OSEC Congressional Testimony
Statement of Robert B. Reich Secretary of Labor Before the Committee on Economics and Educational Opportunities [7/25/95]
Thank you for the opportunity to come before you today to discuss Congressman Goodling and Gunderson's proposal to merge the Department of Education with the Department of Labor. I know that my friend and colleague, Secretary of Education Dick Riley, recently appeared before this committee to express his concerns with this proposal.
Today, I want to augment the testimony of Secretary Riley and do so from my vantage point as Secretary of Labor, where I bear a different set of duties. Let me say at the outset that I share the specific concerns voiced by the Secretary Riley about the threat such a merger would pose for our continuing efforts to ensure access to high- quality education for all Americans. I want to address the particular effect this merger proposal would have on the mission and responsibilities of the Labor Department.
The issues this proposal summons -- cost efficiency in the use of the taxpayers' money, managerial coherence and focus, organization coordination and simplicity -- are issues very close to my heart, and very central to our agenda at the Labor Department. We are 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. We have made the commitment to fund what works, to fix or eliminate what does not, in order to improve workers' prospects and, with them, the prospects for our country's future.
There are only two reasons for organizational change. The first is to save money, and the second is to provide better service. This proposal achieves neither.
I did not come to this conclusion without spending considerable time analyzing the proposal of the Chairman and Mr. Gunderson. I asked Donald Kettl, Professor of Public Affairs and Political Science at the University of Wisconsin and a Senior Fellow at the Brookings Institution, to analyze the implementation of the proposal and I would like to submit his findings for the record. He has three main findings: First, cost savings from restructuring would be small, and costs could actually increase . Second, the history of restructuring in both business and government shows that structure is secondary to
i n in successful reform efforts. Third, a merger as proposed would raise enormous transition problems. As Professor Kettl put it, "the Titanic now lies at the bottom of the Atlantic because its captain pressed boldly ahead without thinking through the details."
Our mission is far too vital, the stakes far too high, for anything but the most dispassionate analysis to guide decisions about how Americans learn and how Americans work.
Missions of Departments Are Fundamentally Different
The role of the Education Department is an important and broad one. In America's schools, our children learn to be good citizens, to converse and cooperate with each other, to appreciate the arts, to participate in sports. Our schools prepare our children not just for work, but for life. The Education Department works with the states and our nation's educational community to make sure that all Americans have access to safe, high-quality schools.
The Department of Labor has a fundamentally different mission. Unlike the Department of Education, the Department of Labor's mission is to serve Americans in their roles as workers. Part of this mission includes ensuring citizens access to opportunities for building their skills. But the Department of Labor goes beyond workforce preparation to encompass worker health and safety; basic labor standards; worker pension and welfare benefits; unemployment insurance; workplace information gathering; and technical support on workplace practices. The Department works with workers and managers to improve our nation's workplaces.
Reinventing the DOL
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. For the last fifteen years, too many families have been working harder but getting nowhere. Wages for most Americans have been stuck and for some have fallen. Families have had a harder time holding on to a decent standard of living.
More and more of them have lost their grip on the middle class or their hope for entering the middle class. If we are to restore our heritage of shared prosperity, American workers need 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.
We can, we have, and we will continue to streamline our operations and improve our performance. The Administration has had much success over the last few years in obtaining better value for each dollar we invest. The Department of Labor is moving ahead with a reinvention program to make the Department more responsive to the needs of our customers and to expand coordination with federal, state, and local agencies, and the private sector.
The School-to-Work program, joining students with workplaces, is a model of inter-agency coordination. This joint venture works because Congress articulated a clear vision, and the Departments of Labor and Education defined clear objectives for its implementation. Drawing on each Department's expertise, we have combined their efforts into working alliances to help states build paths from school to work for young Americans. Where the mission was clear and the commitment genuine, structure was a trivial issue: We worked it out.
Our joint innovation with School-to-Work implementation may be the best example today of real reforms undertaken without shuffling organizational charts. But there are many others, in process or already underway.
In order to meet the needs of our customers, we are replacing the traditional fragmented employment and training system with a One-Stop Career Center System. The Department of Labor, in partnership with states and local communities, is working to transform this vision of an integrated, high-quality delivery system into reality. To bolster these reforms, we are also instituting rigorous performance measures to ensure accountability. The One-Stop Career Centers let the unemployment system meet its ultimate goal, helping people learn new skills and land new jobs.
In order to make government more accountable, the Department has developed plans for reform under Government Performance and Results Act (GPRA). Every office within the Department is working to create a system of performance measures that will let us know what's working (and what's not).
While the Department maintains its commitment to ensuring the safety of America's workers, we are also working to make regulation less burdensome and more efficient. The Occupational Safety and Health Administration (OSHA) is pursuing a new approach to safety inspections that focuses on the worst offenders while relying primarily on voluntary compliance by employers with good safety records. This approach works. We have tried it in Maine--and we have had great success.
We are also expanding a successful pilot program in the construction industry. By identifying the most common accidents in this industry and working with employers and employees to develop worksite safety plans, OSHA can better target its resources. As a result of these new policies, OSHA inspectors can use their time to improve safety while imposing less of a burden on employers.
Moving Boxes Isn't Real Reform
We have been able to achieve such improvements by learning a simple lesson from the business world: successful reforms are goaloriented and carefully planned. The first step is to ask what you are trying to accomplish. In order to provide better service more efficiently, we have identified specific improvements that need to be made in each program. specifically meet these goals. We have Planned our reforms to merger Proposal I am asked to Unfortunately, the same cannot be said Of the comment on today.
Moving boxes around on an organizational chart looks impressive and satisfies our desire for action. But it does not make for good policy. The Goodling/Gunderson proposal would probably not achieve the desired results and would certainly impose a Period Of transitional chaos. That's what the Government Accounting Office (GAO) concluded in its report on the proposal, which warned Of the risks involved in hastily merging two departments without careful analysis and study.
We should take the lessons of corporate mergers and downsizing to heart: promises Of synergy between separate operations failed to materialize once the entities were merged, and many firms downsized only to find administrative savings to be elusive. Prof. Kettl's report reiterates the findings of the GAO that reorganization requires careful Planning.
The merger proposal puts the cart before the horse The merger proposal begins with a series of percentage cuts, which leads to a t departmental structure. Before deciding whether a merger is appropriate we first must determine what we should do to improve the product of each program and then determine whether a merger is the best way to accomplish this. As evidence, Prof. Kettl points out that the Department of Labor's regulatory focus is ignored. As I'm sure Chairman Casellas will elaborate, merging EEOC with DOL would not increase the efficiency and effectiveness of the government's enforcement of equal employment opportunity, nor would it produce any cost savings in the near future. Indeed, such a merger could compromise civil rights enforcement efforts. As a result, this proposal would repeat the mistakes of countless corporations in poorly-planned and hastily-implemented reorganizations.
If this were not enough of a problem, the plan also jeopardizes the progress that we have made and are continuing to make in streamlining our operations. A radical restructuring of the Department disrupts the careers of thousands and creates new offices without a clear idea of their mission or their structure. There can be no doubt that this upheaval will take us back to square one.
In an age where quick and mobile organizations are the most successful, and where the public often charges that the Federal government is clumsy and slow, why create a mammoth institution that houses many disparate functions? A mega-bureaucracy is exactly what the Federal government, preparing for the twenty-first century, needs least.
This proposal is not about eliminating waste. Of the proposed $21 billion in cuts, the GAO could identify administrative savings of only $320 million per year-or just 0.4 percent of the budget of the proposed mega-bureaucracy. Moreover the GAO, while conceding that the costs exist, did not consider a single cost the merger would impose . Imagine: a cost-benefit analysis without any costs. But, experience tells us that there would be expenses: from Reduction in Force expenditures to training costs for new and current workers. Once these are factored into the equation, the $320 million per year in savings will seem even more puny. Thus, the proposal being advanced would undermine America's capacity to build skills and serve its workers interest without even achieving significant cost savings.
So if this proposal is not about reducing inefficiency and generating cost savings, what is it about? More than 93 percent of the savings outlined in the proposal would have to come from cuts in actual services delivered to the ordinary Americans. They would not be painless administrative savings. Instead of trimming the fat, this proposal clips the muscle and bone. Wittingly or not, consolidation proposals will act as procedural cover for deep cuts in lifelong learning and worker protection.
This proposal parallels recent actions in the Appropriations Committee which will lead to divestment in worker safety, pension protection, and job training for new careers. The proposal to merge Labor and Education would do nothing to reverse the sobering fact that more and more Americans are working harder for less. As Federal Reserve Chairman Alan Greenspan recently noted, an increasing unequal distribution of income threatens the fabric of our society. I believe that it is essential to overcome this trend and ensure all Americans the opportunity to earn a better life for themselves and their families. I believe that the enterprises embodied in the Department of Education and the Department of Labor are vital parts of any campaign to restore broadly-shared prosperity. Indeed, my sympathy with the stated aims of the merger proposal is precisely why I must oppose it-because I'm afraid that this proposal would turn back the clock on the progress we have made so far.