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BUILDING THE LADDER OF OPPORTUNITY: 

WHAT’S WORKING TO MAKE THE AMERICAN 

DREAM A REALITY FOR MIDDLE-CLASS FAMILIES 

HEARING 

OF THE

COMMITTEE ON HEALTH, EDUCATION, 

LABOR, AND PENSIONS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

ON

EXAMINING BUILDING A LADDER OF OPPORTUNITY, FOCUSING ON 

WHAT’S WORKING TO MAKE THE AMERICAN DREAM A REALITY FOR 

MIDDLE-CLASS FAMILIES 

JULY 26, 2011 

Printed for the use of the Committee on Health, Education, Labor, and Pensions 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys/ 
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS 

TOM HARKIN, Iowa, Chairman 

BARBARA A. MIKULSKI, Maryland 

JEFF BINGAMAN, New Mexico 

PATTY MURRAY, Washington 

BERNARD SANDERS (I), Vermont 

ROBERT P. CASEY, JR., Pennsylvania 

KAY R. HAGAN, North Carolina 

JEFF MERKLEY, Oregon 

AL FRANKEN, Minnesota 

MICHAEL F. BENNET, Colorado 

SHELDON WHITEHOUSE, Rhode Island 

RICHARD BLUMENTHAL, Connecticut 

MICHAEL B. ENZI, Wyoming 

LAMAR ALEXANDER, Tennessee 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

ORRIN G. HATCH, Utah 

JOHN MCCAIN, Arizona 

PAT ROBERTS, Kansas 

LISA MURKOWSKI, Alaska 

MARK KIRK, Illinois 

DANIEL SMITH, Staff Director 

PAMELA SMITH, Deputy Staff Director 

FRANK MACCHIAROLA, Republican Staff Director and Chief Counsel 

(II) 
C O N T E N T S 

STATEMENTS 

TUESDAY, JULY 26, 2011 

Page 

COMMITTEE MEMBERS

Harkin, Hon. Tom, Chairman, Committee on Health, Education, Labor, and 

Pensions, opening statement ............................................................................... 1 

Isakson, Hon. Johnny, a U.S. Senator from the State of Georgia ....................... 3 

Blumenthal, Hon. Richard, a U.S. Senator from the State of Connecticut ........ 21 

Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee ................ 23 

Murray, Hon. Patty, a U.S. Senator from the State of Washington ................... 25 

Franken, Hon. Al, a U.S. Senator from the State of Minnesota .......................... 27 

Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode Island ...... 28 

Merkley, Hon. Jeff, a U.S. Senator from the State of Oregon ............................. 30 

Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming .................... 61 

WITNESS—PANEL I 

Solis, Hon. Hilda L., Secretary, U.S. Department of Labor, Washington, DC ... 5 

Prepared statement .......................................................................................... 9 

WITNESSES—PANEL II 

King, Deborah, Executive Director, 1199 SEIU Training and Employment 

Funds, New York, NY .......................................................................................... 33 

Prepared statement .......................................................................................... 35 

Corey, Sarah, Public Relations Director, IceStone, New York, NY ..................... 38 

Prepared statement .......................................................................................... 40 

Green, Kenneth P., Resident Scholar, American Enterprise Institute, Washington, DC ............................................................................................................. 42 

Prepared statement .......................................................................................... 44 

Prinske, Tom, Owner, T. Castro Produce Company, Chicago, IL ........................ 55 

Prepared statement .......................................................................................... 57 

ADDITIONAL MATERIAL 

Response by Hilda Solis to questions of: 

Senator Harkin .......................................................................................... 70 

Senator Whitehouse .................................................................................. 70 

Senator Murray ......................................................................................... 71 

Senator Casey ............................................................................................ 73 

Senator Enzi .............................................................................................. 75 

Senator Isakson ......................................................................................... 110 

Senator Hatch ............................................................................................ 115 

Response to questions of Senator Harkin by: 

Deborah King ............................................................................................. 117 

Sarah Corey ............................................................................................... 118 

Response to questions of Senator Enzi by: 

Sarah Corey ............................................................................................... 118 

Tom Prinske ............................................................................................... 119 

(III) 

(1) 

BUILDING THE LADDER OF OPPORTUNITY: 

WHAT’S WORKING TO MAKE THE AMERICAN 

DREAM A REALITY FOR MIDDLE-CLASS 

FAMILIES 

TUESDAY, JULY 26, 2011 

U.S. SENATE, COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, Washington, DC. 

The committee met, pursuant to notice, at 10:03 a.m., in room 

SD–430, Dirksen Senate Office Building, Hon. Tom Harkin, chairman of the committee, presiding. 

Present: Senators Harkin, Murray, Casey, Hagan, Merkley, 

Franken, Bennet, Whitehouse, Blumenthal, Enzi, Alexander, and 

Isakson. 

OPENING STATEMENT OF SENATOR HARKIN

The CHAIRMAN. The Committee on Health, Education, Labor, and 

Pensions will please come to order. 

I would like to welcome everyone to the third in a series of hearings to explore the state of the American middle class. In our previous hearings, the committee has heard testimony from a number 

of noted economists and thinkers, including former Labor Secretary 

Reich and Vice President Biden’s former economic policy adviser 

Jared Bernstein. 

In addition, we have heard testimony from everyday Americans 

like Amanda Greubel of DeWitt, IA, who have explained to the 

committee what it is like to sit around the kitchen table every 

night and worry about how to pay off debts, put a child through 

college, and have enough money left to not only put a good meal 

on the table, but to save for retirement and maybe even take a vacation once in a while. 

These hearings have made one thing very clear. Our once great 

middle class has been under siege for decades. In fact, for the last 

three decades, American workers have failed to share in our overall 

economic growth. 

The chart shows the percent of total employer expenses that they 

have spent on compensation for their workers, and it has steadily 

declined ever since the post-World War II era. At that time, about 

66 percent of employer spending was spent on compensation, and 

that includes benefits. And that is now down to about 58 percent. 

So it has been declining. 

In addition, according to a recent study published by J.P. Morgan 

that looked at the time period between the 2001 recession and the 
2 

current downturn, this decline in wages and benefits over this period was responsible for about 75 percent of the increase in major 

corporations’ profit margins. Worker compensation is at a 50-year 

low relative to both company sales and U.S. GDP. 

These two facts paint a very troubling picture about what has 

happened in our economy in recent decades. Hard-working families 

have seen their incomes stagnate, while the gains have gone to the 

very wealthy, corporate CEOs, and shareholders. As middle-class 

families know all too well, our economy simply can’t function like 

this much longer. 

Our hearing today will help orient us in a different direction by 

focusing on programs, companies, and policies that have taken a 

different approach and are actually working to rebuild the middle 

class. For this reason, I am pleased that we are joined today by 

Labor Secretary Hilda Solis. The department is doing excellent 

work to help America out-innovate, out-educate, and out-compete 

in this global economy, and I am looking forward to hearing more 

about the work the department is doing and your experiences as 

you have traveled the country talking with middle-class families 

and businesses. 

As Senator Enzi mentioned at our previous hearing, it is also important to consider the views of the private sector actors and business owners. One of these individuals, Tom Prinske, has joined us 

from Chicago to talk about a topic close to my heart. Today marks 

the 21st anniversary of the enactment of the Americans with Disabilities Act. 

In the 21 years since this landmark act was signed into law, 

much progress has been made to make our country more accessible 

for people with disabilities. But sadly, too frequently, people with 

disabilities have yet to make it into the middle class. 

According to the Bureau of Labor Statistics, less than a third, 

less than a third of working-age people with disabilities are participating in the labor force. Only about 4 million to 5 million out of 

15.3 million Americans with disabilities. Put it another way, two 

out of every three adult Americans with a disability is not working. 

And in the recent downturn, the people with disabilities left the 

labor force at a rate six times greater than those without disabilities. We need to do better, and I am pleased to be working with 

employers to help grow the size of the disability labor force to six 

million by 2015. 

Mr. Prinske’s story is a reminder that we need to do more to help 

make the American middle class accessible for all Americans, no 

matter their race, gender, ethnicity, sexual orientation, or disability 

status. His story gives me hope that we can meet this challenge 

head on and help people with disabilities move into and beyond the 

middle class. 

I am convinced that we can do things the right way going forward and rebuild our middle class. We are not broke. I keep hearing people say we are broke, we are poor. Well, America still remains the richest Nation in the history of the world. We have the 

highest per capita income of any major Nation. 

If we can build on the lessons that I hope we will learn in this 

and other hearings and make better policy choices, we can continue 
3 

to lead the world in the 21st century with a strong middle class 

and a strong economy. 

I know Senator Enzi was tied up and couldn’t be here right 

away. And so, I would recognize Senator Isakson. 

STATEMENT OF SENATOR ISAKSON

Senator ISAKSON. Thank you very much, Chairman Harkin. 

And welcome, Secretary Solis. We are delighted to have you 

today. 

This is the third hearing we have had on the middle class and 

the struggle they are going through. Unfortunately, since we have 

begun, unemployment has gone up almost 1 percentage point or 0.1 

of a percentage point per month in the last 3 months. 

Since our first hearing early May, the unemployment rate has increased again and again. While the Administration may be 

downplaying this figure, this is just more bad news for nearly 14 

million Americans. 

Not only has the unemployment rate increased, but so has the 

underemployment rate increased—those working part time who 

would like to work full time, those who have left the labor force entirely because they simply have given up searching. The extended 

unemployment benefits that have drained the State trust funds are 

beginning to run out, and we must face the shocking statistic that 

over 50 percent of those exhausting their benefits are unemployed. 

Over these 3 months, there are 50,000 Americans who used up 

all regular unemployment benefits and extended benefits and still 

have no job. Clearly, the actions taken by the Administration and 

this Congress have not created the jobs middle-class families desperately need. Over $1 trillion was added to the deficit for stimulus spending, 

but too much of it is gone, poorly directed or wasted. President 

Obama has even joked about the stimulus funds going to projects 

that really were not shovel ready. Job creating employers of all 

sizes have been directly harmed by the policies of the Administration. 

I learned a long time ago from my father that you should be 

judged by your actions and not your words. Under this Administration, employers are being punished for creating new jobs in the 

right-to-work States of our country. 

One notable incident is what has happened in the Boeing Aircraft Corporation in South Carolina, where they created 1,000 jobs, 

but an attorney for the National Labor Relations Board decided to 

challenge that and issued a complaint claiming Boeing should have 

used unionized workers in Washington State rather than nonunion 

workers in South Carolina. 

Other actions by the Administration are just as disturbing. I am 

very involved with Delta Airlines, which is in my own State. They 

are a National Mediation Board regulated transportation entity. 

They have had union elections 9, 10, 11, and 12 times in which the 

company rejected unionization in terms of their flight attendants. 

After the last vote, the National Mediation Board decided to ask for 

a judicial review of Delta’s management’s involvement in those 

votes, again forcing Delta to over and over again call votes that are 

unnecessary. 
4 

And then there is the new proposal on quickie elections, which 

reduces the time in which an election can be posed. And even 

worse and most troubling for me, as one who worked in retail for 

a while, are micro unions—to approve many unions within a particular institution. 

Take a retailer, for example, that has 12, 15, 20, or even 50 different departments in a huge store. This would allow each department to form a micro union. So you would have 50 different entities competing for the wage rates under the same roof. That is just 

not functional for a company to operate under, and it certainly is 

a job killer, not a job creator. 

The first witness we called in the first middle-class hearing was 

Secretary Robert Reich, who, in the answer to questions, told us 

the following. That he favors repealing the right-to-work option in 

current law in 22 States in America, including the State of Georgia 

and the State of Iowa. That is just not right. 

The irony of this singular focus on increasing unionization rates 

is that unions fare pretty well under the current system of secret 

ballot elections and free and informed choice. Certification elections 

are held at a median of 38 days from the filing of the petition to 

unionize. Over 95 percent of elections are conducted within 56 

days. Unions win 64 percent of those elections. 

The assault on employers also includes the tremendous surge in 

regulatory burden, including the healthcare law and numerous 

EPA regulations. Combining these figures with legitimate concerns 

of our national debt and efforts to hike taxes, it is not surprising 

that employers are uncertain of their ability to maintain profitable 

businesses and wary of making new hires. 

Senior officials in the White House have expressed frustration 

with the regulatory burden coming out of agencies. I hope that 

frustration turns into action before it is too late. 

It is important to have this hearing today because we know the 

stimulus that we had before didn’t work, or where it did work, it 

cost us more than it should have for a job. The Administration’s 

own report estimates that each job added or saved cost $185,000 

to $275,000 per job. That is entirely too expensive and inappropriate. 

I appreciate, Mr. Chairman, you holding the hearing today. I am 

grateful that Secretary Solis has come to be with us. And I look forward to the question and answer session to follow. 

The CHAIRMAN. Thank you very much, Senator Isakson. 

We have two panels. Our first panel will be our Secretary of 

Labor, Secretary Hilda Solis. Prior to her tenure at the department, Secretary Solis represented the 32d congressional district in 

California from 2001 to 2009. She served in the California State 

Assembly from 1992 to 1994, and 1994 was the first Latina elected 

to this California State Senate. In 2000, she became the first 

woman to receive the John F. Kennedy Profile in Courage Award 

for her pioneering work on environmental justice issues. 

Secretary Solis, welcome back to the committee again. You have 

quite a lengthy statement, which I read last night. It is very good. 

It is very interesting. 
5 

It will be made a part of the record in its entirety. If you might 

just sum up for us in 7, 8 minutes, we would sure appreciate it, 

and then we can have a discussion. 

Secretary SOLIS. Great. 

The CHAIRMAN. Welcome back. 

STATEMENT OF THE HON. HILDA L. SOLIS, SECRETARY, 

U.S. DEPARTMENT OF LABOR, WASHINGTON, DC 

Secretary SOLIS. Thank you so much, Mr. Chairman, Chairman 

Harkin, and also Senator Isakson and all your colleagues that are 

here today. 

It is a real pleasure to be here with you again before this committee, and I thank you for inviting me here to testify on what I 

think is one of the most important topics for our discussion. 

There is nothing more important that is facing our country today 

than shoring up the embattled middle class. And as you said, Senator Harkin, in the first hearing in your series, you said we can’t 

have a strong economy without a strong middle class. And I totally 

agree with that. 

This month’s jobs numbers show that we have yet to see the kind 

of economic recovery that the middle class really needs. But the 

challenges of the middle class did not come just with the great recession. The precarious situation of the middle class has been developing for a long time, and I am committed to using the tools at 

my disposal at the Department of Labor to address both the longstanding challenges facing the middle class and those related to the 

recent economic downturn. 

In looking forward to how we should rebuild the security and stability of the middle class, we first have to talk about sustaining the 

middle class at the most basic level. And what I mean by that is 

that in an economic downturn, our unemployment insurance system becomes even more crucial. And that is a part of the middleclass safety net. 

We know that once workers fall out of the middle class, there is 

an enormous barrier to their re-entering into it. And this is why, 

at the very least, we need to preserve the middle class by continuing extended unemployment benefits. 

No worker, as you know, prefers to receive UI benefits. They 

would rather have a job, quite frankly. And that is what I hear 

around the country. That is why my goal, as Secretary of Labor, 

is to help foster an economy in which good jobs are available for 

everyone, and American workers are prepared with the necessary 

skills to be productive in these jobs not only for the time being, but 

for a lifetime. 

And I would like to share with you some principles that I see as 

essential in preserving and expanding the middle class and what 

our role is at the Department of Labor. And briefly, those principles are rebuilding the manufacturing sector; designing our training programs to make them more available in lifelong learning that 

occurs and that skill levels are enhanced; focusing on training programs with high-growth industries for the future, ensuring that all 

workers, including veterans, disabled workers, have access to training; and using worker protection agencies to provide stability and 

security for middle-class workers. 
6 

This is why the committee work that you all have been doing to 

help reauthorize the Workforce Investment Act is so critical. And 

I appreciate, Mr. Chairman, you and Senator Isakson and Senator 

Enzi and all of you, and Senator Murray, for working so tirelessly 

on this issue. I hope that we can get something done in terms of 

reauthorizing the WIA program. 

First, let me address why rebuilding our manufacturing sector is 

so critical to rebuilding the middle class. The manufacturing sector 

has shown enormous resiliency and strength in our economic recovery so far. In fact, 250,000 jobs were added since the beginning of 

2010. 

I saw an example currently, the rebirth of what is possible in the 

manufacturing sector earlier this month when I visited Flint, MI. 

There, I toured Diplomat Specialty Pharmacy, which is manufacturing medicine in the same building that once housed General Motors auto plants. 

For the manufacturing sector and the rest of our economy to 

thrive, we have to ensure that workers have access to skills that 

will support a lifetime of middle-class jobs. It won’t be enough for 

a worker to master a particular set of skills at the outset of his or 

her career. Instead, workers will have to be more flexible and 

adaptable to keep pace with more fluid and dynamic economic challenges that they will see. 

To enable workers to adapt to this shift in the 21st century, we 

will have to change how we think about education and job training 

overall. No longer will most Americans participate in the world of 

education and work to be strictly sequential, first going to school 

and then going to work. Instead, we will have to maintain flexibility, lifelong learning tools. And moreover, the skills that they acquire will have to be portable, and they will have to be able to be 

adaptable to new and emerging industries. 

Let me share another example with you of a worker who is living 

this principle right now. A worker from Colorado lost his job in a 

traditional construction industry and as a result of the downsizing 

in the housing area. 

He attended one of our training programs funded by the Recovery Act. The program trained him in energy efficiency, weatherization, and energy auditing. Now he has a job as a program director 

for a nonprofit organization which provides weatherization and retrofitting to low-income housing. 

The Department of Labor is focusing in our training programs to 

help prepare workers in other high-skill and high-growth industries as well. We are paying particular attention to the green economy and advanced manufacturing and healthcare sectors. 

And just recently, in my travel last week, I happened to be in 

California, and I saw our investment in action when I visited the 

Santa Clara Valley Transportation Authority. The authority has 

developed a fleet of 90 hybrid buses that were built in one of the 

few manufacturing American-only facilities in Hayward, CA. Quite 

an amazing sight to see. 

The department has partially funded a partnership between that 

authority and the Amalgamated Transit Union to train authority 

workers. I met there Mr. Peter Reyes, who was laid off from his 
7 

job in the banking industry and is now working as a hybrid bus 

driver. 

‘‘Without a doubt,’’ in his statement to me, he said, ‘‘I would 

much rather wear a jacket and a shirt instead of having to wear 

a tie.’’ And he was asked that by one of his fellow colleagues who 

used to work with him in the banking industry. He says, ‘‘Now I 

have the relief and ability to provide for my last child, to be able 

to send that child to college. So I am happy that I have this job 

and that I got retooled, and I am in an industry that is providing 

services that are much-needed and also reducing energy consumption.’’ 

I was very moved by that story by Mr. Reyes, and there were 

many stories like that that I heard as I was on the ground in San 

Jose. 

We have another example of the focus here that we are highlighting. One of them happens to be here in the audience. She is 

a recipient of one of our programs from Maryland. Her name is 

Telmy Alfaro. 

Telmy, can you please stand and be recognized? Thank you for 

coming here today. 

She is here because she has also gone through experiences in our 

program. She has gained the skills and experience she needed to 

get a job at Prince George’s County Hospital Center. Telmy got her 

training start there at the local One-Stop center, and now she is 

studying to become a registered nurse. 

And many of you here in the room know how invaluable that is, 

just to be able to provide that opportunity for someone to get into 

that profession, which is so hard to get into. 

The department has collaborated with also many community colleges, which is an important factor in our success for moving toward the future into better jobs. We have partnered with the business community and several community colleges. 

I happen to know something about that as a former trustee at 

Rio Hondo Community College, the importance of making sure that 

community colleges are engaging firsthand with industry and manufacturers in their local areas to see that curriculum fits, fits the 

type of employees that are needed by different industries. And I 

know that in the past few years, perhaps that was a focus that 

wasn’t prioritized, but now at the Department of Labor, we are 

making a part of our excellence. 

I also want to mention another individual who went through our 

program. Her name is Elizabeth Strader. She was bussing tables 

at a casino in Connecticut, and she wanted a better future, too. 

Through a job training grant that she participated in in a local 

workforce investment board, she focused on STEM careers and a 

partnership between WIB and the General Dynamics Electric Boat 

company. Elizabeth was able to take classes in technical drafting, 

math at her local community colleges. And as a result, she has now 

been hired by Electric Boat, doing computer design on naval vessels and continuing to work toward her associate degree in nuclear 

technology. 

Credentials, as you know, are a very important aspect of improving the skills and adaptability of all of our workers, and I can tell 

you that we are, in fact, focusing in on how we can better provide 
8 

for our programs to emphasize credentialing. And I know that if an 

individual has a credential, their placement rate in terms of getting 

a job is much higher than those that only have a GED. 

So we know these programs do work. And I am extremely proud 

of the department in also helping our Nation’s veterans gain and 

retain their rightful place in the middle class. Our VETS program 

is helping to return service members and their families to take advantage of the best civilian opportunities available. 

And having a job is essential to being a part of the middle class, 

but for people with disabilities—Senator Harkin, as you well know, 

on this date, we celebrate the 21st anniversary of the Americans 

with Disabilities Act. DOL’s Office of Disability Employment Policy, 

known as ODEP, is promoting universal strategies, good business 

practices for hiring people with disabilities. The work will help to 

bring about access for these individuals to the middle class. 

Senator Harkin, we owe you a debt of gratitude for being a pioneer on this issue, and I salute you for your work. 

Job training also is a big piece of the department’s contribution 

to supporting the middle class, and that isn’t the whole story. We 

are also implementing major portions of the healthcare reform and 

access to affordable healthcare coverage so that all individuals will 

be able to be covered and that no one will fear that one injury or 

illness will keep them from receiving the assistance they need and 

keeping them out of financial ruin and poverty. 

The department’s worker protection programs also play a key 

role in providing security and stability to workers who need to sustain their place in the middle class. Without rigorous enforcement 

of our wage and hour laws, occupational safety protections will run 

the risk of a race to the bottom in terms of pay and safety. Jobs 

at the bottom of that race are not going to be middle-class jobs, as 

we well know. 

We are also very concerned about middle-class workers who put 

their time in and expect to live out their retirement with dignity 

and respect. The department’s Employee Benefit Security Administration, known as EBSA, works to protect the security of retirement and employee benefits for America’s workers, retirees, and 

their families to support them with the remainder of their lifetime. 

And finally, I think any discussion about finding solutions to the 

challenges facing the middle class would be deficient if we did not 

include a discussion about the importance of collective bargaining 

rights. The health of the labor movement is central to the health 

of the middle class in this country, and I have lived that very close 

connection personally. 

And that is why this Administration feels strongly and supports 

the right of workers to collectively bargain when they choose to. 

We, at the Department of Labor, come to work every day to do our 

best to create economic opportunities for all American workers. 

I look forward to working with all of you to ensure that good jobs 

for American workers are assured. And I am happy to answer any 

questions. 

Thank you, Senator. 

[The prepared statement of Secretary Solis follows:] 
9 

PREPARED STATEMENT OF SECRETARY HILDA L. SOLIS

Chairman Harkin, Ranking Member Enzi, and members of the committee, thank 

you for the invitation to testify today and for holding this series of hearings on the 

state of the American worker. There is no more important issue facing our country 

today than shoring up the embattled middle class. Senator Harkin, I absolutely 

agree with what you said in the first hearing in this series—we can’t have a strong 

economy without a strong middle class, and we won’t have a sustainable economic 

recovery without the recovery of our middle class. 

This month’s jobs numbers show that we have yet to see the kind of economic recovery that the middle class needs to get on firm ground. The payroll employment 

numbers reported for May and June by the Bureau of Labor Statistics showed a 

slowing economic recovery—job growth of 25,000 and 18,000 in each of the 2 months 

respectively—this growth is nowhere near enough to keep up with regular population growth in the labor force, let alone bring our unemployment rate down to prerecession levels. 

No one can deny that now is a difficult time for the American worker. We have 

all been focused on the terrible recession that began in 2007. This recession, the 

deepest since the Great Depression, destroyed almost 9 million jobs. But the precarious situation of the middle class has been developing for a long time. When the 

2001 recession began in March 2001, 64.3 percent of Americans age 16 and over 

were working. Millions of Americans lost their jobs and the rate fell to 62 percent 

by September 2003. But more disturbingly, it hadn’t recovered very much by the 

time the current recession started. In December 2007, only 62.7 percent of the working age population was employed. That means we were still short nearly 4 million 

jobs at the start of the 2007 recession. Throughout the entire Bush administration, 

total job growth averaged just 11,000 jobs per month, meaning that we lost jobs 

from a per capita perspective for 8 years. 

The weak labor market has been particularly tough on young workers. The 17.3 

percent unemployment rate for 16- to 24-year-old workers in June 2011 is nearly 

6 percentage points higher than at the start of the recession in December 2007. 

While the unemployment rate has declined by nearly 1 percent in the last year, the 

rate is still unacceptably high. Although young workers with a bachelor’s degree 

have more labor market opportunities, they too face an extremely difficult job market and now confront substantial hurdles into the middle class. For example, the 

unemployment rate for young college graduates was 12.1 percent in June 2011, far 

worse than the 4.4 percent unemployment rate of older college-educated workers. 

With jobs disappearing, it’s not surprising that we’ve also seen household income 

plummet. Real median household income fell by over 4 percent during the recession 

to its lowest level in more than a decade. 

Looking ahead to how we rebuild the security and stability of the middle class, 

we first have to talk about sustaining the middle class at the most basic level. During this Great Recession, the very survival of the middle class was at risk. For millions of workers, their grasp on their position in the middle class for the first time 

in their lives became tenuous. As millions of pink slips went out, millions of workers 

who had never had to worry before about where the next paycheck was coming from 

faced their worst fears. 

In an economic downturn, our unemployment insurance (UI) system is the most 

crucial part of the middle-class safety net. This kind of backstop is critical. We know 

that once workers fall out of the middle class, there are enormous barriers for them 

to re-enter it. 

The Department of Labor helped 23 million unemployed workers receive $150 billion in unemployment insurance benefits in 2010. That’s 23 million people who had 

a shot at paying their rent, putting food on their tables, and providing the necessities of life for their families—that is, carrying out the basic economic activities of 

a middle-class life—while looking for work. That is 23 million consumers keeping 

demand up for grocery stores and gas stations; keeping local small businesses afloat. 

In the hearing that this committee held last month, you heard from Amanda 

Greubel, a social worker from Iowa. She so eloquently described the cruelty of this 

Great Recession for so many middle-class workers. There are millions of middleclass workers who, like Amanda, have played by the rules for their entire working 

lives. They scrimped and saved to get a good education, got good jobs and saved a 

little money when possible for a rainy day. No one can blame them, however, for 

failing to anticipate just how hard and long the rain would fall during this recession. 

Through no fault of their own, millions of unemployed workers just cannot find 

new jobs. There are still about 14 million unemployed Americans—6.3 million of 

whom have been looking for work for over 6 months—and just 3 million job open-
10 

ings nationwide. In other words, there are almost five job seekers for every open 

job. Our recovery has resulted in a net increase of 2.2 million private sector jobs 

since February 2010, after a recession that saw us lose 8.8 million paying positions. 

Simply put, there are still over 6 million fewer paying positions open for a population that is larger than in 2007. Not all workers who held jobs in 2007 could get 

hired, and not all new workers who entered the labor force after 2007 can get hired. 

That’s why if we want at the very least to preserve the existing middle class, we 

have to continue to extend unemployment benefits. According to the Census Bureau, 

UI benefits kept 3.3 million Americans—including 1 million children—from falling 

below the poverty line in 2009. UI benefits get spent right back into the economy 

and help local businesses: Every dollar spent on UI benefits adds $2 to GDP. As 

you know, we fought a tough battle at the end of the last Congress to get unemployment benefits extended. Those extended benefits will expire again at the end of the 

year. We must renew those extensions when the time comes. 

As important as providing a safety net for unemployed middle-class workers is, 

it is clearly not enough. No middle-class worker wants to be unemployed—no matter 

how long we extend the benefits. Senator Harkin, as you reminded us when you 

began this series of hearings, ‘‘Americans don’t expect to be rich or privileged, but 

they do expect to be treated fairly and they deserve to have the opportunity to build 

a better life for their children.’’ The middle class can build a better life for their children only on the foundation of good, safe jobs. 

My goal as Secretary of Labor has been and will continue to be to help foster an 

economy in which good jobs are available for everyone and American workers are 

prepared with the skills necessary to be productive in these jobs throughout their 

lifetime. This means jobs that can support a family. Jobs that are sustainable. Jobs 

that are safe and secure. In short, my highest priority is to get Americans back to 

work as part of a stable, secure middle class. We must make these investments 

while also making difficult choices that will put our Nation on a sustainable fiscal 

path. 

As I described earlier, we are making progress. We have stabilized the economy, 

prevented a financial meltdown, started the economy growing again, and created 

more than 2.2 million private sector jobs in the past 16 months. As the President 

said in his State of the Union address, however, if we are going to win the future 

and rebuild the middle class, we are going to have to out-educate, out-innovate, and 

out-build our global competitors. The whole Administration is committed to this vision and we are all doing our part. 

I would like to share with you the principles that I see as essential to preserving 

and expanding the middle class in the 21st century American economy and the role 

that the Department of Labor can play in supporting that mission. 

First, I agree wholeheartedly with President Obama that rebuilding our manufacturing sector is critical to rebuilding the middle class. The manufacturing sector has 

shown enormous resiliency and strength in our economic recovery so far, with over 

250,000 jobs added since the beginning of 2010. Manufacturing jobs are the kinds 

of jobs that pay well and can serve as an anchor in communities across the country. 

After more than a decade of losing manufacturing jobs, it is a thrill for me to be 

part of the policies that are helping to rebuild our manufacturing base. 

I saw an example of the rebirth that is possible in the manufacturing sector earlier this month when I visited Flint, MI. There, I toured the Diplomat Specialty 

Pharmacy, which is manufacturing medicine in the same building that once housed 

a General Motors auto plant. I was there with Jay Williams, the Mayor of Youngstown, OH, who in a few days will be taking over our Office of Recovery for Auto 

Communities and Workers. I know that Mayor Williams will effectively lead the Department’s efforts to help transform the manufacturing sector. 

In June, the President announced the Advanced Manufacturing Partnership, an 

effort that brings industry, universities, and the Federal Government together to invest in emerging technologies that will create high quality manufacturing jobs and 

enhance our global competitiveness. This Administration initiative will leverage existing programs and proposals and invest more than $500 million to build domestic 

manufacturing capabilities in critical industries. Supporting the development of new 

technologies can be particularly valuable in an economy that is just beginning to 

come out of recession and in which millions of jobs need to be added to return to 

full employment. Moreover, by helping to train workers for these positions we can 

help speed up a process in which many U.S. workers will need to acquire new skills 

before they can succeed in these industries. Just as U.S. investment in science and 

new technologies for NASA stimulated economic growth during the 1960s, I believe 

that the President’s vision of economic growth due to our investments in technologically advanced, green industry can stimulate economic growth today. 
11 

To take advantage of the jobs created as a result of the Advanced Manufacturing 

Partnership and the other promising industries of the 21st century economy, we are 

going to have to ensure that workers have access to skills that will support a lifetime career path of productive middle-class jobs. To maintain a secure spot in the 

middle class, it will not be enough for a worker to master a particular set of skills 

at the outset of his or her career. Instead, workers will have to be more flexible and 

adaptable to keep pace with a more fluid and dynamic economy than that of the 

past. 

As technology continues to rapidly change and advance, the economy will continue 

to shift. Workers will have to have the skills to accommodate those shifts in technology and changes in the workforce overall. For example, the President has called 

for 80 percent of America’s electricity to come from clean sources by 2035, including 

wind, solar, nuclear, clean coal, and natural gas. He has also put forward measures 

to ensure that the United States is the first country to put 1 million advanced technology vehicles on our roads. These commitments, coupled with private sector investments, will expand our clean energy economy, producing new green jobs in new 

green industries. Employers will need skilled workers to fill these jobs. The skills 

that workers will need are different than those they needed in the pre-recession 

economy and are likely to change again as these new industries continue to mature 

and expand. 

To enable workers to adapt to these shifts in the skill sets that employers require, 

we will have to change how we think about education and job training. No longer 

will most Americans’ participation in the world of education and work be strictly 

sequential—first going to school and then going to work. Instead, to maintain a good 

middle-class job, workers will need life-long learning. Moreover, the skills they acquire will have to be portable to support moves within and between emerging industries. 

This is why this committee’s work to reauthorize the Workforce Investment Act 

(WIA) is so important. I appreciate all your hard work, Mr. Chairman, as well as 

the work of Senators Enzi, Murray and Isakson to make WIA reauthorization a priority and to work together on this bipartisan initiative to modernize our job training 

system to meet the needs of employers and workers. 

Let me share with you a couple of examples of workers who are living these principles, adapting and reinventing themselves as the economy shifts. A worker from 

Colorado lost his job in the traditional construction industry as a result of the recession. He attended a training program funded by the Recovery Act. The program 

trained him in energy efficiency, weatherization and energy auditing. Now he has 

a job as a program director for a local nonprofit that provides weatherization and 

retrofitting of low-income housing. One woman, from Herrin, IL, was a hard worker 

at a washing machine assembly plant. She and a thousand of her colleagues lost 

their jobs when they were laid off from the plant. She took advantage of dislocated 

worker funding and training assistance available through the Workforce Investment 

Act and Trade Adjustment Assistance programs and made a big change in her career plans. She went back to school to get a degree in applied sciences and a certificate in nursing. She now works for a doctor and is realizing her dream of working 

in the medical profession. 

These stories point to another principle of preparing workers for a place in the 

middle class in the future. The world is more science and technology oriented than 

it has ever been before. Computational literacy is more important than ever. Workers will need higher skills training to maintain good-paying middle-class jobs. I do 

not mean to say that every worker will need a 4-year college degree for a middleclass life, but they will need more than a high school degree. The Bureau of Labor 

Statistics (BLS) projects that two-thirds of the occupations that will grow the fastest 

between 2008 and 2018 will require postsecondary education. 

In my travels throughout the country as Secretary of Labor, I have met workers 

of all ages who are accepting the challenge posed by the new higher skills future. 

When I was back home in California, I visited the American River College, where 

I met Rhonda Gage, a 54-year-old medical assistant. Although it had been a long 

time since Rhonda had been in a classroom, with the help of WIA and Recovery Act 

funding, Rhonda went back to school to update her skills. Her enhanced skills led 

to a new job with a healthcare firm, making three times what she previously 

earned. Rhonda now has a more secure future and place in the middle class as a 

result of her enhanced skills. 

The Department of Labor has an important role to play in preparing workers for 

the middle-class jobs of the 21st century. First, we are focusing our training programs to prepare workers for the high growth industries, with particular attention 

to jobs in the green energy, advanced manufacturing, and healthcare sectors. As all 

of you probably know, I am a big believer in the promise of these sectors. I am 
12 

proud of the investment that the Department has made in training workers across 

the country to take advantage of current and future opportunities. 

The Department’s investments in the clean energy economy have focused on three 

goals: 

1. Enabling States to develop needed partnerships and plans to better align their 

workforce and State energy policies leading to employment; 

2. Building the capacity of established job training providers to train workers for 

clean energy jobs; and 

3. Directly supporting education and training services for a diverse community of 

American workers either seeking entry into or retraining for new and emerging jobs 

in the clean energy economy. 

To advance these goals, we just announced $38 million in Green Jobs Innovation 

Fund grants to serve workers in 19 States and the District of Columbia. These 

grants will equip workers with the necessary knowledge, skills and abilities to succeed in green energy industry jobs. They are smart investments in the green energy 

jobs of today and the green energy economy of the future. The funds will help organizations with existing career training programs leverage Registered Apprenticeships, pre-apprenticeship programs and community-based partnerships to build sustainable green career pathways. 

For example, we recently awarded a Green Jobs Innovation Fund grant to the 

Finishing Trades Institute of the Mid-Atlantic Region, a non-profit organization located in Philadelphia, to further Registered Apprenticeship opportunities. The Institute will use the grant to create a partnership between employers, organized labor, 

and the public and private workforce development sectors to create training opportunities for incumbent workers, dislocated workers and unemployed people in the 

construction and building trades. The almost 2,000 participants in the program will 

be working towards green-related associate’s degrees and Green Advantage credentials. 

We also are working with the Department of Commerce and the Small Business 

Administration (SBA) to accept applications for $33 million in grants available 

under our Jobs and Innovation Accelerator Challenge. This program is administered 

in partnership with Commerce and the SBA, and focuses on supporting what are 

called ‘‘industry clusters.’’ Many of these clusters are designed to encourage investment in the high growth industries of the future, like the technology cluster in the 

Silicon Valley or the energy cluster in Houston. I recently traveled to Silicon Valley 

in April and met with business leaders to learn more about what they need to continue growing and innovating and creating jobs in the United States. We are looking 

for innovation and collaboration to infuse these types of communities through our 

grants and, as a result, to create and retain higher-wage and sustainable jobs. 

The Administration’s Better Building Initiative is another innovative program 

working to bring green energy jobs to middle-class workers. This initiative will lead 

to more energy efficient buildings across the Nation, while at the same time boosting manufacturing of energy-efficient products and putting contractors and construction workers back to work. 

We are having similar success in shifting our focus to training for the health care 

industry. As you may know, BLS projects that health care workers will experience 

the largest job growth of any industry over the next decade. Under the Recovery 

Act, we awarded 55 Health Care and Other High Growth Emerging Industries 

grants. 

The Recovery Act also provided funding for other health care training programs, 

including a program in Maryland that helped Telmy Alfaro gain the skills and experience she needed to get a job at the Prince George’s County Hospital Center. She 

participated in a program called the Knowledge Equals Youth Success at her local 

One-Stop Career Center. Telmy is now studying to become a registered nurse—a job 

that should provide a good middle-class career for her. 

In addition to identifying the industries that will provide the middle-class jobs of 

the future, the Department is also identifying the types of training that workers will 

need in those industries and across the economy to succeed. We are focusing on a 

career pathways approach to ensuring that workers have the best chance to compete 

for good jobs. The term ‘‘career pathways’’ refers to a clear sequence of education 

and training that is aligned with the skill needs of employers, utilizes curriculum 

and instructional strategies, leads to the attainment of industry-recognized degree 

or credentials, and includes supportive services such as childcare and transportation 

services, and job placement services. 

The Department’s collaboration with the Nation’s community colleges is an important part of our efforts to ensure that workers have the advanced skills they need 

to obtain middle-class jobs. We’re bringing together the business community and 
13 

1Since 2005, the Department has invested over $485 million in over 250 community colleges 

and related organizations through the Community-Based Job Training Grants. By the end of 

fiscal year 2010, these grants provided training to over 171,000 individuals, of whom over 72,000 

earned a degree or certificate. The green jobs training grants and Health Care Sector and Other 

High Growth Emerging Industries job training grants are still ongoing. $750 million was invested through these ARRA grants and final numbers of people who have been trained through 

these ARRA grants will be available when the funding ends in 2013. 

community colleges to help provide the relevant training that industries are looking 

for, and will surely need more of, as we pave the way to recovery. DOL’s support 

of community colleges is increasingly important during a time when State and local 

governments, as well as employers, continue to trim their budgets and cut spending. 

As a former trustee on a community college board, I know first hand the transformative power these institutions can have in the careers and lives of young and 

older students. 

Many of the Department’s largest job training grants, such as Community-Based 

Job Training Grants, Recovery Act green jobs training grants, and Health Care Sector and Other High Growth Emerging Industries job training grants, have invested 

hundreds of millions of dollars in community colleges and related organizations over 

the past few years. These grants have provided training to hundreds of thousands 

of individuals, many of whom are earning degrees or certificates through their training.1 And it is just as critical that employers who understand the needs and the 

skills desired in their specific industries work directly with community college faculty to develop relevant curricula and coursework that prepare workers to succeed 

in good, safe jobs. 

On January 20th, we announced the availability of $500 million for the Trade Adjustment Assistance (TAA) Community College and Career Training Grants. These 

competitive grants will provide community colleges and other eligible institutions of 

higher education with funds to expand and improve education and career training 

programs suitable for workers who have lost their jobs or are threatened with job 

loss because of trade with other countries. These training programs must be completed in 2 years or less. The overarching goals of these grants are to increase attainment of degrees, certificates, and other industry-recognized credentials and better prepare beneficiaries for high-wage, high-skill middle-class employment. The 

program will also encourage community colleges to develop innovative methods, use 

data, and replicate evidence-based practices to improve student outcomes and efficiency. For example, grants will support the delivery of online education that can 

allow students balancing the competing demands of work and family to acquire new 

skills at a time, place and pace that are convenient for them. We are working with 

our colleagues at the Department of Education as we prepare to award and administer these grants. 

Last month, the President announced another important initiative to expand the 

opportunities for workers to enhance their skills at community colleges in order to 

compete for advanced manufacturing jobs. As part of the Skills for America’s Future 

initiative, the President launched new commitments from businesses and universities to make it possible for 500,000 community college students to earn industryaccepted credentials for manufacturing jobs that companies across the country are 

looking to fill. This program will make it easier for workers to get retrained and 

move up into better, more secure middle-class jobs. 

I have a great example of how these collaborations between the Department of 

Labor, community colleges, and companies can work. Elizabeth Strader was busing 

tables at a casino in Connecticut, but she wanted a better future. Through a job 

training grant awarded to the Eastern Connecticut Workforce Investment Board 

(WIB) that focused on science, technology, engineering and math (STEM) careers 

and a partnership between the WIB and the General Dynamics Electric Boat company, Elizabeth was able to participate in training that included technical drafting 

and math at her local community college. That investment by the Department, Elizabeth, and Electric Boat paid off. Elizabeth is now working for Electric Boat doing 

computer design on naval vessels and continuing to work towards her Associates degree in nuclear technology. 

In Georgia, a worker was looking to upgrade her skills after she lost her job as 

a quality assurance technician at a Georgia bakery. But she took this challenge as 

an educational opportunity to re-invent herself thanks to the Workforce Investment 

Act Adult Program. With help from the Atlanta Regional Commission, a DOL funding recipient, she enrolled in a 2-year technical college to study bioscience. When 

she earns her degree, she said her current contract job as a lab technician with an 

international food producer will become a full-time employee position. She admitted 
14 

she was ‘‘shocked and blindsided’’ when she first lost her job but looked at it as ‘‘an 

opportunity to go back to school.’’ 

Credentials are a key component of improving the skills and adaptability of workers who want to compete for middle-class jobs in the 21st century. Credentials serve 

as documentation that workers have attained the specific skills they need to perform a job. The Department has an important role to play in encouraging a more 

focused effort on credentialing. Ensuring that workers attain the credentials needed 

for jobs in the new and growing sectors of the economy will help workers break into 

those good-paying fields and move between jobs as necessary. 

The value of credentials to employers and workers cannot be overstated. For employers, credentials provide assurance of a potential employee’s skills, giving them 

the security they need to take a leap of faith and hire a new worker. For workers, 

credentials improve their likelihood of landing a good middle-class job and represent 

a portable manifestation of the skills they have attained. According to one recent 

study, workers with an associate’s degree earned, on average, 33 percent more than 

workers with only a high school diploma or General Education Development credential. 

Rubin Castneda from Juneau, AK is a good example of the wage advantage that 

credentials can provide. He was a 20-year-old single parent, who had dropped out 

of high school to work with his parents, immigrants from Mexico. His jobs never 

provided the kind of salary he needed to take care of his son. With help from the 

Workforce Investment Act Youth Program, Rubin got his GED and acquired the credentials he needed to get a better job, including a Commercial Drivers License and 

Basic Welding. He is driving a big rig in Juneau, making a good living and taking 

care of his son. 

In December 2010, I announced, as part of the Department’s 2011 Strategic Plan, 

a high priority performance goal to increase credential attainment by 10 percent 

among customers of the public workforce system by June 2012. To achieve this goal, 

we are working to refer more WIA and TAA participants into programs that result 

in credentials. We are also focusing on providing participants with resources to help 

them complete training. Finally, we are assisting our workforce agencies to ensure 

that the credentials that workers are pursuing are the ones that will lead to secure 

middle-class jobs by encouraging them to assess the needs in their local labor markets and educate employers about the value and validity of credentials. 

I have a great success story from Maryland. Lisa McDowell, a Baltimore resident, 

lacked the skills and confidence to get the good-paying job she desired. According 

to Lisa, the last time she had worked in an office, people used switchboards. To get 

her skills and confidence upgraded, she sought help from Baltimore Works at her 

local One Stop Career Center. There, she earned certifications in several areas of 

computer skills, including Computing Core Certification—a global, validated, standards-based training for basic computer hardware, software, and networks. Her success at her One Stop training courses has led to a $45,000 a year job with the Maryland Board of Public Works. She is thrilled with the doors that have opened to her 

and that the computer training she received can take her, in her own words, ‘‘anywhere and everywhere.’’ 

A very special kind of credential comes with completion of a Registered Apprenticeship program. Last month, I celebrated 100 years of Registered Apprenticeships 

legislation in a great event on the National Mall. We had labor and industry leaders 

with us to recognize the contribution of Registered Apprenticeships to supporting 

entry into the middle class. Registered Apprenticeships continue to provide first-rate 

training and a path to good jobs with good pay and solid footing in the middle class. 

Last year, more than 100,000 workers entered into a Registered Apprenticeship program, over 400,000 active apprentices continued to earn and learn in over 20,000 

apprenticeship programs nationwide, and more than 50,000 program participants 

completed their apprenticeships and received a nationally recognized, portable credential. I am especially proud of the fact that the Employment and Training Administration’s Office of Apprenticeship recently recognized Wind Turbine Technician as 

the first new green occupation to be added to the official list of apprenticeship occupations—another example of how we are working across the Department to prepare 

workers for the middle-class jobs of the 21st century. 

The training needs of incumbent workers are another important piece of the skills 

challenge facing middle-class workers that the Department is addressing. In times 

of high unemployment and tight budgets, however, we struggle to find resources to 

address this need. If we want to ensure that workers have a long-term and not just 

short-term place in the middle class, it is critical to devote at least some resources 

to training incumbent workers. Without this training, workers are at risk of having 

their jobs leave them behind. Changing technology does not only bring out new industries, but it changes the way existing industries do their work. Without opportu-
15 

nities for life-long learning, workers have a hard time keeping up with those 

changes. 

For example, a construction worker in Florida, previously at the top of his profession, found himself unqualified for his job when solar panel installation and renewable energy skills became a requirement. He participated in a DOL-funded program 

and now has an industry recognized Solar Photovoltaic (PV) degree and a firmer 

hold on a good-paying job. DOL also helped fund training for Marat Olfir. He is a 

residential building superintendent in New York. He took courses provided by the 

32BJ Thomas Shortman Training Fund, a joint labor-management partnership. He 

earned the fund’s Green Diploma after taking courses in green building maintenance and management. He feels he is now better prepared for the future of building maintenance and has advanced his career. 

The role of the Department in supporting incumbent worker training is critical. 

Some employers may be disinclined to provide this kind of portable skills upgrade 

for fear that their workers will take those skills to another employer, possibly a 

competitor. Some workers don’t have the resources they need to invest in their own 

training. That leaves a gap that is best filled by publicly supported training and 

public-private partnerships. 

I am also extremely proud of the work the Department is doing to help our Nation’s veterans gain and retain their rightful place in the middle class. Our veterans’ 

employment and training programs are part of a larger effort to provide a smooth 

transition process for veterans, transitioning Service Members, and their spouses as 

they seek to identify and secure productive middle-class civilian opportunities. By 

promoting priority of service for veterans in the One-Stop Career Center system, we 

ensure that over 1.8 million veterans a year receive the training and employment 

assistance they need to obtain good jobs. 

Our work with homeless veterans is especially important. Clearly, being homeless 

is a serious obstacle to moving into the middle class. Our homeless programs help 

nearly 20,000 veterans a year in their efforts to reintegrate into the workforce. I 

am proud to share with you, Senator Harkin, a success story from Iowa. A Goodwill 

Industries of Central Iowa caseworker, Jan Broers, learned of a homeless Army veteran in her community who was battling substance abuse. With help from a grant 

to the program from the Department’s Homeless Veterans Reintegration Program, 

she was able to get the veteran a place to live, medical attention and training. Eventually, she was able to find a job for the veteran at a convenience store. The veteran 

has since been promoted to a management position. Ms. Broers has seen more than 

100 homeless veterans get help as a result of the Department’s $200,000 grant to 

the program. That’s 100 Iowa veterans who have served their country and deserve 

our support, who now have a better chance at a middle-class life. 

Having a job is essential to being a part of the middle class, but many people with 

disabilities are not a part of the U.S. labor force. The most recent BLS report issued 

in June 2011 shows that only 32.8 percent of working age people (16–64) with disabilities are actually in the American workforce, while the participation rate for people without disabilities is 77.2 percent. On this date, which happens to be the 21st 

anniversary of the Americans with Disabilities Act, DOL’s Office of Disability Employment Policy (ODEP) is working hard to reduce this disparity. We believe that 

by making the Federal Government a model employer of persons with disabilities, 

promoting integrated employment of people with significant disabilities through customized employment and Employment First strategies, capitalizing on workforce 

flexibility strategies to retain aging workers and assist workers in returning to 

work, and ensuring that youth with disabilities have the skills they need for today’s 

workplace, we can bring the middle class within reach of many people with disabilities. Because ODEP’s policy work focuses primarily on universal strategies and 

good business practices, it also holds great potential to help millions of other workers with complex needs to find good jobs in the private sector. We owe so much to 

you Senator Harkin for your leadership in both shepherding passage of the ADA 

and in continuing to be a champion for the employment of people with disabilities. 

Job training is a big piece of the Department’s contribution to supporting the middle class, but it is not the whole story. I believe that one of the most important contributions that the Administration and the Department have made to the future security of the middle class is the implementation of health care reform. The Affordable Care Act and the implementation of regulations to make it a reality are making 

a huge difference in the lives of Americans across the country. 

Access to affordable health care coverage means that middle-class workers are no 

longer one injury or illness away from financial ruin and descent into poverty. Without the Affordable Care Act, middle-class families were facing multiple health-care 

related challenges, including an increasing percentage of their income spent on outof-pocket health care costs and increasing difficulty in obtaining health care cov-
16 

erage. With the Affordable Care Act, middle-class families can look forward to lower 

costs and better coverage. In fact, a recent report by the Department of Health and 

Human Services predicts that middle-class families purchasing private insurance in 

the new State-based health insurance exchanges could save as much as $2,300 per 

year in 2014. And independent research on Medicaid released just this month by 

the National Bureau of Economic Research showed that those with access to health 

insurance through Medicaid reported they were in significantly better health and 

were more financially stable as a result of the insurance coverage. 

The Department’s worker protection programs also play a key role in providing 

the security and stability that workers need to sustain their place in the middle 

class. Without rigorous enforcement of our wage and hour laws and occupational 

safety protections, we run the risk of a race to the bottom in terms of pay and safety 

practices. It is simply unfair and bad policy to require good employers to compete 

against employers who are willing to flout the law, cut corners on safety, and pay 

workers less than they are owed. 

Over 4,000 workers are killed in workplace accidents on the job in this country 

each year, and thousands of others continue to die from occupational disease. These 

tragic numbers are well-known. Less well known is the fact that every year well 

over 3 million workers are seriously injured on the job. With so many family budgets already pushed to the breaking point and so many families with little or no savings, living paycheck-to-paycheck, a workplace fatality or even a serious injury may 

be the blow that keeps a struggling family from entering the middle class or knocks 

a family out of the middle class. We know how to prevent these tragedies and our 

worker enforcement agencies are crucial to ensuring that American workplaces are 

safe workplaces. 

The Department’s effort to combat misclassification of employees is an excellent 

example of how our worker protection programs are central to sustaining the middle 

class. We know that the vast majority of employers play by the rules. Unfortunately, 

these high road employers are forced to compete with employers who misclassify 

their employees as something other than employees, such as independent contractors, in order to avoid minimum wage and overtime obligations, paying workers 

compensation premiums and payroll taxes, and investing in required safety practices. Work as a misclassified independent contractor is less likely to support a middle-class lifestyle than work as an employee, which comes with all the protections 

that Congress intended employees to have. Enforcing the laws that Congress has 

passed ensures that firms can count on a level playing field and don’t lose profits 

and opportunities to firms that cheat. And workers can focus on doing their jobs, 

knowing that they can count on the protections that Congress intended them to 

have. 

Our concern for the middle class extends not only to those actively in the workforce, but also to those who have put their time in and expect to live out their retirement in dignity and security. The Department’s Employee Benefits Security Administration (EBSA) works to protect the security of retirement and other employee 

benefits for America’s workers, retirees, and their families and to support the 

growth of our private benefits system. In fulfilling that role, EBSA oversees approximately 718,000 private sector retirement plans, approximately 2.6 million health 

plans and similar number of other welfare benefits plans covering approximately 

150 million Americans. These plans hold over $6 trillion in assets. Most middle-class 

workers and retirees cannot afford to lose retirement savings to mismanagement or 

theft. 

I also believe that the issues facing defined benefit plans are central to the conversation about the security of middle-class retirees. I intend to continue to look at 

proposals to help these plans keep their commitments to workers and retirees. Defined benefits plans play a critical role in the retirement security of millions of 

Americans. The President’s budget proposes to strengthen the defined benefit system by shoring up the solvency of the Federal agency that acts as a backstop to 

protect pension payments for workers whose companies have failed. Moreover, the 

trends that I described earlier in my testimony about the increasing fluidity in 

workers’ careers clearly have significant implications for planning for a secure retirement. I commend the committee for holding a recent hearing on these issues and 

I look forward to working with you on innovative solutions. 

Finally, I think any discussion about finding solutions to the challenges facing the 

middle class would be deficient if it did not include a discussion of the importance 

of collective bargaining rights. I know that the recent actions of the National Labor 

Relations Board (NLRB) have been discussed in earlier hearings in this series. I do 

not mean to take our conversation in that direction. As you know, the NLRB is an 

independent agency and I cannot comment on either the Boeing complaint or the 

recently proposed union election rules. 
17 

I can comment, however, on the centrality of the relationship between the health 

of the labor movement and the health of the middle class in our Nation. I have lived 

that connection. My father was a Teamsters shop steward in a battery recycling 

plant. When I was a child, I would sit at our kitchen table and help translate the 

workers’ grievances from Spanish to English. They wanted safer working conditions 

and livable wages and benefits. The union helped them get what they earned and 

deserved—a shot at a middle-class life for themselves and their families. 

The statistics bear this out. From the 1940s to the 1960s, when union density was 

at its height, the middle class in our country thrived. Wages and productivity rose 

together during that time and we experienced robust growth throughout the economy. Union members with good, secure jobs could afford to buy good American products so American companies could succeed. That’s why this Administration supports 

the right of workers to collectively bargain if they so choose. 

We at the Department of Labor come to work every day to do our best to create 

economic opportunities for the American people. Last month’s jobs report just underscores that more work needs to be done to stimulate new employment opportunities 

in the private sector and to support workers striving to achieve the skills needed 

in the new economy. Again, I appreciate your invitation to be a part of this incredibly important examination of how we can come up with the best solutions for the 

security of the middle class. I look forward to working with all of you to ensure good 

jobs for American workers. I am happy to answer your questions. 

The CHAIRMAN. Well, Secretary Solis, thank you very much for 

a very eloquent statement and a summation of a very nice statement that you had prepared. 

We will begin 5-minute rounds. As I shared with you, before we 

came out here, some disturbing news in the paper this morning. 

The Pew Foundation study examined the impact of the recent recession on wealth disparities. They looked at Census Bureau data. 

They found that the median wealth of Hispanic households fell 

by 66 percent from 2005 to 2009. African-Americans saw their 

wealth drop by 53 percent. Asians also saw a big decline, with 

household wealth dropping 54 percent. By contrast, the median 

wealth of white Americans fell by just 16 percent. 

As a result, a wealth gap between white America and minorities 

is now the widest it has been in 25 years since the census started 

collecting the data, with white households having 20 times the net 

worth of Hispanic and black households. By way of comparison, in 

1995, the wealth ratio was 7-to-1 whites to minority. This is very 

disturbing. 

I saw a recent interview with Bill Moyers, and he was asked 

what his biggest concern was. And he said his biggest concern was 

that in the future, that we were going to—as Americans, we were 

going to accept a wider and wider disparity of income, of inequality, 

a wider disparity of inequality as the norm, that he was afraid that 

we would accept that as the norm. 

Now, Secretary Solis, as you have traveled around the country— 

and I congratulate you for doing that. You have really been out and 

around listening to people. Do you get a sense that people are—do 

you get a feeling—when you are talking to average Americans out 

there, working Americans, do they get a sense that somehow things 

aren’t quite right, that there is this disparity going on? Do they feel 

that? 

Secretary SOLIS. Senator, I know this is a hard question because 

there are, unfortunately, groups that suffer more severe impact in 

terms of poverty when we are going through a recession. And it is 

true that Latinos and African-Americans and others that are lowskilled are the ones that have had to carry the burden through this 
18 

recession, and even before then. I have said that time and time 

again. 

I think the reality is, that we can’t forego our commitment to 

education. And the statistics still continue to bear out, those individuals with higher earnings have higher degrees or credentials. 

So my statement to you is that we have to continue providing job 

opportunities through these programs that can not so much, I 

would say, positively guarantee a job right away, because people 

have to go through a transition. We are talking about a massive 

number of people who have lost jobs, who have been out of work 

for more than 6 months and are somewhat disillusioned but need 

to be integrated into our systems, our One-Stop centers. 

And that is an appropriate place for this to be, so that individuals can get an assessment, know what skill sets they have, where 

they can ramp up, and then given options and opportunities as to 

where to go. 

So education, certificates are important. I hear from businesses 

all the time telling me that it isn’t so much that they need the 

higher end, the bachelor of science or Ph.D. engineer. What they 

need is a good technician who has adaptable skills and is flexible 

and is ready to take on the responsibility of adapting to a whole 

new environment. 

I would say there are different factors going on. But, yes, the disparity amongst these groups is alarming, and that is why the Department of Labor has emphasized in grant programs known as 

Pathways Out of Poverty, $150 million went to communities across 

this country with levels of 50 percent or higher unemployment. 

Now, surely, that wasn’t enough. But we know that it was a start 

in the right direction, and I can tell you that different collaborative 

opportunities have made themselves available with business, community colleges, and even faith-based and other organizations. 

The CHAIRMAN. Madam Secretary, I appreciate that. I also wanted to ask about youth unemployment. 

I have seen figures recently also that show that more and more 

young people, first of all, aren’t even entering the workforce. And 

if they are, there are very low-skilled jobs they are in, and then 

they fall back out of the workforce. 

It seems that we have a real problem with youth unemployment. 

What can we do about that? 

Secretary SOLIS. Senator, unfortunately, what is happening is we 

have older workers who are staying in longer. We have older workers who are not retiring, as usually would take place. But because 

of this recession, they are staying in longer because they have to 

out of necessity. 

That isn’t opening up more jobs for those at the lower end and 

the entry level. Unfortunately, for young people, my preference is 

that we give them mentorships, internships, that we give them at 

least that work-based experience. It is so essential for them. 

I can recall when I was an intern how important it was, even if 

I wasn’t paid, but to have that experience and to have that noted 

on my resume ́, how that created an opportunity to open up another 

full-time job. 

But what is happening here for young people also is that some 

of the areas that perhaps they are getting degrees in may not be 
19 

the ones that are opening—that are offering jobs right now. So we 

are asking students, young people to also take a look at adapting 

their skill sets and taking, perhaps, another credential or maybe 

another type of degree in another area that might be of help while 

this transition occurs, while we begin to expand. 

That is why I think looking at opportunities in the green industry, renewable energy, and looking at how we can transition individuals from some of the harder manufacturing and, say, construction fields is so essential to move people up so we can open up opportunities for them. For young people, it is very hard. And for minorities, young people, it is three times harder. 

I think one of the things I would like to make clear is, though, 

under the Recovery Act, we did have moneys for summer youth employment. That money has gone away. I have created my own initiative and asked corporations around this country if they would 

unselfishly open up some slots for summer jobs. Our goal was to 

help provide at least 100,000 jobs. We are up to about 80,000. 

Recently, I visited Jamba Juice in San Jose. They committed 

2,500 jobs initially. When I went to visit them this last week, they 

had 2,700 jobs that they provided. And they are willing now to 

work with us even to open up slots, internships for some of our Job 

Corps students. 

And so, I think, once we begin a discussion with businesses about 

what we are faced with, I think people will give it some thought 

and open up those opportunities. 

The CHAIRMAN. Thank you very much, Madam Secretary. 

Senator Isakson. 

Senator ISAKSON. Thank you, Mr. Chairman. 

Madam Secretary, are you familiar with OSHA’s rule known as 

RIR, or reportable incident rate rule? 

Secretary SOLIS. Yes. 

Senator ISAKSON. OK, well, I was not familiar with it until yesterday, when a dear friend of mine, who is an Hispanic woman— 

naturalized U.S. citizen, been recognized by the Department of 

Labor in past years as one of the leading minority enterprises in 

the country—came to my office because of the difficulties with regulations being applied in a very difficult economic time. 

And it is important for us to understand that because we are an 

equal opportunity country, all of our rules and regulations apply to 

everybody, regardless of ethnicity or anything else. The RIR rule 

is the reportable incident rate rule that limits a worker, a company 

from getting involved in a government contract if they have a reportable incident rate higher than 3. 

Now I don’t want to be technical, but this is important for everybody to understand. The reportable incident rate rule says the following. A company must take its last 12 months and take how 

many reportable incidents to OSHA it had. A reportable incident 

is an injury that goes beyond first aid, OK? 

They multiply those incidents times 200,000. Two hundred thousand is the number of hours a company employing 100 people 

would consume in a year if each worker worked 40 hours a week 

for 50 weeks. And then you divide that by the number of workable 

hours your particular company had in the preceding year to come 

up with a product. 
20 

This is the exact case in terms of this company. They had three 

reportable incidents in the last 12 months. If you multiply that 

times 200,000 hours, which is 100 people working full time in a 

company, that equals 600,000. If you then divide that by the number of hours your company did—and she had 48 employees, not 

100—multiply 48 times 2,000, you get 96,000 hours. 

When you divide the smaller denominator of 96,000 into the larger number accomplished by 100 workers at 200,000, the reportable 

incident rate for her company with three incidents is 6.2. So the 

rule negatively impacts small business, rewards the more employees you have in a larger business. 

We have Plant Vogtle being built in Georgia right now, which is 

a major nuclear plant, a green jobs plant, I might add. She cannot 

bid on that contract because the RIR rule applies a strict acrossthe-board three factor with no accommodation for a business employing less than 100. Most small business employs less than 100. 

None of us want people being injured. But my point is, it is very 

important that we make sure these rules apply to small businesses 

in an equitable fashion so they can get jobs and employ workers. 

And I would be happy for your comments. 

Secretary SOLIS. Certainly, Senator Isakson. This is the first 

time I am hearing about this particular incident, and I will take 

it back to our Assistant Secretary in OSHA. 

But I do want to make clear that OSHA does work very closely 

with small businesses when there are issues that do come up. So 

I would work with you or your office on this particular case, but 

would say to you that one of our emphasis out front is that we have 

to work with small businesses, and we know that we have to provide free consultation to them. 

In many ways, we can prevent some of these types of incidents 

if we are working with people on the ground and understand that 

we are making ourselves available. We are trying to be more transparent and more available than we have in the past, and I, for one, 

know how important it is. 

In fact, recently, our office actually was working on another regulation, a noise hazard, an MSD column initiative, where we had 

gotten a lot of concerns from businesses. So we have managed to 

go back and work with the Small Business Authority so that we 

could take into consideration all these comments where we do find 

that there are regulations that may have, say, an overly burdened 

disposition for some of these businesses. 

I am open to working with you, and we know that the small business intent is to minimize penalties to small businesses. So I also 

am surprised to hear about this case, but we will guarantee that 

we will get back to you and work with you on that. 

Senator ISAKSON. Please understand, I am not begging attention 

to an individual case, which is specifically why I did not mention 

either the company or the individual. But to point out, when you 

take an arbitrary rule and apply it, you can sometimes have the 

unintended consequence of costing jobs and hurting minority employers equally to what any other non-minority employer might 

have been hurt. 

One other point, and I am going to run out of my time, but just 

one other rule and compliance issue that is causing terrible con-
21 

sternation. And you have gotten a letter from me. This is the fiduciary rule under ERISA. 

And the department, as I understand it, stated it was unable to 

estimate the number of service providers affected or the cost on 

small business when it wrote the rule. But the unintended consequence—I hope it is the unintended consequence—of the fiduciary rule is going to cost small business a tremendous amount of 

money and lose a lot of people in financial advice business and consulting business to small businesses. It is going to put them out of 

business. 

So that is just two examples of rules that are hurting small businesses, raising compliance costs, and eliminating opportunity. 

Thank you, ma’am. 

Secretary SOLIS. Well, Senator Isakson, I would just say that, 

that current rule that you point out is very important because it 

would help to identify who is giving advice. And in many cases, in 

the previous rule, many of those decisions have had adverse effect 

on small businesses as well as individuals because they were given 

erroneous or wrong advice, and we find that there have been conflicts of interest. 

And so, what we are doing with this current rule is trying to 

close that loophole so that the burden does lie on the individual 

that is giving that advice. If there is a conflict there, and there 

shouldn’t be, quite frankly, but if there is, then this rule would 

apply. 

I think that what we are trying to do is not be a burden on small 

business at all, but to have transparency where we know it will 

make a difference, especially in these hard times, economic times, 

when people are making major investments of their pension plans 

and given wrong information and end up losing later on because 

they were misled, say, half of their savings. And there are several 

cases that I could go through and talk to you about. 

But these stories we have read about, we have heard about them, 

and all we are trying to do here is trying to level the playing field 

so that consumers and individuals that make these decisions understand that they are getting the best advice and that there isn’t 

a conflict of interest. 

Senator ISAKSON. My time is up, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Isakson. 

And in order of appearance, we have now Senator Blumenthal, 

Senator Alexander, Senator Hagan, Senator Bennet, Senator Murray, Senator Casey, Senator Franken, Senator Whitehouse. 

Senator Blumenthal. 

STATEMENT OF SENATOR BLUMENTHAL

Senator BLUMENTHAL. Thank you, Mr. Chairman. 

And once again, thank you for holding this hearing on a vitally 

and profoundly important topic. 

Thank you, Madam Secretary, for the great work that you are 

doing on issues like skill training, particularly using community 

colleges, where both the Chairman and I have expressed an interest, and on misclassification of workers, which degrades the value 

of jobs. And the Chairman and I, along with Senator Brown, have 
22 

introduced legislation, the Payroll Fraud Prevention Act, that 

would help address a number of these concerns. 

If I can’t get to all of my questions, I will submit some in writing 

to you. But I would like to focus just at the beginning on an issue 

that has been a concern in my State, concerning the redefinition 

of ‘‘fiduciary’’ under Federal law. 

I know you have been working hard on it, very difficult and complex set of issues surrounding this task. And there have been concerns expressed that the new rule might have the consequence, 

perhaps unintended consequence, of limiting the choice of providers 

or restricting investment, education, and guidance. And I wonder 

if you could talk a little bit about what you are doing to avoid those 

consequences? 

Secretary SOLIS. Thank you, Senator Blumenthal, and it is good 

to see you. 

Senator BLUMENTHAL. Thank you. 

Secretary SOLIS. And I do want to say that, one of the things 

that we have attempted to do—and Assistant Secretary Borzi of 

EBSA will also be happy to meet with you after if there are further 

questions. 

But in this particular regulation, what we are trying to do is, as 

I said earlier, minimize the kind of information that could be misleading and could lead to a potential loss of individuals’ savings 

and their retirement. And we have seen that happen time and time 

again. 

So we are saying here in this regulation that we want to make 

clear that the individual that is giving this advice be held accountable because under the current rules, they are not. So what we are 

asking for is that this be an item that we can move through. 

We have worked with all the agencies, including Treasury and 

all those other agencies that are involved here, and there does not 

seem to be any conflict with respect to how this rule is being interpreted. The White House has been very much involved in this. We 

all have been hearing from many of our friends, and I think a lot 

of it has to do with just misinterpretation of what fiduciary is. 

But I think—— 

Senator BLUMENTHAL. So you will be coordinating as well with 

the Securities and Exchange Commission and other agencies that 

have that. 

Secretary SOLIS. Absolutely. And we have. 

We have had several meetings with them and have purposely 

held more hearings so that we could have more comment made 

available to us. 

Senator BLUMENTHAL. And perhaps also, I know that some concerns have been raised by folks in the industry about information 

that might be made available to them before finalization of the 

rule, such as relating to the prohibited transaction exemptions, and 

perhaps either now or in a subsequent discussion, we might have 

a conversation about how the Department of Labor will proceed in 

dealing with those revisions to the prohibited transaction exemptions? 

Secretary SOLIS. Be happy to do that. 

Senator, you also mentioned TAA—well, TAA community college 

program funding that is going to actually be issued in September, 
23 

$500 million of the first $2 billion that will be made available for 

community colleges to help them ramp up so that we can provide 

better training. It is not for, how could I say, access to a community college. It is to expand current programs that may be impacted. 

So one that I know is very dear to many people in the room happens to deal with nursing. We hear these programs have been impacted. Places like that in institutions where you can acquire 

equipment, bring on staff to change curriculum, and work very 

closely with employers. That is the requirement for that particular 

grant. We are really excited about that. 

And then the last one, misclassification, thank you for your work 

on that. What we are trying to get at here is that those businesses 

and employers that misuse the system are actually hurting our 

economy because they don’t pay into the workers’ comp system. 

They don’t pay into disability insurance. They rob the employee, 

but they also hurt other legitimate businesses. 

That is why we have decided to work collectively in our department with different divisions to put more strength and enforcement 

in this particular area, to really hold clear what the intent of that 

legislation is about. 

Senator BLUMENTHAL. Well, I really commend you. I know a lot 

of the members of the committee join me in welcoming and commending that work. And particularly on the community colleges, I 

know the Chairman and Senator Hagan, I believe in a prior hearing, and I have remarked on the enormous potential for providing 

skills. 

What I hear in Connecticut—and I know you have visited Connecticut, and thank you for doing so—is that a lot of the employers 

have openings, but they can’t find the workers for the skills. And 

actually, we have community colleges that have established relationships with those employers to meet those demands. 

And so I would be very, very eager to follow up with you on that 

issue. 

Secretary SOLIS. Thank you. Thank you so much. 

Senator BLUMENTHAL. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Blumenthal. 

Senator Alexander. 

STATEMENT OF SENATOR ALEXANDER

Senator ALEXANDER. Madam Secretary, thank you for coming. 

You mentioned Flint, MI, and the example there, and it reminded me of the auto industry. This is a discussion about middleincome families, and the auto industry in my State, Tennessee, has 

been a story of raising family incomes, of creating more middleincome families. 

It also reminds me of a book that the late David Halberstam 

wrote in the late 1980s, where he described the American automobile industry centered in the Midwest as noncompetitive, with 

high costs, high labor prices, sort of an oligopoly, as he described 

it, unable to compete with Japanese and German car manufacturers. 

What happened was that when President Carter said that the 

Governors in the 1980s go to Japan and persuade them to make 
24 

in the United States what they sold in the United States, they 

came for the first time to Tennessee. And one of the reasons was 

the central location of the State in the marketplace, but an equally 

important reason was the right-to-work law, which created a different environment for labor relations than was found in the Midwest. 

Do you agree that States should have the right to enact rightto-work laws? 

Secretary SOLIS. Senator Alexander, I recall the first time that 

I came before this committee, you asked me a similar question. I 

believe my response was that States ought to be able to do what 

they find in their best interests. And given the situation, there are 

many States that are right-to-work States, and there are many 

that are not. 

And as I said earlier, my role is to help people right now find 

jobs and good jobs. In fact, I had the pleasure of going down to Tennessee and visit the Sharp Industries there, where they were assembling photovoltaic panels, solar panels. 

The individual there, I believe, was from Japan, said that he was 

ready to ramp up and do more, but wanted to make sure that there 

was also support from the local government as well as the surrounding areas that would help support that build-out. And I told 

him I was very encouraged by what he was doing, and I was very 

happy to see the diversified staff that he had on the ground. 

Senator ALEXANDER. Yes, Sharp is one of those Japanese companies that is located in Tennessee because of the right-to-work law. 

Secretary SOLIS. They also, Senator, had a full force of AfricanAmerican workers, male and female, who happened to be represented by union. 

Senator ALEXANDER. But that doesn’t have anything to do with 

the right-to-work law. I mean— 

Secretary SOLIS. I just want to say that that was my observation 

there. 

Senator ALEXANDER. Yes, well, that is a good—they also make 

solar panels. So my point is that I am deeply concerned by the Administration’s seeming undermining of the right-to-work law in a 

number of ways, and I am reassured by your comment that you 

think States ought to continue to have, under Section 14(b) of the 

Taft-Hartley Act, the right to choose to enact a right-to-work law 

or not to, as 22 States do. 

Do you believe that it is appropriate for a company to decide to 

locate in a State based upon the cost of labor and upon the relative 

number of strikes in that State? Do believe that using those as considerations for locating a plant is a violation of Federal labor laws? 

Secretary SOLIS. Senator, I believe you are referring to the Boeing issue. And I would just clarify that that current dispute is 

being handled by another independent agency, and I don’t have 

any impact with respect to that particular agency. 

But I do, again, want to reiterate that, as I said in my statement, 

I am supportive of those individuals that would choose to be associated with a union, if they choose to. It is entirely up to—— 

Senator ALEXANDER. If they choose to. But you are all part of the 

same Administration, and the same President that appointed you 
25 

appointed members of the National Labor Relations Board and the 

acting general counsel who brought a case. 

Do think it was a wise idea for counsel to wait until our largest 

manufacturer, Boeing, who sells airplanes all around the world, 

built—chose to begin the first new large airplane manufacturing 

plant in 40 years in South Carolina, wait until that manufacturer 

had spent $1 billion, hired 1,000-plus people, and then say you 

can’t build the plant there or you can’t open the plant there unless 

you build X number of planes in Washington State and X number 

of planes in South Carolina? 

Is that the kind of policy that will create an environment in the 

United States where we can create the largest number of good new 

jobs for middle-income families? 

Secretary SOLIS. Senator, I am very supportive of creating good 

jobs, particular middle-class jobs. I think that is what the thrust 

of this hearing is about. And as I said earlier, you are talking 

about a case that is not under my current jurisdiction. It is with 

the NLRB, and I can’t comment on what—their current cases being 

undertaken at this time. 

Senator ALEXANDER. Thank you, Mr. Chairman. My time is expired. 

The CHAIRMAN. Thank you. 

And now Senator Hagan. OK, Senator Bennet and Senator Murray. 

STATEMENT OF SENATOR MURRAY

Senator MURRAY. Well, thank you very much, Mr. Chairman. 

And Secretary Solis, thank you so much for testifying today on 

this really important topic. You talked about it in your opening remarks that since the late 1970s, income inequality in the United 

States has increased dramatically and, at the same time, the oncerobust middle class has severely deteriorated. 

Instead of focusing on the causes today, which certainly are important, I want to focus on what we can do to help hard-working 

families climb back up that ladder. And I am particularly interested, as you have talked a lot about this morning, in making sure 

that low-skilled individuals have access to education and to training, and that education and training leads those skills and credentials that have value in the labor market, that empower them 

to manage their own careers and enable them to earn familysustaining wages. 

You talked about reauthorizing the Workforce Investment Act, 

and how critical it is to meeting that goal. And I want to read to 

the committee a quote from a group of GAO researchers. And they 

said, 

‘‘Reauthorizing WIA has never been more urgent than it is 

today. Workforce trends in the economic downturn have placed 

greater demands on the workforce investment system than 

ever before. At present, this system is stretched thin. 

’’If we, as a Nation, are to maintain our competitiveness for 

the higher skilled jobs, we must place more emphasis on training workers to keep their skills current before they are threatened with layoffs. We must develop better linkages with edu-
26 

cation and employment. Increasing labor force participation 

will require improving basic skills levels and greater involvement of employers and unions in designing education and 

training opportunities.’’ 

I think it is really clear, as you have stated, that higher skills 

are correlated with higher wages and good jobs. So I want to ask 

you while you are here today what else the Federal Government 

should be doing to support skills development for our workers and 

the employers who need those highly skilled laborers and what new 

ideas we should be looking at as we look to reauthorize the WIA 

bill. 

Secretary SOLIS. Well, Senator, I want to commend you and the 

Chairman and also Senator Isakson and Enzi for all of your work 

on this issue of WIA reauthorization. It is one that I continually 

hear around the country from our workforce investment boards, but 

particularly from businesses that have participated in the past and 

want to see a change and encouraging us to move forward with reauthorizing the legislation to allow for different sectors in the business community to also be able to draw down and utilize some of 

the funds that are made available. 

What I want to present to you is that—and this isn’t something 

new. You are aware of this. The whole issue of looking at sectors 

and regionalization of what is happening around the country, and 

trying to garnish that and allow for more flexibility so that the 

WIA boards and the Workforce Act can really engage and provide 

support for these industries that we know are really going to be the 

future of a particular area. 

We see it in clusters right now. Silicon Valley—I think in other 

parts of the country we see pharmaceutical companies that take 

hold in a corridor, say, in North Carolina, or what have you. These 

are areas where we are hearing people say we want to see more 

support for these kinds of efforts. 

We have worked with, partnered with the Department of Commerce to create a program that we are calling Accelerator Program, 

to look at how we can give funding up to $240 million to particular 

sets of individuals that are looking at sectors and accelerating the 

growth in industries, so the 21st century types of jobs, whether it 

be IT, broadband, healthcare, and, in particular, renewable energy. 

Those are sectors that we are looking at right now, and these 

grants are going to be made available. 

And it is something that I believe the WIA reauthorization 

should encompass, but also to provide for a variety of other players 

or stakeholders to also be a part and represented in the WIA programs. We are not doing enough to also allow for, say, communitybased organizations and faith-based groups to also be partnering 

with us. 

In many cases, they provide essential services for the dislocated 

workers that haven’t been to school in 25 years, lost their job. 

There is no return of that job. They need to have the assistance 

that is provided, guidance, and the intensive support case management that is required. 

Unfortunately, our programs, as is, don’t allow for that, enough 

flexibility. So I know those discussions are ongoing about who can 

be partners, and I think it is essential to have businesses. But 
27 

there are many businesses that just sit on the board in some cases, 

but haven’t done anything to help provide assistance to innovate 

and to look at reforming themselves or reinventing themselves. 

So there also has to be a greater monitoring of what these boards 

actually do and more accountability. 

Senator MURRAY. Well, thank you for that comment, and I am 

extremely concerned about this. I think we are working very hard 

to get a good, solid bill out to address that. 

We do have a skills gap. Senator Blumenthal talked about 3 million jobs available today, but we don’t have the skilled workforce. 

This has to be part of our economic recovery, and certainly it is important for the middle class. So thank you for your words on that 

this morning. 

Thank you, Mr. Chairman. 

Secretary SOLIS. Thank you, Senator. 

The CHAIRMAN. Thank you, Senator Murray. 

Senator Franken. 

STATEMENT OF SENATOR FRANKEN

Senator FRANKEN. Thank you, Mr. Chairman. 

I would like to associate myself with what Senator Murray just 

spoke about. And I have recently cosponsored Senator Sherrod 

Brown’s SECTORS Act. 

I visited manufacturing shops and tech colleges all across Minnesota, and I have heard repeatedly from industry groups like the 

Minnesota Precision Manufacturing Association and companies like 

the Top Tool Company in Blaine that we have a skilled worker 

shortage in advanced manufacturing. And there are jobs actually 

going unfilled in a time we have so many Minnesotans out of work. 

And some manufacturers in Minnesota have been collaborating 

with community and technical colleges to develop training programs to prepare people for jobs, and I just want to reiterate what 

she said, reemphasize what she said and you said in response. And 

I liked what I heard. 

Secretary Solis, in the next panel, Dr. Kenneth Green of the 

American Enterprise Institute will be testifying. And in his written 

comments, he says, ‘‘When it comes to American job creation, it is 

unlikely that the Recovery Act has significant positive impact.’’ 

Yet, I heard from economists, like Blinder and his cohort, Mark 

Zandi, who had been McCain’s adviser in 2008, that, in fact, the 

Recovery Act created or saved anywhere from 2 million to 4 million 

jobs at a time when States were disinvesting. And that these jobs 

and the stimulus—and I saw it all around my State—helped create 

or helped prevent us going into a depression. What is your response to that? 

Secretary SOLIS. Senator, I was very pleased to visit your State 

back in April, and I actually visited Viking Drill and Tool. I don’t 

know if you are aware of the group, but they were recipients of one 

of our grants in a partnership with the BlueGreen Alliance. 

And in part, this particular manufacturer was around for over 

50, 60 years, I believe, creating drill bits and had come in contact 

with our partners on the ground and decided that they wanted to 

learn how to retool, make themselves more competitive. Otherwise, 

they would have to close down. 
28 

What they ended up doing was actually bringing in individuals 

to help increase the skill level of current technicians they had on 

the ground there to be able to make that, I guess, step up so that 

they could produce a better product, using more computerization, 

what they call CAD/CAM robotics and things of that nature. 

They were able to utilize our assistance to help provide the skill 

training, the education that was needed, but they were also able 

to help the company save about $100,000 in energy costs and consumption and using new methods for conservation. 

So our partnership assisted this facility from actually having to 

lay off more people. They are now adding more people there, and 

they are providing a product that is being manufactured here in 

our country that is sent throughout the world. 

I was quite amazed to see the diversity of the workforce because 

not everyone was highly skilled, but individuals had an opportunity 

then to move up. So that allowed for individuals that were looking 

for jobs to also be able to come in and be a part of this effort. 

It was also a partnership, labor-management. So you had unions, 

the steelworkers that were represented in that partnership. And 

that is probably one of the best examples that I could give you that 

we would like to see more of in terms of looking at legislation like 

WIA reauthorization that would allow for these kinds of partnerships to be explicitly supported in this kind of legislation. 

Senator FRANKEN. When the President took office, how many 

new jobs were being created each month—in other words, what was 

the net, plus or minus, new jobs in the United States per month? 

Secretary SOLIS. Well, what I would say to you, Senator, is that, 

when I took office, we were hemorrhaging about 700,000 or more 

jobs for the first part of this Administration. Since the time that 

the Recovery Act was instituted, we have seen numbers changing 

dramatically. 

And I would say in the last 16 months, 2.2 million private sector 

jobs, many of which came out of the manufacturing area, have been 

created. And I would say to you, one of the sectors that has been 

more resilient has been in the healthcare arena. That has continued to go up. 

So I can see where, with the help of the Recovery Act, we have 

added jobs. When you look back at the previous administration, in 

each month of the previous administration, they added about 

11,000 jobs per month. And this President has exceeded that. 

Senator FRANKEN. Thank you very much, Mr. Chairman. 

The CHAIRMAN. Senator Whitehouse. 

STATEMENT OF SENATOR WHITEHOUSE

Senator WHITEHOUSE. Thank you. 

Welcome, Madam Secretary. 

Today’s Wall Street Journal says that the median net worth of 

white households is 20 times greater than that of minority households, 20 times greater than that of black households and 18 times 

greater than that of Hispanic households. The disparity, the Wall 

Street Journal says, is the greatest since the Government began 

tracking such data a quarter century ago. 

We just had last week a study correlating the corporate profits 

that are being reported across the corporate sector and buoying the 
29 

stock market with low wages, that there is a direct correlation between the profits that the corporations are declaring and their refusal to raise wages for their workers at a time when American 

workers are actually getting more and more productive. 

And third, we see wealth disparity with the wealthiest Americans with a larger and larger share of the Nation’s wealth really 

unprecedented since the robber baron era of many, many years ago. 

What is your reaction to those sorts of disparities emerging in our 

economy? 

Setting aside the relative injustice between the winners and the 

losers in an economy like that, overall, does an economy succeed 

with that kind of disparity in it, or is it a stronger engine for 

growth if the wealth is more broadly shared with the middle class? 

Secretary SOLIS. Well, obviously, I believe with the latter. If the 

distribution of wealth is made available to everyone, obviously, as 

they say, every boat is lifted. And I am very concerned because I 

think it is very unacceptable the high rates of unemployment 

among the different ethnic groups, and in particular, as I said earlier, amongst our youth. 

It sends a very negative message in particular to young people, 

who are looking, and who will be our future workforce. And therefore, I believe that we can’t afford to continue to cut back on services for the most vulnerable populations, who happen to be these 

particular groups. 

It takes longer to get dislocated workers back into the workforce, 

but chances are, when they are in our programs, they have a higher rate of placement in a job if they go through our workforce training programs. And I am happy to say, with our workforce investment funds and the Recovery Act in particular, we were able to expand some of the curriculum so that people, young people in areas, 

for example, that are experiencing high numbers—high levels of 

unemployment with the African-American community and Latino 

community, we concentrated efforts in the Job Corps program. 

We have a couple of students here in the back who are visiting 

from the DC Potomac program, and I am sure they will tell you 

their individual stories, how these job training programs made the 

difference for them. Or perhaps they fell out of high school. Maybe 

no one in their household is working. This is giving them an opportunity to gain a credential, but also to be placed in a worksite and 

then eventually hired up by, say, a local employer. 

Those are the kinds of programs that we can’t afford to cut right 

now, and I think that we also have to move forward on extending 

the TAA, the Trade Adjustment Assistance program, because there 

are too many people who have lost their jobs and are in need of 

this particular assistance. 

We know it works. We know that these individuals lost their 

jobs, in many cases, through no fault of their own, but decisions 

that were made in another place. And yet, they are suffering. So 

we need to extend TAA, as well as provide incentives for middleclass individuals to get some of those tax breaks, in particular payroll tax. 

Those kinds of things are very important, and also investing in 

infrastructure, transportation, high-speed rail, and other systems 

where we could put people in the construction industry back to 
30 

work, where high numbers of African-American and Latino workers 

were displaced in this recession. 

Senator WHITEHOUSE. Well, let me thank you for your focus on 

jobs. A very small group of very hard-core extremists is holding the 

debt ceiling hostage to an agenda to attack Medicare, things that 

the American people don’t want that you could never get done 

through a vote, but by taking the economy hostage, they are trying 

to do that right now. And it has fixated the public and the press 

on this debt ceiling crisis. 

It is a manufactured crisis, but it is a real crisis. But it is really 

important for families who are out there trying to find a job and 

get back into the workplace and try to get this economy rolling and 

fairer that the Administration focus on jobs and not allow itself to 

be distracted by the real debt limit problem from the other very 

real problem for families in States like mine that have very high 

unemployment. 

So thank you for keeping that focus. 

Secretary SOLIS. Thank you, Senator. 

The CHAIRMAN. Madam Secretary, thank you very much. 

Senator Merkley. 

STATEMENT OF SENATOR MERKLEY

Senator MERKLEY. Thank you very much, Mr. Chair. 

And thank you, Madam Secretary. 

When we were immersed in the conversations about the stimulus 

2 years ago, there was a conversation about renewable energy and 

whether we could require the wind turbines to be built in America. 

And we were told, no, due to trade agreements, we couldn’t. 

Meanwhile, it is my understanding that China had insisted that 

the turbines that they purchased be made in China, that they provided enormous subsidies for companies to come there. And while 

they were pursuing an industrial policy, which discriminated in 

many ways against American companies, we were giving them free 

reign to our economy. And in fact, many of the turbines were made 

overseas that were purchased during that effort. 

If China is pursuing an industrial policy that protects their domestic industries and we are not, and we lose jobs and they gain 

jobs, why is that a sustainable policy for the United States? 

Secretary SOLIS. My response would be that I know that during 

the Recovery Act, there were many projects that were funded, and 

in the course of that, obviously, there were some beneficiaries of 

that. And unfortunately, some of those programs were not funded 

through the Department of Labor. 

My funding goes through to job training, and I am very proud 

of what we have been able to do with respect to creating sustainable green jobs. And I am very excited about the fact that recently 

there was a report that came out from Brookings Institute that actually outlines the creation and number of jobs that have been 

made available here in the United States. 

In fact, I think 10 days ago they just released a report that I am 

sure this committee will have access to. If not, I would be happy 

to share the information that we have. But around the country, you 

can see where there are jobs. In fact, the clean economy, according 

to this study that was put out by Brookings, says that there are 
31 

some now—employed 2.7 million workers in the clean green economy, and much of it has been happening in big metropolitan areas. 

In fact, in States like Toledo, OH; Charlotte, NC; Cleveland, OH; 

San Jose, Sunnyvale, Santa Clara; Knoxville, TN; Albany, NY; and 

Troy. I am happy that this information is finally coming about, but 

I know we need to have policies where we encourage more investment here, that we support American-made products. 

Senator MERKLEY. Thank you. 

I am a big advocate of green jobs, but I think the heart of the 

issue I was raising is not one you address, which is China has an 

industrial policy that discriminates. We provide an open country. 

Let me try a different angle on it, which is that China also pegs 

its currency, which acts as a de facto tariff, on imported goods to 

China. That means it affects the goods that we manufacture, while 

making their goods cheaper to us. Ours is more expensive to them 

and theirs is cheaper to us. 

This sort of de facto tariff is extremely disadvantageous for creating jobs in America, and isn’t this part of the picture? 

Secretary SOLIS. I don’t disagree with you. I think there are 

many issues that we have to look at, and many of which are not 

under my purview. But I agree with you that we need to have better trade agreements that are fair, and I look forward to encouraging the manufacturing base here to grow and be robust. 

That has been what my discussion, I think, today has been 

about, trying to make sure that we can keep these competitive jobs 

and bring some of those back here to pay good wages and to make 

that investment and to close those tax loopholes and not allow for 

that to continue in the pattern that has actually driven down our 

salaries and created the disparities that exist amongst our different 

racial and ethnic groups, and particularly amongst young people. 

Senator MERKLEY. Well, I appreciate that a great deal because 

I think it has been very hard for us to hold a national conversation 

over how, I think, we all believe that trade is advantageous in the 

context of countries being able to specialize and, thereby, produce 

things at lower costs. And trading back and forth on an equal basis 

enhances jobs and standard of living in both countries. 

But I think we really have to wrestle with this issue of disparity 

in trading when there is an industrial policy on one side and not 

on the other. There are some very interesting studies of historical 

relationships, where one side has had industrial policy, the other 

hasn’t. And almost always the side with the industrial policy, as 

you might expect, comes out ahead in that relationship. 

In our recent bipartisan trip to China, every American company, 

every single one we talked to, had stories about their products 

being discriminated against, about the form of the financial agreement under which they could enter the market being stipulated, 

about that type of relationship, that economic structure being used 

to strip technology, steal technology, if you will. 

These are very serious things for our success as a manufacturing 

Nation. And I realize it may not be under your direct purview, but 

in this conversation about jobs, I think we have to wrestle with 

some things that, as a Nation, we have found difficult to address. 

Secretary SOLIS. I think, Senator, if I might, one of the recent activities that has occurred was with respect to tires, the sale of tires 
32 

to China, as you know. And had it not been for some of the folks 

in the steel industry, our friends, we probably wouldn’t have moved 

and really seen the imbalance there. 

And as a result, we now brought those jobs, those jobs came 

back, so to speak, and we are now having more assembly production of these tires that we knew were being—we were being disadvantaged because we were being flooded by exports from China. 

So there are some good rays of hope. And I certainly want to 

work to continue with members on this committee to see that we 

provide opportunities for goods that are made and can be produced 

here and sent abroad. I think that is what many of us would like 

to envision. 

Senator MERKLEY. Thank you so much. 

Secretary SOLIS. Thank you. Thank you, Senator. 

The CHAIRMAN. Thank you, Senator Merkley. 

Secretary Solis, thank you very much for the generosity of your 

time, for coming up here and responding to our questions. We may 

have further questions in written form that we will submit. But 

again, I just thank you for your attention to this plight of the middle class. 

We are going to continue to have these hearings. I don’t feel 

there is any—I really don’t believe there is any debate or discussion about the fact that the middle class has lost ground in the last 

20, 30 years. There may be a debate and discussion about what has 

caused it, what may be some of the answers to it, and what we can 

do. But that is OK. Healthy discussion and debate can lead to 

progress, not necessarily stalemate. 

But I do believe that this is something that all of us are going 

to have to pay attention to, and we are going to have to have this 

as a major debate and discussion in our country, what is happening 

to the middle class and what can we do—if we believe that a solid 

middle class is beneficial to our society, what can we do to regenerate it and to replenish that middle class? 

So I thank you very much for your involvement in this and for 

your advice and suggestions today. Thank you, Madam Secretary. 

And we will now go to the next panel. 

[Pause.] 

Our second panel, we welcome Deborah King, who has served as 

the executive director of the 1199 SEIU Training and Employment 

Fund since 1995. Also project director of the Health Careers Advancement Program, a national project to develop career ladders 

for healthcare workers. Ms. King has served as an adjunct professor at Cornell University in labor-management relations for 10 

years. She also serves on the New York City Workforce Investment 

Board. 

Sarah Corey is the director of public relations for IceStone, LLC, 

a small manufacturing company in New York City that produces 

durable surfaces made from 100 percent recycled glass and concrete. Ms. Corey has a degree in sustainable development, economics, and policy from the University of Vermont. 

Kenneth Green is a resident scholar and the interim director of 

the American Enterprise Institute’s Center for Regulatory Studies. 

He is an environmental scientist by training and has worked for 

more than 16 years at public policy research institutions across 
33 

America. He has twice served as an expert reviewer for the United 

Nation’s Intergovernmental Panel on Climate Change. 

Tom Prinske is an owner of T. Castro Produce in Chicago, IL, a 

small produce distributor with 15 employees. He has a progressive 

facial disability that began when he was a teenager, also serves as 

a member of the Illinois Workforce Investment Board. 

We welcome you all here to this hearing. As you may have heard 

from our first witness, Secretary Solis, that we have been having 

a series of hearings basically on the middle class, what is happening to the middle class and any suggestions on how we can stop 

this erosion of the middle class in our society. 

So we welcome you and your input into this hearing. 

We will start with Ms. King then to Ms. Corey to Mr. Green to 

Mr. Prinske, Your statements will all be made a part of the record 

in their entirety, and I would ask if you could sum up in 5 minutes 

or so. 

Ms. King, welcome. And please proceed. 

STATEMENT OF DEBORAH KING, EXECUTIVE DIRECTOR, 1199 

SEIU TRAINING AND EMPLOYMENT FUNDS, NEW YORK, NY 

Ms. KING. Thank you. Thank you, Chairman Harkin, Ranking 

Member Enzi, and other Senators, for the opportunity to testify 

today. 

I am Deborah King, executive director of the 1199 SEIU Training 

and Employment Fund. We are the largest labor-management 

workforce organization in America, covering over 250,000 healthcare workers and 600 hospital, nursing home, and homecare employers in New York, New Jersey, Massachusetts, Maryland, and 

DC. 

The oldest part of the organization is the Training and Upgrading Fund, or TUF. Since 1969, TUF has supported over 100,000 

workers to upgrade from service and clerical jobs to nursing and 

other technical and professional healthcare careers. These upgrades have enabled them to move from low-income jobs to good 

middle-class jobs, often increasing their salaries by 50 to 100 percent from before the training. 

Additionally, achieving a college degree has brought workers 

long-term job security and has increased the chance that their children will also become college graduates. 

TUF is a Taft-Hartley fund, administered by both labor—in this 

case, 1199 SEIU United Healthcare Workers East—and healthcare 

employers. It is financed through employer contributions and Federal, State, and private grants. Because TUF has input from employers about industry needs and SEIU about worker needs, it has 

been very successful in increasing the mobility of healthcare workers, promoting retention, and addressing industry needs. 

TUF programs provide a full range of benefits, including counseling, preparatory classes, and tutoring, to support workers, many 

of whom have been out of school for years or dropped out of school 

because of economic or life hardships. TUF has established innovative worker-friendly programs, such as partnerships with colleges 

to create part-time, evening, and flexible programs. 

This allows workers to move up the education and career ladder 

and out of entry-level jobs, creating yet another hiring opportunity. 
34 

As people move up, it is an opportunity for unemployed workers to 

move in. 

TUF benefits, provided at no cost to workers, include English as 

a second language, GED, and college preparation. TUF offers up to 

24 credits per year in tuition benefits and a range of technical and 

professional programs. 

Pell grants, which provide most students with additional support, 

allow TUF to support many more workers each year. Without Pell 

grants and TUF, most of these workers would never afford to attend college. And I think we know that college is essential for 

many jobs that are available today. 

In 2010, almost 20,000 workers participated in one of the fund’s 

programs. Around 5,000 were supported through tuition vouchers 

and assistance to study for technical jobs, such as respiratory therapy, radiology tech, or for social work and counseling. 

In the last 3 years, the fund has produced over 1,500 RN graduates. The vast majority of these workers were certified nursing 

aides, allowing them to nearly double their previous average salary 

of $35,000. They went to $65,000 a year to start. Last year, the 

fund also graduated over 500 licensed practical nurses, who went 

from salaries in the low $30s to earning in the high $40s. 

Another success of our programs is the high levels of retention 

and completion rates in college. The Health Care College Core Curriculum is a college program where participants attend prerequisite 

courses as a cohort and are provided additional tutoring, counseling, and interventions to ensure success. It has a 90 percent retention rate in college, compared to national average of 30 to 50 

percent for adults returning to school. 

On June 16, we had a graduation ceremony, and when I think 

of our successful outcomes, I think of one of the speakers who 

spoke there, Christine Porter. Born on a dairy farm in upstate New 

York, Christine left home and school at 16 and had her first child 

at 18. Several years later, her life was in turmoil as the result of 

a terrible divorce that left her and three young children seeking 

refuge in a domestic violence shelter. 

Moving her family to Queens, NY, Christine worked three jobs, 

7 days a week to keep food on the table. After getting a job as a 

medical assistant and becoming an 1199 SEIU member at Long Island Jewish Medical Center, Christine learned about training fund 

benefits. 

Christine found the transition to college to be much smoother, 

thanks to taking classes in the Healthcare College Core Curriculum and getting additional supports. While still working full 

time, Christine graduated with honors, earning her nursing degree 

at Queensborough Community College. 

Christine now works for her same employer, but now as a neonatal intensive care registered nurse. She is currently pursuing a 

bachelor of science degree in nursing and will graduate next year. 

Her dream of having a decent life for herself and her children is 

now a reality. 

Because of her perseverance—and I want to say none of this happens without workers really working hard, but it wouldn’t happen 

just by that. It happens also with the support from our program. 
35 

TUF’s track record of success has encouraged employers around 

the country to join the existing fund or create similar model organizations. In the past 10 years, the fund has grown by 50,000 workers, while similar funds in California, Pennsylvania, Connecticut, 

Washington State, Oregon, and Nevada cover an additional 100,000 

workers. So this is an idea that works, and it is an idea that is 

catching on with other employers around the country. 

Today, attaining middle-class status does not necessarily mean, 

unfortunately, that you will maintain it. Another project under the 

fund’s umbrella is the Job Security Fund, started in 1992 and also 

funded by collective bargaining contributions. 

Over 300 employers in the acute care and long-term care industries currently participate in the Job Security Fund, which covers 

over 125,000 employees. Laid-off workers receive supplemental unemployment benefits, continued health coverage, and retraining, as 

well as priority placement rights in participating institutions. 

This safety net is a clear example of a benefit that prevents people from falling into poverty when faced with job loss. The Job Security Fund enables workers to get support and assistance they 

need to quickly re-enter the workforce. 

And I want to say that over 90 percent of the workers that we 

have serviced since 1994 have been able to be placed back into employment, 11,000 out of 12,000 workers we have serviced. And it 

also supplies participating employers with well-trained, experienced staff. 

Thank you again for the opportunity to testify. I urge the committee to look for ways to encourage initiatives like these through 

the Department of Health and Human Services, Labor, Education, 

and other agencies. We must not give up on the hope that today’s 

workers and future generations will be able to live the American 

dream. 

Thank you. 

[The prepared statement of Ms. King follows:] 

PREPARED STATEMENT OF DEBORAH KING

Thank you Chairman Harkin, Ranking Member Enzi, and all Senators on the 

Health, Education, Labor, and Pensions Committee for the opportunity to testify 

today at your hearing on ‘‘Building the Ladder of Opportunity: What’s Working to 

Make the American Dream a Reality for the Middle Class.’’ I am Deborah King, executive director of the 1199SEIU Training and Employment Funds. 1199SEIU is 

part of the 2.1 million member Service Employees International Union. 1199SEIU 

represents more than 300,000 members and retirees in New York, New Jersey, 

Maryland, the District of Columbia, Florida and Massachusetts. The 1199SEIU 

Training and Employment Funds is the largest labor-management workforce organization in the United States, covering over 250,000 healthcare workers and 600 hospital, nursing home and homecare employers in New York, New Jersey, Massachusetts, Maryland and Washington, DC. 

The oldest part of the organization is the 1199SEIU League Training & Upgrading Fund (TUF). Since it’s founding in 1969, TUF has supported over 100,000 workers to upgrade from service and clerical jobs to nursing and other technical and professional healthcare careers. These upgrades have enabled workers to move from 

low-income jobs to good middle-class jobs, frequently increasing their salaries by 50 

to 100 percent when they move into their new classification. In addition, achieving 

a college degree has brought workers enhanced long-term job security and has increased the likelihood that their children will also become college graduates. 

TUF is a Taft-Hartley Fund administered by both labor (1199SEIU United 

Healthcare Workers East) and management (healthcare employers) and is financed 

through employer contributions. In accordance with collective bargaining agreements, employers contribute a percentage of gross payroll to TUF. As a 501c (3) 
36 

non-profit organization, the Fund is also supported by Federal, State and private 

grants. Because TUF has input from employers about industry needs, and SEIU 

about worker needs, it has been an extremely successful partnership in increasing 

mobility of healthcare workers, promoting retention and addressing industry shortages. 

Although the TUF in New York City started in 1969, its track record has incented 

employers in other geographic areas to join the existing Fund or to create new organizations modeled on TUF. In the last 10 years, the Fund has grown by almost 

50,000 workers and similar funds programs by other locals in California, Pennsylvania, Connecticut, Washington, Oregon, and Nevada cover an additional 100,000 

workers. This program works and it is growing throughout the country. 

TUF programs have been successful because they provide a full range of benefits 

including counseling, preparatory classes and tutoring to support workers, many of 

whom have been out of school for years or who dropped out of high school or college 

because of economic hardships or other life circumstances, to succeed. Without this 

encouragement and support, many would remain in entry level jobs and not fulfill 

their human and economic potential. 

TUF benefits, provided at no cost to workers, include English as a Second Language, GED and college preparation. In 2010 in New York City alone, thousands 

of workers participated in these programs. Over one-third of those who attended college preparatory programs moved on to college. 

In addition, TUF offers up to 24 credits per year in tuition benefits and a range 

of programs for technical and professional workers. This includes reimbursement as 

well as tuition vouchers. TUF has negotiated these pre-paid agreements with State 

and city University colleges, which enable people to attend public colleges with little 

to no out-of-pocket cost. Most of the TUF’s workers receive additional support 

through Federal Pell grants, which make it possible for the TUF to support so many 

people each year. Without the support of these Pell grants and TUF’s tuition assistance, most of these workers would not be able to afford to attend college. I urge you 

to continue to support full funding of the Pell program, which is so essential to enable low-income people to obtain the credentials necessary to secure a decent job. 

In 2010, almost 20,000 workers participated in one of the Fund’s many programs. 

Approximately 5,000 workers were supported through tuition vouchers and tuition 

assistance to attend college. Many people study for technical jobs such as Respiratory Tech, Radiology Tech, Pharmacy Tech, Surgical Tech, for Social Work and 

counseling and hundreds of our members upgrade to these positions each year. Over 

60 percent of SEIU members choose nursing as a career. In the last 3 years, the 

Fund has produced over 1,500 nursing graduates. The vast majority of these workers were Certified Nursing Aides (CNAs) prior to graduating from nursing school. 

Upon upgrading, these workers almost double their salaries. For example, the average salary of a CNA in New York City is $35,000; Registered Nurses typically start 

at around $65,000. In that same time period, the Fund proudly graduated over 500 

Licensed Practical Nurses (LPN), who went from earning salaries in the low $30s 

to the high $40s. 

In addition to the salary increases, these workers secured more satisfying jobs 

with more responsibilities and increased recognition and respect. This is what the 

American Dream is about and we are making it happen. 

Another success of TUF is the high levels of retention and completion rates. One 

specific example is the Health Care Career Core Curriculum program (HC–4), a supported college entry program. In this program, Fund participants attend prerequisite college courses as a cohort, with additional tutoring, counseling and interventions to ensure success. HC–4 retention rates are over 90 percent, as compared 

with national success rates of 30 to 50 percent for adults returning to school. TUF 

is now expanding this model to other geographic regions. 

Another positive outcome has been TUF’s track record in establishing innovative 

worker friendly programs. Through labor and management working together, TUF 

has been able to partner with colleges to create part-time, evening, and flexible programs. These programs have allowed healthcare workers to move up the education 

and career ladder. This is an example of how labor and management speaking with 

one voice can make systemic change which benefits everyone. 

When I think of our successful outcomes, I cannot help but think about some of 

TUF’s participants who have shared their stories at our annual graduate recognition 

ceremonies. 

When Christine Porter spoke at our ceremony just a few weeks ago, the entire 

audience was in tears. Born on a dairy farm in Upstate New York, Christine left 

home at 16 and had her first child at 18 years old. Several years later, her life was 

in turmoil as a result of a terrible divorce that left her and her three young children 

seeking refuge in a domestic violence shelter. Moving her family to Queens, NY, 
37 

Christine worked three jobs, 7 days a week, to keep food on the table. After acquiring a job as a Medical Assistant and becoming an 1199SEIU member at Long Island 

Jewish Medical Center, Christine learned about Training Fund benefits. 

Like the thousands of Health Careers Core Curriculum (HC–4) graduates who 

came before her, Christine found the transition to college to be much smoother while 

taking classes with other 1199 members and having access to additional types of 

support. While working full-time, Christine completed the program and moved on 

to receive tuition vouchers for her nursing degree at Queensborough Community 

College. She graduated this year with honors and served as the President of the 

Student Nurses Association. Christine is now working for her same employer as a 

Neonatal Intensive Care Registered Nurse. She is currently pursuing a Bachelor’s 

of Science in Nursing and plans on graduating in 2012. Her dream of having a decent life for her and her children, which began in that shelter, is now a reality because of her perseverance and support from our program. 

Another speaker who comes to mind is Dr. Michelle Joyce. Michelle worked at 

Jordan Hospital in Plymouth, MA for nearly 10 years after obtaining her masters 

in physical therapy. Many healthcare professions are increasingly requiring higher 

credentials. The Training Fund was negotiated into her Union contract for the first 

time in 2007, and Michelle saw her door to higher education and increased job security open. 

Michelle pursued her Doctorate in Physical Therapy at Boston University, something that was too costly to consider before the Training Fund was established. She 

continued to work, be a wife and mother to two small children and obtain her PhD! 

She credits both the Union and Jordan Hospital’s administrators for their insight 

and timely trust to partner together to bring the Fund to Massachusetts. 

Some of our graduates had a longer road to travel to reach their goals. Some did 

not have a high school diploma or were working in a very low paid, entry level job. 

One such graduate, who I now see every day, is Denise Cherenfant. 

Denise began her journey as a home health aide and then became a Certified 

Nurse Aide and 1199 member at Daughters of Jacob Nursing Home in the Bronx, 

NY. Denise was a single mother at the time and determined to increase her standard of living so that she could offer her son a better future. She tried to pass college 

entrance exams on her own several times but was unsuccessful. When she learned 

about the Training and Upgrading Fund, Denise enrolled in free college preparation 

courses which gave her the ability to pass the college entrance exam and succeed 

in college level work. Denise received her Associate’s degree as a Physical Therapy 

Assistant from New York University, a very demanding program. 

A few years later, Denise decided to return to school to become a Bachelor’sprepared Registered Nurse. Through support from the Fund, she attended Lehman 

College, with no out-of-pocket cost and also received a stipend so that she could take 

time off to attend classes and study. Without this financial support, Denise could 

not have reached her career goal—she became the first member of her family to 

graduate college and earned her Bachelor’s of Science in Nursing in 2009. After 

working as a Registered Nurse at her former employer, Denise is now working at 

the Training Fund and is planning to pursue a Masters Degree in Nursing Education. 

At the beginning of her journey, Denise earned minimum wage, with no benefits. 

She now earns a middle-class salary with excellent health, pension and other benefits and she is able to pay for her son’s college tuition. He just started this fall. 

Unfortunately, in our country today, attaining middle-class status does not necessarily mean that you will maintain it. A particularly scary time is when an employer moves out of the area or closes. Another project under the Training and Employment Funds umbrella is the 1199SEIU League Job Security Fund (JSF), which 

was established in 1992 and is also funded by collective bargaining contributions. 

Over 300 employers in the long-term and acute care industry currently participate 

in the JSF. Together, labor and management accept joint responsibility for the employment security of over 125,000 employees. Since 1993, there have been more 

than 12,000 lay-offs from 214 institutions in New York. The Fund provides a safety 

net and re-employment for laid-off workers within the healthcare industry. Over 

11,000 of those laid-off have accessed JSF services, 8,000 of whom have been re-employed in the industry. Others have chosen to retire, relocate, change industry, and 

so on. 

Laid off workers receive supplemental unemployment benefits, continued health 

coverage and re-training benefits as well as priority placement rights in other participating institutions. This safety net is a clear example of a benefit that prevents 

people from falling into poverty when faced with job loss. The intervention of the 

JSF enables Fund participants to get the support and assistance they need to quickly re-enter the workforce. It also helps to supply participating employers with well- 
38 

trained, experienced workers. It is clearly a program that can work where there is 

a network of employers jointly committed to the workforce in their industry. 

One person who benefited from both TUF and JSF is Jorge Negron, a 2008 graduate. Growing up in ‘‘El Barrio’’ in East Harlem, NY, Jorge dropped out of school, 

became a father at 19 and went to work as a housekeeper at Mount Sinai Hospital. 

Years later, after obtaining his GED, Jorge was promoted to a job in Materials Management in an operating room. He would spend his lunch hours observing procedures and talking to nurses about their work. 

Jorge learned about the Fund’s HC–4 program from one of these nurses. With 

Fund counseling and tutoring services, and the support of his fellow union members 

in class, Jorge completed the HC–4 program and continued his pre-requisite classes 

at New York City College of Technology. He was able to become an Anesthesia tech 

and Operating Room Aide at St. Vincent’s Midtown Hospital while still pursuing his 

RN degree. Sadly, St. Vincent’s closed down and Jorge lost his job while in his last 

semester of school. 

Being an 1199 member, Jorge was able to access the services of the Job Security 

Fund. This allowed him to continue his education, with full tuition being paid, and 

preserved his medical benefits. Today, Jorge works as a Registered Nurse at Mt. 

Sinai, where he once swept the floors. He earns nearly double what he was making 

prior to being laid off. Jorge still lives in ‘‘El Barrio’’ and because of his knowledge 

of his community and Spanish fluency, is making a great contribution to both the 

quality of care at the hospital and to the health of his community. 

We are encouraged that even in these difficult economic times, programs like TUF 

and JSF are continuing to grow and make a difference—demonstrating the valueadded of the labor movement, joint labor management partnerships, and that it is 

still possible to implement initiatives which provide pathways to the middle class. 

In addition to the established funds, in States like Minnesota, Illinois and Michigan, healthcare employers and SEIU are collaborating on fledgling training initiatives. These projects are giving workers access to education opportunities they never 

had. They also are giving employers the chance to create local career pathways and 

site-based projects that engage incumbent workers and improve the quality of care 

that is delivered. I predict that these pilot initiatives, in these States and elsewhere, 

will result in the creation of new Taft-Hartley funds in the next several years. 

I would like to thank the Health, Education, Labor, and Pensions Committee for 

this opportunity to testify and to share our programs with you. I urge the committee 

to look for ways to encourage these initiatives through support from the Departments of Health and Human Services, Labor, Education and other Federal agencies. 

We must not give up the hope that our children will have a secure and fulfilling 

future. Thank you. 

The CHAIRMAN. Ms. King, thank you very much. 

And now we will turn to Ms. Corey. Ms. Corey, welcome. 

And again, your statement will be made part of the record. 

Please proceed. 

STATEMENT OF SARAH COREY, PUBLIC RELATIONS 

DIRECTOR, ICESTONE, NEW YORK, NY 

Ms. COREY. Good morning, and thank you, Mr. Chairman, Ranking Member Enzi, and members of the committee. It is an honor 

to be here today. 

My name is Sarah Corey, and I am the director of public relations for a company called IceStone. I am here to share with you 

IceStone’s unique story and illustrate how our company is part of 

an American manufacturing renaissance, creating safe, good jobs 

that pay a living wage. 

Eight years ago, Peter Strugatz and Miranda Magagnini cofounded IceStone in Brooklyn, NY. Both Brooklyn natives, Peter 

and Miranda envisioned a company that would invigorate the local 

economy and challenge the notion that America’s industrial age 

had passed. They believed that a manufacturing renaissance could 

be possible through the creation of green collar jobs. 

Like so many American entrepreneurs, they embarked on a journey to create a better future for their children, and they found 
39 

their inspiration in America’s landfills. Since 2003, IceStone has diverted 10 million pounds of glass from the waste stream through 

the production of its eponymous durable surfaces. 

I brought a sample with me today. IceStone has three core ingredients—100 percent recycled glass, cement, and pigment. There are 

no carcinogenic resins or toxic chemicals in IceStone. So our products are safe for the employees who make the material and for the 

families who prepare their meals on IceStone countertops. 

We procure 100 percent of the cement and 100 percent of our 

glass from American suppliers. Every slab is cast in Brooklyn. Our 

day-lit 19th century Navy Yard factory is both a reminder of our 

industrial heritage and proof that innovation often requires reflecting on the past. We are proof that America can regain a competitive advantage in the global economy by creating green products 

and paying wages that support families. 

Today, IceStone employs 45 full-time men and women, six of 

whom were hired in 2011, and we are each dedicated to the same 

ethos that inspired our co-founders. A successful business places 

equal value on social responsibility, environmental stewardship, 

and fiscal profitability. We call this the ‘‘triple bottom line.’’ 

For the purposes of today’s hearing, I will focus on IceStone’s social bottom line, which has three key attributes—job training, a living wage, and employee health and safety. 

Job training is an essential component of the IceStone employee 

experience, and we heard earlier from Secretary Solis just how important it is. Each IceStone employee creates a professional development plan every year. More than any other tool, the development 

plan empowers us to take a proactive role in the direction and evolution of our work. It captures our goals and details the resources 

needed to achieve them, inspires pride in our work, and has served 

as a roadmap for entry-level and executive-level employees alike. 

In 2010, our lead technician, Jose Gomez, completed a 5-day 

workshop in total productive maintenance. By participating in the 

workshop, Jose expanded his arsenal of skills required for his job, 

which enabled him to identify and prevent potential equipment 

issues throughout the factory. This led to increased efficiency, and 

in turn, Jose received an increase in wages. 

Other employees have used their professional development plans 

to explore skills unrelated to their day-to-day work. This summer, 

for example, Luke Keller from the operations team left the factory 

floor a few hours each week to work with the marketing team and 

hone his video production skills. 

The capacity building that Jose and Luke have found at IceStone 

should be accessible for every working American and is a critical 

part of strengthening America’s middle class. 

The second key attribute of our social bottom line is the living 

wage. The minimum wage in the State of New York is $7.25. And 

any of you who are familiar with the monthly cost of riding New 

York’s subway can attest to the inadequacy of this wage. 

At IceStone, we believe that all employees have a right to a wage 

that will provide shelter, food, and other basic necessities for their 

families. We also believe that a living wage includes benefits, and 

currently, all IceStone employees have access to health and dental 

care. 
40 

Providing such benefits, coupled with a safe work environment, 

is the third pillar of IceStone’s social bottom line. Our company has 

a low employee turnover rate, a high number of employee referrals, 

and promotes a culture of inclusion and service. But it doesn’t end 

there. 

IceStone strives to make positive social, environmental, and economic impacts beyond the gates of the Navy Yard. We are a founding member of B Corporation, a network of 427 companies that 

prove businesses have the power to solve social and environmental 

issues. To date, five States have signed legislation that recognizes 

B Corporations and holds the leaders of such companies accountable for the material impact their businesses have on society, 

stakeholders, and the environment. 

IceStone has worked to build a network of like-minded businesses to bolster local economies, and we have partnered with an 

elementary school in Brooklyn, where employees collaborated with 

fifth grade teachers to create a curriculum on sustainable careers 

and recycling. We also partner with organizations like AHRC, 

which provides work and services for individuals with developmental disabilities. 

The question posed by the committee today is, ‘‘What is working 

to make the American dream a reality for middle-class families? ’’ 

Innovative businesses like IceStone and hundreds of thousands 

within the American Sustainable Business Council are effectively 

bridging the gap between reality and the dream. 

There is still much work to be done, and IceStone’s growth would 

not be possible without State and Federal capital. Legislation similar to Senator Gillibrand’s Made in America block grant program 

and guaranteed loans are needed to support the new wave of manufacturing in our country. 

However, above all else, America’s workers need and deserve triple bottom line careers that improve the quality of life for their 

families, their local communities, and the planet. 

Thank you. 

[The prepared statement of Ms. Corey follows:] 

PREPARED STATEMENT OF SARAH COREY

Good morning, and thank you Mr. Chairman, Ranking Member Enzi, and members of the committee; it is a privilege to be here today. 

My name is Sarah Corey and I am the director of Public Relations for a company 

called IceStone. I’m here to share with you IceStone’s unique story, and illustrate 

how our company is part of an American manufacturing renaissance, creating safe, 

good jobs that pay a living wage. 

Eight years ago, Peter Strugatz and Miranda Magagnini co-founded IceStone, 

LLC in Brooklyn, NY. Both Brooklyn natives, Peter and Miranda envisioned a company that would invigorate the local economy and challenge the notion that America’s industrial age had passed. They believed that a manufacturing renaissance 

could be possible through the creation of green collar jobs. Like so many American 

entrepreneurs, they embarked on a journey to create a better future for their children. They found their inspiration in America’s landfills. 

Since 2003, IceStone has diverted 10 million pounds of glass from the waste 

stream through the production of its eponymous durable surfaces. IceStone durable 

surfaces contain three core ingredients: 100 percent recycled glass, cement, and pigment. There are no carcinogenic resins or toxic chemicals in IceStone, so our products are safe, for the employees who make the material, and for the families who 

prepare their meals on IceStone countertops. We procure 100 percent of the cement 

of our surfaces and 100 percent of our glass from American suppliers. Every slab 

is cast in Brooklyn; our day-lit 19th century Navy Yard factory is both a reminder 
41 

of our industrial heritage and proof that innovation often requires reflecting on the 

past. We are proof that America can regain a competitive advantage in the global 

economy by creating green products and paying wages that support families. Today, 

IceStone employs 45 full-time men and women, each dedicated to the same ethos 

that inspired our co-founders; a successful business places equal value on social responsibility, environmental stewardship, and fiscal profitability. We call this the 

‘‘triple bottom line.’’ 

(A green collar job is one that pays a living wage, and directly improves environmental (and therefore societal) quality). 

For the purposes of today’s hearing, I will focus on IceStone’s social bottom line, 

which has three key attributes: job training, a living wage, and employee health and 

safety. 

Job training is an essential component of the IceStone employee experience. Each 

employee creates a professional development plan every year. More than any other 

tool, the development plan empowers us to take a proactive role in the direction and 

evolution of our work. It captures our goals and details the resources needed to 

achieve them, inspires pride in our work, and has served as a road map for entryand executive-level employees alike. In 2010, our lead technician, Jose Gomez, completed a 5-day workshop in Total Productive Maintenance. By participating in the 

workshop, Jose expanded his arsenal of skills required for his job, which enabled 

him to identify and prevent potential equipment issues throughout the factory. This 

led to increased efficiency and in turn, Jose received an increase in wages. Other 

employees have used their professional development plans to explore skills unrelated to their day-to-day work. This summer, for example, a member of our Operations Team named Luke Keller left the factory floor a few hours each week to work 

with the Marketing team and hone his video production skills. The capacity building 

that Jose and Luke have found at IceStone should be accessible for every working 

American, and is a critical part of strengthening America’s middle class. 

The second key attribute of our social bottom line is the living wage. The minimum wage in the State of New York is $7.25. Any of you who are familiar with 

the monthly cost of riding New York’s subway can attest to the inadequacy of this 

wage. At IceStone, we believe that all employees have a right to a wage that will 

provide shelter, food, and other basic necessities for their families. We also believe 

that a living wage includes benefits, and currently, all IceStone employees have access to health and dental care. 

(Living wage rates factor the cost of living in a particular area, and the size of 

a family.) 

Providing such benefits, coupled with a safe work environment is the third pillar 

of IceStone’s social bottom line. Our company has a low employee turn over rate, 

a high number of employee referrals, and promotes a culture of inclusion and service. It doesn’t end there. IceStone strives to make positive social, environmental, and 

economic impacts beyond the gates of the Navy Yard. To that end, we’ve co-founded 

B Corporation, a network of 427 companies that prove businesses have the power 

to solve social and environmental issues. To date, five States have signed legislation 

that recognizes B Corporations and holds the leaders of such companies accountable 

for the material impact their businesses have on society, stakeholders and the environment. IceStone is part of the Business Alliance for Local Living Economies, and 

has partnered with an elementary school in Brooklyn where employees collaborated 

with 5th grade teachers to create a curriculum on sustainable careers and recycling. 

We also partner with organizations like AHRC, which provides work and services 

for individuals with developmental disabilities. 

The question posed by the committee today is, ‘‘what’s working to make the American dream a reality for middle-class families?’’ I believe that sustainable, innovative 

businesses like IceStone are effectively bridging the gap between reality and the 

Dream. There is still much work to be done, and IceStone’s growth would not be 

possible without State and Federal capital. Legislation similar to Senator 

Gilibrand’s Made in America block grant program is needed to support the new 

wave of manufacturing in our country. However, above all else, America’s workers 

need and deserve triple bottom line careers that improve the quality of life for their 

families, their local communities, and the planet. 

(The five States that have passed B Corp legislation are: Hawaii, Maryland, New 

Jersey, Vermont, and Virginia. Pending legislation: California, Colorado, Michigan, 

New York, North Carolina, Pennsylvania) 

The CHAIRMAN. Ms. Corey, thank you very, very much. 

And now we go to Kenneth Green. Again, your statement will be 

made a part of the record. Please proceed. 
42 

STATEMENT OF KENNETH P. GREEN, RESIDENT SCHOLAR, 

AMERICAN ENTERPRISE INSTITUTE, WASHINGTON, DC 

Mr. GREEN. Thank you, Chairman Harkin, Ranking Member 

Enzi, members of the committee, for having me here today. 

Along with my remarks, I have submitted a pertinent study I authored recently, called ‘‘The Myth of Green Energy Jobs: The European Experience,’’ through the American Enterprise Institute. 

Much of my testimony today will be excerpted from that study, and 

I should observe that my testimony represents my views only. AEI 

does not take official positions. The views of the scholars are their 

own views. 

I have been asked to discuss the question of today’s hearing in 

the context of green jobs, and I will forego the green job jokes, although I have many of them, as you will no doubt imagine. I have 

been writing about for a few years now. First, a few words about 

my background. 

As Senator Harkin mentioned, I am a biologist and environmental policy analyst by training, and I have applied that training 

to public policy analysis since 1994, when I received my doctoral 

degree from UCLA. While I do not hold a specific degree in economics—this came up in at another hearing—economic analysis is a 

fundamental component of policy analysis and, of course, is studied 

formally, both in the process of learning about policy analysis and 

applying it. 

So, to the question of green jobs. As it turns out, we are only beginning to get a definition of what a green job is. As Secretary Solis 

mentioned, the Brookings Institution recently took a shot at defining what they are calling ‘‘clean’’ jobs. In fact, we are really not 

working on defining green jobs. Now we are looking actually at 

clean jobs. 

They tried to do a good job of it. I give them full credit for doing 

their best to really define what they were talking about and measure it accurately. Very important effort. 

But even their analysis raises more questions than answers. So, 

for instance, Brookings does not count the people who work inside 

companies today on environmental compliance issues or environmental impact reduction. Those people in the EHS, the environmental health and safety industry, aren’t counted by Brookings as 

having a clean job. 

And I worked with those people, and I am sure they are motivated by that desire to improve the environment. And yet, mass 

transit workers are virtually all thrown in, as are waste management workers. And so, there is a conflation of managing sludge, or 

are you driving a bus? 

Whether or not a job is green or clean depends really on a number of things. With regard to transit, it is ridership levels, the 

power source of the transit, the age of the vehicles, and so on. It 

is hard to see how an inefficient 20-year-old Metro car, for instance, powered by coal and based on electricity, running half 

empty, is cleaner than newer, much cleaner automobiles carrying 

the same number of people over the same distance. 

With that caveat, I will move into a quick discussion of the general theory of job creation, then a quick review of some real-world 

experience with Government stimulation of green energy jobs, 
43 

which are somewhat better defined, green energy being a subset of 

the entire green job arena or field. 

First, what is the source of jobs? Do jobs emerge from the interaction of entrepreneurs and consumers, which, to admit my bias, 

is where I believe they come from, or do governments create them? 

That question has been debated since at least the 1850s, when 

Frederic Bastiat, a French journalist and politician, wrote ‘‘What is 

Seen, and What is Not Seen,’’ an essay that should be mandatory 

reading for anyone who wants to study public policy. 

Bastiat explained—and I am going to paraphrase this to break 

up the usual discussion of broken windows and children throwing 

bricks. Bastiat explained that since the Government doesn’t have 

capital of its own, it can only create a job with money it takes from 

someone else who is already using it. So if Uncle Sam wants Taxpayer Tom to hire someone, they must give him money they have 

taken from Taxpayer Paula, who is already using it to create jobs, 

either directly or indirectly, even if it is sitting in a bank or even 

under her mattress. 

But several dynamics make that effort a losing proposition on 

net. First, because Government administration costs money, some 

of the money taken from Paula doesn’t all get to Tom. Some goes 

to pay Bureaucrat Bob. 

Second, Government planners tend to create jobs that are less 

economically efficient than the private sector. After all, if the wind 

power job that Uncle Sam wants Tom to produce was more profitable than the job Paula was already producing, she would cash out 

of what she was doing and throw in with Taxpayer Tom for her 

own benefit, no Government intervention and no mandate required. 

The same is true when Government tells a manufacturer what 

product they can’t sell, while telling someone else what product 

they are allowed to sell. Just as with jobs, when Government regulations favor product A over product B, what is seen are the new 

jobs making product A. What is not seen are the killed jobs that 

were making product B. 

So let us look at the application of green jobs as it has played 

out in three European countries. There are more examples in the 

study I mentioned when I began my testimonies. Let us start with 

Spain. 

In March 2009, researchers at the Universidad Rey Juan Carlos 

studied the economic and employment impacts of Spain’s push into 

green energy job creation. Their study calculates that since the 

year 2000, Spain spent about $815,000 to create each green energy 

job. When it was a wind job, it was particularly expensive, at $1.5 

million per job created. 

The study calculates that the money used to create those jobs 

would have produced 110,500 jobs elsewhere in the economy. Or in 

other words, for every green job created, over two jobs were destroyed or foregone in the general economy. 

In Italy, a study performed by the Bruno Leoni Institute found 

similar problems, if not worse. In Italy, they found for every job 

created, a green job created with government stimulus funds, five 

to seven jobs were either destroyed or foregone in the general economy. 
44 

1The study submitted by Kenneth P. Green may be found at www.aei.org/article/energy-andthe-environment/the-myth-of-green-energy-jobs-the-european-experience/. 

Finally, to the United Kingdom. A recent report by consultancy 

Verso Economics found the situation similar there. For every job 

created by the government in renewables, renewable energy, 3.7 

jobs were destroyed or foregone in the general economy. 

That report, by the way, is interesting because it uses the government of Scotland’s own accounting mechanisms for determining 

job creation based on tax rates. And so, this is how the government 

calculates jobs created and destroyed, which makes it somewhat 

different than the previous studies I discussed, and we can go into 

the detailed methodology, if you wish, during the question period. 

Before I conclude, I was asked to comment about the stimulus of 

2009 and its effectiveness in creating green jobs. A report in September 2010 pointed out that only $20 billion of the $92 billion allocated for renewable energy projects had even been spent. According to the Department of Energy, much of that was spent abroad, 

creating green jobs in China, Spain, and South Korea. 

For example, a report by American University found 11 U.S. 

wind farms used their stimulus grants to buy wind turbines made 

abroad. Seventy percent of those wind turbines purchased with 

stimulus grants were made elsewhere. It could have been worse. 

The Department of Energy reports that for some green stimulus 

projects, 80 percent of the spending was spent abroad. 

The EPA recently admitted that it can’t say whether or not stimulus money it used created jobs. They can tell you what they spent 

and who they gave it to, but they acknowledge they can’t tell you 

what effect it had in terms of creating jobs. 

So given that most of the green stimulus is unspent, and much 

of what has been spent has been spent elsewhere, and I am referring to the green stimulus, that being money targeted for green 

jobs, not all stimulus spending. And some of the projects funded 

have either moved to China or gone bankrupt. 

When it comes to American job creation, it is unlikely that the 

act had a significant positive impact, at least in the domain of 

green jobs, green energy jobs. 

In conclusion, the idea that Government can create jobs in the 

economy is a myth. Painting the myth green doesn’t make it any 

less of a myth. 

The experience of Europe, which has preceded us in the quest for 

a new green economy, is both negative and unsustainable, with 

subsidies being cut back and feed-in tariffs being reduced, even as 

we speak. And what little we know of our own efforts are similarly 

proving to be poorly thought out. 

I thank you for the opportunity to testify, and I look forward to 

your questions. 

[The prepared statement of Mr. Green follows:] 

PREPARED STATEMENT OF KENNETH P. GREEN

Chairman Harkin, Ranking Member Enzi, members of the committee, thank you 

for inviting me to testify today. Along with my remarks, I have submitted a pertinent study that I authored, titled ‘‘The Myth of Green Energy Jobs: The European 

Experience.’’ 1

Much of my testimony is excerpted from this study. I should observe that my testimony represents my views only. 
45 

I have been asked to discuss the question of today’s hearing in the context of 

green jobs, which I have been writing about for a few years now. 

But first, a few words about my background. 

I am a biologist and environmental policy analyst by training, and I have applied 

that training to public policy analysis since 1994. While I do not hold a specific degree in economics, economic analysis is a fundamental component of policy analysis, 

and I have studied it both academically and professionally since 1990. 

So, to the question of green jobs. 

As it turns out, we are only beginning to get a definition of what a green job is. 

The Brookings Institution recently took a shot at defining what they’re calling 

‘‘clean’’ jobs, and they tried to do a good job of it, but even their analysis raises more 

questions than answers. 

For example, Brookings doesn’t count people who work inside companies in environmental compliance or environmental impact reduction, but they throw in a very 

large number of mass transit workers. 

Yet whether or not mass transit is green depends on ridership levels, the power 

source, the age of the vehicles, which emissions you’re focused on and so on. 

For example, it would be hard to see how an inefficient 20-year-old metro car powered by coal-generated electricity, running half empty is ‘‘cleaner’’ than the newer, 

much cleaner automobiles carrying people over the same distance. 

With that caveat, I’ll move into a quick discussion of the general theory of job creation, then move to a review of real-world experience with government stimulation 

of green-energy jobs, which are somewhat better defined. 

First, what is the source of jobs? Do jobs emerge from the interaction of entrepreneurs and consumers, or do governments create them? 

That question has been debated since at least the 1850s, when Fre ́de ́ric Bastiat, 

a French journalist and politician wrote What is Seen, and What is Not Seen, an 

essay that should be mandatory reading for anyone interested in public policy. 

Bastiat explained that since the government doesn’t have capital of its own, it can 

only ‘‘create’’ a job with money it takes from someone who is already using it. 

So, if Uncle Sam wants Taxpayer Tom to hire someone, they must give him 

money they’ve taken from Taxpayer Paula, who was already using it to create jobs 

directly or indirectly. 

But several dynamics make that effort a losing proposition. First, because government administration costs money, what they take from Paula doesn’t all get to Tom. 

Some goes to pay bureaucrat Bob. 

Second, government planners tend to create jobs that are less economically efficient. 

After all, if the wind-power job that Uncle Sam wants Tom to produce was more 

profitable than the job Paula was already producing, she would cash out of what 

she’s doing and throw in with Taxpayer Tom for her own benefit. No mandates required. 

The same is true when government tells a manufacturer what product they can’t 

sell, while telling someone else what product they can sell. 

Just as with jobs, when government regulation favors product A over product B, 

what is seen is the new sales of product A, and the jobs associated with such sales. 

What is not seen is the lost sales of product B, and the lost jobs that go with it. 

Now, let’s look at the application of green-energy job stimulation as it played out 

in three European countries. There are more examples in the study I referenced 

when I began. 

I’ll start with Spain. 

In March 2009, researchers at the Universidad Rey Juan Carlos released a study 

examining the economic and employment impacts of Spain’s push into green energy 

job creation. 

The study calculates that since 2000 Spain spent about $815,000 dollars to create 

each green energy job. Wind industry jobs were particularly pricy, at $1.5 million 

per job created. 

The study calculates that the money used to create those jobs would have produced 110,500 jobs elsewhere in the economy. In other words, for every green job 

created, 2.2 jobs were destroyed or foregone in the general economy. 

Now to Italy, where a study performed by the Bruno Leoni Institute, found similar problems. 

The Bruno Leoni study found that for every job created in the green sector, 5 to 

7 jobs would likely have been created in the general economy. 

Finally, to the United Kingdom. 

A recent report by consultancy Verso Economics found that for every job created 

in the UK in renewable energy, 3.7 jobs were foregone in the general economy. 
46 

* Kenneth P. Green (kgreen@aei.org) is a resident scholar at AEI. 

This report uses the government’s own macroeconomic model for Scotland, and 

calculates that promoting renewable energy in the UK has an opportunity cost of 

10,000 direct jobs in 2009/10 and 1,200 jobs in Scotland. 

Before I conclude, I was asked to comment about the ‘‘stimulus’’ of 2009, and its 

effectiveness in creating green jobs. 

A report September 2010 pointed out that only $20 billion of the $92 billion allocated for renewable energy projects had been spent. And, according to the Department of Energy, much of that was spent abroad, creating green jobs in China, 

Spain, and South Korea. 

For example, a report by American University found that 11 U.S. wind farms used 

their stimulus grants to buy wind turbines made abroad: 70 percent of those wind 

turbines purchased with stimulus grants were made elsewhere. 

It could have been worse: the Department of energy reports that for some green 

stimulus projects, 80 percent of the spending was abroad. 

The EPA itself recently admitted that it can’t say whether or not stimulus money 

created jobs: they can tell you what they spent, but not what effect it had. 

So given that most of the green stimulus is unspent, and much of what has been 

spent has been spent elsewhere, and some of the projects that were funded have 

already gone belly up, when it comes to American job creation, it’s unlikely that the 

Act had a significant positive impact. 

In conclusion, the idea that government can create jobs in the economy is a myth, 

and painting the myth green makes it no less of a myth. 

The experience of Europe, which has preceded us in the quest for a new green 

economy, is both negative, and unsustainable, with subsidies being cut back, and 

feed-in tariffs reduced. 

What little we know of our own efforts are, similarly, proving to be poorly 

thought-out. 

I thank you again for this opportunity to testify, and look forward to your questions. 

ATTACHMENT—PREPARED STATEMENT OF THE AMERICAN ENTERPRISE INSTITUTE

FOR PUBLIC POLICY RESEARCH (AEI) 

THE MYTH OF GREEN ENERGY JOBS: THE EUROPEAN EXPERIENCE

(By Kenneth P. Green)* 

With $2.3 billion in Recovery Act tax credits allocated for green manufacturers, 

President Barack Obama and other Democratic politicians have high hopes for green 

technology. But their expectations clash with both economic theory and practical experience in Europe. Green programs in Spain destroyed 2.2 jobs for every green job 

created, while the capital needed for one green job in Italy could create almost five 

jobs in the general economy. Wind and solar power have raised household energy 

prices by 7.5 percent in Germany, and Denmark has the highest electricity prices in 

the European Union. Central planners in the United States trying to promote green 

industry will fare no better at creating jobs or stimulating the economy. 

Key points in this Outlook: 

• The Obama administration, its allies in Congress, and the environmental community champion the benefits of green technology and the creation of green jobs to 

alleviate unemployment. 

• Green jobs merely replace jobs in other sectors and actually contribute less to 

economic growth. 

• Experiments with renewable energy in Europe have led to job loss, higher energy prices, and corruption. 

Green is the new black, in both the United States and Europe. Virtually everyone 

on the left has thrown on the green pants, green shirts, and green cloak of what 

we are assured is the future of life on earth as we know it. 

President Obama regularly references the green economy in his speeches. The 

Obama/Biden New Energy for America document released in 2008 focuses on green 

jobs, green technology, green manufacturing, green buildings, and even green veterans. In a speech to the Democratic National Committee in September 2010, 

Obama boasted, 

‘‘We’d been falling behind and now we are back at the forefront of [research 

and development]. We made the largest investment in green energy in our his-
47 

tory so that we could start building solar panels and wind turbines all around 

the country.’’ 1

In an August 13 speech, Vice President Joe Biden also sang the praises of greenness: 

‘‘It’s not enough to just rescue the economy, we have to rebuild it better—and 

that work begins with giving American manufacturers the resources to produce 

the clean, green energy technology that will be the foundation of our 21st century economy. With the launch today of $2.3 billion in Recovery Act tax credits 

for green manufacturers, we are going to ramp up manufacturing of green energy materials in this country, while creating thousands of new jobs right here 

in our own backyard. From wind and solar power to electric vehicle technology, 

our recovery is going to be fueled by the Recovery Act incentives we are offering 

businesses today that will be the engine of our economy tomorrow.’’ 2

Former speaker Nancy Pelosi (D—CA) also supports the green cause. A blurb describing a speech Pelosi gave to the Stanley School in Waltham, MA, begins, 

‘‘For a brighter and more prosperous future, we must invest in a green infrastructure, a green economy, and green schools to create a workforce of good-paying green collar American jobs.’’ 3

Governments do not ‘‘create’’ jobs; the willingness of entrepreneurs to invest their 

capital, paired with consumer demand for goods and services, does that. 

Of course, Senator Harry Reid (D—NV) was not left out. At a Senate Democratic 

Green Jobs Summit in 2009, Reid boasted of his green accomplishments: 

‘‘We have made unprecedented investments in clean, renewable energy and 

new, green jobs that can never be outsourced. In 2007 we passed a landmark 

energy bill that led to the development of clean, renewable fuels here at home, 

and the creation of critical American manufacturing jobs. We raised fuel-efficiency standards for the first time in a generation, and set new energy-efficiency 

standards for lighting, appliances, and Federal office buildings and vehicles. In 

the economic recovery plan we passed this year, we invested $67 billion to develop clean energy, and $500 million more to train a new ‘green collar’ workforce—Americans who each day will make our Nation more energy efficient and 

energy independent.’’ 

So, at least on the left, it is unanimous: the world’s future is green: green energy 

powering green technologies, creating green houses, buildings, cars, and jobs, jobs, 

jobs. But is this thinking based on realistic economics, realistic understanding about 

green technology, or realistic expectations of the growth potential of the green movement? This Outlook examines whether the Government creates jobs through subsidies of any sort and then looks at the troubling European experience with green 

energy and job creation. 

GREEN ENERGY AND GREEN JOBS

To understand the fallacy of the Government creating green jobs through subsidies and regulations, we have to refer to the writing of French economist Fre ́de ́ric 

Bastiat. Back in 1850, Bastiat explained the fallacy that underlies such thinking in 

an essay about the unseen costs of such efforts. He called it the ‘‘broken window’’ 

fallacy. 

The fallacy works as follows: imagine some shop keepers get their windows broken by a rock-throwing child. At first, people sympathize with the shopkeepers, 

until someone claims that the broken windows really are not that bad. After all, 

they ‘‘create work’’ for the glass maker, who might then be able to buy more food, 

benefiting the grocer, or buy more clothes, benefiting the tailor. If enough windows 

are broken, the glass maker might even hire an assistant, creating a job. 

Did the child therefore do a public service by breaking the windows? No. We must 

also consider what the shopkeepers would have done with the money they used to 

fix their windows, had those windows not been broken. Most likely, the shopkeepers 

would have plowed that money back into their store; perhaps they would have 

bought more stock from their suppliers or hired new employees. 

Were the windows not broken, the town would still have had jobs created by the 

shopkeepers’ alternate spending, plus the shopkeepers would have had the value of 

their original windows. Because the value of the windows was destroyed, however, 

they—and the village as a whole—have been made poorer. 

It is well-understood, among economists, that governments do not ‘‘create’’ jobs; 

the willingness of entrepreneurs to invest their capital, paired with consumer demand for goods and services, does that. All the Government can do is subsidize some 

industries while jacking up costs for others. In the green case, it is destroying jobs 
48 

in the conventional energy sector—and most likely in other industrial sectors— 

through taxes and subsidies to new green companies that will use taxpayer dollars 

to undercut the competition. The subsidized jobs ‘‘created’’ are, by definition, less efficient uses of capital than market-created jobs. That means they are less economically productive than the jobs they displace and contribute less to economic growth. 

Finally, the good produced by government-favored jobs is inherently a noneconomic 

good that has to be maintained indefinitely, often without an economic revenue 

model, as in the case of roads, rail systems, mass transit, and probably windmills, 

solar-power installations, and other green technologies. 

To understand how this works in practice, I now turn to European countries that 

went hog wild for renewables, while singing the praises of green jobs: Spain, Italy, 

Germany, Denmark, the United Kingdom (UK), and the Netherlands. 

SPAIN

Spain has long been considered a leader in the drive to renewable power. Indeed, 

Obama singled out Spain as an example in a 2009 speech. The president said, 

‘‘We have enormous commercial ties between our two countries and we 

pledged to work diligently to strengthen them, particularly around key issues 

like renewable energy and transportation, where Spain has been a worldwide 

leader and the United States I think has enormous potential to move forward.’’ 4

But the story of Spain’s green-job leadership took a series of hits shortly after the 

president’s speech. In March 2009, researchers Gabriel Calzada Alvarez and colleagues at the Universidad Rey Juan Carlos released a study examining the economic and employment effects of Spain’s aggressive push into renewables. What 

they found confounds the usual green-job rhetoric:5

• Since 2000, Spain spent 571,138 euros on each green job, including subsidies 

of more than 1 million euros per job in the wind industry. 

• The programs creating those jobs destroyed nearly 110,500 jobs elsewhere in 

the economy (2.2 jobs destroyed for every green job created). 

• The high cost of electricity mainly affects production costs and levels of employment in metallurgy, nonmetallic mining and food processing, and beverage and tobacco industries. 

• Each ‘‘green’’ megawatt installed destroys 5.28 jobs elsewhere in the economy 

on average. 

• These costs do not reflect Spain’s particular approach but rather the nature 

of schemes to promote renewable energy sources. 

Spain has found its foray into renewable energy to be unsustainable. Bloomberg 

reports that Spain slashed subsidies for new solar power plants.6 As analyst Andrew 

McKillop observes in the Energy Tribune: 

In Spain, where subsidies to the country’s massive wind farms and their dependent industries is estimated to have attained as much as 12 billion Euros 

in 2009, either directly or through ‘‘feed-in tariff ’’ subsidy for power sales, government proposals target at least a 30 percent cut in subsidies. Major wind energy producer firms, such as Gamesa, have begun cutting their workforces, 

while trying to find sales outside Europe, helped by a weaker Euro. In addition 

and due to Spain’s highly exposed deficit finance status, making it a target for 

market speculators betting its bond rates must rise, the Spanish government 

is also likely to cut financial backing to existing renewable energy power plants, 

built with an expectation of guaranteed prices and government subsidies for 25 

years.7

And then, there is the matter of corruption. As Bloomberg Businessweek reports, 

‘‘An audit of solar-power generation from November 2009 to January 2010 

found that some panel operators were paid for doing the ‘impossible’—producing 

electricity from sunlight during the night.’’ 8 Further, it appears that the solar 

power producers ‘‘may have run diesel-burning generators and sold the output 

as solar power, which earns several times more than electricity from fossil 

fuels.’’ Nineteen people have been arrested in Spain’s ‘‘clean energy’’ sector on 

charges ranging from bribery, to unsavory land deals, to issuing licenses to 

friends and family, to simple construction fraud. 

As the Guardian reports, 

‘‘When Spain’s National Commission for Energy decided to inspect 30 solar 

gardens, it found only 13 of them had been built properly and were actually 

dumping electricity into the network.’’ 9
49 

ITALY

A similar situation has played out in Italy, also a leader in wind and solar-power 

deployment. A study performed by Luciano Lavecchia and Carlo Stagnaro of Italy’s 

Bruno Leoni Institute found an even worse situation: 

Finally, we have compared the average stock of capital per worker in the RES 

[Renewable Energy Systems] with the average stock of capital per worker in the 

industry and the entire economy, finding an average ratio of 6.9 and 4.8, respectively. To put it otherwise, the same amount of capital that creates one job in 

the green sector, would create 6.9 or 4.8 if invested in the industry or the economy in general, respectively—although differences exist between RES themselves, with wind power more likely to create jobs than [photovoltaic] power. 

This fact is particularly relevant because we didn’t even consider the non-trivial 

value of the renewable energy produced, but we focused on pure subsidies. If 

we had considered the energy value, the average stock of capital per worker 

would result even higher. Since subsidies are forcibly taken away from the economic cycle, and allocated for political purposes, it is especially important to 

have a clear vision of what consequences they beg.10

The researchers also found that the vast majority of green jobs created were temporary: 

‘‘Using what we see as inflated estimates, from various sources, of alreadyexisting green jobs, we take between 9,000 and 26,000 jobs in wind power, and 

between 5,500 and 14,500 in photovoltaic energy, as our starting point. From 

there, we have calculated that thanks to the subsidies Rome has promised, the 

number of people working in the green economy will rise to an aggregate total 

of between 50,000 to 112,000 by 2020. However, most of those jobs—at least 60 

percent—will be for installers or other temporary work that will disappear once 

a photovoltaic panel, or a wind tower, is operative.’’ 11

And like Spain, Italy has experienced rampant corruption in the renewable sector. 

Rather than having numerous individuals defrauding the government, however, the 

mafia is involved. As Nick Squires and Nick Meo report in the Telegraph, 

‘‘Attracted by the prospect of generous grants designed to boost the use of alternative energies, the so-called ‘eco Mafia’ has begun fraudulently creaming off 

millions of euros from both the Italian government and the European Union.’’ 12

They go on to report: 

Eight people were arrested in Operation ‘‘Eolo,’’ named after Aeolus, the ancient Greek god of winds, on charges of bribing officials in the coastal town of 

Mazara del Vallo with gifts of luxury cars and individual bribes of 30,000– 

70,000 euros. 

Police wiretaps showed the extent of the mafia’s infiltration of the wind energy sector when they intercepted an alleged mafioso telling his wife, ‘‘Not one 

turbine blade will be built in Mazara unless I agree to it.’’ 

In another operation last November, code-named ‘‘Gone with the Wind,’’ 15 

people were arrested on suspicion of trying to embezzle up to 30 million euros 

in European Union funds. Among those arrested on fraud charges was the 

president of Italy’s National Wind Energy Association, Oreste Vigorito. 

Wind and solar power have raised household energy prices by 7.5 percent in Germany, and Denmark has the highest electricity prices in the European Union. 

GERMANY

Germany’s foray into renewable energy started in earnest in 1997, when the European Union adopted a goal of generating 12 percent of its electricity from renewable 

sources.13 Germany’s method for achieving such targets was the institution of a 

feed-in law, which required utilities to purchase different kinds of renewable energy 

at different rates. In a study of the effects of Germany’s aggressive promotion of 

wind and solar power, Manuel Frondel noted that the German feed-in law required 

utilities to buy solar power at a rate of 59 cents per kilowatt-hour, far above the 

normal cost of conventional electricity, which was between 3 and 10 cents. Feed-in 

subsidies for wind power, he observed, were 300 percent higher than conventional 

electricity costs.14

Needless to say, this massive subsidizing of wind and solar power attracted a lot 

of investors: after all, if the government is going to guarantee a market for several 

decades, and set a price high enough for renewable producers to make a profit from, 

capital will flow into the market. Germany became the second-largest producer of 

wind energy after the United States, and its investment in solar power was aggressive as well. 
50 

But according to Frondel, things did not work out as Germany’s politicians and 

environmentalists said they would. Rather than bringing economic benefits in terms 

of lower cost energy and a proliferation of green-energy jobs, the implementation of 

wind and solar power raised household energy rates by 7.5 percent. Further, while 

greenhouse gas emissions were abated, the cost was astonishingly high: over $1,000 

per ton for solar power, and over $80 per ton for wind power. Given that the carbon 

price in the European Trading System was about $19 per ton at the time, greenhouse gas emissions from wind and solar were not great investments. 

Frondel concludes that, 

‘‘German renewable energy policy, and in particular the adopted feed-in tariff 

scheme, has failed to harness the market incentives needed to ensure a viable 

and cost-effective introduction of renewable energies into the country’s energy 

portfolio. To the contrary, the government’s support mechanisms have in many 

respects subverted these incentives, resulting in massive expenditures that 

show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security. In the case of photovoltaics, Germany’s 

subsidization regime has reached a level that by far exceeds average wages, 

with per-worker subsidies as high as 175,000 euros (US$240,000).’’ 

He adds: 

‘‘In conclusion, government policy has failed to harness the market incentives 

needed to ensure a viable and cost-effective introduction of renewable energies 

into Germany’s energy portfolio. To the contrary, Germany’s principal mechanism of supporting renewable technologies through feed-in tariffs imposes high 

costs without any of the alleged positive impacts on emissions reductions, employment, energy security, or technological innovation. Policymakers should 

thus scrutinize Germany’s experience, including in the United States, where 

there are currently nearly 400 Federal and State programs in place that provide 

financial incentives for renewable energy. Although Germany’s promotion of renewable energies is commonly portrayed in the media as setting a ‘‘shining example in providing a harvest for the world’’ (The Guardian 2007), we would instead regard the country’s experience as a cautionary tale of massively expensive environmental and energy policy that is devoid of economic and environmental benefits.’’ 

As with Spain and Italy, Germany is finding it hard to continue to subsidize wind 

and solar power at existing levels. In May, the German parliament cut back the 

subsidy for domestic rooftop solar photovoltaic systems by 16 percent, with freestanding systems cut by 15 percent.15

DENMARK

Denmark is yet another country that has made wind power a hallmark of its energy policy. Obama praised it for its aggressive wind-power program, telling an 

Earth Day audience in Iowa that, 

‘‘America produces less than 3 percent of our electricity through renewable 

sources like wind and solar—less than 3 percent. Now, in comparison, Denmark 

produces almost 20 percent of their electricity through wind power.’’ 16

The U.S. Energy Information Administration tells America’s children that ‘‘Denmark ranks ninth in the world in wind power capacity, but generates about 20 percent of its electricity from wind.’’ 17 That sounds impressive, but is it true? 

Green programs in Spain destroyed 2.2 jobs for every green job created, while the 

capital needed for one green job in Italy could create almost five jobs in the general 

economy. 

Not according to CEPOS, a Danish think tank, which issued a 2009 report entitled, Wind Energy, the Case of Denmark.18 The CEPOS study found that rather 

than generating 20 percent of its energy from wind, 

‘‘Denmark generates the equivalent of about 19 percent of its electricity demand with wind turbines, but wind power contributes far less than 19 percent 

of the Nation’s electricity demand. The claim that Denmark derives about 20 

percent of its electricity from wind over-states matters. Being highly intermittent, wind power has recently (2006) met as little as 5 percent of Denmark’s 

annual electricity consumption with an average over the last 5 years of 9.7 percent.’’ 

The CEPOS study revealed that Denmark can only produce and consume as much 

wind power as it does due to a convenient circumstance: neighboring countries have 

a lot of hydro power that can quickly and effectively balance the flow of electricity 

on its energy grid, allowing it to export surplus wind capacity. 
51 

‘‘Denmark manages to keep the electricity systems balanced due to having the 

benefit of its particular neighbors and their electricity mix. Norway and Sweden 

provide Denmark, Germany and Netherlands access to significant amounts of 

fast, short-term balancing reserve, via interconnectors. They effectively act as 

Denmark’s ‘electricity storage batteries.’ Norwegian and Swedish hydropower 

can be rapidly turned up and down, and Norway’s lakes effectively ‘store’ some 

portion of Danish wind power. Over the last 8 years West Denmark has exported (couldn’t use), on average, 57 percent of the wind power it generated and 

East Denmark an average of 45 percent. The correlation between high wind output and net outflows makes the case that there is a large component of wind 

energy in the outflow indisputable.’’ 

Finally, the CEPOS study found that Danish consumers are the ones who take 

it on the chin. Denmark’s electricity prices are the highest in the entire European 

Union. And the greenhouse gas reduction benefits? Slim to none, since the exported 

wind power replaces hydro power, which does not produce significant greenhouse 

gas emissions. The wind power consumed in Denmark does displace some fossil-fuel 

emissions, but at some cost: $124 per ton, nearly six times the price on the European Trading System. 

Regarding green jobs, CEPOS found that, 

‘‘The effect of the government subsidy has been to shift employment from 

more productive employment in other sectors to less productive employment in 

the wind industry. As a consequence, Danish GDP is approximately 1.8 billion 

DKK ($270 million) lower than it would have been if the wind sector workforce 

was employed elsewhere.’’ 

Not surprisingly, Denmark is also finding renewable power unsustainable and is 

backing away from the technology. As Andrew Gilligan reports in the Telegraph, the 

Danish state-owned power industry will no longer build onshore wind turbines, and 

consumers are complaining about high energy rates and environmental despoliation. 

‘‘Earlier this year, a new national anti-wind body, Neighbours of Large Wind 

Turbines, was created. More than 40 civic groups have become members. ‘People are fed up with having their property devalued and sleep ruined by noise 

from large wind turbines,’ says the association’s president, Boye Jensen 

Odsherred. ‘We receive constant calls from civic groups that want to join.’ ’’19

THE UNITED KINGDOM

Our Commonwealth cousins across the pond have also embraced the ‘‘green power 

means green jobs’’ theory. The UK (Scotland particularly) has pursued an ambitious 

wind-power agenda. 

Former prime minister Gordon Brown told a Labor Party conference, 

‘‘I am asking the climate change committee to report by October on the case 

for, by 2050 not a 60 percent reduction in our carbon emissions, but an 80 percent cut and I want British companies and British workers to seize the opportunity and lead the world in the transformation to a low carbon economy and 

I believe that we can create in modern green manufacturing and service one 

million new jobs.’’ 20

Ed Miliband, current leader of the opposition, is also big on wind, announcing, 

‘‘With strong government backing, the UK is consolidating its lead in offshore 

wind energy. We already have more offshore wind energy than any other country, we have the biggest wind farm in the world about to start construction, and 

now we’ll see the biggest turbine blades in the world made here in Britain. . . . 

Our coastline means the offshore wind industry has the potential to employ tens 

of thousands of workers by 2020.’’ 21

Party does not seem to be a factor in green-job boosting. Prime Minister (and Conservative Party leader) David Cameron, discussing a deal to work on wind turbines 

with India, said, 

‘‘The innovation and creativity of business won’t just help us save the planet, 

but is expected to create millions of jobs and billions of revenue in the green 

goods and services market.’’ 22

Referring to offshore wind, Cameron is equally bullish: ‘‘I want us to be a world 

leader in offshore wind energy,’’ he said, announcing a national infrastructure plan. 

‘‘We are making these investments so that major manufacturers will decide 

that this is the place they want to come and build their offshore wind turbines. 

This investment is good for jobs and growth, and good for ensuring we have 

clean energy.’’ 23
52 

Alas, the UK and Scotland have fared no better than the other countries discussed above in their pursuit of the new green-energy/green-jobs economy, as a recent report by consultancy Verso Economics points out.24 The study is particularly 

interesting because its methodology is touted as superior to the methodology used 

in the Spanish and Italian studies. Verso uses what economists refer to as ‘‘input/ 

output’’ tables to estimate the number of jobs that were foregone in the UK general 

economy in favor of the green jobs ‘‘created’’ through government subsidies. 

Verso’s conclusion aligns neatly with those of the Spanish and Italian studies discussed above: 

• ‘‘The report’s key finding is that for every job created in the UK in renewable 

energy, 3.7 jobs are lost. In Scotland there is no net benefit from government support for the sector, and probably a small net loss of jobs.’’ 

• ‘‘The main policy tool used to promote renewable energy generation is the Renewables Obligation, which effectively raises the market price paid for electricity 

from renewable sources. This scheme cost electricity consumers 1.1 [billion] British 

pounds in the UK and around 100 [million] British pounds in Scotland in 2009–10.’’ 

• ‘‘This report uses the Scottish Government’s own macroeconomic model for Scotland to assess the impact of identified costs on jobs. A similar model was used by 

the Scottish Government to measure the opportunity cost of the cut in [the valueadded tax] implemented in 2008–9. Based on this, policy to promote renewable energy in the UK has an opportunity cost of 10,000 direct jobs in 2009–10 and 1,200 

jobs in Scotland.’’ 

• ‘‘In conclusion, policy to promote the renewable electricity sector in both Scotland and the UK is economically damaging. Government should not see this as an 

economic opportunity, therefore, but should focus debate instead on whether these 

costs, and the damage done to the environment, are worth the candle in terms of 

climate change mitigation.’’ 25

While the UK and Scotland may have avoided the problems of corruption that afflicted Spain and Italy, they learned something that the warmer countries did not: 

wind turbines can freeze in winter. Not only do they cease to put out power in very 

cold weather, they actually need to be heated. As reporter Richard Littlejohn points 

out in the UK Daily Mail, 

‘‘Over the past 3 weeks, with demand for power at record levels because of 

the freezing weather, there have been days when the contribution of our forests 

of wind turbines has been precisely nothing. It gets better. As the temperature 

has plummeted, the turbines have had to be heated to prevent them seizing up. 

Consequently, they have been consuming more electricity than they generate. 

Even on a good day they rarely work above a quarter of their theoretical capacity. And in high winds they have to be switched off altogether to prevent damage.’’ 26

The frozen turbine problem has also occurred in Canada. As Greg Weston of the 

Telegraph-Journal explained in February 2011, 

‘‘A $200-million wind farm in northern New Brunswick is frozen solid, cutting 

off a supply of renewable energy for NB Power. The 25-kilometre stretch of 

wind turbines, 70 kilometers northwest of Bathurst, has been shut down for 

several weeks due to heavy ice covering the blades. GDF Suez Energy, the company that owns and operates the site, is working to return the windmills to 

working order, a spokeswoman says.’’ 27

THE NETHERLANDS

The Netherlands is yet another country that went big for wind power; it is the 

world’s third-largest producer of offshore wind power. And while no data are available about green jobs in the Netherlands, there is evidence that it will not be producing many through its green power plants. The new conservative government has 

radically reversed course and is slashing subsidies to wind and solar power. 

According to the journal Energy Debate, the Dutch government has lost its faith 

in windmills. The new government in the Netherlands has taken exception to the 

massive subsidies required to build and operate wind farms—and, in this case, to 

the expected export of 4.5 billion euros in subsidies to a German company (Bard Engineering) that would have built, owned, and operated those wind farms. The new 

prime minister of the Netherlands, Mark Rutte, is reported to have said, ‘‘Windmills 

turn on subsidies.’’ 28

On November 30, 2010, the government unveiled its new renewables plan, slashing annual subsidies from 4 billion euros to 1.5 billion euros. And not only are the 

subsidies cut back, what remains will be redirected well away from wind power. As 

Energy Debate explains: 
53 

** I would like to thank AEI research assistant Hiwa Alaghebandian for her valuable assistance with this Outlook. 

In the new system (somewhat misleadingly called SDE-plus), which will take 

effect halfway through 2011, the government will allocate subsidies in an entirely different, and rather complicated way. Subsidies are made available in 

four ‘‘stages’’ (on the basis of first-come, first-served). 

1. In the first stage, a government subsidy of 9 eurocents per kWh (or 79 

cents per m3 for gas) is offered, but only to producers of technologies that have 

‘‘deficits’’ of less than 9 eurocents. Based on the figures from ECN, these are: 

biogas (‘‘green gas’’), hydropower, power from waste processing installations, 

and gas from fermentation processes. 

2. If there is still money left after this first stage, the second stage will be 

opened up, in which a subsidy of 11 eurocents per kWh (or 97 cents per m3) 

will be offered. This stage will be open to producers of onshore wind power and 

fertiliser-based gas. 

3. Again, if there is money left, there will be a third stage with subsidies of 

13 cents per kWh or 114 cents per m3. This will be open to producers of hydropower and small-scale biomass. 

4. The fourth and last stage (15 cents per kWh or 132 cents per m3) will be 

open to electricity produced from all-purpose fermentation processes. 

Not included in any of the four categories, because they are too expensive, are 

solar power, large-scale biomass and, indeed, offshore wind power.29

Another change in the Dutch attitude toward renewables is how to pay for the 

subsidies. In the past, subsidies came from the general budget. Moving forward, consumers will see a surcharge on their energy bills. The new direct billing could cool 

the public’s ardor for additional building of ‘‘green energy.’’ 

According to reports, the new government was planning on a nuclear power renaissance to generate electricity, and one could certainly argue that such a plan 

would generate ‘‘green jobs.’’ 30 However, in the wake of the tragic Japanese earthquake and tsunami in March 2011, such a plan will also undergo a great deal of 

scrutiny. 

The irony here is rich. The Dutch, who have been enamored of wind power for 

hundreds of years,31 may have finally had enough tilting at windmills. If even they 

cannot make it work, one has to wonder if anyone can. 

CONCLUSION

Both economic theory and the experience of European countries that have attempted to build a green-energy economy that will create green jobs reveal that 

such thinking is deeply fallacious. Spain, Italy, Germany, Denmark, the UK, and 

the Netherlands have all tried and failed to accomplish positive outcomes with renewable energy. Some will suggest that the United States is different, and that U.S. 

planners will have the wisdom to make the green economy work here. But there 

is no getting around the fact that you do not improve your economy or create jobs 

by breaking windows, and U.S. planners are no more omniscient than those in Europe.** 

NOTES

1. White House, ‘‘Remarks by the President at DNC Event,’’ news release, September 16, 2010, www.whitehousegov/the-press-office/2010/09/16/remarks-presi 

dent-dnc-event (accessed January 27, 2011). 2. White House, ‘‘Statement from Vice President Biden on Launch of $2.3 Billion 

Recovery Act Green Manufacturer Credit Program,’’ news release, August 13, 2009, 

www.whitehouse.gov/the-press-office/statement-vice-president-biden-launch-23-bill 

ion-recovery-act-green-manufacturer-ta (accessed January 27, 2011). 

3. Nancy Pelosi, remarks to the Stanley Elementary School, Waltham, MA, March 

10, 2008. 

4. White House, ‘‘Remarks by President Obama and President Zapatero of Spain 

after Meeting,’’ news release, October 13, 2009, www.whitehouse.gov/thelpress 

loffice/Remarks-by-President-Obama-and-President-Zapatero-of-Spain-after-meeting (accessed January 27, 2011). 

5. Gabriel Calzada Alvarez, Raquel Merino Jara, Juan Ramon Rallo Julian, and 

Jose Ignacio Garcia Bielsa, ‘‘Study of the Effects of Employment of Public Aid to Renewable Energy Sources’’ (draft, Universidad Rey Juan Carlos, March 2009), 

www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf (accessed January 27, 2011). 
54 

6. Ben Sills, ‘‘Spain Slashes Prices 45 percent for New Ground-Based Solar Plants, 

5 percent for Homes,’’ Bloomberg, November 19, 2010. 

7. Andrew McKillop, ‘‘The Bursting of the Green Energy Bubble? ’’ Energy Tribune, June 4, 2010, www.energytribune.com/articles.cfm/4264/The-Bursting-of-theGreen-Energy-Bubble (accessed February 1, 2011). 

8. Todd White, ‘‘Spanish Solar-Panel Trade Group Calls for Fraud Investigation,’’ 

Bloomberg Businessweek, April 12, 2010. 

9. Giles Tremlett, ‘‘Scandal Sullies Spain’s Clean Energy,’’ Guardian, March 22, 

2009. 

10. Luciano Lavecchia and Carlo Stagnaro, Are Green Jobs Real Jobs? The Case 

of Italy (Milan, Italy: Instituto Bruno Leoni, May 2010), http://brunoleoni 

media.servingfreedom.net/WP/WP-GreenlJobs-May2010.pdf (accessed January 27, 

2011). 

11. Carlo Stagnaro and Luciano Lavecchia, ‘‘Clean Jobs, Expensive Jobs: Why 

Italy Can’t Afford a ‘Green Economy,’ ’’ Wall Street Journal, May 11, 2010. 

12. Nick Squires and Nick Meo, ‘‘Mafia Cash In on Lucrative EU Wind Farm 

HandoutslEspecially in Sicily,’’ Telegraph, September 5, 2010. 

13. Konrad Bauer, ‘‘German Renewable Energy Policy,’’ German Energy Agency, 

October 24, 2007, www.gaccsanfrancisco.com /fileadmin/ahklsanfrancisco/Doku 

mente/2007-10l SolarlDelegation/l1lCalifornialSolarlBusinesslDelegation 

lVortraglKonradl Bauerl241007.pdf (accessed January 27, 2011). 

14. Manuel Frondel, Nolan Ritter, Christoph M. Schmidt, and Colin Vance, Economic Impacts from the Promotion of Renewable Energies, the German Experience 

(Germany: Rheinisch-Westfa ̈lisches Institut fu ̈ r Wirtschaft Sforschung, 2009). 

15. ‘‘German Bundestag Approves Solar Incentive Cuts,’’ Reuters, May 6, 2010. 

16. Igor Kossov, ‘‘Transcript: Obama’s Earth Day Speech,’’ CBS News, April 22, 

2009. 

17. U.S. Energy Information Administration, ‘‘Wind,’’ http://tonto.eia.doe.gov/ 

kids/energy.cfm?page=windlhome-basics-k.cfm (accessed January 28, 2011). 

18. Hugh Sharman, Henrik Meyer, and Martin Agerup, Wind Energy: The Case 

of Denmark (Copenhagen, Denmark: Center for Politiske Studier, September 2009), 

www.cepos.dk/fileadmin/userlupload/Arkiv/PDF/Windlenergyl-lthelcasel 

oflDenmark.pdf (accessed January 28, 2011). 

19. Andrew Gilligan, ‘‘An Ill Wind Blows for Denmark’s Green Energy Revolution,’’ Telegraph, September 12, 2010. 

20. Paul Eccleston, ‘‘Labour Conference: Gordon Brown Says CO2 Targets Must 

Be Raised to 80% by 2050,’’ Telegraph, September 23, 2008. 

21. He ́le`ne Mulholland, ‘‘Ed Miliband Announces Boost for Green Jobs,’’ Guardian, September 17, 2009. 

22. Catherine Airlie, ‘‘UK, India to Create Millions of ‘Green’ Jobs, Cameron 

Says,’’ Bloomberg Businessweek, November 15, 2010. 

23. Fiona Harvey, ‘‘Go-Ahead for Wind to Generate 70,000 Jobs,’’ Financial Times, 

October 25, 2010. 

24. Richard Marsh and Tom Miers, Worth the Candle? The Economic Impact of 

Renewable Energy Policy in Scotland and the UK (Kirkcaldy, Scotland: Verso Economics, March 2011), www.versoeconomics.com/verso-0311B.pdf (accessed March 17, 

2011). 

25. Ibid. 

26. Richard Littlejohn, ‘‘You Don’t Need a Weatherman to Know Which Way the 

Wind Blows,’’ Daily Mail, December 27, 2010. 

27. Greg Weston, ‘‘Ice Buildup on Wind Turbines Cuts Reusable Energy,’’ Vancouver Sun, February 16, 2011. 

28. Jose Mario, ‘‘The Dutch Lose Faith in Windmills,’’ Energy Debate, January 16, 

2011. 

29. Ibid. 

30. Michael Gassmann, ‘‘Holland’s Radical U-Turn on climate and Energy Policy,’’ 

Global Warming Policy Foundation, February 9, 2011. 

31. The Netherlands Board of Tourism and Conventions, ‘‘The Land of the Windmills,’’ May 21, 2007, http://us.holland.com/e/7779/The%20land%20of%20the%20 

windmills.php (accessed March 17, 2011). 

The CHAIRMAN. Thank you very much, Dr. Green. 

Now we turn to Mr. Tom Prinske. And again, we welcome you, 

and your statement will be made a part of the record. 

Please proceed, Mr. Prinske. 
55 

STATEMENT OF TOM PRINSKE, OWNER, T. CASTRO PRODUCE 

COMPANY, CHICAGO, IL 

Mr. PRINSKE. Thank you very much for the opportunity, Senator 

Harkin. 

I would like to thank your staff for all the help they have been 

getting me here and preparing me for this opportunity. 

One of the problems with having a visual disability—I have lost 

two-thirds of my vision—is I can’t come with a prepared statement 

like the others. So while I wouldn’t call it shooting from the hip, 

I would refer to it as my thoughts and my real-life experience. 

At a young age, at about 14 years old, it was determined that 

I was going to lose the majority of my vision, about two-thirds of 

my vision by the time I was in my mid-20s. And back in the 1970s, 

there wasn’t really much of an opportunity to get the training that 

was available to completely blind people, which it is kind of ironic 

that being completely blind may have been a better benefit. But 

nonetheless, I was very, and still am, grateful for the vision that 

remains. 

As time went on and my vision became worse and worse, I would 

like to give the perspective to people. And I think with all disabilities, what it does to your psyche is something that, unless you 

have grown in or have the experience getting a disability is something that you couldn’t understand unless it were to happen to you. 

But eventually, it kind of beats you down to a person that doesn’t 

feel like they are very useful, frankly. 

I was right on the brink there. I was brought to the point where 

I am going to go try and get Social Security help here because I 

am not going to make it otherwise. 

And then one day, as I told in my written story, I woke up with 

a dream because one of—the little bit of the research I did showed 

that there were programs available for persons with disabilities— 

I mean, minorities and female-owned businesses. But for persons 

with disabilities, there really weren’t any programs. 

The programs I am referring to are ones for businesses owned by 

minority and female-owned companies in the State of Illinois. In 

particular, the Minority and Female Business Enterprise Act was 

in place for those groups who wanted to take advantage and certify 

themselves and move toward maybe obtaining Government or 

State contracts. 

The idea I had with my business, what was left of it, frankly, 

was to maybe participate in that program by sending a letter to my 

local State representative, Senator Pate Philip, at the time and informing him of what I thought was something that could be looked 

at. Senator Philip decided to try to amend the Minority and Female 

Business Enterprise Act to include businesses owned by persons 

with disabilities, which is really what started to change our business lives once the law was passed. 

After becoming a certified disabled-owned business and—I apologize. After being invited by Senator Pate Philip to testify at both 

the House and Senate committee hearings to help the law get 

amended, we later found that the vote was totally for the amended 

change. And after Governor Edgar signed the law into effect in 

1992, we became one of the State’s first certified disabled-owned 

businesses. 
56 

After I decided to look at how it would help our company, we 

thought that our best opportunities would be with the private sector and their relationships with the Government contracts, and we 

can be subcontracted for providing product and service to those private sector facilities. It really made a change in our business. 

We grew from before the pre-amendment change, from $100,000 

a year to in a few years $1 million a year. And then after that, it 

just began to continue to progress, mostly because of the fact that 

private sector really started viewing this—our certification as, first, 

credible because of the State’s certifying policies and then their 

own in-company social responsibility efforts at doing business with 

companies with our certification. 

It was on a fast track, frankly, to us being viewed by companies 

that we were able to partner with as a viable resource for product 

and service. 

If I can now go back to the time where my psyche was at its 

worst, and now imagine where it is. I am a business owner that 

has grown the company from $100,000 to $1 million, and a few 

years after that to $5 million, and a few years after that to where 

we currently are at $6.8 million, with 15 employees. And the feeling, quite frankly, is much different than it was when things were 

at their worst. 

That is really what I want to get to here at this hearing, which 

is that persons with disabilities have this mountain to climb. And 

one of the greatest feelings in the world, I am sure you can imagine, is owning and operating your own business and then giving 

something back to people that don’t have disabilities. 

There are people without disabilities relying on two partners in 

this company that are both legally blind, on the work they did for 

their livelihood. There is a lot of pride there that I don’t think— 

it is one of the gifts that you have been granted when you have 

a disability. One of the gifts I have been granted is giving back and 

taking a real important look at making sure my employees are 

taken care of, and they are getting a fair and above fair wage and 

that the company is thriving and that it is just a sense of responsibility that, again, I don’t think that you can appreciate unless you 

have achieved what we have been fortunate to achieve. 

There are wonderful opportunities out there now for business 

owners with disabilities that weren’t there before. The State of Illinois certification is one. USBLN, U.S. Business Leadership Network is another who has really done a wonderful job partnering 

and certifying companies like ours nationally and as well as bringing the private sector companies, corporations together to introduce, if you will, these two organizations. 

It is something that I can see as being the future of entrepreneurship for persons with disabilities because private sector has 

taken the role of this social responsibility like they have so many 

times with minority and women-owned businesses. And I believe 

that it will be the future for entrepreneurship for persons with disabilities, as well as asking if on the Federal side, we could maybe 

gain some support that has been lacking in the past. 

Thank you very much. 

[The prepared statement of Mr. Prinske follows:] 
57 

PREPARED STATEMENT OF TOM PRINSKE

INTRODUCTION

My name is Tom Prinske and I am one of two partners of a produce distribution 

company in Chicago, IL. I would like to express a very warm thank you to the committee and all of those responsible for allowing me this opportunity. I am especially 

pleased to be here today as we celebrate the 21st anniversary of the signing of the 

Americans with Disabilities Act (ADA). I am aware that this committee has had a 

series of bipartisan hearings exploring the issue of how best to improve employment 

and economic well-being of people with disabilities, and I appreciate this opportunity to talk about what has worked for me as a small business owner with a disability. I am very aware of the shockingly low employment rates of people with disabilities, and I am here to make the case that expanding opportunities for disabilityowned businesses is an effective strategy for bringing more people with disabilities 

into the labor force. Speaking to the theme of today’s hearing, I also want to make 

the point that as people with disabilities continue to fight to make a place for ourselves in the middle class, we have a special responsibility when we take on the role 

of an employer to give back by treating our employees well and creating ladders of 

opportunity for others. 

MY STORY

When I was in my teens, my parents and I learned that I was going to lose about 

two-thirds of my vision by the time I was 25 years old. At the time, in the 1970s, 

it was very difficult for partially-sighted people to obtain much adaptive technology 

to help with reading or writing. There was help with braille and talking books for 

the blind, but outside of magnification, there wasn’t much available for the partially-sighted. As a result, I barely made it out of high school and really felt as 

though college was not a possibility. 

After high school I worked at a few labor jobs and did what I could to get by, 

while my vision was getting worse each year. I was given a chance to work with 

my uncle in his small produce business and I accepted. The only problem was that 

he had the same inherited eye disease as me, except he was further along than I 

was at the time. In addition, the business only had annual sales of about $100,000 

a year, and it was barely generating enough for us to get by. After I was unable 

to continue to drive for us anymore we had to hire an expensive driver, and there 

was a sense that we were definitely going to go out of business in a short time. In 

fact, we got to the point where I looked into applying for Social Security disability 

benefits as a means to get by. At 26 years old, that was a tough pill to swallow. 

I then began researching how I might be able to generate business under my circumstances. When I was looking at applying for disability insurance, I thought to 

myself, ‘‘I bet the government has some type of opportunity for businesses owned 

by persons with disabilities,’’ and I began to research that. I quickly learned that 

there was really nothing in place legislatively for disability-owned businesses, but 

I did find that there were programs in place for minority- and women-owned businesses at both the State and local levels. 

Just as I was about to throw in the towel, I awoke from a nap with an idea. I 

began researching who my local State legislators were and thought I would write 

them a letter. The first one I sent was to State Senator James ‘‘Pate’’ Phillip. About 

2 weeks after I sent it, Senator Phillip’s staff person contacted me and told me that 

Senator Phillip was not aware of any programs regarding businesses owned by persons with disabilities but that he would like to look into writing a law that would 

create such a program. A few weeks later, the staff person contacted me and told 

me that Senator Phillip was going to try to amend the State of Illinois’ Minority 

and Female Business Enterprise Act to include businesses owned by persons with 

disabilities, and to ask if I would like to help. With our efforts being pre-ADA, the 

toughest part of the process was writing the definition of a person with a disability. 

However, we were able to get it done and we now were ready to present it to legislators. I was asked to testify at both the Illinois House and Senate committee hearings and when it was finally voted on, there was not one vote against the amendment. As a result, on January 1, 1992 Governor Edgar signed into law the amended 

version of the Minority and Female Business Enterprise Act that is now titled The 

Minority, Female and Persons with Disabilities Business Enterprise Act. 

After becoming the first certified disabled-owned business in the State of Illinois, 

I began to research new potential business opportunities in State facilities. I learned 

that for my type of business, most of the opportunities were not directly through 

State contracts but as a sub-contractor for food service management companies that 

had contracts with the State like Marriott, Sodexo, Aramark, and several others. 
58 

With our new certification, I was able to introduce my company to organizations 

that never would have considered doing business with us in the past. We now were 

able to fit two needs in these fine organizations. One, as a tool to help them meet 

potential contract requirements with State facilities, and two, the company’s social 

responsibility efforts in the company’s diversity programs. 

Marriott and Sodexo were the first to accept our company into their system and 

we needed to show them that we had the ability to perform. Over the next few years 

we were able to grow the company to over $1 million a year in sales, and these companies began viewing us as a real asset. We knew that our certification gave us a 

great opportunity to engage in new business, but there were no guarantees. In my 

mind, it was critical to express to these companies that we viewed our business relationship with them as an opportunity, not an entitlement. We knew that we had 

to work at continuing to bring in product and service at fair market value, despite 

the fact that operating our disabled-owned business had added expenses that our 

competitors did not experience. This is a real fact for business owners with disabilities. In my business, we need a driver to drive both my partner and I. We need 

an office person dedicated to reading and working directly with us, adaptive technology for our computers, and several other expenses that fall under the cost of 

doing business. No other groups have these types of added expenses to their companies. At the end of the year, relative to the disability, these costs can be significant. 

That is one of the reasons why giving disability-owned businesses a competitive advantage in going after contracts and subcontracts is good policy. 

Over time, as we built a relationship with these companies, we earned their trust 

and saw business expand. We not only were receiving business from the State of 

Illinois, but also more opportunities to compete for other private sector business. By 

the fifth year of our certification we had grown our annual sales to more than $2 

million dollars while adding two trucks and five employees. 

Around this time I began a dialogue with the city of Chicago in an effort to include persons with disabilities in the city’s minority- and women-owned business 

program with the procurement department. I first approached a relatively new office 

that Mayor Daley had established called the Mayor’s Office for Persons with Disabilities. The executive director of MOPD, David Hansen, embraced the idea and we 

proceeded to begin the efforts of amending the existing ordinance. This effort was 

a much more difficult one, and did not result in the inclusion of business owners 

with disabilities into the existing ordinance. We were able to create a separate ordinance that only certified business owners with disabilities, but did nothing to create 

an incentive for the city to do business with these companies. As a result, it has 

not been as productive as the State’s law. 

Nonetheless, we continued to grow our business each year by creating more and 

more opportunities by partnering with other private sector companies. We began to 

directly approach larger corporations through their diversity office. Over the years, 

these companies have embraced the concept and have truly gone beyond the call of 

duty to not only include business owners with disabilities in their procurement diversity programs, but also to view the disabled community as a hiring resource. 

The combinations of all these factors over the past 25 years has brought T. Castro 

Produce into quite a different look than when I began, and much further than I 

have ever imagined. The company had annual sales in 2010 of $6.8 million. We are 

based in a 20,000-square foot warehouse in Chicago, operate six trucks throughout 

Illinois, and what I am most proud of, we employ 15 people. 

One of the most difficult things to deal with in living with a disability is having 

to rely on people for their help during the course of the day. For instance, I have 

to get a ride to work each morning and I need my mail read to me. To think that 

the same person who needs this help can also employ 15 people, gives me the sense 

that I am not a drag on society, like a lot of persons with disabilities. In fact, the 

responsibility I feel toward my employees is a direct result of the accomplishments 

we have achieved in bringing the business as far as we have, despite our disabilities. With our success, we feel strongly that we need to treat our employees with 

respect and fairness, which is what we as disabled business owners have been trying to achieve for ourselves. I believe it would be quite hypocritical to act otherwise. 

As a result, we pay our workers a well-above minimum wage in our warehouse, 

above the going rate for drivers and office personnel, and everyone is offered health 

care, of which the company pays 70 percent. We are proud of the fact that we have 

a very low turnover of employees, and we believe it makes good business sense 

when our customer sees the same drivers over and over, and talks to the same personnel in the office for years. It gives our customers a certain feeling of comfort to 

see the same face over and over again. 

Naturally, none of this would have been accomplished if not for our first certification with the State of Illinois. I am hopeful that more State and local govern-
59 

ments, and the Federal Government, would pass laws similar to the Illinois law so 

that there would be more of an incentive for people with disabilities to start their 

own businesses. 

Although the public sector has been slow to embrace disability-owned business enterprises in many instances, I have been encouraged by trends I am seeing in the 

private sector. More and more I am finding through large corporation’s Web sites 

that their diversity programs specifically include persons with disabilities along 

with minorities and females. The fact that these companies have made commitments to disabled-owned businesses is increasingly evident, as can be seen through 

the emergence of the United States Business Leadership Network (USBLN). The 

United States Business Leadership Network (USBLN) has brought both business 

owners with disabilities and large corporations together. The USBLN® Disability 

Supplier Diversity Program® (DSDP) offers businesses that are owned by individuals with a disability, including service disabled veterans, an exciting opportunity 

to increase their access to potential contracting opportunities with major corporations, government agencies, and one another. Through the USBLN® DSDP, a disability-owned business can obtain Disability-Owned Business Enterprise Certification and get connected to a nationwide network of corporate and government procurement professionals, disability advocates, and other certified disability-owned 

businesses. T. Castro Produce Company is a proud, certified Disability-Owned Business Enterprise of the USBLN®! 

The USBLN®’s certification process is extremely rigorous and challenging, thus 

preventing those without disabilities who might try to ‘‘game’’ the system to achieve 

certification. At the same time, it does not preclude severely disabled business owners, many of whom rely on others for assistance, in achieving certification. The 

USBLN has certified several businesses owned by persons with intellectual and 

other disabilities. 

The private sector has moved quickly to join the Disability Supplier Diversity Program by including disability-owned businesses among their preferred vendors, which 

also include businesses owned by minorities and women. Diversity efforts are intended to include everyone, and most progressive companies know their employees 

must look like their customers and their customers must look like their vendors. It’s 

time for the Federal Government to step in and step up! 

The Federal Government can assist certified disability-owned business enterprises 

in several ways: 

• First, by setting aside Federal procurement opportunities for certified disabilityowned businesses, the Federal Government can provide disability owned businesses 

with significant opportunities to grow and hire more employees, including people 

with disabilities, by delivering our goods and services to its many Departments and 

Agencies. 

• Second, either through legislation that could begin within this committee or by 

the President issuing an Executive order, Federal contractors could be encouraged 

to use certified disability-owned business enterprises in their procurement efforts. 

• Finally, the Federal Government can use its platform to recognize leading Federal contractors who embrace disability as an integral part of their Diversity & Inclusion efforts and who participate in this certification program, such as IBM, 

Sodexo, Merck, Ernst & Young, J.P. Morgan Chase, Marriott International, Freddie 

Mac, KPMG, Microsoft, QUALCOMM, Southwest Airlines, Sun Trust, Wal-Mart, 

Wells Fargo, WellPoint and Lowes. The list continues to grow each day. 

In closing, I want to reiterate my belief that people with disabilities want to work, 

make a living, and be part of the middle class. Business ownership isn’t for everyone, but it is one proven strategy for helping disadvantaged groups take their place 

in the middle class and create jobs for other people at the same time. As you know, 

small businesses are the primary engine for job growth and economic development. 

As we celebrate 21 years of the ADA, let’s recommit ourselves to creating more ladders of opportunity for people with disabilities, and let’s make sure that business 

ownership is part of our strategy. 

The CHAIRMAN. Well, Mr. Prinske, thank you very much for a 

very eloquent statement. 

We will start a round of 5-minute questions. And since this is the 

21st anniversary of the signing of the Americans with Disabilities 

Act, Mr. Prinske, I will start with you. 

Quite a story. You know, there are four pillars of the Americans 

with Disabilities Act, four pillars. Two of the four pillars are full 

participation and economic self-sufficiency. 
60 

Mostly we have focused on the issue of providing jobs, meaningful jobs, to people with disabilities. I mentioned earlier that right 

now, we are facing about a two-thirds unemployment among people 

with disabilities. But there is a subset of that that has not been 

focused on very much, and that is the equal opportunity portion of 

the ADA, married up with economic self-sufficiency, and that is 

providing the opportunity for people with disabilities to own their 

own business. 

Mr. PRINSKE. That is right. 

The CHAIRMAN. We had a project in my State of Iowa some years 

ago that worked on this, and we found that with just some training 

in elementary things like bookkeeping and accounting and things 

like that—Mr. Enzi understands—we found that people with disabilities starting a small business were quite entrepreneurial and 

grew those businesses and provided goods or services to people in 

different parts of the State. But it did require some training and 

did require some input in basic business principles and things like 

that. 

From your experience, I want you to speak a little bit more about 

what owning a business means to you. What you would say to people with disabilities today who would be thinking about starting 

their own business. 

You said something about how the Federal Government should 

do what the State of Illinois has done. I am going to look into that. 

I am not certain that we have that in our Federal laws in terms 

of minority and women-owned businesses. You say it doesn’t apply 

to people with disabilities? 

Mr. PRINSKE. Yes, sir. It does not. 

The CHAIRMAN. That needs to be changed. That is what you are 

saying right? 

Mr. PRINSKE. That is what I am saying. That is what I said 20 

years ago in Illinois, and Senator Pate Philip made the change 

then. 

The CHAIRMAN. Tell me just a little bit more about your own employees. You have employees. You believe in giving them a shot at 

the American dream. Tell me more about how you do that, I mean, 

what you do with your employees. 

Mr. PRINSKE. OK. I think, when I put my written statement together, it really, truly would be hypocritical if a person, or myself 

and my partner, didn’t feel like we needed to give back. We felt as 

though we were very, very fortunate to have an opportunity based 

on the legislation that came out of Illinois and feel very, very 

strongly today, how fortunate we are to have the opportunity and 

to have the business that we have. 

Giving back to my employees is a huge part of how I am at work. 

It is very, very important that we give back. And in particular, 

looking at persons with disabilities as a first hire is something that 

my partner and I feel is very, very important. 

But I truly feel, Senator, that the Federal Government needs to 

show now leadership. If State government, and even in the city of 

Chicago, there is an ordinance in place for putting business owners 

with disabilities in programs like minority and female-owned businesses, and now with USBLN certifying in a national effort, I truly 

believe that the Federal Government needs to stand up and say 
61 

that persons with disabilities are truly a viable source for entrepreneurship. 

One of your first questions, Senator, was, what do I feel about 

who should be a—how do I view entrepreneurship for other people 

with disabilities? It is probably the same ratio—I was talking to 

your staffer, Andy, about that earlier today. It is probably the same 

ratio as the nonpersons with disabilities. 

Not everybody is cut out to be a business owner or an entrepreneur. You know, one of my sons will be, and the other one will 

definitely not be. But entrepreneurship isn’t for everyone. But to 

create opportunities like there are in place for minority and femaleowned businesses, what is more worthy a group, Senator, than persons with disabilities? 

The CHAIRMAN. Well, thank you very much. 

And I am going to take a look at the Federal contracting dollars. 

We have been at this before, but we are going to have to take another look at it, I think. 

I have further questions for the rest of the panelists. But my 

time is up. So I will yield to Senator Enzi. 

STATEMENT OF SENATOR ENZI

Senator ENZI. Thank you, Mr. Chairman. 

I want to thank all the people on the panel. Your testimony has 

been extremely helpful. 

I have more questions than I will be able to ask during the allotted time as well, and we are coming up against a vote. So I hope 

you would be willing to answer some questions submitted in writing. 

I will begin with Dr. Green. From your testimony, I learned that 

some of the stimulus projects have gone belly up already. Can you 

elaborate a little bit on that? 

Mr. GREEN. Well, these are basically from news reports that are 

available to anyone. We suffer from a paucity of data. 

The company I am thinking of, most recently, an electric car 

company in California declared bankruptcy after receiving numerous infusions of both State and, I understand, Federal stimulus 

moneys to build a new electric car company. 

Last year, I believe a solar power company, a solar company that 

was built with stimulus funds closed up. It developed a successful 

business. Then it closed up and moved it to China. And so, there 

are some of the battery manufacturers that are not proving out in 

terms of being unable to come forward with the sort of advanced 

technologies they promised to produce. 

Senator ENZI. You also mentioned that taxpayer dollars are 

going to fund foreign jobs, as well as being extremely expensive per 

job in the United States. How is that money going overseas? 

Mr. GREEN. This is an interesting problem, and it is one that actually new findings have made even more interesting. The renewable technologies, a lot of the high technologies and renewable 

technologies—and if I get too deeply in the weeds, just sort of wave 

at me. They depend on a class of elements some people call them 

critical energy elements. Other people call them rare earth elements. 
62 

These are certain classes of metals primarily that have very 

unique characteristics. So if you want to build a wind turbine, the 

generator requires extremely strong magnets. To make these 

magnets, you need to add these particular metals to the magnets. 

The problem is, is that the source of these metals increasingly, 

in fact, 97 percent of the market is controlled by China, in the rare 

earth elements. And these metals are used in almost every advanced technology you can name that is on your body now, from 

your cell phone to your hybrid vehicle, to your battery-operated car, 

to your wind turbine, to your solar panels. They are doped with 

these minerals—these metals as well—elements as well. 

And so, because they have the metals locally, they are, in fact, 

using their trade power, perhaps unfairly, to encourage companies 

to come and build the products there with local labor and local access to the rare earth elements to then ship them elsewhere, to the 

United States and to Europe, for example. And so, in a sense, what 

is biasing this movement of the renewal of the funds is the more 

we look at sort of high-tech outlets, we limit ourselves to these 

being built abroad, where they have lower environmental standards often, sometimes better on paper, but poorer in practice. 

They have access to these rare earth elements, which, by the 

way, again, the production of it is extremely environmentally difficult and dangerous as well. And so, in a sense, we are losing out 

on those grounds. 

Senator ENZI. Well, I am pleased that a rare earth mine may be 

opened in Wyoming. They have discovered some of those minerals 

about 60 miles from my home. So that may ease a little bit of that 

tension. 

I have some other questions, but I will—because I want to know 

more about the green jobs funded by stimulus dollars costing jobs, 

but I will move on to Ms. Corey. 

You mentioned the social bottom line in your capacity building. 

Would you support requiring every small business to provide all of 

the benefits you provide on day one when it hires its first employees. Why or why not? 

Ms. COREY. I think that, as I said earlier, all employees should 

be able to provide for their families and for themselves. And obviously, a living wage and benefits will vary, depending on where a 

business is located. But I do believe that businesses should be 

striving to provide those types of benefits to employees as soon as 

possible. 

Senator ENZI. What is your starting wage? 

Ms. COREY. Currently, our starting wage is $10 per hour, and we 

work very quickly, through the professional development plans 

with our employees, to get that increased as soon as possible. 

Senator ENZI. Thank you. 

Ms. King, recently there was an SEIU document titled ‘‘Contract 

Campaign Manual,’’ which was made public as part of a lawsuit 

against your employer. The manual contains some disturbing tactics, including threatening the employer with costly Government or 

legal action, telling employees to do no more than what is required 

in the union contract, telling employees to not solve or suggest solutions for workplace problems, telling employees to refuse to par-
63 

ticipate in employer-sponsored social and charity events, and going 

after employer’s clients, suppliers, etc. That is just a part of it. 

This document underscores why so many private sector workers 

have lost faith in unions. Do you endorse those tactics? 

Ms. KING. First of all, let me say that I work for a joint labormanagement project. My board is half healthcare employers and 

half people from SEIU. I am not an officer of SEIU. 

But what I can say is that from what I have seen from the work 

that we are doing with over 600 employers, it is helping workers. 

It is helping patients, and it is helping those institutions’ bottom 

lines. So I think there are very many positive things that the labor 

movement is contributing to. 

Senator ENZI. Certainly. My time has expired. 

Thank you, Mr. Chairman. I will submit additional questions in 

writing. 

The CHAIRMAN. OK, thank you. 

Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman. 

Dr. Green, I was intrigued by your explanation of how inefficiently the Government creates jobs using Taxpayer Tom and Bureaucrat Bob. Do you mind terribly if I call you Witness Ken? 

Mr. GREEN. Not at all, Senator, and I will not call you anything 

other than Senator. 

Senator FRANKEN. You can call me Senator Al. 

[Laughter.] 

Now, your conclusion is, ‘‘The idea that Government can create 

jobs in the economy is a myth.’’ I would like to take issue with that 

conclusion. And so, for a while here, I may be just saying some 

stuff before I get to any questions. 

This hearing will be seen on C-SPAN. C-SPAN stands for Cable 

Satellite Public Affairs Network. Our first satellite was launched 

by the Army Ballistic Missile Agency, a Government agency. Of 

course, our satellite technology was further developed by the Government. Today, we have industries based on satellites. I think you 

know about GPS and smartphones and all the kinds of jobs that 

came out of our space program. 

This hearing will also be available on the Internet. The Internet 

was developed by the Government, too, and has created a lot of 

jobs. I don’t know if maybe you have looked at the Internet. 

You tell us that your doctorate is from UCLA, a public university. I wonder if any of your professors thought they had jobs. I 

would suspect that they do. 

I think about, oh, this has been going on for a while, kind of here 

in this country. the Erie Canal. The Erie Canal was built by the 

government of the State of New York. We all remember Dewitt 

Clinton. It really connected the Midwest to the Atlantic Ocean and 

created a lot of jobs. It made it much more efficient for farmers to 

ship their goods and lumber to the east coast and then to Europe, 

it connected the Great Lakes to Europe. 

The interstate highway system was built by Government. I wonder how many companies rely on the interstate highway system to 

ship their goods? Rural electrification seemed to create a lot of jobs 

during the 1970s. 
64 

And I will bet you, Witness Ken, that you would be grateful if 

you got very sick at some point, and that you are saved by a cure 

that came from research from the NIH that not only saved your 

life, but then would save your job. 

To come to the conclusion that the idea that the Government can 

create jobs in the economy is a myth, to me, is just absurd. And 

where did you go undergraduate? Did you go to a public university 

undergraduate? 

Mr. GREEN. Yes, I am proudly public school all the way. Other 

than third grade when we left New Jersey and I was taken out of 

Yeshiva, I was a public school student ever— 

Senator FRANKEN. So, is the Yeshiva responsible for all of this, 

everything? 

Mr. GREEN. No, of course not, Senator. 

Senator FRANKEN. Because we are good. I mean—— 

Mr. GREEN. I will simply—let me add two words, which I am 

sure you understand are already in my testimony. Those two words 

are ‘‘on net.’’ Of course, it would be absurd to say that the Government can’t create jobs. And it would be absurd to say that—— 

Senator FRANKEN. Well, that is what you said. 

Dr. GREEN [continuing]. I am not helped by healthcare. I have 

been helped by healthcare. I had a heart attack not that long ago 

and was very glad to receive a stent. 

But the ‘‘on net’’ is the key point, which is, while we would love 

to believe that we can suspend rules like gravity and things like 

that, the fact of the matter is there are transferred costs to payments. There are more expensive jobs than less expensive jobs, and 

there is no evidence that on net the Government can create jobs. 

I would just like to say, you pointed out some great examples, 

and I wish we had an entire hearing for this, because many of the 

examples you pointed out created many of the environmental problems you now decry. The interstate highway system—a wonderful 

thing. Many, many benefits. Also led to huge rural and suburban 

living that have caused urban sprawl, greater driving, greater environmental problems, fractionation of the landscape, ecosystem disruption. The list could go on for a very long time. 

Rural electrification, wonderful thing. Electricity is vitally important to lift people out of poverty. Side effects, people living in 

places—in flood plains, in drought areas, far away from urban centers, causing many of the problems that are bemoaned today environmentally, socially, and otherwise. 

Senator FRANKEN. OK, sir. I hate to interrupt. But may I remind 

you what your actual testimony was, ‘‘In conclusion, the idea that 

Government can create jobs in the economy is a myth.’’ 

Now, either that is your conclusion, or it isn’t. And if it is not 

your conclusion, you probably should have said so. And so, when 

we receive testimony here in the U.S. Senate, we really like the 

testimony to say what it means and mean what it says. 

So if you were going to say now we could have an enormous discussion over net jobs created by the Internet. I think the Internet, 

it is hard to—do you believe the Internet did not create net jobs? 

Mr. GREEN. I actually worked with people who were working on 

the Internet at UCLA. The question is, what created the jobs? Did 

the Government pave the way for the technology? Certainly. Was 
65 

it private businesses who marketized the technology and created 

the jobs? Absolutely. 

You pointed to satellites. The same thing is true. Did the military and the space program invent some of these technologies, 

basic R&D? And by the way, I have written in favor of basic R&D 

as a Government function in the past. Yes, absolutely. 

Senator FRANKEN. Why would you do that if doesn’t create jobs? 

Mr. GREEN. Because it is a genuine market failure. And it is—— 

Senator FRANKEN. OK. My time is up. 

Mr. GREEN. So is mine. 

Senator FRANKEN. But I will let you finish because you are Witness Ken. 

Mr. GREEN. Thank you, Senator. Thank you, Senator Franken. 

[Laughter.] 

The bottom line is, is that, of course, you can create jobs. And 

R&D, as I have written before, is a vital function of—legitimate 

function of Government because it represents an actual market. 

Senator FRANKEN. Ah, thank you. 

Mr. GREEN. But as somebody recently joked, the only way to 

make sense of the manned space program—for example, it is a sad 

thing, but true—is that it makes a good story if you run it backwards, which is, first, we had no spaceflight capability, then we 

had low-Earth orbit, then we went to the Moon. And then we now 

have no spaceflight capability. 

So these things are not always sustainable when the Government 

builds them, and that is something to keep in mind. 

Senator FRANKEN. Thank you. And I am sorry to go over my 

time. 

The CHAIRMAN. Thanks, Senator. 

Ms. Corey, one of the things we often hear is that the way to increase jobs is to let businesses pay their workers the lowest 

amount possible, source their materials from the cheapest provider 

anywhere in the world, be free of any Government regulation or 

oversight. 

IceStone’s story is the exact opposite of that. You pay your workers a living wage. You source your materials from the United 

States, and you work with local government to improve the safety 

of your factory. 

So the question is, how do you stay competitive while taking all 

of those steps? And what drives IceStone to expand and hire new 

workers? 

Ms. COREY. I believe that the way that IceStone is staying competitive right now rests on the quality of our product, as well as 

on the location of its manufacturing. Most of our competitors are 

manufactured or quarried overseas. And as consumers begin to demand more products or services that are available to them locally, 

the demand for durable surfaces and stone that is sourced locally 

is also increasing. And so, IceStone, being manufactured in Brooklyn, NY, has definitely had an appeal and has enabled us to remain 

competitive. 

And the first part of that was the quality. As I displayed our 

sample earlier, the look, the composition, and the aesthetics of 

IceStone are really what set us apart from our competitors. And so, 

architects, designers, and builders are able to distinguish IceStone 
66 

from other products. And there are very few competitors right now 

in our space that can produce a similar look that meets the quality 

standards that IceStone does. 

The CHAIRMAN. Tell me about the co-founding of B Corporations, 

a network of 427 companies that proved businesses have the power 

to solve social and environmental issues. You say, five States have 

signed legislation that recognizes B Corporations. 

Again, it seems that this goes counter to everything that we are 

hearing now. That, again, the way to beat your competition is to 

pay workers less, cut benefits, do everything you can so that they 

don’t unionize, all those kinds of things. But you seem to be going 

in the opposite direction, and so do the 427 other companies. Again, 

are they profitable companies? 

Ms. COREY. The B Corporations that are part of that network, as 

well as the businesses that are within the American Sustainable 

Business Council, are profitable businesses and businesses that are 

striving toward profitability as well. They range in size. 

I think the trend that these businesses are really underscoring 

is that in order to be profitable, social responsibility and environmental stewardship need to be valued on par with fiscal profitability. And the five States, which have passed that legislation of 

recognizing B Corporations and holding them to standards, are Hawaii, Maryland, New Jersey, Vermont, and Virginia. There are 

seven States that have legislation pending. 

The CHAIRMAN. Well, I just find that fascinating. The other thing 

I would like to know is what is the divergence? What is the span, 

the gap between the income, the payment to the CEO of your company and the workers on the floor? If you don’t know that right 

now, I would like to have you submit that. 

Ms. COREY. I know that it is less than a 10× spread between—— 

The CHAIRMAN. It is less than—— 

Ms. COREY. Less than a 10× spread between the—— 

The CHAIRMAN. Ten times. 

Ms. COREY [continuing]. Between our gemba, our operations 

team, and our CEO. And I could certainly submit the detailed answer in writing to you. 

The CHAIRMAN. Because one of the things we have seen in the 

past 30 years has been a tremendous gap opening up between the 

pay and remuneration for CEOs and other high-ranking people of 

these publicly held corporations—privately held, too—and the 

amount of income of the workers in those plants or in those companies. 

I think I am right in saying this, that in the heyday of the 1950s, 

1960s, maybe early 1970s, I think the gap was around 20 times, 

between the pay at the top and the bottom, or the workers. I think 

that has widened. I think the average now in America is, I think, 

almost 300 times now. 

And I just wonder what effect that has on sort of the mindset of 

those who work there and what that says to them about their 

worth and their own individual worth, but their worth to the company when CEOs just keep making more and more and more 

money, and they get golden parachutes, and they have great pension benefits and everything, but the workers don’t. 
67 

Ms. COREY. Well, IceStone has a very flat structure. Organizationally, we do not have what is commonly found in a lot of manufacturing companies or other corporations, where there is a hierarchy, and there are such gaps in pay, but also in the impact that 

workers at various levels can have on the operations of the business. 

And as I mentioned earlier, the professional development plans 

that every employee is required to create each year are really helping to keep our company flat and to also bring conversation and 

transparency between our C suite and between the floor. 

Something else that we do is hold a town hall meeting every 

month. And that town hall meeting, every single member of our 

company—from our CEO, our co-founder, our VP of sales and marketing, to the employees who are making our product—gather together, share a meal, but also discuss topics of business. We go 

over our yields. We celebrate birthdays. We share important safety 

announcements. 

Those types of activities at IceStone are really helping—in addition to the minimal gap in pay—are really helping to create a culture where all employees feel valued and all employees feel that 

they are having an impact on the business. 

The CHAIRMAN. Thank you, Ms. Corey. 

Senator Enzi. 

Senator ENZI. Thank you. 

Again, I appreciate all the testimony, and I know votes have 

started. So we are running out of time here. 

But, Ms. Corey, you remind me of a company that I knew before 

I ever got to Washington. They put out a little video. It was called 

‘‘The Great Game of Business.’’ The tractor repair company was 

going broke, and the employees decided to buy it. 

Of course, the employees found out they really didn’t have any 

assets, but they were still able to buy it. They did many of these 

things that you are talking about, where they were very inclusive 

of the employees and kept them informed of the bottom line and 

encouraged ideas. I think that is a tremendous way to do business, 

and I congratulate your company for it. 

I didn’t get to ask Mr. Prinske a question. Your testimony, Mr. 

Prinske, it was very, very inspiring, and your presentation today 

was also. For small businessmen and women, that have disabilities, pursuing the American dream is not an easy road. And you 

have done it. 

In your testimony, though, you mentioned that one challenge for 

your business is keeping the cost of your products and services 

competitive when you are faced with higher operational costs. 

Would you share with us some of the decisions that you have to 

make in order to mitigate those costs? 

Mr. PRINSKE. Well, there really isn’t much you can do other than 

live with them. It is just a cost that I think is a fact of life for business owners with disabilities. When adapting the company to our 

disability, it is just more of an expense that is not incurred by our 

competitors, unless, of course, they would have a disability. 

I think it is an important fact that we need to realize in the company. But we can’t pass it on or complain about it to our customers. It is a reality. And it is something that should be consid-
68 

ered when looking at trying to level the playing field for persons 

with disabilities to compete like minority and female-owned businesses are. 

Those two groups, frankly, don’t experience that extra cost. But 

you are right. I did point out that—and those are real expenses. I 

mean, to get 25 miles from Elmhurst, IL, to where my warehouse 

is in Chicago, I have to have a van from work come and pick me 

up and bring me back, and the same thing on the way home. So 

those expenses are real. 

Senator ENZI. Well, I thank you for coping with that and would 

appreciate you sharing in some written testimony any ideas that 

you have for businesses providing those services because it is essential. I congratulate you for what you have done and for what 

you are doing for the disability community. 

We will try and do our part in that, too. I will work with Senator 

Harkin to see what the Federal requirements are and appreciate 

you bringing that to our attention. 

Mr. PRINSKE. Well, I thank you very much for being—one of the 

first steps is being part of this group, this hearing. It is important 

that persons with disabilities are in the picture, and then discussions like this will take place. 

I am sure you are aware of that, and that is why you invited me. 

And I am very grateful to all of you that did invite and allow me 

to represent persons with disabilities. I appreciate it. 

Senator ENZI. Thank you. I will forego the rest of my time. 

The CHAIRMAN. Thank you, Senator Enzi. 

We have 8 minutes left. 

Ms. King, I am sorry. I had a whole number of questions for you. 

If you don’t mind, I will submit them to you in writing. 

And again, on the 21st anniversary of the ADA, I couldn’t think 

of a better witness, Mr. Prinske, than you to give some hope and 

encouragement to people with disabilities that they, too, can become entrepreneurs and own their own business. 

Mr. PRINSKE. You are very kind. You are very, very kind. Thank 

you very much. 

The CHAIRMAN. I thank all of our witnesses. You have all, I 

think, contributed a lot to this hearing. 

And again, we will continue. As I said earlier, we have to have 

more of a national debate on what is happening to the middle class. 

There are certain facts that are irrefutable in terms of income and 

slice of the national income and things like that. 

What has caused it and what solutions we may have is open for 

debate and discussion. And I think it can be a healthy debate. But 

I really believe it is the debate that we have to have. 

I know we are all wrapped up now in this other thing that is 

going on around here, and that is important. But we have got to 

have a national discussion and debate about, is the middle class 

worth saving in America? Is it something that makes us a kind of 

unique country? 

If so, what do we do? What do we do to kind of re-energize and 

rebuild that middle class that has been sinking? As I said, I don’t 

have all the answers, but we need a national discussion on this. 

And yes, we can all have differences on how we get there. But 

through that kind of debate and discussion, we make progress. I 
69 

don’t think debate and discussion necessarily mean stalemate. It 

means you get the best ideas out there. You challenge other people’s thinking, and out of that, maybe we will come up with some 

ways to solve this problem. 

But I believe it is a very big problem, and this committee is going 

to continue to have hearings and discussions on this. And hopefully, we can engender a national discussion on what is happening 

to the middle class and what we do to rebuild it. 

I guess implicit in what I just said is that I do feel that it is important for this country to have a solid middle class. 

Thank you all very, very much. You see our vote has started, and 

I am going to be late if I don’t get out of here. 

Thank you. The record will stay open for 10 days for other questions or submissions. 

Again, I thank the panelists for being here today, all of you. 

Thank you very much. 

[Additional material follows.] 
70 

ADDITIONAL MATERIAL 

RESPONSES BY HILDA L. SOLIS TO QUESTIONS OF SENATOR HARKIN, SENATOR

WHITEHOUSE, SENATOR MURRAY, SENATOR CASEY, SENATOR ENZI, SENATOR

ISAKSON, AND SENATOR HATCH

SENATOR HARKIN

At the hearing, Senator Isakson asked you about certain data that is collected 

under the Occupational Safety and Health Act. To followup on this discussion, what 

is an incidence rate? How is it calculated? Who is required to report this information? For what purpose does the Department of Labor use this information? Does 

the Department have any rules or regulations that prohibit or disqualify employers 

from being awarded any contracts based on recordable injury and illness rates? 

Question 1. What is an incidence rate? How is it calculated? 

Answer 1. In the context of occupational injury and illness statistics, an incidence 

rate is an expression of the number of injuries and/or illnesses in relation to a fixed 

unit, such as the number of hours worked, or the number of full-time employees. 

For example, BLS publishes an incidence rate for total injuries and illnesses per 100 

full-time workers calculated as follows: (N/EH) × 200,000, where: N = number of injuries and/or illnesses, EH = total hours worked by all employees during the calendar year, and 200,000 = hours worked by 100 full-time equivalent workers (working 40 hours per week, 50 weeks per year). Other incidence rates may be expressed 

per 10,000 or 100,000 full-time workers. 

Question 2. Who is required to report this information? 

Answer 2. OSHA does not require employers to report incident rates as such. Employers subject to OSHA’s recordkeeping rule must record work-related injuries and 

illnesses that meet certain criteria and must prepare a year-end summary reflecting 

the total number of cases and hours worked. OSHA requires employers in some industries to report information from their injury and illness records to the agency, 

including total cases and hours from the summary. BLS separately collects data 

from a statistical sample of employers and uses the data to calculate incidence rates 

as part of the national injury and illness statistics. 

Question 3. For what purpose does the Department of Labor use this information? 

Answer 3. Incidence rates are used for a variety of purposes, including identifying 

industry sectors warranting national and local emphasis programs, identifying 

emerging trends, setting regulatory priorities, and measuring the impact of various 

OSHA programs on occupational safety and health. 

Incidence rates are also used by employers, researchers, employees and employee 

representatives, among other groups, in researching the causes of occupational injuries and illnesses and in developing effective abatement measures. 

Question 4. Does the Department have any rules or regulations that prohibit or 

disqualify employers from being awarded any contracts based on recordable injury 

and illness rates? 

Answer 4. Neither the Department of Labor nor OSHA has a rule or regulation 

that would prohibit or disqualify employers from being awarded contracts based on 

injury/illness rates. 

SENATOR WHITEHOUSE

Question 1. The Department of Labor’s ERISA fiduciary proposal takes appropriate steps to ensure that people who give retirement advice stand behind it and 

look out for the customer’s best interest by becoming a fiduciary. I understand the 

Department is looking at further changes to ERISA that would allow different business models (e.g., commission, managed account, etc.) to give advice as long as they 

become a fiduciary. Can you tell me where those efforts stand? 

Answer 1. On September 19, the Department announced it will re-propose the definition of a fiduciary, with the new proposed rule expected to be issued in early 

2012. As we stated in our September 19 news release, we also anticipate issuing 

exemptions addressing concerns about the impact of the new regulation on the current fee practices of brokers and advisers, and clarifying the continued applicability 

of exemptions that have long been in existence that allow brokers to receive commissions in connection with mutual funds, stocks and insurance products. The agency 

will carefully craft new or amended exemptions that can best preserve beneficial fee 

practices, while at the same time protecting plan participants and individual retirement account owners from abusive practices and conflicted advice. 
71 

SENATOR MURRAY

Question 1. How can we expand proven approaches, such as on-the-job training, 

incumbent worker training, sector strategies and registered apprenticeships? 

Answer 1. The Department of Labor is taking multiple steps to identify and expand proven workforce approaches by providing the public workforce system and its 

partners with increased information on the services delivered by the workforce system that are most cost-effective, demand-driven and high-impact and by developing 

new venues in which to provide that information. 

First, the Fiscal Year 2011 continuing resolution included $125 million for a new 

Workforce Innovation Fund (WIF) to demonstrate innovative strategies or to replicate effective evidence-based strategies that support greater coordination of systems and structures between workforce development, education, human services and 

other programs to improve the workforce investment system, leading to better employment and related educational outcomes, connecting employers to the skills they 

need, and increasing the cost-effectiveness of service delivery. The Department is 

pursuing an aggressive timeline for publication of the WIF solicitation. 

The Department intends that the WIF: 

• Invest in projects that are designed to deliver services more efficiently and 

achieve better outcomes, particularly for vulnerable populations, including individuals with disabilities, and dislocated workers; 

• Support both structural reforms and the delivery of services; 

• Emphasize building knowledge about effective practices through rigorous evaluation; 

• Translate into improved labor market outcomes and increased cost efficiency 

and other measures in the regular formula programs; and 

• Encourage the use of waivers, consistent with program requirements, to facilitate integration and coordination across programs and funding streams. 

This investment in innovation and best practices will establish the infrastructure 

necessary for the continued integration of innovative, evidence-based and cost-saving workforce strategies that will lead to improved service delivery for both job-seekers and employers. 

Second, the Department has embarked on an effort to identify and disseminate 

information on best practices methodologies to benefit the public workforce system. 

This initiative establishes levels of rigor and uses consistent processes and terms 

for information on best practices and enhances quality and presentation of practices 

descriptions. 

Third, we have built online communities, which provide a medium in which our 

grantees can share their experiences with the Department and other grantees. For 

example, the 21st Century Apprenticeship online community provides a useful 

forum for apprenticeship stakeholders and the Department to share successful approaches for expanding apprenticeship. 

Finally, the Department conducts pilot projects, demonstrations, research and 

evaluation studies that contribute to improving the understanding of how programs 

work and the effectiveness of service approaches. In addition, most of the Department’s grant programs are designed to accommodate independent evaluation of program outcomes and impacts. For example, the Workforce Investment Act Gold 

Standard Evaluation of the Adult and Dislocated Worker Program will help policymakers and practitioners assess the impact of WIA-sponsored Adult and Dislocated 

Worker activities on participants in the programs. The Green Jobs Innovation Fund 

grants, awarded in June 2011, will help expand registered apprenticeship, preapprenticeship, and many other training opportunities in the energy efficiency and 

renewable energy fields. The $240 million H–1B Technical Skills Training grant 

program is designed to provide education, training, and job placement assistance in 

the occupations and industries for which employers are using H–1B visas to hire 

skilled foreign workers, and the related activities necessary to support such training. The first round of grants, totaling $159 million, were awarded in September 

2011 across a variety of high-growth industries, such as advanced manufacturing, 

energy, health care, and information technology. ETA will award approximately $80 

million during the second round of grants, focusing on on-the-job training (OJT) and 

other training strategies, healthcare-focused projects, and those projects that serve 

the long-term unemployed. In addition, ETA added additional funds totaling approximately $100 million for high-quality applications that are implementing OJT. 

Question 2. I’m particularly concerned about reports regarding skills gaps—that 

small and mid-sized employers are having a hard time finding skilled workers to 

fill some of the 3 million job openings currently available. What more can we do 
72 

to work with small and mid-sized companies—the very companies that tend to be 

the engine of our economy—to close that gap? 

Answer 2. The Department of Labor’s worker training programs and job search 

assistance for both workers and firms are a vital part of helping the economy run 

smoothly. The Department of Labor provides crucial training for individuals who 

have left the formal education system, eligible youth, and workers who find themselves out of work and in need of re-tooling in the middle of their careers. Increasing 

the skills of U.S. workers is key for long-term growth and for the future competitiveness of our economy. 

In addition, the Department of Labor plays a crucial role in providing information 

to both workers and employers. In any economy, employers will sometimes have a 

difficult time finding the right worker for the right position. The intermediary role 

played by the Department of Labor helps to grease the wheels of the labor market 

and helps the economy function more smoothly. 

Problems with intermediation and skills gaps are always present, though unlikely 

to be the main reason for today’s high unemployment. The simple fact is that we 

currently face a labor market that combines record high numbers of unemployed 

workers with record low numbers of job vacancies. Although 3 million job openings 

may seem substantial, there are still more than 1 million fewer job openings than 

on average in 2007, prior to the recession. With almost 14 million unemployed workers, there are still more than 4 unemployed workers for every open job. This pool 

of individuals looking for work means that businesses are generally having a much 

easier time filling their positions than in a stronger economy. For example, each 

month, the National Federation of Independent Businesses surveys small businesses, and asks whether qualified individuals are applying for their open jobs. In 

August 2011, 33 percent of employers said they had no qualified applicants. That 

number is still down dramatically from 4 years ago, when it was 43 percent. 

The Department of Labor’s Employment and Training Administration (ETA) has 

a dual-mission—increase employment opportunities for workers and promote economic growth for businesses by supporting skills development that aligns with business needs. The nationwide network of 2,900 One-Stop Career Centers supports 

businesses, including the small business community, by linking employers looking 

to hire with Americans looking for work. One-Stop Career Centers work with businesses to post job openings, screen and refer applicants, and provide other services 

to meet their workforce needs. 

Employers are not only customers, but critical partners. State and local workforce 

investment boards that administer the One-Stop Career Center system at the State 

and local levels have a majority of members, as well as the board chair, from the 

business community. Participation on workforce boards is an important way that 

businesses in key sectors of the economy can help ensure that job training is meeting the needs of area employers. In addition, ETA’s grant programs that focus on 

employment in key industry sectors, such as health care, green jobs, advanced manufacturing, and information technology, are required to have employers as partners. 

A recent example of employer partnerships is the Trade Adjustment Assistance 

Community College and Career Training (TAACCCT) initiative, for which the 

Health Care and Education Reconciliation Act included a total of $2 billion over a 

4-year period. In partnership with the Department of Education, ETA awarded $500 

million in TAACCCT grants in September 2011 to community colleges around the 

country for targeted training and workforce development to help dislocated workers 

who are changing careers. These grants support partnerships between community 

colleges and employers to develop programs that provide pathways to good jobs, including building instructional programs that meet specific industry needs. Another example of strong linkages with employers is the $37 million Jobs and 

Innovation Accelerator Challenge, a multi-agency grant competition to support the 

advancement of 20 high-growth industry clusters in rural and urban regions spanning 21 States. The winning projects, announced in September 2011, are driven by 

local communities that identified their economic strengths. Investments from ETA, 

the Department of Commerce’s Economic Development Administration, and the 

Small Businesses Administration, as well as technical assistance from 13 additional 

Federal agencies, will promote economic and workforce development in industries 

such as advanced manufacturing, information technology, aerospace and clean technology. 

ETA also supports small- and mid-sized businesses by supporting entrepreneurs. 

Many Americans have the motivation and skills to develop a small business on their 

own, but may lack business experience or more importantly the access to financing. 

• ETA released guidance to the One-Stop Career Center system in November 

2010 encouraging States to establish parameters for funding entrepreneurial training (http://wdr.doleta.gov/directives/corrldoc.cfm?DOCN=2957). 
73 

• To help emerging entrepreneurs, the Project GATE (Growing America Through 

Entrepreneurship) demonstration project teamed ETA training and assistance programs with economic development entities such as local small business development 

centers, local chambers of commerce, small business loan providers, and other such 

entities. Current grantees in four States are helping older and dislocated workers 

launch and grow successful businesses. A random-assignment evaluation of Project 

GATE, completed in December 2009, found that compared to the control group, participants started their first business sooner, and their businesses had greater longevity. • ETA is also developing a new Self-Employment Training Demonstration focused 

on the role of One-Stop Career Centers in supporting self-employment in coordination with Small Business Administration programs. • In collaboration with Small Business Development Centers, chambers of commerce, economic development leaders, business incubators, and higher education institutions, ETA developed a technical assistance tool kit to help local communities 

build a strong network for start-up entrepreneurs and small businesses, from their 

first hires through their first expansion. 

ETA has made a significant investment in on-the-job training (OJT) through the award of $75 million in Recovery Act funds for OJT National Emergency Grants to 

41 States, the District of Columbia and three federally recognized Native American 

tribes. OJT is of particular value to small businesses because it can offset initial 

training costs to fill skilled positions while building organizational productivity as 

the participant learns job requirements. This initiative so far has led to 2,000 placements with several thousand more placements expected over the course of the next 

year. 

As part of ETA’s efforts to improve virtual tools and resources, the ‘‘Business Center’’ site (http://www.careeronestop.org/business/businesscenterhome.asp) provides 

a range of resources to help businesses, including information and tools for financial 

planning; human resources; information technology; workforce safety; and workplace 

issues among other services. This site also features a ‘‘Job Description Writer’’, a 

step-by-step guide that incorporates occupational data to enable employers to write 

descriptions for job postings and increase chances of hiring a qualified applicant. 

These free, on-line tools are especially helpful for small- and mid-sized businesses 

that may not be able to afford to pay for these services. 

SENATOR CASEY

Question 1. I would like to praise your focus on job creation. It is clear that the 

lack of enough good paying jobs is the most pressing issue confronting our economy. 

As Chair of the Joint Economic Committee (JEC), I have been examining our Nation’s manufacturing policy and its role in our economy’s future strength. In your 

view, what more do we need to do to support the manufacturing sector? 

Answer 1. The Administration sees a resurging manufacturing sector as part of 

the American path to recovery, job creation, and sustained economic growth. The 

manufacturing sector has shown enormous resiliency and strength in our economic 

recovery so far, with over 300,000 jobs added since the beginning of 2010. Across 

the Administration, the President recently launched the Advanced Manufacturing 

Partnership, an effort led by the Commerce Department that brings industry, universities, and the Federal Government together to invest in emerging technologies 

that will create high quality manufacturing jobs and enhance our global competitiveness. 

The Department of Labor has emphasized the importance of the manufacturing 

sector and its role in the American economy by playing a leading role in ensuring 

our workforce is trained and prepared to compete for manufacturing jobs across the 

country, especially in high growth industries, such as high-tech, health care, and 

green industries. 

DOL’s competitive grant programs have allowed for the opportunity to support job 

training for careers in high-growth and emerging industries, including manufacturing. 

• The Jobs and Innovation Accelerator Challenge—A joint funding opportunity for 

high-growth regional innovation clusters, including advanced manufacturing, to 

compete for $37 million ($19.5 million from the Department) in flexible workforce, 

economic development and small business development funds to accelerate cluster 

growth. 

• H–1B Technical Skills Training Grants—$240 million in competitive grants to 

provide training, job placement, and other assistance in the occupations and industries for which employers are using H–1B visas to hire skilled foreign workers. Manufacturing is among the top 10 industries for which H–1B visas are granted. 
74 

• Trade Adjustment Assistance Community College Career Training Grants— $500 million in competitive grants to eligible higher education institutions for education and career training programs that can be completed in 2 years or less and 

prepare TAA-eligible and other workers for employment in high-wage, high-skill 

occupations, including manufacturing. 

In the manufacturing industry, employers also have utilized Registered Apprenticeship for many years to train apprentices in traditional manufacturing occupations. In the past decade, as the manufacturing industry has advanced, DOL has 

worked with industry partners, particularly the National Institute of Metalworking 

Skills, to develop competency-based Registered Apprenticeship training models that 

establish unified skill standards throughout the industry. Today, there are approximately 17,000 active apprentices in Advanced Manufacturing programs and over 

3,000 active apprenticeship programs in Advanced Manufacturing, of which 112 

were registered in the past year. 

In spring 2010, DOL released an updated advanced manufacturing competency 

model, working in close collaboration with industry partners, such as the National 

Association of Manufacturers. This employer-validated model outlines the skills necessary to pursue a successful career in the manufacturing industry. 

DOL also is promoting the importance of credential attainment with the adoption 

of a high priority performance goal to increase credential attainment by 10 percent 

among customers of the public workforce system by June 2012. The Department 

also issued guidance in December 2010 that describes the credentialing goal, provides information on defining credentials and directs the public workforce system 

to resources and online tools. 

Question 2. I appreciate your continued advocacy on the part of unemployed 

Americans, especially your emphasis on continuing Unemployment Insurance benefits for those looking for work. The Pennsylvania legislature recently passed work 

share legislation. How do you think Federal work share legislation can assist in 

strengthening the employment environment? 

Answer 2. The Administration supports the work sharing program as a win-win 

for both business and workers because it encourages employers to reduce hours 

rather than lay off workers, and it mitigates the effect of reduced wages on workers 

and their families by providing workers a partial unemployment benefit. By helping 

employers keep their staff on the job, it helps weather uncertain times while protecting their investment in worker training, improving employee morale, and staying ready to scale up their production when business returns to normal. We applaud 

Pennsylvania for enacting legislation that will help workers remain on the job rather than becoming unemployed. 

The American Jobs Act includes a proposal to encourage States to implement 

work sharing programs. The proposal includes a 2-year Federal work share program 

for those States without pre-existing work share programs and up to 3 years of Federal payment of work sharing benefits for States that either have adopted, or subsequently adopt, a permanent State-based program. The proposal also would provide 

financial incentives to encourage States to adopt and promote permanent work 

share programs with employers, and small subsidies to enable an intense marketing 

campaign to promote work sharing by the Department of Labor. This proposal is 

similar to the legislation recently introduced by Senator Reed that you have cosponsored. 

Question 3. The JEC will soon be releasing a report illuminating the need for 

Trade Adjustment Assistance (TAA). Among other findings, this report highlights 

that TAA beneficiaries are typically older workers with no more than a high school 

education. How do the Department’s TAA initiatives support this demographic? Do 

we need to better target resources? 

Answer 3. Trade Adjustment Assistance (TAA) participants come from a variety 

of backgrounds and industries and therefore, participants enter the program with 

a wide array of skills and experiences. However, the majority of TAA participants 

who enter the program face similar challenges in obtaining re-employment, which 

can include no postsecondary degree, job skills solely in the manufacturing sector, 

and an average age of 46 with over 12 years of experience in a specific job that may 

no longer exist. 

Under the 2011 Amendments, TAA offers a variety of benefits and services to support workers in their search for re-employment. This includes training in new occupational skills, a job search allowance when suitable employment is not available 

in the worker’s normal commuting area, a relocation allowance when the worker obtains permanent employment outside the commuting area, the Health Coverage Tax 

Credit (HCTC) covering 72.5 percent of the qualified health insurance premium paid 
75 

by an eligible worker, and Trade Readjustment Allowances (TRA) providing income 

support while workers are enrolled in training. Training and income support are 

available for up to 117 weeks, with an additional 13 weeks available to support 

workers who have met established benchmarks while they complete coursework resulting in an industry recognized credential. 

In addition to the benefits available to all trade-affected workers, Reemployment 

Trade Adjustment Assistance (RTAA) benefits are provided to assist certain eligible 

workers 50 years of age and older. Participation in RTAA allows older workers, for 

whom retraining may not be appropriate, to accept re-employment at a lower wage 

and receive a wage subsidy. Eligible workers age 50 or older who obtain new, fulltime employment at wages of less than $50,000 may receive a wage subsidy of 50 

percent of the difference between the old and new wages, with a maximum of 

$10,000 paid over a period of up to 2 years. 

The 2011 Amendments restore provisions of the Trade and Globalization Adjustment Assistance Act of 2009 (TGAAA), which improved the ability of trade-affected 

older workers to take advantage of the RTAA program by eliminating the deadline 

for workers to become re-employed and by eliminating the wage insurance certification. Taken together, these changes provided more flexibility and support to allow 

trade-affected workers, especially those with no more than a high school education, 

the time they in particular may need to transition into new employment. 

The 2011 Amendments are a result of extensive negotiations with the Administration, Chairman of the Senate Finance Committee, Max Baucus, and Chairman of 

the Ways and Means Committee, Dave Camp. In these negotiations, we reached a 

bipartisan agreement on the underlying terms for a meaningful renewal of a 

strengthened TAA. These Amendments preserves the key goals of the 2009 program 

to ensure workers harmed by trade the best opportunity to acquire skills and credentials to get good jobs. The recent passage of these critical elements of TAA gives 

trade-affected workers a good opportunity to retrain and retool for the 21st century 

economy to get good jobs that keep them in the middle class. 

Question 4. Natural gas exploration provides a significant economic opportunity 

for Pennsylvania. We need to equip local workers for these jobs that come with tapping these resources. I have introduced legislation that would provide on-the-job 

training for Marcellus Shale workers and I will continue to advocate for resources 

that prepare our local workforce for these opportunities. Can you speak about efforts 

already underway by the Department to train these workers? 

Answer 4. The Department of Labor recognizes the recovery of shale gas deposits 

in Pennsylvania, West Virginia and Ohio has been greatly accelerating. The Department awarded Westmoreland County Community College a grant of $4,964,534 to 

create a comprehensive recruitment, training, placement and retention program for 

high priority occupations in the natural gas drilling and production industry. The 

competitively awarded Community Based Job Training grant is titled Marcellus 

ShaleNet and will serve 4,500 unemployed, dislocated and incumbent workers, lowincome workers, youth and veterans between July 1, 2010 and June 30, 2013. 

With Westmoreland County Community College serving as the Western ‘‘hub’’ and 

Pennsylvania College of Technology serving as Eastern ‘‘hub,’’ Marcellus ShaleNet 

brings Workforce Investment Boards, their One Stop Career Centers, industry, and 

training providers together to build a Marcellus-wide, industry—recognized, uniform 

training and certification program, aggregating and augmenting existing curricula, 

and adopting best practices as identified. 

SENATOR ENZI

Question 1. The June jobs report from the Bureau of Labor Statistics showed the 

economy only gained a net 18,000 new jobs, while unemployment remained very 

high at 9.2 percent. The July jobs report is slightly better, but no matter how you 

view it, President Obama’s claim that the Stimulus would create or save 3.5 million 

jobs in 2 years has not panned out. Now, some are suggesting that a second, larger 

stimulus is needed. Why should the American people believe that a second stimulus 

would yield any better result? 

Answer 1. In all, since employment hit its low point in February 2010, the private 

sector has added nearly 2.4 million jobs. Those are just the net new jobs created. 

The success of the American Recovery and Reinvestment Act (ARRA) was to prevent 

the economy from continuing its dramatic decline, as we saw when over 800,000 jobs 

were lost in January 2009, the month President Obama took office. Without that 

critical investment in the economy, through tax cuts, support for State and local 

government and infrastructure improvement projects, we would have had 3.6 million fewer jobs according to the most recent report by the Council of Economic Advi-
76 

1The Economic Impact of the American Recovery and Reinvestment Act of 2009, Seventh Quarterly Report, Council of Economic Advisors, July 1, 2011 http://www.whitehouse.gov/sites/default/files/ceal7thlarralreport.pdf. 2 Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from January 2011 Through May 2011. Congressional Budget Office. May 2011. 

http://www.cbo.gov/ftpdocs/121xx/doc12185/05-25-ARRA.pdf. 

sors.1 The non-partisan Congressional Budget Office has estimated that ARRA 

boosted the total number of people employed by up to 3.3 million.2 Mainstream 

economists, of all political persuasions, agree that the Recovery Act did what it was 

intended to do by preventing our economy from falling into another depression and 

boosting employment by several million jobs. 

We have made important strides to get the economy back on solid footing, but we 

still have more work to do. The President’s proposed American Jobs Act includes 

immediate, common sense and bipartisan steps we can take to boost economic 

growth and job creation: 

1. Extend tax cuts, including payroll tax cuts, for middle-class families so people 

have more money in their paychecks next year. This will help small- and mediumsized businesses, whose customers will be more able to pay for goods and services. 

2. Extend unemployment insurance to support workers who are looking for work 

to pay for basic needs for themselves and their families, while also providing an 

added jolt to the economy. 

3. Re-build America’s infrastructure. There are millions of unemployed workers in 

construction and other industries, while at the same time much of America needs 

rebuilding. This bill will help private companies hire these workers to rebuild our 

roads, bridges and highways, and lay the groundwork for future economic growth. 

4. Pass the patent reform bill to streamline the patent process so innovative and 

job-creating ideas can make it to the market faster. 

All these ideas have bipartisan support and should be passed swiftly, providing 

an immediate boost to job creation. 

Question 2. The Administration has included a package of expanded provisions for 

the Trade Adjustment Assistance (TAA) Program into the implementing text of the 

Korea Free Trade Agreement. These provisions significantly expand the TAA program beyond its existing authorization and will cost nearly $1 billion in new spending. Analysis prepared by both industry and the International Trade Commission 

indicate that all three of the pending free trade agreements with South Korea, Colombia and Panama will create a large number of American jobs—not destroy them. 

Do you agree that more American jobs will be created with these agreements? 

Answer 2. While these agreements are expected to improve the competitiveness 

of U.S. exports to South Korea, Colombia, and Panama when their tariffs are removed on a wide range of U.S. products, the Department of Labor does not expect 

the agreements to have a significant effect on aggregate employment in the United 

States. This position is supported by the literature of general equilibrium modeling 

simulations of these agreements, including those done by the International Trade 

Commission. In the case of the U.S.—Korea FTA, which is by far the most economically significant of the agreements, the simulations find an overall employment impact ranging from negligible to an increase of 280,000 jobs. The agreements with 

Colombia and Panama are expected to have even less of an impact on aggregate employment in the United States. 

Although the aggregate impact on jobs is expected to be negligible, there are likely to be adjustments to the U.S. economy as output and employment adjust to the 

FTAs, with output and employment losses in some industries and new opportunities 

in others. Some workers may be displaced from their jobs as a result. This is why 

the President has signed into law a strong and robust renewal of Trade Adjustment 

Assistance (TAA) that supports Americans who need training and other services 

when their jobs are affected by trade. TAA is essential to protect against any displacements U.S. workers will experience as the result of these agreements. 

Question 3. How do you address the concerns about even more duplication of 

workforce training services under the expanded provisions of the Trade Adjustment 

Assistance program? We know that the Workforce Investment Act (WIA) and other 

long standing programs already work to help displaced workers. Why should we expand TAA when there are already programs to provide this type of assistance to 

State governments and community colleges? Is this an effective way for the Federal 

Government to be spending its resources during a time when we are being asked 

by the President and constituents to cut spending? 
77 

Answer 3. As a part of an ambitious trade agenda, it was very important that 

Congress renew a strong and robust TAA program consistent with reforms enacted 

in 2009. Renewal of this program is necessary to support Americans who need training and other services when their jobs are adversely affected by trade. As we expand 

access to other markets abroad, we need to ensure that American workers are provided the tools needed to take advantage of these opportunities and are not left behind in the global economy. 

Both WIA and TAA are programs that are designed to serve dislocated workers 

who are laid off from work in declining industries, and would therefore benefit from 

federally funded re-employment services to retool their skills for new employment. 

However, in WIA, this eligibility criterion is applied at the local level and is open 

to a certain level of flexibility in interpretation. In many cases, WIA participants 

may only require self-access services (such as local labor market information or computer-based coursework) or shorter training including skill upgrading in order to become marketable. 

In contrast, initial TAA eligibility is more narrowly interpreted through a highly 

standardized investigation process at the Department level, resulting in a written 

determination as to whether the worker groups are affected by foreign trade. Many 

TAA workers are faced with the prospect of starting from scratch on new career 

paths as the U.S. economy and employment adjust to the FTAs, with output and 

employment losses in some industries and new opportunities in others. 

Compounding this challenge is the fact that TAA workers are older, with an average 

age of 46, and that more than two thirds of the program’s incoming participants in 

2010 only had a high school education or less. The need for these individuals to 

jumpstart into entirely new careers midlife justifies the specialized range of services 

and benefits provided to TAA participants. 

Additionally, consistent with the overarching focus of all Federal programs at this 

time, the renewed TAA program contains several provisions designed to see that the 

program delivers necessary services in the most cost effective manner possible. 

• The provision eliminates an additional 26 weeks of income maintenance (TRA) 

available for workers enrolled in Remedial or Pre-requisite training that was available under the 2002 law. 

• Separate funding sources for Training, Administration, Job Search and Relocation, and Case Management have been consolidated under the previous $575 million 

Training Cap, allowing States to determine the most efficient and effective mix of 

benefits and services for their enrollees. 

• Underutilized funds in States can be re-allotted to States in need during the 

2d and 3d year after original allocation when appropriate to maximum available 

funding for the TAA program. 

• Benefit levels for Reemployment Trade Adjustment Assistance have been rolled 

back to 2002 levels. 

• Ensures the final 13 weeks of TRA are available only if trade-affected workers 

in training are making satisfactory progress toward gaining a credential and need 

the additional weeks to complete their program. 

• Three of six waiver provisions allowing workers to receive income maintenance 

(TRA) for a limited period while not enrolled in training have been eliminated so 

that the program focus is firmly fixed on income maintenance only for those seeking 

retraining. Waivers for Marketable Skills during an extended search for work; Retirement Within the Next Two Years; and Awaiting Recall have been eliminated. 

Question 4. A few weeks ago, USA Today published a piece titled, ‘‘How Unions 

are Stifling American Growth.’’ It placed the blame for the failed economic recovery 

on waste and mismanagement of public works projects. The author specifically cites 

‘‘organized labor’s legacy of work rules, jurisdictional disputes and unproductive 

practices that cause costs to soar through delays and over-staffing.’’ The most outrageous example in the article is a union worker at the new World Trade Center 

site in New York City that makes $405,000 per year for virtually doing nothing. 

What has the Administration done to crack down on waste and overspending when 

it comes to public works projects? 

Answer 4. We note that the article you reference is an opinion piece and does not 

reflect the typical experience of Federal contracting. In particular, we also note that 

the World Trade Center project that is cited is not a Federal project and not subject 

to Federal contracting guidelines in the Federal Acquisition Regulations (FAR). 

Question 5. I have submitted numerous inquiries to the Department of Labor asking important questions and have not received answers from several of them or a 

very delayed response. For example, the Department never responded to one letter 

from March 2010; was late in responding to Questions for the Record from my col-
78 

leagues and I following a May 2010 OSHA hearing; never followed up on a request 

for updates on a hiring at the Mine Safety and Health Administration; and was late 

in responding to two other requests and also refused to provide the requested documents in responding to one of those letters. I would like your commitment that the 

Department be more responsive to congressional inquiries in the future. 

Answer 5. The Department takes seriously input and inquiries from members of 

Congress. We endeavor to respond as appropriate to all requests we receive from 

committees and individual Senators and Representatives. Due to the nature or complexity of some inquiries, however, delays are sometimes unavoidable. I assure you 

that the Department will continue to be as responsive as possible to congressional 

requests. 

Question 6. In 2010, the Department failed to get a clean audit for the first time 

in over a decade. A makeup audit done earlier this year still noted a number of ongoing material weaknesses, as well as a pending possible Anti-Deficiency Act violation. In addition, I am told that the Department’s inability to pay invoices in a timely manner has resulted in $1.3 million in interest penalties last year and $424,000 

in interest penalties through June 2011. That’s $1.7 million in penalties, plus the 

cost of the makeup audit. What are you doing to prevent it from continuing? 

Answer 6. As noted in the independent auditor’s report, the inability to obtain a 

clean opinion was related to the transition to a new financial management system. 

The ‘‘disclaimer of opinion’’ issued by the auditors was due to the inability of the 

Department to provide the financial data to the audit team in time to meet the November 15 deadline for issuing an opinion. Two issues were largely responsible for 

that delay. First, the migration of data from a 20+ year-old financial management 

system, which no longer met Federal standards to a robust, modern reporting system, proved very challenging and time consuming. 

Second, the new financial system provides for the first-ever integration of the financial system with the procurement, grants, travel and HR systems. Since this integration was new to all these systems, the Department experienced the challenges 

inherent in such an effort. The Department now has its most extensive internal controls and reporting capabilities ever, but the initial efforts created delays in supporting the audit function in a timely manner. Recognizing these issues during fiscal year 2010, the Department focused its efforts on supporting the mission of the 

Department’s agencies and successfully completing the 2010 year-end close. As a result, grants to States and other entities, FECA payments, and procurement activities were all supported in the same manner as in past years, in spite of the implementation issues. In addition, there were no funds unintentionally left unobligated, 

nor any ADA violations. The ADA violation noted in the question is from a previous 

audit which was still under review by the department at the time of the 2010 audit. 

The Department takes very seriously our fiduciary responsibility, and the need to 

provide stakeholders the independent verification of our financial management activities that a financial statement audit represents. As a result, we resubmitted the 

financial statements to the Office of Inspector General, and their independent audit 

firm, KPMG, for review in January 2011. That review led to an unqualified, or clean 

opinion, which the Department had held for each of the previous 13 years. However, 

even though KPMG noted in their review of the Department’s resubmission that the 

conditions which gave rise to the material weaknesses were addressed in a number 

of cases, their analysis of our resubmitted financial statements did not include a formal re-evaluation of their original findings resulting in the material weaknesses. 

Therefore, the original material weaknesses, which had been reported by the auditors for a number of years as significant deficiencies, remained to be addressed by 

the auditors in the 2011 audit. The Department is confident that the number of material weaknesses will be substantially reduced in the 2011 audit report. 

Late payment penalties increased significantly last year due to the systems implementation issues discussed above. This year, the rate has dropped consistently. 

Total late payment interest penalties between October 2010 and August 2011 were 

approximately $543,000, almost a 60 percent reduction from fiscal year 2010’s total 

of $1.3 million in penalties. In addition, the Department is building upon the capabilities available in the new system to implement an electronic invoicing process in 

2011, which will streamline the invoice payment process, and should reduce the late 

payment rate even further. 

Question 7. According to the Labor Department’s own annual No FEAR Act report, the number of EEO complaints filed against the Department increased by 37 

percent in just 1 year (2009 vs. 2010). Many of your enforcement agencies are reporting results that are substantially inferior to prior years. For example, your wage 

and hour results in terms of back wages recovered and workers assisted appear to 
79 

be lower than all but 1 year since 2001, despite a significant increase in personnel. 

Given these problems, do you believe your management team is successful? How 

would you grade them, and can you explain these problems? 

Answer 7. As noted, the Department’s No FEAR Act reports demonstrate an increase in the number of EEO complaints filed from fiscal year 2009 to fiscal year 

2010. However, the number of complaints filed in 2010 was almost exactly the same 

as the number filed in 2007 (126) and lower than the number filed in 2008 (133) 

despite an increase in the number of DOL employees that began in 2009. The Department will continue to assess the trends in overall EEO complaints. However, 

it is also important to note that, although the overall number of complaints increased, the number of complaints that ended with findings of violations was very 

low; in fiscal year 2009 there was one final action finding discrimination, while in 

fiscal year 2010 there were two. 

The Department takes very seriously its responsibility to ensure that the DOL 

workplace is free from unlawful discrimination and harassment. At the beginning 

of her tenure and annually thereafter, the Secretary of Labor issued robust policy 

statements on Equal Employment Opportunity (EEO) and Harassing Conduct, expressing her commitment to the mandate of equal opportunity for all Department 

employees and applicants regardless of their race, color, religion, sex (including 

pregnancy and gender identity), national origin, age, disability, genetic information, 

parental status, and sexual orientation. Additionally, the Secretary has made clear 

that harassing conduct by managers, supervisors, or employees, including contractors, at any level, will not be tolerated. In furtherance of the commitment to prevent 

and eliminate discrimination, harassment, and retaliation, all agencies within the 

Department are required to conduct self-assessments to identify potential barriers 

to equal opportunity; enhance accountability by including an EEO element in the 

performance standards of every DOL manager and supervisor; widely publicize the 

EEO and Harassing Conduct policies and procedures available for filing complaints; 

take swift and appropriate action (including disciplinary action) to remedy any violations of the Department’s EEO policies; and provide full support to the Department’s internal programs related to nondiscrimination, equal opportunity, and diversity. Additionally, the Department implemented a vigorous program to train and 

educate Department managers and employees on EEO rights and responsibilities. 

For fiscal year 2011 (October 2010–September 2011) the Wage and Hour Division 

collected $224,844,870 in back wages for 275,472 low-wage and vulnerable workers, 

the largest amount collected in a single fiscal year in the Division’s history. Even 

when the prior administration’s performance criteria are used, these results demonstrate that during fiscal year 2010 (October 2009–Septemer 2010), the WHD successfully rebuilt its enforcement capacity. Additional resources for the Wage and 

Hour Division to hire 250 new investigators were not appropriated until March 

2009. During the spring and summer of 2009 the Division engaged in an ambitious 

recruitment and hiring effort. The first wave of newly hired investigators was 

brought on board in the fall of 2009, with a second significant wave brought on 

board midway through fiscal year 2010. During fiscal year 2010, it was necessary 

for the Division to train these new investigators on how to conduct effective and efficient investigations and to enforce the more than a dozen laws under the Division’s 

enforcement authority. This training is intensive and conducted over a 2-year period. It requires significant investment of time by not only the trainees but also by 

the Division’s management team and senior investigators who conduct the training 

and provide ongoing coaching and mentoring. This training and commitment of resources continued during fiscal year 2011 and will be completed in fiscal year 2012. 

These results demonstrate the strength and capability of the DOL’s national and regional management team and field employees. 

WHD Enforcement Statistics—All Acts Fiscal Year 2009 Fiscal Year 2010 Fiscal Year 2011 

Back Wages Collected ............................................................................... $172,615,125 $176,005,043 $224,844,870 

Employees Receiving Back Wages ............................................................. 219,759 209,814 275,472 

Complaints Registered ............................................................................... 26,311D 31,824 27,112 

Enforcement Hours ..................................................................................... 879,626 1,066,188 1,213,182 

Average Days to Resolve Complaint .......................................................... 101 142 177 

Concluded Cases ....................................................................................... 24,922 26,486 33,295 

Question 8a. The Office of Labor-Management Standards (‘‘OLMS’’) came out with 

a new initiative earlier this year called the ‘‘Persuader Reporting Orientation Program’’ (‘‘PROP’’). Essentially, this program examines union petitions filed with the 
80 

National Labor Relations Board (‘‘NLRB’’) and sends notices to employers and their 

representatives of their obligation to report ‘‘persuader activity.’’ Was there any coordination or communication between the NLRB and the Department of Labor on 

this initiative? If not, why not? 

Answer 8a. Periodically, OLMS receives a spreadsheet from the National Labor 

Relations Board (‘‘NLRB’’) listing all employers and their legal representatives involved in recently filed NLRB representation petitions. NLRB also makes the information it provides to OLMS publicly available upon request. Because the information is available to the public, there is no written inter-agency agreement or memorandum of understanding regarding the provision of this information. 

Using this information, OLMS then sends a letter to the employers and to their 

representatives in the NLRB proceeding to inform them of their potential reporting 

obligations under the LMRDA, and to explain how to access the reporting forms and 

instructions in the event that they are required to file. PROP letters are compliance 

assistance letters, not demand letters. 

Question 8b. How much of the OLMS staff is tasked to the PROP initiative? 

Answer 8b. The equivalent of one FTE spends an average of approximately 6 

hours per week on PROP. 

Question 8c. Do you send similar notices to unions of their duty to file under the 

Labor-Management Reporting and Disclosure Act (‘‘LMRDA’’)? 

Answer 8c. Yes. PROP is modeled after the existing Labor Organization Orientation Program (‘‘LOOP’’), under which similar compliance assistance letters are sent 

to newly-covered unions that have filed their initial Form LM-1 Labor Organization 

Information Report. The LOOP letters inform these unions of their obligations 

under the LMRDA or the Civil Service Reform Act (‘‘CSRA’’) standards of conduct 

provisions for Federal sector unions, including their continuing obligation to file annual financial disclosure reports. 

Question 9. As you know, section 8(c) of the NLRA implements the First Amendment, and protects an employer’s right to free speech. If Federal administrative 

roadblocks intentionally or unintentionally limit an employer’s access to effective 

legal counsel, and thereby keep an employer in the dark about how he or she can 

legally communicate with his or her employees, does this infringe on an employer’s 

free speech rights? Why or why not? 

Answer 9. It would be inappropriate for the Department to offer a legal opinion 

on the hypothetical presented, and I am aware of no such roadblocks. Of course, the 

Department is committed to protecting constitutional and other rights. 

Question 10a. A union has launched an organizing drive on a small employer. The 

employer, who does not have any labor relations professionals on its payroll, retains 

outside counsel in order to understand its rights and obligations under the NLRA. 

Under the DOL’s ‘‘Persuader’’ NPRM, can you please give examples of services that 

attorney could perform for the employer in relation to the organizing drive that 

would NOT trigger the Federal reporting requirements? 

Answer 10a. In June, the Department published a Notice of Proposed Rulemaking. See Labor-Management Reporting and Disclosure Act; Interpretation of the 

‘‘Advice’’ Exemption, 76 FR 36178 (June 21, 2011). The NPRM provided examples 

of services that an attorney could provide relating to an organizing drive that would 

not be reportable. 

Question 10b. If an attorney reviewed a speech written by the company president 

to ensure that the speech did not contain any unlawful statements, would this trigger the reporting requirements? 

Answer 10b. No. As stated in the proposed instructions, this described activity 

alone would not trigger reporting because it would be exclusively the provision of 

advice. See 76 FR 36192-93. 

Question 10c. If an attorney gives a presentation to managers about what they 

can and cannot say under the NLRA, would this trigger the reporting requirements? 

Answer 10c. No. Pursuant to the proposed instructions such activity alone would 

not trigger reporting, as it constitutes exclusively the provision of advice. See 76 FR 

36192-93. 

Question 11. Executive Order 13563 requires all agencies, including the Department of Labor to improve its regulations and regulatory review. It states that one 

way to achieve that improvement is through public participation, including an ‘‘open 

exchange of information and perspectives.’’ Do you think the teleconferences DOL 
81 

organized on the OSHA proposed rule on adding an MSD column to injuries logs, 

meets the spirit of Executive Order 13563? 

Answer 11a. OSHA fully met the Executive order’s goal of fostering an open exchange of information and perspectives by providing multiple opportunities for public participation on the proposed MSD column requirement. The proposed rule published in the Federal Register in January of this year provided an explanation and 

economic analysis of the proposal, and allowed the public 60 days in which to submit written comments. This initial comment period was followed by a public meeting 

and a second opportunity to submit comments following the meeting. At the public 

meeting, any interested party was allowed to give oral presentations and exchange 

views with OSHA representatives. After the record closed, OSHA determined that 

the comments indicated some confusion in the small business community on the 

scope of the proposed rule, and that further public participation would be beneficial. 

Accordingly, OSHA, in cooperation with the Small Business Administration’s Office 

of Advocacy, scheduled a series of teleconferences in which small businesses could 

directly discuss the rule with OSHA representatives. OSHA and SBA Advocacy held 

three teleconferences, which accommodated all small businesses that expressed an 

interest in participation. OSHA then published a report on the teleconferences prepared in cooperation with SBA Advocacy, and solicited additional comment from the 

interested public on both the report and the issues raised in the teleconferences. 

OSHA allowed 30 days for comment. 

In summary, OSHA provided three different opportunities for participation by the 

public: an opportunity for written comments, a meeting during which the public 

could give oral presentations and exchange views with OSHA representatives, and 

three teleconferences where small businesses could present their views without 

needing to come to Washington, DC in person. OSHA thoroughly satisfied both the 

letter and the spirit of the Executive order with respect to open exchange of information and perspectives. 

Question 11b. Do you believe that the recently proposed ‘‘persuader’’ regulation 

that will hamper employer efforts to communicate to their employees during union 

organizing campaigns is consistent with Executive Order 13563? 

Answer 11b. Yes, the persuader regulation is consistent with Executive Order 

13563. 

Question 12. Do you accept that injuries and illnesses are at their lowest rates? 

If so, please explain why the National Emphasis Program (NEP) is trying to establish that employers are underreporting? What has OSHA found during the more 

than a year and half of this NEP? 

Answer 12. Workplace injuries and illnesses are at their lowest reported rate, according to the Bureau of Labor Statistics (BLS). However, although OSHA considers 

the BLS injury and illness estimates to be the most accurate and authoritative statistics on the subject, recent academic research (comparing injuries and illnesses reported to BLS to those recorded in State Worker’s Compensation databases) has 

brought into question the accuracy of these data. At the request of Congress, OSHA 

has taken positive steps, along with BLS and National Institute for Occupational 

Safety and Health, to address this issue. The Recordkeeping National Emphasis 

Program (NEP) was implemented to identify and correct individual cases of underrecording of occupational injury and illness. At this point, citations for violations of 

OSHA’s recordkeeping rule have been issued in more than 50 percent of the establishments targeted under this NEP. Although it is still too early to make a conclusive judgment on the NEP, it is OSHA’s belief that this high profile program not 

only leads to correction of the records within the establishments inspected, but will 

also have the positive effect of leading to more accurate recordkeeping throughout 

the regulated community. 

Another Department effort related to the undercounting of injuries and illnesses 

is research the BLS is conducting and overseeing to ascertain factors associated 

with the completeness of the Survey of Occupational Injuries and Illnesses. BLS, 

three State grantees and a contractor are matching multiple sources of data to find 

and classify types of cases that appear not to be captured in the BLS survey. Employers are being interviewed regarding their OSHA recordkeeping and workers’ 

compensation claiming practices, to identify circumstances when workers’ compensation cases might not be captured on an OSHA log. Final results of the research will 

be available in 2012. These results and consensus recommendations from the researchers will guide potential changes to SOII or other possible actions to develop 

more complete SOII estimates. 

Question 13. Can you give us an update on the ‘‘Bridge to Justice’’ program? How 

many cases have your Wage and Hour investigators referred to the American Bar 
82 

Association (‘‘ABA’’)? How many of those cases have led to the filing of private suits 

against employers? Does the Department, the ABA or the ABA’s local bar association affiliates receive any monetary benefit through this program, including from attorneys’ fees collected in cases referred by the Department? How will Wage and 

Hour determine which cases to take and which cases to refer through the ABA? 

Answer 13. WHD’s role in the ABA Referral System is limited to adding the tollfree number for the Referral System to WHD’s standard notification letter sent to 

complainants in cases where the Department will not pursue a claim. In addition, 

WHD staff provide the number orally in appropriate circumstances in which WHD 

does not send a notification letter, e.g., where the worker decides not to file a complaint with the WHD. 

The Department decides whether to pursue a claim based on its national and regional priorities and the particular WHD office’s current resources and workload. 

Complainants who call the Referral System’s toll-free number are connected to an 

automated system that asks them to enter the zip code for their home or place of 

employment. The system provides the caller with the telephone number of participating ABA-approved local attorney-referral service(s) in their area. The complainant may then choose to contact the local referral service, which would then refer 

the complainant to an attorney experienced in FLSA or FMLA matters. If no such 

referral service covers the caller’s geographic area, the system informs the caller of 

that fact. 

The ABA reported that, during the period covering the second quarter of 2011, 

there were 14 instances in which the complainant received attorney referral information from a local referral service, but did not follow up with the attorney; 38 

cases were closed after brief advice or service; 13 cases were found to have insufficient merit to proceed; 17 cases were pending as of the date of the ABA’s report; 

and 2 cases were resolved through settlement negotiations without litigation. Please 

see the ABA’s second quarter report on the Referral System, which is enclosed with 

this response. 

The Department does not receive any monetary benefit through the program and 

the ABA and its participating referral providers do not receive a monetary benefit 

from the program. Any fees are used to recoup the costs of the referral program. 

For example, the participating local referral programs pay a nominal annual fee to 

the ABA to cover the costs of the toll-free telephone vendor. In addition, many bar 

association referral programs have a percentage fee program in place that requires 

the attorney who received the referral to return a percentage of any fees collected 

as a result of the referral, but under the ABA’s model rules, which these programs 

abide by, the percentage fee cannot increase the total cost to the individual client 

of the legal services provided. These percentage fees help cover the referral program’s operational costs. Finally, attorneys who wish to participate and receive referrals pay an annual fee to be on the panel of their local referral provider as an 

FLSA or FMLA specialist, but again, it is our understanding that these fees cover 

operational costs and do not provide an overall monetary benefit. 

Question 14. Under the ‘‘Bridge to Justice’’ program, private attorneys will be 

given specific documents to aid them in their lawsuit. They can obtain these documents through what the Wage and Hour Division calls a ‘‘special process,’’ but in 

reality the attorney will simply have to fill out a form provided by the Department. 

Is the request process open to employers’ representatives or third parties? 

Answer 14. If a complainant receives the toll-free number from the WHD after 

it has completed a full or partial investigation of the complaint, WHD will also provide the complainant with a Document Request form. This form allows the complainant or his or her authorized attorney to request: the complainant’s own statement, the WHD’s back wage computations for the complainant, and copies of any 

documents the complainant provided to the WHD Investigator. The form also allows 

the worker or authorized attorney representative to request the case narrative from 

the file; however, it explains that requesting the narrative will delay the WHD’s response because it must be redacted. The complainant, his or her attorney, employers 

and third parties may continue to request these and other documents in the case 

investigation file using the Freedom of Information Act. 

Employers may use the form to request the same information from the WHD, and 

such a request would be construed as a FOIA request. Whether requested by a complainant or an employer, information will only be released in closed cases. 

Question 15. In staff interviews, the former nominee to lead the Wage and Hour 

Division, Mr. Leon Rodriguez, committed to reconsidering the elimination of opinion 

letters in favor of Administrative Interpretations. Do you support reconsideration of 

this change? 
83 

Answer 15. The WHD has a variety of means for issuing policy, interpretations, 

and guidance regarding the laws it is responsible for administering and enforcing, 

including regulations, administrator interpretations, field assistance bulletins, fact 

sheets, e-laws, and opinion letters. All of these continue to be available to WHD. 

However, the WHD has determined that its limited resources are best spent on 

those means that address issues of general application and that are of interest to 

broad segments of employers and employees rather than guidance that has limited 

application because it is applicable to only a particular set of facts. 

Question 16. Given that the Wage and Hour Division has never had a political 

appointee in charge of it during this Administration, who makes the decisions for 

that division on behalf of the Administration? 

Answer 16. Nancy J. Leppink, who was appointed as Deputy Administrator by 

President Obama on September 21, 2009, has headed the Wage and Hour Division 

in an acting capacity since that date. 

Question 17. One likely consequence of the FLSA Right to Know regulation being 

developed by the Wage and Hour Division will be an exacerbation of the already 

troubling level of multi-plaintiff lawsuits based on subjective interpretations of criteria for exemptions under the FLSA. Is this an outcome the Department supports? 

Answer 17. The Right to Know proposed rule is still under development and no 

final decisions have been made regarding this rulemaking. The WHD has consistently pursued policies that inform both employers and employees about workers’ 

employment status. These policies’ primary objective has been to prevent violations 

from occurring by providing guidance that helps employers ‘‘get it right’’ from the 

outset and thereby prevents litigation. 

Question 18. The President said that many ‘‘shovel ready’’ stimulus projects were 

not actually ‘‘shovel ready.’’ The President’s own Jobs Council said that many of 

these so-called ‘‘shovel ready’’ projects were delayed because of government regulations and burdensome permitting procedures. Do you agree? 

Answer 18. At its June 13 meeting in Durham, NC, the President’s Job Council 

presented the President with 11 different broad ideas for creating jobs and getting 

the economy back on track. One of those was streamlining regulatory and permitting processes. No one—including the Administration—can deny that there are examples of wasteful, redundant, burdensome processes and procedures in the government, and this Administration is dedicated to making government run more efficiently, effectively, and accountably. However, I also agree that, as the Jobs Council 

said in its recommendations, in the course of our streamlining, we cannot afford to 

undercut the protections that our regulatory system affords, to workers, to the environment, and to the public at-large. 

Question 19. In the Department’s Spring 2011 Regulatory Agenda, there are many 

regulatory proposals that will increase enforcement, reporting, inspections, penalties, etc. in almost every agency. Many can question how imposing more regulatory burdens on businesses, especially small businesses, will encourage job creation. What regulatory proposals are you advocating that WILL encourage job creation? 

Answer 19. The Department’s regulations do not discourage job creation; they are 

designed to provide a level playing field for firms following our Nation’s labor laws 

so that they do not face unfair competition while playing by the rules, which could 

cause a loss of jobs. 

The Department’s regulations, among other things, make sure that U.S. jobs are 

good jobs—a concept that means that jobs should be safe, secure, and paid in accordance with legal norms. In other words, our efforts ensure that workers have 

good jobs. 

At the same time, the Department has regulatory projects designed to result in 

significant savings in terms of dollars and burden-hours. For example: 

• OSHA’s Standards Improvement Project III (SIP III) rulemaking achieved a 1.9 

million burden hour reduction, and we anticipate that OSHA’s SIP IV project will 

similarly yield savings for employers and 

• OSHA’s Hazard Communication/Globally Harmonized System for Classification 

and Labeling of Chemicals proposal has estimated savings for employers ranging 

from $585 million to $789.4 million. 

Question 20. The Government Accountability Office (‘‘GAO’’) found that the DavisBacon Act requirement on the home weatherization program money in the stimulus 

resulted in only a fraction of the projected homes getting upgraded weatherization 

treatment. Was it a mistake to expand the application of the Davis-Bacon Act to 
84 

a construction activity where the Federal Government has never been involved and 

thus there were no previous wage surveys and wage determinations available? 

Answer 20. The Department ensured that the prevailing wage requirements contained in the Recovery Act were properly applied to covered construction activities, 

including the weatherization program. In a report issued earlier this year, the Office 

of Inspector General, Office of Audit found that WHD did provide adequate outreach, did conduct timely DBA Recovery Act complaint and directed investigations, 

and did conduct wage determination surveys for Department of Energy’s weatherization program that were timely and reliable. 

As the GAO report notes, WHD completed an expedited nationwide prevailing 

wage survey of weatherization construction on residential projects throughout the 

United States. The survey was initiated after DOE advised the Department that the 

classifications and wage rates listed in existing Davis-Bacon residential construction 

wage determinations were not applicable to the specialized nature of the weatherization work being funded under the Recovery Act. After examining the classifications and wage rates used on weatherization projects, the Department agreed with 

DOE and immediately began work on the weatherization survey. Wage rates for 

weatherization projects were published for each county in the United States in September 2009. 

Once DOE and the Department agreed that a survey was appropriate, the Secretaries of Energy and Labor issued specific guidance to the weatherization grantees 

on how to proceed with these projects while new prevailing wage rates were being 

established. Grantees were told to proceed with weatherization projects using existing on-line residential wage determinations with the caveat that contractors and 

grantees must compensate workers for any increase in wage rates that resulted 

from the new weatherization prevailing wage survey. This June 2009 guidance was 

made available on DOE’s Web site. 

Question 21. The Davis-Bacon Act has been shown to increase the cost of construction, reduce access to construction projects for minority contractors, and reduce the 

amount of jobs that Federal construction projects can create. Does the Administration still support the Davis-Bacon Act and its wide application to projects where the 

only nexus with Federal funding may be a loan guarantee? 

Answer 21. The principle underlying the Davis-Bacon Act (DBA) is simple—to 

provide that the Federal Government’s extensive contracting activity does not have 

the unintended consequence of depressing workers’ wages. Whether the Federal construction activity results from a direct Federal contract or is made possible through 

other forms of Federal assistance, the protections provided by the Davis-Bacon Act 

and over 60 Davis-Bacon related Acts provide a secure floor on wages. Congress 

reached that same conclusion when it applied the Davis-Bacon prevailing wage provisions to the many Federal statutes that provide assistance through grants, loans, 

or loan guarantees. 

The Federal Government continues to construct buildings, build dams, and fund 

housing projects. State highway departments pave roads with Federal funds from 

the Federal Highway Administration. Local and State governments build water 

treatment plants, modernize schools, and renovate airports. The DBA therefore is 

as relevant today as it was when it was first enacted, and it continues to provide 

stable wage rates and benefits that attract higher-skilled labor. And by attracting 

higher-skilled workers who are both experienced and productive, construction 

projects are more often completed on time and at lower cost. Additionally, more and 

more economic studies dispel the notion that prevailing wage laws drive up the cost 

of Federal contracting, such as the University of Utah’s ‘‘Losing Ground: Lessons 

from the Repeal of Nine ‘‘Little Davis-Bacon’’ Acts (Garth Mangum, Peter Philips, 

Norm Waitzman, and Anne Yeagle). 

Question 22. In this year’s Continuing Resolution, the Department received $21 

million for worker misclassification initiatives. In May you reprogrammed those 

funds for other uses, including spending for more enforcement. Can you provide this 

committee with an accounting on how that reprogrammed money has been spent 

thus far? 

Answer 22. The Department’s fiscal year 2011 budget proposal included a request for an additional $21 million for misclassification initiatives; however, the funds for 

that initiative were not included in the final continuing resolution. The Wage and 

Hour Division did receive an additional $335,790, which was transferred from the 

fiscal year 2011 Departmental Management appropriation to prepare for the fiscal 

year 2012 regional enforcement initiatives. 

Question 23. On May 5, the Department finalized the Fair Labor Standards Act 

‘‘clean-up’’ regulation first proposed in July 2008. Stakeholders have expressed their 
85 

disappointment in the new rule as it bears very little resemblance to the proposed 

rule. Can you explain why the Department decided not to reopen the comment period or simply publish a new proposal? Don’t you think that either of those solutions 

would have been more in line with the President’s Executive order on improving 

regulations and the regulatory process? 

Answer 23. The WHD published a notice of proposed rulemaking, commonly referred to as the ‘‘FLSA Clean-Up Rule,’’ because it updates the regulations to reflect 

a number of statutory amendments to the FLSA dating back to 1974, on July 28, 

2008, and the final rule on April 5, 2011. The final rule closely follows the proposed 

rule. All substantive issues addressed in the final regulation were included in the 

notice of proposed rulemaking and the final rule is the result of careful consideration of all the comments received during the public comment period. 

Question 24. It has been reported that the Department is negotiating a settlement 

of a long-term union grievance for violations of the Fair Labor Standards Act with 

regard to hundreds of bargaining unit employees. What is the status of that grievance? How many employees have been reclassified and paid back wages? What are 

the parties’ positions on damages if the matter has not been resolved? What, if any, 

changes have been implemented to prevent future violations and/or will be required 

by the settlement? Please provide copies of any directives or changes to policies resulting from the grievance, including any changes to the availability or use of Blackberrys or other similar communications devices by nonexempt staff. 

Answer 24. The AFGE Local 12 FLSA Group Grievance is currently before the 

arbitrator and the parties are in the midst of litigation. Therefore, the Department 

cannot opine regarding damages and potential liability, if any. The parties, however, 

were able to negotiate a settlement concerning FLSA designations for positions in 

the AFGE Local 12 bargaining unit, and in 2009 the Department re-designated 688 

positions from FLSA exempt to FLSA non-exempt. The parties have not negotiated 

back wages for those positions. On September 25, 2009, the NCFLL filed an institutional class grievance mirroring the AFGE Local 12 Group Grievance. The Department is reviewing over 30,000 pieces of personnel data to discern the number of positions that need to be reviewed for FLSA re-designation and is in the process of 

producing an estimated damage calculation based upon the data. In any event, on 

January 29, 2010, the Department issued guidance and established requirements 

(copy attached) to ensure that the FLSA provisions established under 5 CFR part 

551 are correctly and consistently applied to all DOL positions and employees and 

to reduce DOL’s vulnerability to future FLSA grievances. 

Question 25. Given the recent problems with the top leadership of the Veterans’ 

Employment and Training Service as reported by the Office of Inspector General, 

how does the Department plan to ensure the agency continues its important mission 

to serve veterans? 

Answer 25. Our commitment to America’s veterans remains unchanged. The dedicated team at the Veterans’ Employment and Training Services (VETS)—and each 

and every U.S. Department of Labor employee—will continue their important efforts 

on behalf of the men and women who return from military service and transition 

to civilian work. Our Nation’s veterans deserve nothing less. VETS’ core programs 

were not affected by the OIG report findings, nor were the new initiatives VETS 

was working on, such as the TAP redesign. The current VETS leadership will provide the management direction and vision needed to ensure our work is accomplished successfully and with integrity. 

Question 26. The enforcement agencies of the Department of Labor need to report 

transparent data to ensure that Congress can grade them on their performance. For 

example, I am concerned that the Wage and Hour Division apparently has not updated its annual fiscal year enforcement results since 2008. (available at http:// 

www.dol.gov/whd/statistics/). Please provide the enforcement results for fiscal year 

2009 and fiscal year 2010 for Wage and Hour using the same statistics and tables 

reported on the 2008 (and earlier) annual enforcement facts sheets available on the 

Wage and Hour Web site. 

Answer 26. See the chart inserted in the answer 7. 

Question 27. I am similarly concerned that the performance of the Office of Federal Contract Compliance Programs (OFCCP) is difficult to evaluate. For example, 

the agency’s enforcement results for fiscal year 2009 and fiscal year 2010, presented 

in the Labor Department’s fiscal 2011 and 2012 budget justifications, show OFCCP 

collected $9.3 million in fiscal year 2009 for 21,839 workers and $9.75 million in fiscal year 2010 for 12,397 workers. In fiscal year 2008, reportedly using different 

methodology but with a much smaller budget and more targeted enforcement, 
86 

OFCCP reportedly collected $67,510,982 for 24,508 American workers who had been 

subjected to unlawful employment discrimination. I would like to know the bases 

for any changes made in the way OFCCP calculates its enforcement results. Please 

provide the following information for each of the past 4 fiscal years (if possible using 

both the current and the prior methodology): The amount of back pay collected; the 

amount of back pay and annualized salary and benefits collected; the number of 

workers on whose behalf OFCCP obtained financial recompense; the number of compliance evaluations undertaken; the staffing level of the agency; the average length 

of time a compliance evaluation is open; and the number of compensation cases 

brought and settled each year. 

Answer 27. The reason for the apparent reduction in back pay recovered was a 

change in the methodology by which the Office of Federal Contract Compliance Programs (OFCCP) reported financial settlements. Prior to fiscal year 2009, the agency 

used projected annualized salaries in its financial settlement reports. That meant 

that the agency previously estimated the salaries of the employees who were to be 

offered jobs under the settlement for a year after they could return to work, and 

included those estimates in its reports on the settlement amounts—even though 

those monies had not yet been paid to the employee by the company and indeed, 

may never be paid by the company. This methodology artificially inflated the actual 

back pay settlement amounts reported. In fiscal year 2009, OFCCP began reporting 

its enforcement accomplishments using actual back pay paid to victims of discrimination and discontinued the practice of using projected annualized salaries in its financial settlement reports. 

For comparative purposes, the table below provides an overview of the OFCCP’s 

financial settlements with back pay, annualized salary and other benefits, total financial settlements and total number of compensated workers. As the table shows, 

the amount of actual back pay in fiscal year 2011 was significantly greater than the 

actual back pay for any of the prior 3 years, including fiscal year 2008, and has been 

on a steady increase since fiscal year 2009. 

As to the question about compensation cases, OFCCP settled a total of 28 compensation cases in fiscal year 2011 as compared to the prior 3 fiscal years combined 

(2008, 2009 and 2010), in which OFCCP settled a total of 26 compensation cases. 

This continues a 4-year upward trend and is also one indicator that OFCCP’s current strategy of ensuring that its compliance evaluations more fully reflect the broad 

spectrum of the Agency’s authorities is aggressively implemented. 

OFCCP completes compliance evaluations without discrimination findings on average within 8 months. Reviews with discrimination findings are completed within 

a 2-year timeframe. Reviews involving financial relief for findings of discrimination 

were completed within 2 years in fiscal year 2008, 2.3 years in fiscal year 2009, and 

2.2 years in fiscal year 2010. We do not yet have this information for fiscal year 

2011. 

Fiscal Year 2008–Fiscal Year 2011 Comparative Data 

[OFCCP Enforcement Results] 

Fiscal 

year 2008 

Fiscal 

year 2009 

Fiscal 

year 2010 

Fiscal 

year 2011 Total 

Back Pay* ........................................................................................ $10.83M $9.31M $9.75M 12.3M $42.19M 

Annualized Salary & Other Benefits* .............................................. $56.67M $35.36M $29.82M $39.2M $161.05M 

Total Financial Settlements* ...................................................... $67.50M $44.67M $39.57M $51.5M $203.24M 

# Workers ......................................................................................... 24,508 21,839 12,411 16,356 75,114 

# Compliance Evaluations ............................................................... 4,333 3,917 4,960 4,014 17,224 

# Compensation Cases Settled ....................................................... 6 7 13 28 54 

# OFCCP Staffing Level ................................................................... 555 581 778 748 N/A 

* Includes compliance evaluations, complaint investigations, and FAAP enforcement results. 

Question 28. I am concerned about the reliability of the Occupational Safety and 

Health Administration’s Integrated Management Information System (IMIS). I understand there are plans to upgrade that system for some time and that much of 

the software and hardware infrastructure is getting quite old. I would like to know 

about the reliability of the IMIS system in terms of its ability to continue to serve 

OSHA and the timeline for any replacement. Please also explain how much has 

been spent to replace the IMIS system to date, including consulting contracts, and 

provide copies of all annual Exhibit 300s under Office of Management and Budget 
87 

Circular A-11 (and any prior circulars) for this undertaking from 2008 through the 

present. 

Answer 28. OSHA’s Integrated Management Information System (IMIS) is a reliable system that is available 24–7, 365 days per year, updated nightly with OSHA 

data, and equipped with an active contingency site in the event of a disaster. The 

legacy IMIS system has served the agency well for the last two decades, but is deteriorating. For example, replacement parts for the individual machines cannot be 

readily found, and maintenance contracts are extremely difficult to establish because few vendors still exist in this business area. OSHA has stockpiled replacement parts for the NCRs, but the knowledge and skill set to actually repair the system is becoming more and more scarce. OSHA had anticipated these difficulties and 

has prepared for the implementation of the new data program. To date, approximately $60 million has been spent on the new data program, 

OSHA Information System (OIS) over a 7-year period, which is consistent with the 

amount estimated when the project was being developed using the Department’s 

System Development Life Cycle Management (SDLCM) process. Exhibit 300s are attached. 

[Editor’s Note: Due to the high cost of printing, the Exhibits are maintained in the committee file.] 

On March 11, 2011, OSHA initiated field deployment of its OIS, designed to house 

the Nation’s occupational safety and health data, to two Federal field offices located 

in Boise, ID and Concord, NH. As of August 2011, the OIS has been further deployed to the Federal regions in Denver, Chicago, and Seattle. The next Federal region tentatively scheduled for deployment is the San Francisco region in September 

2011. The OIS has also been deployed to five State On-site Consultation Projects 

in the mid-west, including Colorado, Montana, Wyoming, and the Dakotas. Pending 

next year’s and the following year’s agency budgets, the OIS is scheduled for further 

Federal, State plan, and consultation project deployment in fiscal years 2012 and 

2013. The OIS is web-based, and is the next generation replacement for the National Cash Register (NCR) machines. Once the OIS is fully deployed to the field, 

OSHA will initiate a plan to retire its NCRs. 

Question 29. My staff have learned that OFCCP may be investigating individual 

complaints of discrimination—a responsibility entrusted to the Equal Employment 

Opportunity Commission (EEOC) under a longstanding Memorandum of Understanding—and then launching broader inquiries based on the investigation of individual claims. Has OFCCP undertaken individual cases? If so, please provide a list 

of cases undertaken by OFCCP involving individual complainants since Jan. 20, 

2009 (without including the complainants name or identifying information) and 

OFCCP’s reason for not referring the matter to the EEOC. 

Answer 29. First, Executive Order 11246 allows for individual complaints of employment discrimination to be filed with OFCCP. The procedure under OFCCP’s 

MOU with the EEOC has been that, if the individual’s complaint also states a claim 

under title VII, OFCCP refers it to the EEOC. However, this rule has never been 

absolute, and the MOU has long preserved OFCCP’s ability to coordinate with the 

EEOC to retain individual complaints when deemed necessary to avoid duplication 

and ensure effective law enforcement. As indicated below, the very few individual 

complaints retained by OFCCP have been retained pursuant to this authority. 

This MOU does not cover the processing of individual complaints that are filed 

with OFCCP under either Section 503 of the Rehabilitation Act of 1973 (Section 

503) or the Vietnam Era Veterans Readjustment Assistance Act of 1974 (VEVRAA 

or Section 4212). EEOC has no concurrent jurisdiction with VEVRAA. Coordination 

on disability issues and complaints under section 503 and title I of the ADA is separately governed by a joint OFCCP—EEOC regulation at 29 CFR part 1641 (EEOC) 

and 41 CFR part 60-742 (OFCCP). 

In fiscal year 2009 (beginning January 20, 2009), OFCCP investigated 65 individual complaints, of which only three were Executive Order 11246 complaints. 

Meanwhile, 60 complaints (92 percent) were investigated pursuant to section 503 or 

VEVRAA. In fiscal year 2010, OFCCP investigated 94 individual complaints of 

which only 10 were Executive Order 11246 complaints, while 83 complaints (88 percent) were investigated pursuant to section 503 or VEVRAA. Through August 15, 

2011 of fiscal year 2011, OFCCP has investigated 77 individual complaints, of which 

seven were Executive Order 11246 complaints, 66 complaints (86 percent) were investigated pursuant to Section 503 or VEVRAA. 

The chart below shows the breakout of individual complaints investigated by 

OFCCP from January 20, 2009 to August 15, 2011. Because the vast majority of individual complaints alleging Executive order violations are, pursuant to the MOU 

between OFCCP and the EEOC, referred directly to the EEOC, they are not cap-
88 

tured on this chart. The few individual complaints alleging Executive order violations that were investigated by OFCCP were retained, pursuant to the MOU, to 

avoid duplication and assure effective law enforcement. For example, if OFCCP is 

in the process of conducting a compliance review of a company against which an Executive Order 11246 complaint is filed, it makes sense for the complaint to be investigated by OFCCP rather than EEOC, to conserve law-enforcement resources. 

Reason Total Types of Complaint Issues 

Executive Order .................................................... 3 Termination, Wages, Demotion, Harassment, Job Benefits, Job 

Assignment, Segregated, Retaliation, Other 

Section 503 .......................................................... 34 Hiring, Termination, Layoff, Recall, Wages, Promotion, Demotion, Harassment, Job Benefits, Job Assignment, Training, 

Retaliation, Disabled, Other 

Section 4212 ........................................................ 26 Hiring, Termination, Layoff, Wages, Promotion, Demotion, Seniority, Harassment, Job Benefits, Job Assignment, Training, 

Retaliation, Disabled, Sabbath, Other 

Other .................................................................... 2 Termination, Other 

Total fiscal year 2009 (from Jan. 20, 2009) .. 65 

Executive Order .................................................... 10 Hiring, Termination, Layoff, Promotion, Demotion, Seniority, Harassment, Job Benefits, Job Assignment, Training, Retaliation, 

Other 

Section 503 .......................................................... 36 Hiring, Termination, Layoff, Recall, Wages, Promotion, Demotion, Harassment, Job Benefits, Job Assignment, Training, 

Retaliation, Disabled, Other 

Section 4212 ........................................................ 47 Hiring, Termination, Layoff, Wages, Promotion, Demotion, Seniority, Harassment, Job Benefits, Job Assignment, Training, 

Retaliation, Disabled, Other 

Other .................................................................... 1 Wages, Harassment, Job Benefits, Job Assignment, Segregated, 

Retaliation, Disabled, Other 

Total fiscal year 2010 ..................................... 94 

Executive Order .................................................... 7 Hiring, Termination, Wages, Demotion, Harassment, Job Assignment, Training, Segregated, Retaliation, Disabled, Sabbath, 

Other 

Section 503 .......................................................... 35 Hiring, Termination, Layoff, Wages, Promotion, Demotion, Seniority, Harassment, Job Benefits, Job Assignment, Training, 

Segregated, Retaliation, Disabled, Other 

Section 4212 ........................................................ 31 Hiring, Termination, Layoff, Recall, Wages, Promotion, Demotion, Seniority, Harassment, Job Benefits, Job Assignment, 

Training, Retaliation, Disabled, Other 

Other .................................................................... 4 Hiring, Termination, Wages, Harassment, Retaliation, Other 

Total fiscal year 2011 (as of Aug. 15) .......... 77 

Summary Totals: 3-Yr Executive Order Total 20 Executive Order ONLY 

Overall Total .................................................... 236 Executive Order, Section 503, VEVRAA, and Other 

Note: Some complaints alleged more than one basis. In those cases, OFCCP personnel categorized them as ‘‘Executive Order,’’ ‘‘Section 

503,’’ ‘‘Section 4212,’’ or ‘‘Other’’ (thereby avoiding double-counting). The ‘‘Other’’ category is used for complaints that do not allege violations of one of the laws that OFCCP enforces. 

Question 30. It appears OFCCP is altering standards and guidance for employers 

without replacing them with an alternative—leaving Federal contractors to guess at 

how to comply with the law. Please explain whether the ‘‘Interpretative Standards 

for Systemic Compensation Discrimination’’ (71 FR 35124, June 16, 2006) were followed for investigating cases of systemic compensation discrimination for the last 

2 years, and describe any additional techniques being used by the agency to investigate compensation discrimination? What standards will OFCCP use to evaluate 

compensation discrimination once the current ones have been withdrawn? Without 

the Standards and voluntary guidelines how do employers determine if they are 

compliant with the law? If you are planning to issue other standards, what are you 

holding employers to in the interim? 

Answer 30. There is a pending Notice of Proposed Rescission of the existing 2006 

Interpretive Standards for Systemic Compensation Discrimination and Voluntary 

Guidelines for Self-Evaluation of Compensation Practices (2006 Standards). In the 
89 

absence of the 2006 Standards, contractors will not have to ‘‘guess’’ at their compliance obligations. OFCCP’s longstanding policy is to follow title VII principles in conducting investigations and analyses of potential discrimination under Executive 

Order 11246, including compensation discrimination. The agency will continue to 

hold contractors to title VII principles with respect to equal employment opportunity 

in their compensation practices. 

During the past 2 years (August 2009 to August 2011), the 2006 Standards have 

applied to OFCCP reviews. However, it is important to note that the 2006 Standards, by their terms, only related to the standards by which a violation will be determined rather than the methodology of investigations or preliminary assessments. 

During this period, OFCCP identified very few Executive Order 11246 violations involving compensation disparities and they largely involved individuals or small cohorts where the 2006 Standards would not apply. If the Standards are rescinded, 

OFCCP will develop and issue compensation investigation procedures in the same 

manner it establishes procedures for investigating other forms of discrimination— 

through instructions for its compliance officers contained in the OFCCP Federal 

Contract Compliance Manual (FCCM), directives, and other staff guidance materials. OFCCP will continually refine those procedures to ensure that they are as effective and efficient as possible. 

OFCCP works hard to respond to the concerns of contractors and subcontractors. 

In response to requests from the contractor community, OFCCP publicly stated that 

the agency intends to further clarify how it is investigating compensation discrimination. 

Question 31. Given the fact that the construction industry has an unemployment 

rate of 20 percent, why is OFCCP seeking to make changes to the requirements applicable to that industry? In revising the construction requirements, will OFCCP 

look into whether apprentice programs meet affirmative action requirements since 

contractors often rely on them for new hiring? 

Answer 31. Even in times of high unemployment, it is important that Federal contractors and subcontractors comply with their contractual requirements and the law. 

In order for OFCCP to fully monitor this compliance, the agency must have the tools 

it needs to effectively enforce the law in the current environment. The construction 

regulations are over 30 years old. Much has changed in the industry and the workforce since that time. As a result, the requirements need updating to reflect those 

changes. In considering revising the requirements, OFCCP conducted a series of 

town hall meetings, webinars and listening sessions to solicit comments on the construction industry’s compliance with Executive Order 11246 and recommendations 

for revising and updating the regulations that apply to Federal and federally assisted construction contractors and subcontractors. 

OFCCP is developing a Notice of Proposed Rulemaking and is considering the effect of apprenticeship programs on construction industry employment during the 

process. Although OFCCP generally does not have jurisdiction over apprenticeship 

sponsors because many are not Federal Government contractors or subcontractors 

or federally assisted construction contractors or subcontractors, OFCCP works closely with the Office of Apprenticeship (OA) within the Department’s Employment and 

Training Administration (ETA). OA is currently updating its equal opportunity regulations applicable to registered apprenticeship programs. OFCCP and OA are coordinating development or their equal opportunity regulations to ensure that their 

respective regulations will be complementary. 

Question 32. Please explain whether OFCCP is inquiring into Family and Medical 

Leave Act (FMLA) policies and independent contractor enforcement issues as part 

of its audits and investigations. How would OFCCP detect and address a violation 

of FMLA or employment misclassification given that it does not have authority 

under the relevant statutes? For example, do you anticipate seeking debarment if 

OFCCP determines there may be misclassification or FMLA violations? Will OFCCP 

make referrals to other Federal agencies in this or other areas if investigators detect 

a violation of laws that OFCCP does not enforce? Please provide any documents, including memoranda of understanding, regarding such referrals. Please explain what 

training OFCCP has provided to it compliance officers about FMLA or independent 

contractor status. 

Answer 32. FMLA: Under the Executive order and section 503, OFCCP may review leave and other personnel policies to determine whether they either treat 

women, minority groups, and others protected by the laws OFCCP enforces differently than others, have a discriminatory impact on these employees or applicants, 

or both. This review does not constitute FMLA enforcement. Should OFCCP uncover 

evidence of possible violations of the FMLA in the course of its review of such poli-
90 

cies, its Memorandum of Understanding with the Wage and Hour Division (WHD) 

of the U.S. Department of Labor, which enforces the FMLA, provides that OFCCP 

will refer any apparent violations to WHD. See attached copy of the Memorandum 

of Understanding. 

Employee misclassification: Pursuant to section 4212 as well as to the Executive order and section 503, OFCCP has jurisdiction to determine whether individuals who work for a contractor are properly classified as employees or independent 

contractors. That information is essential to almost every aspect of OFCCP’s investigations and compliance evaluations, including, for example, establishment of jurisdiction; accuracy of EEO-1 reports; and existence of discriminatory decisions regarding hiring, promotion, termination, and compensation. 

Training: In the years immediately preceding this Administration, the National 

Office of OFCCP did not routinely provide standardized training to its compliance 

officers (COs). Training occurred on the job, or was provided infrequently by regional or district offices. In August 2010, OFCCP standardized National Office training, with Basic Training being offered to every newly hired CO, refresher training 

opportunities offered for current COs, and specialty training sessions to be offered 

on an on-going basis for all COs. FMLA and independent contractor status are both 

expected to be topics of future specialty trainings. During OFCCP’s All-Managers 

Meeting, held in early August 2011, OFCCP piloted training on FMLA issues. 

Question 33. Does OFCCP verify that there is a covered contract before seeking 

to investigate/audit an entity? What guidance/directives have been issued since January 20, 2009 on jurisdictional requirements to OFCCP staff? Please provide a copy 

of all such guidance. Please explain whether OFCCP staff believe a jurisdictional 

objection to an investigation or audit can be waived if a non-Federal contractor initially complies with the agency’s requests/investigation but then realizes they are 

not a covered Federal contractor. 

Answer 33. Before scheduling an entity for a compliance evaluation, OFCCP 

verifies that there is a covered contract at two distinct stages. First, pursuant to 

an agency initiative called ‘‘Contracts First’’, OFCCP’s Data Integrity Team evaluates all possible entities for scheduling by researching the entity’s Federal contract 

activity through Federal contractor Web sites that summarize a company’s Federal 

contracting activity with the Federal Government (i.e., FPDS–NG), and by examining the company’s statement on its EEO-1 Report that it is a Federal contractor 

(i.e., Question 3 data). The ‘‘Contracts First’’ initiative occurs while the annual 

scheduling list is being developed by the Data Integrity Team, and before the scheduling notification letters are issued to companies by OFCCP field offices. If the underlying Federal contract meets the requisite dollar amount for coverage under the 

laws that OFCCP enforces, and the contract’s term is current when the annual 

scheduling list is developed, then it becomes a candidate for possible scheduling by 

OFCCP. Secondly, once an OFCCP field office selects that entity for a scheduled 

compliance evaluation, field staff will generally contact the entity directly by phone 

to verify its Federal contractor status, physical location, and number of employees 

at the establishment. 

OFCCP’s National Office, through its Division of Program Operations, has held 

many training sessions via webinar presentations to provide guidance for OFCCP 

field staff on jurisdictional issues. For example, on December 3, 2009, OFCCP’s National Office held a joint webinar presentation with attorneys from the Department’s 

Office of the Solicitor for OFCCP. This webinar was created for field staff to address 

jurisdictional issues and to reinforce the elements needed to establish jurisdiction 

over scheduled entities (see attached Power Point presentation). This same presentation was provided later as an external webinar for our stakeholders and members 

of the public. 

A jurisdictional objection to an investigation cannot be waived at any time by the 

scheduled entity during a compliance review or subsequent litigation, even if it initially complies with the agency’s request for materials or investigation. The contractor can raise a jurisdictional objection at any time during the review once the 

contractor realizes that it is not covered. If OFCCP can verify that it has no jurisdiction over a company, it cannot proceed with a review, even if the company has already provided us with documents/materials. OFCCP does, however, have the authority to investigate whether it has jurisdiction over a company. 

Question 34. Please provide a list of peer reviewed or agency enforcement data 

to support the statement in the 2012 OFCCP budget justification that there is still 

a 23 percent ‘‘pay gap’’ between women and men. 
91 

1Source: Calculations from U.S. Census Bureau, Current Population Survey, 2010 Annual Social and Economic Supplement, Table PINC-05: Work Experience in 2009—People 15 Years Old 

and Over by Total Money Earnings in 2009, Age, Race, Hispanic Origin, and Sex, available at 

http://www.census.gov/hhes/www/cpstables/032010/perinc/toc.htm (last visited Dec. 7, 2010). 

Answer 34. According to the U.S. Census Bureau,1 women still earn only 77 cents 

for each dollar earned by a man. This is based on a broad comparison of workers 

age 15 and older who work full-time, year-round. The wage gap is even greater for 

women of color: non-Hispanic white women make 75 cents for every dollar earned 

by a non-Hispanic white man, while African-American women make 62 cents and 

Latinas make 53 cents for every dollar earned by a non-Hispanic white man. 

Question 35. OFCCP and EEOC are reportedly both in the process of requesting 

information to develop surveys on compensation. Please explain whether allowing 

both agencies to seek this information separately complies with the Equal Pay Task 

Force’s recommendation ‘‘To avoid duplicative data collection efforts, OFCCP and 

the EEOC will work collaboratively when evaluating data collection needs, capabilities, and tools.’’ How does OFCCP plan to develop and implement this survey and 

what is the status of the survey development? Will you also commit to ensuring the 

survey is validated and goes through the notice and comment process before being 

imposed on the private sector? 

Answer 35. OFCCP has been in close communication with EEOC regarding the 

proposed compensation survey instruments. Neither agency wants to impose duplicative or conflicting data collection requirements on Federal contractors. At this 

time, each agency is pursuing different but complementary information gathering 

channels—OFCCP through its recently issued Advance Notice of Proposed Rulemaking is gathering public comment from all stakeholders through a traditional 

public notice and comment process. EEOC has commissioned an expert panel 

through the National Academies of Sciences to provide a report and recommendation. These approaches are in fact complementary and were set forth in the Equal 

Pay Task Force’s Pay Equity Report. Indeed, seeking more and broader input before 

proceeding is a sound regulatory practice. OFCCP’s plans are set forth in the 

ANPRM available at http://www.regulations.gov/#!documentDetail;D=OFCCP2011-0005-0001, which calls for advance public comment and also states that there 

will be an additional public comment period following the NPRM. 

Question 36. As detailed in the 2012 budget justification, OFCCP reportedly plans 

to release contractor data to allow the public to ‘‘[c]onduct automated surveys’’ regarding OFCCP’s enforcement activities and provide information ‘‘to various ethnically diverse groups which comprise the general population.’’ How does OFCCP 

plan to accomplish this and what are the goals of doing so? Please explain how 

OFCCP will protect privacy for individuals and businesses. 

Answer 36. The language quoted refers to OFCCP’s ongoing build-out of its new 

IT system, the Federal Contractor Compliance System (FCCS). By bringing together 

and integrating several disparate data and reporting systems, the FCCS will greatly 

improve OFCCP’s enforcement activities in a variety of ways. For example, it is 

being designed so that, among other things, it will: 

• Provide fundamental information describing OFCCP, its mission, and the laws 

it enforces in multiple languages to the public in general and specifically to stakeholders from the ‘‘various ethnically diverse groups which comprise the general population;’’ 

• Enable OFCCP to conduct more robust analysis and make better use of statistical workforce data; 

• Make data submission during compliance evaluations much more efficient and 

less time-consuming by providing a secure web portal through which Federal contractors can submit their data electronically; 

• Capture and search information about complaints filed with the agency; 

• Enhance recordkeeping and records retrieval; 

• Survey and evaluate OFCCP’s own enforcement activities (these are the ‘‘automated surveys’’ quoted in the Question); and . 

• Report aggregate data about OFCCP’s enforcement activities to Congress, interested stakeholders, and the public at-large. 

The FCCS is being developed to be in full compliance with the Privacy Act as well 

as the Trade Secrets and Freedom of Information Acts. It will not post or otherwise 

release private data of contractors or individuals except as permitted under law. 

Our ability to provide information in multiple languages will also be greatly enhanced by the FCCS. Fundamental information describing OFCCP, its mission, and 
92 

the laws it enforces will be made available to the broadest possible scope of communities and stakeholders. 

Question 37. It is vital that positions in the career senior executive service be 

filled based on civil service merit requirements so that all candidates who are interested—both inside and outside government—can be considered. Are there any career 

senior executive service positions that you have filled using emergency authority 

thereby avoiding merit competition? If so, please explain why. 

Answer 37. The Department of Labor (DOL) has not utilized emergency hiring authority to fill any of our current career SES positions. 

Question 38. In October 2010, the Employee Benefits Security Administration 

(EBSA) published a proposed rule revising the term ‘‘fiduciary’’ pursuant to ERISA 

Section 3(21)(A). The Regulatory Flexibility Act requires Federal agencies to conduct 

regulatory economic analyses if a rule proposal has a significant economic impact 

upon a substantial number of small entities. In the preamble to the fiduciary rule 

proposal, EBSA states that the proposal will directly affect plan sponsors. Why did 

EBSA not conduct a Regulatory Flexibility Act analysis on small plan sponsors? 

Answer 38. In the preamble to the original proposed regulation, the Department 

performed an initial regulatory flexibility analysis that conformed to the requirements of the Regulatory Flexibility Act. The Department based this analysis on the 

best information it had available at that time, and solicited public comment on the 

impact of the rule on small entities. The re-proposal of the rule, which is expected 

to be issued in early 2012, will ensure that the public receives a full opportunity 

to review the agency’s updated economic analysis and revisions of the rule. 

Currently, small employers rely on advice from financial professionals, such as investment advisers, to help them design and implement their retirement plans. The 

original proposed regulation would protect small employers by making it more difficult for investment advisers to steer these small employers into investment options 

that pay higher fees to the advisor. It would also hold advisers accountable for any 

imprudent advice that causes harm to plans and participants. 

Question 39. Since the Regulatory Flexibility Act is designed to give small entities 

the chance to review and understand the potential burdens and costs and then a 

chance to comment on those proposed burdens and costs, it would be inappropriate 

for the Department to conduct a Final Regulatory Flexibility Act analysis on smallplan sponsors. Will EBSA re-propose the fiduciary rule with the proper economic 

analyses? 

Answer 39. As stated in the response to Question 38 above, the Department’s 

original proposed rule complied with the requirements of the Regulatory Flexibility 

Act. As we move forward to re-propose the rule, we will continue to comply with 

all Regulatory Flexibility Act requirements and take into account the input on our 

proposal that we have received from stakeholders. 

Question 40. The fiduciary rule proposal inquires as to whether a fiduciary duty 

should attach to disbursements from plans and roll-overs authorized by participants 

into individual retirement accounts. If the final rule does cover both of these events, 

could small plan sponsors be held liable for violations of a fiduciary duty related 

to these events? In addition, would small plan sponsors be held liable for roll-overs 

conducted by third party service providers (that do not have a contract with the 

plan) conducted on behalf of former employees? 

Answer 40. The Department noted in the preamble to the original proposed regulation that, 

‘‘As a general matter, a recommendation to a plan participant to take an otherwise permissible plan distribution does not constitute investment advice within the meaning of the current regulation, even when that advice is combined 

with a recommendation as to how the distribution should be invested.’’ 

The Department requested public comment in the original proposal as to whether 

and to what extent the final regulation should encompass recommendations related 

to taking a plan distribution. As we move forward to re-propose the rule, the public 

will have the opportunity to provide further input on this issue. 

Question 41. Recently, a senior Department official testified before Congress regarding the fiduciary rule proposal. In a response to a question regarding appraisers 

and/or valuation experts for employee stock option plans (ESOP’s), the official responded, ‘‘. . . What ERISA’s fiduciary rules say is that you have a duty to be fair, 

objective and meet professional standards of conduct . . .’’ Courts have found that 

ERISA fiduciaries have duties of prudence and of loyalty. If the fiduciary proposal 

is finalized in its current form, will ESOP appraisers and/or valuation experts be 
93 

held to both duties of prudence and of loyalty (i.e., exclusive benefit)? Are there any 

other examples under ERISA where a fiduciary would be held only to a standard 

of prudence? 

Answer 41. The Department’s original proposal contemplates that ESOP appraisers and valuation experts who provide an appraisal or fairness opinion for a fee 

would be subject to the fiduciary duties of prudence and loyalty. The duty of loyalty, 

however, would generally require no more than that the appraiser provide an objective and unbiased valuation. It is not in the best interest of the plan for the valuation to be incorrect. As stated in the preamble to the proposed rule, 

‘‘The Department would expect a fiduciary appraiser’s determination of value 

to be unbiased, fair, objective and to be made in good faith and based on a prudent investigation under the prevailing circumstances then known to the appraiser.’’ 

As we move forward to re-propose the rule, we will respond to concerns about the 

application of the regulation to routine appraisals. 

Question 42. For the past 5 years, please list any regulatory proposal issued by 

the Department that required an economic analysis pursuant to Executive Order 

12866. 

Answer 42. Between August 2006 and August 2011, the Department published a 

total of 82 notices of proposed rulemaking (NPRMs). Of these proposals, the Department conducted an Executive Order 12866 economic analysis on the following eight 

economically significant items. 

Agency Title Publication Date FR Cite 

EBSA ........................ Default Investment Alternatives under ParticipantDirected Individual Account Plans.

Fee and Expense Disclosures to Participants in Individual Account 

Plans.

Investment Advice—Participants and Beneficiaries ............................

Definition of the Term ‘‘Fiduciary’’ .......................................................

9/27/2006 

7/23/2008 

3/2/2010 

10/22/2010 

71 FR 56806 

73 FR 43014 

75 FR 9360 

75 FR 65263 

ETA ........................... Wage Methodology for Temporary Non-Agricultural Employment H-2B 

Program.

10/5/2010 75 FR 61578 

MSHA ....................... Refuge Alternatives for Underground Coal Mines ................................ 6/16/2008 73 FR 34140 

OSHA ........................ Hazard Communication .........................................................................

Walking and Working Surfaces .............................................................

9/30/2009 

5/24/2010 

74 FR 50279 

75 FR 28862 

QUARTERLY CASE STATUS REPORT; PERIOD: APRIL 1, 2011–JUNE 30, 2011; 

ABA APPROVED ATTORNEY REFERRAL SYSTEM

SUMMARY—CASE STATUS REPORT

Total Programs Reporting: 40 Programs reporting . 

Twenty-one programs have not received any contacts during this quarter. 

Nineteen programs have received contact(s) during this quarter, see below for the 

details. 

CASE ACTIVITY

1. Brief counsel/brief services: Case closed as a result of brief advice or other action taken within a few days or weeks of accepting the referral. 

Number of cases: 38. 

2. Insufficient merit to proceed. Case closed. 

Number of cases: 13. 

3. Case referral made, no followup contact by client. (No contact made to the attorney after referral from the LRIS program.) 

Number of cases: 14. 

4. Case open—resolution pending. 

Number of cases: 17. 

5. Negotiated settlement without litigation: Case closed through negotiation prior 

to starting court action, resulting in: 
94 

* Two different programs reporting amounts recovered: $7,000 and $17,500. 

Number of cases in this category: 2.* 

a. FLSA: $24,500 in back wages and $0.00 in liquidated damages (if applicable) 

on behalf of 2 * (x number of ) workers. 

b. FMLA: llllllllllllllllllllllllllllllll 

(type of relief or remedy obtained, i.e. reinstatement, back pay, front pay) 

6. Negotiated settlement with litigation: Case settled after filing in court of court 

action, resulting in: 

Number of cases in this category: 0. 

a. FLSA: $llll in back wages and $llll in liquidated damages (if applicable) on behalf of llll (x number of ) workers. 

b. FMLA: llllllllllllllllllllllllllllllll 

(type of relief or remedy obtained, i.e. reinstatement, back pay, front pay). 

7. Case resolved through (check one): 

Number of cases in this category: 0. 

b Jury 

b Bench Trial 

a. FLSA decision in favor of plaintiffs with $llll in back wages and 

$llll in liquidated damages (if applicable) on behalf of $llll(x number of ) workers. 

b. FLMA decision in favor of plaintiff resulting in: 

llllllllllllllllllllllllllllllllllll 

llllllllllllllllllllllllllllllllllll 

(type of relief or remedy obtained, i.e. reinstatement, back pay, front pay). 

c. Decision in favor of defendants. 
95 
96 
97 
98 

Attachment 1 

U.S. DEPARTMENT OF LABOR, 

OFFICE OF THE ASSISTANT SECRETARY

FOR ADMINISTRATION AND MANAGEMENT, 

WASHINGTON, DC 20210, 

January 29, 2010. 

MEMORANDUM FOR: AGENCY ADMINISTRATIVE OFFICERS, 

REGIONAL ADMINISTRATORS, OASAM 

FROM: SUZY M. BARKER, Director of Human Resources 

SUBJECT: Determination of Fair Labor Standards Act (FLSA) Coverage for Department of Labor (DOL) Positions 

This memorandum establishes new requirements for the designation of all DOL. 

positions as exempt or nonexempt from the provisions of the Fair Labor Standards 

Act (FLSA), in accordance with provisions of part 551 of title 5, Code of Federal 

Regulations (5 CFR part 551). 
99 

Specifically, all DOL positions at the GS–11 grade level and lower will be designated as FLSA nonexempt, unless a position has been previously designated as 

exempt by a finalized union agreement relating to the FLSA (including any agreements to which the Department has agreed in the course of pending grievances or 

other litigation), or the position clearly and compellingly meets exemption criteria 

under 5 CFR part 551, consistent with the 5 CFR 551.202(a) provision that requires 

a position to be designated as nonexempt unless it fully meets exemption requirements. If reasonable doubt exists as to whether exemption criteria are met, the position must be designated as FLSA non-exempt. 

The Department of Labor enforces the FLSA provisions as they apply to the nonFederal sector. Accordingly, it is expected that the Department will be in full compliance with the Act, and will serve as an example to other Federal sector agencies. 

It is critical that we demonstrate appropriate application of the Federal sector FLSA 

provisions to all Department positions and employees. In this regard, the aforementioned new FLSA designation requirements reflect a deliberate initiative within the 

Department to ensure that the FLSA provisions established under 5 CFR part 551 

are correctly and consistently applied to all DOL, positions and employees, and to 

reduce DOL’s vulnerability to future FLSA grievances. 

The new FLSA designation requirements established by this memorandum are effective immediately for all new and vacant positions. Position descriptions and 

PeoplePower records must reflect the appropriate FLSA designation by the time 

such positions are filled. Additionally, within 30 days of the date of this memorandum, agency and Regional human Resources Offices are directed to review all 

encumbered positions at grades GS–11 and below that are currently designated as 

FLSA exempt, determine whether the positions should be re-designated as nonexempt in accordance with the provisions of this memorandum, and update position 

descriptions and PeoplePower records as appropriate. Human Resources Offices are 

requested to provide written confirmation to the OASAM Office of Human Resources 

Policy and Accountability (OHRPA) that these actions are complete. Compliance 

with these new FLSA designation requirements will be confirmed during future 

Human Resources Management Accountability Program reviews conducted by 

OHRPA. 

I appreciate your support in implementing the provisions of this memorandum. 

Please direct questions about this memorandum to Katherine Greenlaw, Office of 

Human Resources Policy and Accountability, HRC, OASAM, at (202) 693–7737 or 

greenlaw.katherine@dol.gov. 

Attachment 2 

U.S. DEPARTMENT OF LABOR, 

OFFICE OF THE ASSISTANT SECRETARY

FOR ADMINISTRATION AND MANAGEMENT, 

WASHINGTON, DC 20210, 

January 29, 2010. 

MEMORANDUM FOR: AGENCY ADMINISTRATIVE OFFICERS, 

OASAM REGIONAL ADMINISTRATORS 

FROM: SUZY M. BARKER, Director of Human Resources 

SUBJECT: Fair Labor Standards Act (FLSA)-Position Description Requirements 

This memorandum establishes new requirements for documenting Fair Labor 

Standards Act (FLSA) coverage on position descriptions (PDs) within the Department of Labor. 

Effective immediately, all new PDs must reflect the following requirements: 

1. Approximate percentage of time spent on each major duty. An essential 

component of the FLSA exemption criteria provided under title 5, Code of Federal 

Regulations (5 CFR part 551) is the ‘‘Primary Duty Test,’’ which specifies that exempt work must be performed for a ‘‘majority of time.’’ Accordingly, for each major 

duty required by the position, the PD should indicate the approximate percentage 

of the employee’s time spent performing such major duty. When identifying the 

major duties, include only those duties that are performed 25 percent or more of 

the time. Also, since duties can occur on a cyclical basis within the year, remember 

that the percentage of time spent should be based on the full annual cycle of duties 

performed. The sum of the percentages listed in the position description should 

equal 100 percent. 

2. The basis for FLSA exemption or coverage. The FLSA determination must 

be included on all new PDs by completing and incorporating the FLSA checklist (Attachment A) within the body of the position description. This checklist is a sum-
100 

mary; however, the complete rationale for the FLSA determination must be documented by completing the appropriate worksheet (Attachment B). The worksheet 

must then be retained with the official copy of the PD. 

Implementation of the new requirements and utilizing the attached tools will provide a consistent approach in documenting FLSA determinations for positions departmentwide. Please direct questions about this memorandum to Katherine 

Greenlaw, Office of Human Resources Policy and Accountability, HRC, OASAM, at 

(202) 693–7737 or by email at greenlaw.katherine@dol.gov. 

Attachment 3 

U.S. DEPARTMENT OF LABOR, 

OFFICE OF THE ASSISTANT SECRETARY

FOR ADMINISTRATION AND MANAGEMENT, 

WASHINGTON, DC 20210, 

January 29, 2010. 

MEMORANDUM FOR: AGENCY ADMINISTRATIVE OFFICERS, 

REGIONAL ADMINISTRATORS, OASAM 

FROM: SUZY M. BARKER, Director of Human Resources 

SUBJECT: Management of Overtime Pay, Compensatory Time Off, and Credit 

Hours for FLSA Exempt and Nonexempt Employees 

The following is a brief, general overview of overtime pay, compensatory time off, 

and compensatory time off for travel. We would like agencies to distribute this information to all employees so that they can be aware of their rights and responsibilities regarding the approval of overtime work and the Administration of the time 

and attendance system. 

It is the responsibility of supervisors to properly manage their employees’ work 

schedules, to authorize overtime work when it is necessary to accomplish the mission of the organization, and to approve employees’ bi-weekly time and attendance 

submissions as appropriate. Knowledge of these rules will enable supervisors to ensure that the regulations are adhered to, and that employees receive the compensation to which they are entitled. Servicing human resources offices can provide valuable guidance and assistance based on their knowledge and familiarity with the Office of Personnel Management’s (OPM) governmentwide regulations and the Department’s implementing policies. 

FAIR LABOR STANDARDS ACT (FLSA)

The Fair Labor Standards Act is a Federal law administered by the Department 

of Labor that protects workers by providing minimum standards for both wages and 

overtime entitlement and rules governing overtime pay. Included in the Act are provisions related to child labor and equal pay. While the Department of Labor has responsibility for administering and enforcing the FLSA in the private sector, OPM 

administers the provisions of the FLSA for Federal employees. These OPM provisions, which apply to Federal employees and are addressed in this memorandum, 

are not identical with the regulations applicable to the private sector, but are consistent where practicable to maintain compliance with the FLSA. 

FLSA NONEXEMPT OR EXEMPT

The duties of an employee’s position determine whether an employee is covered 

(nonexempt) or not covered (exempt) by the FLSA. Each agency’s servicing human 

resources office determines FLSA coverage, and this information is contained in 

Block 7 of each employee’s position description cover sheet (OF–8) or Block 35 of 

the Standard Form 50 (i.e., ‘‘E’’ for exempt, and ‘‘N’’ for nonexempt). These documents are available in each employee’s electronic Official Personnel Folder (eOPF). 

Nonexempt employees are covered by the FLSA rules while exempt employees are 

covered by rules in title 5 of the United States Code (U.S.C.). 

OVERTIME PAY RULES

Employees not covered by FLSA (i.e., FLSA exempt) 

• Overtime work must be officially ordered or approved in writing by an authorized official. Employees shall use DOL Form DL–1–105, available on LaborNet, to 

document ordered or approved overtime. 

• Overtime hours are for work ordered or approved in advance, performed over 

8 hours per work day or 40 hours per work week. For flexible work schedules, over-
101 

time hours are generally for work ordered or approved in excess of 80 hours per biweekly pay period. (But see below for guidance on the difference between overtime 

work and credit hours.) • For exempt employees whose rate of basic pay does not exceed the rate of pay 

for GS–10, step 1, the overtime hourly rate is 1.5 times their hourly rate of basic 

pay. For exempt employees whose rate of basic pay exceeds GS–10, step 1 and 

whose pay is below or equal to the GS–10 step 10 level, the overtime hourly rate 

(when overtime work has been properly approved) is the greater of: (i) 1.5 times the 

rate of basic pay for GS–10, step 1, or (ii) 1.0 times the employee’s hourly rate of 

basic pay. For all other DOL employees (i.e., those whose rate of basic pay exceeds 

the GS–10 step 10), DOL generally provides an equivalent amount of compensatory 

time off for all authorized irregular or occasional overtime. • The ‘‘biweekly pay cap’’ limits the amount of premium pay (overtime pay, night 

pay, Sunday pay, holiday premium pay, compensatory time off, and some others, 

such as Law Enforcement Availability Pay, and Standby Duty Pay) that an exempt 

employee may receive in any 2-week period, to the greater of the pay for GS–15, 

step 10 (including any applicable locality pay or special rate supplement) or the rate 

payable for Executive Schedule level EX–V ($145,700 in 2010). In emergency or mission-critical situations, an annual premium pay cap may be used instead of a biweekly pay cap. • When the biweekly pay cap is reached, FLSA exempt employees may still be 

ordered to perform overtime work without receiving further compensation. 

Employees covered by FLSA (i.e., FLSA nonexempt) 

• Overtime hours are for work performed that is over 8 hours in a day or 40 

hours in a workweek. For employees on flexible work schedules, overtime hours are 

generally those in excess of 80 hours per biweekly pay period. (But see below for 

guidance on the difference between overtime work and credit hours.) Employees 

shall use DOL Form DL–1–105, available on LaborNet, to document ordered or approved overtime. • Creditable overtime work includes work ordered or approved by an authorized 

official. In addition, generally any work that is ‘‘suffered or permitted’’ (e.g., overtime work not officially authorized or approved by an authorized official but of 

which management was aware) is also creditable as overtime hours. However, for 

employees on a flexible work schedule, overtime hours are defined to include only 

hours officially ordered in advance. (See below for guidance on the difference between overtime work and credit hours.) A supervisor is responsible for preventing 

the performance of unauthorized work. 

• Nonexempt employees on a flexible work schedule will be paid overtime compensation for overtime as defined in 5 U.S.C. § 6121—i.e., ‘‘overtime’’ includes all 

hours in excess of 8 hours in a day or 40 hours in a week that are officially ordered 

in advance, but does not include credit hours voluntarily worked. 

• The overtime hourly rate (when overtime work for such employees has been 

properly approved) is equal to 1.5 times the employee’s ‘‘hourly regular rate,’’ which 

is computed by dividing total remuneration (not just basic pay) by the total number 

of hours of work for the given period (usually 1 week). 

• No hourly, biweekly, or annual pay caps limit FLSA overtime pay; overtime 

work must always be compensated. 

COMPENSATORY TIME OFF

Employees not covered by FLSA (i.e., FLSA exempt) 

• For employees on flexible work schedules, at the employee’s request, compensatory time off may be approved in lieu of overtime pay for any overtime work, 

whether regularly scheduled or irregular or occasional overtime work, 

• For employees not on a flexible work schedule, at the employee’s request, compensatory time off may be approved in lieu of overtime pay only for irregular or occasional overtime work. 

• The agency can require the payment of compensatory time off (rather than overtime pay) only for FLSA exempt employees with pay greater than GS–10, step 10 

(including applicable locality pay and special rate supplements), and only in lieu of 

overtime pay for irregular or occasional overtime work. 

• FLSA exempt employees whose pay exceeds the biweekly pay cap (as defined 

above) cannot receive ‘‘premium pay,’’ which includes both overtime pay and crediting of compensatory time. 

• FLSA exempt employees have 26 pay periods after the pay period in which compensatory time is earned to use the hours. Any hours unused after 26 pay periods 

will be forfeited. 
102 

Employees covered by FLSA (i.e., FLSA nonexempt) 

• For employees on flexible work schedules, at the employee’s request, compensatory time off may be approved in lieu of overtime pay for any overtime work, 

whether regularly scheduled, or irregular or occasional overtime work. 

• For employees not on a flexible work schedule, at the employee’s request, compensatory time off may be approved in lieu of overtime pay only for irregular or occasional overtime work. 

• FLSA nonexempt employees may never be ordered to take compensatory time 

off in lieu of overtime pay. 

• The biweekly pay cap does not apply to FLSA nonexempt employees. 

• FLSA nonexempt employees have 26 pay periods after the pay period in which 

compensatory time is earned to use the hours. The nonexempt employee will be paid 

for any hours unused after 26 pay periods at the overtime rate in effect when the 

hours were earned. 

OVERTIME VS. CREDIT HOURS FOR FLSA EXEMPT AND NONEXEMPT EMPLOYEES

• Under the flexible work schedules, which are in use throughout DOL, it is important to distinguish overtime hours from credit hours. In accordance with 5 CFR 

610.404, employees on a flexible work schedule at the Department of Labor need 

to sign in and out every day to account for their time worked. Hours that an employee on a flexible schedule voluntarily works—to accrue hours in excess of the 

basic work requirement—are credit hours, not overtime hours. 

• For example, an employee has an assignment which requires several days to 

complete, and chooses to work extra hours on 2 days to complete the assignment. If the employee exceeds the 80-hour basic work requirement for the pay 

period, the extra hours will count as credit hours. 

• An employee on a flexible schedule—whether FLSA exempt or FLSA nonexempt—receives overtime pay or compensatory time if ordered to work beyond 8 

hours on a given day or 40 hours during a given week. Employees shall use DOL 

Form DL–1–105, available on LaborNet, to document ordered or approved overtime. 

• For example, if an employee informs the supervisor that he/she cannot complete an assignment by the established deadline unless he/she works overtime 

and the supervisor authorizes the overtime work by signing the DL–1–10, the 

employee will receive compensatory time or overtime pay, as appropriate, for 

work performed in excess of 8 hours in a day or 40 in a week to complete 

the assignment. 

• An employee may accrue no more than 24 credit hours for carryover from pay 

period to pay period. 

• Credit hours are not included in the premium pay cap. 

COMPENSATORY TIME FOR TRAVEL OF FLSA EXEMPT AND NONEXEMPT EMPLOYEES

• Compensatory time for travel is earned by an employee, without regard to 

whether he or she is FLSA exempt or nonexempt, for time spent in a travel status 

away from the employee’s official duty station when such time is not otherwise compensable. See DOL Spotlight No. 890 for more information. 

• Compensatory time for travel is not included in the biweekly pay cap. • ‘‘Travel status’’ includes only the time actually spent traveling between the official duty station and a temporary duty station, or between two temporary duty stations, and the usual waiting time that precedes or interrupts such travel—typically 

1 hour for air travel within the United States and 2 hours for international travel. 

• Both FLSA exempt and nonexempt employees have 26 pay periods after the pay 

period in which compensatory time for travel is earned to use the hours. Any hours 

unused after 26 pay periods are forfeited, regardless of the employee’s FLSA coverage. 

The following references are also provided for your convenience: 

OPM Regulations 

Covered by Title 5 (5 U.S.C.): 5 CFR part 550. 

Overtime and Compensatory Time for FLSA Nonexempt Staff: 5 CFR part 551. 

Compensatory Time Off for Travel: 5 CFR part 550, subpart N. 

DOL Policies 

Overtime and Compensatory Time for FLSA Exempt Staff Covered by Title 5 (5 

U.S.C.): DPR 550. 

FLSA Nonexempt Staff Covered by the Fair Labor Standards Act: DPR 551. 
103 

Compensatory Time Off for Travel: DPR 550; Spotlight 890 at http:// 

www.labornet.dol.gov/DCSlFileSystem/Spotlights/Spotlight890.doc. 

U.S. DEPARTMENT OF LABOR, 

OFFICE OF THE ASSISTANT SECRETARY

FOR ADMINISTRATION AND MANAGEMENT, 

WASHINGTON, DC 20210, 

January 29, 2010. 

MEMORANDUM FOR AGENCY HEADS 

FROM: T. MICHAEL KERR 

SUBJECT: Application of the Fair Labor Standards Act (FLSA) in the Department 

of Labor (D0L) 

This correspondence establishes new requirements for the application of the Fair 

Labor Standards Act (FLSA) within DOL, as the Act is administered by the Office 

of Personnel Management (OPM) for Federal sector positions under the provisions 

of part 551 of title 5 Code of Federal Regulations (5 CFR 551). In addition, this 

memorandum transmits guidance to assist DOL, management officials, human resources representatives, and employees in implementing these Departmental requirements and in understanding the implications of FLSA coverage for overtime 

and compensatory time off. 

DOL enforces the FLSA provisions as they apply to the non-Federal sector. Accordingly, it is expected that the Department will be in full compliance with the Act 

and will serve as an example to other Federal sector agencies. It is critical that we 

demonstrate appropriate application of the Federal sector FLSA provisions to all Department positions and employees. In this regard, the requirements and guidance 

provided with this memorandum reflect a deliberate initiative within the Department to ensure that the FLSA provisions established under 5 CFR part 551 are correctly and consistently applied to all DOL, positions and employees and to reduce 

DOL’s vulnerability to future FLSA grievances. 

Please find attached the following: 

• Memorandum for Agency Administrative Officers/Regional Administrators, OASAM: Determination of Fair Labor Standards Act (FLSA) Coverage 

for Department of Labor (DOL) Positions (Attachment 1). This memorandum 

requires all DOL positions at the GS–11 grade level and lower to be designated as 

FLSA nonexempt, unless a position has been previously designated as exempt by 

a finalized union agreement relating to the FLSA (including any agreements to 

which the Department has agreed in the course of pending grievances or other litigation), or the position clearly and compellingly meets the exemption criteria under 

5 CFR part 551. This requirement is consistent with 5 CFR 551.202(a), which requires that a position must be designated as nonexempt unless it fully meets the 

exemption requirements. If reasonable doubt exists as to whether exemption criteria 

are met, the position must be designated as FLSA non-exempt. 

• Memorandum for Agency Administrative Officers and OASAM Regional 

Administrators from the Director of Human Resources: FLSA Position Description Requirements (Attachment 2). This memorandum requires all new DOL 

position descriptions (PDs) to reflect the approximate percentage of time spent on 

each major duty, and to reflect the basis for FLSA exemption from coverage within 

the body of the PD. The memorandum additionally requires the complete rationale 

for the FLSA determination to be documented and retained with the official copy 

of the PD. 

• Memorandum for Agency Administrative Officers and OASAM Regional 

Administrators from the Director of Human Resources: Management of 

Overtime Pay, Compensatory Time Off, and Credit Hours for FLSA Exempt 

and Nonexempt Employees (Attachment 3). This memorandum, which is suitable 

for distribution to all employees, provides a general overview of overtime pay, compensatory time off, compensatory time off for travel, and credit hours under flexible 

work schedules, so that supervisors and employees can be aware of their rights and 

responsibilities regarding the implications of FLSA designation on eligibility for and 

approval of overtime work. 

Two additional accountability initiatives further emphasize appropriate application of the FLSA as a priority within this Department: 

• The DOL performance management forms for executives and GS managers and supervisors have been updated for the fiscal year 2010 performance cycle to include the responsibility for complying with the ELSA requirements. Specifically, the managerial competency for ‘‘Resource Management’’ 
104 

has been modified to require executives, managers, and supervisors to prevent staff 

from working unauthorized overtime hours by consistently applying FLSA and DOL 

policy regarding overtime, maintaining an awareness of staff hours worked and organizational goals accomplished, and ensuring that staff are knowledgeable of how 

the FLSA designation impacts overtime eligibility and authorization. This new requirement was announced in my September 24, 2009, memorandum to Agency 

Heads: Closing-Out Fiscal Year (FY) 2009 Performance Appraisals and Establishing 

FY 2010 Performance Plans for Senior Executive Service, Senior Level, and General 

Schedule Employees. 

• The DOL Human Resources Management Accountability Review Program has been expanded to include review of FLSA exemption designations. Specifically, human resources accountability reviews led by the OASAM 

Human Resources Center’s Office of Human Resources Policy and Accountability 

now include a review of selected FLSA exemption designations for purposes of ensuring compliance with governmentwide and DOL requirements. 

Finally, the Department will soon release a comprehensive tutorial regarding the 

implications of FLSA designation through the LearningLink portal. All DOL personnel will be required to complete this course, which is intended to supplement the 

guidance addressed in this memorandum. 

I appreciate your support in implementing the provisions of this memorandum 

and the attachments. 

Please direct questions about this memorandum to Katherine Greenlaw, Office of 

Human Resources Policy and Accountability, HRC, OASAM, at (202) 693–7737 or 

greenlaw.katherine@dol.gov. 
105 

U.S. Department of Labor, Employment Standards Administration, Wage and Hour Division—All Acts 

WHD division enforcement 

statistics—All acts Fiscal year 2001 Fiscal year 2002 Fiscal year 2003 Fiscal year 2004 Fiscal year 2005 Fiscal year 2006 Fiscal year 2007 Fiscal year 2008 Fiscal year 2009 Fiscal year 2010 

Back Wages Collected .................. $131,954,657 $175,640,492 $212,537,554 $196,664,146 $166,005,014 $171,955,533 $220,613,703 $185,287,827 $172,615,125 $176,005,043 Employees Receiving Back Wages 216,647 263,593 342,358 288,296 241,379 246,874 341,624 228,645 219,759 209,814 Complaints Registered .................. 29,085 31,413 31,123 31,786 30,375 26,256 24,950 23,845 26,311 31,824 Enforcement Hours ........................ 998,937 1,070,600 1,032,879 1,000,739 969,776 951,971 899,406 882,419 879,626 1,066,188 Average Days to Resolve Complaint ........................................ 139 129 108 92 85 93 97 97 101 142 Concluded Cases .......................... 38,051 40,264 39,425 37,842 34,858 31,987 30,467 28,242 24,922 26,486 
106 

Fair Labor Standards Act Back Wages 

Violation Back wages 

collected 

Percent of FLSA 

back wages 

Employees 

receiving 

back wages 

(duplicated) 

Percent of 

employees 

receiving FLSA 

back wages 

Fiscal Year 2009: 

Minimum Wage ..................................... 9,176 13,918,600 10 40,235 21 

Overtime ................................................ 8,792 119,215,069 90 175,496 92 

Fiscal Year 2010: 

Minimum Wage ..................................... 10,529 21,043,700 16 52,530 28 

Overtime ................................................ 8,788 107,545,263 84 166,295 90 

Back Wages Collected For Workers in Low-Wage Industries 

Low-wage industries 

statistics fiscal year 

2010 

Cases Back wages Employees Low-wage industries statistics fiscal year 2009 Cases Back wages Employees 

Agriculture ........... 1,259 $3,153,957 5,744 Agriculture ....................... 1,379 $1,404,125 5,523 

Day Care .............. 694 $1,018,255 3,028 Day Care .......................... 714 $1,074,842 3,310 

Restaurants ......... 3,759 $16,415,519 23,042 Restaurants ..................... 3,818 $17,016,109 24,375 

Garment Manufacturing.374 $2,142,336 2,215 Garment Manufacturing .. 371 $2,413,839 2,734 

Guard Services .... 565 $11,751,811 10,631 Guard Services ................ 563 $7,623,120 10,093 

Health Care ......... 1,194 $12,456,283 20,888 Health Care ..................... 1,046 $12,616,148 18,266 

Hotels and Motels 724 $1,935,241 4,051 Hotels and Motels ........... 806 $1,762,195 4,256 

Janitorial Services 507 $2,774,972 2,543 Janitorial Services ........... 447 $2,170,279 3,261 

Temporary Help .... 237 $1,676,467 2,524 Temporary Help ............... 216 $5,982,453 8,937 

Total Low-wage 

industries.

9,303 $53,324,841 74,666 Total Low-Wage Industries.9,360 $52,063,110 80,759 
107 

Low-wage industries statistics Fiscal year 2001 Fiscal year 2002 Fiscal year 2003 Fiscal year 2004 Fiscal year 2005 Fiscal year 2006 Fiscal year 2007 Fiscal year 2008 Fiscal year 2009 Fiscal year 2010 

Back Wages Collected ...................................... $32,470,183 $38,608,612 $39,595,382 $43,141,911 $45,783,743 $50,566,661 $52,722,681 $57,549,45 $52,063,110 $53,324,841 Employees Receiving Back Wages ................... 69,469 86,432 80,772 84,897 96,511 86,780 86,560 76,903 80,759 74,666 Cases in low-Wage Industries .......................... 14,267 14,016 12,962 12,625 12,468 11,172 11,382 10,299 9,360 9,303 
108 

WHD Continues Strong Child Labor Enforcement 

Child labor statistics 

Fiscal 

year 

2001 

Fiscal 

year 

2002 

Fiscal 

year 

2003 

Fiscal 

year 

2004 

Fiscal 

year 

2005 

Fiscal 

year 

2006 

Fiscal 

year 

2007 

Fiscal 

year 

2008 

Fiscal 

year 

2009 

Fiscal 

year 

2010 

Directed Child 

Labor Cases ....... 2,021 2,105 2,031 2,155 1,406 952 1,285 1,269 1,341 591 

Cases With Child 

Labor Violations 2,103 1,936 1,648 1,616 1,129 1,083 1,249 1,129 887 684 

Minors Employed in 

Violation ............. 9,918 9,690 7,228 5,840 3,793 3,723 4,672 4,734 3,448 3,333 

Minors Per Case ..... 4.7 5 4.4 3.6 3.3 3.4 3.7 4.2 3.9 4.9 

Cases With HO Violations ................ 876 747 654 459 396 361 410 466 394 308 

Minors Employed in 

Violation of HOs 2,060 1,710 1,449 1,087 1,091 994 1,000 1,617 1,183 863 
109 

Family And Medical Leave Act Enforcement 

FMLA enforcement statistics Fiscal year 2001 Fiscal year 2002 Fiscal year 2003 Fiscal year 2004 Fiscal year 2005 Fiscal year 2006 Fiscal year 2007 Fiscal year 2008 Fiscal year 2009 Fiscal year 2010 

No. of Complaint Cases ................ 2,700 3,501 3,565 3,350 2,784 2,161 1,983 1,889 1,841 2,094 Percent of No-Violation Cases ...... 48% 50% 54% 55% 51% 49% 45% 47% 49% 58% Nature of Complaint: 

Refusal to Grant FMLA Leave .. 629 741 815 697 647 522 459 416 412 468 Refusal to Restore to Equivalent Position ......................... 360 400 370 369 328 261 242 220 239 230 Termination ............................... 1,123 1,503 1,567 1,473 1,132 870 764 757 763 913 Failure to Maintain Health 

Benefits ................................ 62 71 46 48 50 31 29 39 33 36 

Discrimination .......................... 616 786 767 763 627 477 489 457 394 447 

Status of Compliance Action 

No Violation Cases ................... 1,323 1,766 1,911 1,848 1,429 1,069 896 894 911 1,207 Employer Not Covered .............. 58 63 68 75 37 39 27 29 30 36 Employee Not Eligible ............... 164 224 199 238 176 152 82 105 109 156 Complaint Not Valid ................. 953 1,281 1,417 1,301 1,058 765 689 655 660 869 Other ......................................... 168 198 227 234 158 113 98 105 112 146 Violation Cases ......................... 1,447 1,735 1,654 1,502 1,355 1,092 1,087 995 930 887 No. of Employees Affected ....... 1,627 2,077 1,867 1,742 1,626 1,200 1,675 1,082 2,951 910 Amount of Back Wages ............ $2,983,936 $3,731,929 $2,397,876 $2,311,781 $1,867,807 $1,772,342 $1,573,501 $1,532,505 $1,533,927 $1,630,817 
110 

SENATOR ISAKSON

Fiduciary Rule 

Question 1. Millions of middle-class Americans rely on IRAs to supplement their 

retirement savings. A vast majority of those participants are satisfied with their 

IRAs and maintain ongoing relationships with their broker-dealers. Despite this, 

you have clearly expressed the view that absence of fiduciary status for those who 

sell IRAs is a problem that needs fixing. You have not offered any concrete study 

or evidence of any data that suggests a problem exists that needs fixing—or indeed 

that can be fixed by a new definition of fiduciary. You and others at the DOL have 

offered anecdotal examples of bad investor experiences over the years—which, 

frankly, isn’t surprising given the turmoil we’ve had in the markets. Beyond anecdotes, which do not count as evidence, what is the evidence of a persistent or pervasive problem caused by broker-dealer conflicts of interests in the IRA markets? 

Answer 1. There is a great deal of evidence that conflicts of interest are widespread in the marketplace for investment services and that these conflicts have resulted in lower returns and higher fees for retirement investors. This has been demonstrated through the Department’s own investigations and cases, SEC and GAO 

reports, published securities cases, academic literature, and other sources. Some examples of these include: GAO, 401(k) Plans: Improved Regulation Could Better Protect Participants from Conflicts of Interest, Report to the Ranking Member, Committee on Education and the Workforce, House of Representatives, GAO-11-119 

(Jan. 2011); Securities and Exchange Commission, Office of Compliance Inspections 

and Examinations, 

Protecting Senior Investors: Report of Examinations of Securities Firms Providing 

‘‘Free Lunch’’ Sales Seminars, Sept. 2007, at http://www.sec.gov/spotlight/seniors/ 

freelunchreport.pdf, Daniel Bergstresser, et al., Assessing the Costs and Benefits of 

Brokers in the Mutual Fund Industry, The Review of Financial Studies, 22, no. 10, 

Oct. 2009. Further, while the impact on an individual person or plan in 1 year 

might be small due to these conflicts, even a few basis points per year of excessive 

fees compounds over time and can detrimentally impact the retirement income security of America’s workers and their families. 

Question 2. Respected economists conclude that the Proposed Fiduciary Rule 

would not generate benefits large enough to outweigh its costs. Is the DOL intending to perform any study to assess these costs, particularly the cost of the impact 

of the rule on IRAs? 

Answer 2. OMB requires that an agency cannot put forward a final or proposed 

rule without an economic analysis complying with Executive Order 12866, which requires agencies to perform a comprehensive regulatory impact analysis (RIA) for 

any economically significant regulatory action. The Department provided an RIA for 

the proposed regulation that assessed the costs and benefits associated with the proposal. Currently, we are in the process of conducting an expanded RIA that will 

take into account comments received from stakeholders on the initial RIA that was 

published with the proposed rule. As we move forward to re-propose, the extended 

rulemaking process will ensure that the public receives a full opportunity to review 

the agency’s updated RIA, which will address the rule’s impact on both ERISA plans 

and IRAs. 

Question 3. As unemployment remains stubbornly high and we are facing significant cuts in government spending, I think you will agree that we should be doing 

everything possible to protect private sector jobs. In April, there were 317,000 brokers in the United States who would immediately lose their jobs if the proposed rule 

became effective. This is the number of brokers who currently are licensed to sell 

IRAs, but who are not licensed to provide fiduciary advice. Hundreds of thousands 

more broker-dealers’ jobs are at risk of being lost as a result of the industry restructuring that would occur, moving retail customers into self-directed accounts and 

away from professional service relationships. To what extent has the DOL analyzed 

the impact of the Rule on jobs? It appears that your continued momentum regarding 

the promulgation of this rule is in contradiction to President Obama’s Executive 

order mandating that Federal agencies review their regulations to ensure that they 

are not impeding economic growth and job creation. 

Answer 3. We respectfully disagree that 317,000 brokers will immediately lose 

their jobs if the proposed rule becomes effective, or that hundreds of thousands more 

jobs will be at risk of being lost. Your question relates to assertions included in the 

Oliver Wyman Study (Wyman Study) on the impact of the original proposed fiduciary definition on IRA consumers. This study indicates that, by imposing fiduciary 

duties on brokers, the proposed regulation would increase costs for IRA holders in 
111 

that they will lose access to brokerage and advisory services, thus diminishing their 

retirement savings. 

We believe the analysis performed in the Wyman Study is open to challenge in 

at least two ways. First, the Wyman Study presumes that, under the proposed regulations, brokers would no longer be paid by commissions for advising IRA consumers, and that all IRA accounts will have to be converted to advisory accounts 

which will increase costs. The proposed regulation, however, would not prevent brokers from being paid by commissions for advising IRA consumers. Existing administrative exemptions granted by the Department currently allow fiduciary broker-dealers to receive commissions. To the extent that brokers would need additional relief, 

the DOL is prepared to consider additional exemptions for fee arrangements that 

are beneficial to plan participants and beneficiaries. Second, the Wyman Study presumes that there are only two business models available for advising IRAs: a broker 

model with conflicted advice and a registered investment adviser model. The Department believes a rule can be redrafted to leave ample space for alternative models that are tailored to client needs, competitively priced, and which mitigate conflicts of interest. Finally, broker-dealers would also have the option to become registered investment advisers. 

The Department believes that it has complied with the requirement in Executive 

Order 13563, ‘‘Improving Regulation and Regulatory Review’’ to examine outdated 

and outmoded regulations. The Department retrospectively reviewed its current investment advice fiduciary rule and determined it was outdated because it had not 

been updated since it was issued more than 35 years ago and does not reflect current practices in the investment advice marketplace. Further, the Executive order 

requires Federal agencies to assess all costs and benefits associated with any rule 

and available regulatory alternatives. The Department conducted such an assessment in connection with the original proposed rule and believes that investment results will be better without conflicted advice, which will in turn increase retirement 

security. Consistent with the President’s Executive order, the extended rulemaking 

process will ensure that the public receives a full opportunity to review the agency’s 

updated economic analysis and revisions of the rule. 

Question 4. Can you address the concerns raised in the comments and studies 

that the Proposed Rule will have the effect of significantly reducing IRA retirement 

savings of millions of middle-class Americans, perhaps by as much as $240 billion 

by 2030? 

Answer 4. This question relates to data cited by the Wyman Study. As we explain 

in our answer to Question 3 above, we believe that the analysis in the Study is open 

to challenge. Please see our response above to Question 3. 

Question 5. Nearly 36 percent of client-facing representatives will not be properly 

licensed to service investors under the DOL Rule. Moreover, to adapt, the industry 

likely will shift accounts to advisors who earn their living based on the assets under 

management. These advisors won’t have the bandwidth to service small accounts 

that don’t add enough to their bottom lines. As a result, the combined job losses 

and industry adaptations are likely to result in significantly reduced access to financial services, particularly for working-class and middle-income Americans. Since this 

seems to be the very group that the DOL is attempting to protect, how do you respond? 

Answer 5. We respectfully disagree with the premise that there are only two business models, for reasons stated in the answer to Question 3. Our original proposed 

regulation protects small employers by making it more difficult for investment advisers to steer them into investment options that pay higher fees and would hold 

advisers accountable for any imprudent advice that causes harm to plans and participants. 

Question 6. Several respectable economists expect a significant decrease in IRA 

savings because of this proposed rule, which seems contrary to your intended purpose. Rather it seems to be that the proposed rule is a disguised tax increase on 

the already struggling middle class. As fewer IRAs are opened, the growth in retirement asset values will be taxed as capital gains, instead of protected in a tax-advantaged vehicle. The impact to the consumer will be diminished investment returns, 

but the coffers of the government will grow. It is becoming increasingly apparent 

that some in the Administration actually want fewer IRAs and 401(k)s since these 

accounts enjoy tax advantages which diminish governmental tax receipts. Isn’t it 

true that fairly construed, the rule is a middle-class tax increase disguised as a consumer protection device? 

Answer 6. No, it is not true and we respectfully disagree with the premise of the 

question. The Department is seeking to protect the millions of employers, workers 
112 

and IRA holders who need and rely on investment advice for their retirement savings. The original proposed rule addresses conflicts of interest that are widespread 

in the marketplace for retirement advisory services. When an adviser’s compensation is directly tied to specific investment recommendations, there is a real danger 

that the recommendations will not be based solely on the customer’s interest in a 

secure retirement, but instead will reflect the adviser’s own financial self-interest. 

As stated in the response to Question 1 above, evidence indicates these conflicts 

have resulted in lower returns and higher fees for retirement investors. While the 

impact on an individual person or plan in 1 year might be small due to these conflicts, over time excessive fees can detrimentally impact the retirement income security of America’s workers and their families. 

Question 7. Members from both parties and both chambers of Congress have expressed concern to the DOL about the Proposed Rule and more are doing so each 

week, yet the DOL seems to be increasing its efforts to finalize the Rule by the end 

of 2011. In fact, the DOL has not responded to my letter or the inquiries of many 

of my colleagues. Why do you feel it is so necessary to ignore these concerns and 

push ahead? 

Answer 7. We appreciate your letter and the letters from your colleagues on the 

proposed regulation. As Assistant Secretary Phyllis C. Borzi stated in her August 

12 response to your letter, the Department is committed to developing and issuing 

a clear and effective final rule that takes proper account of all stakeholder views. 

On September 19, the Department announced it will re-propose its rule on the 

definition of a fiduciary. The decision to re-propose was in part a response to requests from the public, including Members of Congress, that the agency allow an 

opportunity for more input on the rule. Consistent with the President’s Executive 

order, the extended rulemaking process also will ensure that the public receives a 

full opportunity to review the agency’s updated economic analysis and revisions of 

the rule. The new proposed rule is expected to be issued in early 2012. When finalized, this important consumer protection initiative will safeguard workers who are 

saving for retirement as well as the businesses that provide retirement plans to 

America’s working men and women. 

Injury and Illness Prevention Program (I2P2) 

Question 8. The Administration has aggressively touted the reductions they believe will occur from the regulatory look back process underway as a result of Executive Order 13563, and in particular gains that will be made under regulations from 

OSHA. Leaving aside the credibility of those claims, won’t the burdens of the I2P2 

regulation under development at OSHA entirely overwhelm whatever burden reductions are produced by this look back effort? 

Answer 8. Executive Order 13563 states that ‘‘Our regulatory system must protect 

public health, welfare, safety, and our environment while promoting economic 

growth, innovation, competitiveness, and job creation.’’ It also requires regulatory 

agencies such as OSHA to conduct look back reviews of existing regulations to identify those that are outmoded, ineffective, insufficient, or excessively burdensome. 

OSHA still is in the process of developing the Injury and Illness Prevention Program rule. OSHA has held five stakeholder meetings across the country to give all 

interested parties an opportunity to inform our development of the rule. OSHA has 

learned much from the variety of approaches taken by 15 States that have required 

such programs of some or all of their employers. OSHA will base its proposal on 

the real world experience of employers and the substantial data on reductions in 

injuries and illnesses from employers who have implemented similar programs— 

including the companies in our Voluntary Protection Programs. OSHA will develop 

a flexible proposal that is appropriate to large and small businesses. 

Question 9. The Administration’s claims of burden reductions from the look back 

effort include this from Cass Sunstein’s Wall Street Journal op-ed of May 26: 

‘‘The Occupational Safety and Health Administration is announcing today 

that it is eliminating over 1.9 million annual hours of redundant reporting burdens on employers, saving tens of millions of dollars every year.’’ 

Doing a little math and dividing the 1.9 million burden hours by the 6.05 million 

firms with employees in the country, according to the Census Bureau, yields about 

20 minutes (a third of an hour) of reduced burden. How do you imagine 20 minutes 

of burden reduction making a difference? Isn’t it true that these redundancies are 

being eliminated because nobody is following them anymore? 

Answer 9. The burden hour reductions that Administrator Sunstein referenced in 

the May 26 Wall Street Journal op-ed resulted from the Department of Labor’s Occupational Safety and Health Administration’s Standards Improvement Project— 
113 

Phase III (SIP–III) rulemaking. SIP–III is the third in a series of rulemaking actions to improve and streamline OSHA standards. The Standards Improvement 

Project removes or revises individual requirements within rules that are confusing, 

outdated, duplicative, or inconsistent. 

The 20-minute burden hour savings per firm that you calculated assumes that all 

6.05 million firms are impacted by the SIP–III final rule and that each of these 

firms would have the same burden hour reduction. This calculation is incorrect. The 

largest burden hour reduction in the SIP–III final rule results from OSHA removing 

the requirement that firms develop and maintain training records for employees 

who must receive training on personal protective equipment (PPE) ((29 CFR 

1910.132(f)(4)). This burden reduction was determined by the total number of workers who wear PPE and who are required to be trained. Therefore, the burden hour 

savings per impacted firm is determined by the number of worker training records 

that no longer must be generated. 

Based on the SIP–III rulemaking record, OSHA believes that instead of requiring 

employers to develop and maintain PPE training records to assure OSHA that training had been conducted, the Agency could use other, less expensive means, such as 

observation, to determine if workers have received adequate training on their PPE. 

Based on this finding, OSHA removed the burden to maintain these records. 

Regardless of the amount of burden hours saved, if OSHA identifies a paperwork 

requirement that does not serve to promote the mission of the Agency to save and 

protect American workers, the Agency has and will continue to eliminate such unnecessary requirements. 

Question 10. Given that fatality and injury and illness rates are at their lowest 

levels since data was first collected, exactly how will imposing more enforcement 

and citations from OSHA in the form of the Injury and Illness Prevention Program 

(I2P2) regulation improve this trend? How will this help employers create more 

jobs? 

Answer 10. OSHA’s goal in issuing new standards is not to do more enforcement 

or issue more citations, but to encourage employers to comply with the best practices laid out in the standard—in this case to work cooperatively with their employees to develop a systematic program to identify and correct health and safety problems in their workplaces. 

The most recent data shows that 4.1 million serious injuries occurred in 2009 and 

4,547 fatalities occurred in 2010 on the job. Far too many workers are still getting 

injured, sick and killed at work. OSHA believes that there is good evidence that the 

Injury and Illness Prevention Program rule will help reduce these numbers. 

OSHA still is in the process of developing the Injury and Illness Prevention Program rule. OSHA has held five stakeholder meetings across the country to give all 

interested parties an opportunity to inform our development of the rule. OSHA has 

learned much from the variety of approaches taken by 15 Sates that have required 

such programs of some or all of their employers. OSHA is basing its proposal on 

the real world experience of employers and the substantial data on reductions in 

injuries and illnesses from employers who have implemented similar programs— 

including the companies in our Voluntary Protection Programs. OSHA will develop 

a flexible proposal that is appropriate to large and small businesses. 

OSHA believes that the resulting reduction in workers’ compensation costs, resultant premium reductions over time, and reductions in indirect costs will save 

U.S. employers billions of dollars each year, make them more competitive on the 

world market and free up capital for business expansion and job creation. 

Tree Care Industry 

Question 11. Earlier this year, Assistant Secretary Michaels indicated to me that 

OSHA would consider taking on a new regulatory initiative to separate arborists 

and tree care workers from traditional loggers. As another regulatory agenda was 

just published without the inclusion of an ANPRM on tree care operations, when 

will you initiate the process to better protect these thousands of middle-class workers who work to make our communities safer and more livable? 

Answer 11. This is one of many areas where OSHA has been asked by employee 

and employer associations to issue new standards and regulations. Unfortunately, 

the regulatory process is quite lengthy and resource intensive. Because OSHA’s resources do not permit the agency to engage in rulemaking in all areas where new 

or revised OSHA standards are needed, where possible, OSHA looks at non-regulatory alternatives that can provide effective worker protection. 

OSHA currently has standards that protect both traditional loggers and tree care 

workers. OSHA’s logging standard 29 CFR 1910.266 is a vertical standard that provides comprehensive coverage for logging operations. Because the nature of tree care 
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operations involve care and trimming instead of removal, and the scale of the operations is generally smaller than logging operations, the logging standard does not 

apply to most tree care operations. This does not mean tree care workers are unprotected; both the OSHA general duty clause and other general industry standards 

apply to tree care workers. OSHA has determined that together they are sufficient 

to adequately address tree care worker health and safety protections. 

In August 2008, OSHA issued a compliance directive, CPL 02-01-045, to detail 

how OSHA’s general duty clause and general industry standards apply to tree care 

operations. OSHA has determined that this compliance directive has strengthened 

our tree care enforcement efforts and enhanced our ability to protect tree care workers. It outlines the application of existing OSHA standards such as personal protective equipment requirements, fall protection requirements, hazard communication, 

first aid, and so forth to protect the health and safety of workers in the tree care 

industry. The Agency also has in place extensive compliance assistance efforts to 

provide information on health and safety to this industry and is working to enhance 

those compliance assistance efforts to specifically target Latino workers. 

This decision does not rule out rulemaking on tree care at a future time. OSHA 

will continue to consider taking on this new regulatory initiative when resources 

and other priorities permit. OSHA has decided, however, that where resources or 

other priorities do not allow us to work actively on a standard, that standard should 

be removed from the regulatory agenda until such time as resources permit the 

agency to make significant progress on it. 

Noise Interpretation 

Question 12. At what point did you realize the OSHA noise reduction proposal to 

require employers to implement costly engineering or administrative controls instead of better and less expensive personal protective equipment was not a proposal 

worth pursuing? Did you know about this proposal before OSHA published it? Did 

it go through OIRA review? 

Answer 12. The proposal would have clarified that the noise standard’s existing 

requirement for use of ‘‘feasible’’ administrative or engineering controls is to be 

given its plain, ordinary meaning consistent with the meaning of the word feasible 

throughout the OSH Act and its standards. OSHA issued the proposal because occupational hearing loss remains a serious problem in workplaces and the agency believes that the existing interpretation permits overreliance on personal protective 

equipment in some situations. Between 2004 and 2009, the Bureau of Labor Statistics has reported that more than 144,000 OSHA recordable hearing loss cases occurred in private industry. The reported annual number of cases ranged between 

19,500 and 28,400 during the 2004 to 2009 period. 

OSHA did not withdraw the proposed interpretation because the agency decided 

that personal protective equipment was better or less expensive. Evidence shows 

that personal protective equipment, such as ear plugs or ear muffs, while effective 

under laboratory conditions, may be far less effective in actual working conditions. 

For example, earplugs and earmuffs are only effective if they fit properly, if they 

are worn all the time and if workers are trained to use them properly. Another problem with personal protective equipment is that earplugs and ear muffs can interfere 

with hearing all kinds of noises that employees at work need to hear, such as equipment back-up warnings, people’s shouts, and changes in workplace conditions. 

Engineering controls are generally preferable because they eliminate harmful 

noise at the source, while allowing employees to hear audible warnings and communicate with each other. Engineering controls may also be less expensive than personal protective equipment in some situations. For example, engineering controls 

can include such inexpensive measures as mufflers, sound blankets or curtains, 

dampeners, and routine lubrication and maintenance on noisy equipment. In some 

instances, the application of a relatively simple engineering noise control can reduce 

the noise hazard to the extent that further costly requirements of the OSHA noise 

standard (e.g. audiometric testing, hearing conservation program, provision of hearing protectors, etc.) are unnecessary. 

OSHA withdrew the noise interpretation because it became clear from the concerns raised by some employers and business associations that effectively addressing 

the noise problem requires more public outreach. OSHA therefore decided to step 

back and look at the entire problem of workplace noise and how we can develop a 

comprehensive approach to the serious problem of hearing loss. 

OSHA has begun the outreach process by developing a new occupational noise 

exposure web page (http://www.osha.gov/SLTC/noisehearingconservation/index 

.html) and is working on scheduling an informal stakeholder meeting this fall to engage in a dialogue with employers, workers, noise control experts, manufacturers, 

and public health professionals on how to prevent occupational hearing loss. The 
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meeting time will be used to gather and share information on best practices for 

noise reduction in the workplace, including a discussion on personal protective 

equipment, hearing conservation programs and engineering controls. 

This proposal went through normal Department of Labor review and clearance. 

As this initiative was a proposed interpretation of an existing OSHA standard and 

not a new standard or regulation, it did not go through OIRA review. 

Persuader Rule 

Question 13. Under DOL’s proposed persuader rule, employers will face civil (and 

possibly criminal) sanctions if they do not properly disclose certain relationships 

that they have with attorneys and clients. Due to the threat of such penalties, some 

employers will likely forego receiving professional legal advice about the rights and 

responsibilities under the NLRA. How does this help employees? 

Answer 13. The employer-consultant reporting proposed rule is currently in the 

comment period, and the Department will review and consider any and all comments submitted on the matter addressed in this question. The Department is committed to protecting the rights of employers, employees, unions, and their members 

as prescribed by the LMRDA. 

The potential sanctions for reporting violations derive from section 209 of the 

LMRDA, and they apply equally to unions, union officials, employers, and consultants. There are no civil sanctions, monetary or otherwise, for violations of the 

LMRDA reporting provisions. The Secretary, however, is authorized to bring a civil 

action for such relief (including injunctions) as may be appropriate, if it appears 

that any person has violated or is about to violate any of the reporting provisions. 

Criminal sanctions apply only to willful conduct and not merely to a failure to 

‘‘properly disclose certain relationships.’’ The Department also intends to continue 

its efforts to provide compliance assistance and outreach to employers and consultants, as it does with unions and their officials. 

SENATOR HATCH

Question 1a and b. I have serious concerns with the Office of Labor Management 

Standards proposed changes to the current LMRDA reporting requirements under 

section 203(b). Under current law, organizations that provide services where the object is to persuade employees in the midst of a union campaign to disclose their fees 

and arrangements. But, for more than half a century, the LMRDA has exempted 

services that amount to ‘‘giving or agreeing to give advice,’’ which has long been interpreted to exclude law firms and consultants performing services like reviewing 

statements and materials to determine their legality without having any interaction 

with employees. 

Under the DOL’s proposed rule, the advice exemption will be more or less obliterated, and any counseling that is directly or indirectly related to persuading employees will be reportable. This would presumably include reviewing materials drafted 

by employers to determine if they will make the employer vulnerable to unfair labor 

practice charges. 

In your view, won’t this proposal discourage employers from seeking legal assistance before communicating their views on unionization to employees? Will we not 

see an increase in unfair labor practices among un-counseled employers, especially 

among smaller employers, as a result of this proposal? How is this desirable national labor policy? 

Answer 1a and b. Under the proposed rule, the LMRDA will continue to exempt 

reporting for agreements that exclusively consist of services that constitute the ‘‘giving or agreeing to give advice.’’ The proposed rule would change the way that the 

reporting trigger, pursuant to the exemption, is applied. 

As stated above, the employer-consultant reporting proposed rule is currently in 

the comment period, and the Department will review and consider any and all comments submitted on the matter addressed in this statement and question. The Department is committed to protecting the rights of employers, employees, unions, and 

their members as prescribed by the LMRDA. 

Question 2. The Department of Labor’s controversial changes to the reporting requirements under the LMRDA were released on the same day the NLRB announced 

a change to union election rules, paving the way for quickie elections and eliminating procedural protections for employers and employees. So, basically, in a single 

day, the Labor Department proposed to limit the amount of information an employee would receive and the NLRB proposed to limit the time an employee has to 

consider this information before having to vote for or against a union. 

To what extent were the DOL and NLRB communicating regarding these two proposals? Was it purely a coincidence that these two highly controversial proposals 
116 

were announced on the very same day and with, at least initially, the very same 

60-day comment period? Combined, what do these two rules say about the Obama 

administration’s respect for a worker’s right to be fully informed when deciding 

whether to join a union? 

Answer 2. The Department did not engage in communication with the NLRB 

about these proposed rules, nor did the Department and the NLRB coordinate the 

publication dates of the two proposed rules. Moreover, as you are aware, the NLRB 

is an independent Federal agency that does not report to the White House, OMB, 

or the Department. 

While the Department cannot comment on the NLRB’s proposed rule, the Department, as stated in the NPRM, views reporting of persuader agreements or arrangements: 

‘‘as providing employees with essential information regarding the underlying 

source of the views and materials being directed at them, as aiding them in 

evaluating their merit and motivation, and as assisting them in developing 

independent and well-informed conclusions regarding union representation and 

collective bargaining.’’ 76 FR 36182. 

Thus, transparency for workers is at the core of this proposed rule, as the proposed rule helps ensure that workers are fully informed about the information bearing on the exercise of their protected rights. Id. 1, see also 76 FR 36187. 

Questions 3 and 4. We are currently facing the highest unemployment levels in 

recent memory. Job creation continues to be sluggish and more and more Americans 

are simply giving up in their efforts to find a job. 

Do you agree that reducing unemployment, training workers for new jobs, and 

stimulating the economy should be the Department of Labor’s highest priority? If 

so, what do the proposed changes to the LMRDA reporting requirements (Section 

203(b)) have to do with these goals? Will any new jobs be created as a result of this 

proposed rule? 

Answer 3 and 4. The Department of Labor is currently working on multiple fronts 

to reduce unemployment and create new jobs. Securing a sustainable economic recovery is critical. The Department will continue to help foster an economy in which 

good jobs are available for everyone. Additionally, the Department has ongoing responsibilities to administer and enforce numerous statutes that protect workers and 

establish workplace standards, including the LMRDA. DOL continues to perform 

these functions as well. 

Question 5a. I have a number of questions as to how the DOL came up with the 

proposed changes to reporting requirements for persuader activities under the 

LMRDA. 

What empirical evidence do you have to support this rule change after 50 years 

of consistent, well-established interpretation of the advice exemption under Section 

203 of LMRDA aside from the few questionable academic studies cited in the Notice 

of Proposed Rulemaking? 

Answer 5a. In proposing these changes to section 203 reporting, and as explained 

in the NPRM, the Department reviewed the available peer-reviewed literature on 

the subject of labor relations consultants. See 76 FR 36185-87. Additionally, we reviewed our own reporting data, which, in connection with the available literature 

showing that, on average, 75 percent of employers hire consultants to orchestrate 

counter-campaigns to union organizing efforts, appeared to reveal potentially significant underreporting. See 76 FR 36186. 

Question 5b. Further, the Department’s most recent view of the advice exemption, 

including the distinction between direct and indirect contact, dates from 1989, and 

was not subject to notice-and-comment rulemaking. See 76 FR 36179-82. 

What are the harms this rule is trying to address? Have a large number of employees complained to the Department of Labor about legal advice their employers 

receive from law firms during union organizing campaigns? If so, why weren’t these 

complaints cited in your proposed rule? 

Answer 5b. The Department does not have a record of complaints from employees 

regarding legal advice their employers receive from law firms. The NPRM does not 

propose that such activity triggers reporting. As explained in the NPRM and above, 

the reporting seeks to provide workers with information about the underlying source 

of the views and materials being directed at them, which the NPRM demonstrates 

is not currently available to workers. See 78 FR 36186. 
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Question 5c. To what extent is this proposed rule the result of consultation with 

union leaders and organizers? And, how much input, if any, did you seek from employers and business owners? 

Answer 5c. The Department sought input from the public at a stakeholder meeting held in May 2010, which was attended by unions and their officials, as well as 

employers, consultants, and their representatives. The Department provided notice 

of the meeting to the public through a Federal Register notice. The Department’s 

own experience in interpreting and administering section 203 of the LMRDA, along 

with the input provided at the stakeholder meeting served as the basis of the Department’s proposal. 

RESPONSE TO QUESTIONS OF SENATOR HARKIN BY DEBORAH KING

Question 1. It’s great that so many employers have made the choice to contribute 

to the funds that you’re describing. Can you talk about the benefits that employers 

reap from their contributions? What’s the case that you would make to an employer 

(or group of employers) in another State or region for why they should set up funds 

like 1199 runs? 

Answer 1. Virtually all healthcare employers have experienced shortages or skill 

gaps in their workforce, which have made it difficult for them to deliver quality, 

cost-effective health care. For example, shortages of nurses have resulted in increased recruitment and wage costs, with employers needing to go abroad to recruit 

and/or being forced to increase salaries dramatically because of the shortages. Other 

strategies, such as the use of agency nurses or excessive overtime have jeopardized 

consistency and quality of care. I would tell employers that experience with joint 

labor management training funds have shown that with assistance, there are many 

incumbent healthcare workers in service or clerical jobs who can be supported to 

become the pipeline to fill such shortages and/or to enhance their skills to meet 

changing demands. The ROI is great, reducing the cost of recruiting and inflated 

salaries and providing the skills needed to achieve the clinical and patient care outcomes, which are increasingly affecting reimbursement rates. 

In addition, training funds have created added value for and positive engagement 

and cooperation between unions and employers and have spurred collaborative relationships that might not otherwise exist. Training funds are helping both employers 

and our members change and adapt to the shifting delivery models in healthcare. 

Negotiated education benefits are a draw for workers and an important factor in retention that helps both employers and workers. Training incumbent workers and 

providing them with access to a career ladder increases retention and employee morale and brings workers with demonstrated commitment to their employers and to 

the job into higher skilled occupations. 

Training funds also help create systemic changes in the education system, making 

colleges and other educational vendors more responsive to worker and industry 

needs. 

Question 2. As you know, this committee has jurisdiction over the Workforce Investment Act and many of us are working hard to get that reauthorized in the near 

future. Along with WIA, what do you think the Federal Government can do to support programs like yours that are working so well to move people into the middle 

class? Are there any Federal policy barriers that impede the job-training system’s 

ability to scale up best practices? 

Answer 2. We totally support the value of WIA and its reauthorization, however, 

WIA itself could be strengthened to support training management initiatives like 

ours. WIA’s value structure does not reflect many of the positive attributes that 

labor-management partnerships bring to the table. 

• The current WIA system favors short-term training and immediate placement 

into entry-level/low-wage positions. In general, training within the healthcare industry requires a much longer timeline than training within other industries. The 

healthcare industry requires highly skilled workers and often requires participants 

to obtain college level courses and credentials. Labor-management partnerships not 

only value job placement, but they emphasize career pathways and lifelong learning. 

• Secondly, incumbent healthcare workers are an important source to fill higher 

level positions and WIA does not currently include incumbent workers as a significant target of public investment. In addition, programs that promote incumbents 

can open entry level positions for the unemployed. 

• WIA does not have performance measure metrics that document industry-recognized certificates, wage gain, entry into college, nor outcomes for reaching targeted 

populations with multiple barriers. WIA is a ‘‘work first’’ model that counts job 
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placement, and not occupational development and employment with responsible employers. 

Question 3. In a previous hearing on this topic, one of our witnesses talked about 

how they felt that you either needed to be rich or poor to get benefits from the government and that those in the middle were being left behind. In that context, can 

you tell us more about the idea behind the Job Security Fund? What is working to 

help workers who experience periods of unemployment and underemployment stay 

in the middle class? 

Answer 3. The idea behind the JSF was that employers in one industry (in this 

case, healthcare) in a particular region would take responsibility for the workforce 

in that region (previous experience has shown that there was a 3 to 7 percent turnover rate each year through attrition and retirement). It made sense to create an 

employment service and re-training benefits to keep experienced workers in the industry. Grants to labor management partnership to seed such projects would be 

helpful in replicating this model in other parts of the country. In addition, Department of Labor funding to support short-term training where there is a demonstrated 

employer commitment to employ workers laid off in the same industry could help 

workers stay in well paying, high road jobs. 

Question 4. When you think about the career pathways in the healthcare and allied health sectors, what do you (or employers or Federal, State, or local governments) need to do to make more of the jobs along those pathways (even entry-level 

jobs) ‘‘good jobs’’ with family-sustaining wages, health benefits, and retirement 

plans? 

Answer 4. Promote incumbent worker training: Incumbent worker training and 

education has proved to be an effective strategy to move workers into ‘‘good jobs.’’ 

Training can give workers the skills and credentials to advance along a career ladder into a new position or occupation, and to move out of jobs that then become new 

employment opportunities for others. This training ‘‘escalator’’ can have an especially dramatic impact on entry-level workers who are often stuck in low-wage jobs 

because they lack the skills or education to advance into family-sustaining occupations and careers. In Los Angeles, for example, the Worker Education & Resource 

Center has been training lower-wage workers for high-demand jobs and occupations 

in healthcare. Program graduates have advanced to new occupations such as Registered Nursing, Licensed Vocational Nursing, and Health Information Technologist, 

resulting in 359 new vacancies in low-wage healthcare occupations such as nursing 

attendants, clerks, and laboratory assistants. With ARRA funds, WERC’s program 

is now also helping unemployed individuals gain the skills and education necessary 

to apply for these vacancies. Once employed, incumbent worker training can repeat 

the job creation cycle. 

In addition to training, increasing the minimum wage and fully implementing 

healthcare reform will dramatically improve the quality of these jobs. 

RESPONSE TO QUESTION OF SENATOR HARKIN BY SARAH COREY

Question 1. Can you please provide the committee with additional detail comparing executive pay to the pay of the average employee at IceStone? What is the 

ratio between the CEO’s annual compensation compared to the annual compensation of the median manufacturing worker? 

Answer 1. IceStone’s pay ratio between the CEO and an hourly factory employee 

is 8:1. The pay ratio between the next level of leadership (which includes IceStone’s 

VP of Sales & Marketing, senior director of business development, controller, and 

managing partner) and an hourly factory employee is 6:1. 

RESPONSE TO QUESTIONS OF SENATOR ENZI BY SARAH COREY

Question 1. Thank you very much for your testimony. You mentioned that 

IceStone’s growth would not be possible without State and Federal capital. Now that 

the company has grown to employ 45 full-time men and women and you have a 

growing customer base, I have a two-part question. First, for this fiscal year, what 

percentage of capital is generated from State and Federal programs? And second, 

would IceStone continue to be a viable company without such support? 

Answer 1. This year, IceStone, LLC did not receive any capital from State or Federal programs. In previous years, IceStone has received a cumulative 5 percent of 

its capital from State and Federal programs. 

IceStone has benefited from such programs, without which its products would not 

be where they are today. In 2007 for example, the company received support from 

the New York State Environmental Investment Program to purchase a new polisher 
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1The material referred to may be found at http://www2.illinois.gov/cms/business/sell2/bep/ 

Documents/BEPlCouncillDocuments/BusinesslEnterpriselProgramlFY2010lReport.pdf. 

and construct a foundation for the equipment. This capital investment has resulted 

in increased product yield; a greater percentage of the slabs IceStone produces each 

month are saleable with this new machine. 

Question 2. I read in your testimony about IceStone’s ‘‘social bottom line,’’ as well 

as the ‘‘capacity building’’ programs the company is able to provide its employees. 

Are IceStone employees unionized? 

Answer 2. No, IceStone employees are not unionized. 

Question 3. I understand that IceStone pledges to pay employees a ‘‘living wage’’ and your starting wage is $10 an hour. Does the living wage take into account the 

size of the employee’s family or number of dependents? 

Answer 3. At this time, IceStone pays full-time employees a living wage, which starts at $10 per hour with benefits that include a dental and vision plan. As our 

revenues increase and loans become readily available to IceStone, we will have the 

ability to provide living wages that do factor in the size of the worker’s family. 

Question 4a and b. It sounds like IceStone does a great deal of job training for 

employees ‘‘in house.’’ Have you participated or drawn employees from any Federalor State-funded job training programs? 

If so, do you have suggestions for improving these programs? If not, are you aware 

of Federal or State funded job training programs in your area? 

Answer 4a and b. Yes; IceStone has worked with the Brooklyn Workforce Initiative, a government-funded non-profit, to recruit skilled workers. 

RESPONSES TO QUESTIONS OF SENATOR ENZI BY TOM PRINSKE

Question 1. Your business experienced a substantial amount of growth after Illinois State Governor Edgar signed ‘‘The Minority, Female and Persons with Disabilities Business Enterprise Act’’ into law. From your testimony, you also mentioned 

that you have worked with your local municipality—the city of Chicago—to create 

incentives for the city to work with businesses owned by persons with disabilities. 

How many business owners are benefiting from these two laws? 

Answer 1. I have attached the most recent annual report from the State of Illinois’ 

Business Enterprise Program (BEP) 1 for you to reference. The report provides the 

most recent details for all three groups in the program, minority (MBE), woman 

(WBE) and persons with disabilities (PBE). According to the attached report, there 

are disabled-owned businesses participating in the BEP program, and together they 

accounted for $48 million in contracts with the State of Illinois. 

In addition to providing the annual report, BEP runs the certification process 

which allows entrepreneurs with disabilities to become certified to participate in the 

program. This certification has proven more valuable for my company in our dealings with the private sector than in our dealings with the State of Illinois or the 

city of Chicago, because we are able to use it to position our company as a disabilityowned vendor for purposes of corporate diversity sourcing and social responsibility 

programs. Although my company has not been able to use the certification to obtain 

subcontracts from companies doing business with Illinois or Chicago, other disability-owned companies have been able to use the certification successfully in the 

subcontractor arena as well. 

Unfortunately, the BEP program did not bear the fruit for business owners with 

disabilities as much as I hoped it would. While the 2010 BEP report shows a reasonable participation by PBEs, the fact is the numbers include both business owners 

with disabilities and non-profit businesses that employ high percentages of disabled 

workers. While the original amendment did not have non-profits in the language, 

unbeknownst to me, a few years later it was amended again to include non-profits. 

Also, it must be noted that the BEP annual report does not distinguish between 

business owners with disabilities and non-profits when breaking down the numbers. 

The only time I am aware of the report separating the PBE for-profits and the nonprofits is in the beginning of the report where it shows 112 non-profits and 128 total 

disability-owned vendors. The original intent of the legislation was to promote the 

use of for-profit businesses owned by persons with disabilities as it promotes the use 

of minority-owned and women-owned businesses. I have also attached a copy of the 

highlights of legislation we are proposing, to correct this flaw. If passed, it will in 

part, require the program to distinguish between business owners with disabilities 

and non-profit employment programs like sheltered workshops. This will then allow 

the program to be held accountable for the low participation and or, not achieving 
120 

the goals of the statute which is 2 percent of State expenditures. In regard to the 

city of Chicago, unfortunately, business owners with disabilities have not fared 

much better. I believe that there are about the same number of for-profit businesses 

certified in the city of Chicago’s program as in the State of Illinois program (16– 

18). The problem there seems to be twofold. First, the disability-owned business initiative for Chicago is totally separate from the successful MBE and WBE programs 

in the city, which have explicit goals and typically exceed those goals. Second, the 

disability-owned business program for Chicago is based on a confusing voucher system that has proven difficult to understand and use and has not been adequately 

promoted by the city. 

I believe at the time these two pieces of legislation were introduced, we took the 

best possible approach to getting something done. In my opinion, and if I had an 

opportunity to develop the legislation now, I would try to include persons with disabilities in the definition of a minority, as opposed to making an entire separate 

group. That way, we could establish goals for disability-owned businesses that 

would be similar to the goals that have been established for minority-owned and 

women-owned businesses. This would ensure total inclusion into existing programs 

that are already effective. 

After having said all that, I guess you would be wondering how I was able to grow 

my business the way I have. The answer is through private sector opportunities. 

The one extremely beneficial thing both programs did was certify business owners 

with disabilities in their respective programs. I then took my certifications to private sector companies and their procurement diversity programs and asked if their 

programs were inclusive for business owners with disabilities. In almost every case 

the answer was yes. In my case, they then would provide me with little opportunities which grew into bigger ones until we got where we are today. While I seem to 

be one of the most successful stories coming out of either program, the irony is, our 

company does not show up in either program’s reporting. I have a total of zero direct 

contracts or sub-contracts with either the State of Illinois or the city of Chicago. 

However, without my certifications, I’m out of business. That is why what USBLN 

is doing with their Disability Supplier Diversity Program (DSDP) is vital to the 

long-term growth of promoting businesses owned by persons with disabilities. As 

you can imagine, with DSDP certifying disabled-owned companies like mine, the 

USBLN has been successful in securing private sector commitments from large corporations, opening opportunities for the certified businesses, and linking corporations with credible vendors that fit into their existing social responsibility programs. 

I hope this long answer was helpful to you. In closing, I would just like to add 

that the Federal Government’s position with how they view business owners with 

disabilities is very important to the work we are all doing here on the local level. 

We truly need you to step up and agree that disability-owned businesses can and 

should benefit from the same Federal incentives that have long existed for minorityowned and women-owned businesses. 

ATTACHMENT.—HIGHLIGHTS OF LEGISLATIVE CHANGES TO THE BUSINESS ENTERPRISE

FOR MINORITIES, FEMALES, AND PERSONS WITH DISABILITIES ACT AND THE ILLINOIS

PROCUREMENT CODE

• Distinguishes a business owned by a person with a disability as a separate business from that of a not-for-profit agency serving people with severe disabilities. 

• Provides same opportunities and preferences to obtain State contracts to persons with disabilities who own businesses as those afforded to businesses owned by 

minorities, females, veterans with disabilities, and not-for-profit agencies serving 

people with severe disabilities. 

• Ensures at least one business owned by a person with a disability is appointed 

as a member of the Business Enterprise Council as indicated in the Business Enterprise Act. 

• Ensures two representatives from businesses owned by a person with a disability are appointed to the State Use Committee as indicated in the Procurement 

Code. 

• Includes businesses owned by a person with a disability in the Procurement 

Code requirement to develop a 5-year plan for increasing the number of products 

and services purchased for females, minorities, veterans with disabilities, and notfor-profit agencies serving people with severe disabilities. 
121 

• Distinguishes businesses owned by a person with a disability from those of notfor-profit agencies serving people with severe disabilities in the Business Enterprise 

Act Annual Report analysis of goal achievement and summary of the number and 

dollar amount of contracts awarded. 

[Whereupon, at 12:25 p.m., the hearing was adjourned.] 

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