Submitted electronically to http://www.regulations.gov
Office of Policy Development and Research,
Employment and Training Administration,
U.S. Department of Labor,
200 Constitution Avenue NW, Room N-5641,
Washington, DC 20210,
Re: Wagner-Peyser Act Staffing, RIN 1205-AC02
Dear Ms. Casta,
The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals. EPI submits these comments on the Department of Labor’s (DOL, Department) proposed Wagner-Peyser Act Staffing rule, which would require states to use state merit staff to provide Wagner-Peyser Act Employment Service (ES) services.1 EPI strongly supports the Department’s proposed rule.
The Wagner-Peyser Act of 1933 set up local public employment offices, known as the Employment Service, to connect jobseekers with employment.2 Before passage of the Wagner-Peyser Act, widespread corruption and inequities had plagued private employment offices nationwide. When passing the Wagner-Peyser Act, Congress envisioned a state merit system that prevented favoritism and promoted equality in the delivery of employment services. For more than 85 years, Congress acted many times to require merit staffing in the ES to guarantee workers receive unbiased and high-quality employment services.3 Moreover, selecting highly qualified, politically unbiased, state government employees for the provision of employment services remains central to reducing unemployment. Research shows the use of state merit staff promotes effective, efficient, and equitable delivery of employment services. For example, a 2012 study of Nevada’s Reemployment Eligibility and Assessment program revealed that requiring merit-based staff to conduct all program components improved outcomes—connecting claimants to jobs more quickly and, as a result, lowering total benefit payouts.4
In 2020, the Trump Department of Labor finalized the Wagner-Peyser Act Staffing Flexibility rule, which purportedly removed the requirement that ES services be provided only through the use of state merit staff and allowed private entities to receive Wagner-Peyser Act funding.5 In doing so, the Trump administration’s rule shifted the Employment Services away from being a worker-focused program that seeks to place individuals in positions they are qualified for towards a profit-motivated service focused on the number of job referrals filled. This shift has negative effects on both jobseekers and potential employers as it could create greater employment turnover and lack of economic stability for workers. In the proposed rule, the Department seeks to rescind the Trump administration’s Wagner-Peyser Act Staffing Flexibility rule and reinstate the requirement that states use state merit staff to provide Wagner-Peyser Act ES services. In doing so, the Department would restore the longstanding state merit requirement that helps ensure that jobseekers receive unbiased, efficient, and equitable delivery of employment services.
The proposed rulemaking also would extend the state merit staffing requirement to states that have been using different staffing models when administering Unemployment Insurance (UI) programs. This proposal would specifically impact the states of Colorado, Michigan, and Massachusetts, which have been exempted from the state merit staffing requirement in some form since the 1990s. Research has shown that—when compared to states with merit-based staffing—contracting out ES functions to private entities has resulted in an underperformance in referrals, placements, job openings, and registrations.6 One study concluded that the merit-based comparison states were highly cost-effective. In fact, the benefits exceeded costs by as much as two to three times in merit-based states, while benefits were considerably smaller in the states without merit-based staffing requirements. The Department’s proposal to extend the merit staffing requirement to states with different models will help ensure that all jobseekers receive quality employment services.
For more than 85 years, Congress acted many times to require merit staffing in the Employment Services. Research shows that state merit staff promotes effective, efficient, and equitable delivery of employment services. During times of economic crisis—the Great Depression, the Great Recession and now the pandemic recession—state merit ES employees provided unbiased, high-quality employment services and supported the provision of UI benefits without the threat of partisan political coercion hanging over jobless workers. For these reasons, EPI strongly supports the proposed rule and urge the Department to move swiftly to promulgate a final rule.
Policy Analyst and Government Affairs Specialist
Economic Policy Institute
1. 87 Fed. Reg. 23700
3. Heidi Shierholz, Celine McNicholas, and Margaret Poydock, “Proposed Rule to Privatize the Federal Employment Service Would Likely Reduce Services for Unemployed Workers,” public comments submitted on behalf of Economic Policy Institute to U.S. Department of Labor, July 24, 2019.
4. Marios Michaelides, Eileen Poe-Yamagata, Jacob Benus, and Dharmendra Tirumalasetti, Impact of the Reemployment And Eligibility Assessment (REA) Initiative In Nevada, Impaq International, January 2012. The study showed a decrease in weeks of duration that was greater than in any other state. The state accomplished this by requiring merit ES staff to conduct the entire work test. In other states, non-merit Workforce Innovation Opportunity Act (previously Workforce Investment Act) staff administered some of these services. For additional evidence of REA’s success, see Stephen A. Wandner, Solving the Reemployment Puzzle: From Research to Policy, W.E. Upjohn Institute for Employment Research, October 2010.
5. 85 Fed. Reg. 592
6. Louis Jacobson, Ian Petta, Amy Shimshak, and Regina Yudd, Evaluation of Labor Exchange Services in a One-Stop Delivery System Environment, U.S. Department of Labor Employment and Training Occasional Paper 2004-09, February 2004.