“BACK TO WORK: THE ADMINISTRATION’S 

PLAN FOR ECONOMIC RECOVERY AND THE 

WORKFORCE INVESTMENT ACT” 

HEARING

BEFORE THE 

COMMITTEE ON EDUCATION AND 

THE WORKFORCE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

HEARING HELD IN WASHINGTON, DC, FEBRUARY 12, 2003 

Serial No. 108-1 

Printed for the use of the Committee on Education 

and the Workforce

87-720 pdf 

For sale by the Superintendent of Documents, U.S. Government Printing Office 

Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 

FAX: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 
ii

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN A. BOEHNER, Ohio, Chairman 

THOMAS E. PETRI, Wisconsin GEORGE MILLER, California 

CASS BALLENGER, North Carolina DALE E. KILDEE, Michigan 

PETER HOEKSTRA, Michigan MAJOR R. OWENS, New York 

HOWARD P. “BUCK” McKEON, California DONALD M. PAYNE, New Jersey 

MICHAEL N. CASTLE, Delaware ROBERT E. ANDREWS, New Jersey 

SAM JOHNSON, Texas LYNN C. WOOLSEY, California 

JAMES C. GREENWOOD, Pennsylvania RUBEѳN HINOJOSA, Texas 

CHARLIE NORWOOD, Georgia CAROLYN McCARTHY, New York 

FRED UPTON, Michigan JOHN F. TIERNEY, Massachusetts 

VERNON J. EHLERS, Michigan RON KIND, Wisconsin 

JIM DeMINT, South Carolina DENNIS J. KUCINICH, Ohio 

JOHNNY ISAKSON, Georgia DAVID WU, Oregon 

JUDY BIGGERT, Illinois RUSH D. HOLT, New Jersey 

TODD RUSSELL PLATTS, Pennsylvania SUSAN A. DAVIS, California 

PATRICK J. TIBERI, Ohio BETTY McCOLLUM, Minnesota 

RIC KELLER, Florida DANNY K. DAVIS, Illinois 

TOM OSBORNE, Nebraska ED CASE, Hawaii 

JOE WILSON, South Carolina RAUѳL M. GRIJALVA, Arizona 

TOM COLE, Oklahoma DENISE L. MAJETTE, Georgia 

JON C. PORTER, Nevada CHRIS VAN HOLLEN, Maryland 

JOHN KLINE, Minnesota TIMOTHY J. RYAN, Ohio 

JOHN R. CARTER, Texas 

MARILYN N. MUSGRAVE, Colorado 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

MAX BURNS, Georgia 

 Paula Nowakowski, Chief of Staff 

 John Lawrence, Minority Staff Director 
iii

Table of Contents 

OPENING STATEMENT OF CHAIRMAN JOHN BOEHNER, COMMITTEE ON 

EDUCATION AND THE WORKFORCE..................................................................................... 2 

OPENING STATEMENT OF RANKING MEMBER GEORGE MILLER, COMMITTEE ON 

EDUCATION AND THE WORKFORCE..................................................................................... 4 

STATEMENT OF ELAINE L. CHAO, SECRETARY OF LABOR, U.S. DEPARTMENT OF 

LABOR, WASHINGTON, D.C. .................................................................................................... 6 

STATEMENT OF KENNETH MAYFIELD, PRESIDENT, NATIONAL ASSOCIATION OF 

COUNTIES, WASHINGTON, D.C............................................................................................. 34 

STATEMENT OF DR. LAWRENCE MISHEL, PRESIDENT, ECONOMIC POLICY 

INSTITUTE, WASHINGTON, D.C. ........................................................................................... 36 

APPENDIX A - WRITTEN OPENING STATEMENT OF CHAIRMAN JOHN BOEHNER, 

COMMITTEE ON EDUCATION AND THE WORKFORCE................................................... 49 

APPENDIX B - STATEMENT OF ELAINE L. CHAO, SECRETARY OF LABOR, U.S. 

DEPARTMENT OF LABOR, WASHINGTON, D.C. ................................................................ 53 

APPENDIX C - STATEMENT OF KENNETH MAYFIELD, PRESIDENT, NATIONAL 

ASSOCIATION OF COUNTIES, WASHINGTON, D.C. .......................................................... 67 

APPENDIX D - STATEMENT OF DR. LAWRENCE MISHEL, PRESIDENT, ECONOMIC 

POLICY INSTITUTE, WASHINGTON, D.C............................................................................. 79 

APPENDIX E – SUBMITTED FOR THE RECORD, STATEMENT OF CONGRESSMAN 

DENNIS KUCINICH, COMMITTEE ON EDUCATION AND THE WORKFORCE............ 107 

APPENDIX F – SUBMITTED FOR THE RECORD, STATEMENT OF CONGRESSWOMAN 

DENISE MAJETTE, 4TH DISTRICT OF GEORGIA, U.S. HOUSE OF REPRESENTATIVES

.................................................................................................................................................... 111 

APPENDIX G – SUBMITTED FOR THE RECORD, STATEMENT OF JOSEPH R. LARSON, 

CHAIRMAN, RESTORING AMERICA, LLC, IBERIA, MO ................................................. 115 

APPENDIX H – SUBMITTED FOR THE RECORD, STATEMENT OF MINNESOTA STATE 

SENATOR, MICHELE BACHMAN, DISTRICT 52, ST. PAUL, MN .................................... 123 

APPENDIX I – SUBMITTED FOR THE RECORD, STATEMENT OF KIMBLE AINSLIE, 

ON BEHALF OF THE MACKINAC CENTER FOR PUBLIC POLICY, MIDLAND, MI..... 129 
iv

APPENDIX J – SUBMITTED FOR THE RECORD, STATEMENT OF MAPLE RIVER 

EDUCATION COALITION, MICHAEL J. CHAPMAN, BOARD OF DIRECTORS, ST. 

PAUL, MN.................................................................................................................................. 135 

Table of Indexes.......................................................................................................................... 144 
1

HEARING ON “BACK TO WORK: THE ADMINISTRATION'S PLAN 

FOR ECONOMIC RECOVERY AND THE WORKFORCE INVESTMENT ACT” 

____________________

Wednesday, February 12, 2003 

U.S. House of Representatives 

Committee on Education and the Workforce 

Washington, D.C. 

 The Committee met, pursuant to notice, at 10:30 a.m., in Room 2175, Rayburn House 

Office Building, Hon. John Boehner, Chairman of the Committee, presiding. 

 Present: Representatives Boehner, Ballenger, Hoekstra, McKeon, Johnson, Ehlers, DeMint, 

Isakson, Platts, Osborne, Wilson, Porter, Kline, Musgrave, Gingrey, Miller, Kildee, Owens, Payne, 

Andrews, Woolsey, Tierney, Sanchez, Kucinich, Holt, Davis, Case, Grijalva, Majette, Van Hollen, 

and Ryan. 

 Staff present: Stephanie Milburn, Professional Staff Member; Travis McCoy, Legislative 

Assistant; Sally Lovejoy, Director of Education and Human Resources Policy; Krisann Pearce, 

Deputy Director of Education and Human Resources Policy; Whitney Rhoades, Professional Staff 

Member; Ed Gilroy, Director of Workforce Policy; Molly Salmi, Deputy Director of Workforce 

Policy; Christine Roth, Workforce Policy Counsel; Jo-Marie St. Martin, General Counsel; Kevin 

Frank, Professional Staff Member; Dave Schnittger, Communications Director; Kevin Smith, 

Senior Communications Counselor; Brady Newby, Communications Specialist; Deborah L. 

Samantar, Committee Clerk/Intern Coordinator. 

John Lawrence, Minority Staff Director; Mark Zuckerman, Minority General Counsel; Cheryl 

Johnson, Minority Counsel; Michele Varnhagen, Minority Labor Counsel/Coordinator; Peter 

Rutledge, Minority Senior Legislative Associate/Labor; Maria Cuprill, Minority Legislative 
2

Associate/Labor; Alex Nock, Minority Legislative Associate/Education; Dan Rawlins, Minority 

Staff Assistant/Labor; Daniel Weiss, Special Assistant to the Ranking Member. 

Chairman Boehner. The Committee on Education and the Workforce will come to order. 

 We're meeting today to hear testimony on “Back to Work: the Administration's Plan for 

Economic Recovery and the Workforce Investment Act.” Under Committee rule 12(b), opening 

statements are limited to the Chairman or Ranking Minority Member of the Committee. Therefore, 

if other Members have statements, they will be included in the hearing record. 

 And with that, I ask unanimous consent for the hearing record to remain open for 14 days to 

allow Members' statements and other extraneous material referenced during the hearing to be 

submitted for the official record. Without objection, so ordered. 

OPENING STATEMENT OF CHAIRMAN JOHN BOEHNER, COMMITTEE 

ON EDUCATION AND THE WORKFORCE 

 Let me start this morning by welcoming our distinguished guest today, the Secretary of 

Labor, Elaine Chao, and I also would like to welcome my counterpart, the gentleman from 

California, Mr. Miller, and the other Members of our Committee. 

 During his State of the Union address, President Bush laid out a comprehensive plan to 

speed our economic recovery and promote long-term job growth and investment. His plan also 

provides specific assistance, in the form of personal re-employment accounts, to help unemployed 

Americans who are struggling to return to work. 

 At a time when the economy is struggling but also improving, it is important that we focus 

on giving the unemployed more flexibility and choices in their employment search. And even 

though the most recent Labor Department statistics reveal that unemployment is down to 5.7 

percent this month, we still need to examine new ways to help working families across this country 

during the time when they need it most. 

 On January 29th, Congressmen Jon Porter, Buck McKeon, Todd Tiahrt, and others 

introduced the Back to Work Incentive Act, which reflects the President's plan to create these 

accounts, and aid unemployed workers who need the most help in getting back to work. I am 

pleased to be a co-sponsor of this important measure. 

 The Back to Work Incentive Act represents a new and innovative approach to helping the 

unemployed get back on their feet. As President Bush has said, one worker out of work is one too 

many, and his plan will help working families in times when they need it most. 

 Now, workers can use the Back to Work accounts for a variety of services to help them find 

a good job, including job training, child care, transportation, housing assistance, and other expenses 

in helping find a new job. Recipients will be able to keep the balance of their $3,000 back to work 
3

account as a cash re-employment bonus if they become re-employed within 13 weeks, creating an 

important incentive to return to work quickly. The more quickly a job is obtained, the larger the reemployment bonus will be. 

States such as Iowa, Pennsylvania, and Washington have experimented with personal reemployment accounts, and the results have been very positive. 

 One of the exciting aspects of the new Back to Work accounts is that they empower 

individual recipients to make choices appropriate for their own circumstances. Recipients will be 

able to create re-employment plans that help them navigate all the options available -- such as 

career counseling or training for a new profession in which they can be employed. By providing 

choice and flexibility, we can get people back into a steady, good-paying job as quickly as possible. 

This new benefit supplements and enhances the services that are already available for those 

who are most likely to face obstacles in finding and keeping new employment. These Back to 

Work accounts will not only provide the unemployed with another important benefit in helping 

them find a new job, but will be efficiently administered through the easily accessible One Stop 

Career Center system, established through the Federal Workforce Investment Act (WIA). 

 The Workforce Investment Act (WIA) and the one-stop delivery system it created represent 

the nation's primary investment in workforce development. WIA assistance is vital to helping 

workers find new or better jobs in this time of economic recovery. Through the one-stop delivery 

system, job seekers have access to labor market information, job counseling, and job training to 

help them get back on their feet. In addition, they have access to numerous other federal programs 

that provide services to job seekers. These Back to Work accounts will be an important new 

benefit that will be offered seamlessly and efficiently through the WIA delivery system. 

 The 21st Century Competitiveness Subcommittee, chaired by Congressman Buck McKeon, 

will lead this Committee's efforts to reauthorize the Workforce Investment Act this year, and will 

focus on improving the system to help achieve the original vision of the law when it was enacted in 

1998, which was to create a seamless workforce development system for workers and employers. 

 While we expect to move the Back to Work Incentive Act as a stand-alone bill, we also 

expect to address the President's proposal as part of our efforts to reauthorize WIA. Particularly 

during a sluggish economy, WIA programs can play a role in helping Americans get back to work, 

or retain for new jobs. 

 I look forward to working with President Bush, Subcommittee Chairman McKeon, 

Congressman Porter, Secretary Chao, and my friends on the Democrat side of the aisle to move this 

proposal quickly and make this innovative plan a reality for working families who need the help the 

most, and certainly they need it quickly. 

 I now yield to my friend and Ranking Member of the Committee, George Miller. 
4

WRITTEN OPENING STATEMENT OF CHAIRMAN JOHN BOEHNER, 

COMMITTEE ON EDUCATION AND THE WORKFORCE – SEE APPENDIX A 

OPENING STATEMENT OF RANKING MEMBER GEORGE MILLER, 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

Thank you, Mr. Chairman. Madame Secretary, welcome back to the Committee. We look 

forward to hearing your comments today regarding the President's proposal for personal reemployment accounts. The question we will have, obviously, is whether or not this proposal meets 

the demands that are being placed on unemployed workers today in our current economy. 

 This proposal comes at a time when working families are facing a weak economy, wracked 

by job insecurity, unemployment, corporate malfeasance, and battered retirement savings. By 

almost any measure you can think of, for wages, job security, retirement security, middle-class 

Americans are worse off today than they were two years ago, or at any time in the past decade. 

 It's not a question of whether we have one unemployed worker in this country, which would 

be too many for the President; we have 8 million unemployed workers in this country. And 

minority and women workers have been particularly hard hit. More than 1 million workers, 1 

million individuals, many heads of households, have exhausted their federal unemployment 

benefits and cannot find work. The number of workers unemployed for more than 15 weeks has 

increased almost 140 percent in the two years since you took office. 

 The paycheck for America's most vulnerable workers, those making the minimum wage, 

will soon be at its lowest value since the Eisenhower administration a half a century ago. And yet 

we have seen absolutely no leadership from the majority in this Congress or from the Bush 

Administration to provide these men and women with a decent increase in their earnings. 

 For some reason, this Administration and the Republican Congress can see fit to give $2 

trillion in tax breaks to the wealthiest Americans during this recession, and during a time of 

impending war, but we can't give 75 cents an hour to the poorest workers in this nation this year. 

 The precipitous drop in the stock market over the past two years has cost employees over 

$175 billion in 401(k) investments and assets. Thousands of these employees who lost hundreds of 

millions of dollars of irreplaceable life savings and retirement benefits due to corporate fraud and 

abuse, are still awaiting help from the Department of Labor to recoup their losses more than a year 

later. 

 Corporate pension plans' under-funding have reached a staggering level of $300 billion. 

This requires that the Department of Labor immediately address the serious problem that threatens 

the retirement security of tens of millions of Americans. The public Pension Benefit Guaranty 

Corporation, the agency that 44 million Americans rely on to pay their pensions if their companies 

are bankrupt, has record deficits close to $10 billion when accounting for future liabilities, and 

huge corporations are lining up to dump their pension burdens into this corporation every month as 

part of their bankruptcy bail-out plans. Most recently we see Bethlehem National, and the question 
5

is how soon will the airlines off-load their employees' pensions into the Pension Benefit Guaranty 

Corporation? This threat to the employees' pensions does not even take into consideration the threat 

to their health insurance benefits that are also under attack. 

 Not only is the federal treasury facing $300 billion in red ink next year and $2 trillion over 

the next decade as a result of the administration's irresponsible fiscal policies, but now state and 

local governments are confronting $85 billion in deficits, forcing cuts in health care, child care, 

education, and training, and tomorrow this Congress will add $11 billion to the burden of those 

states with the passage of the Welfare Reform Bill. 

 The American public is starting to understand that this Administration and this Congress 

have turned a deaf ear to the worsening economic security of millions of Americans worried about 

their jobs, their families, and their retirement security. There is no additional help for more than 1 

million workers who have exhausted their federal unemployment benefits and can't find work. 

There is no support for a modest increase in the minimum wage. There is vigorous opposition to 

the rights of working people to join unions, as demonstrated in the cases of the Department of 

Homeland Security and the baggage handlers and others at our airports. 

 Failures by the Department of Labor over the last 15 months, since the beginning of the 

investigation of Enron, to try and recover hundreds of millions of dollars in retirement investments 

lost due to corporate fraud and abuse, the promotion of unsound and unfair pension changes, like 

the cash balance conversions that could impoverish millions of middle-aged and older employees, 

and the investment advice proposal that former SEC Chairman Arthur Levitt says violates the one 

bedrock principle of investing. 

 Given this record, I am at a loss to see how the Bush Administration's proposal for reemployment accounts speaks to the deep underlying problems facing working men and women in 

this dreadful economy. How will these accounts help the 1 million workers who have already 

exhausted their federal extended benefits? How will they help workers find jobs in communities 

where no work is available? And how will this Department respond to the report by the previous 

Bush Administration that concluded that these accounts do very little for workers who are living in 

areas of moderate or high unemployment, of which there are now millions of Americans that share 

that burden. 

 I am eager to hear your testimony today, Madame Secretary, but I must say that I am very 

concerned about this Administration's lack of attention to the welfare and the well-being of millions 

of middle-class working families who still see their livelihoods and their retirements threatened by 

this economy and by the inability of this Administration to respond to their needs. Simply cutting 

off people's benefits and not giving them additional work is not going to provide the kind of 

economic recovery that this nation needs and this nation's families want so dearly. Thank you very 

much.

Chairman Boehner. Before I introduce the Secretary, let me take a moment to welcome the 

newest member of our Committee, Phil Gingrey, of Georgia. 
6

Dr. Gingrey was elected to our Committee last night. He is an OB/GYN, a former Marietta 

school board member, and most recently served in the Georgia State Senate from 1998 until he was 

elected to Congress this November. He will serve on the Subcommittee on Select Education and 

the Subcommittee on 21st Century Competitiveness. I want to welcome Dr. Gingrey to the 

Committee. 

 It's now my pleasure to introduce the Secretary of Labor, Elaine Chao. Secretary Chao is 

the nation's 24th Secretary of Labor, and is a champion of the nation's contemporary workforce. 

She has worked to focus the Labor Department on the modern realities of workers' lives. 

 Prior to assuming the position of Secretary, she was a director of the Peace Corps, and later 

President and Chief Executive Officer of United Way of America. Secretary Chao's previous 

government experience includes Deputy Secretary at the U.S. Department of Transportation. 

 In addition, her business experience includes positions at Bank of America, Capital Markets 

Group, and Citicorp. And prior to her nomination as Secretary, she was a distinguished Fellow at 

the Heritage Foundation. Secretary Chao received her MBA from the Harvard Business School and 

her undergraduate degree in economics from Mount Holyoke College. 

 Before the Secretary begins her testimony, I want to remind all the Members that we will 

impose a five-minute limit on questions. The Secretary is only with us for a short time today, and 

she must excuse herself at noon. So I would ask Members to be mindful of the clock. 

 And with that, Madame Secretary, welcome and you may begin. 

STATEMENT OF ELAINE L. CHAO, SECRETARY OF LABOR, U.S. 

DEPARTMENT OF LABOR, WASHINGTON, D.C.

 Good morning, Mr. Chairman, Congressman Miller, and Members of the Committee. 

Thank you for the opportunity to testify on the provisions of the President's economic growth and 

jobs package that will help workers with immediate benefits and long-term opportunities. 

 I want to commend you and the Members of this Committee for your leadership in 

introducing the Back to Work Incentive Act, H.R. 444, which would establish personal reemployment accounts for an estimated 1.2 million workers. 

 I would also like to describe some of the innovative changes we proposed to the workforce 

investment system through reauthorization of the Workforce Investment Act of 1998. I will 

summarize my statement, Mr. Chairman, but ask that my prepared statement be included for the 

record.

 Last month, President Bush announced a comprehensive growth and jobs package to 

stimulate spending, promote investment, create jobs, and deliver critical help to unemployed 
7

workers. If enacted, his plan will help create 1.4 million jobs by the end of 2004. 

 I think we all agree that current unemployment rates, while low by historical standards, are 

still too high. Our goal is to preserve the hard-won gains the economy has made, to speed up 

growth and create more jobs in both the short term and the long term. 

 One of the unique features of the President's economic recovery plan is its new approach to 

addressing current unemployment through personal re-employment accounts. These are workermanaged accounts of up to $3,000, and they can be used to purchase a variety of re-employment 

services, including training, counseling, childcare, and transportation. 

 Re-employment accounts will empower individuals by giving them more flexibility, 

personal choice, and control over their job search. These accounts also have a re-employment 

bonus. Workers who find a new job within 13 weeks will be able to keep the cash balance in their 

personal re-employment accounts to assist them in transitioning back to work. 

 These personal re-employment accounts will be administered by the states through the local 

One-Stop Career Centers. And the President's proposal would provide $3.6 billion in additional 

resources to the states to fund these personal re-employment accounts over two years so that there 

will be no duplicative infrastructure that will be needed. 

 As we entered the 21st century, our nation's workforce faced three major challenges: 

globalization, technological advances, and demographic changes. So we need long-term strategies, 

as well, to prepare workers for good-paying jobs in the labor market. 

 This Committee has already recognized the importance of these challenges through its hard 

work on the Workforce Investment Act of 1998. Our goal is to continue to develop the One-Stop 

Career Center delivery system into a cohesive workforce investment system that responds quickly 

and effectively to the changing needs of our population and our economy. 

 The Administration's proposal for the Workforce Investment Act reauthorization would be 

based on five key principles. We want to one, strengthen the governing structure of the workforce 

investment system by streamlining the membership and mission of state and local workforce 

investment boards. Two, we want to support a more comprehensive operation with available 

services through the One-Stop Career Centers. Three, we want to improve adult services by 

consolidating adult dislocated workers and employment services funding streams into one network. 

This will increase customer accessibility, as well as state flexibility in responding to local 

economic conditions. Fourth, we want to better serve at-risk youths by targeting resources to outof-school youths in both urban and rural areas. And fifth, we want to ensure greater accountability 

by focusing on the most important outcomes, and eliminating burdensome and duplicative 

requirements at the state and the local levels. All federal job-training programs will be measured 

by the same performance standards. 

 The President's proposals recognize that investments in the workforce are a key part of 

economic growth. I believe that these proposals are key to ensuring that our nation's workforce 
8

remains the most highly skilled and competitive in the world. I look forward to working with you, 

Mr. Chairman, and this Committee as we move forward. 

STATEMENT OF ELAINE L. CHAO, SECRETARY OF LABOR, U.S. 

DEPARTMENT OF LABOR, WASHINGTON, D.C. – SEE APPENDIX B 

Chairman Boehner. Madame Secretary, thank you for your testimony, and thank you for your 

willingness to come and speak with all of us today. 

 Some are saying that the re-employment bonus that we're talking about in the Back to Work 

accounts encourages individuals to take the first available job, instead of waiting for the best job. 

In your testimony that you submitted, you refute this argument by citing evidence from pilot 

programs showing individuals generally found comparable jobs. Plus someone who chooses to 

take the job bonus funds obviously has that money and can use it for their own family needs. 

 Is it true that for some individuals labor market attachment can help them advance, 

suggesting that it's important to become re-employed quickly? 

Secretary Chao. We believe so. Now, let me just refer to the pilot programs that you mention. 

Indeed, our results from the pilot program show that they are helpful in getting people back to 

work. We had five pilot programs in four states, and they worked out very well. 

 On the bonus issue, it's not as if a person can get a bonus right away. Basically, they will 

receive 60 percent of the bonus upon getting a job, then 40 percent if they stay on the job for six 

months.

 We don't believe that workers would just take the first job that they find, and that's what the 

whole beauty of the personal re-employment account is. It will give them more choice to select the 

kind of training that is currently not available within the One-Stop Career Centers. So there is a 

great deal of investment by the individual in the kind of training they want in order to get the job 

that they want. So we feel that the re-employment account is actually an incentive to get better 

training.

Chairman Boehner. How would the states and the local One-Stops choose which employees 

would be eligible for these Back to Work accounts? 

Secretary Chao. We want to help those who are most at-risk and who have been the harder to 

place. There will be an ongoing effort with the states to come up with certain criteria that will 

target at-risk and hard-to-place workers, those who are about to exhaust their extended 

unemployment benefits, and also those who are working in industries that are obviously impacted 

by trade, or have a difficult time. 

Chairman Boehner. We have heard from businesses that incumbent or current worker training is 

critical for both lay-off aversion and for businesses to remain competitive. However, many small 
9

businesses do not have the capability to train their employees, or to retrain them. 

 Will the Administration's WIA reauthorization proposal increase opportunities to provide 

incumbent worker training? 

Secretary Chao. We have a wonderful workforce investment system that the American taxpayers 

have invested approximately $12 billion a year in. It offers counseling, job placement services, 

skills assessment, resume writing, and workshops. For workers who are currently employed and 

are thinking about other opportunities, these services are available to them, as well. And for 

workers who are currently out of work, or who may have exhausted their unemployment insurance 

benefits, they too can avail themselves of core services at these One-Stop Career Centers. 

Chairman Boehner. Consolidating the adult dislocated workers and the unemployment services 

funds could simplify what is now a complicated administrative structure and allow more flexibility 

to address local circumstances. How do you envision this combined funding system? How do you 

envision that this will improve services to workers and to businesses? 

Secretary Chao. The combined funding is a plus-plus for the state and local entities. Our 

department receives a lot of requests for waivers because one stream of funding has expired and the 

needs still exist. That is a timely process. 

 We want the state and local entities to be able to have more discretion and flexibility with 

which to tap different funds to meet local conditions in order to help local people in their 

communities. This increased flexibility will enable them to do that. 

Chairman Boehner. Mr. Miller? 

Mr. Miller. Thank you. Madame Secretary, has the money for this program been identified yet in 

the budget? 

Secretary Chao. Legislation has to be passed first, and then there will be appropriate monies and 

funding that will go along with it. 

Mr. Miller. So that would be when? 

Secretary Chao. Well, as soon as you are able to pass this bill. 

Mr. Miller. Do you envision that in this budget year? 

Secretary Chao. This will be fully funded. Yes, we certainly hope so, because there are people 

waiting for this money. 

Mr. Miller. But the President's budget doesn't make any room for this. 

Secretary Chao. It will have to be some kind of a supplemental. 
10

Mr. Miller. Okay. So we can envision seeing that $3.6 billion in a supplemental at some point? 

Secretary Chao. Yes, it will be discrete and above the $12 billion that we currently fund the 

workforce investment system with. 

Mr. Miller. As I understand this, we will use the existing profiling system in all states to try and 

identify those people who are most likely to exhaust their benefits.

Secretary Chao. Yes. 

Mr. Miller. And then they would be selected. 

Secretary Chao. We will work in conjunction with the states on defining what these criteria will 

be. But the principle and the goal are to target these harder-to-place workers, and to help them. 

Mr. Miller. Now, it's my understanding that there is no real correlation between the so-called 

profiling score and those individuals at risk for long-term unemployment. It really hasn't delivered 

a high level of reliability in terms of the people that it has identified. What actually happens to 

those individuals, and certainly not in high unemployment areas? Several evaluations have been 

done and it's not a one-to-one correlation. 

Secretary Chao. We have a very good idea through the workforce investment system. 

Mr. Miller. But that's not what the evaluations say. 

Secretary Chao. Well, the evaluations will be looking at workers who are about to exhaust their 

unemployment insurance benefits. And again, we need to flesh this out more in conjunction with 

the states. It would be looking at workers who are about to exhaust their extended unemployment 

insurance benefits, because there have been two extensions of unemployment insurance benefits 

already. 

Mr. Miller. I don't understand then. When is the worker selected and identified to take advantage 

of this program? They come in, they have lost their job, and they file for unemployment. 

Secretary Chao. Right. 

Mr. Miller. Are they identified at that stage? 

Secretary Chao. No, this will be separate although there is the capability to do that. The U.S. 

Department of Labor would work with the state and local boards. 

Mr. Miller. No, I understand that, but do I have to be in high likelihood of exhausting my benefits? 

Secretary Chao. No, you can use the workforce investment system if you are. 
11

Mr. Miller. I understand that. When does this $3,000 come into play? Is it the end of my term of 

unemployment? 

Secretary Chao. No, it comes right at the beginning. If you are qualified you will be notified. 

Mr. Miller. Pre-screened, profiled? 

Secretary Chao. You will be notified. Then you come in and you can get the $3,000. 

Mr. Miller. If I take the $3,000, and if I get a job, I can put the rest of the money into my account, 

and I can use that for whatever purposes I want, right? 

Secretary Chao. There will, of course, be accountability measurements. 

Mr. Miller. Right, I understand, I understand. We will assume everybody here is honest for a 

minute. 

 If I exhaust the $3,000, can I come back and take advantage of other unemployment 

programs? 

Secretary Chao. If you exhaust the $3,000, you can come back and use core services, but not the 

intensive services. Core services that are available within the One-Stop Career Centers are for 

example; resume writing services, other workshops, or counseling. 

Mr. Miller. So if the $3,000 doesn't work out then, I am precluded from the intensive training 

programs. 

Secretary Chao. Yes, because the rationale there is that you would have bought other services 

elsewhere.

Mr. Miller. But if it doesn't work out, and I still don't have a job, and I'm trying to feed my family, 

then I'm done. 

Secretary Chao. No, you can come back and use the workforce investment systems’ core services. 

There are still core services available. You can use the counselors, workshops, resume-writing 

services, work with the computers, do all that. That is still available. 

Mr. Miller. Alongside all the other people who still can't find work. 

Secretary Chao. It's interesting, but in this economy, 40 percent of workers find a new job within 

six to seven weeks. Our economy is churning constantly. 

Mr. Miller. Yes, except the number of people who are unemployed for longer periods of time 

continues to expand. 
12

Secretary Chao. And we're concerned about them, which is why we want to offer this reemployment service. 

Mr. Miller. Let me ask you this. Since the profiling really doesn't have that kind of correlation, or 

that kind of reliability, why aren't you helping people who we already know have exhausted their 

benefits? 

Secretary Chao. People who have exhausted their current benefits have had two extensions so far, 

so they have had their normal unemployment insurance benefits of 26 weeks, an extension of 13 

weeks, and an additional extension up to May. 

Mr. Miller. Yes. 

Secretary Chao. So that's more than a year of unemployment insurance benefits. 

Mr. Miller. So what's your theory, that that's enough for them? Excuse me; these people are 

without a job, Madame Secretary. It's not whether they have 26 weeks or 13 weeks of 

unemployment. 

Secretary Chao. What I'm saying is that we have a workforce investment system that they can 

access. There is still help available. And in fact, these services of finding a new job are still there. 

They are available to everyone and anyone who wants to find a new job. 

Mr. Miller. But let me just finish here, Mr. Chairman. As I understand the presentation of this 

program, this is a belief that this option, which sounds in many ways very positive, is best for those 

people who are most likely to exhaust their unemployment benefits, and we have a pool of one 

million people who have already exhausted their unemployment benefits. Why aren't we offering 

this to those people who are desperately in need of what this program offers to try to get them back 

on their feet and able to provide for their families? 

Secretary Chao. Well, within one of the provisions of this bill, which you are about to consider, it 

does go back and pick up people who have exhausted their unemployment insurance within the last 

three months, prior to enactment. 

Mr. Miller. I understand that. But if this bill becomes law in September, anybody who has 

exhausted their benefits before June is out of the pool? 

Secretary Chao. They can still access the $12 billion of workforce investment core services. 

Mr. Miller. Yes, they have been doing that for 26 weeks, and they haven't found a job. I 

understand, you know. 

Secretary Chao. Well, it's 26 weeks, plus 13 weeks, plus another five months. 

Mr. Miller. Most people are very diligent about trying to get back into the workforce. 
13

Chairman Boehner. The gentleman's time has expired. The Chair recognizes the gentleman from 

Texas, Mr. Johnson. 

Mr. Johnson. Thank you, Mr. Chairman. Thank you, Secretary Chao. I would like you to 

continue to explain what you were just trying to explain when you were cut off; 26 weeks is not the 

end of the road. Would you like to comment on that more fully? 

Secretary Chao. The President had an economic package in 2002. It was called the Job Security 

Program, and among its many provisions was an extension of an additional 13 weeks of 

unemployment insurance benefits. And on January 8th of this year, he asked for and received 

another extension to May of this year for unemployment insurance. So it's 26 weeks, plus 13 

weeks, and then another segment from December 28th of 2002 to May of 2003. 

Mr. Johnson. You got it. Nobody is left out in the cold. And in my visits with some of the local 

workforce boards, in Texas at least, they're doing a great job. 

 You state in your testimony that streamlined local boards would be able to focus more on 

strategic planning and policy development activities. Could you expand on what the Department's 

vision is for local boards, and how that planning will improve the delivery of services? 

Secretary Chao. Yes, thank you. Our goal is to make these services easily accessible and usable 

by the client. And so we hope to work with the workforce investment boards at both the state and 

local levels so that there would be greater clarification of the mission with the aim of streamlining 

the governing structure so that the clients will find it easier to use the many services that are 

available in the system. 

Mr. Johnson. And do you get good cooperation with the local authorities around the country? 

Secretary Chao. Some more so than others. But it's a great system, and it offers tremendous 

resources.

Mr. Johnson. No complaints from Texas, I hope. 

Secretary Chao. No. 

Mr. Johnson. You suggest improving upon individual training accounts by making them more 

flexible and responsive to individual needs. Could you elaborate on the changes necessary to 

accomplish that goal? 

Secretary Chao. Right now, the workforce investment system offers an array of training programs 

through a list of pre-approved providers. It's kind of like an HMO. If you want training, you have 

to go to one of these pre-approved contractors for training. And if they do not offer a training 

program that you want, you have to settle for something less than what you had wanted. 

 The whole goal of the personal re-employment accounts is to allow the individual to find 

the training program that he or she wants. Because we find that a number of major entities in 
14

workforce training, for example the community colleges, do not participate in the Workforce 

Investment Act system because of overly burdensome requirements. For a whole host of reasons, 

the community colleges, and vocational education schools have opted out of the training system 

and therefore many training programs are not available. 

 The personal re-employment accounts empower the individual, and give them a choice so 

that if they find a course that they like, even if it's not from a pre-approved provider within the 

workforce investment system, they can go and purchase the training that they want with that $3,000 

to get the job that they want. 

Mr. Johnson. Yes, that's great. You have also proposed creating youth challenge grants that 

would be used, I guess, to support activities in a non-school setting that lead to high academic 

achievement. 

 Could you provide examples of such activities, and would the grants be available to address 

the needs of in-school youth? 

Secretary Chao. Absolutely. We have a great deal of concern with giving young people hope and 

inspiration and a view for the future. And so these kinds of programs keep them on the right path, 

set them up with good counseling and people that they can consider mentors, and hopefully they 

will be on the path to getting better jobs and greater fulfillment. 

Mr. Johnson. And become great Americans. 

Secretary Chao. Yes. 

Mr. Johnson. Thank you. Thank you, Mr. Chairman. 

Chairman Boehner. Before I introduce the gentleman from Michigan, let me take a moment to 

congratulate our colleague from Texas, Sam Johnson, who, 30 years ago today, was released from 

prison camp in Vietnam. Sam served our country for 29 years in the Air Force, and it included 

some seven years as a prisoner of war. Thank you. 

[Applause.]

Mr. Johnson. Thank you, Mr. Chairman, and all of you. You know, we have the greatest nation in 

the world, and I would go back and do it again tomorrow, if I needed to. Thanks again. 

Chairman Boehner. Mr. Kildee you are recognized for five minutes. 

Mr. Kildee. I yield to Ms. Sanchez. 

Chairman Boehner. The gentlelady from California is recognized for five minutes. 
15

Ms. Sanchez. Thank you, Mr. Chairman. Good morning, Madame Secretary. Thank you for 

coming over and talking to us, in particular, about a new concept with respect to these personal 

accounts. I have a question for you.

Mr. Miller was talking about the fact that we don't do a very good job of profiling who is 

really going to be on unemployment longer, or out of a job longer than we thought, or maybe 

people that we thought were going to be out of a job get it real fast. Do you know what the statistics 

are on our ability to really guess ahead of time what the opportunities are for people who are 

unemployed? 

Secretary Chao. I don't have that information, but I can get it for you. 

Ms. Sanchez. Okay. I would like to see that information, please. 

Secretary Chao. Basically in the past year alone, we have invested $71 billion in unemployment 

insurance.

Ms. Sanchez. Yes. The reason I ask is because I have been here as we have been extending the 

unemployment benefits for families, including a very desperate situation many of my families 

found themselves in on December 28th, a couple of days after Christmas, when the leadership of 

this House failed to get an agreement on passing a new extension. 

 And so I was happy to see that we worked on that, and hopefully we will get another 

extension, because a lot of workers are out of work. And I think they are out of work not 

necessarily because they don't have the skills or training, but because we are not creating the jobs in 

this economy. 

 In fact, I was over the other day at my One-Stop, and I ran into a gentleman who has been 

unemployed for a year. He used to have a manufacturing job. That factory moved; the production 

is now done in China. He told me he has exhausted his unemployment benefits, he is using the 

core benefits, but he has no extension of benefits, and he has no financial stability in his family, 

because he has not been able to find a job. 

 Does this Administration plan on putting forward another extension if, in fact, we still have 

such high unemployment going on in our country in the next few months? 

Secretary Chao. I think it's important to note that while we all want to help people who are having 

a hard time out of a job, the best thing for them is to help them find a job. 

 And you are absolutely right, job creation is important. And that's why this President has 

focused a great deal on economic issues and on job creation. That's why we had the economic job 

security program of 2002. 

 The President has fought corporate fraud and abuse by asking for the passage of the 

Corporate Accountability Act. The President has also signed off on the Terrorism Assurance Act, 
16

which will create about 360,000 jobs by the Teamsters' own account. 

 We have asked for passage of the energy bill, which will also provide for increased job 

creation. And the President's economic growth package, as announced last month, will spark an 

environment through which new jobs can be created, and that includes helping small businesses, 

which is the engine of growth in our economy. 

Ms. Sanchez. Madame Secretary, just because I only have a limited amount of time, with all due 

respect, in 2001+ there were 1.7 million jobs lost in this economy. And just this past January, the 

month that we have just passed, we have had announcements from major employers that they plan 

to eliminate over 132,000 jobs. Just in this past month that's what we're hearing. So the economic 

stimulus package we know now is not working. 

But aside from that, we've got people who are out of work. What you are proposing is that, 

ahead of time, when people come to unemployment they're going to be profiled, and all of a sudden 

it will be decided if they are going to get unemployment and get the special account. 

 Isn't it true that if we're profiling them to be the hardest to place, are you telling me that 

$3,000 is the maximum that we now spend on hard-to-place people, or people who have problems 

getting a job, or who need extra training, or who have language barrier skills? Is $3,000 the 

maximum we ever spent on somebody who is one of those profiled? 

Secretary Chao. No, for TAA, in fact, it's a little bit higher than that. 

Ms. Sanchez. So it costs more than that? 

Secretary Chao. The $3,000 is on top of everything else that has been already invested in a 

worker.

Ms. Sanchez. What happens is some people get out earlier, they find a job faster, et cetera, and so 

you use the mean. And therefore, the people who are the hardest to place are actually the ones who 

are using more than $3,000 worth. 

 What you are doing to these people is saying ahead of time, “we don't think we are going to 

be able to help you find a job as fast as the mean of the group, or even the forward piece of the bell 

curve.” And so what would you say about the fact that you're only allowing $3,000 for the people 

who are actually the hardest to place? 

Secretary Chao. This is $3,000 on top of all the other services that are available to these 

individuals. So this is again, if I can emphasize, on top of all the services that are available. 

 The other thing that is worthwhile to mention is that we want to get these people back to 

work as quickly as possible, because the workplace changes. So the goal should be to get these 

people back to work, by giving them the training to get back to work. 
17

 And going back to your economic issue, again, you're absolutely right. This nation lost 1.7 

million jobs in 2001, and it was because of the attacks of September 11th. The stock market 

peaked in March of 2000. The manufacturing sector began to decline in August of 2000. 

 When this Administration entered office, we saw three quarters of negative growth. We 

were just coming out of it when the attacks of September 11th occurred, in which approximately 

1.7 million jobs were lost. And the average unemployment rate in the last decade was 5.7 percent, 

which is the unemployment rate of the last month. 

Chairman Boehner. Thank you. 

Mr. DeMint? 

Mr. DeMint. Thank you, Mr. Chairman. 

Madame Secretary. I want to thank you, and congratulate the Administration on looking at 

this problem in a different way, by maintaining the safety net for unemployed workers, and 

recognizing that skill development, wealth creation, and well-directed incentives are what we need 

to develop our workforce and help workers in this country. I believe the plan creates more choices 

for workers in their training, as you have outlined, and more competition between the services, 

which, again, I think will provide better training for workers. 

 As you see this program being implemented, have you thought through how we're going to 

track it at the federal level to determine the success of making sure folks aren't falling through the 

cracks? How we will determine, six months out, whether or not this new program is really 

working? 

Secretary Chao. We have. We have one of the best workforce investment systems in the world, 

and we will use the infrastructure of the One-Stop Career Centers to help us track, and also monitor 

success.

 Our success is defined very simply. Number one, we want to place more people in goodpaying jobs. And number two; we hope that more will be able to get off unemployment insurance, 

because they no longer need it, and that they will be able to get new jobs. 

Mr. DeMint. Thank you, Mr. Chairman. I yield back. 

Chairman Boehner. Thank you very much. 

Mr. Case? 

Mr. Case. Thank you, Mr. Chairman. 

Madame Secretary, I'm happy to hear of your alma mater, having spent a fair bit of time 

there, although probably before your time there. 
18

 I'm just trying to understand the math here. You have three figures basically, $3.6 billion 

proposed. You had a maximum of $3,000 intended to serve at least 1.2 million unemployed 

workers. The $3.6 billion, I think it says here, is in one year but intended to be spread over two 

years. Right? 

Secretary Chao. Right. 

Mr. Case. Okay. And I assume that since the states are, as I understand it, under no restrictions 

with the $3,000, they're going to max out, if they can. So the $3,000 is a given. Is that correct? 

The states can spend the $3,000? 

Secretary Chao. Yes, up to $3,000. 

Mr. Case. Right. But why wouldn't they spend the $3,000? 

Secretary Chao. We would not imagine that they would not. 

Mr. Case. Right, exactly. So is that how you got the math to get the states serving at least 1.2 

million people? Because I think that's the math, 1.2 million X $3,000 = $3.6 billion. 

Secretary Chao. Right. 

Mr. Case. Which came first, the $3.6 billion or the 1.2 million workers, or the $3,000? 

Secretary Chao. We were trying to find a number that would seem reasonable, and would offer 

some impetus for people to look at this account in an attractive fashion. So it had to be a large 

enough number. 

 And yet we also wanted it to be a responsible number, to be sufficient to respond to the 

needs of the individual. So $3,000 is approximately the amount that is spent for workers who 

access the workforce investment system, on average. There will be those who will, of course, use 

less; there will be others who will use more. But that's about, on average, how that came out. 

Mr. Case. So you started with the $3,000. 

Secretary Chao. Yes. 

Mr. Case. So you say the accounts are targeted at those newly unemployed workers, eligible for at 

least 20 weeks of UI. Do you estimate that figure at 1.2 million, or are there more than that amount 

that you're trying to serve? 

Secretary Chao. I'm less certain about that answer. I think that was a number that we thought 

would be, again, a responsive number to try to respond to a more conservative estimate of the 

number of people who will be availing themselves of this funding. 
19

Mr. Case. How many unemployed workers in our country right now? 

Secretary Chao. We have approximately 4 million. 

Mr. Case. Four million? What would be the reason the President wouldn't propose this for all 4 

million? 

Secretary Chao. I think for a number of reasons, primarily because all of them are currently able 

to access a $71 billion safety net program of unemployment insurance plus two extensions, plus the 

workforce investment system. So we, as a nation, invest about $71 billion in people who are out of 

work with unemployment insurance and with new training opportunities. 

 These personal re-employment accounts are given to those we think would access this 

program. We don't think all of those who are unemployed would necessarily access this program, 

because some of them are short-term unemployed. As I mentioned, 40 percent of workers in a very 

dynamic economy find new employment within about 6 or 7 weeks and become re-employed. 

 We had 52 million Americans last year, for example, who left their jobs either voluntarily 

or involuntarily. And we had 52 million Americans last year that found new jobs. So our economy 

is very vibrant, and it's churning all the time. The goal is to get people back to work at a job that 

they would like as quickly as possible, because otherwise, the workforce and the workplace just 

changes too rapidly. 

Mr. Case. So you feel that the 2.8 million that you don't anticipate being covered by the proposal 

are not in need of this same attention, or there are other means to assist them. 

Secretary Chao. They will have other resources available to them. 

Mr. Case. And what would happen for the people that become unemployed from this point 

forward, because we've got 4 million today. You’re anticipating that you are going to serve 1.2 

million of them through this program and we anticipate, don't we, that other Americans will 

become unemployed over the next two years. 

Secretary Chao. Yes, but people will be going off the roles, as well. It's very dynamic. It's 

changing; it's churning all the time. So there will be people going off, people coming on. And for 

people who qualify, this is a two-year program, they will have a year with which to use that money. 

Mr. Case. Thank you, Madame Secretary. 

Chairman Boehner. Thank you. 

Mr. Osborne? 

Mr. Osborne. Thank you for being here today Madame Secretary. 
20

I would just like to react briefly to a previous comment that the economic stimulus package 

was not working. As you pointed out, we have had what some have called “the perfect storm” with 

9/11, a downturn in the economy, Middle Eastern crisis, corporate scandals, and so on. According 

to Alan Greenspan, who I believe is reported to be somewhat unbiased and non-partisan, that had 

we not had the previous economic stimulus package, we would probably have a worse situation 

than we have today. 

Secretary Chao. Yes. 

Mr. Osborne. I just thought I would like to comment on that, and I would like to commend you on 

the job that you have done to this point under difficult circumstances. 

 Also, I would like to mention that in the current proposed economic stimulus package that I 

believe the personal re-employment accounts are part of, we often hear it characterized as a tax 

break for the rich. These accounts, certainly, are not for the wealthy. This $3.6 billion goes 

directly to the states for people who most need it, and I think sometimes these types of arguments 

are overlooked in the whole process. 

 I think this is a good idea. It certainly streamlines, as you have mentioned, the delivery 

services through the states, there is no redundancy of delivery systems, and I think it provides a 

powerful incentive. 

 I would like to digress briefly and just ask you a quick question. I am not totally familiar 

with youth councils. I probably should be, but I am not, and I wondered if you could comment on 

what their function is, and how this relates to the overall package. 

Secretary Chao. Youth councils are a wonderful concept. When I was president of the United 

Way of America, I had worked very hard to elicit more cooperation and participation of young 

people in United Way activities. We wanted young people to participate. 

 But under the Workforce Investment Act, which mandated the youth councils, it has not 

worked as well; they have been spotty. In some regions they have worked well, and in others they 

have not. 

 So, as we go forward with the reauthorization of the Workforce Investment Act, we would 

like to look at the youth councils and see whether they should be mandatory. If a local community 

wants to have a youth council, they certainly should have one. But if in other communities there is 

not the same interest, should the Federal Government direct and dictate that these local 

communities have youth councils? I think that's a valuable discussion that we want to have. 

Mr. Osborne. Thank you. Mr. Chairman, I yield back. 

Chairman Boehner. Thank you. 

Mr. Payne? 
21

Mr. Payne. Thank you very much. 

Ms. Secretary, it's good to see you. Certainly this is a new concept. I wish I had more of an 

opportunity to read it. It kind of came at us suddenly. But I wonder, there was some talk about 

profiling the recipients, and I wonder what goes into profiling an individual to assess them, and 

what type of assessment? 

 And secondly, what kind of accountability system do we have to follow whether what is 

being prescribed is working? We know that currently there are actually 8-million unemployed. I 

think 4 million might have been mentioned, but the number is actually, from my statistics, about 8 

million. 

 As we look at the profile of the accountability, and it's a $3,000 one-shot, it's good to have 

new money, but what about places where there is chronic unemployment, or the more difficult to 

place person, or an area that is really more economically devastated than another area; the level one 

shot, one amount, $3 million period per area. It seems that there is less emphasis on various regions 

of the country, and age groups of people, and problems that they may have. 

 So I just wonder how do we deal with those who will have a more difficult time, or a region 

that has a more difficult situation? 

Secretary Chao. Well, first of all, I hate to use the word “profiling,” but basically when new 

claimants come and file for unemployment insurance, they are assigned a counselor. They come 

into a One-Stop Career Center, or they call, or they go to the website. It's a very welcoming 

environment. It is not intimidating. We work very hard to make sure that that's the case. 

They come and with assistance they fill out a kind of a profile of what they do and how 

long they have been out of work; we already have that information, but it's an update, as well. And 

our initial contact with the various experts in the unemployment insurance system indicate that this 

process works well, in terms of giving us a good idea as to who needs what services. 

 So, there is an extensive process by which people are received into the unemployment 

insurance and workforce investment system. And then based on where they're likely to live, where 

they are working, whether it's for a particular company that might be impacted by trade, or 

whatever, all of this is taken into account. 

 The issue about harder to place, long-term unemployed is an issue that we are all concerned 

about. But that's what the whole system of unemployment insurance benefits and the workforce 

investment system address as well. 

 We will, of course, want to help with transitional assistance, but the larger issue is how do 

we train them so that they can get back into the workforce, and then how do we make the economic 

conditions such that there will be new job creation. 

 So I think we are in agreement. We want to help these hard-to-place individuals. And I 

have confidence that the workforce investment system in which we have invested so much time 
22

and resources is up to the task of finding these individuals and helping them with their training and 

job opportunities. It will give them added flexibility, because right now, the One-Stop Career 

Centers may not offer training courses that are available to a long-term displaced person. But if 

they are able to purchase the training course that they want, which is not currently available in the 

one-stop career center, I believe that's a win-win for the individual, and for us who care about the 

person, as well. 

Mr. Payne. Thank you very much. The accountability part is something that I am really concerned 

about.

Secretary Chao. We're concerned with accountability as well. I liked what Mr. Miller said, in that 

I think most people try to be honest, and we will go forward on that. But even so, if that is not the 

case, we do have the infrastructure. This is not a new program that is bereft of any infrastructure.

We are distributing and deploying this new funding stream through the workforce investment 

system. So there are counselors, there are current and existing performance standards that can be 

tapped to watch over the disbursement and usage of funds, as well. 

Mr. Payne. Thank you very much. 

Chairman Boehner. Thank you. 

Mr. Wilson? 

Mr. Wilson. Thank you, Mr. Chairman. 

Madame Secretary, I want to thank you for being here today. It's a great honor to be with 

you. I appreciate your public sector service and private sector service, particularly as President of 

United Way of America, and as a distinguished fellow with the Heritage Foundation. That means a 

lot to me, and I appreciate what you have done. 

 I also want to give you a first-hand report. In my service in Congress, I have had the 

opportunity to visit the One-Stop Career Centers in Columbia, South Carolina, which is an urban 

area, and also in Hampton County, South Carolina, which is very rural and disadvantaged. And it's 

just extraordinary, the opportunities that it provides to citizens. The equipment is just top-notch; 

people can come in and prepare resumes, and they can find jobs in their communities. 

 The directors have done a phenomenal job of recruiting career counselors. And they are 

just like cheerleaders. When the people come in, they are not victims. They are wonderfully treated 

like sports heroes, welcomed with enthusiasm, and given the respect they deserve. It has really 

worked in our state, particularly with welfare reform and has success in helping people get jobs and 

employment. 

 In line with that, in your statement, you suggest that the mandatory One-Stop partners 

should have a stronger role on the state boards to ensure their investment in and commitment to the 

integrated service delivery system. Could you please elaborate on how to provide the partner 
23

programs with additional incentives to participate in the system? 

Secretary Chao. I think it's very important for the WIB boards to really encompass the full array 

of stakeholders within their community. And because we want these clients, dislocated workers, to 

come in and get new jobs, we have to envelope more participation of employers, many of whom 

are businesses. 

 In the past, there may have been some hesitation in fully addressing relevant training 

opportunities. We want people to get relevant training, so they can get real live jobs. That entails 

understanding what employers and businesses want in their workforce skills requirements, and 

working with them to make sure that when we ask people to invest a year or two years of their time 

in new training opportunities, that they will be rewarded with the job that they want. So that means 

working with the employers more closely. 

Mr. Wilson. Well, that's successfully helped people to have fulfilling lifestyles in our state, and I 

appreciate it. 

 I have one final question. In your testimony, you state that the streamlined local boards 

would be able to focus more on strategic planning, and policy development activities. Could you 

please expand on the Department's visions for the local boards, and how the strategic planning by 

local business-led boards will improve the delivery systems at the local level? 

Secretary Chao. Right now, the role of the state boards appears rather ambiguous. They are such 

a wonderful resource, and there is more work that can be done. So we need to clarify and work 

with the local workforce investment boards, and the state workforce investment boards, so that they 

work together and we leverage all of our collective strengths to make sure that the person that 

walks through the door in the One-Stop Career Center will get a job. 

Mr. Wilson. Well, thank you for making a difference for the American worker. I yield the balance 

of my time. 

Secretary Chao. Thank you. 

Chairman Boehner. Thank you. 

Ms. Woolsey? 

Ms. Woolsey. Thank you very much, Mr. Chairman, and thank you, Madame Secretary. I feel like 

this is deja vu, because I remember the last time you were here. I believe the money we were 

talking about was for health care for the unemployed, and it felt like we were spending the same 

money over and over and over and it was not going to be spread. 

Secretary Chao. That's not true. 

Ms. Woolsey. Well, that's what I thought was happening. And I feel like the same thing is 

happening. We're talking about $3.6 billion that will be spent or be a bonus, and then it will be 
24

available for the people that come after. 

 I mean, there is going to be a limit to this, and I think we have to be realistic that it's going 

to take more than $3.6 billion. I think we have to look at the fact that $3,000 seems like a lot of 

money. My profession was human resources training, counseling, interviewing, and the whole nine 

yards. Three thousand dollars will not cover an individual who is in an industry where there will 

be no rehiring, where the worker has to leave. 

 For example, an engineer may decide, because there are no more jobs in that industry, to 

serve the community and, be better off for all of us, become an educator. Well, $3,000 isn't going 

to get that person there. If an autoworker needs to relocate, $3,000 is not going to relocate that 

family. And I just want to know if you really think $3,000 is going to go far, even though it's more 

than we have now, and it only starts with newly unemployed and we're leaving out those that are 

the real hard to employ, or else they would have jobs. 

Secretary Chao. I guess it's only in Washington that we look at $3.6 billion as chump change. I 

had mentioned before that we have invested $71 billion in our unemployed dislocated workers, 

which also includes $12 billion that we have invested in the Workforce Investment Act. 

 The recently passed Trade Adjustment Assistant Program adds another $17 billion in health 

care. And for dislocated workers who are eligible for trade adjustment assistance, health care will 

be taken care of as well.

Ms. Woolsey. Well, Madame Secretary, if you could let me ask a question about chump change, a 

$2 billion tax break is for the wealthiest of the wealthy when we have all of these people that are 

unemployed. That is not chump change. 

Secretary Chao. Well, I wanted to disabuse the idea that somehow $3,000 is insufficient. It is on 

top of the $71 billion that we already invest in people that we care about who are dislocated, as 

well as in the workforce investment system. So it's on top of what's already available, and on top 

of almost more than a year of benefits to those who are dislocated. 

Ms. Woolsey. Well, let me ask you a question about speaking of “on top of.” Will the states be 

allowed to supplant their existing programs, or will this be supplementary? 

Secretary Chao. No, this will be on top of what the states receive. 

Ms. Woolsey. And will we have it written, that they must use this as additional funding, and not 

use it for what they were going to do already? 

Secretary Chao. I don't think that will be a problem. 

Ms. Woolsey. Oh, it will be a problem. It must be clear. 

Secretary Chao. Well, this is additional funding for them, and we will work with the states. 
25

Ms. Woolsey. Well, yes, it's additional. But they can then not do what they were going to do 

already, and use that funding. 

Secretary Chao. Workforce Investment Act monies are already much decentralized. Basically, 

they go to the states, and we will certainly work with them on that. 

Ms. Woolsey. All right. Thank you very much. 

Chairman Boehner. Thank you. 

Mr. Porter, the author of the Personal Re-employment Accounts that we have before us. 

Mr. Porter. Thank you, Mr. Chairman, and thank you for the opportunity to be a part of this 

legislation. To the Secretary, thank you for being here today. 

 I come from one of the fastest-growing states, if not the fastest-growing state in the country, 

Nevada. And after the 9/11 catastrophe, we experienced probably as large an impact on our 

workforce as anyone in the country. At one time we had close to 100,000 men, women and 

families out of work, so we are pleased to work with you on this legislation. 

 Currently in Nevada, we have about 36,000 of our neighbors and friends that have 

exhausted their benefits, and of that about 19,000 will soon be losing their extended temporary 

benefits. This is a great start. It's a great start; it's a jump-start. 

If I could, just for a moment, I’d like to put a real face on this situation. I know we talked a 

lot about numbers today, and we talked about billions, and we talked about policy, and it's obvious 

that there are some opposed to this bill. But there is a young lady in Las Vegas that's a friend of 

mine that is a single mother with two children. She is currently unemployed, and she receives 

about $600 a month in unemployment benefits. So if we're to put a real face on this piece of 

legislation, this young woman now will have help with child and day care, so that she can get out 

and get a job. She will now have help with transportation, to make sure that she can get back to 

work.

 She wants to get back to work; she cannot survive on $600. It helps but it certainly is not 

enough. But this bill is a great jump-start for single moms, and moms and dads that are having 

challenges across the country. And yes, we could say it's not enough. Certainly we could always 

do more. But what a great start for this young woman in Las Vegas, Nevada, with two little kids 

that needs help, and needs it now. 

 I expect of course, as a freshman, that there is going to be lots of discussion and lots of 

debate. But I would encourage my colleagues on both sides of the aisle to think about this single 

mom in Las Vegas with two little kids that could use help today. I would encourage fast passage, 

because certainly it can be adjusted in the future. But I am excited about this for our communities 

and for our state. And thank you for being here and for your presentation. 
26

Secretary Chao. Mr. Chairman, thank you very much. I am really passionate about these Personal 

Re-employment Accounts. I think they are a good thing. They give people a lot of flexibility, a lot 

of choice. And we expand their array of choices. 

 So I want to make the offer to Members on both sides of the aisle, if I have not been great at 

explaining this, I apologize. I hope that if any of you want to learn more about it, I will be more 

than glad to have my staff come over and talk with you and assuage some of the concerns that 

people may have. It's a wonderful program. It will give people a great deal more choice and 

flexibility. 

Chairman Boehner. Thank you. 

Mr. Kildee? 

Mr. Kildee. Thank you, Mr. Chairman. Will this be new money, or will it be money that will be 

reprogrammed? 

Secretary Chao. No, it will be new money. 

Mr. Kildee. It will be new money. 

Secretary Chao. Yes. 

Mr. Kildee. Well, if we're going to do this, I want to help you, and help the President to get that 

new money. I will start off by helping get that new money by voting against his tax cut, so we will 

have some flexibility on that. Because if we give away another $650 billion, it's going to be very 

difficult to find new money, there is no question. 

Secretary Chao. Well, if it were not for the tax cut, I think the recession would have been even 

worse.

Mr. Kildee. Okay. Well, we will see. But I will give him about $650 billion that he can find this 

$3.6 billion out of. I voted against the last tax cut, and I feel morally comfortable in that. 

 Why is there no unemployment insurance extension in the Administration's budget? 

Secretary Chao. Unemployment insurance benefits have already been extended twice. The first 

extension was for 13 weeks, the second extension occurred on January 8th of this year, and it will 

last through May. So there are two extensions on top of the normal 26 weeks of unemployment 

insurance.

 The issue is not whether we want to extend unemployment insurance. We all want to help 

people with transitional assistance. But the issue is how do we get them back to work, because 

people want to go back to work, and it's much better for them to receive a paycheck rather than an 

unemployment check. That's why we want to talk about the Workforce Investment Act, and find 
27

ways to get people the training that they need to get the job that they want. 

Mr. Kildee. Well, I am very much impressed with the Workforce Investment Act; we have a very 

good One-Stop Center in Flint, and it works very, very well. I just visited it last week, again. 

 But under the President's father, we did four extensions of unemployment. And the 

extension that we had in January did not provide any additional weeks of benefits to more than one 

million workers who had run out of benefits and were still unemployed. Those people are hanging 

out there still. And it seems to me that we should have some responsibility, if not concern, for 

those people. 

Secretary Chao. Well, we do. One concern is we want to get them back to work. I think we all 

agree on that. 

Mr. Kildee. Yes. 

Secretary Chao. So the issue is not so much how many more extensions we can give, but how do 

we get these people back to work. 

 Secondly, we have this wonderful $12 billion workforce investment system, which is 

available for people's use, and we want to encourage them to go into the One-Stop Career Centers, 

which are re-employment centers, so that they can have other opportunities to get training, or to 

find new jobs. 

Mr. Kildee. You know, I get the most questions about when we’re going to extend unemployment 

compensation, particularly for those more than 1 million who had run out in January and were not 

reinstated with that extension. When I go out to Genesee Valley Mall, which is the biggest mall in 

my district, the entrepreneurs and managers keep asking, “When are you going to get this 

extension?” They were asking about it before January, now they're asking about it for those who 

did not get the extension. Because they know that the unemployment check, in itself, is a stimulus 

to the economy. If the workers of Flint don't have money, the mall can't sell. So that, in itself, is a 

great stimulus to the economy. 

 I like the idea of job training, and WIA does a good job. I like the idea of counseling and 

these various things, but in Flint, Michigan, we have almost completed the process of tearing down 

the Buick plant that my dad went to work for in 1916. He retired in 1950. 

 Many of the people who are laid off in Flint are skilled workers. You have millwrights, you 

have electricians, machine repair people. These are very skilled people. I was talking to an 

electrician the other day, and he is a very skilled electrician. 

 So you ask yourself what type of job training do you provide for these people who have 

gone through apprenticeship programs, and they are still laid off? And these are the type of people, 

in many parts of the country, that are laid off. How will the job training particularly help them?

 They might get, I don't want to have to use McDonald's the entire time, some lesser-skilled 
28

job. How will it help them? 

Secretary Chao. Well, this is a tough question. And it's a larger demographic and societal issue, 

because it basically speaks to the fact that our workforce and our workplace are changing. We are 

in a globalized economy. As much as we would want to hold on to a majority of these jobs, we may 

not be able to. Our economy has transformed from a manufacturing into a service industry into an 

information-based industry. 

 So this is of great concern. That's why we do want to place more emphasis on training. We 

also have to foster an environment in which job creation will occur, and that's why the President's 

economic growth package for helping small businesses could be one solution. All of these factors 

need to work together. 

Mr. Kildee. Thank you, Madame Secretary. Thank you very much. 

Chairman Boehner. Thank you. 

Mrs. Musgrave, no questions? 

Mr. Van Hollen. 

Mr. Van Hollen. Thank you, Mr. Chairman. Madame Secretary, as a new Member, I appreciate 

your being here. It's good to be here. 

 I think we would all agree that the best way to address the job shortage in this country is to 

get the economy moving again. We have been talking a lot today as if the issue is a job-retraining 

problem, but in fact, the current problem is largely the gap between the lack of demand for jobs, 

and the many people who are unemployed. I mean, isn't that right? 

Secretary Chao. I think retraining is a large part of that, because there is a skills gap in our 

country. And clearly, job creation is important. 

Mr. Van Hollen. Right. Maybe you could update these figures for me. I understand that in 

November 2002, the Department of Labor statistics showed that there were 2.8 million job 

openings in the United States. In other words, 2.8 million employers were looking for 2.8 million 

employees. But at the same time, you had about 8 million people looking for work. Are those 

figures still approximately true today? 

Secretary Chao. Not exactly. 

Mr. Van Hollen. Can you give the figures? 

Secretary Chao. I will give you the right figures. Basically, our economy is churning all the time. 

So any number taken in its static version is not indicative. Fifty two million Americans left their 

jobs last year, either voluntarily or involuntarily, and 52 million Americans found new jobs. 
29

 There is constant churning going on, and there is a skills gap, because there are employers 

today who are looking for workers, and they cannot find the workers with the requisite skills. So 

it's both parts, but I do agree with you, job creation is important. And that's why the President's 

economic growth program has gone into small businesses, and we have the Terrorism Insurance 

Bill.

Mr. Van Hollen. Right. What is the gap today? Do you have the figures for what the gap is today 

between the number of employers with jobs to fill, and how many people are looking for jobs? 

Secretary Chao. I can get that for you. You might think it's easy to get, but it's not because, our 

economy is so vibrant. It's so dynamic; it's churning all the time. 

Mr. Van Hollen. Right. 

Secretary Chao. But I will certainly try to get those figures. 

Mr. Van Hollen. With respect to the economic growth plan that the President has put forward, one 

of my colleagues from the other side of the aisle mentioned that Alan Greenspan was considered a 

non-partisan, neutral party. Could you respond to his comments yesterday, which indicated I think 

to most people, that he did not think that the President's economic plan would, in fact, spur growth 

in the short term, and in fact, also concluded that it would drive up interest rates in the long term? 

Could you respond to that? 

Secretary Chao. Yes.

Mr. Van Hollen. Do you agree with Alan Greenspan? 

Secretary Chao. I don't know what he said yesterday. I'm not aware of what he said. But he has 

said things in the past about the overall exuberance of the stock market, which led to the overcapacity that faces our economy now. And business investment is slow, because of over-capacity. 

Mr. Van Hollen. Right. 

Secretary Chao. And that was obviously a result of the over-indulgence of the stock market in the 

last decade. 

Mr. Van Hollen. Right. But do you agree with him that the large deficits in the out years would 

result in increases in interest rates? 

Secretary Chao. I don't know what he said. 

Mr. Van Hollen. Do you agree with that statement, that large increases in deficits will increase the 

interest rates? 

Secretary Chao. No, there is another point of view on that, as you well know. 
30

Mr. Van Hollen. Well, I was just interested in your personal point of view. 

Secretary Chao. Well, I don't think that's relevant. 

Mr. Van Hollen. Okay. Can I ask you one local question, Secretary Chao? 

Secretary Chao. Yes, of course. 

Mr. Van Hollen. This relates to the transit subsidy provided by the Federal Government. I think 

everyone in the audience knows that we face a severe congestion issue in this region. As someone 

who represents an area in suburban Maryland, I wondered if the Department of Labor had 

considered increasing the transit subsidy to the $100 a month level that is allowed by the Federal 

Government. 

Secretary Chao. We have. I'm glad you asked that question, because it's one that I have been 

trying to put to certain employees of the Department of Labor. 

 We, in fact, have increased the transit subsidy to everyone outside the one particular 

bargaining unit. And there seems to be the inability to come to any agreement with this very small 

bargaining unit. So we have given the transit subsidy to people outside the bargaining unit, and 

they have accepted. We have 17,500 employees, and the particular bargaining unit that we're 

talking about is less than 1,000 people. We're quite perplexed. 

Mr. Van Hollen. Well, that's good to know. Is it $100 now? Have you gone to $100? 

Secretary Chao. I believe so, yes, but I can confirm that for you. 

Mr. Van Hollen. Okay, thank you. 

 Thank you, Mr. Chairman. 

Chairman Boehner. Thank you. Madame Secretary, I know you need to leave at 12:00. It looks 

to me like it's one minute to 12:00. 

Mr. Andrews, can you ask questions in 30 seconds? 

Mr. Andrews. I'm sure of it. 

 Madame Secretary, welcome back. It's great to have you here. 

Secretary Chao. Thank you. 

Mr. Andrews. I hope that you would convey to Senator McConnell our best wishes for his speedy 

recovery.
31

Secretary Chao. Thank you. 

Mr. Andrews. I wanted to ask you about the funding available under this new idea, which is up to 

$3,000 per person. We have had some discussion this morning as to whether that is adequate. I 

think it probably isn't, in a lot of cases, but the point I want to get to is whether the $3,000 is really 

there.

This program allocates $3.6 billion for two fiscal years; that's the plan if it makes it into the 

budget, which it hasn't yet. In the last two years, in 2001 and 2002, 7.3 million people exhausted 

their unemployment benefits. Now, if we had $3.6 billion for those 7.3 million people, each person 

would get a benefit of about $500, not $3,000. How much are people really going to get under this 

program? 

Secretary Chao. I'm sorry, I didn't answer this question in the past, and I think it does lead to some 

confusion. Of the 8 million that are unemployed, from experience we only expect there to be about 

50 percent who will access unemployment insurance. Not everyone does because, again, these 

numbers are very dynamic. So a person can be out of the workforce for a very short period of time. 

Mr. Andrews. No, but the number I gave you are people who accessed unemployment benefits and 

exhausted their unemployment benefits. So these are people that were in the system. 

Secretary Chao. Okay, what was the question? I'm sorry. 

Mr. Andrews. There are 7.3 million people who exhausted their benefits in the last two years. 

Secretary Chao. But this is not a stagnant pool. It's very dynamic. 

Mr. Andrews. You think fewer people will exhaust their benefits in the next two years? 

Secretary Chao. We hope so, sure. 

Mr. Andrews. Well, if it were half as many, you would have, if my math is right, $1,000 available 

per person, not $3,000. 

Secretary Chao. And the question is? 

Mr. Andrews. My question is why should we conclude that there is $3,000 per person available 

when the numbers don't add up? $3.6 billion is wholly insufficient to cover the proposal that you're 

making. 

Secretary Chao. Well, it's $3.6 billion. 

Mr. Andrews. Over two years, right? 

Secretary Chao. No, it's every year. 
32

Mr. Andrews. Oh, every year. 

Secretary Chao. Yes, yes.

Mr. Andrews. Well, if it were $3.6 billion, it's $7.2 billion over two years. I think that would still 

only offer $1,000 per person for people who exhausted their benefits. 

Secretary Chao. But not everybody will access it.

Mr. Andrews. But doesn't that mean that to get $3,000, two-thirds of the people who exhausted 

their benefits wouldn't get this program at all, right? 

Secretary Chao. Some of them may not access it; some of them will have other services that are 

available to them. We expect that probably 1.2 million will access the program, and $3,000 is 

about average. 

Mr. Andrews. I would not question for one moment the intention of the Secretary or the program, 

but I think the Administration has its usual “loaves and fishes” problem here. It occurred when you 

came in and talked about unemployment benefit extensions and health benefits, and had 

insufficient dollars to cover the health benefits, which never really materialized, anyway, for 

anyone.

 And then it happened again in welfare reform, when the Administration was talking about 

childcare money when there were too many recipients and not enough dollars. The Administration, 

with all due respect, has a penchant for spending the same money over and over and over again and 

making everyone the same promise. 

 There is no way that even a majority of people who exhaust their unemployment benefits 

would ever get anything close to a $3,000 allocation under this program. The money isn't there, 

unless I'm missing something. 

Secretary Chao. Mr. Andrews, with all due respect, I disagree. We already have, as I mentioned, 

a $71 billion program to help dislocated workers. 

Mr. Andrews. Which doesn’t include this, though? This is above and beyond that, right? 

Secretary Chao. You're right. And on top of that, we're adding $3.6 billion. 

Mr. Andrews. Right. 

Secretary Chao. And on top of that, there is a TAA component that adds another $17 billion. 

Mr. Andrews. I appreciate that. 

Secretary Chao. There is a wide array of services available. 
33

Mr. Andrews. My concern is that my constituents, when they hear this proposal, are going to 

think, “Great. I can get a $3,000 voucher where I can go out”, if we're allowed to use that word, 

“where I can go out and buy customized job training services, or get help with child care or 

transportation.” And the reality is the majority of them aren't. It's really a false premise. 

The question I'm going to ask you and you can submit it for the record, what would it really 

cost to guarantee each person who exhausts his or her unemployment benefits a $3,000 voucher? 

What would that cost? And what's the difference between what you propose and what that number 

would be? 

Secretary Chao. I'm not particularly partial to assigning it any one title. But you do bring up an 

important point, and that is there are some training programs that are not available to the One-Stop 

Career Centers. And if a person wanted to access some new training programs in a community 

college, they can use that $3,000 and access the training program that they want to get the job that 

they want. 

I'm not quite sure I understand your question, but I will be more than glad to submit it for 

the record, as requested. 

(NOTE: This item was not submitted prior to the official printing of the hearing transcript. 

However, the item will be maintained upon its submission and available for inspection in the 

Majority office of the Committee on Education and the Workforce.)

 Mr. Andrews. Very succinctly, my question is I don't know how you can do $8 billion worth of 

good with $3.6 billion worth of money. 

Secretary Chao. It can be done because not everyone will access the funding, according to our 

past experience and historical records. 

Chairman Boehner. Thank you very much. 

Mr. Andrews. Well, I would again say that you have a “loaves and fishes” problem here. 

Chairman Boehner. Those 30 seconds became 6 minutes, and I guess that's why we don't have an 

opportunity for everybody to ask questions. 

 But thank you, again, Madame Secretary, we really appreciate you being here, and staying 

for a few extra minutes with us. 

Secretary Chao. Thank you very much for the opportunity to be with you all. Thank you. 

Chairman Boehner. Thank you. 

 We will ask the second panel to come forward. As soon as they are ready, we will begin 

the second panel. 
34

Mr. McKeon. [Presiding]. We are happy to welcome our second panel here today. We have Mr. 

Mayfield, a constituent of one of our Members. We would like to have Mr. Johnson introduce you 

at this time. 

Mr. Johnson. Thank you, Mr. Chairman. 

I want to welcome Ken Mayfield, who has been a County Commissioner in Dallas County, 

which is, as you know, the center of the universe of course, being in Texas. He has recently 

become the President of the National Association of Counties. And in that prestigious job, I think, 

he is a welcome witness for this Committee. We welcome you, Ken, and thank you for being here. 

Mr. McKeon. Thank you. Our second witness is Dr. Lawrence Mishel, President of the Economic 

Policy Institute. His areas of expertise include income distribution and poverty, labor markets, 

wages, unions, and collective bargaining. Dr. Mishel earned his doctorate degree in economics 

from the University of Wisconsin. 

 We appreciate both of you being here. You know the ground rules about five minutes and 

how the lights work. 

 We will hear first from Mr. Mayfield, and then Dr. Mishel. Commissioner? 

STATEMENT OF KENNETH MAYFIELD, PRESIDENT, NATIONAL 

ASSOCIATION OF COUNTIES, WASHINGTON, D.C.

Thank you, Mr. McKeon and Mr. Miller, and of course, my good friend Sam Johnson from 

Texas, and other distinguished Members of this Committee. My name is Ken Mayfield; I am the 

President of the National Association of Counties and a County Commissioner from Dallas County, 

Texas.

 I am deeply honored to have been asked to testify on H.R. 444 and to offer some comments 

on the reauthorization of the Workforce Investment Act. Mr. Chairman, I would ask that my 

written testimony, which was provided to you earlier this week, be made part of the record. 

 As you know, every county in America is involved in a local workforce program. We 

believe that these programs, as established under the Workforce Investment Act of 1998 have been 

responding to today's workforce crisis effectively and responsively. 

 NACO shares your concern for the ongoing workforce crisis. Quite simply put, too many 

people are unemployed, and we must help these people return to work as quickly as possible. The 

decision by this Committee to consider legislation that would enhance the existing workforce 

system is a vote of confidence in the system, and a vote of confidence that we share with you. 

 NACO believes that H.R. 444 is a very important and innovative approach for our 

unemployment problems, and will enable workforce programs to address the problems of long-
35

term and structural unemployment. Therefore, we wish to offer our overall support for this bill, 

and we urge you to adopt it with some modification. 

 We support the efforts to make personal re-employment accounts as part of the workforce 

development system, limit substantially the amount of funds that may be used at the state and local 

levels for administrative purposes, institute sufficient flexibility so that individuals may step 

outside the parameters established through individual training accounts and utilize different types 

of services and make these funds directly available to recipients. 

 However, we believe that some modifications would be helpful, which include, number 

one, each individual who receives a personal re-employment account should be required to 

establish a personal re-employment plan at the local One-Stop system office to which they are 

referred.

 Two, as a condition of receiving administrative dollars to operate this program, local 

workforce investment areas should be required to amend their plans to reflect the kinds of services 

they will provide to individuals receiving personal re-employment accounts. 

 And three, local workforce investment areas should be permitted to supplement PRA funds 

with Workforce Investment Act funds to ensure their participants can purchase the types of training 

and employment assistance they need to achieve the outcomes expressed in their personal reemployment plan. 

 Four, local One-Stop systems should be permitted to charge for any services that the local 

One-Stop provides, other than the personal re-employment plan, the cost of which should be 

covered by administrative funds. 

 Individuals who lose their jobs within the first year of employment, through no fault of their 

own, should be permitted to receive Workforce Investment Act intensive and training services. 

Funds appropriated for personal re-employment accounts should be in addition to those funds 

appropriated for other Workforce Investment Act activities. 

 The Back to Work Incentive Act of 2003 should not become a vehicle by which to 

reauthorize the Workforce Investment Act, except as is necessary to establish this program, or to 

reform the Wagner-Peyser Act, the employment service, or the unemployment insurance system. 

 We also urge you to clarify in your committee report that the term “local area” referenced in 

H.R. 444 is, in fact, a local workforce investment area, as designated under section 116 of the 

Workforce Investment Act, and that the One-Stop delivery system referenced in H.R. 444 is the 

same as the One-Stop delivery systems delineated in section 121 of the Act. 

 I would also like to take this opportunity to outline for you some of our most significant 

concerns regarding reauthorization of the Workforce Investment Act. We believe that the local 

public/private partnership, as established under the Workforce Investment Act, should be 

maintained. The federal/state/local relationship established by the Workforce Investment Act 
36

should be maintained. 

 Appointment authority for the local workforce investment boards must remain with chief 

local elected officials. Local One-Stop centers should remain under the guidance and jurisdiction 

of the local chief elected officials and local workforce investment boards as provided for in current 

law, and the percentage of private sector representatives of the local workforce investment boards 

should be increased in the number and percentage of public sector representatives, especially the 

mandatory partners, should be reduced substantially, or eliminated. 

 In conclusion, the National Association of Counties believes strongly that workforce 

development programs represent an important tool for federal, state, and local governments to 

respond to the continuing employment crisis. 

 While no workforce program can ensure that every American who wishes to work can 

work, that can only be ensured by a robust economy with substantial job creation capability, we do 

believe that the current system is well positioned to address the needs of America's unemployed 

workers and businesses. 

 We believe that the Back to Work Incentive Act, and the Workforce Investment Act, of 

which it will become a part, if enacted into law, represents important steps towards helping all 

Americans find work. We therefore welcome this proposal and endorse it, with the modifications 

recommended. 

STATEMENT OF KENNETH MAYFIELD, PRESIDENT, NATIONAL 

ASSOCIATION OF COUNTIES, WASHINGTON, D.C. – SEE APPENDIX C 

Mr. McKeon. Thank you very much. 

Dr. Mishel? 

STATEMENT OF DR. LAWRENCE MISHEL, PRESIDENT, ECONOMIC 

POLICY INSTITUTE, WASHINGTON, D.C. 

Thank you very much, and I appreciate the Committee inviting me to testify on these very 

important issues. 

 I am going to make three points today. One is that our labor market is troubled. There is, 

essentially, a jobs and income crisis, in my view. Two, the plan that President Bush has proposed 

will not be very effective at short-term job creation, and will actually destroy jobs in the long run. 

Three, personal re-employment accounts are far from the answer that the unemployed workers in 

our country need at this point. 
37

 Let's turn to the labor market. As you know, the unemployment rate has risen almost two 

percentage points over the last two years, and we have lost more than 2 million jobs, 2 million 

private sector jobs, since unemployment started rising in October of 2000. 

 We also know that household incomes fell in 2001, nearly across the board, and that in 

2002, when we have the numbers later this year, I'm sure we will see that household incomes have 

continued to fall, as I believe they probably are this month, as well. 

 I wanted to point out two things that you may not know about the current labor market 

situation. One is a reference to Graph 1 in the testimony, which shows what is the job loss in this 

recession compared to prior recessions, when you're 28 months into a recession. And you will note 

that this recession we have lost 1.8 percent of our private sector jobs after being in a recession 28 

months. And this is a greater loss of jobs than even we had in the early 1990s, the early/mid-1980s 

recession, and the 1970s recession. 

 A second thing I want to point out about the current labor market troubles is that this does 

not only affect those who are unemployed, it also affects those who are employed, because we are 

now seeing that wages are falling behind inflation, which we now show on graph two. 

 Graph 2 has two bars for each type of worker: low wage, middle wage, and high wage 

workers. And you will see that in 2001, there is very strong wage growth, faster than inflation, 

across the board. But during 2002, we see that wages actually grew less than inflation for nearly 

every type of worker. 

 This is very problematic, in my view, and calls for attention to how to create jobs and lower 

unemployment quickly, which brings me to the President's plan, which is labeled a jobs and growth 

plan, especially for the long term. 

 I am also proud to share with you a statement that was signed this week by 10 Nobel Prize 

winners, many prominent economists, and 450 economists in total that was released on Monday.

And that statement noted that the tax cut plan proposed by President Bush is not the answer.

However one views the specifics of the plan, there is wide agreement that its purpose is a 

permanent change in the tax structure, and not the creation of jobs and growth in the near term. 

The permanent dividend tax cut, in particular, is not credible as a short-term stimulus. 

 But one need not listen to 10 Nobel Prize winners to know that one can actually look at the 

actual reports of the current Council of Economic Advisors to know that this is a failed plan. Their 

own analysis, which I show in Chart 3, shows that they claim that the plan will create 1.4 million 

jobs over the next two years, but that after five years, it only has created 700,000 jobs. That means, 

with simple mathematics, that over the last three years of this five-year period 233,000 jobs a year 

are lost. That means, in the long run, we're actually losing jobs. 

 If you look at the projections of a standard forecaster, Mark Zandi of Economy.com, who 

the Wall Street Journal just recently referred to as one of the smartest, brightest observers of the 

economic scene, he estimates that by the year 2013, we will have 750,000 fewer jobs than if the 
38

Bush plan had never been legislated. There are many other forecasters who would agree. 

 In the short run, there are some jobs, but it's a lot of money to spend, $674 billion, to create 

some jobs in the next year or two, when all we need to do is to spend some money on some 

temporary tax and spending measures to create jobs. I might add that all of the plans offered by the 

Democrats in both the Senate and the House spend less money overall but spend more money up 

front and create a lot more jobs up front. 

 Let me turn to the PRAs. My fear is that the personal re-employment accounts are more 

about a sense that somehow the unemployed are not really looking hard enough for work and that 

we need to discipline them by giving them the motivation to get re-employment bonuses. All of 

the research that shows that they get re-employed shows that they get re-employed one week 

earlier. That's not really a magnificent achievement, in my view. What workers want most are jobs, 

then they would like income support if they don't have a job, and they would like training with 

income support if they are unemployed. 

 As I have said, the President's plan does not really create jobs. We have heard today that 

there is no offer of extended unemployment insurance benefits, and the training is actually worse 

under the personal re-employment accounts, than I think under the Workforce Investment Act. 

 If I just may conclude, it's my fear that this proposal is really about curtailing costs, because 

you're asking people to decide early in their unemployment, are they going to accept this personal 

re-employment account so they can get a bonus after 13 weeks. If you accept this, you get $3,000 

to spend. But the Secretary earlier said that $3,000 is what, on average, people use. This is a 

maximum in this plan. Okay. Then if you accept this, and you fail to find work, you're not eligible 

for the intensive services available in the workforce development system. And then if you're 

unemployed after 26 weeks, of course, you're not going to get any extended benefits later this year, 

so you're just out of luck. 

 And so I fear that this is not really going to be that useful to the unemployed. And thank 

you very much. 

STATEMENT OF DR. LAWRENCE MISHEL, PRESIDENT, ECONOMIC 

POLICY INSTITUTE, WASHINGTON, D.C. – SEE APPENDIX D 

Mr. McKeon. Thank you.

Mr. Miller? 

Mr. Miller. Thank you very much. If I might, Mr. Mayfield, let me ask you a question. On page 

four of your statement, item number three, you say, “When appropriate, local workforce investment 

areas should be permitted to add crucial Workforce Investment Act funds to an individual's 

personal re-employment account to ensure that they can purchase the types of training assistance 

they need to achieve the outcome expressed in their plan.” 
39

 If I read that correctly, you would augment this plan, maybe, with other services that are 

available through the Workforce Investment Act to try to sort of ensure that you get the results you 

want with the personal re-employment account. Is that a fair statement of what you're suggesting 

there? 

Mr. Mayfield. Yes, that's a fair statement. We do think that the bill should be modified in some 

cases. If you're not under the PRA, as it is now, they may spend up to $5,000 or $6,000 on 

individuals to find them work and be successful. 

 We think it is reasonable to give the flexibility to the local boards and local individuals who 

will implement it, that if that $3,000 has been exhausted, and the individual is participating and 

doing everything and getting the training, that there could be other intensive training that would be 

available to them under the WIA part that they ought to be able to take advantage of if that board 

decides that's correct. 

Mr. Miller. Well, from my point of view, that's a very encouraging statement, because I think it 

more properly reflects what's really happening with unemployed people, if you try to determine 

what is the best avenue to get them back to work, which may even be a new job career ladder in 

some other industry or place. 

 But that kind of flexibility, so you can gather those resources, and try to ensure a positive 

outcome, other than being limited by the $3,000, maybe for the want of another $500 in services or 

something else, the plan falls apart. 

Mr. Mayfield. Yes, we think these will be very limited areas. 

Mr. Miller. I understand. 

Mr. Mayfield. Let me tell you, we think the $3,000 and the PRA is a great start. It's very 

innovative, and I think it's a good use of those additional funds to get targeted individuals, looking 

at the industry that they came from, their employment background, et cetera, get them back to work 

very quickly. But there will be some situations, I think, that you can anticipate, that there might be 

other resources that would be needed after the exhaustion of that $3,000 in that particular case. 

Mr. Miller. I think that's an important suggestion for the plan. The other concern I have on that 

point is, as I understand it, the current negotiations in the end of the year appropriations bill here, 

the Workforce Investment Act is about to take a $600 million hit. And so I just have some 

concerns whether or not we are putting up this account at the front end, but at the other end on this 

program that got all the accolades today, the Workforce Investment, we're whacking the budget 

there fairly substantially at a time of high need. 

Mr. Mayfield. Well, obviously, it's still a large increase, $1.2 billion if you subtract that $600 

million from this fiscal year, if that, in fact, is done. And obviously, we think there can be some 

economies done and tinkering with the local boards, and getting rid of the public sector people and 

getting more input from private sector. Because really, the public sector, other than the chief local 
40

elected official, doesn't have much power, and doesn't offer as much as the private sector, who have 

been out there creating jobs, who employ people, and who can give real-world ideas to how to get 

these individuals back to work. 

Mr. Miller. Do you have an opinion or suggestion of what you anticipate when this current 

extension runs out in May, is that correct? What's your anticipation of whether or not there should 

be another extension for those people who are about to exhaust? 

Mr. Mayfield. I'm not prepared to give an opinion on that. 

Mr. Miller. Well, let me ask you this. What's the situation you have with people who have run out 

of unemployment, versus people who still have the financial underpinnings of unemployment 

insurance? 

What's the difference in your caseload, and your success ratios? Is there a difference? I 

don't know, but is there a difference between people who have exhausted their unemployment 

benefits, as opposed to those who can go through the work investment programs while they have 

some financial underpinnings? 

Mr. Mayfield. Well, those individuals who have exhausted their unemployment benefits can still 

take advantage of the training through the local One-Stop. So I don't know if there is what you're 

talking about, the experience or correlation on that. I'm not prepared to answer that. 

Mr. Miller. Thank you. 

Mr. McKeon. Thank you. 

Mr. Wilson? 

Mr. Wilson. Thank you, Mr. Chairman. Commissioner Mayfield, it's an honor to have you here 

with us. I never had the honor of being a county councilman, commissioner, or municipal official, 

but I have always respected the fact that you are on the front line. As an elected official, you are 

with the people daily, hourly, by the minute. So I appreciate your statement about real world 

experience.

 I want to commend the county councils, because it's your jurisdiction for the One-Stop 

Career Centers that have been so successful in encouraging people to find employment, by really 

being so helpful and enthusiastic. 

 In particular, I also appreciate the suggestions you have for the modifications for the PRA, 

the personal re-employment accounts. And I think that, as you point out, there should be a plan 

adopted. I think that makes sense. That's just real world, again. This is not make-believe, it's just 

helpful, and I hope that that can be done. 

 Of course, the flexibility and latitude, I think, is so crucial. Every person, every 

community, is different, and we respect that. And that dreaded word “mandates.” We don't want 
41

mandates, we want you and then the people you work with to administer the program. 

 And I also think it works so well with the success of the welfare reform program that we 

will be voting on tomorrow. And there was prognostication that that plan would be disastrous, but 

it has had the opposite effect. And so I want to thank you for persisting. 

 In regard to the public/private partnerships, could you review the experience Dallas has had 

for us, and in particular, you said to add more on the private side. Could you tell us about that? 

Mr. Mayfield. Yes, Dallas has been very successful, and it's because of the energy and the 

contributions that the private sector individuals have brought to the table. And that's what we want 

to encourage, and make sure that we have more of, because sometimes the public sector members 

of the committee want to delay certain things. 

 The private sector is used to implementing things, seeing things work, demanding 

accountability, et cetera, and so that's what we want to keep up. And we think it would be 

beneficial if we just reduced the committee by the public sector individuals that are on it, and 

perhaps added some more private sector individuals to replace them. 

Mr. Wilson. Well, all of us were always impressed by the enthusiasm of Texans, particularly 

people from Dallas. And so we appreciate your service. 

 I have no further questions. 

Mr. Mayfield. But let me just say that the National Association of Counties stands ready as a 

resource, particularly on how any of these programs play out in the counties across the United 

States. And we are very thankful to work with the Department of Labor, and the staff of this 

Committee and this Committee to, hopefully, bring you some good insight and some good 

recommendations to make a better bill to get a better result in the work place. 

Mr. Wilson. Thank you. 

Mr. McKeon. Thank you. 

Mr. Kildee. 

Mr. Kildee. Thank you, Mr. Chairman. 

Dr. Mishel, it's always good to have you before our Committee. 

Dr. Mishel. Thank you. 

Mr. Kildee. Let me ask you this question. To what extent do you think the Administration 

underestimates the stimulus of that unemployment compensation? 
42

Dr. Mishel. Well, apparently, they must underestimate it a lot, because they're not really very 

prone to providing much. So it turns out that the projections I mentioned earlier from 

Economy.com, a very mainstream forecasting firm, show that the most stimulating aspect of all the 

different plans that have been proposed is actually providing extended UI benefits. 

 And the reason is easy to understand. Money you give to someone in those circumstances, 

we know is going to be spent. And so that will help the economy, because the problem we have in 

the economy, I think as you understand, is 74 percent of our industrial capacity is used. We're not 

using the capacity we have now to produce goods and services. What we need are more customers. 

We don't need more supply-side; we need more demand, more customers. 

 You get more customers only a few ways. You give money to some people who are going 

to spend it, or the government actually spends money. The government can spend money in ways 

that have been suggested, such as giving fiscal relief to the states, or give money to renovate and 

repair schools, infrastructure, or you give money to people who are going to spend it, which means, 

necessarily, that you have to have the tax cuts targeted, distributionally, at low and middle-income 

families. 

 Now, of course, that's not what we see with the President's plan, but it is possible to have a 

one-time tax cut given to people who are going to spend it. Senator Daschle proposes giving $300 

per adult and $300 for the first two children. On the House side, I think some are saying that we 

should give a certain percentage of wages earned last year, money that could be given to people in 

April.

 So it's very possible to give money to people who spend, and I think that's what we really 

need to get some jobs created in this calendar year. 

Mr. Kildee. When the Secretary was here, I mentioned Genesee Valley Mall, one of the big malls 

in my district. I can recall 10 or 12 years ago, when the auto industry was going through a great 

transition, for the first time I had had two meetings with the entrepreneurs and managers at 

Genesee Valley Mall within about eight months' time. 

 The individuals at one meeting were begging me to vote against the increase in minimum 

wage. We had breakfast, and I told them very politely, that I was going to vote for it. But they 

were telling me, “Please, it will hurt our business if you vote for the minimum wage.” 

 About eight months later, they called me out there for another breakfast meeting, saying, 

“When are you going to appropriate the money for the TAA or TRA?” Because they knew that the 

autoworkers needed that TAA and TRA. And once they got the money, they would be out there 

spending the money. And that is a stimulus there is no question. 

 It's a stimulus that keeps going. Because once their shelves became a little empty, they 

place orders at the various companies, and they in turn, keep people employed. So it keeps going 

on and on, and I really believe that the White House is, as you say, greatly underestimating, at least 

by their actions, the stimulus effect of unemployment compensation. 
43

Dr. Mishel. In fact, it's almost as if they designed a plan that was to be ineffective. I was really 

surprised about it. I had a great day on Monday spending time with these Nobel laureates, talking 

about the Bush economic plan. And one of the ones from the University of California Berkeley, 

Daniel McFadden, said that it was an anti-stimulatory plan. It was like a weapon of mass 

destruction aimed at the middle class. Now, that's not the usual kind of language you get from 

academics. It's the students at Berkeley who are known to be radicals, not the faculty by the way. 

 Professor Franco Modigliani, who laid the foundation for modern economics, an 85-yearold man, flew down against doctor's orders because he said he wanted to protest the Bush tax cut, 

and said that the only reason to do this would be if you wanted to enrich the very rich. 

 I find policy people in Washington don't use language like that. But it's surprising; I have 

never seen any statement on economics signed by 10 Nobel laureates in economics. They are 

really unified that this is not going to increase investment in jobs in the long run. And Alan 

Greenspan, yesterday, agreed with them, saying that if you want to do a dividend tax cut, maybe 

that's a good idea, but it's got to be revenue-neutral. It shouldn't lead to chronic deficits far off into 

the future. 

 And so he's echoing, in a sense, what I think these very brilliant economists have already 

said. If you wanted to design something that wasn't going to have an effect in the long run, you 

would do the dividend tax cut without offsetting revenues. You can't have a long-run effect from 

the other part of the tax cut, which is basically advancing personal income tax cuts that are already 

scheduled. I mean, how can advancing something that's already scheduled have a big effect 10 

years from now? 

 Thank you very much. 

Mr. Kildee. Thank you. 

Mr. McKeon. Thank you. I am sure when we get to the President's economic growth plan, we will 

have hearings, and we will spend a lot of time discussing it. Today we are talking about the 

personal responsibility plan that has been presented. 

 You know, it's interesting to me listening to this discussion today, I sometimes wonder if 

I'm on a different planet. We have unemployed people that need help. The President has proposed 

$3.6 billion worth of help, and we're beating it up. Maybe it's not enough. But why don't we move 

forward, and then maybe talk about more? Why don't we move forward on the plan to help, and 

get it to the people that need it the most? 

 Commissioner, the Department's budget proposes base re-allotment; we will talk about 

WIA now. They talk about this base re-allotment of the WIA funds among states on unexpended 

balances. However, we regularly hear from rural areas that these balances do not reflect the actual 

level of funds available to states and local areas, as many times these funds are often obligated to 

training and other uses. We are trying to figure out how we grapple with that. 
44

 One of the reasons they are saying they want to cut is because they haven't spent the money 

that we have already given them. And when we talk to them, they say, “Well, we have obligated 

the funds, but it's the accounting system.” Do you have some suggestions for us as we move 

forward on the re-authorization of WIA? 

Mr. Mayfield. Well, we would be happy to gather some statistics and information from counties 

around the United States regarding that issue, because there is a difference of opinion in looking at 

what monies are available, because they are obligated, in most instances. They are obligated to be 

spent; they just have not been formally spent yet, and still are on the books. But they are obligated. 

 So that is a problem, and we feel that our accounting and the amounts of funds that are 

available are more accurate than the Department of Labor's accounting. 

Mr. McKeon. This is something I think we are really going to have to pull together and work on, 

because I think if we had done a better job of pleading our case, we wouldn't have had that $600 

million cut. Because every time I talked to them, their rationale for it is that they don't need it, 

because the monies out there aren't spent. 

 We found one other thing. It just seems to me, in talking to people at the One-Stop, they 

tell me that it took them some time to get up to speed and get things going. We just passed the Act 

in 1998, and then got the regs written and forwarded to the local people to implement, and that's 

another reason why they haven't spent those funds. 

Mr. Mayfield. Absolutely, absolutely. That is the delay that is unaccounted for in there. Had 

everything been up and running, and everybody ready to go the minute the law was passed, you 

wouldn't see that there. But because of those delays, you have those balances. 

Mr. McKeon. Well, I think those two things are things we have to really work on, because we 

shouldn't have had that $600 million cut. And especially now when we do have an unemployment 

problem, and we have people out there that need these resources, we really need to be focused in on 

that. And that's something we need to look at when we do the re-authorization. 

Mr. Mayfield. We would offer to work very closely with you to get some statistics and 

information on that, to help in that regard. 

Mr. McKeon. I want to thank you both for being here today. Excuse me. Mr. Miller? 

Mr. Miller. Thank you. I would like to have a chance to ask some questions of Dr. Mishel. 

Mr. McKeon. I was using my time. 

Mr. Miller. Oh, I'm sorry; I thought you were getting ready to close the hearing. 

Mr. McKeon. I am. 
45

Mr. Miller. I wanted to ask a second round of questions under the rules. 

Mr. McKeon. Go ahead. 

Mr. Miller. Thank you.

Dr. Mishel, first of all, the program on Monday was spectacular. It was really one of the 

best conversations on our economy that I think could have been put forth in front of the American 

people, and also incredibly understandable, given that they were all economists speaking there. 

Dr. Mishel. I understand. Thank you very much. 

Mr. Miller. The reason you're here is that the title of this hearing is “Back to Work: The 

Administration's Plan for Economic Recovery And The Workforce Investment Act.” 

 If you go back to your testimony, on page six, talking about the forecasts of Economy.com,

and by microeconomics advisors and others, the question is, will this $3,000 allowance work? Will 

this have an impact? Will it make a difference for these workers? 

 A lot of this, I think, makes sense in terms of making sure that people can pick up the 

options that might make sense to them, whether it's at a community college, other access to 

training, or what have you. But I go back to “where are the jobs”? I mean, if you read the 

combination of economic forecasts, and as you point out, from very mainstream economic 

forecasters, including even the President's, Mr. Hubbard, in the short term and the long term, there 

is no real job growth here. I mean, at one point you get the President's plan creating over several 

years maybe 100,000, 150,000 jobs. 

Dr. Mishel. Right. 

Mr. Miller. So where do we get this? I mean, you mentioned that it's a lack of the demand. Again, 

if you read the business journals, you have the CEO of almost every company saying, “We're 

concerned about the demand for our products,” whether they're selling automobiles, semiconductors, microchips, whatever they're selling, every company has said, “We're concerned about 

the softness of demand.” 

Dr. Mishel. Thank you for your question. In fact, that is exactly what the Business Roundtable 

said a few months ago, when they issued a call for a stimulus plan, that they needed customers, 

they needed demand. 

 Well, let's just look at the short run, what we can expect, in terms of jobs and 

unemployment. I was a little bit surprised by Secretary Chao saying that 5.7 percent is what the 

average was in the 1990s sort of indicating that it was somehow acceptable. It was just two years 

ago we had roughly 4 percent unemployment, and I think that needs to be our target. 

Chairman Greenspan yesterday suggested that unemployment is going to remain as high as 

it is now, or higher, over the next year. If that's the case, we know that it's going to be very hard to 
46

get work. The numbers that were reflected earlier in a question from the JOLTS survey of the 

Bureau of Labor Statistics that there are less than 3 million vacancies, but more than 8 million 

people looking for work indicates that there are basically three unemployed workers for every job 

available.

 Now, that doesn't mean that we shouldn't do things on the workforce training side. I think 

everybody here agrees that we need to give everybody help. But you know, in economics we 

learned that somehow there is a queue, and sometimes these things just jump people in the queue. 

What we really need to do is get rid of the number of unemployed. And the only way to do that is 

to really focus your money on how to create jobs right now, and stimulate demand. And I think 

that's what you're driving at, and I think that would be very important to do. 

 So a training strategy coupled with a job creation strategy makes sense. A training strategy 

that is not coupled with a job creation strategy is not so sensible, in my view. 

Mr. Miller. Well, I guess it's just a problem for us. You know, we, the Democrats, put together an 

economic stimulus package. The President then said that they shouldn't view his package as 

economic stimulus; they should view it as growth. But when the econometrics people look at the 

growth, they say the growth isn't there over the long term, and short term, the help in the jobs isn't 

there.

I just see that we have a couple of ships; we've got the unemployed going in one direction in 

the middle of the night, and we've got the ship of state going in the other direction, and we're going 

to pass right by one another. And this is going to be millions of families where there isn't going to 

be the help. 

 When we're constructing these accounts, again, which I'm not hostile to, the question has 

got to be at the end of the day, is a person more likely to get a job? Is the person, in fact, going to 

get a job? And I don't see that. 

 And you know, you can even layer over the top of that that we now see more and more 

companies moving to Asia, not to sell into the Asian market, but for export. You just saw the 

largest semiconductor in Taiwan, which was a low-cost producer decide that they are moving to 

China of all things; Taiwanese companies moving to China for export. You see Honda moving to 

China for export. You see General Motors moving to Korea for export back to the American 

market. That suggests that some of these jobs that we have lost in this recession may not be 

coming back. 

You know, that's another layer on top of this notion of whether we're creating long-term 

growth or short-term stimulus, and it appears that the Administration is creating neither, except 

deficit. I mean, you kind of get the deficit, but you don't get the benefit. 

Mr. McKeon. Mr. Kildee, did you have a question? 

Mr. Miller. I feel I just had the last word that I'm probably going to get here. 
47

Mr. McKeon. I think the rules also say Mr. Kildee may question. 

Mr. Kildee. No, I have no further questions. 

Mr. McKeon. Thank you very much. We appreciate your being here today.

We have Mr. Kucinich's remarks to enter into the record. 

Mr. Kucinich. Thank you. 

Mr. McKeon. If there are any other statements, we will keep the record open. 

We appreciate your working with us as we go through this process, and your input, as we 

go through the Workforce Investment Act. 

 Thank you very much. This hearing is adjourned. 

Whereupon, at 12:45 p.m., the Committee was adjourned 
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Table of Indexes 

Chairman Boehner, 2, 5, 8, 9, 13, 14, 17, 19, 20, 22, 23, 25, 26, 28, 30, 33, 34, 36, 38, 40, 41, 43, 

44, 45, 46, 47 

Mr. Andrews, 30, 31, 32, 33 

Mr. Case, 17, 18, 19 

Mr. DeMint, 17 

Mr. Johnson, 13, 14, 34 

Mr. Kildee, 14, 26, 27, 28, 41, 42, 43, 47 

Mr. Kucinich, 47 

Mr. Mayfield, 39, 40, 41, 44 

Mr. McKeon, 34 

Mr. Miller, 9, 10, 11, 12, 38, 39, 40, 44, 45, 46 

Mr. Mishel, 41, 42, 43, 45 

Mr. Osborne, 19, 20 

Mr. Payne, 20, 21, 22 

Mr. Porter, 25 

Mr. Van Hollen, 28, 29, 30 

Mr. Wilson, 22, 23, 40, 41 

Ms. Sanchez, 15, 16 

Ms. Woolsey, 23, 24, 25 

Secretary Chao, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 

31, 32, 33