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74–272—PDF 2011

S. HRG. 112–410 

UNEMPLOYMENT INSURANCE: 

THE PATH BACK TO WORK 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

NOVEMBER 10, 2011 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

RUSSELL SULLIVAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

WITNESSES 

Wandner, Stephen, Ph.D., visiting fellow, The Urban Institute, Washington, 

DC .......................................................................................................................... 4 

Temple, Larry, Executive Director, Texas Workforce Commission, Austin, TX . 6 

Peitersen, Don, director of unemployment insurance and workforce projects, 

American Institute for Full Employment, Aurora, CO ..................................... 7 

Fogarty, Charles J., Director, Rhode Island Department of Labor and Training, Cranston, RI .................................................................................................. 9 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement with attachment ............................................................. 25 

Fogarty, Charles J.: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 29 

Responses to questions from committee members ......................................... 34 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 36 

Peitersen, Don: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 38 

Responses to questions from committee members ......................................... 52 

Temple, Larry: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 55 

Responses to questions from committee members ......................................... 59 

Wandner, Stephen, Ph.D.: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 64 

Responses to questions from committee members ......................................... 78 

Wyden, Hon. Ron: 

‘‘Urban Airship Raises $15.1 Million Amid Rising Prospects for Portland 

Startups,’’ The Oregonian article dated November 7, 2011 ....................... 80 

COMMUNICATIONS

Center for Fiscal Equity .......................................................................................... 83 

TrueBlue, Inc. .......................................................................................................... 85 

(III) 

(1) 

UNEMPLOYMENT INSURANCE: 

THE PATH BACK TO WORK 

THURSDAY, NOVEMBER 10, 2011 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 10:14 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Wyden, Stabenow, Cardin, Hatch, Snowe, 

Cornyn, and Thune. 

Also present: Democratic Staff: David Schwartz, Chief Health 

Counsel; Deidra Henry-Spires, Professional Staff; and Amber Roberts, Tax-Exempt Organization Policy Staffer. Republican Staff: 

Chris Campbell, Staff Director; and Preston Rutledge, Tax Counsel. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The hearing will come to order. 

First, I apologize to our witnesses and everyone here for a late 

beginning. Something came up that was unavoidable, but we are 

going to make up for it. 

Theodore Roosevelt once said, ‘‘The best prize that life has to 

offer is the chance to work hard at work worth doing.’’ The Great 

Recession hit Americans with soaring unemployment rates. That 

has kept this prize of a chance to work hard from millions of Americans. 

The economy created 80,000 jobs in October, and it was the 13th 

uninterrupted month of job growth. That is the good news. However, we need faster job growth to keep this economy moving in the 

right direction. Nearly 14 million Americans are still unemployed, 

and more than 42 percent of these folks have been searching for 

a job for at least 6 months. That means nearly 6 million Americans 

have been without a job for half a year or more. 

For families who have been hit hard by hard times, Unemployment Insurance is a crucial lifeline, and it is an essential part of 

the solution to get folks back to work. Families need these benefits 

to keep their homes, pay bills, stay afloat. We must remember that 

the folks who collect unemployment benefits have worked, want to 

work, and will work again. 

I recently spoke with one such young man, Roy Houseman, Jr. 

from Missoula, MT. Roy worked at Smurfit-Stone Container. It is 

a paper plant, vital to the Missoula community. In 2009, SmurfitVerDate Nov 24 2008 19:47 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 R:\DOCS\74272.000 TIMD
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Stone closed its doors. Roy shared with me that losing that job, for 

him and his co-workers, was traumatic. 

Unemployment benefits were a necessary lifeline for his family. 

The income he received from Unemployment Insurance was less 

than half of what he previously made. When he was working, the 

mortgage on his home was 30 percent of his income. While he was 

collecting unemployment, the same mortgage ate up 60 percent of 

that income. After Roy’s company closed, it was certified, fortunately, for the Trade Adjustment Assistance program. Roy was able 

to meet with his UI case manager and go back to school. Through 

this training program, Roy found a new career. 

Roy told me he thinks that the best reemployment programs give 

someone the opportunity to find a job that meets three criteria. His 

first principle is that the job pays equal to, or more than, the job 

someone left. His second is, the job provides an opportunity for 

growth. His last measure is that the job must be sustainable in the 

21st-century economy, and I could not agree more. 

So today I encourage us to focus on how our Unemployment Insurance system can use reemployment strategies to save existing 

jobs and create new ones. Let us find a way to improve the program. 

There are several reemployment proposals that this committee is 

considering. Some programs partially replace the earnings of workers who suffer job loss. Others help unemployed workers find permanent work either through direct job placement or through retraining. Other models are even designed to develop entrepreneurs. 

We need to tap into these ideas. 

There are already a number of States doing great work. Twentytwo States have implemented a work-sharing program. Under 

these programs, to avoid lay-offs, States allow employers to trim 

the hours they pay their employees, then use Unemployment Insurance funds to maintain pay for the full-time job. My State of Montana has its own version of this. 

I look forward to hearing testimony today about Rhode Island’s 

work-sharing experience. Some States create new jobs through 

wage subsidy programs. These programs help employers cover a 

portion of the new employees’ wages to encourage the hiring of unemployed workers, and we will hear more today about the opportunities and challenges that arise from these programs. 

Many components of the Unemployment Insurance program will 

expire at the end of this year. We must extend this program. It is 

critical not only for millions of Americans, but also for our economy. This is also an opportunity for this committee to examine the 

unemployment system and to make improvements. 

So let us ensure that workers are prepared with the skills employers need. That is how jobs get filled and our economy recovers. 

Because what people really want more than an unemployment 

check is to be back at work. That is really what this is about. 

So let us focus on getting these folks back to work. Let us heed 

the words of Teddy Roosevelt and make sure all Americans have 

a chance at the prize of working hard at work worth doing. 

[The prepared statement of Chairman Baucus appears in the appendix.] 

The CHAIRMAN. Senator Hatch? 

3 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Well, thank you, Mr. Chairman, for holding this 

hearing. This is a very important topic. It is one worthy of the committee’s attention. 

The fact that we are holding this hearing today is yet another 

reminder that, despite some scattered signs of recovery in our economy, too many Americans are unable to find jobs. Our unemployment rate is simply too high. While there are differences of opinion 

about how to solve this problem, we are all in agreement that Congress must do more to restore job creation and to help get the unemployment and under-employment rate down. 

Today we will have another discussion about our Nation’s Unemployment Insurance system. My hope is that we can get some answers about how our Unemployment Insurance system can be reformed. Currently, the UI system is designed simply to process and 

distribute benefits to the unemployed. Individuals and families who 

face job loss deserve more than this. 

Ideally, the goal of a UI system would be to help unemployed 

workers find new jobs. Indeed, the success of the various UI programs should not be measured by the number of people receiving 

benefits, but by the number of people who have moved from receiving benefits into long-term employment. 

Today I hope we will hear some ideas for making these types of 

changes. It is gratifying to see that we have representatives from 

State workforce agencies on our panel today. I am convinced that, 

if we are going to see reforms to the UI system to get people back 

to work, those reforms will come from innovation at the State level. 

Over the years, Unemployment Insurance has essentially been a 

State-run program. While the Federal Government has provided 

guidelines and administrative funding, States have been given the 

primary responsibility of collecting unemployment taxes and distributing benefits. 

However, with the recent economic downturn we have seen an 

expansion in the Federal Government’s role in Unemployment Insurance. With expanded federally financed benefits, States have 

had less flexibility to innovate and reform their individual UI programs. 

This is unfortunate because, as we have seen over the years, 

many States have generated ideas and reforms that have drastically improved their UI systems. When individual States have 

taken action to reform their own programs, they have been able to 

effectively communicate their successes, and even their failures, 

with other States. This has led to the expansion of the best practices across multiple States. 

When I speak with Utah officials about their UI programs, which 

are by most accounts among the most efficient in the country, they 

continually express their desire to take on more responsibility in 

designing and implementing reforms and helping people to get 

back to work. More than anything, State officials in Utah want to 

see fewer restrictions coming from the Federal level and greater 

flexibility to innovate. 

The evidence of State innovation is probably strongest in the 

area we are discussing today, and that is reemployment. I am hopVerDate Nov 24 2008 19:47 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 R:\DOCS\74272.000 TIMD
4 

ing that today’s panel will give us some insight into what States 

have been able to do in this area, which programs have worked, 

and which ones have not. Most of all, I hope this hearing will help 

to provide some clarity about what Congress can do to help States 

find success as they work to solve their own unemployment problems. 

There are a number of UI-related issues that will have to be addressed between now and the end of the year. Once again, I am 

convinced that, if we want to see improvements in reemployment 

efforts and other areas of the UI system, the Federal Government’s 

role will need to be reduced. States need to be given more flexibility to develop their own approaches and to adopt and adapt successful programs from other States. 

To the extent that Congress can play a role in this area, I believe 

it should be getting the Federal Government out of the States’ way. 

I am quite certain that in the coming days we will hear very few 

State officials clamoring for more strings to be attached to their UI 

programs. Once again, I hope to gain greater insight into these 

issues today, and I look forward to hearing from our panel. 

Mr. Chairman, I am going to have to slip out for a little while 

to go over to the Judiciary Committee, but I will be right back as 

soon as I can. But I welcome all of you here today. We are grateful 

for your time and for your testimony, and I look forward to not only 

hearing, but reading everything you have to say. 

The CHAIRMAN. You bet, Senator. Thank you. Thank you very 

much. I look forward to your return. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. I would now like to introduce our witnesses. 

First is Dr. Stephen Wandner, a visiting fellow at The Urban Institute, and a former senior economist at the Department of Labor. 

The second witness is Larry Temple, Executive Director of the 

Texas Workforce Commission in Austin. Welcome, Mr. Temple. 

Third—I guess they are in a different order here; it does not make 

any difference—we will hear from Charles Fogarty, director of the 

Rhode Island Department of Labor and Training. Mr. Fogarty is 

also the former Lieutenant Governor of the great State of Rhode 

Island. And finally, Don Peitersen, who is the director of unemployment insurance and workforce projects at the American Institute 

for Full Employment in Aurora, CO. 

I might remind all of you that your full written statements will 

be in the record. I urge you to summarize them. I urge you to pull 

no punches, tell it like it is. Life is short. You cannot take it with 

you. [Laughter.] 

So let us have at it. 

Dr. Wandner? 

STATEMENT OF STEPHEN WANDNER, Ph.D., VISITING FELLOW, 

THE URBAN INSTITUTE, WASHINGTON, DC 

Dr. WANDNER. Chairman Baucus, other distinguished members 

of the committee, I am Stephen Wandner, a visiting fellow at The 

Urban Institute and a visiting scholar at the W.E. Upjohn Institute 

for Employment Research. Thank you for inviting me to testify 

about reemployment services. The views expressed are solely mine 

5 

and should not be attributed to the Upjohn Institute or to The 

Urban Institute. 

Returning American workers to work is essential to the economic 

health of the Nation, and reemployment services are important 

tools to accomplish that goal. Many rigorous and impartial studies 

have shown that several reemployment services have helped to 

cost-effectively return Unemployment Insurance recipients to productive work. 

Over the past 25 years, a great deal has been learned about how 

reemployment services help the jobless get back to work. Researchers have used rigorous evaluation methods to assess what works 

and what does not. During my career at the U.S. Department of 

Labor, I participated in much of this research. 

I was fortunate to have initiated and overseen a series of social 

science experiments under the leadership of Secretaries from Bill 

Brock to Robert Reisch. Evaluations of these Labor Department experiments concluded that at least three re-employment approaches 

are cost-effective for dislocated workers. These approaches are: job 

search assistance; self-employment assistance; and reemployment 

bonuses. In addition, work-sharing evaluations have shown that 

program to be effective in the U.S. and over a dozen other industrial nations. 

My testimony recommends that each of these four reemployment 

approaches be used nationally to help unemployed workers return 

to work during the period of high unemployment. These reemployment approaches can be implemented and expanded at little cost 

to the Federal Government. 

Let me explain. Job search assistance consists of assessment, 

counseling, job matching and referral, job development, and providing labor market information and job search workshops. Together, they speed the return to work, reducing Unemployment Insurance payments and increasing tax payments. They were supported by the Recovery Act, but these funds have now expired. Federal funding is needed to provide substantial amounts of job search 

assistance to those who need it. 

Self-employment assistance allows workers to set up their own 

businesses, creating their own jobs. Program participants have 

been shown to rapidly return to work and earn substantially more 

money than non-participants. Federal law allows States to set up 

their own self-employment programs, but few States have done so, 

and the program is little used. Temporary Federal funding would 

greatly increase program adoption and use. 

Work-sharing is permissible under Federal law, and 22 States 

and the District of Columbia have such programs, allowing reductions in hours instead of laying off workers. Participants receive a 

pro-rated share of the weekly Unemployment Insurance benefits for 

the days they do not work. Work-sharing is much more widely used 

in other industrial nations than in the United States. Work-sharing 

would be much more widely adopted and used by the States if 

State unemployment trust funds were temporarily relieved of paying benefits. 

Finally, reemployment bonuses of about $1,200 for workers who 

retain a job for 4 months have been shown to be a cost-effective incentive to speeding the return to work. This finding is based on 

6 

analyses of four reemployment bonus experiments that have been 

conducted in the United States. I recommend that we try out this 

approach nationally. Each reemployment strategy should be rigorously evaluated so we can determine how effectively it works in 

this period of high unemployment, and public policy can be shaped 

accordingly. 

Thank you for this opportunity to testify. I welcome your questions. 

The CHAIRMAN. Thank you, Doctor, very much. 

[The prepared statement of Dr. Wandner appears in the appendix.] 

The CHAIRMAN. Mr. Temple, you are next. 

STATEMENT OF LARRY TEMPLE, EXECUTIVE DIRECTOR, 

TEXAS WORKFORCE COMMISSION, AUSTIN, TX 

Mr. TEMPLE. Good morning, Chairman Baucus and distinguished 

members of the committee. For the record, my name is Larry Temple. I am the Executive Director of the Texas Workforce Commission. I appreciate this opportunity to share with you the exciting 

things we are doing in Texas to assist those on Unemployment Insurance, and those who have exhausted all their benefits, to find 

work. 

Our unemployment rate is certainly higher than we wish it were, 

and Texas has certainly felt the impact of the national downturn 

in the economy. But at the same time, we have also, from September 2010 to September 2011, created nearly 250,000 net jobs. 

Caterpillar and Toyota, just to name a few, have selected Texas for 

new plants and for plant expansion. We were rated top by the Site 

Selection magazine, as the top State to locate a business in 2011. 

I am proud to say that our workforce commission and its network 

of local workforce boards have all been a part of this economic development team. Through our system, job seekers and employers 

are connected, and, by being a part of this team at the economic 

development level, we are able to assist the unemployed take advantage of these hiring opportunities. 

Over the past year alone our local workforce boards have held 

over 500 job fairs to help connect employers and job seekers. 

Through our integrated delivery model and our commitment to Unemployment Insurance claimants, we have been able just in the 

past year to reconnect over 800,000 unemployed Texans to the 

workforce. We have a demand-driven system, and the model is 

built around private employers, as they are the key to job creation. 

A little background on how our model is structured. In 1995, the 

legislature created the commission by merging 28 workforce development programs from 10 different agencies. We have 28 local 

workforce boards, 240 1-stops serving our 254 counties. Our boards 

build strong bonds between business, education, and job training in 

a strengthened economy to benefit everyone. They partner with the 

community colleges, community-based organizations, economic development and education partners, as well as their local Chambers 

of Commerce. 

The local flexibility with the State oversight is our model, and it 

continues to serve Texans the best. Second only to veterans, the 

Unemployment Insurance claimant is our number-one priority in 

7 

our system. It was formerly designated as a priority by the commission in 2003, and to reinforce this commitment, this priority, we 

self-imposed a measure with the gold standard for us to reemploy 

claimants within 10 weeks. Not a Federal measure, not a legislative measure, it is something we put on ourselves. 

When we put this in place, our unemployment rate was around 

5 percent, and our performance was around 27 percent of the people going to work within 10 weeks. Although 10 weeks is a great 

goal, if we can do it and get someone back in 11, 12, or 13 weeks, 

it is still better for everyone involved. 

We believe, in the first 5 years alone, that this initiative saved our trust fund about $1 billion. It also has put a little over $1 billion into the households of our claimants, and the local economic 

impact, with a conservative multiplier of 1.5, puts about $1.5 billion into local communities. 

In addition to this, when we work with our claimants, we have 

such things that we use as the Texas Back-to-Work Program, 

which is a hiring incentive program which provides employers with 

a $2,000 hiring incentive over a 4-month period. To date, we have 

placed, in less than 2 years, over 20,000 claimants with about 

4,000 employers participating. The targeting of claimants who are coming out of $15-an-hour or 

less jobs, and for those who complete the program, they are receiving about 99.4 percent replacement wages. We have had tremendous success with this program. In addition to these programs, we 

also have a work-share program. In 2009 it peaked at nearly 700 

companies. To date, we have about 477 companies and about 

25,000 people who are participating. But all of this goes to, we 

have had flexibility at the local level to do these things. 

Whether it be in the UI administrative dollars or the workforce 

funding through WIA, the Workforce Investment Act, we really 

hope that you would consider giving States more flexibility, because we certainly are the labs of innovation and we can get much 

more accomplished in light of budget cuts, which we deal with ourselves because we are dealing with less money as well, but serving 

more people. 

Thank you for the opportunity to share with you. I would be glad 

to answer any questions, Mr. Chairman. 

The CHAIRMAN. You bet. Thanks, Mr. Temple. 

[The prepared statement of Mr. Temple appears in the appendix.] 

The CHAIRMAN. Mr. Peitersen? 

STATEMENT OF DON PEITERSEN, DIRECTOR OF UNEMPLOYMENT INSURANCE AND WORKFORCE PROJECTS, AMERICAN 

INSTITUTE FOR FULL EMPLOYMENT, AURORA, CO 

Mr. PEITERSEN. Chairman Baucus, members of the committee, 

thank you for this opportunity to testify. 

The American Institute for Full Employment is a nonprofit think 

tank that provides counsel to State governments with an emphasis 

on reemployment and subsidized wage policy design and implementation. 

Your focus on the Unemployment Insurance program is timely. In the past year, the United States has spent $115 billion in this 

8 

program. Over half of the claimants exhaust regular benefits, and 

those who go on to receive Federal benefits, on average, stay unemployed for over 1 year, claiming $16,000 in benefits. 

My testimony addresses strategies that offer an opportunity to 

realize a greater return on this significant commitment of taxpayer 

resources while returning unemployed Americans to work more 

rapidly. According to a study of job seekers, more than half have 

visited their community workforce centers only once over the 

course of the entire year. 

However, brick-and-mortar workforce centers are not the only 

place to search for jobs. Today, much of that activity occurs online 

in the form of job boards, social networks, and employer websites. 

Unfortunately, on the whole, States have not kept pace with these 

online trends, creating a mismatch of available services. Some 

States now require those applying for unemployment benefits to simultaneously register with their employment services program, 

thus ensuring an immediate connection with reemployment resources by also promoting a more engaged job search. 

For many States that have not adopted this practice, funding is 

an issue. Congress should allow States to use a portion of their Unemployment Insurance dollars to fund better reemployment efforts. 

To provide a level of fiscal discipline, this option should be accompanied by a requirement for stipulated return on the States’ investment and a program limit of 5 percent of the unemployment dollars. 

Each day, job seekers confront headlines like ‘‘Seven Million Jobs 

Lost,’’ ‘‘Five Job Seekers for Every Job.’’ These headlines are easy 

to report, but can leave a confusing impression on the job market. 

In doing so, they can sap job seekers of optimism and motivation. 

By highlighting the 5 percent of jobs lost, we overlooked the significance of the 95 percent of jobs that remain. Driven by natural 

churn in the labor market, those 95 percent of jobs will provide 50 

million hiring opportunities in this year alone. 

Labor market data has a far more helpful story to tell, one that 

suggests finding a job, while difficult, is not impossible. To be successful at job search today, a job seeker must focus on networking 

and cold-calling, because more than half of all hires happen 

through an employer’s network. 

Most States simply ask a claimant to contact one or two employers per week, a task that could take less than 2 hours. That level 

of activity is hardly a recipe for success. We found effective job 

seekers have two main characteristics: they treat their job search 

as a job in itself, and they maintain detailed records of their job 

search activities. 

Congress’s most significant untapped opportunity is the adoption 

of a wage subsidy program with Unemployment Insurance dollars. 

In the best programs we have studied, over 80 percent of job seekers were employed immediately after participation; 98 percent were 

employed within 3 months. Participants had greater job retention 

and greater wage gains. More than 80 percent of employers said 

the program helped cost, capacity, and/or expansion. 

The President has proposed a wage subsidy called Bridge to 

Work, which blends attributes of several State programs. Bridge to 

Work has promise, but should be modified to eliminate the emVerDate Nov 24 2008 19:47 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 R:\DOCS\74272.000 TIMD
9 

ployer mandate to hire, increase the maximum training from up to 

8 weeks to up to 13 weeks, and simplify a cumbersome 2-payer system by paying the subsidy directly to the employer. 

Because the net cost of a wage subsidy program can make it a 

legacy or a loser, we recommend using existing State strategies for 

early interventions for those claimants who are most likely to exhaust their claims. State agencies are full of good ideas and promising solutions, but are hamstrung by restrictive funding silos. UI 

was born separately from an employment service, which was born 

separately from the Workforce Investment Act. 

Little has been done to harmonize the findings or enable strategic connection. There are waivers for program requirements in 

the Workforce Investment Act, Temporary Assistance to Needy 

Families, and Medicaid, but not for Unemployment Insurance. By 

providing States more flexibility for waivers in the UI program and 

funding, accompanied by cost-effective safeguards built on measured impact on reemployment, we could make some serious inroads 

into getting people reemployed. 

Congress has a real opportunity to clear a path toward meaningful gains in reemployment by enhancing job search engagement, 

enabling innovative wage subsidy programs, and giving States freedom and flexibility to devise and employ creative new solutions. 

Thank you. I look forward to your questions. 

The CHAIRMAN. Thank you, Mr. Peitersen. 

[The prepared statement of Mr. Peitersen appears in the appendix.] 

The CHAIRMAN. Mr. Fogarty? 

STATEMENT OF CHARLES J. FOGARTY, DIRECTOR, RHODE 

ISLAND DEPARTMENT OF LABOR AND TRAINING, CRANSTON, RI 

Mr. FOGARTY. Thank you, Chairman Baucus and members of the 

committee. It is an honor to be with you today to speak about 

Rhode Island’s 20-year experience with the WorkShare Short-Term 

Compensation Program. 

Mr. Chairman, simply put, WorkShare is a successful layoff aversion program that has prevented an estimated 14,600 lay-offs in 

Rhode Island since 2007, the beginning of the economic recession 

in our State. That is especially important for a State like ours because we have been experiencing double-digit unemployment since 

March of 2009. We believe that our WorkShare program has kept 

this rate from escalating and causing further damage to our State 

economy. 

Through WorkShare, a company may uniformly reduce the work 

hours of its entire workforce or of all employees within an impacted 

business unit or division; the reduction can run from as little as 10 

percent to as much as 50 percent. Income that would otherwise 

have been lost due to layoffs is partially reimbursed through Unemployment Insurance. In Rhode Island, our average Unemployment Insurance benefit covers approximately 60 percent of lost 

wages. 

Let me give you an example. A person works full-time, earning 

$500 each week, or $100 a day. Under WorkShare, this same person has his or her work week reduced from 5 days to 4. The particiVerDate Nov 24 2008 19:47 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 R:\DOCS\74272.000 TIMD
10 

pating company would pay that employee $400 in wages, and Unemployment Insurance would pay him or her $60, 60 percent of 

that 1 day’s wages, for the remainder of the work week, bringing 

the total wages to $460. 

Now, had that person been laid off, his or her weekly benefit would have totaled approximately $300, or $160 less. Conversely, 

the weekly drain on the Unemployment Insurance fund would have 

been $300, $240 more than if he or she had been participating in 

WorkShare. 

WorkShare is available to any employer with two or more employees, provided the business meets certain criteria. It is designed 

as a layoff aversion program during an unanticipated downturn 

and cannot be applied to a time period associated with seasonal 

slow-downs. Only those employees who normally work 30 hours or 

more per week and who would normally qualify for Unemployment 

Insurance benefits are eligible to participate. 

By Rhode Island policy, employers enrolled in WorkShare are 

also asked to continue to provide existing fringe benefits. In the 

case where a collective bargaining unit is involved, that bargaining 

unit must sign off on the plan before the State will approve it. 

For Rhode Island, WorkShare has proven to be a win-win-win 

situation: a win for employees, a win for employers, and a win for 

the State of Rhode Island. The biggest benefit for employees is an 

obvious one: they get to keep the jobs at which they already excel. 

That is important in Rhode Island, where there are now seven job 

seekers for every two job openings. Those are tough odds if you are 

trying to put food on the table. That is why layoff aversion programs like WorkShare are so important. They help provide stability to families that otherwise may be facing an average of 30 or 

more weeks of unemployment. 

WorkShare is a win for employers because they are able to protect their greatest investment, a trained and productive workforce. 

Employers will tell you that, when a laid-off worker walks out the 

door, all the knowledge and skills that he or she accumulated walk 

out with them. 

However, employers who have benefitted from WorkShare will 

tell you that, because their employees are able to remain on the job 

part-time during hard times, those same employees will be prepared and better able to boost production when the economy turns 

around. 

I would just like to provide a couple of comments from some of 

the folks who have used our WorkShare program. Geoff Grove, the 

CEO of Pilgrim Screw, a Rhode Island manufacturing company, is 

now actively involved in WorkShare. He says, ‘‘By giving small 

businesses an option to a full lay-off, WorkShare helps us to maintain skills that might otherwise be lost. People in small companies 

often wear many hats, so a lay-off may mean that a skill is lost 

to the company when the person leaves, unlike in large companies 

where skills are redundant.’’ 

Mike Cooley, the CEO of The Quinlan Companies, calls his company the poster child for WorkShare. ‘‘The single-most instrumental action we took that put us back on the map was WorkShare. We were preparing a cut in our staff, and instead we were 

able to have WorkShare subsidize the wages until we got through 

11 

the downturn. We survived the recession. Today we are adding a 

huge facility and we will be hiring more people in Rhode Island. 

For the State of Rhode Island, the win is simple: jobs. WorkShare 

keeps taxpayers employed today and keeps companies poised for 

growth tomorrow.’’ 

Mr. Chairman, members of the committee, thank you for this opportunity to testify about this important economic development 

tool. 

The CHAIRMAN. Thank you, Mr. Fogarty. I thank all of you. 

[The prepared statement of Mr. Fogarty appears in the appendix.] 

The CHAIRMAN. In listening to you, all four, I would be curious 

as to your reaction how these various alternatives work and which 

ones might work better with respect to our changing economy in 

lots of ways. Some of your efforts may be relevant to the changes, 

some may not. The changes obviously are that, with increased productivity, many companies are finding ways to improve their bottom line with automation, other increases in productivity, maybe 

fewer employees. 

It is also the recession caused by the financial crisis which has 

caused a very prolonged effort to get out of the recession because 

of all the de-leveraging that is necessary, both public and private. 

International competition and globalization—it is even more of an 

issue today than it was 10, 15 years ago. It will continue to be 

more of an issue. The world is changing so much. 

So given all of that, and many companies—you hear the story 

about how major corporations in the United States have about 

$2 trillion in cash on hand, and they are just not spending it because of uncertainty, uncertainty as to what tax policy will be, uncertainty in some other areas. Maybe Europe—who knows—will 

maybe cause some additional uncertainty. But just how do these 

programs you are talking about address these changes, the continued changes in the nature of the American economy as it affects 

jobs, affects people working? Does anybody want to take a stab at 

that? Yes, sir? Dr. Wandner? 

Dr. WANDNER. Well, as far as productivity, discussing productivity, I have discussed work-sharing. Work-sharing has been 

shown in evaluations to help employers retain skilled workers and 

prevent them from having to hire new workers and train them over 

again when demand comes back. So clearly, if skilled workers can 

be retained and be there when—— 

The CHAIRMAN. So you kind of like the Rhode Island program. 

Dr. WANDNER. What? 

The CHAIRMAN. You like the Rhode Island program? 

Dr. WANDNER. I like the Rhode Island program, yes. 

The CHAIRMAN. It seems to make some sense? 

Dr. WANDNER. Yes, it does, indeed. Rhode Island has done more 

and has had more work-sharing relative to its size than any State 

in the country, so it has done a particularly good job of it. But job 

search assistance as well prevents people from losing their skills 

and being unemployed for longer periods of time than they otherwise would. But a lot of reemployment services will help us. 

12 

The CHAIRMAN. What are the new jobs? Are the new jobs the 

same jobs, or are they different kinds of jobs, different skill sets? 

We have to think ahead a little bit here. 

Mr. TEMPLE. Mr. Chairman, what we are seeing—of course, in 

manufacturing, we are seeing some growth in manufacturing, but 

not nearly what we would like to see. But the logistics piece is an 

area that we are finding is really needed in the economy, and 

working with people, being able to assess and identify what skills 

they have that are transferrable—— 

The CHAIRMAN. I am sorry. You say ‘‘logistics?’’ 

Mr. TEMPLE. Logistics. 

The CHAIRMAN. What do you mean by that? 

Mr. TEMPLE. Transportation, getting the products moved around, 

inventory control, and those type of things. It may be manufactured out of the country, but it is coming back in for distribution. 

And the logistics of putting that, and the suppliers—in our Toyota 

initiative in San Antonio, one of the primary pieces of our economic 

development in the southern part of the State there is the suppliers, and getting those products to Toyota on a just-in-time basis. 

So that is something that is a different type of work for people 

who have been strictly on a production floor. But they had transferrable skills, so a strong workforce program that provides services can identify through assessment where the skills gaps are, 

what skills are transferrable, and be able to connect them to trainers. And flexibility. I hate to get on that soap box again, but what 

works in Dallas does not necessarily work in El Paso, and what 

works in Texas does not necessarily work in Rhode Island. 

The CHAIRMAN. So what is the greatest restriction on flexibility, 

to be able to do what you want to do? 

Mr. TEMPLE. Flexibility between all these funding sources. It is 

so siloed. You have the UI administrative dollars that you cannot 

use for much other than getting the check out. And, if you have administrative dollars that you could use toward reemployment services, the TANF program that Mr. Peitersen was talking about earlier has different restrictions for putting people back to work than 

the adult WIA. 

So all of those are siloed, have different reporting. There is some 

flexibility at the Federal level to allow States to move part and parcel of these among the various programs, but it really needs a combined effort to work. 

The CHAIRMAN. Any way of trying to put that together? 

Mr. TEMPLE. Absolutely. 

The CHAIRMAN. Who is, you? 

Mr. TEMPLE. We are trying our best with common measures and 

doing that to where it is a 1-stop shop for someone coming in. 

The CHAIRMAN. Right. You mentioned the 1-stop. Yes. Well, what 

is the best way to figure out how to put that 1-stop together? 

Mr. TEMPLE. I would be glad to provide you with some ideas on 

how we can do that. 

The CHAIRMAN. All right. 

Mr. FOGARTY. Mr. Chairman, in Rhode Island, Governor Chafee’s 

workforce board has identified—and it is business-driven, as you 

know—growth areas where we see jobs now and are likely to in the 

future, areas such as defense, high-tech, the green jobs industry, 

13 

hospitality, and health care. We form partnerships and consortiums 

with business to identify training opportunities to make sure those 

skilled workers are there when the jobs are available. 

The CHAIRMAN. Thank you. 

Mr. FOGARTY. Because ironically, even in a State like ours where 

there is a high unemployment rate, we still hear from employers 

who are having trouble getting skilled workers in jobs. 

The CHAIRMAN. I apologize. My time is up. Thank you very 

much. 

Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. 

Mr. Temple and Mr. Peitersen, as I mentioned in my opening 

statement, I believe we need to change the culture of the UI system 

from one that simply measures the distribution of benefits to one 

that focuses more on getting the unemployed back to work. Now, 

I gather from your statements here today that changes like this are 

already being made in a number of States, and I am glad to see 

this, but I believe we need to do more to facilitate this shift at the 

Federal level. 

You both have discussed your efforts to improve reemployment at 

the State level. What real evidence can you point to that the ideas 

you have mentioned—job search, reemployment services or training 

programs—reduce the length of time individuals spend receiving 

unemployment benefits? Also, what metrics would you use to 

evaluate these programs at the Federal or the State level? We will 

start with you, Mr. Temple, and then anybody else can weigh in. 

Mr. TEMPLE. In Texas we have self-imposed a 10-week reemployment measure on ourselves to rapidly reemploy, so we use that as 

a measurement, as a metric, and hold our local offices accountable 

to that. Making them a priority and an outcome-based initiative, 

I think, is really the key. To my knowledge, Texas is the only State 

that has implemented a State-wide self-imposed measure. There is 

not a Federal measure for reemployment at all. So I think our 

model—and one other thing is just simply the duration and exhaustion as a metric to reduce it. 

But the real deal is the priority and making this population a 

priority, to get them reemployed and hold ourselves accountable to 

do that. In government, if you do not measure it, it does not exist. 

We measure it now, and it does exist. 

Senator HATCH. Thank you. 

Mr. PEITERSEN. I would just add to what Mr. Temple said that 

there is another factor in there that you need to look at. It is not 

just looking at all those measures of reemployment. And I could not 

agree with you more, Senator Hatch, about getting the organizations to look first in the UI program to getting people back to employment. It should be the main focus of where we are going and 

how we can do these things. 

But the other metric that you need to look at there is, you should 

measure anything that is being done as, what is that doing to create savings for the UI trust funds that are sitting out there? By 

taking any methodology, whether it is work-share or enhanced job 

assistance or whatever it is, it needs to be proven that what you 

are doing is actually making a difference with those funds that you 

are spending to get those people back to work, by reducing the 

14 

amount of time they are on unemployment, thus saving money for 

the trust fund. 

So one of the metrics that I would like to see out there more is 

something that talks about, how does this program impact the 

trust fund? And, when you impact the trust fund, you have fewer 

benefits being paid, you have people getting back to work quicker, 

and you reduce the employer’s taxes, et cetera. 

Senator HATCH. All right. 

Mr. Temple, in your written testimony and in your statement, as 

I understand it, you describe a number of reemployment services 

that Texas offers to UI claimants. Now, I am hoping that we can 

get a better idea of how these various programs work in practice. 

So, let us say I am an unemployed worker in Texas, and I file for 

unemployment benefits. Your goal is to help me find a new job 

within 10 weeks. How do I become aware of your State’s reemployment services, whether it is job search services, the wage subsidy 

program, or something else? How specifically do I take advantage 

of them, and what will you require of me to be able to participate? 

Mr. TEMPLE. Tonight, every workforce board will generate a letter that will be mailed in the morning to everyone who applied for 

Unemployment Insurance in Texas today, introducing them to the 

system, giving them a number, a location of the office closest to 

them, and inviting them to come in and get the services. That is 

not the usual UI—you have to come in, you have to do this. This 

is the welcome wagon letter, letting them know what we have. But 

we start immediately letting them know. 

The second thing that we do is, through our priority and our 

workforce boards, have extensive outreach—as we have said, 500 

job fairs just in the last month. We communicate through outreach 

with the claimants—for instance, our hiring incentive program. We 

let them know that they can take this and go out and sell themselves so that, if an employer hires them—because it is strictly as 

a hiring incentive to hire Unemployment Insurance claimants— 

they can take that and say, if you hire me, I know I do not exactly 

have the skills, but here is $2,000 that will offset the training cost 

for me. 

So we are trying to find them jobs, and we let them self-market 

themselves at the same time. So that is kind of how we start, day 

one, letting them know about the services that we have. But we 

also have an expectation of job search. We implemented, in 2003, 

a minimum of three job searches a week. Our local board set what 

it will be. It is generally around five. Around the State, some of the 

rural areas are at three. So there is an expectation on the claimant’s part that they are having to look for work, and a meaningful 

job search as well. 

We check that. The culture of our agency—I, myself, call one employer a week relative to a claimant to see if he or she did what 

she was supposed to do, or he was supposed to do, in job search. 

We do about 1,500 of those a week within the agency. So, we are 

trying to set the culture inside the agency that we are about putting people to work and sending that message to employers that we 

care, and job seekers that we care. 

Senator HATCH. Well, thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Hatch. 

15 

Before I turn to Senator Wyden, may I ask what percentage of 

people who receive that letter initially respond? 

Mr. TEMPLE. One hundred percent. 

The CHAIRMAN. One hundred percent? 

Mr. TEMPLE. Yes. 

The CHAIRMAN. You send that letter out, the welcome wagon letter, and you have a 100-percent response rate? 

Mr. TEMPLE. Oh, I am sorry. Response rate. No, sir, it is not 100. 

I thought you meant of the letter. 

The CHAIRMAN. No. 

Mr. TEMPLE. I am not really sure what the response rate is. I do 

know that our outreach, our rapid reemployment program that we 

use, reaches about 60 percent, 50, 60 percent, and we have about 

a 90-percent show-up rate for those. 

The CHAIRMAN. I am encroaching on Senator Wyden’s time. 

Mr. TEMPLE. I am sorry. 

The CHAIRMAN. Senator Wyden? I am sorry. 

Senator WYDEN. Thank you, Mr. Chairman. I commend you for 

a very important hearing. This is exactly what we need to be focused on. 

Gentlemen, I had a great thrill almost 20 years ago when I had 

a chance to team up with the late Senator Kennedy and also, as 

a member of the House, Congresswoman Olympia Snowe, and we 

were part of the original effort that became law in 1993 to set up 

this self-employment program. Dr. Wandner noted what this essentially does is allow people who have been carefully screened to 

draw their unemployment benefits while at the same time being 

exempt from some of the search requirements that they would have 

to be part of unless they were setting up their own businesses. 

Yesterday, seeing the recent success I introduced with Senator 

Carper and Senator Casey—Senator Carper was one of the first in 

the country, focusing on a point Senator Hatch made about State 

flexibility—our colleague on this committee, then Governor Carper, 

was one of the first to use this program in Delaware, with considerable success. 

The reason a number of us are focused on trying to expand it, 

and the President, to his credit, wants to do this as well, is we are 

seeing some extraordinary successes. 

I just want to describe one to you, Dr. Wandner, to kind of get 

a sense of what we would need to do in the future. We have seen 

an enormously successful tech start-up in our home State, really in 

my hometown, called Urban Airship. What you had were a couple 

of young guys, Adam Lowry and Michael Richardson. They had 

worked in the technology field. They saw that there were a lot of 

opportunities that consumers, for example, want to make online 

purchases with Smart Phone applications. 

These were savvy tech software developers, and they said, let us 

get our benefits and be able to pool them, so instead of having the 

traditional maintenance, to get their checks and search for work, 

they could use the unemployment system as a trampoline to be 

able to come up with new jobs and new industries and the like. 

I have a picture of them. You all cannot see it, but these are four 

young guys in their sneakers who know a lot about technology. 

This obviously is not for everybody, and I am not going to pretend 

16 

that it is, but is this not the kind of model, Dr. Wandner, that 

ought to be expanded significantly, having seen some of these successes in the model programs going back to the early 1990s? 

Dr. WANDNER. The answer is ‘‘yes.’’ I mean, the program does in 

fact reduce the duration of unemployment, saving the trust fund 

money, and it ends up substantially increasing the earnings of people who participate. The problem with the program, and I think the 

reason why it is only in seven States, is because there is not a dedicated funding source for training, and counseling for entrepreneurial training, for this program, so it is difficult to put the program together and make it work. 

But we do have the Workforce Investment Act that has many 

kinds of training that can be provided to individuals, and one of 

them is entrepreneurial training. I think we need more change in 

the way we measure the success of entrepreneurial training to get 

greater participation, and it is also very important to engage the 

Small Business Administration and the State Small Business Development Centers that are the experts in counseling and training. 

So I think that is what needs to be done. 

Senator WYDEN. Would it be fair to say that the costs associated 

with both administration and training, since we do have some programs that can help in this area, are pretty modest compared to 

the potential benefits? I would like to make part of the record, Mr. 

Chairman, an article that describes essentially how Silicon Valley 

is tripping over themselves to invest in Urban Airship, and Dr. 

Wandner has done some very good work. I have your book here 

that mentions Senator Snowe, for example. 

[The article appears in the appendix on p. 80.] 

Senator WYDEN. My time is almost up, and I think, for purposes 

of just wrapping this up, while there are training costs, there are 

administrative costs and the like—and that is what Senator Carper 

and I and Senator Casey want to address—is it not fair to say that 

those costs are pretty modest compared to the potential benefit of 

self-employment? 

Dr. WANDNER. Yes. I mean, we have done, in an experiment, a 

benefit-cost analysis, and the benefits are substantially greater 

than the costs of the program. 

Senator WYDEN. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Next is Senator Stabenow. 

Senator STABENOW. Thanks very much, Mr. Chairman. Thank 

you to all of our witnesses. 

I want to talk a little bit more about the growing skills gap that 

I am hearing about in terms of people who are out of work but not 

matching up with the jobs that are available. I know you have been 

talking about that, but, Dr. Wandner, I wonder if you might talk 

a little bit more about that. 

In Michigan, we have tried to address that with something we 

call No Worker Left Behind, which is helping workers gain skills 

and credentials they need to gain the employment for jobs that are 

available, or start their own businesses. But I am wondering, from 

your perspective, how we could better coordinate the changing employer needs with training and placement and support for those 

who need jobs. 

17 

Dr. WANDNER. Well, there are many very fine training programs 

out there. I think what we need is more training, more training 

that is targeted to areas of economic growth. 

Senator STABENOW. I guess what I am asking is—I know that in 

general, but we have very specific employers that are doing job 

fairs and so on in Michigan and indicating that they are not able 

to find the people whom they need. So specifically matching up employers with employees, what have you found to be the most effective way at this point to do that? 

Dr. WANDNER. Well, certainly the kind of job search assistance 

programs that try to match employers and workers, that do job development, which is done in many States, I think have to be more 

emphasized and better-funded. 

Senator STABENOW. Would anyone else like to say anything? Mr. 

Fogarty, would you like to add to that? 

Mr. FOGARTY. Thank you, Senator Stabenow. You hit the nail 

right on the head with the middle skills gap, and that is what we 

are looking at in Rhode Island and really in New England. We are 

finding that, while college is important, not all students are going 

to go to college, but everyone needs to get a continuing education 

level above high school. 

So we have what is called the Careers Pathway program under 

Governor Chafee’s workforce board, where we are looking at setting 

up a mechanism where people can identify stackable certificates 

where they can look to see, what are the jobs that are out there, 

kind of the wage that I am looking for, and what path do I need 

to take to get there at a certain level so I can kind of move up 

through the process, not a ladder as much as a lattice. 

We have that organization which is going to be coming out with 

this report very shortly about what we can do in Rhode Island to 

make that a reality so we get those skill levels up and the workforce is one that matches the needs of employers, because it does 

have to be, Senator, as you know and pointed out, employer-driven. 

Senator STABENOW. Absolutely. 

Does anyone else want to respond to that? Yes, Mr. Temple? 

Mr. TEMPLE. Going back to flexibility, the Workforce Investment 

Act has restrictions and actual prohibitions on being able to use 

dollars for incumbent workers. If you are able to upgrade the skills 

of incumbent workers, they can be promoted and open up entrylevel positions for individuals who are unemployed. So it is a ‘‘build 

it and they will come’’ type of deal when you are looking at the incumbent worker. So that is something that, when we are talking 

about the flexibility that has a practical approach like that, I would 

want to share. 

Senator STABENOW. Thank you. 

Yes? 

Mr. FOGARTY. Senator, if I could add one more thing. One thing 

that we are finding very helpful is on-the-job training grants, 

where the businesses may be on the cusp of deciding whether to 

add someone or not. They may need skills that are just not out 

there, and they need to train them in place. They have to come up 

with some dollars, we come up with some dollars, but in the end 

it is a win-win situation for everybody. They get the skilled worker 

they need, and the person is employed. We are finding that a very 

18 

useful tool. Unfortunately, we do not have the resources to do as 

much of it as we would like. 

Senator STABENOW. Yes, Mr. Peitersen? 

Mr. PEITERSEN. I would just like to add, to build on Mr. Fogarty’s 

comment, that is the beauty of a lot of wage subsidy programs. 

What they are doing is giving that employer the incentive to bring 

somebody on to help get them those marginal skills that they now 

need to get before they even become fully employed. 

Senator STABENOW. Right. And just in my final seconds, Director 

Fogarty, I do not know if you want to respond to the fact that, as 

we look at the need to extend unemployment benefits, that we are 

looking—The Urban Institute has indicated that there is a multiplier, a GDP multiplier of about two, so every dollar that we spend 

on UI generates about $2. I am wondering how important you 

think extending unemployment benefits is. 

Mr. FOGARTY. In our State, Senator, it is critical. In fact, we are 

already planning for the consequences if it does not happen, because, once the full phase-out occurs sometime in March for us, we 

are looking at a net impact to our State of about $24, $25 million 

a month. That is significant dollars. That impacts other businesses 

as well. 

Senator STABENOW. Right. 

Mr. FOGARTY. And folks do not have the reserves anymore. The 

jobs are not out there. It is not that they are sitting home doing 

nothing; the jobs are not out there. What is going to happen to 

them if they have absolutely no source of income? We are very concerned about that. 

Senator STABENOW. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Cardin? 

Senator CARDIN. Well, thank you, Mr. Chairman. Thank you very 

much for this hearing. I want to thank all of our witnesses. 

The UI system is a vital link for individuals during tough economic times. It is their lifeline. As the last exchange pointed out, 

it is counter-cyclical. It is very important for our economy to make 

sure that we have a healthy Unemployment Insurance system. But 

I think we all agree that the best result is to get people jobs that 

will help their families and that will help our economy. 

So our objective is to make sure you have the tools necessary to 

get people back to work. I have heard you talk about the different 

tools that you use, from job fairs to the Texas 10-week guideline 

issues, to the 1-stop shops that we employ in our State of Maryland, work-share programs, and Senator Wyden’s proposals that we 

have been moving forward with on business opportunity. 

But the challenge is that we just do not have enough jobs out 

there, number one, for the people who are unemployed in the system. Yes, we do deal with the skill levels, which may increase the 

availability of jobs for some, but we still do not have enough jobs. 

The incentive issues I hear about frequently—and yes, from the 

employer point of view, it is good to have some additional incentives. From the employee point of view, people want to work. 

We run across the problem that, if you are unemployed in a 

tough economic time and you are looking for a job, your chance of 

getting that job is less likely than someone who is already emVerDate Nov 24 2008 19:47 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 R:\DOCS\74272.000 TIMD
19 

ployed looking for a job with the exact same skill levels as everyone 

else. There is discrimination against people who do not have employment today. 

So I guess my question to you is, tell me specifically how we can 

adjust the guidelines or policies in our Federal Unemployment Insurance laws to give you the best tools to deal with the challenges 

that we are confronting in this very stubborn economic period. 

What would you like to see us do here? I just heard from the last 

exchange you want us to extend Unemployment Insurance. I understand that. If you could give us some additional specific guidelines—I also understand you want flexibility, but tell me specifically how that is going to deal with the challenges I just mentioned. Do not be shy. 

Mr. TEMPLE. Of course, I am on the flexibility soapbox, I know, 

but I will give you a good example. We took the encouragement of 

Health and Human Services and the Department of Labor in using 

TANF dollars the summer before last to do hiring incentive programs, using that to augment what we had in general revenue and 

trying to do that 1-stop with anyone who would come in. We were 

prohibited because of all of the technicalities with the TANF dollars. We were not able to serve anyone who did not have a child. 

If a single adult came in who did not have children or was the 

non-custodial parent, we had to find another pot of money. You 

cannot use any UI money for that. We were trying to also target 

children who were aging out of foster care who were about to be 

unemployed, and we were not able to serve those individuals either. So, as much as we want to have a 1-stop, those were dollars 

right there that—— 

Senator CARDIN. The challenge is, though, as we do that, the 

next step Congress usually takes is to cut the funds because there 

is not the specific reason for having the funds. So that is one of our 

challenges here as I have seen us go towards more block-granting. 

I understand that, but how do you deal with the discrimination 

against someone who does not have a job? I met yesterday, Senator 

Wyden met yesterday, with college students who cannot find work. 

They have not worked, so they do not have the work experience, 

but they are trained. Someone who has a job is getting that job. 

How do you deal with that within the unemployment system? What 

can we do here nationally to give you a better crack at opening up 

doors? 

Mr. TEMPLE. We are promoting these individuals on Unemployment Insurance, doing exactly what employers tell us. Employers 

have told us when things were tough as far as finding skilled labor, 

they were saying, just send me someone who will show up, and I 

will take it from there. 

Well, the Unemployment Insurance folks, by definition, are unemployed by no fault of their own, so we are saying these are people who have the work ethic, who are trained, are trainable, and 

hopefully with our hiring incentives and flexibility to do other 

things, that we are able to bridge the gap of the cost of training 

someone. But we sell the individuals as being just exactly what employers—— 

Senator CARDIN. Anything other than flexibility you want from 

us? 

20 

Mr. TEMPLE. As I promised Chairman Baucus, we will be glad 

to provide a list of things, because I know my staff is—— 

[The list appears in the appendix on p. 59.] 

Senator CARDIN. My time is running out. Does anybody else want 

to jump in? You have 5 seconds. 

Dr. WANDNER. Senator, one problem is that businesses are not 

hiring as much as we would like them to. So there are programs 

like work-sharing that will prevent unemployment from happening 

in the first place, and, for unemployed workers who are looking for 

a job and whom Texas cannot place, they can create their own jobs 

if you have a self-employment assistance program in your own 

State. So let people, as you can in Maryland, create their own jobs. 

Senator CARDIN. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

This is not directly on point, but I was struck by a column I read 

in one of the morning papers on Confucianism in Asia. This was 

a column about a young lady in Vietnam who just works so hard. 

I think her mom is no longer with her. She takes care of the kids. 

She bikes an hour and a half to work. She gets up very early in 

the morning and she takes care of all the chores. 

But the point is, she is driven, absolutely driven, to succeed. She 

has undertaken huge obstacles because she is so driven. She is 

going to succeed, this lady. She is training to become a CPA in 

Vietnam. Part of it is sort of the Confucian ethic in Asia of education, of just striving to succeed. It partly explains, I think, why 

to some degree Asians, when they are in this country, tend to work 

harder in schools, get better grades, work so hard, et cetera. 

[The article appears in the appendix on p. 27.] 

The CHAIRMAN. So I am wondering, in all these programs we are 

talking about—this is hard; this is as much cultural as it is anything else—if there is an education component here that makes 

sense. It is not just—maybe it is just to educate for a new skill set, 

but also it is education just to instill the incentive to see if there 

is hope in America still. You do not have to be ground down. 

The thought just occurred to me, and I was wondering if any of 

that makes any sense. I do think, and it is not really directly related to the unemployment program, work-share, et cetera. Maybe 

it is. But I do think that, in this country, to get jobs and have the 

jobs in the future, more of us are going to have to have that drive 

to succeed and just really do well for the right reasons, just provide 

for family, and so on and so forth. 

Any thoughts? 

Mr. FOGARTY. Senator, our State kind of entered the recession a 

little earlier than the Nation. We were a little bit harder hit. 

The CHAIRMAN. You have a high unemployment rate. 

Mr. FOGARTY. A high unemployment rate for a long time. And we 

are in a position now where I think that a mind-set has set in that 

we are in tough times. Even though there is a recovery ongoing, 

statistically most people have not felt it. I think that is starting to 

bring about a mind-set change in terms of how you approach the 

workforce, in terms of what is expected, the fact that you just cannot take it for granted that a certain level of education will get you 

something. 

21 

I believe that—you were talking about education—by experiential education, we need to let folks know that, if they want to be 

successful, they are going to have to look at different routes to get 

there. They are going to have to be much more focused in terms 

of career and skills. They cannot take the opportunity to waste 

time when they are on unemployment. 

They really need to take advantage of all the training programs 

that are out there that are available. I think that they also understand, because of the flexibility of the workplace today, that, unless 

they are nimble and unless they continually upgrade their skills, 

they are going to have trouble in the long term. 

I think that message is starting to get out there, and we are 

starting to see that, I think, in some of the workforce people. I 

know in our universities we are. I also teach part-time, and I do 

see that in some of my students in terms of the approach they take, 

particularly as they get ready to graduate. 

The CHAIRMAN. Role models often help, too. If somebody in some 

of your offices, the 1-stops, whatever, who has just done it, that is, 

came from, if not the ashes, from a very difficult background or a 

difficult condition, they were laid off and looked around and so 

forth, just so that those with whom you are in contact say, boy, old 

Joe, he was down and out, but old Joe, he has enthusiasm, he has 

hope, and all that. That is infectious; it is contagious. I am just curious whether there is—I do not know. That is more psychological 

than it is programmatic. 

Dr. WANDNER. Well, but this is the time to encourage education 

and training. The unfortunate part of high unemployment is that 

people cannot find jobs, but while they do not have jobs I think we 

should be pushing education and training as much as we can so 

when the jobs come back people have the skills to take them. 

The CHAIRMAN. Yes. Good. Thanks very much. This is a very vexing challenge we have. I deeply appreciate your jumping into it and 

helping. 

Senator Hatch? 

Senator HATCH. Let me just ask one other question. Mr. 

Peitersen, I would like to just chat a little bit about the employerbased training program some States have developed, the so-called 

Georgia Works model. 

Now, as I understand it, these programs would allow UI beneficiaries to work part-time with an employer, receiving some job 

training and possible placement at the work site at some point 

down the line. This has garnered a lot of attention recently as the 

Obama administration has expressed interest in this idea. 

I am also aware that these programs have received a fair amount 

of criticism from those who claim that UI claimants are essentially 

working for free and that these types of programs will encourage 

abuse on the part of employers. Is that a valid concern, in your 

view? Have you seen any abuse in these particular programs? 

Mr. PEITERSEN. No, I have not seen any abuse. We have not 

studied all of them. I have studied the Georgia Works a great deal, 

but the ones that have been replicated in other States, I have not 

yet. But abuses are usually not present in these programs. I mean, 

employers, it takes a lot for them to take somebody into their shop 

or their company and train them and spend resources to get them 

22 

involved in something. That is what Georgia Works is, it is a training program. It is teaching you new skills, it is teaching you new 

work habits, getting you primed to go to work in today’s environment. 

The nice thing about the Georgia Works program is that it is 

only 3 days a week. The other time that UI claimant, while they 

are still receiving their UI when they are in that Georgia Works 

program, is also still out there looking for work. The statistics show 

that a lot of the people who went into the Georgia Works program 

ended up getting employment before the training ended, the 8 

weeks they had for the training in there, and that employers were 

giving them some skills and abilities to go to work for somebody 

else, and they were doing so. 

Senator HATCH. Well, I know that the most talked-about version 

of this type of program, the one implemented in Georgia, is currently undergoing an overhaul, and other States are trying out 

similar programs with some variations. In your observation, which 

elements of this particular model have worked and which elements 

have not worked? Is this an idea that can work on a large scale 

in places around the country? 

Mr. PEITERSEN. I think it can work in large scale, but we also 

need to look at it. It is just another tool in the toolbox with which 

the workforce agencies can work with claimants in getting them 

jobs. It is another tool for employers to work with in providing employees and seeing if they work out in their job site and seeing how 

they can adapt to the new skills that they need in the job. 

So, like everything else, there are a lot of parts that go into getting people back to work, and the more options that we have out 

there for people to get back to work, the more they will be able to. 

The Georgia Works program is going through a reevaluation in 

Georgia right now, but that is also because it was expanded a great 

deal. They paid a lot of the costs for that Georgia Works program 

out of State funds, and those State funds obviously dried up. 

I mean, they were paying for the Worker’s Compensation for 

those people who were unemployed, they were paying them a stipend to help them with transportation, and these kinds of things, 

all the time while they were receiving their UI. So there are aspects of that program—New Hampshire is running that program 

without paying those kinds of costs. So we are still looking and seeing what else these other States are coming up with as they modify 

that Georgia Works model to see which one works the best. 

But once again, as Mr. Temple said a little while ago, what 

works really well in Georgia may or may not work well in North 

Dakota, or Alabama, or wherever it is. So what we need to make 

sure of is that we have States that have enough flexibility so they 

can look at things that are out there that other States have tried 

and are successful with, and say, boy, that makes a lot of sense for 

me, let me try to do it this way, and let me put it in here. 

So it is not saying that this is a big national program you need 

to have out there. It needs to be an option for States to say, how 

does it fit? The best thing, of course, is to have a wage subsidy kind 

of thing, where you are actually going to work for that full time 

with that employer. 

23 

But the Georgia Works program can oftentimes be a stepping 

stone that says, I put somebody in a Georgia Works program and 

I had them in there for 8 weeks, and now that employer really 

likes that person and so now maybe we can do something on a subsidy program for a few additional weeks to get them further 

trained on those skill gaps that they have been having and move 

them into full employment. So it is just like everything, there are 

a lot of gears going on there, and they all need to work together. 

Senator HATCH. I want to thank all four of you. I really appreciate your testimony here today. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Does Georgia Works work? I heard somewhere that it has been 

discontinued. 

Mr. PEITERSEN. It has not been discontinued as far as I know. 

It has been ratcheted down. A couple of years ago they moved 

it—— 

The CHAIRMAN. Because? 

Mr. PEITERSEN. Well, because of the cost, the huge cost. They 

moved that program. It started out as just a UI claimant program 

in Georgia, but then, as the recession got worse and everything, 

they expanded that out there to everybody, so, even though they 

were using Georgia Works, the people were not on UI claims even. 

So their volume went way up, but the cost for maintaining that 

out there with those individuals became too big of a burden for 

them, because once again they were using State funds for that, and 

so they had to cut back the program to go back to the original intent of just using it for UI claimants. 

Dr. WANDNER. Senator, I think we need an evaluation of Bridge 

to Work programs. There has not been a rigorous evaluation of 

them yet, and there is a lot that we do not know about them at 

this time. 

The CHAIRMAN. Yes. Well, we are a huge, complex country. We 

have 50 States, each to some degree attempting to solve the problems on their own, which is wonderful. It is sort of the old laboratory of ideas. Nothing is simple. But we just have to keep at it. 

With all the people who are unemployed, it is just a tragedy. We 

need new jobs. That is number one. Number two is getting those 

people to match those jobs. 

But thanks. This is very helpful. We have to digest all this. Mr. 

Temple is going to send some information. I would encourage others who also want to send it to do so too. We will try to figure out 

how to make the best use of it. So, thank you very, very much. We 

appreciate it. 

The hearing is adjourned. 

[Whereupon, at 11:28 a.m., the hearing was concluded.] 

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