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Hearing Of The Labor, Health And Human Services, Education, And Related Agencies Subcommittee Of The Senate Appropriations Committee - Department Of Labor


Location: Washington, DC

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SEN. HARKIN: Good morning. The Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will come to order. I'm very pleased to welcome Secretary Solis in her first appearance before this subcommittee. Welcome, Madame Secretary, and again, congratulations on your appointment to this very important position.

It's been less than four months since President Obama took the oath of office and inherited our current economic crisis, the likes of which we haven't seen since the Great Depression. In January, our nation was shedding more than 600,000 jobs a months, millions more working part-time because they could not find full-time work. Business were slowing down. It was in this context that Secretary Solis began her tenure as our nation's 25th Secretary of Labor.

Madame Secretary, as you are well aware, the Department of Labor carries out a critical mission and on that is particularly important in these challenging times. The Department must ensure that the nation's public workforce development system is providing employers with access to skilled workforce. We need to enforce our nation's laws on establishing safe workplaces and work for economic security, but also, in this time, worker retraining, job retraining for so many workers that have been displaced.

I think we have paid too little attention to some of these priorities. Previous budget requests have routinely cut funding for job training and underinvested in OSHA and MSHA and the Employment Standards Administration. I am pleased to say that the Fiscal Year 2010 budget request before this subcommittee is a very welcomed change and appears to be consistent with my view of the important work supported by the Department of Labor.

For the first time in nine years, the budget request does not include a devastating cut in funding for the International Labor Affairs Bureau. I want to thank you Secretary Solis for proposing a $91 million budget for ILAB, an increase of five million over the 2009 funding level. As I mentioned during your confirmation hearing, ILAB is a very important priority for me.

I think it sends the important message around the world. The United States will help lead the fight against the worst forms of child labor. This funding is particularly critical as economic challenge around the world push back against the progress that's been made in recent years in getting children out of dangerous workplaces and back into the classroom. As you know, this is the 10th anniversary of the adoption of ILO Convention 182 and I'm hopeful that the Department of Labor, under your leadership, will commemorate this historic occasion. In fact, I was in Seattle with President Clinton when we became a signatory to that and then, later, traveled with President Clinton to Geneva when it was adopted by the ILO in Geneva. That was 10 years ago. So I hope we have something to commemorate this 10th anniversary. For myself, I will be in Geneva on that day, so I won't be here to celebrate, but I hope that we have some commemoration of it here.

I also want to thank you for your support of worker protection agencies. Where the budget proposes to bring staffing levels back to those supported at the end of the Clinton administration. Enforcement staff levels are down by one-third at the wage and hour division and, below the FY2001 level at OSHA. Many years have passed without issuing a single ergonomic citation even though musculoskeletal disorders constitute one-third of all workplace injuries. They developed an enhanced enforcement program that was enhanced in name only and record low workplace injury rates were highlighted. Despite the first comprehensive analysis revealing an apparent underaccounting of workplace injuries.

So Madame Secretary, I look forward to working with you to change the direction of the Department of Labor's worker protection agencies to ensure they have sufficient resources and the right strategy for carrying out their important work.

Again, I would like to work with you to improve employment opportunities for individuals with disabilities. We've talked about that. As you know, another longstanding priority of mine.

I appreciate your proposed $37 million budget for the Office of Disability Employment Policy, ODEP, that's an increase of $10 million over the 2009 level. That now being released by the Bureau of Labor statistics reveal that roughly 80 percent of individuals with disabilities are not in the labor force. This is really unacceptable 19 years after the passing of the Americans with Disabilities Act, so we must improve this situation. And I look forward to working with you to ensure that ODEP can carry out its mission and work effectively with other agencies in the government to ensure that the policies of our government foster improved employment opportunities for individuals with disabilities.

So Madame Secretary, enacting the 2010 Labor Appropriations Bill will not be an easy task. There are many worthy health, education, and labor programs competing for a limited discretionary allocation. Some will suggest that the deficit is too big so Congress should simply cut spending. Others will express concern about programs not increased enough or proposed for elimination, especially during tough times when we need to support our workers and our workforce.

Again, I do have some questions I will ask you about the proposal to eliminate funding for the work incentives grant program and tight funding requests for job corps. However, I believe the budget proposal before us establishes the right priorities for our nation and will move us towards safer workplaces and a better skilled workforce.

Madame Secretary, again, welcome to the Subcommittee. I look forward to your testimony on the budget request. And I will yield now towards distinguished Ranking Member, Senator Cochran.

SEN. COCHRAN: Mr. Chairman, thank you very much. Welcome Madame Secretary to this first hearing of our committee and with your serving as Secretary. We congratulate you on your assumption of these important responsibilities and we look forward to working with you to help make sure that we do improve the funding levels and the programs under the jurisdiction of the Department of Labor that are important to our nation's workforce and to our nation at large. It's a big undertaking. It's a big building over there, too, isn't it?

Anyway, I remember when Elizabeth Dole, I think, was there, wasn't she? No. She was --- yeah, Elizabeth Dole was there.

Her husband, of course, tended to be quick-witted and sometimes he said things that he wished he had taken back. He made some comment about how large the building was and how many people work here and somebody said, "About half of them." He said, "About half of them." Anyway, I shouldn't be trying to tell Bob Dole jokes. They don't work for me.

We know that you've indicated there will be $135 million in this budget for a new career pathways program which, as I understand it, will take the place of the community-based job training activities of the Department. It would be interesting to hear what your thoughts are about how that would be a step forward.

Also, there are some increases, as you point out, in programs, or as the Chairman pointed out in his comments, and we'll look carefully at those, too. But we appreciate your cooperation with our committee and coming here to help us understand the budget request.

SEN. HARKIN: Thank you very much, Senator Cochran. Secretary Solis, again, welcome. Your statement will be made a part of the record in its entirety. We were advised we may have a vote around 10:30, but I don't know if that's still true or not, but we'll try to see if we can move ahead. So please proceed as you so desire, Madame Secretary.

SEC. SOLIS: Thank you very much, Chairman Harkin and Senator Cochran. It's good to be here before you. And, also, Senator Murray and other subcommittee members whom I understand may be coming in and out today. I'm happy to be here today before your subcommittee. I want to thank you for the invitation to testify and present you with the President's Fiscal Year 2010 budget, the request for the Department of Labor.

I'd like to just summarize my remarks and ask that my testimony also be entered into the record formally.

Just to begin with, I want to outline what our Fiscal Year 2010 overall three major priorities are. They are, as you've said, Senator Harkin, to begin with, worker protection. We're beginning to restore the capacity of the programs that protect workers health, safety, pay, and benefits. Secondly, a green recovery. What do I mean? I mean implementing new and innovative ways to promote economic recovery by working towards energy independence and increasing competitiveness of our nation's workforce. And, third, accountability and transparency. We will ensure that all of our programs are carried out in a way that is accountable, transparent to our stakeholders and to the public.

In all these efforts I am committed to fostering diversity, to ensuring that our programs are accessible to previously underserved populations including those in rural communities. And I'm particularly proud that the Fiscal Year 2010 budget begins to restore program protections for workers.

The Fiscal Year 2010 budget, the Department of Labor is requesting $1.7 billion for worker protection programs. As you said earlier, Senator Harkin, it's about a 10 percent increase for worker protection which is above the Fiscal Year 2009. We're adding 878 enforcement positions. The budget will return as to worker protection efforts to a level not seen since 2001. And we're increasing our capacity, too, so dramatically in a single year, which I know is unprecedented, but we're ready with an aggressive, comprehensive hiring plan that will be implemented as soon as the Fiscal Year 2010 funding is available.

I want to highlight three agencies where the increases are most substantial due to the erosion in enforcement capacity over the last eight years. The additional provided for the wage and hour division will allow the agency to do the following:

Improve compliance in low wage industries that employ vulnerable workers; increase its focus on reducing repeat violations; and strategically conduct complaint investigation.

Secondly, the increase for OSHA will allow us to add 213 new staff such as enforcement personnel, standard writers, and bilingual staff to address the changing demographics in the workplace as well as increase funding for our state program grants.

Third, to promote equal opportunity in Federal contracting which I know will help expand the Office of Contract Compliance programs. The number of compliance officers there will go to 213 FTE. The increases in our enforcement programs will require also legal services and support for the Office of the Solicitor where we also anticipate an increase. And I'm hopeful that the Congress will meet our worker protection program requests to allow the Department to meet its responsibility to all American workers.

As you are aware, DOL is currently using Recovery Act funds for a range of activities that provide transitional benefits, job training and placement assistance to unemployed workers. Our Fiscal Year 2010 request supplements Recovery Act funding through targeted investments in employment and training programs.

For dislocated workers, our $71 million increase will go to the National Reserve account which will help to fund the national emergency grants allowing for targeted response to large scale worker dislocations as we're experiencing now. Through a new career pathways innovation fund, we will fund grants to community colleges and other educations institutions to help individuals advance up career ladders in growth sectors like healthcare and IT.

For green jobs, the budget requests $50 million for enhanced apprenticeship and competitive grants. We'll also pursue strategies to equip all our training programs to provide training in the new green economy. And we've included funding also for the Bureau of Labor Statistics to produce valuable information to help us define green jobs.

Within our request for pilots and demonstrations, the budget also includes an investment of $50 million for transitional jobs to help young and non-custodial parents gain employment experience and sustainable employment. The budget also includes $114 million to expand the capacity of the Youth Build program to train low income, at risk youth.

The request for the Veterans Employment and Training Services contains strategic investments that will allow the agency to reach out to homeless veterans who are women, make employment workshops available to families of veterans and transitioning service members, and to restructure our existing training grants to focus on green jobs.

These innovative strategies will supplement our core workforce security programs that are extremely sensitive to economic conditions including an increase of $860 million for the newly expanded trade adjustment assistance program and $3.2 billion for state grants to fund the administration of unemployment insurance to support the increased demand on our state programs. In addition to providing states with the resources to cover increased workloads, our approach includes increased funding for reemployment and eligibility assessment to help claimants return to work as soon as possible.

I know that you share the belief that I do that spending tax dollars wisely is very important to our mission and our core goal to putting American workers back to work. A number of our budget proposal supports the goal the accountability and I'd like to name them.

A new $15 million workforce data quality initiative which will help us develop data to understand the effect of education and training on worker advancement; $5 million increase in job training program evaluations which will help us understand which approaches are effective and will help inform the direction of future programs; and an additional $5 million program evaluation initiative that will help the Department examine all of our programs, not just in employment and training.

And I'd like to say just a few words about some other programs that I know you're interested in.

First, the budget provides an increase of $10 million for the Office of Disability Employment Policy. The increase will allow us to build on the lessons we learn through the work incentive grant demonstration and it will allow us to promote opportunities for individuals with disabilities, particularly young people in employment or apprenticeship programs, pre-apprenticeship programs, and community service activities.

Second, the budget request, as you've stated, Mr. Chairman, that it will provide an increase of $5.3 million for the Bureau of Labor International Affairs, ILAB. With these funds, ILAB will be able to step up in monitoring and oversight of labor rights through closer monitoring and reporting on labor conditions worldwide, particularly with our trading partners while also maintaining ILAB's child labor and worker rights grant activities.

In conclusion, I'm committed to ensuring that these new efforts along with all the programs supported by the Department's Fiscal Year 2010 budget will demonstrate that we are putting our workers first, not just our workers, but their families. I ask for your support on this request and will be happy to respond to any of your questions.

SEN. HARKIN: Thank you very much, Madame Secretary. Again, I really appreciate the focus you've made on sort of getting back in the game on OSHA and worker protections, what you're doing on dislocated workers especially during this period of time, and on the green jobs. I just, again, commend you and President Obama for focusing on this area.

As I understand it, you're looking at the green jobs in different areas and different programs that you have under your jurisdiction.

One of those is the career pathways innovation fund for community colleges. It's been my experience that a lot of these community colleges are the ones that are really in the forefront of developing a curriculum and teaching kids some of these new technologies in green jobs, and so, I hope that the pathways fund will be kind of used for that also. Getting more of it to community colleges for them to use for developing these new careers in renewable energy and wind energy and transportation, a lot of different things that they're teaching in the community colleges.

I thank you very much for your increase in ODEP. Very much this is something that we just can't fall back on and we've got to continue our efforts to get more people with disabilities employed. And, of course, the ILAB on keeping our position as leader in the world on getting rid of the worst forms of child labor.

I remember I was driving to work one day and I was listening to-- who do I listen to in the morning? 81.5 WAMU--this was a couple of months ago, they were talking about the impact that President Obama has had on young people.

There was this inner city school teacher who was talking about how the kids in her classroom and stuff were now, you know, paying more attention and taking pride in their schoolwork. She had this one kid, she said, who had been noted as a troublemaker. This kid said something about, you know, "They say I'm a troublemaker and my teacher says I'm impossible. Well, I want to be possible." I think that's the kind of spirit that's kind of gone out from President Obama. Kids want to be possible. So we've got to focus a lot on our minority youth in this country and their training and their skills and their education and making sure that they can become possible like this one young man said.

That's your job. I mean, that's the job that I see at the Department of Labor, that you could really carry this out and focus on the areas of getting our young people trained for the careers of tomorrow.

The only couple of questions I have is just, again, on the employment of persons with disabilities. You have requested that $10 million over the last year. I thank you for that, but then again, we look at a $17 million disability navigators program that was funded through the work incentives grants. Now, those disability navigator grants were often used to increase physical and program accessibility at your one-stop centers. Well, that's going away and, now, we have a $10 million increase, so am I really looking at a $7 million decrease in funding? I'm just concerned about the wide ranging problems with accessibility and participation of job seekers with disabilities in the one-stop system.

Can you assure me that this issue, which was previously the focus of the disability navigators that was funded under the work incentives grant program will continue to be a priority of this department?

SEC. SOLIS: Mr. Chairman, Senator Harkin, yes, I would say that one of the things and please keep in mind that I have only been in not even three months yet and I did come in at a time when the budget was somewhat already being prepared.


SEC. SOLIS: So it was very interested to be in those discussions. But I continue to remain very supportive of the notion that we have to really fully integrate services for our disabled population at every point in our agency where we can. Not just at the one-stops, but also in our efforts, and I think I may have mentioned this at our confirmation hearing, we're going to see an unusually large number of returning veterans that are going to have severe brain injury and traumatic stress. We also need to expand what we do with the disabled community in addition to those that are currently here and have not found employment. I would hope that our state agencies will work with us now because, with these demonstration programs that you note, the navigator program, have been in existence and they were supposed to be demonstration projects. Funding has now been fully exercised there. My hope is to get and our directives are that the state agencies will pick up that responsibility as well.

I'm going to do whatever I can to make sure that happens and then, hopefully, work with this committee to see that we can increase our efforts to collaborate not just with the DOL but also with DOE and with other agencies and veterans administrations as well to see how we can expand the services and work intersegmentally with these other agencies, but also have pools of money where we can do a little bit better targeting. I think this is going to be a great opportunity for us.

I'm very excited, once I have my leadership in place in ODEP, that we're going to have, I think, some very innovative strategies to bring back to you and this committee.

SEN. HARKIN: I appreciate that. Well, I look forward to working with you in that area. I have another question, but I will do it in another round if we have time. At this point, I will just yield to Senator Cochran.

SEN. COCHRAN: Mr. Chairman, thank you very much. Madame Secretary, we appreciate the call you made the other day to advise us of the release of funds under the NEG--there are more acronyms in this budget than any budget--its' the National Emergency Grant and it was an extension of a grant that had been made and approved to the State of Mississippi by the Department of Labor and they had requested additional funding and your call indicated that that had been approved. I just wanted to thank you for that and encourage the Department to continue to monitor the needs that exist on the Mississippi gulf coast as a result of Hurricane Katrina.

One example is a job corps center that was destroyed in the hurricane and it has not been rebuilt. We were hopeful that funds would be made available for the Gulf Job Corps Center. It is scheduled to be reopened in August of this year. There is an interim modular building, I think, being used right now for about 150 students, but we hope that that can be accelerated and we can move towards a completion of that center at an early date.

Do you have anything in your notes about that?

SEC. SOLIS: Yes, I do, Senator Cochran, and I realize that I also inherited this challenge and we will work diligently to try to really streamline the process so that we could get this up and moving in, hopefully, a shorter timeframe; 2011, I believe, is what we're looking at to fully operate the job corps. Meanwhile, as you said, we do have other transitional modules that are out there to help with the different job corps students that need assistance.

I do want to mention that during Katrina and the recovery effort, that the Youth Build program was very, very involved in helping to provide assistance in construction, other types of exercises that they were fully involved in. So our programs are working and I just wanted to report that to you that we're watching and monitoring and want to continue to work with you and to see that this job corps program is fully implemented and that it's up to speed and ready to go in a shorter period of time.

SEN. COCHRAN: Well, we appreciate your personal interest in that goal and thank you for your attention to that. We had, in our committee report, that that Youth Build program which specifically was actively engaged in the construction of new homes and helping rebuild neighborhoods and communities all along the Gulf of Mexico, so we appreciate that.

There was a decrease in funding that we were advised about for the State of Mississippi of 50.4 percent, a reduction which amounts to $13.8 million below the amount the state received in WIA funds in Fiscal Year '08. I'm advised that funds are distributed to states based on the state's unemployment rate and the rise in its unemployment rate as compared with other states. I think what has happened is that, in other states, unemployment rates have increased over the previous years at a higher level than they did in Mississippi, and so, our state ended up getting a decrease in funding as compared with the funds received from other states. Is there any plan to address that or to make a request for supplemental funding so that a state can be held harmless.

The unemployment rate is still high; there are probably more people unemployed than there were last year, but because other states have much higher unemployment rates, Mississippi loses money and it gets transferred to other states. That's the way I read that. Is that the way that program works?

SEC. SOLIS: Unfortunately, you hit it right on the nose, Senator. The program you're talking about is the Dislocated Worker Funding and it's a formula-based funding. Those formulas are set by you, the Senate and the Congress, and unfortunately, I understand this is an issue that we may want to address as we go through reauthorization. I know some members are very concerned about this and I also agree that something has to be done.

In my request before you, I'm asking for an additional $71 million in the national emergency grant, so we can address this issue as soon as we can. That isn't the cure-all, though; the long term problem is we have to fix the formula so that when crises like these occur, we are readily able to not penalize states and hold them harmless when you see a continuing unemployment rate that just is not going down over a period of two years. The program wasn't intended to fund as many states in this manner as what I believe, and so, yes, this is a crisis and we have to take measures to modify that. I would love to work with you, Senator, and with this committee and other members who have already expressed concern about this issue.

SEN. COCHRAN: Thank you very much.

SEN. HARKIN: Thank you, Senator Cochran. Senator Murray?

SEN. MURRAY: Thank you very much and Secretary Solis, welcome to this committee and thank you for your conversation yesterday and for all the work that you are doing. We really appreciate you having this hearing today.

Following up on Senator Cochran, I had a question on the same thing because this does have to do with the distribution of the WIA funds for the Dislocated Worker Program. When we originally set up the formula for this, it was meant to be dynamic so that it could react to the ebb and flow of a turbulent economy, but the formula actually now has impacted some states in a negative way and we are going to have to figure out how to do that in the future so that we don't end up in this situation.

My state is estimated to lose about $200 million under the current challenge that we've got.

You mentioned using some of the National Emergency Grant to fill in the gaps. Do you need an additional appropriation from the staff from the Senate bill to do that or are you going to use what you currently have until we can meet those obligations?

SEC. SOLIS: Senator Murray, thank you for your question. We're going to try to exhaust the $1.2 billion that has been provided in the Recovery Act, and I'm assuming that that may go quicker than, than we assume. So we are requesting the $71 million to help --


SEC. SOLIS: -- of that.

SEN. MURRAY: Could you let us know where you are with that formula, or with the NEG grants, and where the shortfalls are, or when you expect to hit that, because a number of states have been impacted.

SEC. SOLIS: Absolutely.


SEC. SOLIS: Absolutely.

SEN. MURRAY: Thank you. I wanted to ask you, on Friday, the president announced an initiative to ensure that those who are unemployed will be eligible for a Pell Grant. Has your budget team and the budget team of the Department of Education come up with an estimate of amount -- the amount of funds that will be necessary to carry out that expansion?

SEC. SOLIS: Senator Murray, as I spoke with you regarding this issue, we are, we are now looking at how this program will be implemented. I don't have that figure in front of me at this moment, because our staff is working on that now. But I know this is something that I know you have a great deal of concern, and I expressed to you that I -- through your leadership, we want to work with you to make sure that we do the best in terms of implementing this and, and try to do the best in terms of delivery and efficiency.

I think it's an exciting program. I'm not sure quite how DOE, Department of Education and ourselves, will have all the mechanics, but I know our staff is working on it. It's an exciting topic, but I have similar concerns that you might have.

SEN. MURRAY: Right. I agree that it's much needed, and, you know, in the right direction. I just want to know what our, our costs is going to be, and how that's going to be appropriated or if it will come from other funds. So if you can work with Department of Education and come back and let us know what the costs of that are going to be.

Are you considering expanding that to immediate family members or is it -- is the proposal include immediate family members, children of unemployed workers or is it just the worker, themselves?

SEC. SOLIS: I don't have all the specific details, because this has just been rolled out Friday. But my understanding, it's for -- we haven't really discussed what other family members would be impacted. So certainly I will get back to you as soon as I can. If possible, later today.

SEN. MURRAY: Okay. I appreciate that very much.

Also, I wanted to ask you about the funds for Job Corps, which is the largest program in the federal government to help our at-risk youth. It targets some of our hardest. It serves 16 to 24 year olds. Many of them with criminal records. Most of them with poor reading and math skills, and probably with very limited attachment to any kind of school or a labor market.

I have been told that this is a time when our young adults are facing the worse job markets since World War II. So I am following the Job Corps very closely. I think it's an important part of our dealing with that challenge. It's a public -- private/public partnership with 94 of the 122 Job Corps Centers that are run today by corporations and private not-for-profit organizations, and it is a competitively awarded contract. I think it's a really good program.

I was concerned it was flat funded in your budget request.

Do you think this is a program that, that needs to have some increased costs, particularly at this economic time when a lot of our kids are facing some real challenges?

SEC. SOLIS: I think that what, what we're looking at right now is still the $37 million that was provided through the Recovery Act. That was a substantial increase, overall. So that also does set somewhat of a precedent. What I'm looking at now is trying to make sure that we can also, as Senator Harkin was saying earlier, the Chairman, about trying to make sure that these programs really have career ladders.

That we also look at opportunities to go to a community college or attend a vocational school, and get a certificate. But also green these programs. So that's also going to take additional focus and funds. Job Corps Programs, I think are wonderful. I've seen them in effect, even here in the District, in D.C. And they're not all green jobs. Obviously, you have people that are going into health care. And I think that there's -- it's worthwhile to have a discussion to see how there can be some innovation provided in Job Corps.

I think their goal, the focused population that they have, is well-meaning. But I do think there could be more that we can provide in terms of the systems. Yesterday when I spoke before the Appropriation Committee in the House, there was concerns also about funding that may not be as exuberant at this time. And certainly I --

SEN. MURRAY: I appreciate that the economic recovery package has money for this, but if we don't have, you know, long-term sustained requests for -- beyond the timeframe of the economic recovery package, we are going to be in a very bad place, so this is something I care a lot about, Mr. Chairman, and I hope we can work on it.

SEC. SOLIS: Senator Murray, if I could just explain, also, one of the things I would like to do as Secretary of Labor, is to put Job Corps back with the other programs, in the employment training programs.

SEN. MURRAY: I saw that proposal. I think that's worthwhile.

SEC. SOLIS: And really try to make more meaningful what we're doing with all of our youth. So there is some coordination. There's an overlap, and we really focus in, in a more meaningful way. And this will be a good opportunity, and that's the prerogative that I have as Secretary of Labor.

SEN. MURRAY: Okay. Very good. I appreciate that. Thank you.

SEN. HARKIN: Thank you, Senator Murray.

Senator Pryor.

SEN. PRYOR: Thank you, Mr. Chairman. Secretary, let me start with a question that is more immediate, and that is on the COBRA Premium Assistance Program. I think you mentioned that in your opening statement. We've had -- and I'm sure the other senators have had lots of calls and concerns and confusion about -- from unemployed workers about this COBRA provision in the Recovery package.

Can you just give the subcommittee here a little update on the -- on what you're working on, and how all that's going to be set up?

SEC. SOLIS: There is -- thank you, Senator. There is a lot of interest in the program. In fact, reports we're getting back from our regional offices is that there's an overwhelming number of individuals, participants who want to know how to get involved in the program. And it is --

SEN. PRYOR: We get a lot of those calls, too. Yeah.

SEC. SOLIS: (Laughs) There's a lot of calls. In fact, I'm not quite sure that our systems are really prepared to receive all of those incoming calls. I know that there will be -- that we are anticipating that there will probably be a process that may prolong itself in terms of appeals that might be made, because there also has to be substantiation of where an individual was working. So that will also require some backup or will -- it will happen as a consequence of all these calls.

So I am concerned about that, and our staff is doing everything we can. I don't have my full leadership in place yet. So that's also been a hindrance, because I have to rely on the current staff that are there. So it's our challenge, but it's one that I know we are very, very focused on, and would like to get back to you with more details.

SEN. PRYOR: Okay. Let me ask, if I can, about unemployment insurance. There's a -- in the budget, the administration puts forward an idea to reduce unemployment overpayments by $3.9 billion. What is going on in the system where, you know, it sounds like $3.9 billion, you've got a lot of people who are overpaying every year. Can we fix that system or do you feel like the Department of Labor is on top of that?

SEC. SOLIS: That is going to be a priority for this department. This also came up yesterday in our hearings before the House appropriators, and it is something that we know we will need resources to do a better job to focus here. To go after those fraudulent claims and collect, collect that money. So it will be a priority for this new administration.

SEN. PRYOR: One of the things that the -- that your department does, it may be kind of mundane but it's important to a lot of people, and that's the Bureau of Labor Statistics. I know last year we had someone calling our office, they were trying to get a handle -- I think it may have been on an economic development issue. I don't recall right now. But they were trying to get a handle on some real specific statistics for Arkansas, and basically I think what they wanted is local employment statistics. And the Bureau of Labor Statistics told us that they're no longer collecting or disseminating that specific of information.

And I notice in the budget there's an $8 million increase for the BLS, Bureau of Labor Statistics. Do you know, are you going to restore some of the things that you used to do? Do you know anything about that?

SEC. SOLIS: I don't -- Senator, I don't know specifically about the response with respect to your state, but certainly the monies that we are requesting will go into also helping to look at jobs in green industry. But also looking at where we are not doing a good job in terms of gathering data on disabilities, on different populations. And certainly one of my concerns is, as a former member of the House, was always wanting to have quick response in terms of what our cities, our locals, what those figures were.

And I can tell you in all honesty that I would always look up in my local (Laughs) paper what the local states have, because they typically have the best information. I know that our Bureau coordinates, but we need to have a better approach to having that more immediately. So I know I will be working very closely. I think this is something very important. And we do have to reconfigure what, I believe some of the priorities are in the BLS. And of course this is going to be a challenge, and we'll need to work closely on this.

SEN. PRYOR: Great. Thank you.

And the last question I had was about -- something that's a follow up to one of your earlier questions in your opening statement, the veterans' employment and training service. You have the request of $225 million. Do you feel like that's sufficient, given the fact that we have so many folks coming back from Iraq and Afghanistan. And just, you know, given the tempo that the military has been at recently, do you feel like that $255 million is sufficient?

SEC. SOLIS: Senator, I want to be as honest as I can. I still have yet to be able to place my leadership team together in that particular unit. So I'm awaiting that, but we have -- my personal commitment is that we need to do everything we can to coordinate with other agencies, federal agencies.

We certainly have a key component in helping -- to help folks that are coming back to get back into their job, and we're finding that a lot of veterans are not being reemployed. That is going to obviously take a lot of, a lot of effort and hours to do that. But we also want to expand how we work with veterans and with their families and their spouses. And that's an initiative that the, that the president's wife, Michelle Obama, is also taking on, which I take very serious.

So I want to try to integrate as many things as I can with the current resources and the other agencies that can help us do that. Because it's going to, it's going to require what I would say our more wrap-around services to really help address the issues of these returning soldiers. So I agree with you. This is -- this has to be a priority, and would like to work with you to see how we can really formulize a good program, because this is going to be ongoing.

SEN. PRYOR: Thank you.

Thank you, Mr. Chairman.

SEN. HARKIN: Thank you, Senator Pryor.

Madam Secretary, in March I held a hearing on the department's oversight of the -- what we call the 14(c) program in the Fair Labor Standards Act. And this arose out of a terrible situation that was uncovered in my state of Iowa. The 14(c) program, as you know, is a program that allows employers to pay subminimum wages -- subminimum wages to individuals with disabilities, especially individuals with intellectual disabilities, because they maybe can't produce as much. They're low productivity so they can -- they have a program that allows them to pay subminimum wages. It's been in the law for a long time.

Now, here's what happened, though, in this situation, which came to light. It's been going on for many years. I mean, like, 30-some years. Individuals with intellectual disabilities, what we might call mentally retarded in the past, were hired by a company in Texas, Henry's Turkey Service. They were then put on a bus and shipped to Iowa to work at a turkey plant in Southeast Iowa. These were all men.

They were then put up in a kind of a rooming house, which was an old abandoned schoolhouse. And they got up at 3:00 or 4:00 in the morning, got on a bus. Went to work there at this plant. Many of them worked right alongside of the workers, doing the same work that other workers were doing. They were housed in this schoolhouse. I think the monthly rental on that whole school was, like, $600 a month for the whole building.

And yet each of these -- how many were there, 20-some individuals, were charged $1,200.00 a month for their rent. And that was taken out of their pay. That was taken out of their pay. And so this situation was uncovered. But what -- the things that were startling was not -- was how bad this was, but the fact that it had gone on for years and no one knew about it.

Well, then the more I dug in it, the more I found out that this company, their 14(c) application had expired. You have to get it renewed every couple of years. And it had expired, and yet nothing was done. It just expired. And so the hearing that I held was on this issue of how could this happen, and how many people in the country are we talking about.

Is this just some isolated little incident that we don't need to change anything for? Well, the GAO report indicated in 2001, that I found out about, that there are approximately 424,000 workers in America paid subminimum wages. These are people with intellectual disabilities -- mental retardation, most of them.

Well, it's also come to my intention that the Department of Labor, this Department of Labor, really has a minimal number of people working on this. And it's all done by paper. They send a paper out. The employer fills it out, sends it back in, and says, yes, I'm under the 14(c) program, and that's it, and they file it. And that's it.

Federal inspectors had been at this plant once some years ago, and nothing was done. It wasn't until a local worker -- I think a state worker had uncovered this that it all came to light, what was going on. People -- some of these men had been working there for, like, 20 years, and had nothing to show for it. They had no retirement. They had no benefits. They had nothing. Some of them worked in there everyday, eight hours a day, 40 hours a week. Sometimes overtime.

And some of them had, like, $6 bucks a month left over. I mean, this was a scandal. It was -- and it just -- you think, "How could that happen in America?" Well, I tell you this story, because it's something I want to work with you on. We've got to get a better handle on this 14(c) program, and I'm developing some legislation on it. But I think there's a lot that can be done administratively on this to, again, tighten down on this, to make sure that people who are applying for 14(c) exemptions, actually are doing what they say they're doing. That the people qualify. And that they really are doing work at a reduced rate, you know what I'm saying? They're not as productive.

I'm not against the 14(c) program. Don't get me, don't get me wrong. It can be a good thing for a lot of people with severe disabilities to actually have some employment. But obviously if they can't produce as much, then you pay them a little bit less. I understand that. But I want to make sure that they're actually -- are they actually really so disabled that they cannot make at least the minimum wage or more. If you get my point?


SEN. HARKIN: Somebody has to make those determinations. It's all done by paper now. We have no inspectors basically going out there and checking up on this, and finding out what's going on. So how widespread this is, I don't know. I just know from my 2001 report that there's 424,000 workers that GAO said approximately, so, and that's just an approximation.

So anyway, we need monitoring, and I've just -- I bring this up, and not that I have a real question for you on it, but to ask you and in your department, to get some people paying attention to this, because I would like to come back with you on this to find out what it is administratively that you can do, but what it is that we need to do legislatively to maybe fix this. And we're trying to work on that right now.

So I hope we can have your cooperation on this, and also your attention to this one factor. These are the most vulnerable people in our society, and the fact that they can be treated like this is just unconscionable. So I hope we can work with you on that.

SEC. SOLIS: Senator, thank you for your comments. And I, too, was horrified when I read the article, and articles surrounding this issue. And I know that in the last eight years we have not had sufficient investigators in the Wage and Hour Division. And hopefully our budget requests will help us begin to address that so we can could put real bodies -- real investigators out in the field, to look at these kinds of industries that are, that are taking advantage of these most vulnerable populations.

And I want to thank you for your leadership in drawing to your attention the fact that we need to do more collaboration on the 14(c) applications, along with trying to collaborate better with the Social Security Administration, also, so that we can, we can identify who these individuals are. And also who is, who is drawing down the 14(c) applications, so we do get rid of the bad actors, and that we send a strong message that this is not going to be tolerated.

So I want to work with you on it, and be exited to hear what ideas you have surrounding the program.

SEN. HARKIN: Okay. Thank you very much, Madam Secretary.

Senator Pryor, do you have any more questions?

Well, Madam Secretary, we've got no more questions here. If we have other questions, we'll submit them in writing. But, again, do you have anything else that you want to draw our attention to here regarding your budget that you think that we didn't cover that you would like to bring up?

SEC. SOLIS: Well, there is one concern that I have, and that is just that I know that we're a new administration. And it's hard right now to process the number of people that we'd like to bring in to help with our leadership in our department.

Yesterday I was asked this question by Chairman Obey. He asked me (parenthetically ?) how many people we have actually gotten through the process and confirmed by the Senate. And I could only tell him two. And one of them is sitting with me here behind.

So we know that we have a tremendous effort ahead of us, and we want to be able to show that we're working effectively, transparently, but also accountable to you.

I would just ask and urge the members of the Senate, if you can pass that along, that would be of appreciation.

SEN. HARKIN: And inform me, how many are -- do you have some pending up here right now?

SEC. SOLIS: Yeah, we do.

SEN. HARKIN: How many?

SEC. SOLIS: Two. We have two.

SEN. HARKIN: Two that are pending right now?


SEN. HARKIN: Are they before our committee -- no, I mean, not this committee, the other committee I'm on (Laughs.)

SEC. SOLIS: They're before the Health Committee. (Laughter)

SEN. HARKIN: The other committee I'm on, the Health Committee, right?

SEC. SOLIS: Some of you had -- yes. Yes.

SEN. HARKIN: They're pending before that?


SEN. HARKIN: The Health --

SEC. SOLIS: Before the Health Committee, yes.

SEN. HARKIN: Two pending before the Health Committee.

SEC. SOLIS: Any effort and energy would be much appreciated.

SEN. HARKIN: Okay. We'll look at that, and see if we can get that --

SEC. SOLIS: Thank you.

SEN. HARKIN: -- done as soon as possible. I appreciate it.

SEC. SOLIS: Thank you for you indulgence.

SEN. HARKIN: Thank you very much, Madam Secretary.

The subcommittee will stand adjourned.

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