***Weekly Update***
From Legislative Committee Chair: Todd Kolden, Aberdeen Central Office
Week of March 5, 2007
IMPASSE OVER MINIMUM WAGE INCREASE PERSISTS BUT VOTE IN SENATE COULD FORCE COMPROMISE
• Legislation to increase the minimum wage has languished in Congress over disagreement on how much tax relief for business the bill should include. But if Senate Majority Leader Harry Reid (D-NV) has his way, the Senate will soon schedule a vote on the wage increase with a scaled-back version of business tax cuts with the hope of moving the bill closer to enactment. The Senate has been focused over the past few weeks on proposals related to the War in Iraq and recommendations by the 9/11 Commission, but time could be made available for a vote on the wage hike as early as this week. Both the House and Senate have approved legislation (H.R. 2) already to increase the minimum wage, but conference negotiations over differences in the bills were never initiated because of the potentially embarrassing possibility compromise couldn't be reached over the size of the tax breaks added by the Senate. The House approved legislation to increase the minimum wage did not include tax breaks, while the Senate took the House version and added $7 billion in business-related tax savings; a move Members of the House Majority opposed.
• As a compromise, the House two weeks ago approved (360-45) legislation (H.R. 976) with a cost of approximately $1 billion to provide business a variety of tax breaks, including a one-year extension of the Work Opportunities Tax Credit (WOTC) through 2008. The House bill has been transmitted to the Senate where it is expected to be added to the Senate's legislation to increase the minimum-wage (S. 2). The final hurdle to Congressional approval appears to be disagreement raised largely by the Senate Minority and Chairman of the Senate Finance Committee Max Baucus (D-MT), who desire a larger package of business tax cuts. If Senate Majority Leader Reid moves to bring the legislation to increase the minimum wage to the Senate floor for a vote, it is uncertain whether Members desirous of more tax cuts would vote against the legislation to increase the minimum wage.
Week of March 12, 2007
EFFORT IN THE HOUSE TO ATTACH MINIMUM WAGE INCREASE TO IRAQ SUPPLEMENTAL SPENDING BILL
• Members of the House Majority disclosed last week they are working to attach the minimum wage hike language to a supplemental spending bill for funding the war in Iraq. The minimum wage provision to be added to the supplemental spending measure is identical to legislation (H.R. 2) approved already by both the House and Senate to increase the minimum wage to $7.25 over a two year period. This tactic appears to have the dual goal of enticing sufficient Members of the House Majority to vote in favor of the wartime supplemental while simultaneously moving the minimum wage increase to the President's desk. Whether this latest attempt to dislodge the stalled minimum wage bill is successful, Members on both sides of the political aisle agree legislation to increase the minimum wage is likely to be approved before June. The military supplemental spending bill is scheduled to be considered by the House Appropriations Committee this week and by the House the following week.
• Consideration of legislation to increase the minimum wage has been ongoing since January 5, but has stalled over disagreement on how much tax relief for business the bill should include. The Ranking Member of the Senate Finance Committee Charles Grassley (R-IA) noted that previous compromises over wage increases have been far more generous to business, expressing concern that the Senate bill amounts to "peanuts" while the House bill represents a "peanut shell." The House three weeks ago approved (360-45) legislation (H.R. 976) with a cost of approximately $1 billion to provide business a variety of tax breaks, including a one-year extension of the Work Opportunities Tax Credit (WOTC) through 2008. The Senate's version is estimated to cost at least seven-times more than the House version, causing Members of the House Majority to balk. But a compromise has been slow to materialize requiring Congressional leaders to identify other legislative vehicles, such as the military supplemental.
WAYS AND MEANS SUBCOMMITTEE TO HOLD HEARING ON EXPANSION OF UI BENEFITS AND WAGE INSURANCE PROGRAM
• The House Committee on Ways and Means Subcommittee on Income Security and Family Support is scheduled to hold a hearing on March 15 to discuss the prospects of expanding the eligibility for Unemployment Insurance (UI) benefits and creating a program to subsidize a portion of lost wages for dislocated workers who return to work in lower paying jobs. Robert Reich, Former U.S. Department of Labor Secretary during the Clinton Administration, is scheduled to appear. Additional witnesses have not yet been announced by the Subcommittee. Few official details of the proposal regarding the UI benefit expansion and creation of the wage insurance program are available, but are expected to be released early next week. In announcing the hearing, Subcommittee Chairman Jim McDermott (D-WA) stated that he wishes to "help states fix some of the more obvious holes in the UI system" to respond to changes that have occurred in the American workforce and in the U.S. labor market.
HOUSE APPROPRIATORS GEARED UP FOR APPROVAL OF FY 2008 WORKFORCE SYSTEM SPENDING BILL
• House appropriators have begun calling witnesses from the Administration to testify on the President's fiscal year 2008 Budget request, with U.S. Department of Labor (USDOL) Secretary Elaine Chao scheduled to appear before the House Labor, Health and Human Services and Education Appropriations Subcommittee on March 15, and Employment and Training Administration Assistant Secretary DeRocco to appear the following week. Groups interested in the fiscal year 2008 workforce system spending bill have been asked to submit their appropriations requests to the Subcommittee by March 30 for consideration and inclusion in the Subcommittee's hearing record.
• Approval by the Subcommittee of the fiscal year 2008 Labor, HHS and Education appropriations bill marks the first step toward enactment of workforce system spending for the fiscal year beginning on October 1, 2007. Appropriations levels approved by the Subcommittee are not typically significantly amended by the full Appropriations Committee or the House before being sent to the Senate, which uses the levels as its baseline for consideration and approval. This makes engagement with the House Subcommittee important.
FIFTH QUARTER FUNDING ALLOWED FOR VETS PROGRAMS UNDER FY 2007 APPROPRIATIONS – AMENDED
• The law (P.L. 110-5) which funds federal government operations for the remainder of the 2007 federal fiscal year ending on September 30, 2007, did not include language typically included in veterans' employment program appropriations allowing states to obligate fiscal year 2007 funds during the "Fifth Quarter." The term, Fifth Quarter, is used to describe the period from October 1 to December 31 following a federal fiscal year (October to September). The Office of Management and Budget (OMB) in response to an inquiry by the USDOL Veterans Employment and Training Service (VETS) indicated H.J. Res. 20 does not impact the ability of states to obligate unspent fiscal year 2007 funds for the Disabled Veterans Outreach Program (DVOP) and the Local Veterans Employment Representative (LVER) program in the Fifth Quarter.
FEBRUARY NATIONAL UNEMPLOYMENT RATE 4.5 PERCENT
• The Bureau of Labor Statistics reported last Friday the nation's February unemployment rate was 4.5 percent, essentially unchanged from January's 4.6 percent. The jobless rate has remained within a narrow range - 4.4 to 4.6 percent - since September 2006. The share of the unemployed who had been without a job for 27 weeks or longer increased by 1.7 percentage points to 17.8 percent in February.
• Nonfarm payroll employment increased by 97,000 over the month, following gains of 146,000 in January and 226,000 in December. Over the year ending in February, payroll employment grew by 2 million. In the service sector, health care employment continued to expand. Health care accounted for about one in six jobs added to payrolls in the past 12 months. In the goods-producing sector, mining employment rose 4,000 in February. Over the year, mining employment has increased by 49,000. Construction employment declined sharply, by 62,000, in February. Adverse weather conditions in many parts of the country likely contributed to the job declines throughout the construction industry. Manufacturing employment continued to trend downward, -14,000 in February.
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Week of March 26, 2007
HOUSE APPROPRIATORS AIMING FOR JUNE TO MOVE LABOR PROGRAM SPENDING BILL
• The House Labor, Health and Human Services (HHS) and Education Appropriations Subcommittee is using the next two months to piece together its fiscal year 2008 spending bill with the goal of approving it in June. Approval by the Subcommittee of the bill marks the first step toward enactment of workforce system spending for the fiscal year beginning on October 1, 2007. Appropriations levels approved by the Subcommittee are not typically significantly amended by the full Appropriations Committee or the House before being sent to the Senate, which uses the levels as its baseline for consideration and approval. This makes engagement with the House Subcommittee important. Subcommittee staff advised those interested in effecting spending levels in the bill to submit their requests as soon as possible.
• According to Congressional staff, the change in leadership on Capitol Hill is releasing pent up expectations by many labor, health and education constituencies funded under the spending bill and desirous of additional funding. But with little more discretionary funding than was available in fiscal year 2007, many groups are again likely to come away disappointed. This competitive environment for limited funding requires Congressional appropriators to look seriously at proposals in the Administration's fiscal year 2008 Budget to cut spending. This includes the Administration's proposal to rescind $335 million from Workforce Investment Act (WIA) funding and additional reductions of over $500 million to the programs proposed for consolidation under the Career Advancement Account (CAA) proposal. But even as Congressional staff says "no proposal is off the table," they and some Members of the Subcommittee say they will do what they can to appropriate adequate funding for the workforce system.
• Divisions over funding levels requested in the Administration's fiscal year 2008 Budget were apparent during a hearing early last week when Employment and Training Administration (ETA) Assistant Secretary Emily DeRocco appeared along with other federal officials before the House Labor, HHS and Education Subcommittee. Sitting in for Subcommittee Chairman Dave Obey (D-WI), Congressman Tom Udall (D-NM) said he believed the $1.2 billion total cut to workforce program spending in the Administration's fiscal year 2008 Budget combined with the proposal to establish CAA's amounted to a dismantling of the workforce system. Assistant Secretary De Rocco countered that ETA's proposal is targeted at eliminating duplicative services and administrative functions available at both state and local offices. She said the Administration's proposal would shift funding to training where it is needed most and noted that the workforce system trains far fewer workers than it should. She said 189,000 workers were trained over the past year according to the latest available data, while recognizing that the "soft touch" of other core and intensive services have assisted approximately 11 million individuals over the same period.
• A Member on the panel said he was not supportive of the status quo and encouraged the Administration to pursue its reforms to make the system more efficient. Another Member said he did not believe any Member would support an inefficient program, but that cutting funding for the system would not solve problems of inefficiency, supporting instead reforms where needed with adequate appropriations. U.S. Department of Labor (USDOL) Secretary Elaine Chao was to appear before the panel today, but the hearing was postponed as a result of the impending vote on the House floor to approve the supplemental funding bill for wars in Iraq and Afghanistan.
REAUTHORIZATION OF WIA ON LIST OF CONGRESSIONAL PRIORITIES WITHIN NEXT THREE MONTHS
• House and Senate staff with the authorizing committees responsible for reauthorization of the Workforce Investment Act (WIA) has confirmed they are working to introduce legislation to reauthorize WIA soon with the goal of having it approved the first six-months of the 110th Congress. If legislation to reauthorize WIA is not approved by the end of June, it may not have a hope of being completed because of the crush of other priorities and the pressure of an impending Presidential election in November of 2008. The Senate has been reaching out to stakeholder groups, collecting information on their priorities, with the goal of introducing a bill early in April.
WAYS AND MEANS SUBCOMMITTEE DISCUSSES EXPANDING UI ELIGIBILITY AND CREATING PROGRAM OF WAGE INSURANCE
• The House Committee on Ways and Means Subcommittee on Income Security and Family Support held a hearing on March 15 to discuss the prospects of expanding the eligibility for Unemployment Insurance (UI) benefits and creating a program to subsidize a portion of lost wages for dislocated workers who return to work in lower paying jobs. In opening the hearing, Subcommittee Chairman Jim McDermott (D-WA) noted that just over one-third of jobless workers are eligible for UI benefits and there is no assistance available for dislocated workers reemployed in lower paying jobs. Chairman McDermott expressed a hope his draft proposal would be given serious consideration, concerns worked out and a bill advanced to assist more workers than are covered under current programs. Subcommittee Ranking Member Jerry Weller (R-IL) was quick to point out that the proposals were possible only by increasing taxes on employers as states' expenses under the UI benefit expansion proposal would be covered by an extension of the FUTA 0.2 percent surtax and the wage insurance would be paid through a new tax on employee's wages.
• Appearing before the Subcommittee, Secretary Robert Reich, former U.S. Department of Labor Secretary during the Clinton Administration, expressed a need for expanded assistance for dislocated workers that account for the structural changes to the labor market caused by forces of globalization and technological integration. Mr. Reich writes in his statement submitted for the record that the answer to "what happened to that job?" is as often "it's being done by software" as "it's being done elsewhere." This relatively new environment, according to Mr. Reich has made almost all jobs temporary with earnings that are unpredictable - conditions which are by-in-large fine with younger workers but shocking to older ones. Representatives from the AFL-CIO and National Employment Law Project were generally supportive of proposals to expand UI benefit eligibility, despite desires to make further reforms to UI to cover even more workers than proposed; these representatives were not in favor of the wage insurance program. Concerns with the wage insurance proposal included a fear it would promote reemployment in substandard jobs and potentially divert funding from existent programs under funded already to assist dislocated workers.
• UI Benefit Expansion Proposal: Under the proposal to expand UI benefit eligibility, states would be given five years (fiscal years 2008-2012) to enact laws to expand UI benefit eligibility and receive a portion of $7 billion from the Federal Unemployment Account set aside as a financial incentive. A state's potential maximum share of the distribution would be the amount of disbursement proportionate to FUTA taxes paid.
• One-third of a states distribution would be received when state law includes provisions for counting an applicant's most recent wages from the last completed quarter. The remaining two-thirds of a state's share would be received when the alternative base period is enacted and the state meets at least two of an additional three requirements. These requirements include: (1) not denying UI benefit eligibility to someone seeking part-time work; (2) state law allows separation from employment for compelling family reasons; and (3) an individual is in training and has exhausted UI benefits. States would receive up to $100 million per year in fiscal years 2008-2012 in special Reed Act distributions for administration. The cost of the proposal would be financed by extending the 0.2 percent FUTA surtax through 2012.
• Wage Insurance Proposal: The wage insurance program would replace 50 percent of workers lost wages compared to previous employment for two years up to a total of $10,000. Workers would be eligible if they worked at least two years in their prior job and lost their employment through no fault of their own. The wage insurance benefit and program implementation cost would be financed by the federal government - implementation would be handled by the states. The program would be financed by an employer tax paid to a new Wage Insurance Trust Fund. The tax would equal 0.1 percent of each employee's wages up to the taxable wage base in the Social Security program - just over $94,000 per year.
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