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Work & Welfare Subcommittee Chairman LaHood Opening Statement – Hearing on Unemployment Insurance Reforms

June 04, 2024

“The purpose of today’s hearing is to learn how Congress can help rebuild and restore confidence in the unemployment insurance program after the turmoil of identity theft, fraud, and claims delays during the pandemic.”

As prepared for delivery.

“Good afternoon and welcome. 

“Thank you all for joining us for today’s subcommittee hearing on ‘Reforming Unemployment Insurance to Support American Workers and Businesses.’

“I especially want to thank our witnesses for traveling here and for your commitment to helping us further understand this important issue. 

“My name is Darin LaHood and I represent Illinois’ 16th District, covering much of the central and northwestern parts of the state. 

“Before we start, I want to welcome back our colleague, Rep. Jimmy Gomez, of California to the Work and Welfare Subcommittee. I look forward to working with you. 

“The purpose of today’s hearing is to learn how Congress can help rebuild and restore confidence in the unemployment insurance program after the turmoil of identity theft, fraud, and claims delays during the pandemic.

“GAO has estimated between $100 and $135 billion was lost from COVID-era UI programs to fraudsters and criminals, foreign and domestic, deploying sophisticated schemes to divert benefits from unemployed workers. 

“My home state of Illinois lost approximately $3.2 billion to fraud. This is outright theft of valuable taxpayer dollars that were not delivered to the workers who needed them most. 

“And while COVID programs have since expired, this data exposes a number of program weaknesses that need to be addressed.  

“In February 2023, the Ways and Means Committee held a hearing with witnesses from the Department of Labor Inspector General, GAO, and Pandemic Response Accountability Committee. 

“These oversight agencies testified to problems with outdated state systems and weak online security that made the UI program particularly vulnerable to fraud.

“Last year, this Committee passed the Protecting Taxpayers and Victims of Unemployment Fraud Act, which includes steps to strengthen program integrity, recover lost funds, and prevent future fraud. The House has since passed this legislation on a bipartisan basis. 

“We know fraudsters are still attacking UI and other federal benefit programs, and we need to build on these efforts moving forward. This hearing will investigate three main areas of reform.

“First, supporting state program integrity improvements and technology modernization efforts is vital. We will explore ways to prevent fraud by verifying identity of UI recipients and moving away from the ‘pay and chase’ model of benefit delivery.

“Second, we must focus on reemployment. The purpose of UI is to provide a bridge between jobs. However, many workers end up exhausting their benefits and remain out of the labor force. 

“According to the Department of Labor, 38 percent of UI claimants exhausted their benefits in the first quarter of 2024. We know the longer a worker remains out of the labor force the harder it is to return to work. 

“That’s why I have co-led, along with Ranking Member Danny Davis, the BRIDGE For Worker’s Act to strengthen the Reemployment Services and Eligibility Assessments (RESEA) program. 

“Our bill would offer more flexibility to states to provide job skills training, resume preparation, and career exploration to connect unemployed workers to in-demand jobs more quickly. We passed this bill unanimously out of Committee last November, and I look forward to its consideration on the House floor soon.

“Third, to improve program administration, we will examine the administrative funding model for state UI programs, which collects, but does not distribute, adequate resources to states. 

“The Federal Unemployment Tax Act, or FUTA, provides a dedicated revenue stream to support state administration of the UI program. However, these dollars are not ending up in state agency hands to enact needed system improvements. 

“In FY 2022, states received approximately $3.7 billion less in administrative funding than employers collectively paid in FUTA taxes due to problems with how dollars flow through the Unemployment Trust Fund. This process also creates disparities in how funding is allocated across the country. 

“As part of making the UI program more resilient, reforms are needed to improve this financing mechanism, so states are able to invest in long-term solutions. 

“Lastly, I would like to recognize my colleagues, Reps. Carey, Steel, and Tenney, for their recent introduction of legislation to modernize UI and support workers and small businesses. These bills are important building blocks for us to work on reforming this critical program for American workers. 

“Thank you again to our witnesses for being here today and I look forward to your testimony.”