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OSEC Congressional Testimony

Statement of Robert B. Reich Secretary of Labor, before the Subcommittee on Labor, HHS, Education and Related Agencies, Committee on Appropriations, U.S. House of Representatives,[5/7/96]

Mr. Chairman and Distinguished Members of the Subcommittee:

I am pleased to appear before you today to discuss the Department's accomplishments and our FY 1997 request. I would first like to thank you Mr. Chairman and Ranking Minority Member Obey, and other members of the Subcommittee who worked long and hard to forge the FY 1996 budget agreement that was enacted on April 26, 1996. We can now get on with the people's business.

The Department's FY 1997 budget proposals support the President's goals by working in partnership with American business and by investing in our human capital--investments important to this nation that we believe will yield a tremendous return for American workers, businesses and their communities. Through a vast network of statutory responsibilities, the Department of Labor is involved in the work lives of most Americans.

This budget is built on the foundation of our accomplishments that have resulted from a careful strategy developed to create a better-prepared workforce through effective employment and training assistance; by promoting workplace safety and health and support to small businesses; by ensuring the pension security of America's working men and women; and by ensuring that employees have minimum wages and working conditions afforded them by law. Also, the Department's Bureau of Labor Statistics produces many of the principal economic indicators which form the backbone of economic intelligence for public and private strategic planning. I would like to begin by mentioning just a few of our major accomplishments during this past year:

  • Awarded implementation grants to 19 states which increased total School-to-Work states to 27. These grants make it possible to provide opportunities for hundreds of thousands of students to prepare for careers.
  • Increased Job Corps placements in jobs paying over $6.00 per hour by 37 percent. The overall effectiveness of Job Corps continues to improve, and the high quality of training and education being received by Job Corps students translates into higher earnings and greater self-sufficiency for Jobs Corps graduates.
  • Provided summer employment to about one-half million youths with two out of three enrolled in education services.
  • Awarded One-Stop Career Center implementation grants to 10 states which increases the total to 16 states. The Career Centers will provide an opportunity for the 56 million civilian workers and the first-time labor force entrants in these states to access essential job and career information easily.
  • Awarded grants to all States to develop America's Labor Market Information System -- an easily accessible and comprehensive source of local information on which jobs are available, which skills are in demand, which occupations are growing and which are declining, and on the performance and job placement records of local training institutions.
  • Implemented America's Job Bank database on the Internet and provided access to 400,000 job openings daily.
  • Conducted nearly 300,000 employment eligibility verification compliance inspections and maintained a continuing program of employer education regarding their employment verification and anti-discrimination responsibilities.
  • Recovered nearly $1.7 million in wages that should have been paid to 400 workers admitted for temporary employment under the H-1B visa program.
  • Recovered more than $1.1 million for 2,800 workers by conducting 550 investigations to eradicate "sweatshops" in the garment centers.
  • Lowered pension underfunding through legal reforms and an "early warning" program by working with companies to structure corporate transactions to protect pensions.
  • Returned $8.4 million to 401(k) plans as of March 31, 1996, as a result of an Employee Contribution Project. These funds will be returned to plan participant's accounts along with lost earnings.
  • Increased special mine inspections aimed at discrete hazards by 30 percent.
  • Developed and published customer service standards in all major agencies.
  • Announced a solution to a subtle and pervasive bias in the CPI because of the introduction of new items into the index either through sample rotation or through item substitution.
  • Based on the exceptional success with OSHA Maine 200 program, similar programs in Wisconsin and New Hampshire are achieving positive results and the program will be implemented in six new states.
  • Assisted 566,000 veterans into jobs through the combined efforts of State Employment Security Agencies and their Veterans' Employment and Training Service funded-staff. Also, conducted over 3,500 transition assistance employability and job search workshops for 152,000 servicemembers and their spouses. The priority of services given to veterans and intense efforts to get them jobs is evidenced by their 3.4% unemployment rate by the end of the fiscal year.
  • Also, while the Department's FTE has steadily declined since 1992, consistent with a trend beginning in 1980, there has been a significant increase during this period in the number of working men and women in the American Labor force. For example, the Department's FTE has been reduced from 23,841 in 1980, to 16,655 in FY 1996, while U.S. employment increased from 99.3 million to 124.9 million. As the Department's staffing declined by 30 percent, the population served -- America's workers -- increased by 26 percent.

We accomplished these items, many of which were completed in FY 1996, under the most difficult of circumstances faced by the Department due to seven months of funding uncertainty.

The President's economic program emphasized one primary concern - to raise the standard of living for average Americans now and in the future. While the President's budget proposes to balance the budget by 2002, he has steadfastly supported education and training along with the basic protection of workers' health and safety, pensions, wages, hours and working conditions, and prevention of job discrimination. The FY 1997 request reflects these priorities.

So, the national conversation we are now having about wages, about jobs, and about the anxiety felt by many Americans in an era of vast, momentous economic change is key. How do we continue to make the American dream of opportunity available to all who are willing to work for it?

Unemployment and inflation rates are at their lowest combined level in nearly three decades. Unemployment has stayed under six percent 18 straight months. In three years our economy has created 8.5 million new jobs. And every year, more and more of them are good, higher-paying jobs. Companies are doing well. Last year, the Fortune 500 enjoyed an average profit rate of 13 percent.

This is an era of extraordinary dynamism and change, similar in scope to the industrial revolution that moved people from farm to factory. And like that earlier transition, this one is perilous for many people.

In every advanced economy, demand is rapidly shifting in favor of people with high skills and against people without them. The earnings of the former are rising, while the earnings of the latter are dropping--or they simply become unemployed.

Those who remain trapped in the old economy either don't know what skills are in demand, cannot afford the cost of getting them, feel too old to learn, or cannot easily uproot themselves and their families and move to the emerging jobs. As a result, too many Americans who lose their jobs never catch up with the earnings and benefits they once had.

Training in job-related skills is the best way to ensure a rising standard of living for ordinary American workers. This country is built on a promise that anyone who works hard and plays by the rules has a fair chance for success. Today, that success is linked to education and training more than at any time in our Nation's history.

The job training legislation now in conference--the CAREERS Act and the Workforce Development Act--would significantly reform the delivery of employment and training programs, and I am hopeful that Congress can work out its differences and soon complete action on this bill. The President has stated the critical importance of legislation to give a fair chance to Americans to equip themselves with the skills and information needed to compete in the new economy. He has emphasized the need to collapse many separate job training programs, greatly streamline access to these services, inject choice and individual responsibility, and make the services more effective.

For decades, job training and education and employment programs have enjoyed bipartisan support, and there now seems to be a reasonable consensus on what we can do to improve these programs. For example, we agree that services to adult workers will be improved by streamlining access to them through One-Stop Centers. In doing so, we must not abandon or reduce our commitment to "dislocated workers," and ensure that they will have training resources they need. We must also ensure that they will be able to make their own informed choices for learning new skills to find new and better jobs.

There is a reasonable consensus that services to youth will be significantly improved by extending the School-to-Work model. This will enable schools, colleges, and the private sector in each local community to offer all youth work-based learning opportunities and clear pathways to good jobs, rewarding careers and lifelong learning. To achieve this objective, we need to make sure that each State has sufficient support to complete implementation of its School-to-Work plan.

We offer our assistance to craft a bipartisan bill that the President can sign -- one that will ensure that the new workforce development system is effective in enhancing the skills and opportunities available to our current and future workers.

Departmental Overview

The Department's budget is designed to keep the President's commitment to a balanced budget while investing in the nation's bottom line--a globally competitive workforce.

The proposed budget request before the Committee for the Department of Labor in FY 1997 is $12.4 billion. The amount requested to be appropriated by this Committee is $1.3 billion above our FY 1996 enacted level and 419 FTE above our FY 1996 enacted level for a total of 17,074 full-time equivalent (FTE) staff.

The Department's budget is grouped around key themes of: (1) Giving Americans the Tools to Succeed in this new economy through effective training and employment services for youth and adults; (2) Easing the Transition from Job to Job with programs both for dislocated and incumbent workers; (3) Enhancing Pension Security; (4) Ensuring Worker Protection; and (5) Improving Economic Indicators to provide key economic forecasting tools for the private and public sector.

Giving Americans the Tools to Succeed

A variety of initiatives provide training, education and skill development for America's youth as they prepare for work and the development and upgrading of skills for adults to compete in the global economy.

Unemployment among all youth is currently 16 percent, while the rate among black youth is 34 percent. Left unchecked, this unacceptable situation will lead to a future workforce which is unprepared, unproductive, and a drain on the resources of our Nation.

For FY 1997, the Department has requested $3.6 billion for assisting America's workers with the tools to succeed, an increase of $732 million. Within this total the Department funds several youth programs:

Opportunity Areas for Out-of-School Youth . The FY 1997 request proposes to fund a new initiative to address the special problems of out-of-school youth. Funding of $250 million a year is requested to provide grants of approximately $14 million a year each to 15 to 20 high-poverty urban and rural communities. These competitive matching grants, which will be distributed to selected Empowerment Zones (EZ)/ Enterprise Communities (EC) and other communities meeting EZ/EC criteria, are expected to assist an estimated 50,000 youth a year.

With the problem of high employment in the inner cities, we should be giving our inner city youth something to say "yes" to--and to do it in the spirit of the President's call for partnership between our Federal government, our cities and states, and the private sector. With nearly half of our inner city kids dropping out of high school, we've got to find ways to keep them there, or in some alternative learning environments. I believe we can. I've seen it work.

In Detroit, I've met with young adults involved in a school-to-work program called Project Focus Hope, in which they trained for high-tech industrial jobs. You wouldn't believe how excited they become when they talk about the relationship between what they learn in class and how they apply that knowledge to their job-skills training.

I've toured the East LA Skills Center, where former gang members are being trained to be automobile electronics technicians. As automobiles become more sophisticated, it is clear that these are the high-wage, high-skill jobs of the future. And what is remarkable is the change that comes over these kids as they develop their skills and begin to see opportunities opening up to them. It affects their whole personalities.

This new out-of-school youth initiative is firmly grounded in the elements of successful programs identified by GAO in a recent report. We are building on our demonstration programs and, based on that experience, designing new programs around what works, including the Center for Employment Training, YouthBuild, and Conservation Corps type programs. In view of the importance of beginning the new initiative, it will be undertaken utilizing legislative authority under Title IV of JTPA.

The Job Corps, funded under the authority of the Job Training Partnership Act (JTPA), will continue to provide intensive skill training, academic and social education, and improve services to an estimated 68,300 severely disadvantaged -- the hardest to serve -- young people

at 119 centers. The 1997 budget requests $1.2 billion, an increase of $59.6 million for increased costs, and the opening of new centers financed in prior years. Five new centers will be activated in Program Year (PY) 1996, while four more will be brought on line in PY 1997. Job Corps continues to be a very effective program. It returns $1.46 to society for every dollar invested. We are proud of the improvements in outcomes which we've made in this program over the past two years. In 1995, 73 percent of students leaving the program were placed in jobs or further education, up from 64 percent during the previous year.

The Summer Youth Employment and Training Program, funded by JTPA, provides disadvantaged youth with a summer employment experience, as well as academic enrichment. This program serves kids at a critical time in their lives, helping them stay in school and graduate. It provides low-income young people with an opportunity to gain a first job, use some skills they've learned in school , and build their knowledge of the demands of the workplace. A total of $871 million is requested for the summer of 1997 to support an estimated 574,000 participants. The request brings the total for the program nearly back to the level available to states in the summer of 1994. The increase is $246 million above the $625 million provided in FY 1996. In terms of total funds available (including carryover) to States in FY 1996, this FY 1997 level is only a $110 million increase over FY 1996 for an estimated 53,000 more participants

Youth Training Grants under authority of Title II-C of the Job Training Partnership Act provide formula grants to communities to assist economically disadvantaged youth. The program will be maintained at its FY 1996 level of $127 million, providing assistance to an estimated 75,900 participants. The Administration proposes to continue the final consolidation provision allowing States total flexibility to move funds between JTPA Title II-B and II-C. Despite major reductions to the program, local data show progress over the past year. The average length of stay has increased, placement rates have improved to 43 percent, and wages have risen. This positive direction comes despite assisting more hard-to-serve young people.

The School-to-Work System under authority of the School-to-Work Opportunities Act, is administered jointly with the Department of Education and links education and employment through competitive grants to States and communities. The funds will help build systems to assist youth to acquire the knowledge, skills, and labor market information they need to make a smooth transition from school to career-oriented work or to further education and training. In FY 1997, $200 million each is requested for the two Departments primarily to provide State implementation grants to all States that have met the School-to-Work criteria. To date, 44 States have received planning grants and 27 have received implementation grants to begin system-building and to convene the appropriate stakeholders and new players to redesign each States' education and employment delivery system.

Adult Training Grants provide JTPA formula grants to assist economically disadvantaged adults. The program will be funded at $947 million in FY 1997, an increase of $97 million. The request will provide assistance to an estimated 407,600 participants. These training programs for adults provide the opportunity to access employment and training services that open opportunities to gain skills for those individuals who might not otherwise be able to participate in the new economy. For 1996, these programs are expected to provide job training to nearly 380,700 economically disadvantaged adults.

An increase of $50 million is requested for a new initiative on Jobs for Residents. This initiative will utilize community empowerment networks to help unemployed adults and youth find jobs within their labor market area. The community empowerment network will include all of the parties necessary to address the job needs of the residents and the employers: representatives of business, labor organizations, the transportation system, job developers, social service agencies, the criminal justice system, job training and education institutions, and others.

Easing the Transition from Job to Job

Every year, around 2.5 million Americans lose their jobs as global competition and technological evolution quicken the pace of economic change.

Education and training programs are needed to provide Americans with the opportunity to prosper in the expanding economy and into the next century. New technologies, global competition, and an increasingly integrated economy have reshaped the way we work and live.

The Department has five main mechanisms for improving the effectiveness of training: (1) evaluating program effectiveness; (2) making changes when standards are not met; (3) replicating successful models; (4) testing new approaches through pilots and demonstrations; and (5) providing technical assistance and monitoring and institutionalized quality improvement efforts. The results of this approach, what we have learned about what works, are reflected in our budget strategy.

The FY 1997 budget request for ETA programs that ease the transition from job to job proposes an increase of [$1.6] billion in FY 1997 to [$4.9] billion.

Currently, job training reform legislation is in conference with a planned effective date of FY 1998; therefore, our FY 1997 budget is based on current programs. The FY 1997 budget was designed to support the transition to the new legislation. All States participating in the One-Stop and School-to-Work activities have been aware of the consolidation and are striving to develop appropriate systems even before job training reform becomes effective. Flexibility at the ground level has been provided in the President's budget request by allowing transferability of funds among youth programs and among adult programs.

Dislocated Workers - America has long recognized its special responsibility to provide retraining and adjustment services to workers affected by mass layoffs including defense downsizing and especially to provide tools to those who fall victim to economic conditions or restructuring. Dislocated Workers funding provides funds to States for training and supportive services to those with a labor market attachment to produce marketable skills leading to productive, unsubsidized employment. In FY 1997, a level of $1.3 billion is requested, an increase of $196 million over the FY 1996 level, to provide reemployment services to an estimated 636,600 dislocated workers. Helping workers move quickly into new jobs is good not only for the workers themselves, but for communities and the nation at large.

Our "GI Bill for America's Workers" is based on what we know works and reflects, to a large degree, the successful training strategies highlighted in a recent GAO report. The Administration's G.I. Bill proposal calls for the consolidation of federal job-training programs into vouchers that unemployed or low-wage workers can use at community colleges or technical schools to get the training they need. The President is also proposing to give families a $10,000 per year tax deduction to offset expenses for university education or job training.

Incumbent Worker Training - In the new economy, economic security for American workers depends more than ever on skills. For those workers who already have jobs, research has shown that employer-sponsored training has the greatest positive effect on a worker's earnings. In addition, a recent study has found that companies that introduced formal employee training programs experienced a 19 percent larger rise in productivity than firms which did not train their workers. Another shows that raising the average education of the workforce by one year helps them become as much as 12 percent more productive.

In FY 1997, the Department is proposing a new demonstration on financing approaches that will increase employers' investment in training their own workers. An additional $15 million is requested to fund this demonstration on State-based loan guarantee programs for employer-sponsored training.

The Department will award competitive grants to 5-8 States to demonstrate the optimum criteria and conditions of a training loan guarantee program for employers within a State. The demonstration will also explore the concept of a State "endowment" to sustain a loan guarantee program once Federal funds cease.

The Department's One-Stop initiative is designed to transform a fragmented array of employment and training programs into a coordinated information and service delivery system for job-seekers and employers. The One-Stop grant program also supports investments in America's Labor Market Information System which is designed to provide all American workers and businesses with the information and value-added services necessary to exercise informed choice in their workforce-related decisions and to compete successfully in a global economy. We have already begun to transform the current system through the award of One-Stop implementation grants to 16 States in 1994 and 1995. In FY 1997, $150 million is requested to continue system-building activities under the One-Stop grant program. An increase of $40 million will allow State implementation grants to increase from 26 to 35. Planning and Development grants were awarded to 19 States in 1994 and another 23 were awarded in February, 1996.

In FY 1997, the Administration's reauthorization proposal for the Older Americans Act proposes transferring the administration of the Community Service Employment for Older Americans program from the Department of Labor's Employment and Training Administration to the Department of Health and Human Service's (HHS) Administration on Aging. This transfer will result in the consolidation of administration at the Federal level to streamline the Federal application and planning processes with which states must deal.

U.I. Administration - In FY 1997, $2.6 billion is requested for State administration of the Unemployment Insurance Program. In addition, $211.0 million in mandatory spending is included for benefits and allowances under the Trade Adjustment Assistance (TAA) program and the North American Free Trade Agreement (NAFTA) program. An additional $113.5 million is provided for TAA and NAFTA training, job search and relocation. This amount is $10 million less than we might have expected due to a one-year reduction in the statutory training cap in the TAA program.

Enhancing Pension Security

Health Care Reform and Pension Portability

This Administration is encouraging Congress to pass legislation barring health insurers from cutting off workers when they change jobs or when someone in their family gets sick.

The President recently announced a package of pension reforms enabling small businesses to provide pensions, more easily and helping workers carry their pensions from job to job.

The Pension and Welfare Benefits Administration (PWBA ) is responsible for the administration and enforcement under Title I of the Employee Retirement Income Security Act of 1974 (ERISA) and portions of the Federal Employees' Retirement System Act (FERSA). The primary mission of PWBA is to protect the pension and welfare benefits of participants in employee benefit plans. Employee benefit plans (including medical plans) provide income and services on which individuals rely for their quality of life, often to a critical degree. The financial security of an individual or family may be jeopardized if pension, health, or other benefits are not paid as promised. Health benefit plans provide for the provision of covered medical services to workers and their families which individuals might rarely be able to afford. When these plans fail, the burden often falls on public programs to provide affected individuals with necessary services. PWBA affects the livelihood of over 150 million people who participate in ERISA covered plan, and protects the economy's single largest source of capital for investment -- pension plans. Currently, there are approximately 0.7 million private sector pension plans whose assets total more than $3.5 trillion and 6 million welfare benefit arrangements.

In FY 1997, the Department is requesting $85.4 million and 652 FTE for PWBA . An increase of $11 million will enable PWBA to complete the design and development of the initiative to improve processing of benefit plan data. This initiative, recommended by the Vice-President in the Report on the National Performance Review, will work towards a new system and computer software for the processing of the Form 5500 series financial data required under the Employee Retirement Income Security Act (ERISA). The Internal Revenue Service and the Pension Benefit Guaranty Corporation, which are participating in the redesign, will also benefit from this new system.

Additionally, $4.4 million and 44 FTE is requested for 401(k) enforcement. This has become increasingly important in recent years, since the changing financial environment presented by the rapid growth of 401(k) plans (which have increased from 17,000 plans covering 7.5 million people in 1984 to 140,000 plans covering 22 million people in 1992) has necessitated an enforcement presence larger than that which PWBA currently has.

Finally, 401(k) and similar plans grow, it is incumbent upon workers to be more aware of issues and options regarding their retirement income. An additional $2 million is requested for PWBA 's public education and participant assistance programs to help prepare the American workforce for retirement, and to empower the public so that they can help ensure their retirement security.

Ensuring Worker Protection

The Employment Standards Administration (ESA) works to protect workers and to obtain and encourage compliance with the minimum wage, overtime, child labor, and other employment standards under the Fair Labor Standards Act; enforces nondiscrimination and affirmative action regulations; and manages Workers' Compensation programs for federal employees, longshore and harbor workers, coal miners and other groups.

The budget request for FY 1997 is for $332.0 million and 3,998 FTE, an increase of $58.2 million and 536 FTE over FY 1996. The request, which includes the transfer of the Office of Labor-Management Standards plus the 13(c) enforcement related functions from the Office of the American Workplace, provides for additional resources in support of Departmental compliance and affirmative action initiatives and the Administration's immigration reform initiative.

Illegal Immigration - The Administration is continuing its multi-year initiative to stem the flow of illegal aliens into the United States. The Department has included an increase of $15.2 million and 200 FTE for the ESA to curb illegal immigration through stronger worksite enforcement. The Department's primary role is to reduce the economic incentive to hire illegal workers through targeted enforcement of minimum labor standards in the workplace. Vigorous enforcement of the Nation's employment standards serves as a meaningful deterrent to illegal immigration by denying some of the business advantages gained through the employment of highly vulnerable and exploitable workers at substandard wages and working conditions. The requested increase will help reduce utilization of illegal alien labor by those employers who are seeking an exploitable workforce, and could result in increased hiring of U.S. workers.

Davis-Bacon: Integrity and Accuracy of Wage Determinations. An increase of $3.8 million is included to improve the integrity, accuracy and timeliness of prevailing wage and fringe benefits determinations under the Davis-Bacon and related Acts. These additional resources are required to develop and implement alternative or improved methodologies to determine prevailing wages and to develop improvements in obtaining broader participation in, and verifying the accuracy of current wage surveys.

Affirmative Action. An increase of $7.3 million for the Office of Federal Contract Compliance Programs (OFCCP) is proposed to implement a three-pronged Fair Enforcement Strategy and comprehensive technical assistance strategy designed to promote compliance with Executive Order 11246. This increase is proposed to implement one of the recommendations made as part of the Vice-President's National Performance Review. Additional resources will allow OFCCP to support a vigorous technical assistance effort to and assist Federal contractors in understanding regulatory requirements. Special emphasis will be devoted to small companies that may not have the expertise to develop Affirmative Action Programs by providing grassroots seminars, technical assistance and training sessions.

Worker Safety and Health

The Mine Safety and Health Administration (MSHA) uses a variety of tools to promote safety and health in the Nation's mines. Mining is a $54 billion industry which touches every aspect of our lives. For example, more than one-half of our electronic power is generated by coal. MSHA protects more than 350,000 men and women working in the mines through an integrated program of enforcement, compliance assistance and education and training. MSHA's 1997 budget request of $204 million and 2,318 FTE for the mine safety and health program will allow us to further improve miners' safety and health by continuing to focus the inspection program on emerging and known hazards, providing MSHA's inspectors with modern technical equipment used to detect hazards conditions, and continuing our partnership with the states through the mine safety and health state grant program.

The Occupational Safety and Health Administration (OSHA) protects America's working men and women by promulgating protective safety and health standards and enforcing compliance by inspecting places of employment. OSHA also provides consultation, training and information services for employers and employees; assists other Federal agencies in establishing and maintaining occupational safety and health programs for Federal workers; and provides matching grants to assist states in administering and enforcing approved state occupational safety and health programs.

Under President Clinton's May, 1995 "New OSHA" initiative, OSHA is emphasizing the development of partnerships as an additional tool to complement OSHA's traditional enforcement approach. There are two underlying themes: first, OSHA can only inspect a tiny fraction of the nation's 6 million workplaces, and needs to leverage its limited resources to protect more workers with fewer dollars. Second, OSHA needs to treat responsible employers

differently from neglectful ones, offering partnerships and incentives to the former and traditional enforcement for the latter.

The safest workplaces are those at which the employer, the government and workers work in partnership. That's just common sense. OSHA's new mix of partnership and enforcement programs is proving this maxim over and over again.

In FY 1997, OSHA will continue to improve workplace safety and health through the implementation of these and other reforms. A budget of $340.9 million and 2,415 FTE is requested for these changes, which include: (1) offering employers a choice between partnership and traditional enforcement; (2) developing common sense protective standards; and (3) redirecting the agency's focus from red tape to results.

OSHA Partnership. For the Occupational Safety and Health Administration, an increase of $21.8 million and 283 FTE is included for OSHA's Partnership initiative. Of that increase, $18.1 million and 283 FTE are for the Federal program with $2.7 million for the State program, and $0.3 million for state consultation projects.

Another feature of the Partnership initiative is a provision for small business specialists to address the specific needs of the small businesses. Such assistance is necessary to ensure that workers at such businesses are adequately protected without imposing unnecessary or unfair burdens on their employers.

The proposed increase of $2.7 million will be used to allow OSHA's state partners to follow Federal OSHA's lead in providing employers the choice between partnership and traditional enforcement, and focusing on results, not red tape.

Ultimately, OSHA's new partnership programs can be effective only if OSHA maintains a strong enforcement presence. Serious violators must face serious consequences. Thus, OSHA has taken steps to identify the most dangerous workplaces and enforce the law against employers who fail to address serious hazards.

Common Sense Regulation - An increase of $10 million and 12 FTE is requested to streamline and improve the regulatory process to ensure the development of common sense standards. As recommended by the Vice-President's National Performance Review, the three objectives of this initiative include: (1) accelerating the process which turns outdated, technical standards into sensible, realistic, and protective standards that are readily understandable; (2) increasing stakeholder involvement in the regulatory process, including the use of negotiated rulemaking where feasible; and (3) improving Hazard Communication in the workplace.

Chemical Safety Board. - The request includes $3.0 million and 5 FTE to enable OSHA, jointly with the Environmental Protection Agency, to assume the responsibilities of the Chemical Safety and Hazard Investigation Board. With this increase, OSHA expects to continue current activities in the chemical industry while meeting the anticipated need for more thorough accident investigations and evaluation. In addition, the agencies will provide increased training to ensure staff capabilities to respond to chemical industry incidents and will develop both an internal and external expert review process for accident reports and other chemical safety reports.

Improving Economic Indicators

The Bureau of Labor Statistics (BLS) is the principal data-gathering agency in the Federal government in the broad field of labor economics. The direct request for FY 1997 is $372.4 million, an increase of $28.0 million and an increase of 94 FTE.

The Department requests an increase of $4.6 million and 63 FTE for the revision of the Consumer Price Index. Revision of the CPI is a multi-year effort, and this revision will be completed over a six-year period. The CPI is the principal source of information concerning trends in consumer prices and inflation in the United States and is one of the Nation's most important economic indicators. The measure is used extensively for economic analysis and policy formulation in both the public and private sectors as well as to escalate contract costs among individuals and organizations.

The FY 1997 request includes $2.5 million and 8 FTE for the BLS component of a government-wide revision to the Standard Industrial Classification System (SIC). The revision of the current SIC system is a multi-year effort that the government plans to complete over a four year period, beginning in 1997 and ending in 2000. The SIC system is the classification standard underlying all of the United States economic statistics classified by industry. The SIC system has become the most widely recognized industrial classification system in this country and is the official industrial classification structure required for use in all Federal statistical programs. The proposed new system would provide common industry definitions in Canada, Mexico, and the United States to facilitate economic analyses that cover the combined economies, and be renamed the North American Industry Classification System (NAICS).

Management Initiatives and Accomplishments

In keeping with the President's commitment to the American public to reinvent and reduce the size of government, the Department has continued to streamline organizational structures that focus agency efforts to reduce employment while preserving the resources necessary to carry-out agency missions. Our streamlining plans and reinvention efforts to date clearly reflect our commitment to re-engineer major work processes and reduce the number of control FTE by another 365 and related funding in FY 1997. The Department has already achieved the 12 percent streamlining reduction goal targeted for 1999. However, streamlining and reinvention activities will continue for greater enhancement of the Department's worker protection and other programs. In addition, the Department will absorb administrative reductions that will save over $52 million in FY 1997, and will continue to increase reaching a total savings of about $170 million by FY 1998.

By now you are all familiar with the Innovation Awards the Department received in FY 1995 for OSHA's Maine 200 program and for PBGC's Early Warning Program. You should know the Department continues to improve management efficiency at all levels, and as a result, the Department has gained widespread recognition for its effort. This year the Department nominated 14 reinvention projects for the Innovation in American Government Awards Program in FY 1996. I will just mention two of the nominations here:

  • ESA's Office of Workers' Compensation Programs' Rapid Injury Response Initiative in the Oklahoma City Disaster successfully and timely responded to claims from injured workers and made payments to survivors within nine days of the event; a process that sometimes takes as long as three months. OWCP had already initiated a number of steps to improve claims processing, the Oklahoma City disaster served as a catalyst for bringing all elements together into a customer-centered program.
  • OSHA's focus on getting results and improving performance in their redesigned area offices through the efforts of a joint union-management Design Team has resulted in streamlining, and an increase of 30-50 percent more staff-time available to develop practical solutions to underlying safety and health problems.

In summary, Mr. Chairman, we believe that the Department's budget supports the President's commitment to balance the budget in seven years; adheres to the goals of the Vice-President's National Performance Review by streamlining organizational structures and implementing management improvements; and focuses our resources on the development of economic security for the majority of working families, making the American dream of opportunity for all a reality for all who are willing to work for it. In addition, we acknowledge the need to work in partnership with American business to secure America's economic future in the global economy and to help American workers, businesses and communities prosper in what the President has called the "Age of Possibility."

I thank the Subcommittee for the opportunity to talk with you today and to present our budget. This concludes my prepared statement. Mr. Chairman, I would be happy to answer any questions that you or other members of the Subcommittee may have.

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