U.S. Department of Labor Budget

PROGRAMS FOR JOB TRAINING AND JOBLESS WORKERS
Budget Calls for Cuts in All Major Employment and Training Programs

Once again, the Bush administration’s budget shortchanges programs for job training and jobless workers. President George W. Bush proposes some of the most drastic cuts in these programs since taking office. If enacted, these cuts would exacerbate inequality and increase educational and economic polarization. They would make it harder than ever for workers to navigate an increasingly turbulent labor market and profound economic restructuring.

With cuts of more than $1 billion, the Bush 2008 budget for job training and jobless workers rings hollow when compared with the Bush rhetoric. In his Jan. 31, 2007 speech on the “State of the Economy” the president noted that “income inequality is real; it’s been rising for more than 25 years.” The president goes on to say, “And the question is whether we respond to the income inequality we see with policies that help lift people up, or tear others down. The key to rising in this economy is skills—and the government's job is to make sure we have an education system that delivers them.”

The Bush administration’s pretense of supporting education and training belies the reality of the 2008 budget. Strong labor market institutions that provide income security, education and job training to the unemployed are a vital component of an economy that works for all workers and their families. At a time of increasing inequality and declining living standards, the Bush administration has undercut and undermined our nation’s most important labor market programs.

If the FY 2008 budget is adopted, President Bush will have cut inflation-adjusted investment in the WIA Employment Service/Unemployment Insurance assistance programs described in this analysis by $2 billion since taking office. The president’s budget fails America’s jobless in every way:

• Consolidates, block-grants and cuts funding for job training and employment security programs designed to help unemployed workers, disadvantaged adults and at-risk youth.
• Dismantles the Employment Service, the backbone of our nation’s employment security system aimed at connecting workers needing jobs with employers who need workers.
• Diverts ES and WIA funding to unproven individual Career Advancement Accounts (CAAs) that will provide less, not more, help to workers in need
• Weakens the federal-state unemployment insurance program through state waivers that will undermine the UI safety net for unemployed workers and lead to the contracting out of important UI functions.
• Cuts funding for Trade Adjustment Assistance benefits at a time when millions of jobs are being lost to trade and off shoring.

Following is a chart showing major cuts to Employment and Training programs:

The U.S. Department of Labor invests in job training and provides assistance to unemployed workers through a number of important broad-based and targeted programs administered by the Employment and Training Administration, including the Workforce Investment Act. The president’s FY 2008 budget proposes to eliminate WIA adult, youth and dislocated worker programs and consolidate funding into a state block grant. Additionally, the budget would cut the total commitment to all training and assistance programs immediately.

Cuts Hurt Dislocated and Disadvantaged Workers

Our nation’s workforce training programs are often the last resort for low income and disadvantaged workers who have been neglected by their employers and the under funded student financial aid system. The president’s continued cutting of job training funding and assistance for unemployed workers compounds the labor market problems working families have experienced since 2001 and worsens their economic anxiety.

Contrary to official rhetoric that paints a picture of a strong economy, America's workers have faced a weak job market, increased long-term unemployment and significant declines in living standards for those who have been displaced.

• Millions of Americans who want to work do not have jobs. Seven million Americans are officially unemployed—nearly 1 million more than when President Bush took office—and 4.5 million additional people want jobs, but are not counted among the unemployed. Another 4.2 million people work part time because of the weak job market. The unemployment rate would be 8.3 percent if those workers were included in the unemployment rate. 
•   Long-term unemployment has nearly doubled under President Bush. About one in six unemployed workers (1.1 million workers) has been jobless for more than 26 weeks, the maximum number of weeks for receiving regular unemployment insurance benefits.
• Displaced workers continue to struggle. The consequences of job loss are profound for workers and their families. The majority—particularly those who lose long-held jobs—will see their living standards decline substantially—some permanently. Those laid off from good-paying manufacturing jobs suffer particularly long lasting economic hardship. According to the federal Bureau of Labor Statistics [2]
  • From 2003 to 2005 the number of displaced workers, including short and long tenured workers, totaled 8.1 million.
  • About 28 percent of long-tenured workers (those with three or more years on the job) lost jobs in manufacturing.
  • About half of long-tenured workers who were displaced from full-time wage and salary jobs and who were reemployed had earnings that were less than those on the lost job. Twenty-nine percent experienced earnings losses of 20 percent or more.

Unemployment Insurance and Employment Service Programs

The Employment Service and Unemployment Insurance programs are federal-state partnerships created more than 70 years ago to provide income protections and job search assistance to unemployed workers. The federal government funds the Employment Service to match job seekers to employers looking for workers and provides the UI system with administrative resources.

Our nation’s Employment Service, the bedrock of our workforce system, helped more than 13 million workers look for jobs in Program Year 2006. At a cost per participant of $55, the Employment Service is one of the workforce system’s most cost effective programs. Workers who were helped by the Employment Service saw an earnings increase of more than $1,500.[3]

Large cuts in Employment Security programs mean less help for jobseekers

The FY 2008 budget proposes to cut Employment Security programs that support state UI and Job Service activities, national activities and one-stop/labor market information programs by $92.9 million in real dollars compared to 2007. Such cuts will significantly impair the ability of our nation’s workforce system to provide career information to jobless workers and reduce the capacity to link effectively employers and jobseekers.

 

Eliminating the U.S. Employment Service will hurt millions of jobless workers

President Bush’s plan to eliminate the Employment Service will undermine the principle of an unbiased, nonpartisan agency to administer job referrals and assist in the payment of UI benefits. The president’s plan will lead to the privatization and contracting out of vitally important employment security functions, thereby compromising control over and accountability for federal resources.

Trade Adjustment Assistance (TAA) Programs

Bad trade policies are shrinking the middle class and fostering the flight of good jobs overseas. The manufacturing sector, a source of some of our nation’s best jobs, has lost nearly 3 million jobs since the start of the Bush administration. The TAA program was designed to provide income support and training to workers who lose their jobs due to trade.

Renewed in 2002, and combined with the NAFTA Transitional Adjustment Assistance Program, the new Trade Adjustment Assistance (TAA) program combined NAFTA-TAA and TAA, and significantly increased the number of workers potentially eligible for training and, income support when they lose jobs because of international trade. It also extended some health care coverage to eligible participants. Lack of resources and ineffective administration, however, has resulted in significant problems in the adequacy and efficacy of the program. The president’s FY 2008 budget proposal will only worsen those problems.

Cuts to Trade Adjustment Assistance benefits will impair opportunities for long-term training

The FY 2008 budget proposes to decrease funding for income support benefits under the Trade Adjustment Assistance program, assuming that fewer workers will take advantage the program next year.

The 2008 budget proposes inflation-adjusted cuts of $102.9 million in TAA benefits funding compared to 2007. The Bush administration plans for a reduction in TAA participants of nearly 6,000 workers in FY 2008 while the number of workers covered by TAA certifications has increased. In 2005 117,904 workers were certified for TAA—in 2006 there were 120,199 workers certified. [4]

During this same period there has been a troubling decline in the number of workers in training (from 37,774 to 35,958) and receiving trade adjustment allowances (from 55,293 to 53,493). [5] By denying workers the income support benefits to which they are lawfully entitled, the Bush administration’s cuts continue to impair opportunities for workers to participate in long-term training.

Cuts to TAA income support benefits are compounded by shortfalls in training funds. Previous studies have shown that many states exhaust their training funds before the end of each fiscal year, precluding numerous workers from being able to take advantage of training programs to which they are entitled. According to GAO, 35 states expected that available TAA training funds for FY 2004 would not cover the amount they would obligate and spend for TAA-eligible workers—18 states estimated the gap at more than $1 million.[6]

 

Inadequate Department of Labor administration hurts trade-impacted workers

In the past 5 years, courts have entered numerous orders directing the Department of Labor to reconsider erroneous denials of TAA income and training assistance to hundreds of trade-affected workers. Workers have suffered protracted delays in getting assistance as a result of these errors. Many more are too discouraged or lack the resources to pursue appeals.

 

Help for secondary workers is minimal

The new TAA program was expanded to cover secondary workers, such as parts manufacturing workers who lose their jobs when a client-manufacturing firm moves its operations to another country. Poor program design and inadequate guidance to identify affected workers, however, have meant that few secondary workers are receiving benefits.

• Just more than 2 percent of workers covered by TAA were secondary workers in FY 2003.
• No state has developed procedures to identify workers who are secondarily affected by a trade-related layoff in another state.[7]

1. Career Advancement Accounts (CAAs) are a bad deal for workers

Once again, the Bush administration has asked Congress to eliminate current WIA programs for adult workers, dislocated workers and youth as well as the Employment Service and transfer the funding for those programs to state block grants to pay for unproven Career Advancement Accounts (CAAs). Under President Bush’s plan, each eligible individual will receive a maximum yearly CAA contribution of $3,000 but no longer have access to the more valuable existing training programs and employment services.

CAAs take resources from current programs and provide fewer benefits

The Bush Labor Department is shifting existing WIA and Employment Service funds to create CAAs despite the fact that earlier legislative proposals to establish similar accounts have gone nowhere in Congress.

The benefit from CAAs would be very limited, and workers receiving CAAs would actually experience reduced rather than expanded services and benefits relative to what they get now.

• Current law imposes no caps on reemployment services or job training services unemployed workers may access through the WIA system. For the first time, CAAs create a $3,000 federal cap on the combined amount of reemployment services and job training. Under the current WIA system, states offer job training help through training accounts of up to $10,000 with an average value of roughly $5,000 to $6,000. [8]

• Bush Administration officials have touted CAAs as a program that will triple the number of workers receiving training. This maneuver is really a cruel ruse. Fewer dollars will be spread among more workers–leaving workers with less funding and less help.

CAAs will eliminate Rapid Response Programs

Rapid Response services under the Workforce Investment Act would be eliminated in favor of CAAs. States and communities would no longer have the resources to provide early intervention assistance to companies and workers facing mass layoffs and plant closings.

CAAs will severely restrict industry and workplace based training programs

Current WIA funding can be used to support sector partnerships with employers, unions and educational institutions to identify skill needs and develop customized training programs that meet worker and employer needs. The Bush proposal requires that at a minimum states spend 75 percent of their funding on CAA individual training vouchers, which would preclude the use of these funds to support work-based training programs.

CAAs are a back door to school vouchers

Under the president’s proposal WIA youth programs for high school dropouts, the homeless and runaway youth would be eliminated. The in-depth counseling and linkages to alternative education and training programs would be eliminated. Instead, these most vulnerable at-risk youth would be given CAA vouchers to purchase education and/or training with no support systems available to ensure they connect with quality secondary and post-secondary education programs.

2. Major Changes Will Undermine the Unemployment Insurance Safety Net

Proposed state waivers will allow diversion of Unemployment Insurance benefits

The Bush FY 2008 budget proposes to waive fundamental requirements of the UI program, including the requirement that states use their UI trust funds only to pay for UI benefits, and the requirement that states assess UI employer taxes based on employers’ experience rating. This alarming proposal threatens the ability of the UI system to provide unemployment compensation to displaced workers.

• The proposal would allow states to divert UI trust funds to purposes other than UI benefits. DOL’s proposal   imposes no restrictions on the size of such diversions, so it would allow states to divert the entire balance of their UI trust funds to other purposes.
• Diverting UI trust funds to other purposes threatens the ability of states to provide unemployment compensation to workers who need it. Moreover, it makes it far less likely that states will be able to make needed reforms such as expanding UI eligibility or increasing UI benefit levels.
• Diversion of UI trust funds may also compromise the role of the UI system as an economic stabilizer if trust funds are used in ways that have less stimulative effect on the economy.
• Allowing UI trust funds to support flawed and unproven programs such as individual reemployment accounts and wage insurance will provide workers less security and promote downward mobility.

Proposed re-employment and eligibility assessments privatize important UI functions

The Bush administration proposes to shift responsibility for major unemployment insurance activities, such as eligibility assessments, to the WIA One-Stop System, using $40 million in proposed funding.

• This move would transfer resources available through the Unemployment Insurance Trust Fund to privatized WIA operations, setting the stage for outsourcing of UI administration to private contractors instead of reserving them to public agency staff.

Proposals to prevent and detect UI fraud must be balanced

Monitoring the UI system to ensure that jobless workers receive their UI benefits and employers pay UI taxes is appropriate.  

•  Erroneous overpayments of benefits to workers and deliberate or negligent failure to make employer contributions on behalf of covered employees, along with erroneous underpayments and mistaken denials should be tracked and corrected. 
• The Bush FY 2007 budget, however, lacks important details on how it plans to achieve a balanced approach that addresses workers, employers and programmatic error.

States need adequate administrative resources

• At a time when UI administrative budgets are regularly cut, states should receive the full administrative resources necessary to help detect employer fraud and claimant overpayments. 

The Department of Labor should provide funding to states to track down employers who are cheating.  It should give states more tools to detect fraud on the part of employers and their accounting firms, including employer misclassification of employees as independent contractors. 

Collecting UI overpayments should be done appropriately

• The Department of Labor should not require states to use the federal income tax system to recover overpayments, as the FY 2008 budget proposes.
• Many states have implemented overpayment collection systems that reflect the unique circumstances of the overpayment and individual workers’ financial situations. Mandating reliance on the federal tax system would undermine these carefully tailored programs and unfairly penalize workers.

Collection of overpayments should not be privatized

• The President’s plan to allow states to use private collection agencies to collect “uncollectible” fraud overpayments and delinquent employer taxes is also deeply troubling.
• Privatizing the collection function, coupled with the powerful financial incentive the budget proposes for private collection agencies, will lead to abusive and potentially fraudulent collection practices that compromise the privacy of UI claimant and employer records and undermine the work of the state workforce agency.
• States should receive adequate resources for collection activities, and they should be allowed to dedicate a portion of their overpayment funds to support increased detection and auditing functions.

 

According to the Center on Budget and Policy Priorities analysis of the Bush FY 2008 projections, $5.8 billion will be taken from employment and training programs over the next five years. This includes WIA and Employment Service programs. The cut would reach 17 percent in 2012. The proposed funding level for programs in this falls below a freeze of the expected fiscal year 2007 funding level in every one of the next five years. The President’s proposed cuts would come on top of the already deep cuts imposed since 2001." [9]

The Wage and Hour Division

The Wage and Hour Division enforces basic worker protection laws that cover virtually every American workplace and apply to nearly all workers. Enforcement responsibilities include the nation's minimum wage, overtime, child labor and other employment standards under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act, the Migrant and Seasonal Agricultural Worker Protection Act, certain provisions of the Immigration and Nationality Act and other basic worker protection statutes.

The FY 2008 budget request for the Wage and Hour Division is $182.4 million, an increase ($16.7 million) in current dollars over the FY 2006 appropriation and an $8.7 million increase when adjusted for inflation. However, the FY 2008 budget request is still lower than the FY 2001 funding level, after accounting for inflation. The FY 2008 budget request for the Wage and Hour Division is 1.1 percent ($2 million) less than the Division’s funding level for FY 2001, in inflation adjusted dollars. The budget proposes 1,336 Full-Time Equivalent (FTE) employees for FY 2008, which is 36 more than were funded in FY 2006, but 123 less than were funded in FY 2001.

The Office of Federal Contract Compliance Programs (OFCCP) is responsible for administering a range of laws and executive orders that prohibit employment discrimination and require affirmative action by businesses contracting with the federal government. Collectively, these laws ban discrimination based on race, sex, religion, color, national origin, disability or veteran status.

The Bush Administration requests that the OFCCP be funded at $84.2 million for FY 2008. This funding level would represent a $1 million cut from the FY 2006 appropriation and an $8.1 million cut from FY 2001, in inflation adjusted dollars. The OFCCP budget proposes 625 FTEs for FY 2006, 164 fewer staff than in FY 2001, when OFCCP had 789 FTEs. This represents a 20.1 percent cut in FTEs from FY 2001.

The Bush Labor Department continues to seek funding increases in its FY 2008 budget for programs that audit, investigate and prosecute unions.  Increases would go to the department’s Office of Labor Management Standards (OLMS), which has union oversight and investigation authority, receives and publishes statutorily required union reports, sets standards governing union elections and finances and conducts both civil and criminal investigations into unions’ finances and elections.  The Department has also asked for increased funding for its Office of Inspector General (OIG), which unlike OIG offices in other departments, is also charged with investigating unions.

The FY 2008 budget proposal of $56.9 million represents an $11.2 million increase in funding for OLMS from FY 2006 (an increase of $8.9 million in real dollars).  This represents a 24.4 percent increase from FY 2006 (an 18.6 percent increase in real dollars) and an increase of 86.6 percent from FY 2001 (a 54.1 percent increase in real dollars).  The OLMS budget proposes 369 FTEs for FY 2008, 107 more than were funded in FY 2001. This represents a 40.8 percent jump in FTEs from FY 2001.

The FY 2008 budget proposal would increase OIG funding by $7.6 million dollars, to $79.0 million, up from $71.4 million in FY 2006.  Of this increase, $2 million is requested to expand the OIG’s labor racketeering program. These additional resources would fund the following: investigations targeting federally funded Gulf Coast construction contracts with union workforces; investigations of Gulf Coast construction project program fraud (including Unemployment Insurance (UI) fraud); and investigations of UI program fraud by “nontraditional crime groups.”

The FY 2008 proposal represents an increase in funding of 18.6 percent since FY 2001, in dollars adjusted for inflation.  The president’s FY 2008 budget requests an additional 18 FTEs for the OIG. This request would bring the number of FTEs in FY 2008 to 468, a 9.3 percent increase from 428 FTEs in FY 2001.

President Bush’s FY 2008 budget for worker safety and health is in large measure a status quo budget compared to FY 2006. (Since the Fiscal FY 2007 funding for the job safety agencies has not yet been finalized, the firmest comparison is to FY 2006 funding levels).

While in nominal dollars, the Bush budget request for FY 2008 increases funding for OSHA, adjusting for inflation, the FY 2008 budget in fact represents a cut in funding compared to FY 2006. [10]

An increase in funding is being requested for MSHA, particularly the coal enforcement program. This request for additional funding comes only after the deaths of 47 coal miners in 2006, and after the Congress increased funding for coal enforcement through an emergency appropriation. Adjusting for inflation, the FY 2008 budget request for MSHA and the coal enforcement program are less than the combined amounts Congress appropriated in the regular and emergency appropriations for FY 2006.

For FY 2008, the Bush budget proposes a cut in the NIOSH budget, reducing the nation’s commitment to researching and preventing workplace injuries, diseases and deaths. [11]

For FY 2008, the Bush Administration has proposed the following funding levels for the job safety agencies:

• $490.3 million for OSHA
• $313.5 million for MSHA
• $253 million for NIOSH

With this combined budget request of $1,056 million for the federal job safety agencies, in FY 2008, the Bush Administration proposes to spend $7.32 per worker to protect American workers from job injuries, illnesses and death.

• The FY 2008 budget proposes $490.3 million in funding for OSHA compared to $472.4 million appropriated in FY 2006.
• Adjusting for inflation, the FY 2008 proposed OSHA budget represents a $5.1 million cut over the FY 2006 appropriation. Since FY 2001, when the Bush Administration took office, there has been an erosion in federal job safety programs. In real dollar (inflation adjusted terms), the FY 2008 budget request would cut the OSHA budget by $25.4 million compared to FY 2001 funding levels.
• In FY 2008, the Bush Administration proposes to totally eliminate funding for worker safety and health training and education programs, as it did in FY 2006 and FY 2007. (Indeed every year since taking office, the Administration has sought to slash or eliminate funding worker training). But each year the Congress rejected these proposed cuts and maintained funding for worker safety training programs. The recently passed House FY 2007 Funding Resolution maintained funding for worker safety and health training at the $10.1 million FY 2006 level.
• At the same time it proposes to eliminate safety and health training for workers, the Administration has proposed significant increases in funding for compliance assistance programs for employers. In FY 2008, the budget proposes a $7.1 million increase in the federal compliance assistance program with $4.6 million of this increase being sought to expand the Voluntary Protection Program. The total combined funding requested in FY 2008 for federal and state compliance assistance programs is $134.1 million, 27% of the overall OSHA budget.

• The proposed budget requests $16.9 million in funding for safety and health standards, compared to $16.4 million appropriated in FY 2006. Adjusted for inflation, since FY 2001 the OSHA standard’s budget has been cut by 7.5%. Since taking office, the Bush Administration has virtually shut down the regulatory process, favoring voluntary guidelines over mandatory protections. Only one major safety and health rule – a hexavalent chromium standard – has been issued, and that was under court order. Instead of developing and issuing needed protections, the Bush Administration overturned OSHA’s ergonomics standard, killed pending final rules on indoor air quality and tuberculosis and withdrew or delayed dozens of other important safety and health rules.
• The FY 2008 budget proposal increases funding for federal enforcement by $10.4 million over FY 2006, with a request of $183.0 million. Adjusting for inflation, this represents a $2 million increase. Since the Bush Administration took office, the OSHA federal enforcement budget has seen a decrease of $1 million in real dollar terms. The budget for State OSHA enforcement has experienced much greater cuts. The FY 2008 request of $91.1 million represents a cut of $15.9 million in real dollar terms over FY 2001.
• No specific funds or activities are proposed to address ergonomic hazards or to implement the Administration’s Comprehensive Approach to Ergonomics that was announced in April 2002. Since that time federal OSHA has issued only three voluntary guidelines – for nursing homes, retail grocery and poultry - and issued 17 general duty citations for ergonomic hazards. This minimal activity has ground to a halt. In 2006, no new ergonomic guidelines or general duty citations were issued.
• Since the Bush Administration took office in 2001, they have reduced OSHA staff by 197 positions, from 2,370 Full Time Equivalents (FTEs) in FY 2001 to 2,173 FTEs in FY 2006. The majority of these staff cuts have been in the standards and federal enforcement programs. For FY 2008, the request is to add 13 FTEs for the voluntary protection program, bringing the total FTEs to 2,186.

• The FY 2008 budget proposes $313.5 million in funding for MSHA compared to a total of $303.3 million appropriated for MSHA in FY 2006 through regular appropriations and an emergency supplemental enacted in 2006 following a series of deadly mine disasters.
• Adjusting for inflation, the FY 2008 proposed MSHA budget represents a cut of $4.6 million over the FY 2006 appropriations. But compared to FY 2001, the MSHA budget has seen an increase of $15.2 million in real dollar terms.
• For the coal enforcement program, $140.7 million is requested, less than the total of $142.7 million appropriated in FY 2006. Compared to FY 2001, the coal enforcement program has seen an increase of $2 million (1.5%) in real dollar terms. This increase in funding followed years of funding reductions and was largely in response to the deaths of 47 coal miners in 2006.
• For Metal/Non-Metal Enforcement activities, $70.1 million is requested, compared to $68.1 million appropriated in FY 2006.
• For MSHA standard setting, $2.7 million is requested, compared to $2.5 million appropriated in FY 2006. This level of funding maintains this program at current activity levels. No additional funds are being sought to develop and issue the new standards required by the Mine Improvement and New Emergency Response (MINER) Act enacted by the Congress in 2006.
• The FY 2008 budget requests 2,306 FTEs for MSHA. This continues the funding for the existing MSHA staff and the 170 positions added by the emergency supplemental in 2006. This staffing level is still 51 FTEs below the 2357 FTE MSHA staffing level in FY 2001.

• For FY 2008, the Bush Administration has proposed a $253 million budget for NIOSH - $166 million for program activity and an additional $87 million to fund the National Occupational Research Agenda (NORA). This funding request is $1.5 million less than the $254.4 million for NIOSH program activities appropriated in FY 2006, (not accounting for a one-time supplemental in FY 2006 for mine safety research). In inflation adjusted terms the FY 2008 budget request represents a $13.8 million cut for the job safety and health research agency over FY 2006 levels.