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OSEC Congressional Testimony

Statement of Robert B. Reich Secretary of Labor before the Committee on Government Reform Subcommittee on Human Resources and Intergovernmental Affairs United States House of Representatives[3/9/95]

Mr. Chairman and Distinguished Members of the Subcommittee:

Thank you for this opportunity to discuss the operations and programs of the Department of Labor. I welcome the chance to engage in bipartisan dialogue on the critical choices facing us in ensuring the best uses of limited public resources.

Your review could not be more timely. The Department has already embarked on an extensive examination and reorganization of our programs and operations. We have made significant changes to ensure greater accountability and efficiency in what we do and how we do it.

And we have made a commitment: to fund what works, to fix or eliminate what does not, to improve workers' prospects and, with them, the prospects for our country's future.

Background

However, we cannot examine the Department's programs and operations in a vacuum -- they must be examined in the context of the larger forces that are reshaping our economy. Five years from the turn of the century, America is facing enormous challenges. We won the Cold War, but now struggle to find a common purpose during peacetime. We hurtled into the age of information, but now wonder whether the communications revolution will bring us together or only deepen our divisions. We saw our fundamental principles -- democracy and free markets -- affirmed throughout the world, yet we are anxious about the resiliency of American values here at home.

The backdrop -- and indeed the root cause -- of these challenges and anxieties can be located, I believe, in the fundamental shifts now taking place in the global economy. We have entered an era in which, increasingly, skilled and well-educated workers are the ones who can expect to capture a growing portion of the economic gains. New technologies and global competition have rewritten the rules that govern our economic futures. Now more than ever, what you earn will depend on what you learn. For those with the right education and skills, this new economy means rising wages and widening prospects. But the wages of the rest of the workforce are stagnating or sinking, and their opportunities are shrinking.

The operations and programs of the Department of Labor must be scrutinized in the light of the central challenge our country now faces: to restore America's middle class. If we are to restore our heritage of shared prosperity, American workers need protection in the workplace and every bit of assistance we can give them in adapting to the new economy. And let me assure you that I agree with those of you who also say that Americans are rightly demanding that we provide for these needs as efficiently and creatively as possible.

But only some Americans stand ready to prosper in this new economy. These divisions aren't simply a threat to the incomes of working Americans; they also undermine our nation's economic competitiveness. Companies are discovering that their global competitors can replicate nearly every element of their operation, including machinery, technology, and state of the art processes. The only thing that can't be duplicated are American workers -- their skills, abilities, and capacity to work together. For corporations and for nations, a skilled workforce is the only enduring competitive advantage.

Reaping the dividends

Our investment in America's workforce over the past two years is already paying dividends. We are experiencing an unprecedented economic recovery which has created 5.7 million new jobs, the vast majority in the private sector. At the same time, the deficit has been reduced from $290 billion in 1992 to $203 billion in 1994, to a projected $193 billion this year. It is expected that by 1999, the deficit will fall to its lowest level as a percentage of GDP since 1979. These indicators demonstrate, I believe, the continued wisdom of reducing the deficit without haphazardly cutting programs which have proven to be effective in helping all Americans find new and better jobs -- including disadvantaged youth, dislocated workers, and other groups in need of job training assistance.

These investments have traditionally been bipartisan. Recognizing the need to invest resources to promote lifelong learning, the 103rd Congress enacted, with bipartisan support, systems to enhance job opportunities for those entering the workforce and those seeking new jobs. The School-to-Work Opportunities Act promotes nationwide innovations in youth apprenticeships, which are especially important to low-income kids who frequently have little contact with the job market and often drop out of school. The creation of One-Stop Career Centers is transforming the unemployment system into a customer-driven reemployment system where state and local institutions are customizing the design and operation of these operations to meet their needs.

Transforming Job Training

The next step along the path to reform the existing array of job training programs -- with their confusing requirements and bureaucratic barriers -- is contained in the Administration's Middle Class Bill of Rights proposal. This proposal offers every American a chance to learn the skills needed to build a better future by putting resources directly into workers' hands so they can gain skills at the time, place and in the manner which makes sense to them -- a plan very similar to the operation of the original G.I. Bill. The proposed new system focuses on workers, job seekers, labor market information, state and local flexibility, private sector partnerships and accountability. The G.I. Bill for America's Workers will replace the outmoded and confusing maze of federal job training programs by consolidating 70 job training programs. Many of these existing programs were designed to address a specific concern at a specific time but were never aligned with other programs.

For adults, skill grants of up to $2,620 will be offered to low-income and dislocated workers. Services will be provided through One-Stop Career Centers offering easy access to reliable, up-to-date information on where jobs exist, what skills are in demand, and the performance records of training institutions. For youth, reforms started under the School-to Work Opportunities Act will intensify. Work-based learning will be integrated with school-based learning for high-risk youth. Second Chance grants will empower local institutions to manage resources to assist youth likely to have the most difficulties in making a successful transition into stable employment and a career path. Disadvantaged youth need practical, effective opportunities through access to a learning framework offering the prospects of solid returns in the form of jobs and higher earnings.

False economies

However, I believe the recent rescission of $2.3 billion by the House Subcommittee on Appropriations exhibits a disregard for the need to maintain this successful investment strategy. The severe cuts being proposed in programs that serve disadvantaged youth and additional reductions in training programs for adults and dislocated workers will eliminate or seriously undermine our ability to provide for Americans most in need of job training and job search assistance. The proposed rescissions will also damage our ability to enforce the laws that ensure worker protection in the areas of safety and health and labor standards.

We must recognize reality -- beginning with the fact that all Americans are not equally well-poised to take advantage of the opportunities in today's economy. The unemployment rate among this nation's young people, particularly minorities, looms high above the overall unemployment rate. The proposed rescission of summer job funding will have devastating effects on the 1.2 million disadvantaged young people, who will be denied summer employment work experiences and desperately needed income. At a time when we are extolling the benefits of work over welfare, these priorities must seem incomprehensible to young people and their communities. States and municipalities will not only lose over $800 million in direct funding; they will also suffer a commensurate loss in consumer purchasing power.

Such decisions are not only false economies, they run directly contrary to mainstream American concerns, which evince a strong national commitment to assuring access for Americans to the skills and job protection that are increasingly required for a place in the middle-class.

Some suggest that education and job training are not federal responsibilities, and the solution is to provide block grants to states so they may determine how to invest in worker training programs. But the American people are not clamoring for public resources to be diverted from one bureaucratic structure to another. They are asking for less bureaucracy and more accountability.

Reinventing Health and Safety

Just as Americans who are ready to take responsibility to improve their own prospects can expect the government to support their efforts, so too can workers legitimately expect us to ensure that their workplaces are healthy, safe, and free from discrimination. Many critics have targeted the programs and regulations of the Occupational Safety and Health Administration as an example of a program gone awry -- too many complicated, nonsensical, and overly intrusive regulations, as well as incompetent and confrontational inspectors who focus on fines rather than job safety and compliance assistance. Many horror stories are being cited to support this position. But they do not accord with the facts.

Since its creation in 1970, OSHA's standards and enforcement programs have helped to reduce the workplace fatality rate by over 50% percent and made significant inroads in reducing workplace injuries, particularly in high-risk industries like construction and manufacturing. The record is clear: sensible standards have made a difference between life and death for many American workers. For example:

  • Strengthened trenching protections have reduced fatalities by 35%;
  • Grain handling standards have helped cut fatalities by 58% and injuries by 41%; and
  • Cotton dust standards in the textile industry have dramatically reduced "brown lung" cases from 40,000 cases to a few hundred.

In addition, OSHA inspections have helped make over 40,000 workplaces safer for nearly two million working Americans.

Every year, work-related accidents and illnesses take an estimated 56,000 lives and cost our economy over $100 billion. We have made significant progress in reinventing the way that OSHA

does business, and we are committed to continuing to make the necessary changes to maximize the impact on worker safety. These efforts include:

  • measuring performance by real improvement in worker safety and health, not the number of inspections conducted;
  • simplifying or eliminating outdated, vague, conflicting or duplicative regulations;
  • helping businesses identify and abate hazards, through technical assistance free of citations or fines;
  • targeting the most dangerous workplaces and hazards; and
  • recognizing employers who have excellent safety and health records, exempting them from general inspections.

Our achievements in protecting American workers cannot be compromised by slashing resources at random or imposing unworkable, rigid rule-making requirements without regard to saving the lives of those that entrust us with protecting their health and welfare.

Reinventing DOL

The Department's budget and program priorities, such as those I discussed above, reflect our commitment to reinvention. It's important to recognize that the Department's employment levels have fallen from nearly 24,000 in Fiscal Year 1980 to approximately 18,000 in Fiscal Year 1993, a drop of 25%. At the same time, U.S. employment has grown from 90 million to approximately 125 million. But we've made great strides, not only in downsizing the department -- with nearly 1,000 fewer employees over two years -- but in changing the way we do business. When we started to take a good, hard look at what we could improve, we made some dramatic changes. For example:

  • the Pension Benefit Guaranty Corporation developed a new program that enabled them to find 12,000 missing pension beneficiaries -- people entitled to pensions they would not have gotten otherwise.
  • Out in the state of Washington, the Department of Labor joined forces across agency and sector lines to make sure laid-off Boeing Aircraft employees got the help they needed to find new jobs. The one-stop career shop the partners set up on-site at Boeing was up and running even before the company laid off 19,000 people.
  • Because people and communities facing base closings and loss of employment have enough to contend with as it is, they don't need long waits, bureaucratic red tape, and uncertainty about where to get help. So we sent in "swat teams" of job assistance counselors to communities where military bases were scheduled to be closed, giving people rapid, on-the-spot response to their reemployment needs. Last year alone, DOL helped an estimated 35,000 workers through defense conversion and diversification efforts.
  • Here at DOL, we saved $66.4 million net by reviewing the rolls of federal employees on long-term workers' compensation. Through such "periodic roll management," we expect to save an additional $230 million from now through 2000.

We actively initiated reinvention efforts in each of our program areas by focusing on how we could improve existing work processes so as to more effectively serve the American workforce. By focusing on improving customer service, empowering employees, cutting red tape, and getting back to basics, the Department has been able to use resources more fully while at the same time eliminating unnecessary processes and burdens.

We have leveraged limited federal and state resources by forming federal-state partnerships and targeting investigations. For example, the State of Maine had incidence rates of workplace injuries and illness that were 71% greater than the national average. Through the use of workers' compensation data, the 200 most dangerous workplaces were identified and each was asked to cooperate with OSHA to improve their workplace safety and health programs. The vast majority of workplaces participated in this program and identified over 95,0000 instances of hazards, with 55,000 of these already eliminated. This number is more than twice the number of hazards OSHA has cited during 1,316 inspections performed during the previous eight years.

The Department is already ahead of schedule in reaching the National Performance Review targets of reducing the overall number of employees and redirecting resources from overhead to front-line, customer service positions. A cumulative reduction of 1,037 FTE has been achieved through FY 1996.

The Department is actively embarking on the second phase of the National Performance Review. We are closely reviewing our operations and seeking to improve the ways we carry out our varied missions -- as with our new and varied approaches to ensure the safety and health of Americans in the workplace. Similarly, the Skill Grants contained in the proposed G.I. Bill for America's Workers would turn over decisions on job training to the customers themselves -- American workers.

To complement our reinvention efforts, we are reviewing the manner in which we promulgate regulations with an eye to reducing or eliminating unnecessary regulations, and adopting different models for achieving our regulatory objectives with an emphasis on minimizing federal governmental intrusion. I have asked each agency head to review and evaluate all existing regulations to assess their impact on both employers and employees, and take the necessary actions to improve the regulatory process. Our answer to allegations of "regulatory-zeal" by enforcement agencies is to weed out overly specific and obsolete regulations, not to prevent those charged with such workplace responsibilities as safety and health, from issuing necessary, common sense regulations.

Is there still room for improvement? Of course. That's why the Department of Labor is continuing to engage in a rigorous, methodical review of its mission and operations.

This concludes my prepared remarks. I would be happy to answer any questions.

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