SECTION: CAPITOL HILL HEARING TESTIMONY

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HEADLINE: TESTIMONY March 16, 1999 BERNARD E. ANDERSON ASSISTANT SECRETARY EMPLOYMENT STANDARDS ADMINISTRATION HOUSE APPROPRIATIONS LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION FISCAL 2000 LABOR - HHS APPROPRIATIONS

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U.S. DEPARTMENT OF LABOR Statement by Bernard E. Anderson Assistant Secretary for Employment Standards Administration On Fiscal Year 2000 Request for the Employment Standards Administration Mr. Chairman and Members of the Committee: I welcome this opportunity to appear before you to discuss the Fiscal Year 2000 budget request for programs administered by the Employment Standards Administration (ESA) of the U.S. Department of Labor. As Secretary of Labor Herman has testified, the only way the Department can succeed in meeting all the challenges we face is to do so as one Department and not as separate agencies. The Secretary's three strategic goals reflect that philosophy. ESA, an agency with diverse responsibilities that include both labor standards enforcement and disability compensation programs, is the largest agency in the Department of Labor with over 4,000 employees working to administer over 100 laws enacted by Congress. Nearly every worker in America is covered by laws and regulations administered by ESA's programs. ESA's FY 2000 initiatives support two of Secretary's three Strategic goals - a Secure Workforce and Quality Workplaces, and build upon our success in recent years. ESA's total Salaries and Expenses request is for $405.2 million and 4,012 FTE, which includes nearly $18 million for new or expanded initiatives in FY 2000. The FY 2000 funding and staffing levels also include resources associated with the transfer of immigration related functions from the Employment and Training Administration (ETA) to the Employment Standards Administration. A total of $33.7 million and 77 FTE would be transferred in order to consolidate immigration functions within ESA's Wage and Hour Division. In addition, $5.3 million and 21 FTE will be provided via H-1B fees. With this transfer, the Department will undertake a major reform of the foreign labor certification program designed to streamline and create a fee-based, customer- responsive system to assume timely processing of employer applications, while more effectively protecting U.S. workers. For the last decade (since enactment of the Immigration Reform and Control Act (IRCA) in 1986), the Department's immigration- related operational responsibilities have been split between the United States Employment Service in the Employment and Training Administration and the Wage and Hour Division in ESA. ETA has been responsible for adjudicating employers, applications for certain employment-based immigrants and non-immigrants, and ESA has been responsible for enforcing employers, compliance with their labor standards obligations under these programs. Consistent with the principles underlying the (1997) recommendations of the U.S. Commission on Immigration Reform, we believe that immigration program operations, customer service, and worker protections can all be improved through consolidating operational functions in one Department of Labor agency. Enforcement of Wage and Hour Standards Last year, we celebrated the 60th anniversary of the Fair Labor Standards Act. We are far from reaching the goals of this important legislation that offers protection to more than 120 million workers. Unfortunately, even in today's prosperous economy, violations of this law, which offers only the barest protection against exploitation in the workplace, are still widespread. For example, compliance surveys of the Los Angeles and New York garment manufacturing industry reveal minimum wage and overtime requirements are met by fewer than 40 percent of employers. The same low level of compliance with the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act was found in a national survey of poultry processing plants. And only 70 percent of nursing home employers are in compliance with the Fair Labor Standards Act. Last year we also celebrated the 5th anniversary of the landmark Family and Medical Leave Act, which offers important benefits to many American working families. In the last five years (since the Act became effective on August 5, 1993, through the end of Fiscal Year 1998), the Department has completed action on nearly 13,600 complaints alleging failure to comply with the Family and Medical Leave Act. Nearly 60 percent of the complaints were valid; i.e. there were apparent Family and Medical Leave Act violations. We believe that the time is right to strengthen both of these important laws. The Wage and Hour Division has a long-term goal of increasing compliance with labor laws - especially in low-wage industries such as garment manufacturing, agriculture, health care, as well as restaurants, hotels/motels, guard service and janitorial service. The goal of increasing compliance is expressed in the Wage and Hour Division's Performance Plan that was adopted in response to the Government Performance and Results Act (GPRA). We are focusing on the low-wage industries because they have a historically high level of noncompliance and employ vulnerable workers who often won't complain about violation of their workplace rights. It is a difficult challenge to realize lasting changes in compliance behavior in these sectors of the economy. Secretary Herman has made the safe and legal employment of youth a priority for the Department and we are looking at innovative steps, including enforcement, education, and partnerships, that can be taken to ensure that workplaces are free from illegal child labor. Wage and Hour found over 5,500 minors illegally employed last fiscal year and assessed nearly $5.5 million in civil money penalties for those violations. As a result of last year's special enforcement initiative targeted to the "salad bowl" commodities of tomatoes, onions, garlic, lettuce and cucumbers, Wage and Hour discovered numerous instances of children illegally employed in the fields, including a four-year- old in Arizona found working in the onion harvest. Our budget proposal directly advances one of the Secretary's goals for A Secure Workforce: to Increase Compliance with Worker Protection Laws. In supporting this Goal, Wage and Hour is focusing on increasing compliance, including child labor compliance, in low- wage industries where the challenge is prodigious. Focusing on egregious violators will help to reduce the current high rate of recidivism in these industries. Wage and Hour's Fiscal Year 2000 request includes: 1) $4.25 million and 30 FTE to enhance Wage and Hour's principal domestic compliance initiatives in garment manufacturing (the "No Sweat" initiative) and agriculture (the "Salad Bowl" initiative) with an emphasis on child labor compliance through enhanced education/outreach and greater sustained presence, more timely and effective litigation, and criminal prosecution. This request would allow Wage and Hour to place a total of 30 additional investigators in New York City and Los Angeles to increase Fair Labor Standards Act compliance in the garment industry. Wage and Hour will also deploy investigative resources from other areas to carry out concentrated, short-term enforcement initiatives in both garment manufacturing centers and targeted agricultural commodities. 2) $1.675 million to begin building and operating an integrated information technology system to provide workers and employers with prompt response and referral to the appropriate agency of any calls unrelated to Wage and Hour's activities or jurisdiction; easily accessible, quick and accurate responses about Wage and Hour compliance issues; and eventual on-line and centralized telephone receipt of complaints alleging violations of laws administered by Wage and Hour. Wage and Hour is participating in a crosscutting Departmental initiative which will be a pilot project that, when successfully completed, could be expanded in scope to include other Department of Labor regulatory agencies. The office of the Assistant Secretary for Policy has separately asked for $200,000 and two FTE to provide research, design and development expertise needed to implement the infrastructure necessary to accommodate additional Department of Labor agencies. 3) $700,000 for a nationwide education initiative through nontraditional partnerships with intermediary organizations and institutions that provide services to workers and employers. Examples of such organizations would be public and school libraries, public health providers, Small Business Administration Development Centers, and Department of Agriculture's cooperative extension service. This is also part of a Department-wide crosscutting initiative that requires coordination and cooperation with other Federal agencies as well as local and state government agencies. In addition, $3.75 million remains in wage and Hour's base to continue the efforts to reinvent the Davis-Bacon wage determination process. The FY 2000 spending will substantially complete the Davis-Bacon reengineering and reinvention initiative. We expect to have preliminary recommendations for the new Davis-Bacon wage determination process by this fall. Federal Contractor EEO Standards Enforcement The Office of Federal Contract Compliance Programs (OFCCP) has proposed a Fiscal Year 2000 budget of $76.4 million and 827 FTE, which includes $8.3 million and 39 FTE for new initiatives. OFCCP supports the Secretary's third Strategic Goal for Quality Workplaces through the second outcome goal to Foster Equal Employment Opportunity Workplaces. To realize this goal, OFCCP developed a long-term GPRA performance goal to increase the number of Federal contractors brought into compliance with the Equal Employment Opportunity provisions of federal contracts. In FY 2000, OFCCP is seeking funding for the following initiatives to support this goal. 1) $4.22 million and 20 FTE for an initiative to improve equal pay. The average working woman earns about 74 cents for every dollar that is earned by a working man. Although the gap between men's and women's wages has narrowed substantially since the Equal Pay Act was enacted in 1963, a significant wage gap still exists. Part of this gap is attributable to differing levels of experience, education, and skill. Even after accounting for these factors, however, a pay gap still exists between men and women in similar jobs. Recognizing this wage disparity, the President's FY 2000 budget proposes $14 million for an equal pay initiative, which also includes approximately $10 million for the Equal Employment Opportunity Commission. This initiative will allow resources to be focused on assisting contractors in identifying resources, including linking with the new Workforce Investment Act system, for recruiting qualified women in non-traditional jobs; providing employers with the necessary tools to assess and improve their pay policies; and educating the public on the importance of this issue, while informing workers and employers of their rights and responsibilities. 2) $2.74 million and 19 FTE for implementation of a Compliance Assistance Initiative that would establish a vigorous technical assistance effort to help Federal contractors understand the regulatory requirements for providing equal employment opportunity and affirmative action. Special emphasis will be devoted to small companies that may not have the expertise or resources to develop affirmative action programs. 3) An additional $500,000 is requested for a Discrimination Measurement Initiative that would document and deepen our understanding of the role discrimination plays in society. This is a multi-agency, multi-year initiative to develop, implement, and track data that measures the extent of discrimination. ESA and the Department of Labor will join forces with the Departments of Education, Health and Human Services, Justice, and Housing and Urban Development in this effort to develop and evaluate feasible methodologies to accurately measure and track discrimination in America. Federal Programs for Workers' Compensation The Office of Workers' Compensation Programs (OWCP) administers three major disability compensation programs that ease the financial burden on certain workers, or their dependents or survivors, resulting from work related injury, disease, or death. OWCP's traditional focus has been to protect the interests of eligible workers, employers and the Federal government and ensure accurate and timely claims adjudication and payment of benefits. Part of the Secretary of Labor's second Strategic Goal of a Secure Workforce is supported in the Outcome Goal to Protect Worker Benefits by a commitment to provide, in an appropriate and timely manner, compensation benefits when workers are unable to work. OWCP's request has been formulated to achieve that goal. OWCP's Salaries and Expenses request for FY 2000 is for $110.5 million and 1,173 FTE, an increase of $1.9 million with no increase in FTE. Another 140 FTE are funded through the Federal Employees, Compensation (FECA) Special Benefits fund Fair Share assessments and 17 FTE are funded in Black Lung through the reimbursable agreement with the Social Security Administration. The same funding mechanisms for these 157 FTE are in place in FY 1999. OWCP, with over 1,300 employees, comprises about one third of ESA's staff. About 90% of its employees are either front-line claims examiners or direct support staff. These are the employees who decide claims and pay benefits for injured workers and their dependents. $2.5 billion in benefits are authorized and paid annually by the staff of the three programs that comprise OWCP. OWCP has demonstrated a steady record of accomplishment in carrying out its Government Performance and Results Act commitments. For example: 1) FECA's major Performance Goal is reducing lost production days (days lost from work due to disability) and they have made significant progress with a 12-day (6%) improvement since 1996. 2) FECA has produced more than $300 million in savings through the Periodic Roll Management (PRM) teams established in 1992, 1995 and 1997. PRM became an integral part of the program in 1999 with teams in every office. 3) The Black Lung program smoothly absorbed more than 100,000 Part B cases from Social Security and is providing Part B beneficiaries with high quality service. 4) The Longshore program modernized its automated system, making it Y2K compliant and more supportive of efficient service. 5) Improvements in communications and customer service are reflected in more timely telephone and written responses and in higher ratings received in customer satisfaction surveys. This year's budget is a steady-state budget that moves the program toward the strategic plan outcomes. FECA has no new Salaries & Expenses requests but requests a slight increase of $1.6 million in Fair Share funds to establish the ADP platform needed to reduce its blizzard of paperwork to electronic images, modernize its software, and train its employees in new business processes. Black Lung's request is $1.5 million lower than last year's, with completion of the new computer platform, and includes only a modest request of $359,000 to create a database that will assist MSHA in reducing black lung disease. Longshore will begin its migration to a paperless, office claims processing system and will test its employer/carrier reporting system. Office of-Labor-Management Standards The FY 2000 request for the Office of Labor-Management Standards (OLMS) totals $29.3 million and 288 FTE, which, compared to Fiscal Year 1999, represents an increase of $1.2 million. As part of the Secretary's Strategic Goal for A Secure Workforce, in the first Outcome Goal to Increase Compliance with Worker Protection Laws, OLMS is requesting an additional $1 million that will be combined with the $1 million in the Fiscal Year 1999 base to continue the development and implementation of a system to improve public access to the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) reports, including labor organizations annual financial reports, and allow electronic filing of reports required under the LMRDA. The additional funding will also allow OLMS to complete the implementation of the computerized audit program to detect and correct reporting deficiencies. Support for ESA's Enhanced ADP System In addition to the individual program initiatives, ESA is also requesting $2.4 million to provide effective support in, and to enable the programs to benefit fully from, ESA's enhanced and dynamic Information Technology environment. This initiative includes four of ESA's activities Wage and Hour, OFCCP, OWCP, and OLMS. The additional resources will be used to provide hardware and software design and maintenance to support the requirements of the Clinger-Cohen Act, Computer Security Act, and the Year 2000 challenge as well as the increased automation of our basic work processes consistent with the Department's overall information technology initiative. Conclusion Mr. Chairman, the ESA programs face significant challenges in helping to assure workplace justice in our dynamic economy -- ensuring that low-wage workers receive the pay and benefits the law seeks to guarantee; protecting against discrimination by contractors that receive taxpayer's money; providing timely and fair wage replacement benefits to the victims of workplace injuries and illnesses; and assuring the integrity of unions, finances and elections. we appreciate your support for these important programs that directly benefit American workers and their families and hope you will look favorably on our budget proposals. This concludes my formal statement. I appreciate the opportunity to discuss our FY 2000 initiatives. My colleagues and I will be happy to respond to any questions regarding the proposals in our FY 2000 request. Biographical Sketc BERNARD E. ANDERSON Assistant Secretary Employment Standards Administration Department of Labor Bernard E. Anderson, the Assistant Secretary for the Employment Standards Administration, was confirmed by the Senate in February 1994. The Employment Standards Administration includes the Wage and Hour Division, the office of Federal Contract Compliance Programs, the Office of Workers' Compensation Programs, and the Office of Labor-Management Standards. As Assistant Secretary, Mr. Anderson has led the effort for reinventing ESA programs, emphasizing the reduction in paperwork, increase in customer service, and focus on measurable enforcement results. He has approached these goals in partnership with the representatives of ESA bargaining unit employees and managers. For two years prior to his appointment to the Federal service, Mr. Anderson was president of The Anderson Group, a Philadelphia, Pennsylvania, economic and management advisory firm that provided strategic planning and organizational development advice to private and non-profit organizations. He was also a tenured full professor at the University of Pennsylvania's Wharton School of Finance and Commerce and formerly served as a lecturer in economics at Swarthmore College in Swarthmore, Pennsylvania; the Director of the Social Sciences Division of the Rockefeller Foundation, and a Visiting Fellow in Public and International Affairs, Woodrow Wilson School, at Princeton University. The author of six books and numerous articles on economic and employment policy, Mr. Anderson began his career as an economist for the U.S. Department of Labor's Bureau of Labor Statistics. Mr. Anderson's prior public service includes membership on many advisory and consultative boards that addressed employment and economic development issues. In 1991, the Governor of Pennsylvania appointed him Chairman of the Pennsylvania Intergovernmental Cooperation Authority, the fiscal oversight board for the City of Philadelphia. He is a member of the America Economic Association, former executive board member of the Industrial Relations Research Association, and former president of the National Economic Association. Mr. Anderson received a Bachelor of Arts degree in economics, with highest honors, from Livingstone College, Salisbury, North Carolina; a Masters of Arts in Economics from Michigan State University, East Lansing, Michigan; and the Ph.D. in Business and Applied Economics from the University of Pennsylvania. He also received honorary L.H.D. degrees from Shaw University and from Livingstone College.

LOAD-DATE: April 5, 1999