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Hearing on Moving from Unemployment Checks to Paychecks: Assessing the President’s Proposals to Help the Long-Term Unemployed

October 06, 2011











October 6, 2011


Printed for the use of the Committee on Ways and Means

GEOFF DAVIS, Kentucky 


RICK BERG, North Dakota
TOM REED, New York
TOM PRICE, Georgia
DIANE BLACK, Tennessee


JON TRAUB,  Staff Director
JANICE MAYS, Minority Staff Director 





Advisory of October 6, 2011 announcing the hearing



The Honorable Ron Wyden
Senator from the State of Oregon

The Honorable Jim Renacci
Representative from the State of Ohio


The Honorable Jane Oates
Assistant Secretary, Employment and Training Administration, U.S. Department of Labor


Maren Daley
Executive Director, Job Service North Dakota

Dawn Deane
Unemployed Worker

Don Peitersen, Director of Unemployment/Workforce Project, American Institute for Full Employment

Chris McConnell
Workforce Consultant, AlliedBarton Security Services



Thursday, October 6, 2011
  U.S. House of Representatives,
Subcommittee on Human Resources,
Committee on Ways and Means,
Washington, D.C.

The subcommittee met, pursuant to notice, at 9:03 a.m. in Room B‑318, Rayburn House Office Building, Hon. Geoff Davis [chairman of the subcommittee] presiding.

[The advisory of the hearing follows:]


     *Chairman Davis.  Good morning.  Thank you all for joining us today.  Today’s hearing is on the President’s proposals to help the long‑term unemployed get back to work, which are part of his latest jobs plan.

     There is certainly bipartisan agreement on that goal of getting people back to work, but we need to do a better job helping all of the unemployed return to work, because today’s short‑term unemployed workers risk becoming tomorrow’s long‑term unemployed.  For example, one of America’s 14 million unemployed workers, Ms. Dawn Deane, will testify shortly about her experience since being laid off in June.  She’s not “long‑term unemployed,” but why should we wait until she reaches that stage before she gets effective help in getting back to work?

     Yet that’s largely what the President’s latest plan proposes, starting with its call to extend unemployment benefits for up to 99 weeks for another year.  That has a familiar ring, because this would be the tenth extension since mid‑2008.  That’s left a long track record of assessing whether extending unemployment benefits will create jobs, as some have claimed.

     For instance, then‑Speaker Nancy Pelosi last year said that extending unemployment benefits is “one of the biggest stimuluses [sic] to our economy… It creates jobs faster than almost any other initiative that you can name.”  But in reality, since federal extended benefits began, the unemployment rate rose from 5.6 to 9.1 percent, and over 6 million jobs disappeared.

     Federal benefits have already added $180 billion to the deficit, and today we are being asked by the President to spend another $50 billion next year.  Other proposals in this plan have a familiar ring, too.  For example, like provisions in the Democrats’ 2009 stimulus law, the President’s latest plan proposes more temporary federal funds if states adopt UI policies dozens of states already support.  If these programs have merit, and many states already use them, why must the Federal Government again spend billions of dollars for other states to adopt them, too?

     There is no free lunch here.  The Administration has proposed new taxes on job creators to pay for this new spending, but Senate Democrats have already rejected some of those.  Meanwhile, the Administration’s budget, which was unanimously rejected in the other body, called for nearly $60 billion in permanently higher unemployment taxes on jobs in the coming decade.  It is hard to see how permanently higher taxes on jobs will help the unemployed get back to work. 

The President’s plan is noteworthy for steps it does not take, such as providing states more flexibility over UI funds, so fewer people become long‑term unemployed.  This committee approved such UI waiver authority to the states earlier this year.  Just last week, President Obama signed into law a bill cosponsored by my friend Mr. Doggett, among others, to provide states waiver authority in child welfare programs.  I had the privilege of being in the Oval Office last Friday to see that bill enacted into law.  And that shows that we can make progress from a bipartisan perspective, focusing on the process and the real economics and opportunities to help people move forward.

     If states can be trusted to design better programs for children at risk of abuse and neglect, can’t they be trusted to test ways to better help the unemployed get back to work, using their own state funds?

     Other important reforms are missing, too, like strengthening work search and better engaging unemployed workers in training — reforms that were needed even before the recession.  The good news is these sources of improvements to help all unemployed workers can and should be included in any legislation enacted this year to help the unemployed return to work.

     I look forward to working with my colleagues and the Administration to that end, and welcome all of our witnesses today to discuss how we can craft the most effective policies to do just that.

     Without objection, each Member will have the opportunity to submit a written statement and have it included in the record at this point.  And I would like to yield now to my friend, Lloyd Doggett.

     Do you care to make an opening statement?

     *Mr. Doggett.  Thank you very much, Mr. Chairman.  This is an opportunity to review the proposals of the President to assist the unemployed find work, and to listen to the creative recommendations of our colleagues.

     Today in America the problem that we face is not the unemployed, but unemployment.  Too many Americans remain unemployed because of lack of work, not for their lack of wanting to work.  We must stop the blame‑the‑victim approach of just blaming unemployment on the unemployed.  Thus far this year we have yet to vote in the House on a single meaningful jobs bill.  And threats of default on our debt and threats to shut down the government only set back our economic recovery and cost us more jobs.

     There is a great difference in this country between what happens to some unemployed citizens.  Those at the top of the economic ladder don’t need to worry about unemployment insurance.  Last month the executive at Hewlett Packard, HP, got a $13 million golden parachute after he was dismissed when his company’s stock price fell by half.  But for the rest of America, and particularly the working‑age poor, of whom we have more than at any time in about 50 years, things are considerably different.

     As luxury goods fly off the shelves at some specialty stores, Wal‑Mart has reduced the size of its toilet tissue rolls because so many people can’t afford to buy the old size.  When folks lose a job through no fault of their own, the least we ought to do is extend a life line.

     In examining the provisions of the President’s Americans Job Act relating to unemployment, there are several new initiatives that merit our study.  If Congress fails to act by December 31st on extending Federal unemployment insurance benefits, more than 2 million people will lose their unemployment assistance by the middle of February.  And throughout next year, a total of six million Americans will be without assistance.

     The President’s proposal is a good place to start in addressing this problem.  This doesn’t mean I think that every aspect of his proposal has the right answers, or that he even has the best answers on all aspects of this problem.  But I especially emphasize the need to extend Federal unemployment assistance at this time of continued economic downturn.  Terminating unemployment assistance would hurt our nation’s economy by further suppressing consumer demand and confidence.

     The Economic Policy Institute has estimated that allowing the extended Federal unemployment program to expire would cost this country over half‑a‑million jobs.  This amounts to a double whammy for the unemployed.  They lose their benefits, and jobs become even more difficult to find.

     And there is near unanimity among economists that few government expenditures have more positive stimulative effect.  It’s true, it doesn’t solve all the jobless problem in the country.  But economists of all political stripes agree that one of the best ways to stimulate the economy is to make payments to those who have no choice but to spend those dollars immediately on the necessities of life.

     But things could get even worse for the unemployed if the proposal before the House Appropriations Committee to cut job training and unemployment services by 75 percent is effective.

     Finally, while there is much ballyhooing about the so‑called Texas Miracle, the unemployment rate in my state, 8.5 percent, stands higher today than at any time in the last quarter of a century.  Our state is also a good example of what happens when ideological constraints and political imperatives produce decisions that harm both employers and employees.

     Let’s hope that this hearing is just the first step in forging a stronger consensus that we must not abandon the millions of our neighbors who depend on unemployment insurance to make ends meet until they can be successful in securing a new job.  Let’s work together to move our economy forward, and increase the opportunity for folks looking for work to find it.  Thank you, Mr. Chairman.

     *Chairman Davis.  Thank you, Mr. Doggett.  Before we move on to our testimony, I would like to remind our witnesses that all oral statements need to be limited to five minutes.  And, however, without objection all of the written testimony will be made part of the permanent record.

     On our panel today we will be hearing from several of our distinguished colleagues.  First will be the Honorable Ron Wyden, Senator from Oregon.  Welcome to the panel.  The Honorable James Renacci of Ohio, accompanied by the Honorable Hansen Clarke of Michigan.  Thank you all for joining us today.

     Senator Wyden, please proceed with your remarks.



     *Senator Wyden.  Thank you very much, Mr. Chairman, and it is a pleasure to be with you and Congressman Doggett.  I had a chance to serve in the House of Representatives.  It is good to be back.  And let me first of all say I am going to spare you the filibuster this morning.  And if I could just make my prepared remarks a part of the record, perhaps just kind of summarize a few thoughts.

     *Chairman Davis.  Without objection.

     *Senator Wyden.  Thank you, Mr. Chairman.  I particularly appreciate the way you, Mr. Chairman, and others are looking at trying to find a bipartisan way to make some changes in the unemployment system to provide more opportunities for our workers, folks that are hurting, to get ahead.

     And what I want to do is just start this brief discussion with my belief that this isn’t our grandparents’ job market.  I think we all understand that we saw our grandparents and our parents very often get caught up in the typical business cycle caused by bad weather, or an increase in the price of raw materials, something like that.  They would be unemployed for a few months, six, eight months, but their jobs would come back.

     We know today that a lot of lost jobs aren’t coming back, and we have to start with that basic understanding.  And so, I come to offer the theory that, in a bipartisan way, we could start with the proposition that a significant number of folks who are unemployed are essentially treading water in the unemployment system with no way of getting ahead.  And these are folks who now have one of two choices.

     They’ve got these two choices, which aren’t particularly good for them, and they aren’t particularly good for taxpayers.  They can take their unemployment check and keeping looking for jobs that no longer exist or they can take their unemployment check and go into a training program that is not as valuable as the knowledge in their head and the work ethic in their body.

     So, what I would like to suggest is that, on a bipartisan basis, we look at the idea of reforming the unemployment system to give those who are qualified to do so the opportunity to get off the treadmill.  We should let them use the marketable skills that they have often picked up in decades of employment in the private sector, to become self‑employed in the private sector, where they’re going to be paying taxes and often putting others to work.

     Now, I want colleagues to know that I don’t think this is for everybody.  I am not suggesting you can be unemployed and just walk into the UI office and say, “I am going to go set up a biotech company,” or something of that nature.  But if you look around the country at what we’ve done in the last 15 years with these programs on a small scale ‑‑ and I authored federal SEA law in the 1980s ‑‑ we see people setting up welding shops, we see folks doing innovative work in wood products, in technology in a variety of areas.

     Recently, two unemployed fellows in my home town of Portland started a technology company, “Urban Airship,” and they are doing pioneering work with new mobile apps.  And they have got people all over the country interested in their mobile applications.  So, these jobs can pay good wages, and turn folks into entrepreneurs.

     And I will close with this, Mr. Chairman.  A study by the Department of Labor found that self‑employment participants were 19 times more likely than eligible non‑participants to be self‑employed at some point after being unemployed.  And even more importantly, they were four times more likely to obtain employment of any kind, any kind whatsoever.  And the average cost of these jobs was $3,350.

     So, we can continue to go back and forth, Democrats and Republicans, punching on each other about the idea of job creation that costs many, many times that level, or we can find a way, in a bipartisan fashion, to do it.  What we have done in this legislation is put in what I think are realistic limits.  A state can only give about one percent of its UI recipients the opportunity to take part in self-employment assistance with a limitation of the number of weeks of benefits.

     And I just appreciate the tone that you are setting, Mr. Chairman and Congressman Doggett has worked, through your joint bipartisan work on the child welfare bill that was signed recently.

     And let me break the speechifying off here, and just know that I would be very much interested in being part of this bipartisan approach you all are trying to cultivate.

     [The statement of Senator Wyden follows:  Testimony ]

     *Chairman Davis.  Thank you, Senator Wyden.  Much of what you mentioned fits the spirit of legislation that we worked on back in the spring regarding issues like this.  And we will look forward to continuing that dialogue.  Thank you very much.

     Congressmen Renacci and Clarke?



     *Mr. Renacci.  Good morning, Mr. Chairman, Mr. Doggett, and members of the subcommittee.  I would like to thank you for hosting today’s hearing on moving from unemployment checks to paychecks, and for inviting me to testify.  It is my hope that today’s hearing will provide the subcommittee with actionable information for getting our nations’ unemployed back to work.

     The dire unemployment situation currently gripping the United States has been an inescapable reality for several years.  Unemployment data for the month of August showed zero jobs added and a sustained unemployment rate of over nine percent.  The next report on job creation ‑‑ or, unfortunately, the lack thereof ‑‑ is due on October 7th.  But there is little reason for optimism.

     However, the tools we need to overcome the economic downturn are already at our disposal, the most valuable of which is unemployment insurance.  Significant employment opportunities can be created by allowing the states to leverage unemployment insurance into job creation.  There is no silver bullet to returning America back to work.  But creating an incentive for both employers and job seekers through unemployment insurance is an important first step.

     I have introduced a bill with bipartisan support entitled, “Employ Act,” H.R. 2137, that would create this dual incentive.  The unemployment benefit to the business ‑‑ the Employ Act would allow states to develop an optional program for providing a percentage of the unemployment benefit to a business willing to hire an individual at a rate higher than the normal benefit amount.

     The purpose of this program is simple:  provide businesses with an incentive to hire through reduced risk, provide individuals with an incentive to work through increased pay, and reduce cost to the government by paying only a percentage of the unemployment benefit to the eligible businesses.  As stated, the Employ Act is not a panacea for the joblessness crisis the United States is currently facing.  But it is a crucial step in the right direction.

     I again thank the subcommittee for inviting me to testify here today, and I look forward to answering any questions you may have.  I also look forward to hearing the ideas presented by my colleagues here today.

     [The statement of Mr. Renacci follows:  Testimony ]

     *Chairman Davis.  Congressman Clarke?



     *Mr. Clarke.  Chairman Davis, Ranking Member Doggett, subcommittee members, my name is Hansen Clarke.  I represent the metropolitan region in this country that has lost more jobs than any region over the last years:  metropolitan Detroit.

     People in metro Detroit, they need work.  They are desperate for work.  This Employ Act would provide the people that I represent a chance to get on‑the‑job training, but also an opportunity to get a job long‑term.  This is important, and I am going to be brief.  When you put folks in metro Detroit back to work, even though our area has been so hard hit, economically, we have the best manufacturing know‑how still.  We have got a great trained workforce.  When you put our folks in Detroit back to work, you put this country back to work.  We can create more new advanced manufacturing jobs.

     But I am not here just talking to you today as a Member of Congress representing Michigan’s 13th District.  I also want to share with you my experience during the last great recession that we had here in this country, during the 1980s.  I was a young man in my early twenties.  I had already lost my family, they had died by the time I was 19.  I had no brothers and sisters.  I had dropped out of college, I had been out for years.  And I lost my income.  I lost my food stamps, and then I gave up completely.  I knew that there was no way I was going to be able to make it in life.

     This is the tremendous tragedy right now with folks who are unemployed.  I know that feeling.  I can see it in their eyes.  People in Detroit are tough, but they have given up.  They don’t think that they have a chance any more.  This Employ Act gives people some confidence in themselves by putting them back to work, putting them in a work situation where they can work with a team, they can see that ‑‑ the value that they have to a company, to themselves, and to this country.

     The other reason why I wanted to be here today, I wanted to show this Congress and to show this country that a Republican like Jim, a Democrat like me, that we can work together, and we are committed to put our people back to work.  This bill is not perfect, but nothing in this country is.  But it is a clear statement:  Here is a way that we can provide an incentive for employers to hire people who need money, but also need faith, faith in themselves and faith in what this country is all about, giving everyone an equal chance ‑‑ not a guarantee, but a chance to pursue happiness, to actually live your life as fully as you can.

     So, I really appreciate you giving us this opportunity.  I want to let, again, this country know Democrats and Republicans are willing to work together to put you back to work.  That is why Jim and I are here today.  Thank you so much.

     *Chairman Davis.  Thank you very much, Congressman Clarke.  We appreciate your sentiments.

     Does anybody have any questions for our colleagues on the panel?

     [No response.]

     *Chairman Davis.  I would like to thank Senator Wyden and Congressmen Renacci and Clarke for joining us today, sharing your insights.  The one thing I also would like to do is extend the invitation to continue to work with all of you.  We look forward to this dialogue as we move forward, and thank you very much.

     That concludes our first panel.  And for our second panel we will be hearing from the Honorable Jane Oates, Assistant Secretary of the Employment and Training Administration, U.S. Department of Labor.

     Welcome, Secretary Oates, for another appearance before the subcommittee.  You can go ahead and proceed with your testimony.



     *Ms. Oates.  Good morning, Chairman Davis, Ranking Member Doggett, other members of the committee.  Thanks for this opportunity to begin the discussion on the President’s American Jobs Act.

     The act draws on bipartisan ideas and proposes innovative changes to the unemployment insurance, the UI program.  It gives states flexibility to implement innovative voluntary approaches to get long‑term unemployed workers back to work and boost job creation, while also providing UI benefits to the long‑term unemployed who continue to face challenges finding jobs.

     I know you all agree that getting people back to work is essential to our sustained recovery and our nation’s economic strength.  The UI reforms in the American Jobs Act are packaged to ensure unemployed workers have the benefits they need while searching for work, but also ensures that they have the necessary services and opportunities to get re‑employed.

     The proposal couples a further extension of emergency unemployment compensation with full federal funding of the extended benefit program for one year, with mandatory re‑employment services and eligibility assessments for EUC claimants, and state flexibility to implement a menu of innovative re‑employment strategies that would provide claimants with additional options, if they chose to pursue them.

     The President’s proposal will, by the end of 2012, prevent 6 million Americans from losing access to the benefits they need to sustain their families while they look for work.  We know that without these life‑sustaining benefits this past year, 3.2 million people would have slipped into poverty.

     At the same time, an extension of emergency unemployment benefits for a year bolsters consumer spending, which, in turn, fuels local economies by returning $2 in economic growth for every $1 in benefits paid.  We know that the longer an individual is unemployed, the less likely that individual is to successfully return to work, because their skills get rusty and they face the stigma of being long‑term unemployed.

     The President is asking Congress to extend EUC and full federal funding for EB through the end of 2012.  At the same time, the act promotes rapid re‑employment by requiring states to provide re‑employment services, and UI eligibility assessments similar to the re‑employment and eligibility assessment initiative that 40 states currently operate.  They would now provide this to all EUC recipients.

     States will provide these services in tandem, and we know this strategy works.  Research shows that a combination of RES and REA activities reduces UI duration and saves trust fund dollars, because claimants find jobs faster and ineligible claimants are identified, thus reducing improper payments.

     In addition to these important re‑employment services, the American Jobs Act proposes the Re‑Employment Now initiative, which provides $4 billion to states through a formula, and gives states the flexibility to implement something from the menu of optional re‑employment services, including state‑developed models, while joining DOL in an evaluation of the models to inform future UI reforms.

     All of these options directly benefit long‑term unemployed workers.  The Bridge to Work program builds on and improves on programs such as Georgia Works, and will permit EUC recipients to voluntarily engage in temporary work for up to 38 hours a week for up to 8 weeks, while continuing to receive their EUC benefits.  Total benefits in every state must be at least equal to the minimum wage in that state.

     Key worker protections are mandatory for both the EUC recipient and for employees at the participating employer.  Bridge to Work is a win‑win for both the EUC recipient and the employer, and we think it promotes job creation and hiring.

     Wage insurance will provide an incentive for older EUC recipients 50 and above to return to the labor market by taking a job that pays less than what they were making in their last job.  Participants could be paid up to 50 percent of the difference in wages between the two jobs during a period of time determined by the state.

     Other initiatives in my oral testimony, as my time is running out, we can discuss during questioning.  But I do want to end by saying that we think the American Jobs Act is a comprehensive package and the President is urging Congress to enact it in its entirety, including, for example, the additional re‑employment strategies that are pathways back to work that will be considered by other committees.

     I really hope this is the beginning of our discussion.  I hope we can reach some common ground on this, and really hope we can get to something quickly.

     Thank you, Mr. Chairman.

     [The statement of Ms. Oates follows:  Testimony ]

     *Chairman Davis.  Thank you very much, Ms. Oates.  I will go ahead with the first question.

     According to the Administration’s most recent projections in the fiscal year 2012 mid‑session review released in September, to quote, “The unemployment rate is projected to fall, but it is not projected to fall below 6.0 percent until 2016.”  For reference, in 2008, our national unemployment rate hit a low of 4.9 percent.

     Now, the Administration also projects that at this time next year the national unemployment rate will still be at 8.2 percent, which is, I think we would agree, unacceptably high.  Yet, when we look at the proposals before us from the President, they generally propose help for the long‑term unemployed through the end of 2012.

     Now the question.  Does this mean that if we pass the proposed tenth extension of UI benefits now, that a year from now will you be back asking for an eleventh extension of federal UI benefits, and another infusion of one‑time short‑term stimulus funds to “create jobs”?

     *Ms. Oates.  Mr. Chairman, I think that is a fair question, but I don’t have a crystal ball, with great respect.  I think our hopes are that the proposals that we are putting forward here will reduce the number of people continuing into long‑term unemployment, will accelerate people getting back to work, particularly when you look at the re‑employment services that we are asking for, and the assessments.

     We think that a number of people in your state and in every state across the country have been put out of work in a sector where there are no longer jobs for them.  So we are hoping that these initiatives that we are proposing ‑‑ and we will work with you on trying to enact many, all, or some of them ‑‑ we think it will change the direction of people.

     We certainly think that something like the Recovery Act, while some people say it wasn’t effective ‑‑ I mean we can certainly look at things like the state sustainability funds, which eliminated the need to lay off workers in 2009 and 2010 from states and municipal areas, and the resurgence of the auto industry.  Likewise, I think this proposal will have real benefits.  Do I think it is perfect?  No, sir.  I wouldn’t say that to you.  But I think together we can make it even better than it is now, and I look forward to working with you on that.

     *Chairman Davis.  Okay.  Well, we have a mutual concern.  There is a couple of generations of statistical data that would suggest that when people pass that two‑year mark being unemployed, that it is very rare that they re‑employ.  And the question that we have tried to deal with over the course of this year is looking at ways to encourage working ‑‑ especially with states, empowering front‑line service providers ‑‑  to get them to work as quickly as possible, so there is not a lag time that moves them away from the workforce.

     Regardless of the issues surrounding that and the unique issues that Senator Wyden commented on ‑‑ I certainly think he brought up some very creative ideas.  We had a discussion on creative ideas that was very well received by the states that were a little bit different from this.

     But I guess a final question would be why doesn’t your proposal include permanent reforms to the UI program, so that we always do a better job helping the recipients to work from the first week of collecting benefits, instead of engaging largely after they have been unemployed for six months?

     *Ms. Oates.  Well, I think, Mr. Chairman, you and I have had discussions about the fact that there is real need to work with this committee and the other chamber to look at long‑term UI reform.  Some of the things that we would like to do, in terms of solvency and improper payments, we are initiating as much as we can without statutory change.

     But I think that what we are hoping is ‑‑

     *Chairman Davis.  Just to intercede, had we gotten our JOBS Act passed, you would have had the statutory authority to deal with the data exchange and issues there.  Go ahead.

     *Ms. Oates.  We appreciate that.  But we want you to know that we are hoping that some of the ideas that we are proposing in this act, they contain an element that has been missing when states try to do this ad hoc on their own, and that is a strong evaluation piece.  We are committed to you to evaluating anything that you give us the permission to do, so that a year from now, if you are choosing to look at long‑term underlying UI reform, we will have real data, not anecdotal, not guesses, not political spin.  We will have data to share with you about what the promising ideas were that really did make a difference in getting people back to work.

     *Chairman Davis.  Okay, thank you very much.  I yield now five minutes to the gentleman from Texas, the distinguished ranking member, Mr. Doggett.

     *Mr. Doggett.  I thank the gentleman and the Secretary for her service.

     With reference to the JOBS Act, my recollection is that the bill, though strongly urged in Committee and strongly opposed by me and others in Committee, was never brought by the House leadership to the House floor, so that anything could be done on it.  I am thankful that it wasn’t, because I think the unemployed need the assistance more in my state than Governor Perry needs their money to pay off state bonds.

     But to focus, Madam Secretary, on your testimony, what do you believe the economic impact will be if we allow two million people to begin losing their Federal unemployment insurance benefits in February, and a total of six million to lose their benefits, as you have testified, over the course of the next year?

     *Ms. Oates.  Congressman, I think one word would sum it up.  It would be “catastrophic.”  We would not only be pushing people into much more expensive safety net programs, but many of them would be entering programs like long‑term disability that would be a mortgage that our country would have for decades to come.

     I think that the American people want to go to work.  But when pushed to the wall, they are going to do what they have to do to support themselves, to keep a roof over their head and their families’.

     So I think that we have already seen a disturbing growth in long‑term unemployment numbers.  And I think that unless we give people real options, real job options so that they can support themselves, they are going to find another way to do it.  I mean I do believe that we can reform our programs, but job creation is what we have to be about.  There are 16 million unemployed people today, almost another 7 million working part‑time that would like to work full‑time.  And by the best estimates, there is a little bit over three million jobs.  That math doesn’t add up.

     So, I really hope that, you know, we don’t look at that ‑‑ we don’t deny 6 million people in 2012 their benefits.

     *Mr. Doggett.  And, really, if you look back over the decades through Republican administrations and Democratic administrations, when we have hit unemployment levels that are as high as they are today, have there usually been bipartisan efforts to extend unemployment benefits under that circumstance?

     *Ms. Oates.  Yes, sir.  Looking at the history, the last time unemployment ‑‑ long‑term federally‑supported unemployment benefits were eliminated [sic], the unemployment rate was about 7.2 percent.  There has never been a time in history when Congress has not included extensions when the unemployment rate was at nine percent.

     *Mr. Doggett.  And I know, as I said in my opening statement, there are those who want to blame the unemployed for unemployment.  But aren’t we in a circumstance today where there are more than four unemployed Americans available for every job opening?

     *Ms. Oates.  Yes, sir.  And that is the national average.  In some areas, even those areas represented on this committee, that number has doubled.

     *Mr. Doggett.  And in that circumstance, what will be the effect if the effort last week by Republicans on the House Appropriations Committee to slash the Workforce Investment Act by 75 percent ‑‑ almost eliminate it ‑‑ what will the effect be on employment services, on job training, and opportunities for those unemployed individuals to find the work that they want?

     *Ms. Oates.  Well, I would love to give you a direct answer to that, sir.  But clearly, the way the bill is written with changing program year to fiscal year in some parts of the bill and not others, make it almost impossible to give you an accurate answer.  But at the minimum, it would cut our services at least  by 50 percent, and perhaps up to 90 percent in some programs.

     What would that mean in Texas?  It would probably mean that Larry Temple, your director of workforce programs, would probably have to close 80 percent of the one‑stops.

     *Mr. Doggett.  That ‑‑

     *Ms. Oates.  Eighty percent.

     *Mr. Doggett.  That doesn’t seem to me to be a very creative way to address this problem.

     I do have some concerns about the Bridge to Work model that copies Georgia Works.  I like the sound and theory of the program.  But at least one analysis I have seen shows that after a couple of months of providing employers free work, only about 10 percent of those workers find permanent employment.  Is that the record?

     And is there anything you do in the Bridge to Work proposal to try to ensure that we get better worker placement after providing weeks of free labor?

     *Ms. Oates.  First of all, the Georgia Works program and the other programs in Missouri and North Carolina, in New Hampshire, don’t use UI money.  So therefore, we don’t have a lot of accurate data on them.  What we can tell you in studies that we have done, that people who do active work search actually have done twice as well in getting placed in jobs.

     So, when we proposed this as an option ‑‑ because we fully recognize that some people are sending out hundreds of resumes and not getting one interview ‑‑ we hear that desperation whenever Secretary Solis and I travel individually or together ‑‑ we think that some people really would like a chance to show what they have, what their worth is to an employer.

     So, in addition to giving them this opportunity, we would first exhaust the resources of the Wagner‑Peyser system and the employment service system by making sure they get an accurate assessment, they get face‑to‑face attention from someone so that they know that they are doing ‑‑ they are getting the best, in terms of workforce ‑‑ work search information.

     I think that by beefing up the basics, the work search, the job counseling, the labor market information, and adding other options, we are responding to good ideas from around the country.  So I think the pairing of them may give us the best options.

     *Mr. Doggett.  Thank you.

     *Chairman Davis.  Great.  Thank you very much.  The gentleman’s time has expired.  The chair recognizes Mr. Paulsen from Minnesota for five minutes.

     *Mr. Paulsen.  Thank you.

     *Ms. Oates.  Good morning.

     *Mr. Paulsen.  And, Madam Secretary, thanks for being here this morning.  And, first of all, thanks for your comments at the end of your testimony, just saying that this is, from your view, the beginning of a discussion and wanting to work to find common ground on some significant challenges before us.  And I think, as the chairman had mentioned, some proposals had already passed out of this subcommittee or out of the Ways and Means Committee.

     So my understanding now is that the President’s latest plan now that is before us ‑‑ and some of the folks in the administration, by the way, are saying, “Look, you need to vote on this plan as it is, there is not room for modifications,” that is why I really appreciate your comments here today ‑‑ but this is the latest plan now that essentially will extend UI benefits for the tenth time for up to 99 weeks, for 1 more year, it will cost about $44 billion, and there is another $10 billion or so in some other sort of one‑time stimulus‑like programs that would also go into the deficit.

     But I want to go back to some of the testimony that was received back in March from the inspector general at the Department of Labor.  And at that time the testimony was centered around reporting an 11.2 percent improper payment rate for unemployment insurance benefits.  And that represents about $16.5 billion in overpayments, about $936 million in underpayments.  And I think one of the issues that the inspector general rose was that the unemployment improper payment reduction plan did not include specific targets for preventing these improper payments, or details on how to meet certain targets, both for the Department of Labor and for the states.

     And they also mentioned, “As we previously recommended, the Department and states must identify these strategies to maximize opportunities here, especially maximizing the use of the national directory.”

     And I guess just in summary, so knowing that $17 billion in overpayments or improper payments have been made, which is a record high, and the inspector general has essentially come out and said, “Look, the Department of Labor and the states have not identified the strategies that are necessary to target these improper payments,” and now we are being asked to sort of move forward another $50 billion or so on unemployment benefits and services, at this 11.2 percent error rate, does that mean we’re going to have another $5 billion that is going to be spent improperly?  I mean is the math correct?

     *Ms. Oates.  Well, all your numbers are correct, Congressman.  Let me tell you that we have a very aggressive plan with the states to try to work on this number quickly.

     It is very difficult to do anything quickly in the UI system because of the data lag time.  But I think we have given you some materials, and we are happy to give you more about what we are doing.

     Number one, we have set targets now with the states.  Each state has an inter‑agency team, because in the variety of states there are a variety of people who touch UI, whether through re‑employment or direct benefit services.  We have brought the 11 largest states together to work in a cohort, not because their rates are the worst, but because their numbers are so large that they can help us drive the number down.

     We have put a new website up so that there is complete transparency about both the number and the dollar amount that each state is paying in improper payments.  We have given states $191 million in money that we have cobbled together, so that they can advance their use of the program or their use of the national database of new hires.

     We have identified for each state in a pie chart that I think we provided to each of you what their root causes were, so that they could work with us on getting down the root causes, whether it is separation issues, where employers aren’t timely in their ‑‑ getting back to the state about the reason for separation, or whether it is someone continuing to collect after they have gotten a job.

     I think we have put together ‑‑ and lastly, we have actually identified 6 states that have rates over 10 percent, and are giving them targeted technical assistance to get their rates down.

     This is a partnership program with the states, and in ‑‑ you are going to hear from a state director on the next panel, and I know she will be able to make this case much more accurately than I.

     But I don’t think any of us really understand what the unemployment numbers have done to state workforce people.  I mean they have been inundated with requests.  And I would venture that every state has shifted people from the kinds of integrity issues that we all care about and they care about into making sure people get their check in a timely manner.  I hope that, as the rates come down a little bit in states, they will be able to shift those employees back to integrity issues.

     *Mr. Paulsen.  Yes.  Well, and thank you for that.  And I know Congress, obviously, is looking to save and make sure that every amount of waste, fraud, and abuse is not there.

     And what suggestion would you have to make sure that we, as Congress, is making sure the Department and the administration and the states are held accountable for making sure we are not going to have an 11 percent improper payment rate?  Because that is a huge amount of money that is going out the door.

     *Ms. Oates.  Absolutely.  It is unacceptable, Congressman.  And I would say to you for the length of my time that I have in the future in this office, hold my feet to the fire.  You know, call me up to your office, get your staff on the phone.  We will have quarterly results.  And if we are not showing progress, you need to help me and give me more ideas.

     We have put together a plan that has literally taxed my UI staff in the national office and the regional offices, and they are enthusiastically embracing the extra workload.  But I am open to new ideas, ideas that you might have.  You may have things from your state and your state administrator ‑‑ you know we work very closely with the states, there is not an administrator that I don’t know personally ‑‑ and we work closely with NASWA.  We have no pride of authorship on what we have done.  We are willing to try these out.  If this doesn’t get us where we are, if we need to add new measures, please be open and tell us.

     So we look forward to working with you on this.  I do not want to leave this position with the improper payment rate where it is now.  I would like it well below 10 percent.

     *Chairman Davis.  Thank you.  The gentleman’s time has expired.  Mr. Berg is recognized for five minutes.

     *Mr. Berg.  Thank you, Mr. Chairman.  Thank you, Secretary.

     *Ms. Oates.  Good morning.

     *Mr. Berg.  I ‑‑ you know, maybe I am looking at this very simply, but one of my frustrations is this is the tenth time we have extended this, all right?  And since the major stimulus package, nothing has changed.

     I mean you talk about this money going in the economy and stimulating spending, but we really haven’t seen that happen.  We are still at nine percent.  The economy is bleak.  I mean I agree that it is about jobs.  But I also am concerned that we don’t have anything innovative, anything that is changing.  We are just doing the same thing.

     And so, you mentioned earlier that there is 16 million unemployed people.

     *Ms. Oates.  Yes, sir.

     *Mr. Berg.  And there is about three million jobs.  I guess my first question is it seems to me that we ought to be doing everything we can in this program to fill those three million jobs with the people that are unemployed.  That should be our number one focus.

     My other frustration ‑‑ and this is just kind of the big picture ‑‑ is everything is temporary.  This temporary nature does not provide the security and the stability that people need, either those that are unemployed, or that our economy needs.

     And, you know, obviously I have said this several times in our state is, you know, we are at 3.5 percent in North Dakota.  We didn’t have a jobs bill in North Dakota, and we understand there that government doesn’t create jobs, the private sector creates jobs.  And so we need to create an environment that encourages that to happen.  And we need to create a system here that recognizes that and works with that private sector to encourage hiring and to fill those jobs and fill that capacity.

     I mean there is a couple stories today in the press back home that are really disheartening, people that have lost their businesses in other states that have come to North Dakota, living in trailers, trying to pull things together, and there is a lot of optimism in those people.  But the sad thing is this dead economy, they are never going to be able to recover from that.  They have lost their businesses, they have lost their homes, and they are starting over at 60 years old.

     And so, again, this whole thing ‑‑ I think we need to get back to the focus of trying to create those jobs.  And I am a strong believer that these solutions are not going to come from us in Washington.  These solutions are going to come from the states.

     And so, one of the core things that I want to talk to you about is we have a federal waiver, if I understand it correctly, at the federal point.  But we don’t have the waiver at the state.  And so the ‑‑ you know, I guess maybe if you could, just explain to me the federal waiver process that we have.

     *Ms. Oates.  Well, under the unemployment insurance program we have no waiver authority.  Under the Workforce Investment Act, which is the subject of another committee, we have more liberal waiver authority in many areas, and North Dakota is a recipient of many of those waivers under the Workforce Investment Act program.

     But you know, we do not ‑‑ you haven’t given us statutory authority to waive anything in the unemployment insurance program.

     *Mr. Berg.  Is that something that has been asked for in the President’s bill?

     *Ms. Oates.  No.

     *Mr. Berg.  Would that ‑‑

     *Ms. Oates.  We haven’t done, really, anything to the underlying Unemployment Insurance laws in this bill.  As you say, these are temporary programs.

     But I think while your state has the blessing of great natural resources, it has done, really, a lot of things right.  I mean you were able to come back from Mother Nature’s natural disasters and floods this year in a much stronger way than anybody ‑‑ than many of your other neighboring states were able to do so quickly.  So, you are doing a lot of things right.

     But one of the things the President’s bill does, sir, is recognize the fact that we don’t know everything in Washington, and it gives states a menu of options so that they can figure out whether wage insurance is right for them, whether, you know, self‑employment assistance, that program is right for them, or whether they just want to build up their REA and RES programs.

     So, I think we are on the same page there.  We may have differences in other areas, but I think we definitely agree with you that states know better about how to build their own local economy, how to respond to their employers, and we give them a menu of options.

     *Mr. Berg.  I understand the rhetoric, but I don’t see the action.  And so I guess I would just challenge you to, as we are looking at this, and as we are debating this, that we look for those areas of waivers and flexibility within UI, both at the federal level and the state, to kind of move that forward.

     *Ms. Oates.  Happy to work with you on that, sir.  I am not a rhetoric person, I am an action person.  Thank you.

     *Mr. Berg.  Thank you.  I yield back.

     *Chairman Davis.  Thank you.  The chair recognizes Mr. Crowley for five minutes.

     *Mr. Crowley.  Thank you, Madam.  Thank you Mr. Chair ‑‑

     *Ms. Oates.  Good morning.

     *Mr. Crowley.  ‑‑ and thank you, Madam Secretary.  Rhetoric has its place, so ‑‑

     *Ms. Oates.  You must have been a preacher in a former life.

     *Mr. Crowley.  Boy, I wish we all were North Dakota, I wish we all had a 3.5 percent unemployment rate.  And unfortunately, in New York, it is, as Mr. Reed knows, it is at eight percent, if not higher.  And so I appreciate my colleague’s remarks, but also note that other states are even at higher levels than New York, in terms of unemployment.  In fact, we feel kind of lucky that we are only at eight percent when we look at other states.

     The ‑‑ what I would remind my colleagues is that this portion, the UI benefit extension, is part of ‑‑ part and parcel of ‑‑ the President’s overall jobs creator, jobs bill creating jobs.  And I say it is a part of it.  It is not a small part, and not an insignificant part.

     People who receive unemployment, Madam Secretary, they have to be engaged in trying to find employment.  Is that not correct?

     *Ms. Oates.  That is correct, sir.  That is the work search piece of every state law.

     *Mr. Crowley.  So these folks aren’t sitting home and just collecting a check.  They have to be out looking for work, looking for a job.  Right?

     *Ms. Oates.  That is correct.

     *Mr. Crowley.  The most a person in New York State can receive is $405 per week.  Now, just a little calculating, that is $1,620 per month.

     Now, we have gotten, I think, past the folks who were steered into improper mortgages.  Most of those mortgages have been worked out.  But now you are really delving into folks who have been, unfortunately, at ‑‑ not due to their own malfeasance, but now find themselves chronically out of work.  For many people half a year, for others a full year, a year‑and‑a‑half.  Is that not true?

     *Ms. Oates.  Actually, 46 percent of all the unemployed have been unemployed more than 26 weeks.

     *Mr. Crowley.  Now, I am just going to look at a mortgage not that one would have today, I’m just going ‑‑ a homeowner.  Someone who may have, a number of years ago, had a 5.8 percent mortgage rate, which was reasonable not even 10 years ago, 30‑year fixed mortgage, it comes to about $2,100 per month, just to pay the mortgage.  Now, at $1,620 per month in New York ‑‑ and that is for a $350,000 home, which, just to clarify for folks, when my father was a New York City detective in 1964, the home that he purchased in Woodside, Queens, was for $24,250, 3 bedroom, 1 bath.  Today the City of New York says that house, for tax purposes, is worth over a half‑a‑million dollars.  That’s on a detective salary, New York City police officer’s salary.

     Now, I am even coming down from that.  $350,000, they are already into this house now for about 10 years.  They have been paying $2,100 a month for 10 years.  Now they don’t have a job, they are out of work.  These are hard‑working folks who were working all their lives, continue ‑‑ they want to be ‑‑ they want to play by the rules.  They have played by the rules.  They are continually looking for work, and they can’t find it.  And they are barely holding on to their home if they are getting that $1,620, not to mention food, not to mention gas, not to mention possibly tuition, not to mention any extra‑curricular activities for their children, utilities.  Is that not correct?

     *Ms. Oates.  Absolutely, sir.

     *Mr. Crowley.  So, the giveaway of $1,620 per month barely, if they are lucky, can keep them in their home.  Is that not correct?

     *Ms. Oates.  That is correct.  And don’t forget, sir, they pay taxes on that $1,600.

     *Mr. Crowley.  Pax taxes on that.  So ‑‑

     *Ms. Oates.  So they don’t get the whole thing.

     *Mr. Crowley.  ‑‑ one more last point.  These folks are actively out looking for work.  Is that ‑‑ as we said before, correct?

     *Ms. Oates.  In order to be eligible, yes, sir.  They have to ‑‑

     *Mr. Crowley.  They are not really ‑‑ they can’t be down on Wall Street protesting, can they?

     *Ms. Oates.  I don’t think so, sir.

     *Mr. Crowley.  No.  So ‑‑

     *Ms. Oates.  I don’t think they have the money to take the Metro.

     *Mr. Crowley.  So what I would suggest to all my colleagues, they are not down on Wall Street, protesting, or anywhere in this country protesting, because they are too busy out looking for work.

     Deny them unemployment insurance, deny them that, maybe deny their ability to keep their home and pay for their kids to grow up properly, you are going to find them ‑‑ these are not just a rabble who are down at Wall Street, these are not just professional protestors.  You take unemployment away, and see what happens.  That is not a threat, it is just a reality, that people lose all hope.  And I would just suggest that.

     The Hoover Dam, the Triborough ‑‑ now the Robert F. Kennedy Bridge, the interstate highway system was built, not by private industry ‑‑ they may have built it, but contracted out with the assistance of government.

     And a great portion of what the President is talking about is not just unemployment ‑‑ this is part of it ‑‑ but he is talking about investment in infrastructure, he is talking about helping create employment so that we can help people help themselves and keep their homes.  And I would just remind all my colleagues of that point, and I yield back.  Thank you.

     *Chairman Davis.  The gentleman’s time has expired.  Mr. Reed from New York is recognized for five minutes.

     *Mr. Reed.  Thank you, Chairman.  Madam Secretary, I appreciate you being here today.

     I just wanted to follow up on a piece of your testimony that you gave to Mr. Doggett.  You said that cutting off unemployment insurance would lead to catastrophic situation.

     *Ms. Oates.  Yes, sir.

     *Mr. Reed.  And in that response you said that the people that would be denied benefits would move to long‑term disability status.  What do you mean?  Why would they be going to long‑term disability status?

     *Ms. Oates.  Well, sir, if you look ‑‑ and I would be happy to get the numbers for your staff ‑‑ if you look at the increase to people who are considered long‑term disabled, permanently disabled, the number has almost doubled during the recession.  And I think ‑‑

     *Mr. Reed.  Is that because there is more disability out there, or they are just applying for whatever benefits, even though they may not be entitled to them?

     I don’t see a growing populous of disabled Americans in my district or around the country.  And yet you are telling me, from your perspective, what people are going to do is move to disability status.

     *Ms. Oates.  Well, it is ‑‑

     *Mr. Reed.  Has their disability status changed, physically?

     *Ms. Oates.  If I might, sir ‑‑

     *Mr. Reed.  Yes.

     *Ms. Oates.  ‑‑ I would propose ‑‑ and I would certainly be open to what you have seen in your population ‑‑ I think many people work 40 hours a week who could be claimed as long‑term disabled because of long‑term illnesses, because of permanent disabilities that they have, but they are able to work.  But if they can’t find a job, and they can’t feed themselves and their families, what other option do they have?

     *Mr. Reed.  Well, and that ‑‑ see, and that is what I am trying to get to, your mind set.  Because when I go back to my district and I talk to my farmers and I talk to folks, they say, “We can’t find people to come work.”  Yet in some of these counties we are at 9 percent, 10 percent unemployment.

     Why do you believe that people will choose to do inappropriate things in order to put a roof over their heads, as opposed to, in my opinion, do what is right, and maybe go to work on a farm or in an under‑employed status in order to get off the unemployment roll?  Why do you automatically assume that they are going to move to long‑term disability, when they are not disabled, as your testimony suggests to me?  Why do you assume that, from the administrative ‑‑

     *Ms. Oates.  I didn’t ‑‑ I don’t think I am assuming that they are doing anything inappropriate.  I said that there are people who have disabilities, but have chosen to work.  And in a place where they can’t find work, what other option do they have?

     In terms of farm work and temporary seasonal work, I think we have done a much better job working with states to advertise those jobs.  Quite frankly, I don’t think people knew that those jobs existed.  They didn’t know what they were ‑‑

     *Mr. Reed.  We would love to work with you to publicize that, so we definitely will reach out to you.

     *Ms. Oates.  Absolutely.

     *Mr. Reed.  I really want to focus ‑‑ my heart of my questioning this morning is I am greatly concerned how we are paying for all this.  Because when I went back ‑‑ and this is a whole new area for me, okay, so bear with me, maybe I am misunderstanding the program, but in New York State the loans that were advanced to the state came due, and the governor had no choice but to put a surcharge on the employees.  And as I went back to my district in August, I think it was $27 per employee.  And a lot of my small business owners were saying, “Tom, I am in dire straits.”

     I ran four small businesses.  When you impact a business on an unforseen bill that impacts cash flow to the extent that some of these small business owners were receiving because they got a letter from the state saying that they owed this surcharge on their employee to pay back the loans that were advanced to the state, that is crippling them.  They literally told me to my face that they were choosing between paying this bill for their unemployment surcharge or investing and hiring new people.

     So how do you reconcile ‑‑ how are we going to pay for this without having the negative impact of the costs that come with it?  Because it has to be paid for.  I mean this is real money.  And so how do you say we are helping job creation by extending unemployment benefits, when at the same time the bill for that is hurting the small business owners that are ultimately going to have to pick up the tab that hopefully will put the people back to work?  Do you understand my concern?

     *Ms. Oates.  I have to apologize, Congressman.  I don’t really understand what the surcharge is that the state is ‑‑ and I will go back and learn more about ‑‑

     *Mr. Reed.  It is the interest‑free loans that came due after two years that was advanced to the state because of the extended unemployment period of time.

     *Ms. Oates.  Actually, you know, 36 states borrowed.

     *Mr. Reed.  Yes.  We are one of them.

     *Ms. Oates.  You are one of them.  That is right.  In fact, over the course of the time that we have been doing the loans, 16 states are continuing to borrow as of September.

     So, what they ‑‑ the reason they have to pay the interest back is so that they don’t have to raise their FUTA tax.

     *Mr. Reed.  Yes.

     *Ms. Oates.  They don’t lose the credit on that.  So it could be that what New York did is put on a surcharge so they didn’t raise the tax.

     *Mr. Reed.  That is exactly what they did.  That is exactly my understanding.  But the small business owners are the ones that have to pay that, because ‑‑ just can’t print the money.  They have to go back to the business owners that are creating ‑‑ that have to pay the bill, that are trying to create the jobs to get people off the unemployment rolls.  It just doesn’t make sense to me, why we are doing this.

     *Chairman Davis.  Thank you, the ‑‑

     *Ms. Oates.  Well, the other option would be a permanent increase to their FUTA tax, and I think, you know, we could work with your staff to figure out what the numbers were, and work with Albany to figure it out so I understand it better.  I apologize that I am not as clear with what ‑‑ why they are doing a surtax ‑‑

     *Mr. Reed.  So you would agree raising the FUTA tax would not be conducive to job creation.

     *Ms. Oates.  Oh, absolutely.

     *Chairman Davis.  The gentleman’s time has expired.

     *Mr. Reed.  Thank you, Chairman.

     *Chairman Davis.  But perhaps you could answer his question in writing and I will submit it ‑‑

     *Ms. Oates.  Absolutely, through the chair.  Yes, sir.

     *Chairman Davis.  Thank you.  The chair recognizes Mr. McDermott for five minutes.

     *Mr. McDermott.  Thank you, Mr. Chairman.  Reading the history of unemployment creation in 1935 and the Unemployment Act ‑‑ or the Social Security Act in 1935, the last issue that was argued on the last day in the Senate was, “Is there some kind of moral degenerative element to giving people unemployment insurance?  They will somehow get a weak soul, and they will stay in their chair and wait for their unemployment check.”  The Republican Party has never believed unemployment insurance was good.

     Now, I would like you to explain ‑‑ my colleague can’t seem to get the picture ‑‑ I want you to explain ‑‑

     *Mr. Reed.  Would the gentleman yield for just one second?

     *Mr. McDermott.  Yes.

     *Mr. Reed.  I would just like to remind the gentleman that he and I sponsored two of the extensions together for unemployment, based on your last remark.  I yield back.

     *Mr. McDermott.  I understand.  I would like you to explain to the committee the term counter‑cyclical, the idea that you put money into the fund when things are good, so that when things are bad you have money to draw out.  And what happens to states who, when things are good, say, “Well, let’s drop the tax because we don’t need the money, look, we’ve got all this money in the pot,” and then they wind up having to borrow.

     *Ms. Oates.  Congressman, you are exactly right.  I mean the ‑‑ some states were just hit extraordinarily hard.  And no matter what they would have done, states like Michigan probably would have been hit, no matter what.  But the vast majority of the states, unlike your home state of Washington, did lower business taxes, you know, without thinking about what would happen, and let their trust funds get disproportionately low.

     I think that is the concern that the Department of Labor has with funding any of these innovations with trust fund money.  We think trust fund money should be sacrosanct.  It should be held there for the future, and not used to fund novel ideas.  That is why we think the President is right in asking for additional money to fund these innovations that we would do as voluntary options under UI.

     *Mr. McDermott.  The thing that I would like you to also talk about is the National Bureau of Economic Research has recently done a study on this question about the moral degeneracy that comes from unemployment insurance.  What is their conclusions of that report that were just released?

     *Ms. Oates.  Yes.  They basically find it is completely unfounded in research.  There is nothing to say that there is anything about unemployment insurance that depresses people’s desire to work, or anxiousness to work.

     *Mr. McDermott.  And the plan ‑‑ the Georgia Works plan, how did that work?  Did it ‑‑ was it successful?

     *Ms. Oates.  Well, actually, Congressman, as I said before you got here, they didn’t use our money, so we don’t have a lot of good data on it.  They used other state money.  And quite frankly, right now they are running out of money, and the program is kind of dissolving.

     In terms of successful, looking at their outcomes in Georgia against regular outcomes using just regular Wagner‑Peyser services, they did get about ‑‑ a third of their people did find jobs.  But if you just used Wagner‑Peyser services, twice as many people got jobs.

     *Mr. McDermott.  And today what is the number of people looking for jobs, as compared to the number of jobs available?

     *Ms. Oates.  Sixteen million full‑time unemployed, and another six to seven million who are working part‑time who are looking for full employment, and about three million jobs available.

     *Mr. McDermott.  So you are talking 22 million people looking for 3 million jobs?

     *Ms. Oates.  That is correct.

     *Mr. McDermott.  So, even in the best of circumstances, there are going to be a lot of people who are going to be in the situation that Mr. Crowley was describing.

     *Ms. Oates.  Especially if they are in urban areas or rural areas, they are mostly high‑impact areas.

     *Mr. McDermott.  Now, this is a little out of your neighborhood, but if you are an unemployed worker, and you have reached 99 weeks, you have got nothing left.

     *Ms. Oates.  That is correct.

     *Mr. McDermott.  And you have lost your health care benefits.  What are you entitled to, as an American in this society, besides food stamps?

     *Ms. Oates.  Food stamps, possibly you could go to the housing authority and get a housing voucher, but there is a long line in most areas for that.  And the charity of your faith‑based or community‑based organization.

     *Mr. McDermott.  So we are basically saying to the middle class that have been unemployed for how many weeks, you said?  What is the percentage?

     *Ms. Oates.  Forty‑four percent have been unemployed more than twenty‑six weeks.

     *Mr. McDermott.  So you now have no more unemployment benefits, and you are middle class yesterday, and today you are with food stamps.

     *Ms. Oates.  Correct.  And kids in college with student debt, and kids going to K‑12 school that need books and supplies.  Absolutely, sir.

     *Chairman Davis.  Thank you.  The gentleman’s time has expired.  The chair would like to recognize Mr. Boustany from Louisiana for five minutes.

     *Mr. Boustany.  Thank you, Mr. Chairman.  Welcome.  Good to see you.

     I have some concerns about the static nature of the statistics that the gentleman from Washington laid out.  And I think the job market is much more dynamic than what the statistics would lay out.

     But, you know, in thinking about the purpose of unemployment benefits, clearly they are designed to provide financial support while an individual looks for another job.  That is really the purpose.  And none of us on this side of the aisle will deny the importance of the program for those who find themselves stuck in a situation ‑‑ I mean we have all supported the extension of this program, I know we have worked with our chairman to do this.

     But consistent with the purpose of the benefit, should there be a requirement that UI recipients must search for work every week, with only very few limited exceptions, perhaps for those expected to return to a former job?  I mean is that ‑‑

     *Ms. Oates.  Congressman, each state law is slightly different.  But every state law has a requirement for work search.

     *Mr. Boustany.  Well, I know there is a requirement in the federal extended benefits program.  That is correct, right?

     *Ms. Oates.  We follow state law with that.  Yes, sir.

     *Mr. Boustany.  Right, right, right.  And ‑‑ but with regard to the state UI program which pays benefits when people first become employed, I mean is there a requirement?

     *Ms. Oates.  Yes, sir.  Every state law has a requirement on their initial benefits, as well.

     *Mr. Boustany.  Could you provide us where in statutes that ‑‑

     *Ms. Oates.  In each state law, sir?

     *Mr. Boustany.  ‑‑ is the case?  Because I am ‑‑ I don’t think that is the case.

     *Ms. Oates.  Well, we work closely with Louisiana and Commissioner Isen.  We know what the work search is in Louisiana.  So we can provide you that state law.  I am happy to provide whatever it is to other committee members.

     But it is a requirement for active beneficiaries to work ‑‑ to search for work.  In some states the requirement has a numerical, so you have to have at least three evidences of looking for work.  In some states it is as small as one evidence.  In many of them you do it electronically.  In some states you do it by returning a card.  And in some states, you still, at certain points, have to come in and, face to face, meet with a ‑‑

     *Mr. Boustany.  Because bottom line is we need to make sure the program is working.  I know someone earlier asked the question about overpayments.  And, you know, being chairman of the Oversight Subcommittee on Ways and Means, I am concerned about making sure these programs are working to the best that we can assure, you know, within the law that they are.

     And I am very concerned that the work requirement issue is something we need to probably take a closer look at to make sure that, you know, this is really the case.  Because I mean I have heard a lot of anecdotal evidence back home, talking to employers, where someone will call and ask, “Do you have any job openings?”  And they will say, “Well, yes, why don’t you come in, send a resume, come visit with us,” and they will say, “Oh, no, I just had to do this because it meets the requirement under the unemployment insurance benefit.”

     And I want to make sure that we are doing what we can to make sure that this program is working, that the intent of providing a bridge to getting people back into the workforce is what is really happening.  And, I mean, shouldn’t the work requirement be at least as strong in week 1 as it is in, you know, week 99?

     I mean there should be an incentive all the way through this process to get people to really do the job of getting out there and looking for work.  Because there are jobs.  I mean I think we have got a dynamic labor market, even with high unemployment and all the problems.  I talk to employers all the time who are struggling to find workers.

     In my state, in Louisiana, we have got a lot of folks, a lot of businesses related to agriculture, farmers.  Mr. Reed was mentioning this earlier.  We have got seafood processing plants.  They are looking for jobs [sic].  They are coming to me and saying, “Can you do something about the H2B visa program?  We need more workers.”  And yet we have got, you know, high unemployment of Americans here in this country.

     There is a disconnect, and somehow we have got to get to the bottom of it.  And I think at the heart of this could be understanding what steps we need to take to do the best we can with this work requirement.  And I would like your comments.

     *Ms. Oates.  Well, you know, this is a balance.  As I said, we do this program in collaboration with the states.  And I think all of us have a great respect for the states’ critical role in this program.

     So, rather than going in and saying, you know, we are going to overrule state law on work search, what this proposal has done is mandated for anybody getting EUC, when you decide to extend it, what ‑‑ we will mandate both the re‑employment assessment and the re‑employment services.  That gets to the same thing as work search.  It means that, face to face, somebody has got to come in, not just handing in a card, not just mailing something in.  They have got to talk to somebody, they have got to understand why it is important to take a job when it is offered, because we don’t know what the future is going to deliver.

     So, I think if we talked about this, Congressman, we would probably agree that, right now, the best role we could take is to make sure that we are really mandating the RES and the REA.  And, in the future, in terms of what this committee and the Senate would choose to do in underlying UI law, if you wanted to look at creating some kind of national standard for a work search requirement, I think we would be willing to provide you technical assistance on that, and work with NASWA.

     *Chairman Davis.  Great, thank you very much.  The ‑‑

     *Mr. Boustany.  We may need to look at that.  Thank you.

     *Chairman Davis.  Thank you.  The gentleman’s time has expired.  Secretary Oates, thank you very much for joining us today.

     *Ms. Oates.  Thank you.  Thank you so much, Chairman.

     *Chairman Davis.  We look forward to a continued dialogue.  And that will conclude our second panel.  If Members have additional questions, they will submit them to you in writing, and we would appreciate your responses for the record.  This concludes the second panel.  Thank you.


     *Chairman Davis.  For our third panel we are going to be hearing from Maren Daley, Executive Director of Job Service North Dakota; Dawn Deane, an unemployed person from Philadelphia; Don Peitersen, Director of Unemployment Insurance/Workforce Project at the American Institute for Full Employment; and Chris McConnell, workforce consultant with AlliedBarton Security Services.

     Before we go to ‑‑ one special introduction.  I would like to make a statement.  We have been informed from the whip’s office there is going to be a very long series of votes that is going to go in the next 15 to 20 minutes.  I think we are going to have about 20 to 25 minutes before we go.  I would rather not having you all standing in limbo for 90 minutes, while the floor process works itself out.

     Because of this, if we have time for questions we will begin questions.  But what I would like to ask your indulgence is if our members ‑‑ and I know several will have questions, including me ‑‑ if we could submit those to you in writing, and those could be responded to in writing, and we will make sure that they are part of the permanent record on this.  And I appreciate very much your time coming in to deal with this very critical issue.  So thank you.

     With that, before we proceed with testimony, I would like to recognize Mr. Berg to introduce his colleague from his home state.

     *Mr. Berg.  Well, thank you, Mr. Chairman.  I would like to introduce Maren Daley, who is our first witness here on this panel.  And she is executive director of Job Service for unemployment in North Dakota.  It is a cabinet‑level department.  She administers these programs.  In fact, we worked together a long time ‑‑ for the last 20 years ‑‑ and so I am just excited to have her here.

     And kind of again, my hope is that we will pull some of these ideas at the state level that are working at the state level, and try and create a federal program that creates incentives for the right kind of things to get people back to long‑term work.  So thank you, Mr. Chairman.

     *Chairman Davis.  Thank you very much.  Ms. Daley, you can proceed with your testimony.



     *Ms. Daley.  Thank you.  Chairman Davis and Ranking Member Doggett and members of the Subcommittee on Human Resources, thank you for the opportunity to testify on the President’s proposals to help the long‑term unemployed.

     As Congressman Berg introduced me, I am Maren Daley with Job Service North Dakota, the state workforce agency that administers the unemployment insurance, labor exchange, and labor market information services.

     The Workforce Investment Act, Wagner‑Peyser, and unemployment insurance programs are fully integrated within Job Service’s one‑step career centers.  This seamless delivery system improves the transition of UI claimants to re‑employment.

     A basic principle embraced by all states is rapid, effective re‑employment of unemployed workers is critical to the economic well‑being of individuals, families, and employers which, in turn, support the local and national economies.

     I am encouraged to see a variety of options included in the President’s proposal, but I encourage even more flexibility in this realm.  By allowing maximum flexibility, states are able to implement strategy specific to the needs of their state, ultimately providing for faster economic progress with a more efficient use of tight resources.

     North Dakota’s low unemployment continued job and wage growth among many other factors make North Dakota unique.  However, they do not shield us completely from re‑employment struggles.  While we have thousands of good jobs available, the skill sets of the worker base and, in many cases, the location of these individuals, do not always correspond with the available jobs.

     Examples of our re‑employment successes are readily available, and I would like to outline one of the more successful cost‑effective approaches we have taken.  I should note that this program could not have been undertaken without federal funding resources.  And this is the type of situation in which the President’s proposal and each state’s intimate knowledge of the workforce needs of their own state can converge.

     There is strong competition for jobs available in North Dakota.  And one of our primary goals is to help UI claimants be competitive contenders for these jobs.  To this end, we have had excellent results in the past with our re‑employment eligibility assessment program.  REA focuses on individual case management services, and creates an environment of coaching and support for discouraged unemployed workers.

     Springboarding off the success of the REA program, we developed a series of workshops focused on intensive re‑employment activities and focused individual activities.  These workshops were funded by Wagner‑Peyser RES dollars through the American Recovery and Reinvestment Act.  The workshops were four days long, and required a major time commitment from UI claimants.

     The workshops consisted of one day devoted to basic computer skills training and three days addressing skills identification, exploration of jobs to which the claimant’s skills would be transferrable, effective job searches, writing good resumes and cover letters, and interviewing.  All participants completed the workshop with an updated resume, a new understanding of how their skills could be transferred to another position, and with the confidence gained through a practice interview exercise.

     We have solid statistics proving the success of the workshops.  The statistics showed a significant reduction in the time that the workshop participants spent on unemployment, compared to the overall UI claimant duration in North Dakota.  During the same period, the average claimant duration was 11.28 weeks.  While this number is good compared to the rest of the country, the individuals that attended the workshops returned to work, full‑time work, in 7.32 weeks, on average.  This is an improvement of almost four weeks, and this represents significant savings to the UI trust fund.

     Many things have been tried on a national basis.  Some of them have been successful, and some of them not.  In North Dakota, our UI claimants have greatly appreciated the availability of EUC benefits.  These benefits have been a game‑changer for some.  However, it could be argued a large portion of the EUC benefits paid in North Dakota could have been more effectively spent on focused re‑employment efforts.

     Typically, under federally‑funded extended benefit programs, a minimum work search requirement exists.  However, the 2008 EUC program does not require this, and instead provides that state law and policy regarding work search requirements be followed.

     In North Dakota we have a large seasonal workforce that faces temporary lay‑offs over the winter, particularly in the construction industry.  Because of this, our UI laws and policies are different than that would be seen in many other states.  What this has led to is 24.75 million, or 43 percent of the extended benefits paid in North Dakota have gone to eligible UI claimants who will be returning to employment after a temporary lay‑off.  In essence, these individuals have not faced a change in their normal employment status.

     I have submitted my written testimony.  Mr. Chairman, I see my time is up.  And I would invite you to check out the written testimony ‑‑

     *Chairman Davis.  Yes.

     *Ms. Daley.  ‑‑ for a unique cost‑effective, simplified work‑share program that North Dakota has used.  Thank you.

     [The statement of Ms. Daley follows:  Testimony ]

     *Chairman Davis.  We appreciate your insights, especially the written testimony.  It was quite illuminating.  And thanks for your hard work up there.

     Now the chair recognizes Ms. Deane for her remarks.



     *Ms. Deane.  Chairman Davis, Ranking Member Doggett, and distinguished members of the subcommittee, thank you for inviting me here today.  My name is Dawn Deane, I am a resident of Philadelphia, Pennsylvania.

     Since June of this year, and like so many others these days, I am unemployed through no fault of my own, and supporting myself and my nine‑year‑old daughter on unemployment insurance.  Too often these days, unemployed Americans like me are reduced to either statistics or stereotypes.  We don’t have names and faces.  We are either 1 of 14 million who are out of work, or we are lazy people, happy to sit home collecting unemployment, rather than actively looking for jobs.

     But I am not just a statistic, and I am not lazy.  For the past 20 years, I have worked in the field of human resources, and I have held my 3 previous jobs for 7, 8, and 3‑1/2 years.  In spite of all my hard work, right now I am unemployed.  Thankfully, I am able to receive unemployment insurance benefits, which are what is sustaining me and my daughter, while I diligently look for new work.

     As a human resources professional, I am very aware of how to diligently and strategically search for a new job.  And I am doing just that.  Like tens of millions of other Americans each day, I engage in a thorough and multi‑faceted search for employment.  And I have been doing so since I lost my job in June.

     I have registered my resume with all of the major websites, and I have applied for approximately 40 jobs so far.  In addition, I have attended four different career fairs since being laid off.  And through them I have applied for about 50 additional jobs.  I have yet to hear from a single employer from any of these applications.

     I also understand the importance of networking, so I have reached out to all of my friends and former colleagues, asking for their assistance in finding a new job.  I have gone to my local one‑stop career center to look for open jobs.  I have visited and/or contacted the offices of city council and state representatives to see if they have any resources for their constituents who are searching for jobs.

     I am not only applying for jobs in my field, I am looking more widely for all sorts of administrative jobs, just because I want to work and support my daughter and myself.

     Because I know that I am not the only one in this situation, and because I have skills to offer others who are struggling with unemployment, I also volunteer at a local community center and church, helping others with their job searches.

     Finally, I am auditing a course at Villanova University that will prepare me to take an exam to receive a professional human resources certification, hopefully enhancing my value to the job market.

     Right now I thank God for unemployment insurance, because it is allowing me to keep up with my mortgage and provide the bare necessities of food and transportation.  I lived well within my means when I was working.  But even our modest lifestyle is a challenge now.  I could not afford to keep up with health insurance right now.  My daughter and I have no coverage, which is very frightening.

     I am working with a housing counselor to see if I can restructure my mortgage and lower the monthly payments.  I have applied for a subsidy to pay my monthly gas bill and electric bills.  I have had to stop my daughter’s extra‑curricular activities, like dance class, which she loved, and was not able to buy many back‑to‑school supplies or clothes for her.  And I am looking for other ways to continue to scale back on our expenses, even though I have already eliminated everything that isn’t strictly necessary already.

     Until I find new work, unemployment insurance is our necessary source of income.  My state benefits began in June, and will end in December.  And while I hope that I have a new job before the end of the year, the absolute lack of any success I have had so far really worries.

     Thus, while I do not want to have to receive federal unemployment insurance benefits, with the unemployment rate so high right now I just don’t see how Congress can even think about letting these important programs expire.  If they do, my daughter and I and millions of other families like us might have no safety net, no life line in the new year.  Quite simply, reauthorizing these important federal unemployment insurance programs is simply the single most important thing for this Congress to do right now, along with making some real efforts to create good jobs for millions like me, who just want to work.

     Thank you for your time today.

     [The statement of Ms. Deane follows:  Testimony ]

     *Chairman Davis.  Thank you very much, Ms. Deane.

     Mr. Peitersen.



     *Mr. Peitersen.  Chairman Davis, Ranking Member Doggett, and members of the committee, thank you for this opportunity to testify.  The American Institute for Full Employment is a non‑profit think tank.  We consult with states and specialize in wage subsidy designs similar to the Bridge to Work program.  We applaud the Obama Administration and the Republican leadership for their bipartisan interest in turning an unemployment support into an employment support.

     This testimony addresses two pieces of the legislation, the Bridge to Work and state flexibility.  Briefly, we think Bridge to Work has great promise, but should be modified as follows:  eliminate the employer mandate; simplify it by letting employers pay the full wage; increase the subsidy from 8 to 13 weeks; let states help claimants earlier than 6 months; give states flexibility, but require return on investment; extend Bridge to Work to the regular UI program.

     Half of our regular UI claimants go jobless for nearly 6 months, and three quarters of our emergency benefits claimants went jobless for another 10 months, even though we spent $50 billion in emergency benefits alone in the last year trying to help them get back on their feet.

     EUC wages claims averaged over $9,000, a wage subsidy costs under $4,000.  The math is both obvious and compelling.  We have studied UI’s specific wage subsidy programs, plus Georgia Works.

     First was Oregon’s Jobs Plus program, operated for more than a decade.  The program helped over 10,000 claimants.  Over 80 percent of the participants landed jobs and saw an average wage gain of over 15 percent.  Georgia Works is an employer‑based training program that has been replicated in a handful of states.  Claimants keep their benefit check while volunteering with an employer for up to 8 weeks, for a minimum of 24 hours per week.  Over 10,000 job seekers have participated.

     Texas Back to Work, launched in 2010, has received the U.S. DoL’s innovation award for its program design.  It is a subsidy of $2,000 over 16 weeks.  It has served over 20,000 claimants and over 3,000 employers.  Sixty‑three percent of the job seekers have been successfully placed.  Earnings retention was 99.4 percent.  And the program has been replicated in Utah and Nevada.  These wage subsidy programs succeed because they provide real training in a real job, allow job seekers to gain a foot in the door.  They are cost neutral or cost savers, and are economic development programs.  Over 80 percent of the employers said it helped with cost capacity and/or expansion.

     Based on our research in these programs, we offer four recommendations for Bridge to work.

     One, employers have repeatedly told us that simplicity makes or breaks a program.  Bridge to Work has an employer mandate that none of the four state UI initiatives includes.  It requires employers to hire claimants within 24 weeks of program participation.  But the core of any wage subsidy program is to encourage employers to take a chance on a job seeker that they would not otherwise hire.  Our experience suggests that abuse is rare.  We recommend eliminate the employer mandate to hire, and give states the flexibility to design program safeguards based on their own state needs.

     Two, increase state flexibility to allow the wage subsidy to be up to 13 weeks, to match the 90‑day probationary period used by many employers.  This allows participants to learn higher‑skilled jobs, and it gives state staff more flexibility to match workers with opportunities.

     Three, eliminate the complication of two payers for the worker by paying the subsidy directly to the employer, and requiring the employer to give the worker a paycheck like any other new worker.

     Four, the net cost of a wage subsidy program can determine whether it becomes a legacy or a loser.  Timing of placement with the employer is key.  The earlier the placement, the more weeks of benefits that can be saved.  Unfortunately, the earliest Bridge to Work would start is about six months after a claimant lost their job, because that’s when EUC begins.  Early placement also helps claimants avoid costly unemployment spells that drain their savings.  We recommend you allow states to offer Bridge to Work to claimants earlier than six months.

     The Jobs Act includes two other provisions allowing states innovative program authority.  We support state program flexibility, and recommend that when proposals are vetted, that return on investment is a requirement.

     We also would allow ‑‑ ask you to allow states to use regular benefits to fund a Bridge to Work program for their regular UI claimants with the improvements noted here.

     We estimate that a modified Bridge to Work initiative can provide opportunities to 300,000 to 400,000 long‑term UI claimants each year and, in doing so, save the Federal Government over $1.5 billion and states $270 million a year.  It is important not to miss the enormity of the opportunity we have here.  Thank you.

     [The statement of Mr. Peitersen follows:  Testimony ]

     *Chairman Davis.  Thank you very much, Mr. Peitersen.

     Mr. McConnell.



     *Mr. McConnell.  Thank you for the opportunity to testify today.  I would like to offer some observations from a private sector employer’s experience working with many local workforce agencies to recruit folks on UI and other federal benefits.

     I provide general consulting services and project management to public, private, and non‑profit clients in the area of housing, human services, and workforce development.  For the past four years, AlliedBarton Security Services has been one of my clients.  AlliedBarton has over 50,000 employees, and 100 offices located across the United States.  As such, AlliedBarton is a significant entry level employer in scores of local labor markets.

     We recruit almost exclusively for security officers.  These are full‑time jobs with benefits, including health care after 90 days.  We also promote from within, and can provide a clear career ladder from security officer to supervisory and management positions.  My role with AlliedBarton is to help them make links with local workforce agencies, and identify policies and programs that help us recruit good staff and, whenever possible, defray the costs of recruitment, staff training, and wages.

     In light of our experience in this realm, I would like to share just a couple of thoughts on our interaction at the local level over the past four years.

     Short‑term funding windows can be very problematic to administer down on the ground.  And in this respect, I would ask you to be mindful of how difficult the process can be for getting funds from here through the state capitals and down to the counties and cities.

     Two weeks ago I was in a meeting just outside of Detroit, and they wanted us to hire 20 people in 10 days, because one of their on‑the‑job training budgets for displaced workers on UI would be up at the end of the month.  We would have loved to, and we will eventually hire those folks.  But it might take us a couple of months or more, depending upon what our recruitment flow is like.

     Another issue is how certain funding streams are only allowed to be applied to certain groups of people, like those with a longer duration on UI.  As an employer, we need to see the people that best fit our job opportunities, regardless of when they might have lost a job, or what their benefit status might be.  So it is frustrating for all of us down on the ground when a local job developer has to tell my recruiter that, “No, we can’t get some help with the training costs on these folks, because they have only been out of work for X number of months, as opposed to this other group of folks who have been out of work Y number of months.”

     Of all the programs we have worked with across the country ‑‑ and we have worked in New York, Pennsylvania, Ohio, Michigan, Texas, Illinois, and many, many others, wage subsidy is the best one that we found.  Incentives like wage subsidy do exactly what they are meant to do.  They give an employer a reason to look a little harder at a particular individual.  Let me be clear.  Like most employers, we have plenty of applicants these days, in some districts as many as 30 for each job opening.  So if the federal or local government wants us to focus on particular folks, well, these incentives are a good place to start.

     Plus, when we generate revenue from an area of our business where we had never expected to generate revenue, this improves our bottom line, makes us more competitive, which, in turn, makes it easier for us to grow our business and hire more people.  Hopefully, via these same programs.

     Wage subsidy programs tend to be cleaner.  We hire, we pay our employees the rate and duration of the subsidy, as previously established.  There is nothing that gets in the way of the employer‑employee relationship.  And this is key for us, as I would imagine it is for many employers.  We like hiring people.  We want to pay them a prevailing wage, train them effectively, and hold them accountable for their work.  This is what we do, and we are good at it.  Wage subsidy respects that relationship like no other program available.

     And from a less self‑interested perspective, I would maintain that another strength of wage subsidy is that it is a post‑employment program.  The government funding comes through in direct relation to the money that the former UI recipient is earning.

     Lastly, I would comment on any program models that you’re looking at that keep folks on benefits and also try to put them in the workplace.  For my client, AlliedBarton, any program like this is a no‑go proposition.  Because, from a legal standpoint, we can’t have anybody working or performing job functions that isn’t a direct employee.  And I would imagine that we are probably not the only employer that would say something like that.

     Thank you very much.

     [The statement of Mr. McConnell follows:  Testimony ]

     *Chairman Davis.  Thank you very much, Mr. McConnell.  You may have heard the buzzer several minutes ago during Mr. Peitersen’s testimony.  That signals the beginning of this very long vote series.  Rather than hold you hostage for about 90 minutes, I think what we are going to do ‑‑ as I mentioned, the possibility at the beginning of your testimony ‑‑ we will be submitting questions to you for the record.  We would appreciate a response back in writing.

     I look forward to a continued dialogue on this critical issue.  Ranking Member Doggett and I are both personally committed to finding creative ways to address both the inefficiencies and the process problems within the government space, and ways to help folks find a path back to work very quickly.

     And I appreciate your testimony today, your time invested in this.  This will be an ongoing dialogue.  And again, thank you very much.

     This concludes the hearing today.

     [Whereupon, at 10:35 a.m., the subcommittee was adjourned.]


The Honorable Geoff Davis
The Honorable Rick Berg
The Honorable Tom Reed
The Honorable Llyod Doggett


Aaron Benjamin
American 99ers Union