U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

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

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

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

89–538 2016

IMPLEMENTATION OF 2012 UNEMPLOYMENT 

INSURANCE REFORMS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

APRIL 16, 2013

Serial No 113–HR03 

Printed for the use of the Committee on Ways and Means 

( 


joloto on DSKB35BYQ1 with HEARING
ii 

COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HUMAN RESOURCES 

DAVID G. REICHERT, Washington, Chairman 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

TOM REED, New York 

CHARLES W. BOUSTANY, JR., Louisiana 

LLOYD DOGGETT, Texas 

JOHN LEWIS, Georgia 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 


joloto on DSKB35BYQ1 with HEARING
iii 

C O N T E N T S 

Page 

Advisory of April 16, 2013 announcing the hearing ............................................. 2 

WITNESSES 

Bill Starks, Director, Unemployment Insurance Division, Utah Department 

of Workforce Services, Testimony ....................................................................... 7 

The Honorable Tommy Williams, Texas State Senator, District 4, Testimony .. 17 

Rich Hobbie, Executive Director, National Association of State Workforce 

Agencies, Testimony ............................................................................................ 25 

Larry Kidd, Principal/Chief Executive Officer of Reliable Staffing Services 

and RSS Professional, LLC, Testimony ............................................................. 39 

Judy Conti, Federal Advocacy Coordinator, National Employment Law 

Project, Testimony ................................................................................................ 49 


joloto on DSKB35BYQ1 with HEARING

joloto on DSKB35BYQ1 with HEARING
(1) 

IMPLEMENTATION OF 2012 UNEMPLOYMENT 

INSURANCE REFORMS 

TUESDAY, APRIL 16, 2013 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HUMAN RESOURCES, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2:25 p.m., in room 

1100, Longworth House Office Building, the Honorable Dave 

Reichert [Chairman of the Subcommittee] presiding. 

[The advisory of the hearing follows:] 


joloto on DSKB35BYQ1 with HEARING
2 

HEARING ADVISORY 

Chairman Reichert Announces Hearing on the Implementation of 2012 Unemployment Insurance 

Reforms 

1100 Longworth House Office Building at 2:00 PM 

Washington, April 9, 2013 

Congressman Dave Reichert (R–WA), Chairman of the Subcommittee on Human 

Resources of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing reviewing the implementation of reforms to the unemployment insurance system contained in Public Law 112–96, The Middle Class Tax 

Relief and Job Creation Act of 2012. The hearing will take place at 2:00 P.M. 

on Tuesday, April 16, 2013, in room 1100 of the Longworth House Office 

Building. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. Witnesses will include public and private sector experts on unemployment benefits and policies designed to promote reemployment. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and 

for inclusion in the printed record of the hearing. 

BACKGROUND: 

In March 2013 (the most recent official data), the U.S. unemployment rate was 

7.6 percent, with 11.7 million individuals unemployed, of whom 4.6 million were 

long-term unemployed—defined as unemployed for 27 weeks or longer. As of the 

week ending March 16, 2013, approximately 5.2 million individuals were collecting 

State or Federal unemployment benefits. 

The Federal-State Unemployment Insurance (UI) program, created by the Social 

Security Act 1935, assists unemployed individuals by offering weekly unemployment 

benefit checks while they search for work. In order to be eligible for benefits, jobless 

workers must have a history of attachment to the workforce and must be able and 

available for work. 

As a result of a series of laws enacted since 2008 to provide Federal extended benefits on a temporary basis, the maximum number of weeks of total unemployment 

benefits payable per person grew by late 2009 to a record 99 weeks, including up 

to 73 weeks of federally-funded benefits. Today, long-term unemployed individuals 

in most States are eligible for a maximum of 63 weeks of total benefits. From July 

2008 through December 2012, a total of $208 billion was spent on Federal extended 

unemployment benefits, with most of that cost supported by general revenues. 

On February 22, 2012, the President signed P.L. 112–96, The Middle Class Tax 

Relief and Job Creation Act. This legislation extended and reformed the Federal 

Emergency Unemployment Compensation (EUC) program for the remainder of 2012, 

which was subsequently extended through December 2013. This legislation also included landmark reforms to the permanent unemployment program, such as creating new job search requirements for Federal benefits, permitting States to have 

new flexibility to seek ‘‘waivers’’ to promote pro-work reforms, allowing States to 

screen and test certain UI applicants for illegal drugs, requiring ‘‘reemployment eligibility assessments’’ (REAs) for the long-term unemployed, and requiring States to 

recover more prior overpayments of UI benefits. The initial implementation of these 

2012 reforms was previously explored during a Human Resources Subcommittee 

hearing in April 2012. 

In announcing the hearing, Chairman Reichert said, ‘‘Fourteen months ago, 

Republicans and Democrats in the House and the Senate agreed on commonsense reforms to the unemployment insurance system designed to help 

more Americans return to work sooner. The President signed those policies 


joloto on DSKB35BYQ1 with HEARING
3 

into law, but the administration has since been selective in implementing 

some policies and has created barriers to successfully helping states take 

action on other policies. This hearing will help us evaluate how the administration has implemented the 2012 reforms and determine what we can do 

to help more Americans collect paychecks instead of unemployment 

checks. 

FOCUS OF THE HEARING: 

The hearing will focus on the implementation of reforms to unemployment benefits enacted in P.L. 112–96, The Middle Class Tax Relief and Job Creation Act. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance 

with the formatting requirements listed below, by Tuesday, April 30, 2013. Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225–1721 or (202) 

225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any supplementary materials submitted for 

the printed record, and any written comments in response to a request for written 

comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will 

be maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word format and MUST 

NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised 

that the Committee relies on electronic submissions for printing the official hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://www.waysandmeans.house.gov

f 

/. 

Chairman REICHERT. Welcome. This hearing is now in order. 

I want to welcome you to today’s hearing on the progress of reforms 


joloto on DSKB35BYQ1 with HEARING
4 

enacted last year designed to help more unemployed individuals, 

especially the long-term unemployed, get back to work. 

Reforms enacted in 2012 were aimed at connecting those in need 

with the resources necessary to succeed. Today we will take a look 

at what the administration and States are doing to implement 

these reforms. As we saw in the most recent disappointing jobs report, there is much more that needs to be done to help the unemployed get back to work. Overall, we are still 2.5 million jobs short 

of where the President predicted we would be at the end of 2010 

under his trillion-dollar 2009 stimulus plan. 

Too many people are out of work. Currently, 4.6 million people, 

or 40 percent of the unemployed, are without a job for 6 months 

or longer, an unprecedented level prior to this administration. 

Sadly, many Americans who have fallen on hard times find themselves without the guidance or resources needed to identify work 

opportunities. 

When you take into account the unaccounted millions who have 

lost hope and given up on looking for work altogether, the official 

unemployment rates skyrockets to over 11 percent. This is unacceptable. We cannot sit idly by when people need help finding jobs. 

We must do more to lift people up and instill hope in those who 

need it most, so no one falls through the cracks. 

Solutions exist and we can make changes that lead to more hope, 

opportunity, and employment. That is why, 14 months ago, Republicans and Democrats agreed on commonsense reforms, which 

President Obama signed into law, to help more Americans get back 

to work and provide for their families. Under those reforms, for the 

first time States can apply for waivers to pay people for working 

or getting training to go to work instead of simply receiving an unemployment check. However, instead of helping States test innovative ways to help people get back to work, the Department of Labor 

issued 24 pages of grueling application requirements, and actually 

a longer application process than applying for health care under 

the new health care law. These requirements have completely discouraged States from applying altogether. 

Even though a senior Department of Labor official testified before this Subcommittee last April indicating that DOL would consider revising their requirements if no States applied, the Department has yet to make any changes to simplify things for States trying to help people find work. The 2012 reforms also now allow 

States to screen and test unemployment insurance recipients for illegal drugs, starting with those who lost their job due to drugs or 

who need to pass a drug test to land a new job. Such reforms ensure that those who break the law through substance abuse are not 

receiving benefits over law-abiding citizens truly in need of help. 

It is interesting that while DOL was able to issue 24 pages of 

lengthy, demanding regulations for waiver applicants, the Department has yet to issue a single page of guidance to States that 

would allow them to screen for drug tests. In addition to helping 

people find work, the 2012 reforms also ensure that all long-term 

unemployment benefit recipients are actively engaged with the 

States to find work, and that States must check on recipients to determine what services and activities they need to get back to work. 


joloto on DSKB35BYQ1 with HEARING
5 

As we will learn in today’s hearing, this type of meaningful interaction between States and recipients helps struggling individuals 

discover opportunities for success. A year ago, this subcommittee 

met to discuss the early implementation of these commonsense reforms, but we are left with more questions than answers, many of 

which are still outstanding. 

Today, we are checking back in. We are hearing from the State 

and local officials and employers who have been directly involved 

in the implementation of these reforms. But mostly we are looking 

for guidance on what we can do to help more Americans collect 

paychecks instead of unemployment checks. All Americans deserve 

answers about how these policies are working and what else we 

can do to help. 

And, Mr. Doggett, we recognize you for 5 minutes to make your 

opening statement. 

Mr. DOGGETT. Thank you so much, Mr. Chairman. You will recall that the last time this Subcommittee got together, it was because of criticism that the administration was just offering too 

much leniency and flexibility to the States, and today’s hearing 

seems to focus on the administration offering too little flexibility for 

waivers from another program. Sometimes I get the feeling that for 

our Republican colleagues the porridge is either too hot or too cold 

but never just right so long as it is President Obama’s administration that is doing the serving. 

Rather than refight all of our past battles, I believe that we 

should be focused on what policies we have adopted in the past 

that have been effectively implemented to help unemployed Americans and what else can we do to advance that goal in the future. 

Unfortunately, as we meet today, there are about 90,000 Texans 

who are among about 2 million Americans who have had or will 

have their unemployment insurance check cut by about 10 percent, 

which is a pretty good hit for someone who is out looking for a job 

and trying to survive with their family in the meantime. And really 

those who are unemployed today in America have faced a bit of a 

triple whammy. They get their unemployment check cut, they are 

subject to cuts in job training and in employment services, which 

are being reduced at the very time they need help finding work, 

and according to the Congressional Budget Office, the overall effect 

of sequestration will be a reduction in the number of jobs that are 

out there and a reduction in economic growth for those seeking to 

enter the job market. 

We all talk about wanting to get people back to work, but if we 

fail to provide folks with the tools to do it, it is just so much talk. 

I look forward to hearing today from Judy Conti about at least one 

area that is part of the need to strengthen our Nation’s employment service system to provide early and intensive personal assistance to those who are unemployed. 

Last year Congress did enact a series of changes in our unemployment insurance law that I think were overall a step in the 

right direction. Senator Ron Wyden came to this Subcommittee and 

I joined with him in working on a provision that is helpful to a few 

people who are unemployed in special situations where the focus 

can be on opening their own business rather than continuing to 

search for a job. There is some indication that these programs have 


joloto on DSKB35BYQ1 with HEARING
6 

resulted in more people being employed than those who are traditional unemployment insurance recipients. 

The same is true concerning a reform that we adopted concerning 

work sharing. Though not many new States have signed onto the 

program, the 26 that have these programs seem to have had some 

success. There was a provision relating to providing waivers under 

the UI program, and a provision that dealt with drug testing for 

a limited group of applicants. While I think the evidence is still 

lacking as to whether the savings from such testing exceed the cost 

of the testing, I am pleased that Senator Williams is here from 

Texas because if we are to effectively implement this program, it 

would appear to me that he has done an effective job of doing it 

in a bipartisan way with some good, reasonable safeguards in the 

legislation. 

I thank you, Senator, for your leadership on that issue. 

Again, as we sit here today, we just need to realize that when 

it comes to helping the unemployed, our first and most immediate 

goal should be to find a sensible and balanced alternative to the 

budget cuts encompassed in the sequestration that is now in effect 

and to recognize that the best remedy for unemployment is a 

strong economy and that when things are done that blunt economic 

growth, they hurt the unemployed first and foremost. 

Mr. Chairman, I look forward to hearing from all of our witnesses and to working with you on the objectives that you have laid 

out. Thank you very much. 

Chairman REICHERT. Thank you, Mr. Doggett. 

Chairman REICHERT. And without objection, each Member will 

have the opportunity to submit a written statement and have it included in the record. 

I want to remind our witnesses to please limit your oral testimony to five minutes; however, without objection, all of the written 

testimony will be made a part of the permanent record. While Mr. 

Doggett and I get to make our political statements at the beginning, as you can tell, everyone on this panel joins with you in trying to make a real concerted effort to get people back to work. That 

is the bottom line that you heard from both of us today. And we 

are fortunate to have you here as our panelists. We hope to learn 

from you and find ways that we can accomplish that. 

So, Mr. Starks, Bill Starks, is the director, Unemployment Insurance Division, Utah Department of Workforce Services. Welcome. 

The Hon. Tommy Williams, Texas State Senator from District 4. 

Welcome. 

Rich Hobbie, executive director, National Association of State 

Workforce Agencies. Thank you for being here. 

Larry Kidd, principal/chief executive officer of Reliable Staffing 

Services and RSS Professional Services. And Judy Conti, Federal 

advocacy coordinator, National Employment Law Project. Welcome 

to you also. 

Mr. Starks, please proceed with your testimony. 


joloto on DSKB35BYQ1 with HEARING
7 

STATEMENT OF BILL STARKS, DIRECTOR, UNEMPLOYMENT 

INSURANCE DIVISION, UTAH DEPARTMENT OF WORKFORCE 

SERVICES 

Mr. STARKS. Thank you, Mr. Chairman and Members of the 

House Human Resource Subcommittee. I appreciate the opportunity to provide you with our observation on last year’s UI reforms, reemployment opportunities, and share some of our discoveries that have shown some promising results. 

We had four significant discoveries through a pilot program that 

have some important implications and suggest we are now in an 

era where we can cost-effectively better serve and engage our UI 

claimants and achieve improved employment outcomes. 

First, we found there is a large job search readiness gap. Utah 

performed a control group study of about 505 claimants in our REA 

program. They initially rated their job search readiness at about a 

D-plus average. Through online workshops, we were able to improve that to a B-plus average. We learned that job search readiness gaps were larger than what we thought and present a bigger 

opportunity than we knew. 

Second, we found that many claimants who are not engaged can 

become engaged. We implemented an online work search readiness 

training program that involves about a 1- to 3-hour commitment 

for 2 weeks. About 31 percent of our claimants refused to participate. However, once their benefits were suspended, 25 percent of 

them completed it. 

Third, we found that the claimants returned to work sooner by 

engaging in meaningful work search activities. Claimants that participated decreased their duration on unemployment by a full week, 

producing significant savings to our trust fund. 

Lastly, our claimants not only responded well, they liked the 

tools. They voluntarily completed about a third more of the online 

workshops than they were required. 

Utah has designed a triaged approach to reemployment. We use 

online engagement immediately and graduate to staff-assisted engagement over time. We invested some of our ARRA funds to upgrade our job exchange system. We implemented a statewide online 

overview, evaluation and workshop system. We developed a Reemployment Support Services system that allows employment center 

staff to select claimants to engage in staff-assisted workshops, employment counseling, and job fairs. We implemented the REA program, and it is producing about $2 

in savings for every dollar invested. We implemented REAs on 

EUC claimants; however, we discovered engaging the claimants in 

the early stages of the process would provide far greater trust fund 

savings. 

Utah’s average UI duration went from a high of 18.2 weeks in 

2009 to 13.5 weeks at the end of 2012 as a result of some of these 

initiatives, and Utah has had a fairly strong economy. Last year’s 

act also required EUC claimants to register for work and engage 

and document an active work search. Utah requires this for all 

claimants and believes these requirements are good public policy 

and supports their enactment. 

Last year’s act also provided that DOL could enter into agreements with up to 10 States to provide demonstration projects that 


joloto on DSKB35BYQ1 with HEARING
8 

expedite reemployment and save unemployment dollars. The act 

limits the projects to subsidies for employers providing training, 

such as wage subsidies and direct disbursements to employers who 

hire claimants. However, the second provision requires that the 

disbursements are only permissible if the individual’s new wages 

exceed their prior weekly benefit amount and they only be used to 

pay the difference between the new weekly wage and the prior 

weekly benefit amount. In our opinion, this provision is a flaw and 

Congress should consider eliminating it. 

We implemented our own employer hiring incentive program in 

2010 called the Utah Back to Work program providing a $2,000 

hiring incentive to employers. Initially this appeared to be an ideal 

demonstration project; however, under the provisions within the 

law, it would be extremely difficult to market, as well as administer that program. 

In summary, virtually all data suggests that the sooner a State 

becomes actively involved in engaging UI claimants in reemployment activities, the sooner the claimants return to the workforce. 

We feel they need to establish clear and meaningful expectations 

for the claimants, that reemployment is a priority that requires a 

full-time commitment. Claimants need to be held accountable when 

directed to reemployment activities and understand that there are 

consequences if they choose not to participate. 

We would also like you to consider allowing States to use a small 

percentage, for example, 5 to 10 percent of any net trust fund savings generated from any enhanced reemployment or integrity efforts. And then finally, understand that all claimants are not committed to getting back to work. If we encourage them with meaningful tools and support, the vast majority of the claimants can become engaged and improve their job readiness. 

Thank you. 

Chairman REICHERT. Thank you, Mr. Starks. 

[The prepared statement of Mr. Starks follows:] 


joloto on DSKB35BYQ1 with HEARING
9 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 210 here 89538.001
10 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 211 here 89538.002
11 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 212 here 89538.003
12 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 213 here 89538.004
13 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 214 here 89538.005
14 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 215 here 89538.006
15 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 216 here 89538.007
16 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 217 here 89538.008
17 

f 

Chairman REICHERT. Senator, you are recognized for 5 minutes. 

STATEMENT OF HON. TOMMY WILLIAMS, TEXAS STATE 

SENATOR, DISTRICT 4 

Mr. WILLIAMS. Thank you, Mr. Chairman, Members. I am 

State Senator Tommy Williams. I represent the southeast portion 

of Texas, the southeast corner of the State, and the suburban areas 

on the northern and eastern parts of the greater Houston area. My 

Senate district overlaps Congressman Brady. He is my neighbor 

and my Congressman. I serve, as well as the 800,000 constituents 

I represent, I serve as chairman of the Senate Finance Committee, 

and we have jurisdiction over the State’s $196 billion biennial 

budget and all State tax policy. 

I am pleased to have an opportunity to appear before the Committee today and to testify about the Middle Class Tax Relief and 

Job Creation Act, Public Law 112-96. The bill contained major provisions, as you know, related to unemployment insurance and 

TANF benefits. There have been two bills that have been filed in 

the 83rd legislature in Texas that would enact drug testing provisions for certain unemployment insurance claimants authorized by 

House Resolution 3630. I am the author of Senate Bill 21, which 

relates to drug screening and testing as a condition for receiving 

unemployment compensation benefits by certain individuals. Its 

House companion is carried by Representative Brandon Creighton. 

Senate Bill 21 passed out of the State Senate 31 to nothing on 

Thursday, April the 11th. The bill had broad bipartisan support. It 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 218 here 89538.009
18 

would require applicants for unemployment insurance benefits to 

submit to drug screening if their only suitable work is for an occupation identified by the U.S. Secretary of Labor as one that regularly requires drug testing. 

If the applicant’s drug screening indicates that person has used 

illegal drugs, they can and would be required to submit to and pass 

a drug test before being eligible to receive unemployment insurance 

benefits. If the individual is required to take a drug test and tests 

positive, they would be ineligible for benefits and they must retake 

and pass the drug test no sooner than 4 weeks after the failed test 

in order to become eligible for unemployment insurance. 

There are also provisions that would allow people who had a 

false positive to challenge the test. The bill also allows those who 

test positive to continue receiving unemployment benefits if they 

enroll and attend a drug treatment program. I expect this bill will 

receive broad bipartisan support in the Texas House as it did in 

the Senate and for it to be on the Governor’s desk in a few weeks. 

The Texas Senate also passed Senate Bill 11, which subjects 

high-risk TANF applicants to drug testing, and those who fail the 

drug test would be disqualified from TANF benefits for 1 year. 

However, applicants who fail the drug test could reapply for benefits if they enter a drug treatment program. Applicants who tested 

positive for drugs three times would be permanently disqualified 

from receiving any TANF benefits. 

Senator Jane Nelson, author of Senate Bill 11, modified her 

original bill to address concerns that children would be hurt if 

TANF applicants flunked the drug test. The Senate version allows 

TANF benefits to continue helping dependents through is a third 

party known as a protective payee, if an adult applicant tested 

positive for drugs. This legislation also received broad bipartisan 

support and passed the Senate 31 to nothing on Wednesday, April 

the 10th. 

The bill would also remove all sanctions if an adult recipient who 

tested positive for drugs passes a new drug test after 6 months. 

The bill requires the Health and Human Services Commission to 

use the most efficient and cost-effective drug screening assessment 

tool that is developed jointly with the Department of State Health 

Services based on validated controlled substance use and assessment tools. 

It is my understanding that the Labor Department has not yet 

written regulations for the drug testing program. It is our hope 

that these regulations would be issued soon so that the State of 

Texas can implement the program when these two bills become 

State law on September 1st. 

Public Law 112-96 also creates a new cost-neutral waiver authority providing States with unprecedented flexibility on how they use 

their unemployment benefits to promote the type of pro-work reforms that led to successful welfare program reform in the nineties. 

Our State submitted a request on February the 24th of 2012. It 

was denied on March 16th of that same year. And on April 19th, 

the DOL issued another statement providing guidance on unemployment insurance demonstration products. 

Representative Burkett has introduced House Bill 3005 in the 

Texas House which would amend the labor code to allow the WorkVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
19 

force Commission to use money in the Unemployment Compensation Fund for reemployment demonstration projects pursuant to an 

agreement or waiver. We already have a very highly successful program in Texas called Back to Work that has been championed but 

our Lieutenant Governor, and under that program more than 5,000 

employers have made nearly 31,000 hires as of October 29th, 2012. 

Overall, 57.6 percent of the Texas Back to Work claimants were 

still employed in the quarter after the incentive period ended. The 

percentage jumps to 83.8 percent when you look at those placements which were successful. The Texas Back to Work placement 

program is $595 cheaper on average than the total benefit cost for 

a similar claimant who is not placed. 

Thank you, Mr. Chairman, and thank you, committee Members, 

for allowing me to update you on this, and I will be glad to take 

any questions. 

Chairman REICHERT. Thank you. 

[The prepared statement of Mr. Williams follows:] 


joloto on DSKB35BYQ1 with HEARING
20 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 219 here 89538.010
21 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 220 here 89538.011
22 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 221 here 89538.012
23 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 222 here 89538.013
24 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 223 here 89538.014
25 

f 

Chairman REICHERT. Mr. Hobbie, you are recognized. 

STATEMENT OF RICH HOBBIE, EXECUTIVE DIRECTOR, 

NATIONAL ASSOCIATION OF STATE WORKFORCE AGENCIES 

Mr. HOBBIE. Good afternoon, Chairman Reichert and Ranking 

Member Doggett and Members of the Subcommittee. I am Rich 

Hobbie, executive director of the National Association of State 

Workforce Agencies, known as NASWA. Our organization was 

founded in 1937, and since 1973 it has been a private nonprofit corporation financed by annual dues from Member States and other 

revenue. On behalf of NASWA, I am pleased to comment on impleVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARINGInsert offset folio 224 here 89538.015
26 

mentation of the Middle Class Tax Relief and Job Creation Act of 

2012. 

First, State workforce agencies have done an extraordinary job 

reacting to unprecedented challenges of the great recession, processing record numbers of claims and programming numerous law 

changes. The unemployment insurance system has paid claimants 

nearly a half trillion dollars from 2008 to 2012. But chronic Federal 

underfunding of UI program administration has left States with 

legacy computer systems averaging 25 years old. Upgrading a typical State UI benefit and tax system has been estimated to cost between $45 million and $100 million. 

NASWA urges Congress to enact the NASWA UI administrative 

financing reform proposal that guarantees States at least 50 percent of the Federal Unemployment Tax Act revenue for administrative purposes. 

Second, States applaud Congress for funding reemployment services and reemployment eligibility assessments, known as RES and 

REA. States have moved aggressively to meet with over 9 million 

emergency unemployment compensation or EUC claimants since 

the enactment of the Job Creation Act to comply with the in-person 

eligibility assessment requirement. States reported several startup 

problems, a short time period to plan and implement the program, 

the need for extensive cross training of staff, initially high claimant 

no show rates, and a lack of meeting space. However, most of these 

issues have been resolved. 

Based in part on this experience, NASWA strongly supports a 

permanent REA/RES program to assist jobless workers return to 

work. Recent evaluations demonstrate these programs increase employment and reduce unemployment insurance duration and are 

cost effective. 

NASWA recommends the Federal Government create a capped 

mandatory spending grant to States for REA and RES to ensure 

steady and sustainable funding. We know this might be hard in the 

current budget environment, but this would be a positive reform for 

workers, employers, and the government. 

Three, sequestration, which began on March 1st, applies to some 

mandatory programs. The EUC sequestration amount represents a 

significant portion of nondefense spending reductions, perhaps as 

much as 10 percent. But what seemed to be a simple percentage 

change of benefit amounts is complex for many States. A recent 

NASWA survey asked when States could implement sequestration 

of EUC. A third of States said they could implement quickly, but 

many States said that changes could not be implemented timely or 

with minimal cost. There still are as many as 10 States that do not 

know how they will make the changes. 

Four, on the nonreduction rule applied to weekly benefit 

amounts, NASWA recommends elimination. States should have the 

flexibility to determine unemployment benefit amounts. 

Five, NASWA does not have a position on drug testing, but State 

administrative funds are already constrained and funding might 

have to come from other UI administrative activities or other 

sources. 

Six, on the demonstration projects, USDOL guidance seems to be 

a mirror of Federal law. Federal law and guidance do raise conVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00030 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
27 

cerns for States, however. States would have to shift scarce administrative resources to plan, build, manage, evaluate, and regularly 

report on the approved projects. Projects could not result in any increased cost to the State UI trust fund, and calculating a wage subsidy based on different weekly benefit amounts for each claimant 

also could be a challenge for States and employers. 

Seven, before the Act, 22 States had short-time compensation 

programs. Since then, three additional States have implemented 

the program. 

Eight, on self-employment assistance, NASWA partnered with 

the USDOL for a national webinar to promote SEA programs. 

Fourteen States participated in that webinar, but only four States 

have active programs as of now. 

Nine, on data exchange standardization, NASWA agrees that 

data in various publicly funded programs could be collected, stored, 

and exchanged more efficiently. 

NASWA and its Members are currently engaged in two successful standardized data exchange systems, the State Information 

Data Exchange System between employers and States and the 

Interstate Connection Network among States. 

Mr. Chairman, thank you for the opportunity to testify. I look 

forward to answering questions. 

Chairman REICHERT. And thank you. 

[The prepared statement of Mr. Hobbie follows:] 


joloto on DSKB35BYQ1 with HEARING
28 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 363 here 89538.016
29 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 364 here 89538.017
30 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 365 here 89538.018
31 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 366 here 89538.019
32 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 367 here 89538.020
33 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 368 here 89538.021
34 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 369 here 89538.022
35 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 370 here 89538.023
36 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 371 here 89538.024
37 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 372 here 89538.025
38 

f 

Chairman REICHERT. And now the chair will recognize Mr. 

Renacci to introduce our next witness. 

Mr. RENACCI. Thank you, Mr. Chairman. 

Today I have the privilege of welcoming a fellow Buckeye to the 

Committee. 

Welcome, Larry, and thank you for being here. 

Mr. Kidd has a unique perspective. Not only is he a business 

owner himself, but Larry’s business is putting Ohioans back to 

work and helping employers locate talent. Larry was recently appointed by Governor Kasich to the board of JobsOhio, a nonprofit 

corporation that helps create jobs in Ohio. He has firsthand knowledge about the difficulties facing the unemployed, as well as the 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 373 here 89538.026
39 

difficulties employers face during periods of long-term unemployment. 

Larry, I appreciate you taking the time away from your business 

to give us your perspective. I hope we hear from you and the other 

witnesses about how we can help make State unemployment programs more efficient and effective for job seekers, job creators, and 

the taxpayer. 

I yield back. 

Chairman REICHERT. Thank you, Mr. Renacci. 

Chairman REICHERT. Mr. Kidd, please continue with the testimony. You have 5 minutes. 

STATEMENT OF LARRY KIDD, PRINCIPAL/CHIEF EXECUTIVE 

OFFICER OF RELIABLE STAFFING SERVICES AND RSS PROFESSIONAL, LLC 

Mr. KIDD. Good afternoon, Chairman Reichert, Ranking Member 

Doggett, and other Members of the subcommittee. Thank you for 

the opportunity to testify before the Ways and Means Subcommittee on Human Resources. I am honored to be able to speak 

to you today. Again, my name is Larry Kidd, president and chief 

executive officer of Reliable Staffing Services of Jackson, Ohio. I 

graduated from Miami University in 1986 and earned an MBA 

from National University in 1989. 

From 1986 to 2003, I worked in various positions with three 

large corporations. During that period of time, I was promoted from 

an entry level employee to a director of a department. In 2003, I 

left my director’s position and became a partner in a small business, a third-party warehousing company. In 2 years, I was able to 

increase the business by two times. Consistently our team faced 

struggles in finding the right people for the right positions. I engaged the services of temporary staffing firms but found staffing 

firms could not meet our employment needs either. 

Having experienced the importance of finding and keeping key 

employees, my management staff and I formed a temporary staffing service, Reliable Staffing Services, or RSS. Our role was to recruit, screen, interview, hire, and place employees in client workplaces. As stated in our client agreements, RSS was the employer 

of record. This means that RSS was responsible for the FUTA, 

SUTA, worker’s compensation, and all other employee costs. 

Our company’s goal was to service our employment needs, but 

also to creatively supply a market that was underserved. As a 

former user of the temporary staffing service, my team was very 

familiar with the importance of finding the right people. In a short 

period of time, Reliable Staffing Service became one of the leading 

staffing suppliers in the region. In 2010, when the local economy 

experienced a downward shift, our clients’ customer orders were 

abruptly cut back. This resulted in layoffs of our employees. Our 

team worked diligently and soon we were able to secure additional 

clients that needed our workers. We tried to call back many of the 

laid-off workers, but found that they were happy receiving unemployment benefits and chose not to accept our offers for employment. 

We contacted the unemployment offices to explain our dilemma 

and were told by the unemployment staff that they were just simVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
40 

ply too many claims to process and they couldn’t follow up on all 

the employees. This attitude made it very challenging to get former 

employees back to work. 

There were several reasons employees chose not to return to 

work. Number one was they claimed it was too far to drive; number 

two, they claimed that they were making too much money on unemployment to return to work; number three, they were uncertain 

of the length of the assignment; number four, they admittedly 

could not pass a drug test; or number five, they could not afford 

to take a pay cut. 

As a small business owner, I found regulation, cost of compliance, and taxes to be extraordinary. Often I found my biggest hindrance to my company’s growth was not competition or the economy but burdensome government policy. In my staffing company, 

our cost structure is the cost of wages, cost of burden, plus our 

margin. We charge our clients based on these three items. If the 

cost of unemployment insurance increases, our company may or 

may not be able to pass these costs along to our client. If we cannot 

pass the cost along to the client, we must absorb the cost in our 

margins or simply lose the customer. This situation occurs more 

often than one may realize. 

Unemployment benefits should be short term and truly for the 

needy. Those unwilling to search for work or do not want to return 

to the workforce should not be eligible for unemployment benefits. 

Recipients of illegal drugs should be evaluated for treatment because they are likely unemployable. 

Unemployment should not be up to 99 weeks. Other programs 

should be implemented to keep recipients in the right frame of 

mind. Programs such as Ohio’s Learn to Earn or on-the-job training programs are much better for the employee, the employer, and 

society. These programs help keep employees fresh and motivated. 

I have the utmost respect for the small business owner. In some 

ways the small business owner is our country’s most at-risk employee. They carry the burden of growing a business, managing employees, properly applying government regulation, meeting customer demands, and creating that next best idea. Many times there 

is little or no return on investment for the small business owner. 

When increases in taxes, unemployment burden, or other governmental demands occur, the small business person must scramble to 

find a way to make it work. 

Please consider the impact increases have in unemployment burdens or other taxes have on them, the small business owner. Some 

reports State that 50 percent all employees work for the small business. If the risk does not equal the reward, small business people 

will not continue to take the risk with their new ventures. 

Chairman Reichert, Ranking Member Doggett and other Members of the Subcommittee, thank you for your time and allowing me 

to present my views today. 

Chairman REICHERT. Thank you for your testimony. 

[The prepared statement of Mr. Kidd follows:] 


joloto on DSKB35BYQ1 with HEARING
41 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 374 here 89538.027
42 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 375 here 89538.028
43 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 376 here 89538.029
44 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 377 here 89538.030
45 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 378 here 89538.031
46 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 379 here 89538.032
47 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 380 here 89538.033
48 

f 

Chairman REICHERT. Ms. Conti, you are recognized for 5 minutes. 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 381 here 89538.034 Insert offset folio 382 here 89538.035
49 

STATEMENT OF JUDY CONTI, FEDERAL ADVOCACY 

COORDINATOR, NATIONAL EMPLOYMENT LAW PROJECT 

Ms. CONTI. Thank you, sir. Chairman Reichert, Ranking Member Doggett and Members of the Subcommittee, thank you for the 

opportunity to testify here today. My name is Judy Conti, and I am 

the Federal advocacy coordinator at the National Employment Law 

Project. We are a nonprofit organization that advocates on behalf 

of low income and unemployed workers. 

I would like to briefly summarize the four main points in my 

written testimony. 

First, nearly 4 years after the end of the great recession, 4.6 million people have been out of work for 27 weeks or longer, and the 

average duration of unemployment stands at nearly 9 months. The 

Middle Class Tax Relief and Job Creation Act scaled back the Federally funded UI programs in a manner that resulted in a 43 percent reduction in benefits during a time in which nobody would 

argue that we have seen anything close to a 43 percent improvement in the jobs picture. And currently the average EUC payment 

is a mere $294 per week, which is hardly sufficient to cover even 

housing costs in most States for a family. 

But that, too, will face reduction as the sequester sets in. States 

that have already implemented the sequester have reduced benefits 

by an average of $31 per week, but the longer States take to implement the cuts, the steeper they will be from workers who are often 

barely scraping by. 

Simultaneous with the sequester, many States are making unprecedented reductions to State UI programs, further weakening 

the safety net at a time when too many families and communities 

still need it desperately. These cuts are counterproductive and 

cruel at a time when so many are still struggling so badly to get 

a foothold back on the economic ladder. 

Second, Congress carefully defined appropriate circumstances in 

which States could enact legislation requiring UI claimants to pass 

a drug test as a condition of eligibility for UI. And the Department 

of Labor, though it hasn’t issued regulations, as I understand it, 

has been diligently advising States that have pending drug testing 

laws to make sure that their proposals are in conformity with Federal law, as Texas’ is. 

It is worth noting, however, that drug testing UI applicants is a 

solution in search of a problem. As detailed in Mr. Hobbie’s written 

testimony, drug testing is extremely costly, and in the few States 

that have enacted some sort of testing scheme for recipients of public benefits, in every instance the rate at which applicants tested 

positive was truly negligible. Workers aren’t unable to find work 

because of drug use on some widespread basis, but rather because 

there is still only about one open job for every three unemployed 

workers. This is a waste of taxpayer money and an insidious 

stereotype of the unemployed that Congress sought to narrowly circumscribe and with good cause. 

The bill also authorized up to 10 States to experiment with reemployment programs that for the first time would apply UI trust 

fund accounts to wages and wage subsidies designed to return the 

long-term unemployed to jobs. Congress crafted this provision to 

protect the integrity of UI funding—that is the money that employVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00053 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
50 

ers pay in, in the form of taxes—and to ensure that workers are 

guaranteed their fundamental rights under Federal, labor and employment laws. 

Though no State has sought such a waiver pursuant to the UI 

program letter released by the Department of Labor, we are confident that once States can demonstrate that programs will not 

compromise their UI trust funds, many of which are still in trouble, 

and will have the desired effect of finding workers good and permanent jobs, they will seek the waivers and the Department of Labor 

will grant them in appropriate circumstances. 

Third, as has been discussed, one silver lining of the great recession is that it sparked renewed interest in work sharing programs, 

a form of UI that gives employers the option of reducing employers’ 

hours instead of firing people. The February 2012 legislation provided $500 million in incentive funding to enact and amend work 

sharing, and DOL has produced clear and timely guidance for 

States. 

In the current and coming legislative sessions, NELP will continue to work to raise the profile of this win-win option for workers 

and employers, and we hope to see many more States take it up 

next year. 

Finally, like our colleagues at Utah and in NASWA, NELP believes that many workers need more and more rigorous reemployment services at the onset of periods of unemployment, not just 

when they have reach the 27th week of unemployment. We recently published a paper on this issue called ‘‘Getting Real: Time 

to Reinvest in the Public Employment Service,’’ and we propose 

that Congress appropriate an additional $1.6 billion in annual 

funding for the Employment Service to serve workers and employers alike, and though this costs money, the savings seen in increased income taxes, reductions in UI, and the salary that workers will start receiving more than pays for itself. 

We live in troubling economic times, and if we are serious about 

an economic recovery that works for all Americans, we can’t be 

penny-wise and pound foolish when it comes to supporting our Nation’s unemployed workers. 

Thank you again for inviting me to testify, and I welcome questions from Members of the Subcommittee. 

Chairman REICHERT. Thank you. 

[The prepared statement of Ms. Conti follows:] 


joloto on DSKB35BYQ1 with HEARING
51 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 383 here 89538.036
52 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 384 here 89538.037
53 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 385 here 89538.038
54 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 386 here 89538.039
55 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 387 here 89538.040
56 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 388 here 89538.041
57 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 389 here 89538.042
58 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 390 here 89538.043
59 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 391 here 89538.044
60 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 392 here 89538.045
61 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 393 here 89538.046
62 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 394 here 89538.047
63 

f 

Chairman REICHERT. And thank you all for your testimony, 

and thank you also now as we move into the question phase for 

your patience as we ask you a few questions. So my first question 

is for—actually all my questions will be directed to Mr. Starks and 

Mr. Hobbie. 

Mr. Starks, your State, as we heard in your testimony, has a 

very aggressive approach to work research and early engagement 

of UI recipients. Can you walk us through how Utah helps people 

search for work and how that differs from other States? And what 

does everyone have to do, what do you have to do to offer help and 

assistance for people who are sincerely trying to find work but are 


joloto on DSKB35BYQ1 with HEARINGInsert offset folio 395 here 89538.048
64 

having trouble quickly working their way through the maze of trying to find the right job that fits them? 

Mr. STARKS. In Utah, our work search standard was to do two 

work search contacts per week. We doubled that a couple of years 

ago. Claimants were able to file over the telephone or over the 

Internet for their weekly claims. In August of this year, we made 

Internet the only option, and that way we could document their 

four work searches. 

We felt it was reasonable for the claimants to do four. On average, that would only take a couple of hours per week. Internet is 

kind of the future for job applications, and we require them to register for work, too, as a condition for unemployment. So asking 

them to take another step doing online filing we didn’t think, was 

unreasonable. 

One of the problems that we have had associated with that is 

verifying those work searches, too. It is one thing to, you know, require a claimant to document those work searches and it is another 

thing to verify those. It is often not a record that employers are required to document. And so when we are trying to verify those 

work searches, it can prove difficult sometimes. 

Chairman REICHERT. Well, how cost effective is this approach, 

compared to what you did in the past and maybe what some States 

are even still doing today? 

Mr. STARKS. You know, I don’t have any numbers as far as the 

work search requirements. I can tell you that we think it is good 

public policy in that it helps screen out the claimants that don’t 

want to engage in active reemployment activities. If they are serious about getting back to work, requiring four work searches we 

don’t feel is unreasonable. However, we think that it should be left 

to the State to determine that. 

Chairman REICHERT. So what would be your advice to the rest 

of the country? Any lessons learned that you want to share today? 

Mr. STARKS. Asking claimants to do work search activities, I 

think it goes back to our whole program at Workforce Services, and 

that is getting jobs should be your full-time job, and everything 

that we are trying to do in Utah is around jobs. So, my recommendation is, is to engage the claimants early and often and you 

will see some positive results. 

Chairman REICHERT. Mr. Hobbie, do you have any response to 

those questions? 

Mr. HOBBIE. Yes, Mr. Chairman. There was a four-State study 

of reemployment services and reemployment eligibility assessments 

recently produced by IMPAQ International, and particularly promising there were the results in Nevada where provision of these 

services led to a reduction in 3 weeks of duration on unemployment 

insurance, at an average cost of about $300 per week. That is a 

gross savings of $900, and at a cost probably approaching $200 to 

no more that be $300. So there is an indication that the net savings there probably was at least $600 per claimant helping them 

go back to work sooner than they would otherwise and at jobs comparable to what they would have found if they had waited those 

3 weeks. 

So the evidence we see indicates that these programs are effective at lowering unemployment, increasing employment, and they 


joloto on DSKB35BYQ1 with HEARING
65 

are highly cost effective. And they help employers, too, in the sense 

employers are finding workers that they are looking for sooner 

than they would otherwise. 

Chairman REICHERT. Thank you. 

Mr. Doggett, you are recognized. 

Mr. DOGGETT. Thank you very much. 

Senator Williams, on your proposal that is likely soon to become 

law in Texas, do you believe that it provides a model that other 

States could follow and that the Department of Labor should consider as it sets its guidelines? 

Mr. WILLIAMS. I do believe that, and I think that the sooner 

they set their guidelines, the more likely it will be that other 

States follow suit. We have a number of programs that have been 

successful that we are going back and trying to bring them into 

compliance with DOL requirements. So I think it would be very 

helpful for them to go ahead and get that guidance out there. 

Mr. DOGGETT. And you focused your requirement in accordance 

with the statute so that you were focused only on individuals that 

have been terminated because of unlawful use of a controlled substance and individuals for whom there is not suitable work in an 

occupation that does not regularly require a drug test. 

Mr. WILLIAMS. Well, I think what we focused on is that it 

would be an occupation that would require drug testing as a routine part of—as a condition of employment, and then we have directed the Workforce Commission to develop a set of screening 

questions that would help identify those people who need to be 

tested. So it is not limited only to people who were terminated for 

that reason. There could be other reasons that might show up in 

that screening assessment and it is yet to be drafted or implemented. 

Mr. DOGGETT. You also mentioned the denial by the Department of Labor of a Texas waiver application, and it is true that 

Texas was the early bird trying to secure the grant. In fact, they 

were so early, I believe they were within about 48 hours of the 

signing of the law that Governor Perry sent a letter up, and back 

in March, shortly after that, last year, Secretary Oates replied that 

she regretted denying the application but that the guidance, so 

that all States would be on a level playingfield for applying, had 

not been completed and expressed the hope that Texas would resubmit its application and welcome States’ ideas for demonstration 

projects. I believe that Texas has not resubmitted its application 

since receiving that letter. 

I would also want to note with reference to the effect of these 

cuts on our job training programs that Texas is projected to lose 

approximately $38 million in job training programs during this 

year under sequestration, and if it stays in effect it will be about 

$500 million over the course of sequestration over the next decade, 

which seems to me to be a real setback to trying to get folks to 

work. 

I want to ask Ms. Conti, with reference to your comments that 

an investment in these programs, in these reemployment services 

generates about $3.40 in lower government spending and higher 

revenue from more employment, if you could elaborate on specific 


joloto on DSKB35BYQ1 with HEARING
66 

programs and services that have proven successful in getting people reemployed. 

Ms. CONTI. Absolutely. Thank you for if question. In our paper 

‘‘Getting Real,’’ we detailed four different things that for a relatively speaking modest of investment, $1.6 billion, we believe 

could really help return a lot of people to work. Expand job placement services, including increasing job listings on the public exchange and improved matching technology, basically having job 

counselors do what Mr. Kidd does, help set people, unemployed 

workers up with employers in the area that have open jobs and 

they have skills to fill those jobs. We believe that that could help 

an additional 700,000 job seekers, for example, for less than $500 

million. 

We recommend that you interview an additional 1.5 million unemployment insurance applicants after they file the initial claim to 

create a job search plan. You know, we are in different times now. 

There are many people that have had either the same job for their 

whole work life or they have easily transitioned from one job to another, but we are in different economic times now, not just because 

people are applying for jobs more using technology as opposed to 

resumes or networking, but also because we just don’t have a robust economy. And if people are looking for a job now like they 

were 5 or 6 years ago they are not likely to be successful. So we 

know that there are plenty of people out there that have good marketable skills to compete but don’t know how to market themselves. 

There is a Worker Profiling and Reemployment Service that we recommend allocating an additional $540 million for, and this 

again is something that gets workers early and determines who are 

those that are likely to become the long-term unemployed and from 

the beginning gives them more intense services, including training 

where necessary. 

And finally, provide pretraining counseling for an additional 1 million people for about $540 million. This would be to help people 

pick the right training programs so that they get skills that are 

marketable in their local economies instead of studying for a certification that may not help them. 

Mr. DOGGETT. Thank you. 

Thank you, Mr. Chairman. 

Chairman REICHERT. Mr. Young. 

Mr. YOUNG. Thank you, Mr. Chairman. 

Thank you to all of our panelists for being here today. I really 

appreciate your testimony. 

Under the 2012 unemployment insurance reform, States are now 

required to establish job search requirements for everyone collecting State and Federal unemployment insurance benefits, from 

the first through the last week of benefits. Currently, in my home 

State of Indiana, our State legislators are working in a bipartisan 

way to implement a law that would be consistent with these new 

requirements. This would effectively require all Hoosiers to visit 

the same Work-One Centers that they would have to visit to receive Federal benefits, and extends it to State unemployment insurance benefits. 

With only the Federal unemployment insurance job search requirements already implemented, we have seen in the State of InVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00070 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
67 

diana around a 70 percent statewide compliance rate with the job 

search requirements. 

My question to Mr. Starks and Mr. Hobbie is this: What additional efforts might our State adopt, might you recommend to them 

or might we, at the Federal level, in our conversations with State 

legislators indicate to them would be helpful in increasing this 

compliance rate? And can you conceive of incentives at the Federal 

level that might assist in increasing that compliance rate? 

And I know, Mr. Starks, you have already spoken to the important role that verification in the job search plays. Perhaps there 

are other things that come to mind. 

Mr. STARKS. Again, as far as work search goes, I don’t know 

how much more I can add than I indicated earlier. We think it is 

reasonable for States to require that. However, we are a strong advocate also of State rights, and I think what is maybe good for 

Utah may necessarily not be good for another State. It works for 

Utah. It has created some unintended consequences that create 

some workload for us. If somebody doesn’t complete their work 

search, then we have to send out a denial letter, then they have 

an opportunity to come and complete those work searches. But, you 

know, we still think it is good public policy. We are not going to 

not do it because it is going to create some work for ourselves. 

Mr. YOUNG. By way of follow-up, there is, of course, an incentive as a matter of good public policy to get more people to work 

and improving their own circumstances. It grows your own economy. It could save you, at the State level, a certain amount of 

money. Are there any additional incentives that you currently receive for a higher compliance rate with the work search requirements from the Feds? 

Mr. STARKS. No. 

Mr. YOUNG. Mr. Hobbie. 

Mr. HOBBIE. Thank you, Mr. Young. 

Mr. YOUNG. Yes, sir. 

Mr. HOBBIE. I have several ideas with respect to the additional 

efforts. One is NASWA, in partnership with all States, and in partnership with DirectEmployers Association, an association of over 

600 major corporations, operates the National Labor Exchange, 

which is a job bank that is available nationally and in each State. 

It contains over 1 million job openings on any given day and they 

are updated every day. So I would urge all States to take advantage of the National Labor Exchange and work with employers who 

are not entering jobs into the State job bank to enter their jobs in 

there so that they become immediately available to workers seeking jobs in their States. 

Second, the work search amendments in the Job Creation Act, I 

think, could serve as a model for the regular State programs, too. 

And of course I respect what Mr. Starks said about States designing their own programs, but greater emphasis on looking for work, 

expecting claimants to seek work, and then providing some assistance through reemployment and eligibility assessments and reemployment services funded by the Federal Government. We do need 

additional funding to provide these additional services, but if we 

did, I think it would be far more cost effective. And then I would 


joloto on DSKB35BYQ1 with HEARING
68 

just like to add, in terms of incentives, the act also provided for 

demonstration projects, which we can get into later. 

Mr. YOUNG. Yes, sir. 

Mr. HOBBIE. I think there are some incentives that could be 

built into the current law that would improve the possibilities for 

those demonstrations at the State level, and I could get into detail 

on that later. 

Mr. YOUNG. Absolutely. And I would like to go on record as supporting the flexibility that I know is so important at the State level 

as well. 

I yield back. Thank you so much. 

Chairman REICHERT. Thank you, Mr. Young. 

Mr. Renacci, you are recognized for 5 minutes. 

Mr. RENACCI. Thank you, Mr. Chairman. I want to thank the 

witnesses for being here. 

Last Congress I introduced the EMPLOY Act, a bill that would 

have allowed participating employers to receive a subsidy from the 

State for the wages paid to an individual eligible for unemployment 

compensation. This concept of my bill is similar to the one in the 

2012 UI reforms included in the Middle Class Tax Relief and Job 

Creation Act. This act allowed States to apply for waivers in order 

to use unemployment funds to pay for reemployment programs. 

In April 2012, the Department of Labor issued 24 pages of burdensome application requirements. To the best of my knowledge, 

Texas has been the only State to apply for a waiver. This is concerning, as many States have been working diligently to expedite 

the reemployment of individuals receiving unemployment benefits. 

Mr. Hobbie, you have experience with regards to reemployment 

services and the impact these waivers would have on States. What 

changes could be made to improve the UI policy? 

Mr. KIDD. In our written testimony we indicate two changes 

that we think would be helpful that my association supports. One 

is to add a provision for reemployment bonuses for UI claimants to 

provide incentives for the individuals to go back to work sooner 

than they otherwise would with a bonus. And there have been evaluations of that approach that indicate that would be cost effective. 

Second, of course, I also mentioned additional Federal funding 

would be helpful. 

Third, the way the Job Creation Act is drafted, it embeds training with the wage subsidy in that particular paragraph. And what 

I would suggest there is you separate out the training and have 

two provisions. One would be for wage subsidies only and the other 

would be for wage subsidies with the training for a kind of on-thejob training program so that States could also run just a straight, 

simple wage subsidy program in addition to the on-the-job training 

program. 

And then also I think there is a problem with paying the subsidies off of the weekly benefit amount. Each individual has a different weekly benefit amount. That can be hard for States to administer. I would suggest following something similar to what Utah 

has done, or Texas, with just a flat amount that would be provided 

for a subsidy to an employer to employ an individual for a certain 

amount of time and then maybe an additional subsidy if that employee is retained an additional amount of time beyond that. 


joloto on DSKB35BYQ1 with HEARING
69 

And then, finally, I would also suggest the subcommittee take a 

look at Sections 1115 and 1110 of the Social Security Act, which 

provides permanent demonstration authority for other programs in 

your jurisdictions, such as Supplemental Security Income. There 

may be some provisions in there that you could use to set up a permanent demonstration authority for unemployment insurance, too, 

which is excluded from those provisions. 

Mr. RENACCI. Thank you. I am going to come to Mr. Williams 

before I do that. 

Mr. Kidd, earlier, in regards to drug testing, one of the witnesses 

testified that the number of individuals who test positive were negligible. In your business, do you do drug testing? 

Mr. KIDD. We do do drug testing. 

Mr. RENACCI. What is the percentage of people who test positive? 

Mr. KIDD. Between 15 and 20 percent. 

Mr. RENACCI. Would you consider that negligible? 

Mr. KIDD. I would not consider that negligible. And 80 of our clients require drug testing. 

Mr. RENACCI. And the biggest concern, of course, with someone 

who tests positive, is if they go out into the workforce and are 

working and they injure somebody, that is a problem not only for 

you, but for the business. 

Mr. KIDD. It absolutely is a problem. Many people forget that 

many of our employment clients are factory workers. And if you 

were to send somebody that is on an opiate or cocaine or something 

like that, and they are on a production line, it is very possible they 

could cut their hand off or drive a forklift into somebody and hurt 

somebody else, or even kill somebody. We are not going to take 

that risk, and neither will our client. 

Mr. RENACCI. Thank you. Thank you, Mr. Kidd. 

Senator Williams, it is clear that the waiver process has really 

been a deterrent for most States. I know Texas appears to be the 

only State that has applied. Ohio is not applying because of the 

waiver process and its complexities. As the only State that applied, 

do you believe it is time for the Department of Labor to go back 

to the drawing board and make the waiver application process 

more attractive to the States? And please explain what the waiver 

process has been like for your State of Texas. 

Mr. WILLIAMS. Well, I don’t know that I can speak directly to 

the waiver process. I know it has been a lengthy thing. And it is 

my impression that once the DOL issued their guidelines that more 

of the States seemed to become discouraged about that. 

One thing I would encourage, though, is more flexibility. And I 

say that because what we have done with our job search requirements, for example, is that we allow our local workforce boards to 

set the number of job interviews that an applicant has to have on 

a monthly basis. And, you know, we have found that that has 

worked better, to allow them to set those. And our average is approaching five now. And so it has worked really well, and people 

are out looking for a job. I think it would work a lot better if they 

would just allow the States a lot more flexibility and allow us to 

move forward and, you know, get those impediments out of the 

way, is the key. 


joloto on DSKB35BYQ1 with HEARING
70 

Mr. RENACCI. Thank you, Senator. 

I yield back. 

Chairman REICHERT. Thank you. 

Mr. Davis, you are recognized. 

Mr. DAVIS. Thank you very much, Mr. Chairman. And I want 

to thank the witnesses for appearing. 

Ms. Conti, let me ask you, even with the most successful reemployment programs in place, do you agree that the most important 

factor in people returning to work is a strong economy that creates 

jobs for the unemployed? Do you believe that past threats of default on our Nation’s debt, as well as the implementation of the sequester, has negatively affected our economic recovery and thereby 

hurt the ability of the unemployed to find work? 

Ms. CONTI. Absolutely, Congressman. Look, we all know that 

these demonstration projects, reemployment services, these are all 

things that can help around the margins, and we should do them 

because all of the workers that are unemployed in this country deserve every effort we can muster. But there is no replacement for 

a robust economy and one that works for everybody, where employers are creating jobs, where governments are making appropriate 

investments, not threatening default, not enacting or allowing to 

happen a sequester that was put into place in the first instance because it was so odious that nobody thought it would ever actually 

happen. 

So we find ourselves in interesting political times. We obviously 

have concerns about our debt and deficit that we can’t ignore. But 

the biggest debt and deficit we have right now is the jobs deficit 

and the deficit that workers are feeling in terms of their ability to 

provide for themselves and their families. And there is nothing that 

is going to do any better for unemployed workers than a robust 

economy and one where we are making appropriate investments in 

public service employees, in infrastructure in this country, and 

making sure that we have our fiscal house in order. 

Mr. DAVIS. Thank you very much. 

Mr. Kidd, I noticed in your testimony you suggest that some 

Americans aren’t going back to work because they were making too 

much money with unemployment benefits to return to work. Is 

there any indication of what ‘‘some’’ really means? Is that a lot of 

people? Or is that maybe two or three? Or half a dozen? I mean, 

it seems to me that the average weekly unemployment benefit is 

$300, and that only reaches about 70 percent of the poverty level 

for a family of four. So I am trying to understand how much is the 

many. 

Mr. KIDD. I appreciate the question. I cannot give you a percentage, but I can tell you that we are working in an area that at one 

time had an unemployment, one of the counties we serve, of over 

17 percent unemployment. It was significant. There was a large 

plant closure. And I would argue that if we had an employee that 

was willing, flexible, and willing to work for the amount of money 

that our client offers, we could employ about anybody. We have 

over 90,000 open positions in Ohio, with an unemployment rate of 

about 7 percent. 

So there are jobs out there available. And even in our small community we could get them jobs if they applied and they were willVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00074 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
71 

ing to be flexible with that. As a percentage, I don’t know. I know 

it is less now than it was when we had 99 weeks on unemployment. They were very free to tell us that there is no way we are 

going to go back to work when we receive this unemployment benefit. First off, they were concerned how long the assignment lasts. 

At that time, gas prices were very expensive, and quite frankly 

some of them just didn’t want to go back to work, so they chose 

not to accept our offers. 

Mr. DAVIS. I find that to be a very interesting observation. And 

I guess maybe what works in some economies or some locations. I 

can tell you that $300 wouldn’t influence many people in the communities where I live to not take a job if they could actually find 

one. So chances are there are differences based upon cost of living 

and what takes place. Certainly would not happen in the community where I live. 

Ms. Conti, let me ask you, is it fair to say that the last year or 

so there has been a dramatic reduction in assistance to the unemployed? Last year, the duration of Federal UI benefits was significantly scaled back. And this year the sequester has cut the amount 

of the weekly Federal unemployment benefit. Also, you mentioned 

that each eight States have cut back on basic unemployment benefits, reducing them below 6 months for the first time in over 50 

years. Do you think that these dramatic reductions in unemployment benefits are reflective of an equal improvement in the labor 

market? 

Chairman REICHERT. Ms. Conti, if you could answer briefly, 

please. The gentleman’s time has expired. 

Ms. CONTI. Sure. 

Absolutely not. We all know that we are still struggling with unemployment that is far too high. We understand that our unemployment numbers are coming down not just because we are creating jobs, but also because too many people are leaving the workforce. They are discouraged. So we have not seen the kind of improvements that justify the kind of cuts that we have see in unemployment. 

Mr. DAVIS. Thank you very much. 

And thank you, Mr. Chairman. 

Chairman REICHERT. Thank you, Mr. Davis. 

Mr. Kelly, you are recognized. 

Mr. KELLY. Thank you, Chairman. 

And I thank all of you to being here. 

Actually, coming from the private sector—and, Mr. Kidd, I can 

appreciate what you are saying—it is very difficult to hire people 

today. You know, I worry the reason people are not employed is because some of them are unemployable. When I am back in Pennsylvania, in District 3, and I am going to these different places and 

talking to employers, and I say, what is the number one thing, because I see a sign up there that says now hiring, why are you not 

able to hire? And inevitably they come back to saying, the people 

who are applying can’t pass a drug test. 

Now, I want you all to understand this. This is from being in the 

real world. When I talk to my insurance carrier, they suggest 

under loss control you should drug test people, but be very careful 

when you do that because alcoholism and drug addiction are conVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00075 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
72 

sidered diseases, and it could be discriminatory, what you are 

doing. So when you talk to people, Mr. Kidd, because you talk to 

them, and I got tell you, there are a lot of people right now willing, 

looking for people to employ. They can’t do it because these people 

are unemployable. 

Now, is that what you are seeing? I mean, this isn’t a myth. This 

is what actually happens on the ground when you are out talking 

to people, looking for folks to fill jobs, and understanding that there 

is a tremendous liability on that person who hires somebody and 

brings them in if something happens. Mr. Renacci talked about a 

safety issue. You brought somebody in and you knew of their condition, instead allowed them to go on the floor, and they are somehow involved in an accident, you are liable for that. 

Mr. KIDD. I absolutely agree with you. We do see a real issue 

with the whole drug situation. As part of the JobsOhio board of directors, I had a small roundtable of business people in our local 

community, and we had two employers that were 1,200 and 1,500 

each, two of the largest employers in the community. And we asked 

them, what is the biggest problem that you face? I thought it might 

be worker’s compensation or even unemployment, but it wasn’t. It 

was drugs. We can’t get people to work. And we can’t keep them 

once they are here because they will continue to fail a drug test. 

It is a big risk for employers to put somebody knowingly on 

drugs in a factory or any other kind of setting. And, you know, it 

is a dangerous situation. And it is not something that an employer 

is willing to take that risk. It just simply isn’t. 

If I may make one quick statement about the drug situation. 

Jackson County is the largest prescription opiate problem in the 

whole State of Ohio. Jackson County is only a county of 30,000 people. We have 131 per capita prescriptions per person a year, which 

is extraordinary. So I developed a drug task force to help solve this 

problem. And we continued, as you pull the onion back, you see 

more and more and more of it. And it is a huge problem for employers. 

Mr. KELLY. Let me ask, Mr. Hobbie and Senator Williams, now, 

in 2012, we did the unemployment insurance reforms. It is 14 

months later. You are still waiting for the regs. A lot of the States 

have gone out of session right now. So 14 months for the Federal 

Government. Nobody is alarmed by that because that’s kind of the 

way these folks work. How do you proceed when you don’t have the 

regs in place? How in the world do you begin to build a model when 

you don’t know what the regs are going to be? And is this what you 

have experienced in the past. 

Mr. WILLIAMS. Well, it is a problem for us in Texas. We have 

a legislature that is in session for about 41⁄2 months every other 

year. And so when the Federal Government takes so long to issue 

guidance, it makes it very difficult for us to make any adjustments 

to things so that we can comply with Federal law. So it is a huge 

impediment. 

Mr. KELLY. Okay. 

Mr. Hobbie. 

Mr. HOBBIE. I agree. And this happens repeatedly where there 

is an expectation that States implement a new law quickly, but 

there is a lag between the time the law goes into effect and States 


joloto on DSKB35BYQ1 with HEARING
73 

are expected to implement and the regulations come forth. The recent amendments to trade adjustment assistance were a good example of that. So States would very much like to have the regulations sooner, but they often don’t get them. So they do what they 

can and they cope when the regulations finally come out. 

Mr. KELLY. And I would like to see the direction of the conversation go to talk about the benefits of being employed as to worrying about unemployment benefits. There is something wrong. We 

have the model upside down. And Mr. Davis hit on it. Until we 

have a dynamic and robust economy, we are not going to get people 

back to work. We can have this conversation and continue to have 

this conversation, but until you get some certainty for the job creators to look into the future and say, oh, you know what, I am 

going to make that move now, I am going to hire these folks, I am 

going to bring them in, I am going to train, I am going to pay them, 

and I am going to look to a brighter future. 

But that is the problem. I am so tired of hearing about unemployment benefits and not about the benefits of being fully employed. That is the key and that is what we should be concentrating on. Thank you all for being here. 

Thank you, Mr. Chairman. 

Chairman REICHERT. Thank you. 

Mr. Griffin. 

Mr. GRIFFIN. Thank you, Mr. Chairman. 

Thank you all for being here today. 

In my home State of Arkansas, the issue of drug testing for unemployment benefits has been a hot one in the State Legislature. 

And I want to ask you, Senator Williams, not in your testimony, 

but on your Web site you talked about, I think the term you used 

was drug testing as a reemployment strategy. Does that sound familiar? Basically, it is something that helps prepare people, the 

drug testing does, it prepares them for employment. 

I would ask if you could comment and elaborate on that and any 

other benefits that you are finding to drug testing for unemployment benefits. 

Mr. WILLIAMS. Well, in Texas we have long required that someone be ready and willing to go back to work and that they actively 

be seeking employment in order to be able to receive unemployment benefits in Texas. And so this has been a standard that we 

have held our applicants to for many, many years. 

I would say that if you are abusing illegal drugs or if you are 

abusing prescription drugs—and I would point out that that is a 

huge problem all over the country—you are not ready and able to 

go back to work, so you are not employable. And it is important for 

those people and for their families and really for the future of our 

country that we identify those folks and that they get in a program 

where they can get straightened out. 

The largest refinery in the Western Hemisphere was recently 

built in my senate district, in Port Arthur, Texas. And when I visited there 4 years ago, when that plant was under construction, I 

heard over and over again, we want to hire local folks but we can’t 

find people that can pass the drug test. And we have that all over 

the State. We have a booming economy, and the biggest problem 

we hear, to hire truckdrivers in the State of Texas, is to find people 


joloto on DSKB35BYQ1 with HEARING
74 

who can pass the drug test. And so I would submit to you that it 

is a big problem, and this is something that we need a national policy to address this. 

Mr. GRIFFIN. I want to echo my friend, Mr. Kelly. I spoke with 

a major, major employer in my district. And I have central Arkansas, Little Rock and surrounding counties. And this particular employer is an industrial employer. And they told me, actually in a 

public hearing at the Clinton School, we had a jobs conference a 

couple years ago, and they said openly there that routinely they try 

to hire people, but those people fail the drug test. And this is an 

industrial context, so they can’t take the risk of having people operate dangerous—potentially dangerous machinery, et cetera, when 

they can’t pass a drug test. And so, that is a real problem in my 

district, I can tell you that. 

Let me ask you quickly, separate from the drug testing, pursuant 

to the act that we have been discussing here today, States can 

apply for waivers to design programs, pay people for working or 

training, et cetera. Now, my understanding from this hearing is 

that no State has yet applied. Do you know if Texas plans to apply, 

if there is some innovative program that they plan to seek approval 

for? 

Mr. WILLIAMS. Well, as I mentioned in my previous testimony, 

we do have a program that is our Back to Work program that has 

been successful, and we are trying to bring that in compliance with 

DOL guidelines in lieu of regulations being issued. But our State 

has long resisted, for instance, people who are self-employed. If 

they choose to go and start their own business, we don’t feel like 

it is appropriate for those folks to be able to collect unemployment 

benefits from their former employer while they are trying to start 

their own business. So I would say that, beyond our Back to Work 

program and the Shared Work program, there is very little beyond 

that that we are involved in right now. 

Mr. GRIFFIN. Got you. 

Mr. Kidd, real quickly, the law specifically mentions one category 

open for testing people who need to pass a drug test to get a particular job, or to perform that job. In your experience, what share 

of employers require drug tests for that job, for a particular job? 

Mr. KIDD. I can think of very few jobs that shouldn’t require it. 

Eighty percent of all our clients require it. 

Mr. GRIFFIN. Eighty percent, okay. 

Mr. KIDD. Eighty percent of ours do. And I would argue that the 

others should be doing it, too. And, quite frankly, we test them 

anyway because we want to make sure that they are going to be 

clean. First, it is a reflection on us. But second, we cannot afford 

the cost of the worker’s compensation case if somebody gets hurt 

or somebody else dies. We just can’t afford to do that, and we 

couldn’t live with that with our conscience. 

Mr. GRIFFIN. Thank you. 

And thank you, Mr. Chairman. 

Chairman REICHERT. Thank you. 

Mr. Reed. 

Mr. REED. Thank you, Mr. Chairman. And not to belabor a 

point, but I did want to reference, Ms. Conti, in your testimony— 

and I am not asking you a question—you have come to the concluVerDate Sep 11 2014 12:07 Jun 27, 2016 Jkt 089538 PO 00000 Frm 00078 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89538.XXX 89538

joloto on DSKB35BYQ1 with HEARING
75 

sion that drug use in the workplace is a negligible number. And, 

obviously, you have heard testimony from your colleagues or peers 

on this panel who disagree with you. I can also tell you that as cochair of the Manufacturing Caucus, we have had people testify before us as employers repeatedly say it is a significant issue, not a 

negligible issue. 

And when I look at the citations within your testimony, where 

you refer to the support of your ‘‘negligible’’ conclusion, you reference a welfare test for welfare recipients. We are talking about 

unemployment. Welfare and unemployment are completely different programs. So to use that as the basis for your conclusion 

that it is negligible I think is misleading. I don’t take and give 

much weight to it, to be perfectly honest with you, because they are 

two different issues. 

Also, you cite a Huffington Post article that I note was written 

on June 6, 2012, just a few months after the law passed. So to 

come to a conclusion that somehow this reform is not producing in 

regards to unemployment and the issue of drug use in the workplace in a short 2- to 3-month window, to come to a conclusion that 

a negligible drug issue is the reality of the situation, I question 

that conclusion. 

Ms. CONTI. May I respond, sir? 

Mr. REED. It is my time. I appreciate it. But to make such a 

bold conclusion I find very troublesome. Because, you know what? 

I care about the people who are on unemployment. And if someone 

has a drug problem, I look at drug addiction as a medical condition, 

an illness, a mental health-related issue in certain circumstances. 

What we are talking about is trying to empower people to get back 

to work. That is what has made America great, is that work ethic, 

that pride. 

And so a lot of times I think we on this side of the aisle, people 

try to portray us as somehow trying to target people on unemployment. That is the farthest thing from the truth, ladies and gentlemen. We are talking about empowering people to overcome an obstacle that we believe is a significant problem and that many employers who have testified before me and other Members of this 

panel have indicated is a significant panel. And that is what we are 

talking about, is how can you in the unemployment program identify areas where those issues of drug use and abuse are there and 

make sure those employers and those employees get the help so 

that the people can get back to work. 

The question I wanted to focus on to the panel is on the physically requiring to show up reforms that were in the reemployment 

eligibility assessment policies back in the 2012 reforms. And coming from a rural district of western New York, I see the benefits 

of using technology, allowing people to access the program that way 

because of transportation issues and things like that. 

But one thing I am also concerned about, I harken back to some 

memories I have when I was a law guardian, when I first started 

out my law practice, and I was assigned to represent kids. And I 

remember vividly an 8-year-old young man in the western portion 

of my home county, Steuben County in western New York. And we 

were sitting in his living room, and I am trying to have a conversation with him, just, you know, who are you, you know, I am who 


joloto on DSKB35BYQ1 with HEARING
76 

I am, and that type of thing. And I said, what do you want to be 

when you get older? And the response from an 8-year-old young 

man was, what are you talking about? I mean, it was the sum and 

substance, what are you talking about? We live here, check comes 

in the mail, and that is what we do. 

Now, I was expecting astronaut, firefighter, police officer. And 

then it struck me, as I sat in that living room with that 8-yearold young man, I said, why would I expect when that 8-year old 

man becomes 20, 21, that he has learned about adults working. 

And so when I look at that in-person requirement, it resonates 

with me that maybe what we are trying to do is to send a message 

to the people in the home so somehow we can break the cycle of 

dependency that we are seeing in America. 

And so, you know, I am running out of time, and I will get off 

my bully pulpit. But I am very interested in knowing how you 

deal—Mr. Starks, you are from Utah—how you deal with those 

rural issues and those competing issues that I just articulated 

there? How does it work? And has anyone studied or looked at the 

impact on the children in the households in regards to the life lessons that are being taught by not having that in-person requirement? 

Mr. STARK. The staff-assisted requirement that is included in 

the provision for the EUC REAs, even though we are a fairly rural 

state, about 80 percent of our population is within 50 miles of Salt 

Lake City, and over 90 percent of our EUC claimants were actually 

within 50 miles of an employment center. So in Utah we covered 

the vast majority. We sent REA requirements to every claimant, 

every EUC claimant. However, if they did call up and indicate that 

they were more than 50 miles away, we would issue them a waiver 

for that REA. But they were few and far between. 

So it really didn’t become too much of an issue in Utah. However, 

we support technology wherever it can be, you know, substituted. 

We typically find excellent results with technology, too. 

Mr. REED. Appreciate it. Time has expired. Thank you very 

much. 

Yield back, Mr. Chairman. 

Chairman REICHERT. Thank you. 

I would like to welcome the gentlelady from Tennessee, who is 

a fellow Member of the Ways and Means Committee, Ms. Black. 

Ms. Black, thanks for joining us today. Do you have a question 

for the panel? 

Mrs. BLACK. Yes, I do. Thank you so much, Mr. Reichert, for allowing me to be here with you today. I want to go just a little bit 

different direction, but still tying in with the conversation that has 

been had so far. 

According to the President’s budget, which was released last 

week, in the last 5 years, counting both the State and the Federal 

unemployment benefits, the UI system has paid out almost $550 

billion in benefits. That is an annual average of more than $100 

billion in benefits through the system that previously paid out only 

about $35 billion in those same benefits. This I think is not only 

having a negative impact on some recipients, as we have heard 

today, but also on the system that administers these benefits. 


joloto on DSKB35BYQ1 with HEARING
77 

I want to go to my own home State of Tennessee. A recent audit 

that just occurred in the last couple weeks in Tennessee’s unemployment insurance program revealed that the Department of 

Labor and Workforce in my home State had provided about $73 

million in unemployment benefits to ineligible claimants over the 

last 3 years. And the audit went on to say that these overpayments 

had, and I quote, ‘‘increased significantly over the past 3 years,’’ 

close quote. 

Now, Congress has tried to address these issues. And in 2011 we 

enacted bipartisan reforms to impose a 15 percent penalty for fraud 

cases. And then in 2012 we came back and we passed further reform so that States would recover more overpayments by reducing 

the current benefit checks. But, clearly, there is still more work 

that needs to be done here. 

I want you to begin answering this question for me, Mr. Hobbie, 

and then, Mr. Starks, if you will follow up. Now that benefit recipient is coming down and the receipts are coming, are States shifting 

workers away from getting benefits out the door and back to program integrity? And are error rates improving as a result? Mr. 

Hobbie, would you address that? 

Mr. HOBBIE. Yes. Thank you, Ms. Black. 

The system is still overwhelmed. Now, initial claims have come 

down. But because we have a continuing long-term unemployment 

problem, continued claims remain very high. So the workload in 

States is still high, but it is coming down. Some of the increases 

in overpayments in the system were due to the great recession. 

But, of course, that started the end of 2007 and was ended in the 

summer of 2009. And you point out that the overpayments in Tennessee increased in the last 3 years. 

Mrs. BLACK. Last 3 years. 

Mr. HOBBIE. So that is a bit puzzling, that pattern there. I don’t 

have enough knowledge about Tennessee to know what is going on 

there. 

I can say that as the claimant workload goes down, we do expect, 

and what has happened before, is States do shift workers back 

away from processing claims timely to some of the integrity activities. 

I should also note that the system used to estimate overpayments, called the Benefit Accuracy Measurement System, has some 

problems with it. And we at NASWA in individual States are working with the U.S. Department of Labor to try to improve that system. It wasn’t originally designed to estimate overpayments. The 

sample sizes are somewhat small. It is not focused so much on 

overpayments. And as a result, the estimates are somewhat inaccurate, the confidence interval around them is really quite wide. 

So we are trying to work with the Department of Labor to improve that methodology, improve the accuracy, the estimates. 

Originally, when that so-called BAM System, B-A-M System was 

designed, it was designed as a system more to help States improve 

the integrity of their programs by providing them management information to improve their programs rather than calculating overpayment rates. But it subsequently has been used for the publishing of overpayment rates which, frankly, can’t be compared 

from one State to the other, they can only be looked at within a 


joloto on DSKB35BYQ1 with HEARING
78 

State. But the overpayment rates have been high; they are coming 

down, to some extent. And we are trying to make some progress 

on it. 

Mrs. BLACK. If we would give the rest of the time to Mr. Starks. 

Mr. STARKS. Thank you. I would echo what Mr. Hobbie indicated. It is really difficult to compare one State against the other. 

For instance, if one State is more stringent on work search requirements, they are going to have, usually, a higher improper payment 

rate. 

I think with unemployment settling down, talking to my fellow 

directors, there is a much bigger effort on integrity. I think over 

20 States now have implemented a treasury offset program where 

they are now intercepting Federal income tax refunds for overpayments. We have the SIDES initiative. In Utah, we are actually piloting two projects right now where we are actually looking at incarceration records for the prisons and county jails. We are also 

working with a large vendor that has data on about a third of the 

payrolls. 

Mrs. BLACK. I think my time has expired. 

But thank you again, Mr. Chairman, for allowing me to ask my 

question. 

Chairman REICHERT. Thank you. 

I would also like to welcome the gentleman from Texas, who is 

the chairman of the Health Subcommittee on the Ways and Means 

Committee. 

Mr. Brady, do you have a question? 

Mr. BRADY. Yes. Chairman Reichert, thanks very much for letting me join you today. And I want to applaud the leadership of 

Senator Williams, my state senator, for his leadership not only in 

chairing the Senate Finance Committee in Texas, but leadership on 

finding innovative ways to get people back to work. 

Today there are literally tens of millions of Americans who can’t 

find a full-time job. There are millions more who have simply given 

up looking for work altogether. Yet we have jobs going unfilled in 

energy, in building trades, in transportation, simply because the 

applicants cannot pass a drug test. Last year at this time, Republicans, Democrats, and the White House came together and agreed 

it was time to find some solutions to get people job-ready, those 

who are on unemployment today. And we, together, in a bipartisan 

way, created a process where States could raise their hand and 

show us in demonstration projects and pilot programs exactly how 

we connect those who don’t have a job with good-paying jobs that 

are available today. Yet here we are, more than a year later, no 

waivers have been granted because no applications have been submitted under a round that has created a very burdensome, very 

complex process that, in fact, won’t work. 

So my question to Senator Williams and then to Mr. Hobbie is, 

if we can convince the Department of Labor to do their job, to follow the law as written, and the intent, to go back to the drawing 

board, coming up with the process that encourages States to step 

forward, Senator Williams, in your view, for Texas, which has already been recognized has having innovative programs to connecting local people to local jobs, if Department of Labor can get 


joloto on DSKB35BYQ1 with HEARING
79 

it right, is Texas still willing to raise their hand and implement a 

pilot program to help show us the way? 

Mr. WILLIAMS. Yes, sir, we are. And I would point out that 

when we rolled out this Back to Work program, our Lieutenant 

Governor traveled to 18 cities around the State promoting our Back 

to Work program. And so this is something that all of us in the legislature, from our leadership to the Membership, take very seriously. And removing those impediments and hurdles that we have 

would make a big difference in what we were able to do. 

I would also point out that I think there are some technical 

changes that need to be made. I think one thing that hasn’t been 

touched on here about your program integrity is the sample size 

that you are using to test unemployment benefits for overpayment 

is set by the Department of Labor at 480. Now, what does that 

mean? In Rhode Island, they sample 480 people; in South Dakota, 

who doesn’t have as many people as live in my senate district, they 

sample 480 people; and, in Texas, with 25 million people, they sample 480 people. 

And so there are others, Mr. Temple and others, who could go 

into a lot of the details about what the Labor Department considers 

best practices that are also just a way to scratch the list off and 

check the box and say, we don’t have overpayments by looking the 

other way. And so I think there is not only a need for waivers, but 

there is a need for the Department to recognize that States are the 

best ones to implement these programs and to give us the flexibility to monitor them and make sure that they are working appropriately. 

Mr. BRADY. Senator, thank you very much. 

Mr. Hobbie, we are sort of given the impression up here that 

States weren’t interested in stepping forward to help us solve this 

problem, connect these workers with jobs, and that today, you 

know, a year later, States generally aren’t all that interested. Do 

you think that is the case? Or do you think States need the right 

application process so that they can indicate their interest? Is the 

interest still there? 

Mr. HOBBIE. Mr. Brady, yes, the interest is there. States generally would like more flexibility from the Federal Government in 

implementing these demonstration programs, not only from the Department of Labor, but also under the law. And earlier I mentioned 

some changes that could be made, I think, to the current law which 

would make it more flexible for States such as Texas to operate the 

kind of demonstration programs they have had in the past. 

So, in general, I would say our Members are interested. They 

want more flexibility. But they also recognize the Federal Government wants accountability. With respect to accountability, the law 

requires sophisticated evaluation of the demonstration programs. It 

would be very helpful if the Federal Government would provide 

funding for those evaluations rather than having it come out of the 

Unemployment Trust Fund or from state administrative costs. 

Mr. BRADY. Well, I appreciate all the witnesses. 

Again, Chairman, you are holding this hearing because we want 

those who are unemployed to be job-ready on day one. And key to 

that is the growing number of jobs that require drug screening and 


joloto on DSKB35BYQ1 with HEARING
80 

drug testing, good-paying jobs. So thank you for continuing to shine 

a light on this problem. 

Chairman REICHERT. Thank you for joining us today, Mr. 

Brady. 

Well, thanks to all of you for your testimony. Your information 

is very helpful. Sometimes these hearings seem so sterile and formal, and you probably walk away and wonder if it was worth it. 

You can see there was a lot of interest here today, a lot of questions asked. We want to get this right. And what is worth it is getting, as everyone here has said, on both sides, getting people back 

to work. I mean, that really is what we all are here for. 

And accountability, Senator, you mentioned that, the Federal 

Government has an issue with performance measures, accountability, and, you know, on a program that spends billions of dollars 

every year, there are a lot of complicated processes involved in this 

issue. But that doesn’t mean we should not proceed forward and 

find solutions to the problems that we are all facing and try to get 

people back to work. 

I will just mention this rather quickly. There are a lot of us on 

this Committee, on the Full Committee and some of us here today, 

who have had experience working with local government. Having 

been a part of the local government, my job was the sheriff in Seattle. And in dealing at local level, you know what is best for your 

community, you know what works in your community. And that 

has been a common theme today. I think that the Federal Government needs to understand even more so than some of us do that 

the Federal Government would be best letting you have that flexibility administering programs. Yes, with accountability and responsibility, but the ability to administer those programs tailored to 

your community so you can help the people that you know best get 

back to work and support their families. 

So, again, I appreciate all of your hard work. Continue to do 

that. And we will look to you for answers. And hopefully we can 

find solutions. 

If Members have additional questions for the witnesses, they will 

submit them to you in writing. And we would appreciate receiving 

your responses for the record within 2 weeks. 

Chairman REICHERT. Thank you. This Committee stands adjourned. 

[Whereupon, at 4:03 p.m., the subcommittee was adjourned.] 

Æ 


joloto on DSKB35BYQ1 with HEARING