House hearing (118th Congress), REFORMING UNEMPLOYMENT INSURANCE TO SUPPORT AMERICAN WORKERS AND BUSINESSES (PDF)
Summary
The printed record of a June 4, 2024 hearing of the Subcommittee on Work and Welfare of the House Committee on Ways and Means, Serial No. 118–WW08, titled Reforming Unemployment Insurance to Support American Workers and Businesses. Opening statements come from Chairman Darin LaHood and Ranking Member Danny Davis, both of Illinois. Witnesses are J.T. Taylor of ID.me, Beth Townsend of Iowa Workforce Development, Chris Stricklin of Dunn University, Will Raderman of the Niskanen Center and Jennifer Phillips of Georgetown University's Beeck Center for Social Impact + Innovation. Member post-hearing questions follow, including responses from Raderman.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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REFORMING UNEMPLOYMENT
INSURANCE TO SUPPORT AMERICAN
WORKERS AND BUSINESSES
HEARING
BEFORE THE
SUBCOMMITTEE ON WORK AND WELFARE
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
JUNE 4, 2024
Serial No. 118–WW08
Printed for the use of the Committee on Ways and Means
(
U.S. GOVERNMENT PUBLISHING OFFICE
57–013 WASHINGTON : 2024
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COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LAHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, JR., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SÁNCHEZ, California
RON ESTES, Kansas TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DELBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
MARK ROMAN, Staff Director
BRANDON CASEY, Minority Chief Counsel
SUBCOMMITTEE ON WORK AND WELFARE
DARIN LAHOOD, Illinois, Chairman
BRAD WENSTRUP, Ohio DANNY DAVIS, Illinois
MIKE CAREY, Ohio JUDY CHU, California
BLAKE MOORE, Utah GWEN MOORE, Wisconsin
MICHELLE STEEL, California DWIGHT EVANS, Pennsylvania
LLOYD SMUCKER, Pennsylvania JIMMY GOMEZ, California
ADRIAN SMITH, Nebraska
CLAUDIA TENNEY, New York
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C O N T E N T S
OPENING STATEMENTS
Page
Hon. Darin LaHood, Illinois, Chairman ................................................................ 1
Hon. Danny Davis, Illinois, Ranking Member ...................................................... 2
Advisory of June 4, 2024 announcing the hearing ................................................ V
WITNESSES
J.T. Taylor, Senior Director of Fraud, ID.me ........................................................ 4
Beth Townsend, Executive Director, Iowa Workforce Development ................... 19
Chris Stricklin, President, Dunn University ......................................................... 31
Will Raderman, Employment Policy Analyst, Niskanen Center ......................... 36
Jennifer Phillips, Program Lead, Georgetown University, Beeck Center for
Social Impact + Innovation ................................................................................. 47
MEMBER QUESTIONS FOR THE RECORD
Member Questions for the Record and Responses from Will Raderman, Em-
ployment Policy Analyst, Niskanen Center ....................................................... 92
Member Questions for the Record and Responses from Jennifer Phillips,
Program Lead, Georgetown University, Beeck Center for Social Impact
+ Innovation ......................................................................................................... 97
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions .................................................................................................. 113
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REFORMING UNEMPLOYMENT INSURANCE TO
SUPPORT AMERICAN WORKERS AND
BUSINESSES
TUESDAY, JUNE 4, 2024
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON WORK AND WELFARE,
COMMITTEE ON WAYS AND MEANS,
Washington, DC.
The subcommittee met, pursuant to call, at 1:59 p.m. in Room
2020, Rayburn House Office Building, Hon. Darin LaHood [chair-
man of the subcommittee] presiding.
Chairman LAHOOD. Well, good afternoon, everybody. I want to
welcome everybody to our Subcommittee on Work and Welfare for
our hearing today on reforming unemployment insurance to sup-
port American workers and businesses.
And I am grateful for the witnesses for your time and the effort
you took to be here today, and for our conversation and dialogue
that we will have for this hearing. I especially want to thank the
committee members that are here today for this important subject.
My name is Darin LaHood, and I represent Illinois’s 16th dis-
trict, covering much of the central and northern part of Illinois.
For the purposes of today’s hearing we want to learn how Con-
gress can help rebuild and restore confidence in the unemployment
insurance program after the turmoil of identity theft, fraud, and
claim delays during the pandemic.
GAO has estimated that between $100 and $135 billion was lost
from COVID-era UI programs to fraudsters and criminals, foreign
and domestic, deploying sophisticated schemes to divert benefits
from unemployed workers. My home state of Illinois lost approxi-
mately $3.2 billion to fraud. This is outright theft of valuable tax-
payer dollars that were not delivered to workers who needed them
the most.
And while COVID programs have since expired, this data ex-
poses a number of program weaknesses that need to be addressed.
In February 2023 the Ways and Means Committee held a hearing
with witnesses from the Department of Labor, Inspector General’s
Office, GAO, and the Pandemic Response Accountability Com-
mittee. These oversight agencies testified to problems with out-
dated state systems and weak online security that made the UI
program particularly vulnerable to fraud.
Last year this committee passed the Protecting Taxpayers and
Victims of Unemployment Fraud Act, which includes steps to
strengthen program integrity, recover lost funds, and prevent fu-
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2
ture fraud. The House has since passed this legislation on a bipar-
tisan basis.
We know fraudsters are still attacking UI and other Federal ben-
efit programs, and we need to build on these efforts moving for-
ward. This hearing will investigate three main areas of reform.
Number one, supporting state program integrity improvements
and technology modernization, which are vital to this process. We
will explore ways to prevent fraud by verifying identity of UI re-
cipients and moving away from the ‘‘pay and chase’’ model of ben-
efit delivery.
Second, we must focus on reemployment. The purpose of UI is to
provide a bridge between jobs. However, many workers end up ex-
hausting their benefits and remain out of the labor force. According
to the Department of Labor, 38 percent of UI claimants exhausted
their benefits in the first quarter of 2024. We know the longer a
worker remains out of the labor force, the harder it is to return to
work. That is why I have co-led, along with Ranking Member
Danny Davis, to my left, the BRIDGE for Workers Act, to strength-
en the Reemployment Services to Eligibility Assessments program.
Our bill would offer more flexibility to states to provide job skills
training, resume preparation, and career exploration to connect un-
employed workers to in-demand jobs more quickly. We passed this
bill unanimously out of committee last November, and I look for-
ward to its consideration on the House floor very soon.
Third, to improve program administration, we will examine the
administrative funding model for state UI programs which collects
but does not distribute adequate resources to states. The Federal
Unemployment Tax, pronounced FUTA, provides a dedicated rev-
enue stream to support state administration of the UI program.
However, these dollars are not ending up in state agency hands to
enact needed system improvements.
In fiscal year 2022 states received approximately $3.7 billion less
in administrative funding than employers collectively paid in
FUTA taxes due to problems with how dollars flow through the Un-
employment Trust Fund. This process also creates disparities in
how funding is allocated across the country. As part of making the
UI program more resilient, reforms are needed to improve this fi-
nancing mechanism so states are able to invest in long-term solu-
tions.
Lastly, I would like to recognize my colleagues Representative
Carey, Representative Steel, and Representative Tenney for their
recent introduction of legislation to modernize UI and support
workers and small businesses. These bills are important building
blocks for us to work on reforming this critical program for Amer-
ican workers.
Again, I am grateful for the witnesses before us today. I want to
thank you for being here today, and we look forward to your testi-
mony.
Chairman LAHOOD. With that, I am pleased to now recognize
the gentleman from Illinois, our ranking member, Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chair. And before I begin my state-
ment, I want to thank you for the hearing and thank the witnesses
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But I want to convey all of our best wishes to our colleague,
Dwight Evans, who could not join in person today. I know Dwight
is probably watching this hearing and formulating questions, and
we all look forward to having him back with us in person very
soon.
Unemployment insurance is an earned benefit to assist workers
who lost their jobs through no fault of their own, helping workers
pay the rent and put food on the table while stabilizing our local
and national economies. During the pandemic, 22 million, or about
one in four, American workers received unemployment benefits.
Unemployment benefits kept five million people out of poverty and
helped prevent the long, deep recession predicted by economists.
The Biden American Rescue Plan’s extended unemployment bene-
fits and other investments resulted in record-breaking job growth
and the longest stretch of low unemployment since the 1960s.
However, the pandemic highlighted that much work remains to
make the unemployment insurance program fair and effective. Mil-
lions of workers spent hours or days trying to access and complete
the unemployment benefit application, and many never succeeded.
People of color, younger workers, and lower-paid workers were dis-
proportionately less likely to know they could even apply.
The Government Accountability Office also notified us about a
deeply troubling and unacceptable problem among workers who ap-
plied for benefits: White workers were more likely to receive bene-
fits than Black workers.
Unfortunately, problems with equitable access to unemployment
benefits preceded the pandemic, with many states making it dif-
ficult or near impossible for workers to claim earned unemploy-
ment benefits when they needed them. States often justified the
roadblocks as fraud prevention, but the stark reality was that
workers who were our friends and neighbors were locked out of
benefits they earned.
The good news is that both red and blue states are now hard at
work removing some of these barriers to unemployment benefits.
Ways and Means Democrats worked closely with the Biden Admin-
istration to provide the American Rescue Plan resources so that the
states could take immediate action to ensure that workers receive
their benefits fairly and on time, while preventing fraud.
The Department of Labor has funded 160 grants in 46 states to
ensure basic fairness to people of all ages and races in our unem-
ployment system. I am very proud of the good work in my home
state of Illinois, as well as around the country, and I look forward
to hearing about these efforts from Jennifer Phillips today. The
success of the equity grant shows how much states can do with
adequate resources.
But we should not confuse the effects of funding shortfalls with
the appropriate funding consequences states currently experience
when they fail to pay benefits to unemployed workers. The ARPA
equity grants were an important first step to make sure that all
workers received their earned benefits, and these grants are an in-
vestment that should continue.
In addition, there are larger structural issues to address, starting
with giving the Department of Labor the data and tools it needs
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Mr. DAVIS. Thank you, Mr. Chairman, and I yield back.
Chairman LAHOOD. Thank you, Mr. Davis, for your opening
statement there.
We will now go to introduction of the witnesses and have their
five-minute presentation. I will start with introductions from left to
right.
J.T. Taylor is the senior director of fraud at ID.me from McLean,
Virginia.
Next we will have Beth Townsend as executive director of the
Iowa Workforce Development in Des Moines, Iowa.
Next we will have Chris Stricklin, who is the president of Dunn
University in Birmingham, Alabama.
We have Will Raderman, who is an employment policy analyst
at the Niskanen Center in Washington, D.C.
We have Jennifer Phillips, who is the program lead at George-
town University’s Beeck Center for Social Impact and Innovation
in Washington, D.C.
Welcome to you all.
Mr. Taylor, I will start with you. You are recognized for five min-
utes.
STATEMENT OF J.T. TAYLOR, SENIOR DIRECTOR OF FRAUD,
ID.ME
Mr. TAYLOR. Thank you, Chairman. Chair LaHood, Ranking
Member Davis, and distinguished committee members, thank you
for the opportunity to testify today on reforming unemployment in-
surance to support American workers and businesses.
My name is J.T. Taylor, and I currently serve as the senior direc-
tor of fraud at ID.me. Drawing from over two decades of public
service in the United States Secret Service, the U.S. intelligence
community, and the U.S. military, I bring a comprehensive per-
spective on digital fraud and cyber threats.
ID.me is a leading digital identity verification platform, inde-
pendently certified against NIST 863.3. We support over 129 mil-
lion digital wallets, and help dozens of Federal and state agencies
enhance security and streamline identity verification processes.
The COVID–19 pandemic presented unprecedented economic
challenges requiring a swift response. In March 2020 the CARES
Act was signed into law designed to deliver emergency assistance
to individuals and businesses affected by the pandemic. However,
lacking identity verification controls, this rapid action opened the
door to widespread fraud.
The GAO reported improper payments totaling $247 billion in
2022, with estimates of pandemic-related UI fraud ranging from
100 billion to 135 billion. ID.me estimates this figure closer to be
400 billion based upon our data and insights from 27 states that
we supported during that tumultuous time period. This discrepancy
highlights the persistent challenges in accurately quantifying and
combating fraud due to the technological limitations and fraud re-
porting deficiencies across the state networks.
Overall, 27 states partnered with ID.me for digital identity
verification at the height of the pandemic, implementing IAL2 con-
trols in their respective programs, effectively curbing fraudulent ac-
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As a result of our NIST IAL2 solution, we have been credited by
seven states for helping to avert a staggering $273 billion in poten-
tial fraud loss.
We were brought in, in part, because legacy methods of identity
verification that have traditionally supported public benefit pro-
grams are no longer up to the task of both stopping fraud and en-
suring that the communities who need the programs the most are
able to access them seamlessly. The combination of stolen personal
information and generative AI enables fraudsters to hyper-scale
their fraudulent attempts. Biometrics, including facial verification
and liveness detection, are essential in combating these threats.
ID.me’s responsible use of biometrics, guided by principles of fair-
ness, transparency, and choice through the multiple verification
pathways ensures that identity verification processes are both se-
cure and inclusive. However, the increasing sophistication of deep
fakes from domestic fraudsters to nation-state-affiliated cyber
criminals makes securing these inclusive verification pathways
much more difficult.
The Department of Homeland Security has acknowledged the
clear and present danger posed by synthetic content, which threat-
ens various domains, including national security and the financial
sector. Biometrics are increasingly proving to be an effective coun-
termeasure to deep fakes and digital injection attacks, and ID.me
believes that biometrics will need to play an even bigger role in the
protection of benefits in the future.
Now is the right time to discuss how responsible use of bio-
metrics, continuous human oversight, and threat research and
monitoring will enable the government to maintain its edge in the
fight against digital fraud. Congress should work with the execu-
tive branch to avoid any form of blanket bans or restrictions on
their use, and advance guidelines for responsible deployment of bio-
metrics.
The integrity of our national services and benefit programs
hinges significantly on the robustness of our identity verification
processes. My recommendations on strengthening these mecha-
nisms are as follows: number one, adherence to NIST guidance on
identity verification; number two, opt for NIST Identity Assurance
level 2; and number three, establish uniformity in data retention
and the statute of limitations for prosecutorial support.
Additionally, legislative efforts like Protecting Taxpayers and
Victims of Unemployment Fraud Act should be commended and ad-
vanced as soon as possible. The longer we wait to act, the harder
it will be to recover what stolen dollars we can mitigate and the
newest evolutions of fraud we are starting to see.
Key provisions like extending the statute of limitations for crimi-
nal charges and civil actions for prosecuting fraud from five to ten
years, and incentivizing states by allowing them to retain a per-
centage of the recovered overpayments of unemployment benefits
and reinvesting these dollars into program integrity and fraud pre-
vention are crucial. By allowing recovered funds to be utilized to
modernize state systems for verifying identity and income, states
can further enhance their fraud prevention measures, ensuring UI
claims are cross-verified against the National Directory of New
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Hires and the State Information Data Exchange System.
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It is also important, however, to underscore that states have
been—effectively demonstrated, when given choice, they can effi-
ciently leverage the competitive identity verification marketplace
developed around the NIST I02 guidelines. Just as Congress added
the identity verification requirement under section 242 of the Con-
tinued Assistance Act to improve integrity of the Pandemic Unem-
ployment Assistance Program, Congress should also consider fur-
ther steps to add identity verification to traditional UI and subse-
quent UI programs.
Recovery and resilience extend beyond strict measures. They re-
quire fostering competitive innovation where technology can thrive
to recover stolen funds and prevent future losses. This effort must
include continuous dialogue and cooperation between private sector
and government entities.
As we tackle these challenges and work to ensure solvency and
crucial public benefit programs like UI, we owe it to the American
taxpayer to implement forward-thinking strategies and robust in-
frastructures that ensure accessibility, security, and privacy.
Thank you again for the opportunity to discuss these crucial
issues.
[The statement of Mr. Taylor follows:]
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Chairman LAHOOD. Thank you, Mr. Taylor, and thanks for your
prior service to the country. We will next move to Ms. Townsend.
You are recognized for five minutes.
STATEMENT OF BETH TOWNSEND, EXECUTIVE DIRECTOR,
IOWA WORKFORCE DEVELOPMENT
Ms. TOWNSEND. Thank you, Chairman LaHood and Ranking
Member Davis and other members of the committee for the oppor-
tunity to speak to you today about Iowa’s Reemployment Case
Management program and our efforts to help Iowans find reem-
ployment at the earliest possible moment.
I am Beth Townsend and, as the director of Iowa Workforce De-
velopment since 2015, I am here to talk about the value in pro-
viding intensive, one-on-one support and innovative resources as
soon as someone files for unemployment.
Iowa has seen significant and consistent value in overhauling our
approach to helping Iowans find jobs. Iowa Workforce Development
is the centerpiece of workforce information programing and solu-
tions in Iowa. We are the agency responsible for administering the
unemployment insurance program, implementing all Federal work-
force services programs, including 15 American job centers located
throughout the state.
Iowa, like every state, depends on our employers to move our
economy forward. But real, long-term growth requires a workforce
that is stable as well as sufficient. We want people to feel fulfilled
where they work, which helps decrease the churn in the labor force
that has been so common since the pandemic. That is why Iowa
Workforce Development focuses on helping its customers find re-
warding careers, rather than jobs. This is the path that benefits
our entire state the most, when both workers and employers grow
together.
Nothing is a better illustration of Iowa’s innovative efforts to
grow and develop its workforce than the Reemployment Case Man-
agement program, also known as RCM, which was created in 2021
in response to the workforce shortage caused by the pandemic. Our
path to creating the Reemployment Case Management program
began in 2020, when the COVID–19 pandemic created unprece-
dented joblessness and overwhelmed unemployment systems
throughout the nation.
One step Governor Reynolds took in an effort to get more Iowans
back into the workforce and ease the challenge employers were fac-
ing in June of 2021 was to end Iowa’s participation in Federal un-
employment programs early. Her actions removed the disincentive
that the generous pandemic benefits had created for some Iowans
to continue to sit on the sidelines.
Additionally, in October 2021, Governor Reynolds announced a
shift in the mission of Iowa Workforce Development. Our agency’s
new and overriding policy priority would be to get those jobless
Iowans to the other side of the unemployment as quickly as pos-
sible. This unemployment—or this simple yet profound change re-
volved around returning unemployment to its original purposes:
serving as a short-term bridge between careers, rather than as a
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It is important to understand that the RCM was not created to
eliminate or lessen unemployment benefits. Instead, our goal was
to reduce the need for benefits by helping the unemployed find
work quickly.
Our Reemployment Case Management program is built on two
things: strengthening the incentives that encourage the unem-
ployed to aggressively search for work, and providing more assist-
ance earlier in the process to increase the odds of their success. To
do this we decided to implement a modified and supplementary
version of the Federal RESEA program.
As you know, RESEA programs have been part of unemployment
in the United States for more than a decade. Iowa has operated a
version of RESEA since 2015, but under the terms of the federally-
funded program which require waiting until claimants receive un-
employment benefit payments and are notified about RESEA, ca-
reer planners were not meeting with unemployment claimants at
the earliest until roughly the fifth week after an initial claim was
filed.
Given the increased demand for workers created by COVID–19,
as well as workers’ increased need for job search assistance, we
deemed that delay to be too long. Instead, RCM was created to be
a new, state-funded program that would supplement the Federal
version, meeting with unemployment claimants from the week
after their initial claims were filed.
Unemployment claimants in Iowa now are contacted about RCM
during the first week after they file for benefits. Career planners
schedule one-on-one appointments and immediately assign claim-
ants to several virtual workshops on topics of how to navigate the
computer system for reporting work search, how to build a success-
ful resume, and how to interview for a job. Career planners con-
tinue to have regular one-on-one employments with claimants to
review job search results and assign reemployment activities.
Once the claimant becomes eligible for RESEA, the program
takes over the one-on-one appointments and monitoring. The claim-
ant continues to receive these services until he or she is reem-
ployed. If anyone exhausts 50 percent of their eligible benefit
weeks, we shift him or her to more intensive services.
Because of the RCM program, we have seen a reduction of 30
percent—of over 30 percent in the amount of duration of unemploy-
ment benefits, and we have saved approximately $250 million in
unemployment benefits in the last two years, paid out, which re-
sults in a reduction in unemployment taxes to our employers.
Through this program we have been very successful in helping
Iowans get back to work faster and helping Iowa employers find
the workforce that they need. Thank you.
[The statement of Ms. Townsend follows:]
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31
Chairman LAHOOD. Thank you, Ms. Townsend. I also want to
thank you for your prior service in the Air Force.
With that we will next recognize President Stricklin for five min-
utes.
STATEMENT OF CHRIS STRICKLIN, PRESIDENT, DUNN
UNIVERSITY
Mr. STRICKLIN. Good afternoon, Chairman LaHood, Ranking
Member Davis, and distinguished members of the subcommittee.
On behalf of the Alabama Workforce Council, I am Chris Stricklin,
a retired Air Force colonel with an encore career in the construc-
tion industry at Dunn Companies in Birmingham, Alabama.
Thank you for the opportunity to speak on our belief the answer
to reducing the number of people on unemployment insurance, as
well as increasing labor force participation and getting people back
to work, lies in revolutionizing our workforce, both removing obsta-
cles to entry and improving the opportunity to earn a livable wage
while on a career progression pathway. This requires teamwork
and an all-hands-on-deck approach with business, government, and
education leaders to create multiple pathways for individuals to re-
ceive the education or skills needed to be successful and remain
employed.
Our team of industry partners, the State of Alabama, the Depart-
ment of Labor, and our workforce councils simultaneously focus on
training those searching for employment for the first time,
upskilling those yearning for advancement, and retraining those on
unemployment. To be successful we must ask ourselves, what leads
people to need unemployment compensation?
Our group of leaders began efforts with the belief that workforce
issues in UI could not be solved by merely putting a hammer in
someone’s hand. Instead, we must capture their hearts and their
minds, and inspire motivation in both our industries and in their
futures. This is not a labor crisis; it is an issue of finding one’s per-
sonal identity and purpose.
Our efforts initially targeted areas with some of the highest un-
employment and least skilled population. The training model deliv-
ered awareness of job options in different specialties so one could
find what interested them, then reduce barriers to entry. Training
is provided at reduced cost, designed to be accomplished quickly,
and focused on one simple task: train the first two weeks on the
job. This delivers a measure by which to guide course development
while delivering to industry partners an individual who understand
safety and basic operation. This translates to employers with a re-
duction in on-the-job training, improved safety outcomes, and in-
creased retention.
Through our efforts we enabled unskilled, under-skilled, and un-
employed individuals the ability to obtain skill certifications which
follows for their entire career. We are now reaching a previously
untapped or underserved pool of motivated individuals and ena-
bling their career pathways, not merely jobs.
Our model of certification is hybrid, in which an individual takes
theory portion of the class online, on demand, and on their sched-
ule, then transitions to an in-person lab for the last part of the
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hands-on. Through this effort, over 3,000 Alabamians have earned
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32
credentials to date, and the training has extended to other indus-
tries including food and beverage, hotel operations, meat cutter,
and mental health worker.
Along the same motivation, courses have been conducted in our
prisons to reduce recidivism and build a positive future for parol-
ees, specifically developing a commercial driver’s license program
which has graduated 78 parolee students to date.
Our next innovation is occurring this month at Dovetail Landing,
with a focus on veterans reentering the workforce after their mili-
tary service with the Reverse Boot Camp.
Alabama has developed a comprehensive approach to decreasing
the need for unemployment compensation while increasing the
labor force participation and post-secondary attainment rates by
concurrently developing new modalities of training that integrate
supportive services, work-based learning, enhanced career naviga-
tion, and short cycle training programs to allow individuals facing
benefits cliffs to persist in training and the workforce. By
unbundling and modernizing degrees, Alabama is providing mul-
tiple points of entry and exit for Alabamians to enter training and
the subsequent workforce.
What I am most excited about with regard to reducing unemploy-
ment is Governor Kay Ivey’s December 23 launch of the Alabama
Talent Triad as the nation’s first full-scale talent marketplace to
connect education and training providers, students and job seekers,
and employers based on a direct skills match. In March this year
Alabama State Workforce Development Board adopted a policy to
require the Alabama Talent Triad to be used for the Workforce In-
novation and Opportunity Act training program intake process.
Where this best impacts our conversation today will be a policy
to be adopted shortly, which would enable unemployment insur-
ance claimants to apply for all available and suitable employment
using the triad. This will allow the state to instantly verify work
search requirements. Rather than the traditional three applications
per week, Alabamians will now be able to apply for all jobs, poten-
tially hundreds, with the click of one button, and this will be a re-
quired first step of signing up for unemployment.
In closing, we are a state working together for a better tomorrow
for our individuals, our companies, our industries, our commu-
nities, our state, and our nation. Together this will revolutionize
our social dialogue and develop career routes with progression
pathways, especially for those who may have fallen behind.
Thank you for the opportunity to sit before you today and explain
why we truly believe Alabama is number one in the nation for
workforce innovation.
[The statement of Mr. Stricklin follows:]
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36
Chairman LAHOOD. Thank you, President Stricklin, for that,
and we are grateful for your service.
Mr. STRICKLIN. Thank you.
Chairman LAHOOD. We will next recognize Mr. Raderman for
five minutes.
You are now recognized.
STATEMENT OF WILL RADERMAN, EMPLOYMENT POLICY
ANALYST, NISKANEN CENTER
Mr. RADERMAN. Chairman LaHood, Ranking Member Davis,
and members of the committee, thank you for inviting me here
today and for holding a hearing on how to better administer unem-
ployment benefits.
My name is Will Raderman, and I am an employment analyst at
the Niskanen Center, a non-partisan think tank founded in 2015.
We have been privileged to support this committee’s work, most re-
cently with the Tax Relief for American Families and Workers Act.
Our central economic philosophy is that strong free markets and
robust social policies together provide the foundation for a free and
fair society.
Unfortunately, programs meant to complement our dynamic
economy and keep families stable following job loss are falling
short. This includes recurring performance issues with the state
unemployment insurance systems. My testimony will touch on
three related points.
One is that Federal funding sent to state UI agencies for admin-
istration has been eroded by inflation and fluctuates year to year,
making it difficult to develop strategic, long-term investments.
Two, substantial amounts of tax revenue raised specifically for
program administration is not ending up in state agency accounts
to fund upgrades.
And three, Congress should reform the financing process so that
state agencies have the resources needed to maintain program in-
tegrity.
Early on in the COVID pandemic, it became clear that UI agen-
cies were not equipped to handle the surge of claims. Although the
agencies received an influx of additional funding to help manage
the situation, years worth of necessary improvements could not be
implemented overnight. Many legitimate applicants were forced to
wait months before receiving their benefits, while criminals stole
up to $135 billion, according to GAO estimates.
The magnitude of the fraud was unprecedented. However, the
administrative shortcomings were not. Past emergencies like Hur-
ricane Katrina exposed many of the same system gaps that were
exploited at a far more costly scale during COVID. Similar types
of malfunctions will repeat themselves without changes to the ad-
ministrative financing process so that state agencies can steadily
invest in program modernization. One-off funds are not a sub-
stitute.
Each year Congress provides state agencies with the base alloca-
tion to fund program administration, which they must try to plan
around, but those allocations are not reliable. Since 2007 the value
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of the base allocation sent out to states has declined by $900 mil-
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37
lion when adjusting for inflation, a 27 percent decline. Every agen-
cy is worse off as a result.
State space funding is also volatile. Less funding is released dur-
ing stronger economic years, when fewer claims are projected. The
result is that UI agencies get fewer resources when they have the
most opportunity to focus on system updates.
To make matters worse, the approved funding is divided up dif-
ferently each year through a distributional resource justification
model. This formula causes states’ allocations to fluctuate over
time, and tends to shortchange agencies struggling the most to
process benefit claims. In particular, this formula contributes to
significant regional disparities that hurt central and southern
states. Their agencies can receive half as many dollars per work-
ing-age resident as the best-funded ones.
Part of the problem is that we are leaving hundreds of millions
of dollars of revenue already raised annually for the purpose of UI
administration on the sideline. Eighty percent of the funding raised
through the Federal unemployment tax is kept in a Federal ac-
count to fund program administration, while 20 percent is auto-
matically directed to an emergency benefits account. Yet agencies
are not given full access to the 80 percent of funds intended for
program administration, due to congressional appropriations and
complex trust fund rules.
The spare revenue could be used by state UI agencies to improve
their systems, but it is rarely made available for that purpose. In-
stead, a strict account law frequently causes unused funds in the
administrative account to be diverted to the emergency benefits ac-
count, including more than $4.5 billion in the five years leading up
to the pandemic. A better use of those funds would have been to
allow UI agencies to upgrade their institutional capacity.
To counter these issues, we advise Congress to pursue reforms to
establish a stronger connection between what is raised for program
administration and what goes back to the UI agencies, and to en-
sure that agencies receive steadier, inflation-adjusted allocations
over time.
In conclusion, administrative financing fixes are necessary to
maximize agency performance and integrity.
Chairman LaHood, Ranking Member Davis, and members of the
committee, thank you again for the opportunity to testify today. I
look forward to hearing your questions.
[The statement of Mr. Raderman follows:]
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47
Chairman LAHOOD. Thank you, Mr. Raderman. We will now
recognize our last witness, Ms. Phillips.
You are recognized for five minutes.
STATEMENT OF JENNIFER PHILLIPS, PROGRAM LEAD,
GEORGETOWN UNIVERSITY, BEECK CENTER FOR SOCIAL IM-
PACT
Ms. PHILLIPS. Thank you, Chairman LaHood, Ranking Member
Davis, and distinguished members of the subcommittee, for the op-
portunity to testify today. It is my honor to share insights about
how state unemployment insurance agencies are helping histori-
cally disenfranchized workers access UI benefits, and how simpli-
fying and improving access for all workers actually boosts UI sys-
tem integrity.
I work for the Beeck Center for Social Impact + Innovation at
Georgetown University, and we focus on best-in-class digital service
delivery solutions to ensure access to public benefits. And pre-
viously I proudly worked for the Illinois Department of Employ-
ment Security as the assistant deputy director for service delivery.
Unemployment insurance is an economic first responder pro-
gram. It safeguards eligible workers from financial crises when
they lose a job, and it helps stabilize the economy. Eligible workers
can and should expect it will work for them when they need it. And
Michigan’s mission statement really says it all: UI should be fast,
fair, and fraud free.
Pandemic claim volume, combined with years of declining invest-
ment in state technology, brutally exposed foundational cracks in
aging systems, and millions of eligible American workers struggled
to obtain UI benefits. Research shows that many were historically
disenfranchized workers who were less educated, younger, and
from racial and ethnic groups.
Equitable access means that any eligible worker should be able
to effectively and efficiently obtain and—apply and obtain for bene-
fits that they are entitled to without facing undue burdens or bar-
riers. McKinsey Research finds that when a person’s experience
utilizing state services meets or exceeds expectations, it can boost
trust in government, improve morale among civil servants, and
lower government agency costs.
U.S. DoL has awarded nearly $800 million for ARPA UI mod-
ernization to help achieve three congressionally-mandated, mutu-
ally reinforcing goals of preventing and detecting fraud, increasing
benefit timeliness, and expanding equitable access to UI. These in-
novation-focused grants offer an unprecedented opportunity to
modernize UI. And as a former state UI administrator, I thank
you, and I want you to know that UI leaders across the country are
hard at work meeting those goals.
State innovation will shine a light on what works and what does
not. That plus U.S. DoL’s recent Building Resiliency recommenda-
tions will create a roadmap for the reforms that are most needed.
In my written testimony I outline ten UI access challenges and cor-
responding solutions that U.S. DoL and states are working on, and
I will highlight five now.
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48
Ms. PHILLIPS. In Illinois we created an acronym for the first
three: PLATE, Plain Language, Accessibility, and Translation for
Equity. PLATE encourages thinking about claimant diversity, like
for someone who reads at a fifth grade level, or is blind, or is deaf,
or whose first language is not English. States like New Jersey—
and that is up on the screen—took complicated UI correspondence
and made it easy to understand, with actionable steps for claim-
ants. They also created a how-to toolkit to share with other states
like Illinois.
Fourth, it is critically important to develop technology solutions
that build in iterative feedback loops via user research. We need
to build, test, improve, launch in phases, and keep improving. Illi-
nois plans to update its UI application and online claimant portal.
To better understand user pain points, Illinois partnered with U.S.
DoL to analyze over 270,000 claimant survey responses. We con-
ducted live claim filing observational research, and we analyzed
data about where people abandon in the application process. States
are improving their ability to conduct this type of customer experi-
ence and usability research, ensuring that new technology works
for unemployed workers, especially those historically marginalized.
Lastly, another key challenge is website navigation and how to
apply for UI. States like Michigan, working with human-centered
non-profit Civilla, have created a step-by-step claimant roadmap on
their website. They offer weekly claim-filing help sessions, and
launched a Community Connect program with regional liaisons to
help when needed. State outreach efforts that increase human
interaction also help confirm that claimants are legitimate filers.
States have pivoted from the crush of the pandemic to now pio-
neering and implementing innovative solutions that increase equi-
table access to UI. My written testimony has more than 25 exam-
ples of that state ingenuity that improve access and can also drive
down non-fraud improper payments. To keep this momentum,
states need flexibility and continued funding. They need ways to
accelerate the work by collaborating. And organizations like the
Beeck Center and others, supported by private philanthropy, help
convene, connect, and catalyze this change.
States need champions. States need Congress to champion addi-
tional technology modernization and customer experience improve-
ments to restore faith that when an eligible American worker loses
their job, UI will work for them fast, fair, and fraud-free.
It was an honor to testify to the committee today, and I welcome
your questions. Thank you.
[The statement of Ms. Phillips follows:]
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62
Chairman LAHOOD. Thank you, Ms. Phillips, and that concludes
our formal testimony today. We will now move to the question-and-
answer period, and I will recognize myself for questions.
[Chart]
Chairman LAHOOD. Mr. Raderman, I am going to start with
you. For years, states have said there is inadequate administrative
funding available for making needed improvements to their UI
technology and benefit systems. As the chart behind me shows—
and I think is up on the monitoring screens here—outside economic
downturns such as the Great Recession of 2008 and COVID–19,
states routinely receive less than half of Federal tax revenues paid
by employers to administer the UI program. In fact, prior to the
pandemic, when the economy was strong, states received about 40
percent of what employers paid in.
It is clear that substantial amounts of tax revenue raised specifi-
cally for UI administration is not ending up in the state agency
hands to enact needed system improvements. So, Mr. Raderman,
can you explain some of the challenges this administrative financ-
ing mechanism creates, and what can be done to improve it?
Mr. RADERMAN. Thank you for the question, Chairman
LaHood.
So the current financing mechanism is causing states to manage
their programs with bare bones resources and with little to no
guaranteed funding each year to actually focus on system improve-
ments. The result of that is a lot of the problems that you see dur-
ing COVID we are seeing in past crises like Hurricane Katrina, as
well, because the financing system is not in a good place to actually
let states proactively address those problems over time.
In order to actually improve the system there needs to be a
stronger connection between what is being raised for program ad-
ministration and what is being returned to states each year.
Chairman LAHOOD. And what is your recommendation on im-
proving that connection from a public policy standpoint?
Mr. RADERMAN. There is going to be kind of two points in time
that I think—or two points of access that need to be changed. One
is the actual appropriations. It needs to be that all of the dollars
being raised are being approved. But there is also the issue that
some of the Federal accounts that manage the dollars end up di-
verting funds away from program administration when that bal-
ance for the administrative account exceeds a pretty low value.
So making sure those funds are actually going back to states is
crucial, as well.
Chairman LAHOOD. And what you just mentioned there, is it
your recommendation that it be codified into law?
Mr. RADERMAN. Currently, there is a statutory provision that
is diverting funds away from the administrative account. And our
view at the Niskanen Center is to change that so those funds stay
for program administration.
Chairman LAHOOD. Thank you for that. I am going to turn next
to Ms. Townsend.
In your testimony you state that unemployment claimants in the
State of Iowa are contacted about the state’s reemployment case
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management program when they first file for benefits so claimants
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can quickly begin developing skills to successfully navigate a path-
way back into the labor force.
As I referenced in my opening, our BRIDGE for Workers Act,
which gives states additional flexibility to provide reemployment
support to any individual receiving benefits as long as the state be-
lieves these services would help them return to work more quickly.
Ms. Townsend, can you talk more about the return on invest-
ment that reemployment services provide, and how that relates to
rebuilding our labor force, particularly looking at the success you
have had in Iowa?
Ms. TOWNSEND. Thank you for that question.
So since the inception of the program we have spent approxi-
mately $4 million on our Reemployment Case Management, and
that pays for 18 caseworkers and a manager. It also pays for some
computer upgrades so that we were able to better track individual
efforts in terms of their work search activities, and also manage
their cases better.
Of the $4 million, we anticipate that by the end of 2024 we will
have saved $400 million in unemployment benefits. So it is about
a 1-to-100 return so far. Just to give you an idea, in 2019, the year
before the pandemic, Iowa paid out roughly $388 million in unem-
ployment benefits. Once the Reemployment Case Management sys-
tem went into effect, we paid $253 million in 2022 and $260 million
in 2023, and we expect to—or anticipate paying a similar amount.
But one of the things that I would also point out is the value that
individuals receive in getting that one-on-one assistance. I receive
daily success stories from individuals who, when they lose their job,
they are frustrated, they are hopeless, they are anxious, and they
are not sure where they are going to go. And having that person
in their corner to say, you can do this, you can do more. Let’s apply
for that job that maybe you didn’t think you had the experience for,
and let’s get your resume and interview skills up to par to get
those.
So we are helping Iowans get jobs that are beyond what they ex-
pected to get. They are getting really good-paying jobs, and they
are getting those careers that, like I talked about in my opening
statement, they are going to stay with, and they are going to con-
tinue to benefit the employer that they have come to in their next
act.
Chairman LAHOOD. Thank you for that. And, Ms. Townsend,
have you found that other states have tried to model or look at
your program as a success in what they do?
Ms. TOWNSEND. We have received inquiries from other states
about how we are doing it. I think it is probably a funding issue.
We are—Governor Reynolds gave us ARP dollars to fund the pro-
gram, and that is what we have been—we will use until 2026, at
which point we will ask the legislature for funding if we don’t have
any additional Federal funding.
Chairman LAHOOD. Thank you for that.
Mr. Taylor, I will turn to you now. An April report from the GAO
analyzed data from 2018 to 2022 that showed the federal govern-
ment’s losses were an estimated $233 to $521 billion annually to
fraud, a substantial portion from the unemployment insurance pro-
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gram. I think you referenced that in your statement.
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Mr. Taylor, can you describe the current trends your company
has noticed in relation to UI fraud, and what can be done to
strengthen program integrity for the unemployment program?
Mr. TAYLOR. Thank you, Chair LaHood. I would offer that—
when ID.me was initially retained by the 27 states in my opening
testimony, what we found was an outdated system, a legacy system
built around what is known as knowledge-based answers, things
like looking at a credit report to see what type of car you drove
whenever you were in college or high school. This was an outdated
policy.
Whenever we went into those 27 states, fraud rates went down,
accessibility went up. Today the threats that we are facing to spe-
cifically unemployment are—have risen to a critical infrastructure
level, primarily driven by nation-state involvement, where they are
attacking a number of states. This includes the country of China,
it also includes the country of Nigeria, predominantly.
So fraud has evolved. Yet the controls that we have put in place
have not evolved at the vast majority of states and institutions.
ID.me has seen great gains specifically around the IAL2. But even
today, we enhance the IAL2 NIST policy by adding in the machine
learning aspects. What we have found is that you have to fight AI
with AI.
And the stolen identities are already out there. Now there is a
hyperscaling that is taking place within these criminal networks.
As an agent on the front lines of this back in 2020, you would get
a phone call and it would be maybe a person that suffered one in-
stance of identity theft. Whenever I came to work at ID.me, we
verify 60,000 to 70,000 identities per day. We have a receptacle, we
have an email box where you can email in to our team and see if
you are under threat of identity theft. And the scale that we see
today is a direct result of this hyperscaling of fraud controls.
So what I am seeing today is that not only are the outdated as-
pects of identity verification need to be replaced by at least IAL2,
but at the same time fraud is evolving quicker than our policies,
and we need to account for that.
Chairman LAHOOD. Thank you for that, Mr. Taylor. Those con-
clude my questions.
I will next turn to Ranking Member Davis for your questions.
Mr. DAVIS. Thank you, Mr. Chairman, and thank you to all of
our witnesses.
Ms. Phillips, thank you for testifying today and for the important
work you did on behalf of Illinois workers.
One of the things we fought to do in the American Rescue Plan
was invest in equity, and specifically in race equity in the unem-
ployment program. What are some of the long-term benefits for
children and communities when workers who are historically left
out are able to access their earned benefits?
Ms. PHILLIPS. Thank you, Ranking Member Davis, for that
question. I have four points to answer that question.
One, financial stability is incredibly important. Losing a job is
stressful, it has devastating consequences. Sixty-four percent of
Americans live paycheck to paycheck right now. If you cannot find
a job immediately or get UI benefits that you—assuming you may
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be eligible, families may not be able to pay bills, rent, and other
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expenses. My written testimony offers citations on numerous re-
search studies that show how financial stability is a gateway for
better child outcomes, emotional and educational success for both
parents and children, and reattachment to the labor market.
Financial instability can be a disrupting force, like having to
move to a different school district because you don’t have enough
money to pay rent. And parents—research is very clear on parents’
unemployment that can also have long-term effects on children’s
lifelong earnings.
The third point is that there is well-documented and well-re-
searched evidence that shows the mental health and the stress im-
pacts that unemployed people face. I cite research in the testimony
about that hardship, about anxiety and depression that unem-
ployed workers face that also affects children.
And finally, the fourth point is that local economies lose when
they—they lose when eligible workers can’t get UI, when people
have less income and those dollars are not circulating into those
local economies.
The research also is very clear, and there is numerous studies
cited in my testimony about how unemployment has extreme dis-
parities for people of color, namely African American and Hispanic
families.
Mr. DAVIS. Thank you. Can you tell us more about why ensur-
ing equitable access makes unemployment insurance more effective
as a tool for preventing recession or making economic downturns
shorter and less bad?
Ms. PHILLIPS. I also cite research in my testimony that shows
the return on investment for the unemployment insurance program
is $1.2 to every dollar spent. There is evidence in my testimony
that cites a Harvard research project that shows the importance of
UI as an economic stabilizer, demonstrating that states that have
more generous unemployment insurance benefits actually signifi-
cantly lessen the volatility of local economic fluctuations. Having
workers have financial stability is good for local economies, and the
lack of UI access that happens during financial economic
downturns when people cannot access UI and cannot get reem-
ployed right away sets communities of color back economically.
Mr. DAVIS. Ms. Phillips, can you tell us more about what data
we collect currently to measure fairness in the UI system, and
what additional data we might need to hold states fully account-
able?
Ms. PHILLIPS. Thank you for that question.
Currently, I will cite two examples of where there is data col-
lected that has really robust demographic information.
Right now the U.S. DoL requires states to report on recipiency
rates. That has strong demographic information. But I will say that
any new reform that can allow for greater disaggregation of data
will help states—will help Congress hold states accountable. One
example that I cite in my testimony is the ETA 227 report. That
is the overpayment report that states report on—to U.S. DoL quar-
terly. Within that report there is a section on non-fraud improper
payments.
In my testimony I cite that just in last—in 2023 in Illinois, the
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percentage of non-fraud improper payments was actually higher
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than the fraud improper payments. And we have no demographic
disaggregated data to show, like, what is happening with those
non-fraud improper payments. They are this—they are—they can
be claimant error, state agency error, employer error. But we don’t
know anything about anything deeper than that.
And then finally, I would just like to say, like, in terms of rec-
ommendations for what states could collect in the future, Illinois is
using its equity grant to look at likelihood to file. One of the equi-
table access to UI issues is not just what happens when someone
actually has applied and is on the journey to reemployment, but we
know virtually nothing about people who don’t make it to the front
door who are potentially eligible.
One of the things that Illinois is doing with the equity—the
ARPA equity grant is looking at when employers file a WARN no-
tice, and figuring out if we can find out why people choose to apply
or not apply to UI.
And finally, states could be collecting customer experience data.
They could be collecting survey information like we did in Illinois
that asks claimants about their levels of trust, satisfaction, timeli-
ness, and ease with the application process.
Mr. DAVIS. Thank you——
Ms. PHILLIPS. Thank you.
Mr. DAVIS [continuing]. Mr. Chairman, for your indulgence, and
I yield back.
Chairman LAHOOD. Thank you, Mr. Davis. We will now recog-
nize Mr. Carey of Ohio.
Mr. CAREY. First I want to thank the chairman for having the
hearing, and I want to join the ranking member in wishing our col-
league, Mr. Evans—we can’t wait to have you back up here with
us.
I also want to thank the witnesses for being here to discuss these
much-needed reforms to unemployment insurance program—or UI
from now on.
Today, alongside my colleague, Representative Greg Landsman
from Cincinnati, I am proud to introduce the New Opportunities for
Business Ownership and Self-Sufficiency, or as we call it, NO
BOSS Act. This legislation intends to support individuals pursuing
small business ownership by improving the currently under-uti-
lized Self-Employment Assistance Program within the UI program.
Our legislation aims to make state participation less burdensome
and to encourage greater engagement in the SEAP program.
[Chart]
Mr. CAREY. Mr. Chairman, currently the Federal Unemploy-
ment Tax, or FUTA, tax is paid versus revenue received by states
whose fraud UI administration is unequal across the states. You
can see from the chart behind me.
The disparity is most pronounced in the Midwest, where I come
from, in Ohio, the south, southwest, according to your own calcula-
tions. In Fiscal Year 2022, according to the Department of Labor,
FUTA receipts versus amounts returned data, Ohio employers paid
an estimated $229 million in FUTA taxes, and Ohio received $105
million in administrative grants from DoL, which is—if you do the
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math, it is only about 46 percent of the taxes paid.
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So as you can see, Ohio kind of is getting the short end of the
stick here on the UA administration funding versus taxes paid by
its employers. Funding that could be used to potentially adminis-
trate programs like the Self-Employment Assistance Program, or
SEAP, which my bill, the NO BOSS Act, gives states more flexi-
bility to administer.
Can you explain a little bit why this disparity is so pronounced
in these areas?
Mr. RADERMAN. Thank you for the question, Representative.
So the way that the dollars for program administration get dis-
tributed, it is through a resource justification model, the—kind of
the main points of emphasis in terms of how it gets divided up be-
tween the states, it includes both program efficiency and proc-
essing, the various basic workload, and then how accessible the
program is. So is there going to be a higher workload in the state?
And so the states that—or the agencies that are having the most
issues with either efficiency or accessibility, they end up getting pe-
nalized the most when it comes time to actually distributing the
dollars. And a better approach would make—would be to make
sure that all the states were getting a much more stable amount,
making sure that it was based more on the working population
that was overseen, rather than the claims levels itself.
Mr. CAREY. Okay, thank you. This committee has done impor-
tant work to address fraud and overpayments of the UI benefits,
including the House-passed Protecting Taxpayers and Victims of
Unemployment Fraud Act, which was mentioned earlier today.
States like Ohio are making investments in fraud recovery and
prevention efforts. And as they continue to recover these fraudulent
payments, we should be working to incentivize their investments in
these efforts. So back to you, sir. What thoughts do you have on
policy recommendations that would incentivize states to pursue
fraud recovery work?
Mr. RADERMAN. Thank you for the question, Representative.
A number of the proposals that have been put forward do include
incentives that provide states a percentage of the funds that are re-
claimed. I know that there has been proposals to allow the OIG to
pursue fraud for a longer period of time, making sure that that
fraud—those fraud dollars end up going back to the States. It
makes sense to us.
But I think making sure that the state agencies have more ro-
bust funding moving forward so all the dollars that are being
raised specifically for administration, ensuring that they go back to
the states and that some of the losses due to inflation over the past
several decades get undone, those are both important measures to
put them in a better financial position.
Mr. CAREY. Again, I want to thank the witnesses, and I want
to thank the chairman and the ranking member for having this
hearing. And with that I yield back.
Chairman LAHOOD. Thank you, Mr. Carey. I will now recognize
Mrs. Steel.
Mrs. STEEL. Thank you, Mr. Chairman LaHood, for holding this
hearing. And thank you, all the witnesses for coming out.
Recently, Chairman Smith and I sent a letter to Acting Secretary
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Su asking for all details of any attempt of her to forgive or write
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off fraudulent unemployment insurance payments issued by Cali-
fornia or any other state. I would love to submit this letter for the
record, Mr. Chairman.
[Pause.]
Chairman LAHOOD. Yes, I am sorry, yes. [Laughter.]
So ordered.
[The information follows:]
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Mrs. STEEL. We are still awaiting a response from the Depart-
ment, and I want to submit another record of recent L.A. Times ar-
ticle titled, ‘‘Job Growth in California Falls Back, Unemployment
Rate Remains Highest in the Country.’’
Chairman LAHOOD. Without objection.
[The information follows:]
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Mrs. STEEL. Thank you.
Inflation, record high cost, and heavy state regulations are kill-
ing small businesses across the state.
Before I ask Mr. Taylor for the questions, and I want to ask Ms.
Phillips that—you just mentioned while you are speaking that non-
fraud proper overpayment is more than fraudulent payments?
Ms. PHILLIPS. Thank you, Representative Steel. So, yes, the
U.S. Department of Labor requires all states on a quarterly basis
to file the ETA 227 report, it is the improper overpayment report.
And I am going to just make sure I have the exact number here.
So in 2023, 62 percent of Illinois’s total overpayments were con-
sidered non-fraud, improper payments. And of that 62 percent of
non-fraud, improper payments, 57 percent were attributable to a
claimant error made somewhere along the process.
Mrs. STEEL. So it was Illinois, but not for the national average.
Ms. PHILLIPS. Yes, I have not done——
Mrs. STEEL. Yes, because we had this hearing with Acting Sec-
retary Su regarding this, and she said that fraudulent payments by
the law that you cannot really forgive because she wanted to for-
give this loan that fraudulent payments went out in California. Out
of $135 billion, $30 billion happened in California. It is over 22 per-
cent. So that is actually under her watch, because she was labor
secretary in California. She was the one who created it. Now she
wants to forgive that. That is taxpayers’ money, and it should not
go to that. So that is why I was asking.
I asked the same questions that she couldn’t give me any num-
bers for. So she was hiding something or, you know, you gave me
some numbers because she said she doesn’t know the numbers na-
tionally, that during the COVID that this UI went out—the pay-
ments went out, and then how much was overpayment or how
much was fraudulent payments.
Ms. PHILLIPS. And Representative Steel, I should amend my
comment that the data, the ETA 227 data, is regular UI. It does
not include the CARES Act program.
Mrs. STEEL. So it has nothing to do with the CARES Act, so——
Ms. PHILLIPS. Doesn’t have the CARES Act.
Mrs. STEEL. So thank you.
Ms. PHILLIPS. Yes.
Mrs. STEEL. Thank you very much for clearing that up.
According to the Pandemic Response Accountability Committee,
California estimated it sent $800 million in pandemic unemploy-
ment benefits to the 45,000 prisoners. Improper payments to pris-
oners, scammers, and international gangs are part of the reason
California has a Federal unemployment insurance loan balance to
the Federal Government of $18.3 billion. If it is not going to be
paid, then guess what happens? Employers have to pay a much
higher rate.
Some estimates show California Employment Development De-
partment distributed approximately 30 billion, as I just mentioned,
during the pandemic. So, Mr. Taylor, in your opinion, why was
California the epicenter for UI fraud during the pandemic?
Mr. TAYLOR. Thank you, Representative Steel. Let me offer that
prior to implementing ID.me, and right around October 2020, Cali-
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fornia was experiencing a landslide of fraud at the time. Coming
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80
out of the governor’s office and post the ID.me integration, when-
ever we implemented the IAL2 controls in there, reporting out of
the governor’s office put it right at $125 billion in fraud savings
that ID.me saved the State of California. Subsequently, California
has moved away from the IAL2 standard, and now you are starting
to see those fraud rates that you are alluding to.
As far as the why, it is going back to an old data broker model
that I referenced in my testimony, where you are asking for PII
that is quite literally available for cents on the dollar on the dark
web.
Mrs. STEEL. Thank you very much, because I want to make very
clear about that, because when Julie Su was Labor Secretary, she
actually mentioned that, you know what, they are not up to date
with how they are going to make proper payments.
I have a few more questions, but I am going to submit in writing
because—since my time is over.
Mrs. STEEL. I yield back.
Chairman LAHOOD. Thank you, Mrs. Steel. I will now recognize
Ms. Chu of California.
Ms. CHU. Ms. Phillips, the Niskanen Center—and indeed, some
on this dais—assert that the formula that allocates the appropria-
tions among states unfairly shortchanges certain states because the
state employers pay more Federal UI taxes than they receive in
Federal administrative payments. But the reason that certain cen-
tral and southeastern states receive smaller allocations is that they
erect barriers to receiving UI benefits, they pay UI benefits to
fewer workers, and therefore have a smaller claims processing and
payment workload. Is that correct?
Ms. PHILLIPS. So that is—I worked for Illinois Department of
Employment Security, and probably am not the right person to ask
on other states. But lower benefits would result in a lower FUTA.
I do want to say, Representative Chu, that one of the things that
Mr. Raderman’s testimony is spot on is that when states have
fewer resources, when they need to make the improvements the
most, that is a problem, right? State capacity during the pandemic
was at its lowest point, and the funding goes up when it is raining
the hardest, but the funding goes down when states need to really
ramp up and improve both technological and process improve-
ments.
Ms. CHU. Well, one thing is clear. There has not been full fund-
ing on helping the states deal with the UI workload, and this prob-
lem has been going on consistently. In fact, the only time they real-
ly had those funds was when the American Rescue Plan mod-
ernization funding came in, which you testified about with regard
to its positive benefit.
Now, the Biden Administration has consistently proposed to in-
crease annual funding and to fully fund the state UI workload to
ensure that workers have access to the earned UI benefits while si-
multaneously helping states prevent fraud and errors. However,
Republicans routinely appropriate less than what is needed to fund
the state workload.
Can you talk about how consistent increased Federal funding for
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UI administration would enable the state workforce agency direc-
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81
tors to increase support for staffing and technology, and perhaps
even having things like equity grants?
Ms. PHILLIPS. Thank you for that question.
In my testimony I celebrate the ARPA UI modernization funding.
Congress originally appropriated $2 billion. And last year, as a re-
sult of the Fiscal Responsibility Act, that was reduced to $1 billion.
As a state administrator at that time, we were planning for that
funding. We were working on proposals at that time, and it was a
setback, capacity-wise, for us not—to know that we were not going
to have as many resources for improving technology, improving
processes, improving reemployment efforts, as well.
Ms. CHU. Well, we know that these funds that Congress pro-
vided through the American Rescue Plan have indeed made signifi-
cant strides to help states improve their UI systems by detecting
and preventing fraud, promoting equitable access, and ensuring the
timely payment of benefits since the pandemic. In fact, because
California received these funds, you know, through ARPA, it was
able to actually deal with the fraudulent things that took place,
was able to streamline its identity verification and fraud reporting
system, expand language access, and also eliminate the backlog of
unprocessed claims.
So, Ms. Phillips, would these type of improvements have been
possible without the American Rescue Plan funding that Democrats
provided?
And how should the lessons learned from these achievements in-
form any further reform of the UI system?
Ms. PHILLIPS. Thank you, Representative. I am going to start
backwards with the lessons.
Organizations like the Beeck Center and others are trying to
help connect states with one another. In my testimony U.S. DoL
also has been documenting the ingenuity that states are working
on not only on equitable access to UI, but also on timeliness of ben-
efits, and detection of fraud, and preventing fraud.
I would argue that one of the best ways to prevent and detect
fraud is by—I know this might sound strange coming from someone
working on digital benefits, but making sure that the digital ben-
efit access is also paired with in-person options, as is required by
law, is an important fraud prevention mechanism.
Your question about whether this would happen—whether all of
this innovation would have happened or would be happening if the
ARPA funding was not there, I would argue probably not, for many
of the reasons that Mr. Raderman was talking about, that the re-
source justification model makes it difficult to have extra resources
to be able to work on modernization efforts.
Ms. CHU. Thank you. I yield back.
Chairman LAHOOD. Thank you. Now I recognize Mr. Moore of
Utah.
Mr. MOORE of Utah. Thank you, Chairman LaHood, for holding
this important hearing.
I would look back to when I first ran for this seat. It was just
three-and-a-half years ago, and unemployment insurance was, you
know, just becoming a thing with—as we were trying to navigate
the pandemic and, you know, seeing the workforce go through a
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stress point. And it was that moment that, to me, was like we are
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not going to be able to solve these things at the Federal level. And
it continually got worse.
And the thing that was the most frustrating to a lot of my con-
stituents, particularly small business owners, was not being able to
hire people, or not being able to get some of their folks back to
work. That is an un-American concept. It is un-American. I get the
pandemic was a tricky thing to navigate, and that different states
handled it different ways, but we can’t ever get to that point again.
We can’t ever get to that point again where it was easier to stay
home and engage in this type of program than it was to go back
to work.
And, you know, we didn’t—I look back on it, and we made mis-
takes as a country, as a Federal Government, trying to do too much
and creating unintended consequences. And I think the data will
bear that out over the history of time. We saw an enormous
amount of inflation right after the ARPA, or the American Rescue
Plan, was passed. We cannot have so much money chasing too few
goods, especially when there was a stress on supply chain and
things like that.
And that, I think, is leading to my main point and one question
simply that I have for Ms. Townsend. Like Iowa, Utah is a state
that has been on the forefront of creating high-performance service
delivery models for the unemployed and those lacking the job skills
required to fully participate in the workforce. And so my point
here, ultimately, is what are we doing at the state level to make
sure these programs are actually run well?
And where do we get the outcomes? We are just not going to get
the outcomes from the Federal Government. The nation is too big,
the population is too high, and we do not have the purview and the
ability to properly target where the work needs to be done.
The Utah Department of Workforce Services, Utah’s integrated
model for workforce and social assistance, simplified the applica-
tion process for individuals seeking assistance such as unemploy-
ment insurance, and provides a case manager who identifies suit-
able services based on an individual’s needs. Can you speak to the
effectiveness of individuals receiving unemployment benefits hav-
ing case managers in shortening their duration on unemployment
insurance and finding meaningful employment?
Ms. TOWNSEND. Absolutely. Thank you for the question, Rep-
resentative Moore.
So what we have found in Iowa is that when individuals, like I
said before, come into the American job centers or contact Iowa
Workforce Development after they have filed a claim for unemploy-
ment benefits, and we assign a single individual to help walk them
through the process, most of them have not looked for a job for a
period of time. Many of them have not looked for a new job for dec-
ades. And so—and as anyone who has been paying attention
knows, the way to find a job now is not the way it was even five
years ago, even pre-pandemic.
So having someone available to help them navigate the new sys-
tem of basically virtual and all-digital application process, having
someone available to look through your resume—because, for in-
stance, in Iowa we have more jobs than we have unemployed, and
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I know it is the same in Utah. If you are applying for jobs and you
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are not getting a response, then the problem is probably in your
resume. It is probably in the way that you are going about your
job search.
And so one of the things that we can do with the reemployment
case management is look at what jobs are you applying for? Are
they the right jobs for your skills and your experience? What other
jobs should you be applying for? And is there something in your re-
sume that we need to fix or improve?
And so, when they get that one-on-one assistance, it helps direct
them not only to the better jobs that they may not have otherwise
realized they were eligible for, but also gives them that support
and the hope that I can get this job. And they do. And we see—
every day we are seeing stories about people who are getting jobs
that pay them way more than they were making before they be-
came unemployed.
Mr. MOORE of Utah. Absolutely, thank you. And I think the
irony that—I can even, you know, admit it myself that I am saying
that having a case manager involved, some people would claim that
is more bureaucracy, right? What I am saying is, if we don’t have
that special attention to do this at the most basic level, where we
are actually helping the individuals, we are going to continue, like
Mr. Taylor was highlighting, the just an enormous amount of fraud
that slips through the system unless you give it that special atten-
tion.
And that is why I want to be able to communicate and help
spread throughout the country that states that do this well, they
need to be replicated, and we don’t need to just continue to throw
more money at the problem. You need to put the right type of re-
sources at the ground level to help these individuals get out of this
mess, and that should be an incredibly bipartisan approach. And
if you look beyond the rhetoric, that is what this Work and Welfare
Committee is trying to do, is find the help that they need, and lift
people out of these horrible situations that they get put in.
Ms. Townsend and to the rest of the witnesses, I appreciate your
perspective, and I yield back.
Chairman LAHOOD. Thank you, Mr. Moore. We will recognize
Ms. Tenney of New York.
Ms. TENNEY. Thank you, Mr. Chairman, and thank you to the
witnesses. This is a really important issue.
I am a small employer up in upstate New York. And, you know,
there has been serious systemic problems with unemployment in-
surance in this program, and particularly in the State of New York.
There have been over 11 billion fraudulent unemployment pay-
ments since 2020. Yet despite this figure, New York has only recov-
ered a small fraction of that.
New York is one of only two states, along with California, that
remains delinquent on its loans borrowed from the Federal Unem-
ployment Trust Fund and the COVID–19—and that was from the
COVID–19 pandemic. The failure of Albany—and it is run by the
Democrats right now, it is one-party rule all across the board—to
repay the debts will force employers to bear the burden of these in-
creased Federal unemployment taxes. And this debt remains, and
it has been a tremendous burden. It has forced businesses to close
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in upstate New York. It is really heartbreaking.
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And I just think it is worthy of note that last year, in our meet-
ing on February of—I believe it was 2023—we had the inspector
general here to discuss this unemployment at our last Ways and
Means full committee hearing. And I asked the inspector general
about New York, and he specifically said, ‘‘We tasked the governor
of New York’’—at the time it was Governor Cuomo—‘‘in 2011 to
change the systems in place, the computer systems, the technology,
or you are going to have a real serious problem with fraud.’’ And
we ended up with that. And guess who is paying the price? Our be-
leaguered employers in upstate New York.
And so, because of this fiscal mismanagement and these real-
world consequences, they are hiking this Federal unemployment
tax that really particularly hits the smaller businesses, a lot of res-
taurants, a lot of businesses forced to close, and also those who are
unable to find people to replace them.
That is why I am happy to join with Michelle Steel of California.
We introduced legislation to protect employers in our respective
states, New York and California. The small businesses in New
York, and also California, should not be punished because of their
state government’s incompetence. And it really is, it is a huge con-
cern because we do have programs to help people temporarily move
into unemployment in their attempt to get a new job.
So I appreciate all the ideas and the tasks that you have here.
And I first wanted to just say thank you to Colonel Stricklin for
your innovation in reading your testimony and hearing your testi-
mony today on what you have done on trying to get people back
into the workforce, particularly veterans, and I appreciate that. My
son just became a major yesterday in the Marine Corps, so it was
kind of fun to pin his little oak leaf cluster on him yesterday.
And so—but I know that so many people that—we have so many
incredible people that serve in our military who can convert those
skills into, you know, into the private sector when they go into
their new careers, and so I thought maybe what you might explain
to us in enhancing what you talked about, how you actually got
people back to work, how this detrimental effect of our workforce
shortage—how did you get businesses to deal with initiatives to get
people back into the workforce in light of some of the issues we
have today, where people almost have more incentives to stay home
than they do to go to work? How do you inspire people to get out,
go to work, take care of their families, pay taxes that we need for
some of our services? How did you do that? And I would love to
hear about it, especially with your unique background as a military
member.
Mr. STRICKLIN. Thank you for the opportunity to respond to
that, and it is something that we are very passionate about.
And when we started this five years ago in our group, we were
not happy with the progress being made. And so we met and said
we are going to make a difference. And this all started on a cocktail
napkin among competitors in industry, among our training aspects
of the Alabama Community College system and among our govern-
ment. And we sat down and said, ‘‘How do we get people inspired
to a new tomorrow? We need to find something they are passionate
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about, and we need to reduce the barriers to entry.’’
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So when we started these courses, it started with a skid steer
and a pile of rocks, a pile of aggregates, and we had people come
in to learn this single piece of equipment. And everybody agreed
that we are going to work together to make a difference. And then,
down the road, when we are finished with this, we are going to
compete over hiring them to get them back into our workforce. Be-
cause if we don’t have a better workforce, there is nothing to com-
pete with down the road.
And these individuals—if I could tell one quick story—so as we
did the first pilot group, somebody went through and he thought
he was going to earn a new job. And in three classes down the road
I happened to be there, and he came up and hugged my neck, and
he said, ‘‘I want to thank you and the committee for what you are
doing because I thought I was getting a new job, but this didn’t
change my pay, it changed my family and my kids’ futures, because
you changed our level of income so that now I can offer more to
my kids and offer more for their future.’’ And that is how we in-
spire a new tomorrow to them. We all want good. We all love this
nation.
Ms. TENNEY. So your company invests in getting new people
during that transition period, where they are training and getting
them off unemployment and getting into your business. Is that——
Mr. STRICKLIN. Yes, ma’am. And originally, we didn’t know—
it was funded by a grant. We didn’t know if we were going to get
it. And the partners in industry went to our training aspect. And
we said, ‘‘If we don’t get the grant, we will write a check to cover
the first year of training.’’
Now, mind you, none of us wanted to, but we were willing to.
And luckily, the grant came through. And when I mentioned in my
testimony we have trained over 3,000 Alabamians, none of those
3,000 Alabamians have paid a cent for their training. It has all
been through grants that we have enabled them to a new tomor-
row.
Ms. TENNEY. Well, thank you so much. My time has expired.
But thank you to everyone. I appreciate your insight.
Chairman LAHOOD. Thank you. I recognize Ms. Moore of Wis-
consin.
Ms. MOORE of Wisconsin. Thank you so much, Mr. Chairman.
And thank you, Mr. Ranking Member. I think this is an ex-
tremely important discussion, and I want to get a few things
straight before I move on.
I think, Ms. Phillips, you were talking about the non-fraudulent
improper payments that were made. Did you say that we have not
disaggregated what percentage of the overpayments were fraudu-
lent versus non-fraudulent, accidental?
Ms. PHILLIPS. So we—thank you, Representative Moore, for
that question. The ETA 227 has no demographic information.
Ms. MOORE of Wisconsin. Demographic.
Ms. PHILLIPS. There is no disaggregated demographic informa-
tion. It is broken down by what type of improper—non-fraud, im-
proper error code a state reports on that quarterly report, and
the——
Ms. MOORE of Wisconsin. But we do know which ones were——
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Ms. PHILLIPS. We know whether——
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86
Ms. MOORE of Wisconsin [continuing]. Which ones were fraudu-
lent——
Ms. PHILLIPS. Yes.
Ms. MOORE of Wisconsin [continuing]. Versus improper pay-
ment.
Ms. PHILLIPS. Non——
Ms. MOORE of Wisconsin. And what percentage is that? That
wasn’t clear to me.
Ms. PHILLIPS. So I only have—anyone could look at the infor-
mation, state by state or nationally. But I can only speak right now
to Illinois’s numbers. And in 2023, as I mentioned just a minute
ago—I just want to make sure I am completely accurate here—that
62 percent of Illinois’s total improper payments—total overpay-
ments were considered non-fraud improper payments.
Ms. MOORE of Wisconsin. Mr. Taylor, would you agree with
that? I probably should have asked you that. What percentage of
these payments were improper and other part fraudulent?
Mr. TAYLOR. It depends on the state, Representative Moore.
There was a wide variety of disparity when it comes to what we
call first-party and third-party fraud, third-party fraud being the
stolen identity——
Ms. MOORE of Wisconsin. Yes, yes.
Mr. TAYLOR [continuing]. First-party improper.
Ms. MOORE of Wisconsin. Well, the reason that I have just
burnt up so much of my time on this, Mr. LaHood, is because I just
think our committee was focusing on this as if the majority of these
payments were fraudulent.
And, I mean, thank God we made these payments because I
think it was Ms. Phillips that said 64 percent of folks live paycheck
to paycheck, and we know what people were doing four years ago.
I mean, they were maxing out their credit cards, hoarding toilet
paper. And so, we want to just be clear that it was important. I
mean, all of you would agree that, despite the fraud, which is ter-
rible, that we saved people’s lives, literally, by providing this ben-
efit.
Ms. Townsend, your reemployment work strategies. I mean, I am
very impressed with your ability to get people back to work. It is
a model that everybody has to look at. But I am wondering if what
we used to say, that you bite your hand to spite your face or what-
ever—haven’t we found that states that did a remarkable job of
avoiding inflationary problems over the years reduced staffing, and
then found themselves in this situation where we had an emer-
gency and they just didn’t have the staffing in place as a punish-
ment, almost, for their doing so well in getting people unemployed?
So, I am wondering if any of you feel that the formula maybe
punishes states that do a good job. Maybe I will ask you that, Ms.
Phillips, and also—yes, go on.
Ms. PHILLIPS. Well, I think I would go back to Mr. Raderman’s
comments earlier that the way the resource justification model
works is that when there is a low demand for unemployment bene-
fits, that is also a low administrative amount of money that states
have, and so you can’t fix the roof during that time. So that is one
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point.
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87
But I also want to comment on the workforce aspect because, as
a former fellow UI administrator, states across the country are
working on the RESEA program, and most administrators believe
that the UI program is a temporary—it is a trampoline. But the
people that are eligible to apply for UI are workers, and they want
to get back to work. And most state agencies are working on——
Ms. MOORE of Wisconsin. Can I——
Ms. PHILLIPS [continuing]. That employment piece——
Ms. MOORE of Wisconsin. Can I ask something very quick be-
fore I get cut off?
Ms. PHILLIPS. Mm-hmm.
Ms. MOORE of Wisconsin. Do we see instances where there are
barriers to applying to unemployment?
I mean, like the state has taken the position that we don’t want
to provide this benefit, and so many more people who are eligible
and need it don’t get it, and that also lowers the numbers and sort
of masks the need?
Ms. PHILLIPS. Representative Moore, I can really only speak
from my experience in Illinois that there was—there is no pre-
venting people from applying. But I think we know, especially
through the pandemic, the challenges that any UI claimant faces
in applying, and the administrative burdens that they face on on-
line applications, on certification processes, on other documentation
that they need to provide.
I know I am over time, but one of the things that I cannot unsee
is I observed these live claim filing observations, and I watched
people from five different regions in Illinois apply, including an
older woman, a 76-year-old woman from downstate Illinois near
Carbondale, who was struggling mightily. She came into the office
because she couldn’t apply online. It wasn’t working for her. There
were many different blockades that I won’t go into, but there are
improvements that can be made to the actual application process.
Ms. MOORE of Wisconsin. Thank you so much, Mr. Chairman,
for your indulgence.
Chairman LAHOOD. Thank you, Ms. Moore. I recognize Mr.
Smucker of Pennsylvania.
Mr. SMUCKER. Thank you, Mr. Chairman, for convening this
hearing. I would like to talk a little bit about the state’s manage-
ment of their own unemployment funds.
And as a former business owner, I think most business owners,
you know, we value unemployment. We know that when you go
through rough times, it is a safety net for employees that they are
no longer able to provide work for. Even most business owners, at
least in our case, I think we understood the need for a rating sys-
tem—I was in Pennsylvania a rating system based on your own ex-
perience so that businesses who are laying off more workers are
paying more.
But what did get frustrating was when states mismanaged their
own funds and, as a result, businesses in Pennsylvania, for in-
stance, had much higher rates and it was harder to compete.
And I am concerned right now, you know—during the pandemic
we, of course, know that states’ unemployment budgets were
strained. There was a huge surge in claims. We have been talking
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about that this entire hearing. The federal government provided
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88
loans to states to help them bridge the gap and, of course, expected
that to last while the pandemic lasts, and until individuals re-
turned to work, and then expected, I think, to begin paying back
those loans.
So it is—there are some states, like California, New York that
have yet to pay the federal government for those loans from four
years ago. And in fact, they not only have been accumulating that
debt, but also now paying high interest. So in California $650 mil-
lion already paid in interest, and another $550 million in interest
due to the federal government by September 30. That really, I
think, is going to matter to small businesses in those states who
probably will end up having to bail out the states as a result of the
bad policies by the governors and the administrations in those
states. And it should maybe be even concerning to us, because
eventually all taxpayers, if states can’t pay that back, may need to
bail them out even further.
And so I was proud to have cosponsored Representative Steel
and Representative Tenney’s legislation to ensure that small busi-
nesses will not have their credits against the FUTA, the Federal
tax rate, reduced and will not see a dramatic increase. And I hope
that today’s hearing will call attention to best practices that states
can utilize, can take advantage of during strong economic times to
prevent these kind of future system strains and collapses in the fu-
ture.
So Mr. Raderman, what actions can Congress take to ensure that
states who receive Federal loans for their UI programs repay those
loans in a timely manner, with hopefully minimal to zero impact
on small businesses?
Mr. RADERMAN. Thank you for the question, Representative.
In terms of the state loans that were taken out, the way the pro-
grams are currently structured, it does fall to the states to fund the
benefits. Our view is that the taxable wage base that is used to ac-
tually finance the state level benefits—I can’t speak to every state,
but I know for California and New York in particular, those wage
bases have not been adjusted for inflation over time, and so it has
become especially difficult to actually fund the benefits when
downturns do occur, and that kind of results in that large amount
of debt.
So the preference is to make sure that that wage base is indexed
moving forward, or raised and indexed, and you can actually lower
the rates overall so that businesses will have a bit more stable tax
rates moving forward.
Mr. SMUCKER. With the budget hole that we are in now in
those particular states, do you agree it will eventually probably im-
pact the small businesses there? And how do you think it will do
that?
Mr. RADERMAN. I agree, they are going to be facing higher
rates at the moment. And I think it is important to address the fi-
nancing issues now——
Mr. SMUCKER. I think it——
Mr. RADERMAN [continuing]. So that there is not a problem
moving forward.
Mr. SMUCKER. I think there is a lot of concern there. I appre-
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ciate you responding to that.
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Mr. Stricklin, your testimony was really impressive. It sounds
like the program that you have in Alabama is very impressive. I
was really just interested in one aspect of it, and I am out of time.
But you talked—I have seen a lot of employee workforce education
and training programs, and apprenticeship programs, and so on.
Your goal is to train the first two weeks on the job. I have never
really seen that exactly, and I found that really interesting. Really
fascinating, actually. I would love to have you expand a little bit
on that.
Mr. STRICKLIN. Yes, sir. Thanks for the opportunity to expand
on that.
And when we sat down in the beginning, and you look at this
problem—and it is so big you never know where to start, right?
How do we climb a mountain? We have got to take the first step.
And when we looked at this we said we have to have something
manageable and measurable so that we know how to develop the
training courses.
And we said, as owners of businesses, as small businesses, what
do I want most from an employee when they show up? And we
really boiled it back to I would love for somebody to walk in on day
one of their third week, they know how to put on their safety
equipment, they know where to go in the office, they know basic
operation of the equipment. Then we can train them the specifics
of what to do. And that is where that came from, is let’s just train
the first two weeks. That way they are showing up on day one of
week three, and they are ready to run. Like, your company or my
company or any company wants to train them in the specifics of
what we do there and what our competitive advantage is.
Running a piece of equipment is running a piece of equipment.
Operating a piece of equipment is——
Mr. SMUCKER. It is a really interesting concept, and I am out
of time.
Mr. STRICKLIN. Thank you, sir.
Mr. SMUCKER. Thank you, Mr. Chairman, yes.
Chairman LAHOOD. Thank you, Mr. Smucker.
Well, that concludes our question-and-answer period. I know it
went by quickly.
Let me just say in closing here how grateful we are for your gen-
erous testimony here today. As I think we all learned from this
hearing, this is a complex subject. There are many nuances here
that need to be worked out. And we have to figure out ways to re-
build and restore confidence in this system moving forward. And so
this was a great learning process for the members here. It was
great for me and everybody else here. So we appreciate your ideas,
your proposals, your successes that you have had. And we look for-
ward to staying in touch with you as we put together further public
policy initiatives to address these problems and serve the people
that we need to serve.
So with that, please be advised that members have two weeks to
submit written questions to be answered later in writing. Those
questions and your answers will be part of the formal record.
With that, we are grateful again for you being here today, and
the committee stands adjourned.
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[Whereupon, at 3:33 p.m., the subcommittee was adjourned.]
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Insert offset folio 074 here 57013A.074
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jgilmore on DSK126QN23PROD with REPORTS
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 076 here 57013A.076
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jgilmore on DSK126QN23PROD with REPORTS
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VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00116 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 078 here 57013A.078
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00117 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
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VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00118 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
PUBLIC SUBMISSIONS FOR THE RECORD
jgilmore on DSK126QN23PROD with REPORTS
(113)
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jgilmore on DSK126QN23PROD with REPORTS
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jgilmore on DSK126QN23PROD with REPORTS
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VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00121 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 082 here 57013A.082
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00122 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 083 here 57013A.083
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00123 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 084 here 57013A.084
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00124 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 085 here 57013A.085
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00125 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 086 here 57013A.086
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00126 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 087 here 57013A.087
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00127 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 088 here 57013A.088
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00128 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 089 here 57013A.089
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00129 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 090 here 57013A.090
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00130 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 091 here 57013A.091
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00131 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 092 here 57013A.092
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00132 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 093 here 57013A.093
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00133 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 094 here 57013A.094
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00134 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 095 here 57013A.095
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00135 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 096 here 57013A.096
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00136 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 097 here 57013A.097
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00137 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 098 here 57013A.098
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00138 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 099 here 57013A.099
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00139 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0100 here 57013A.100
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00140 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0101 here 57013A.101
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00141 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0102 here 57013A.102
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00142 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0103 here 57013A.103
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00143 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0104 here 57013A.104
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00144 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0105 here 57013A.105
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00145 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0106 here 57013A.106
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00146 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0107 here 57013A.107
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00147 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0108 here 57013A.108
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00148 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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jgilmore on DSK126QN23PROD with REPORTS
Insert offset folio 0110 here 57013A.110
VerDate Sep 11 2014 06:05 Nov 01, 2024 Jkt 057013 PO 00000 Frm 00150 Fmt 6601 Sfmt 6601 E:\HR\OC\A013.XXX A013
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File and source
- File
- CHRG-118hhrg57013.pdf
- Size
- 49,960,039 bytes
- SHA-256
- 092291e10a7c8f4751ad3189e4b42976b4fbc0f4fd20ff0777cdd8d46a5dcdd0
- Our copy
- CHRG-118hhrg57013.pdf
- Original
- www.govinfo.gov