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Red Tape Threatens Unemployment Reforms

April 26, 2012

A hearing of the House Ways and Means Subcommittee on Human Resources this week exposed serious threats to the implementation of critical unemployment insurance (UI) reforms contained in The Middle Class Tax Relief and Job Creation Act of 2012 (Public Law 112-96), which the President signed into law on February 22, 2012. 

Several Republican Members as well as representatives from State UI agencies expressed concern that cumbersome new Department of Labor (DOL) “guidance” on how States may apply for waivers is having a chilling effect on States’ interest in taking advantage of this new flexibility.  The DOL “guidance” was released on April 19, 2012, in the form of a 25-page program letter.  It repeats the application requirements Congress included in the new law – but adds a new section called the “Secretary’s Priorities.”  This section includes a number of new requirements drawn from the President’s September 2011 American Jobs Act, which Congress did not pass and was rejected by even Congressional Democrats.

“The DOL guidance added provisions outside of the scope of the new law.  These unnecessary complications are not only beyond the Administration’s authority under the new law, but constitute legislating through regulation,” said Subcommittee Chairman Geoff Davis (R-KY).  “States are already telling us of a number of roadblocks they see in the guidance and expressing a decreasing interest in applying for a waiver, which is unfortunate for the unemployed who could be greatly helped by some of these innovative strategies.”

Subcommittee member and sponsor of the original waiver provision, Congressman Rick Berg (R-ND), went on to add , “Rather than empowering creative and innovative states, like North Dakota, to apply for waivers in the unemployment insurance program, the Obama Administration’s guidance once again applies a one-size-fits-all approach to the program.  Washington can learn a lot from the States but instead this guidance discourages them from applying for waivers and departs from Congress’ intent to let States determine the best solutions to get their unemployed back to work.”

“With so many people out of work in America, there’s ample evidence the White House is dragging its feet on the bi-partisan unemployment reforms that will allow States to more quickly match local workers with local jobs,” said Rep. Kevin Brady (R-TX), whose State’s early application for a waiver has been denied by a technicality at the DOL.  “I worry the White House is playing politics with Texas and other States eager to help get people back to work.”

Testimony about the Effects of the Administration’s “Guidance” on Waivers :

“While New Hampshire has an excellent return-to-work program, it decided against applying for the demonstration project because USDOL imposed too many conditions in its Unemployment Insurance Program Letter.   In order to provide assurances that all requirements in USDOL’s application process were complete, New Hampshire would need an additional staff person to complete the application.”  ( Testimony of Darrell Gates, New Hampshire Department of Employment Security, on behalf of the National Association of State Workforce Agencies)


“We were disappointed that the guidance appears to go beyond what we believe is required by the legislation.  The legislation set out a simple process in about four (4) pages of bill language, yet DOL released 19 pages of guidance that we believe to be overly bureaucratic and administratively burdensome.” (Testimony of Larry Temple, Texas Workforce Commission)

Even the DOL witness, Assistant Secretary for Employment and Training Jane Oates, joked that “many States may still be reading” the DOL guidance.  Tellingly, she characterized States seeking to use this flexibility as “raiding the trust” fund that supports UI benefits, arguing that was one of the reasons why DOL sought to issue extensive “guidance” that was not authorized in the new law.
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Another State has already said “No, thank you” to seeking a waiver in the wake of the DOL “guidance”: “‘At this time there are no plans for Florida to submit an application to implement a demonstration project,’ said Nancy Blum, spokeswoman for the Florida Department of Economic Opportunity.” ( South Florida Sun-Sentinel, April 23, 2012)