[Senate Hearing 108-406]
[From the U.S. Government Printing Office]
S. Hrg. 108-406
NOMINATION OF STEVEN J. LAW
=======================================================================
HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
ON
STEVEN J. LAW, OF THE DISTRICT OF COLUMBIA, TO BE DEPUTY SECRETARY OF
LABOR
__________
NOVEMBER 21, 2003
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
JUDD GREGG, New Hampshire, Chairman
BILL FRIST, Tennessee EDWARD M. KENNEDY, Massachusetts
MICHAEL B. ENZI, Wyoming CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri BARBARA A. MIKULSKI, Maryland
MIKE DeWINE, Ohio JAMES M. JEFFORDS (I), Vermont
PAT ROBERTS, Kansas JEFF BINGAMAN, New Mexico
JEFF SESSIONS, Alabama PATTY MURRAY, Washington
JOHN ENSIGN, Nevada JACK REED, Rhode Island
LINDSEY O. GRAHAM, South Carolina JOHN EDWARDS, North Carolina
JOHN W. WARNER, Virginia HILLARY RODHAM CLINTON, New York
Sharon R. Soderstrom, Staff Director
J. Michael Myers, Minority Staff Director and Chief Counsel
(ii)
C O N T E N T S
__________
STATEMENTS
Friday, November 21, 2003
Page
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabma..... 1
Kennedy, Hon. Edward M., a U.S. Senator from the State of
Massachusetts.................................................. 2
Law, Steven J., nominee to be Deputy Secretary, Department of
Labor.......................................................... 5
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Steven J. Law................................................ 16
(iii)
NOMINATION OF STEVEN J. LAW
---------- --
FRIDAY, NOVEMBER 21, 2003
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:04 a.m., in
room SD-430, Dirksen Senate Office Building, Senator Sessions,
presiding.
Present: Senators Sessions, Kennedy, and Clinton.
Opening Statement of Senator Sessions
Senator Sessions. We will come to order.
Today's hearing focuses on the nomination of Steven J. Law
to serve as Deputy Secretary of Labor. The Deputy Secretary is
the second highest position in the Department of Labor. The
Department is the Government agency principally tasked with
improving working conditions for tens of millions of American
workers, protecting retirees' pension plans and health care
benefits, and helping employers find workers and comply with
the law. In carrying out this mission, the Department of Labor
administers a variety of Federal labor laws, including the Fair
Labor Standards Act, the Davis-Bacon Act, the Labor-Management
Reporting and Disclosure Act, the Occupational Safety and
Health Act, the Federal Mine Safety and Health Act, and the
Employee Retirement Income Security Act, among others.
Mr. Law has served as Chief of Staff of the Labor
Department since February 2001. In this role, he has led
Secretary Chao's staff and has overseen budget and policy
development, congressional and public affairs, and strategic
planning for this important Federal agency.
I am very proud of Secretary Chao. I think she is one of
the finest members of the Cabinet, a person of integrity and
commitment to public service that few can exceed in Government,
in my experience.
Mr. Law has participated in crafting major administration
initiatives such as post 9/11 economic recovery, retirement
security, and regulatory reform. Steven Law in many respects is
the perfect choice for Deputy Secretary. He is knowledgeable
about the issues, knows the key players, and has had managerial
responsibility. And having worked here in the Senate, he
understands the prerogatives of Congress and the headaches
sometimes Congress can present.
More importantly, he is respected by people he had worked
with on both sides of the aisle. He is fair and open-minded. He
has good relationships with the major stakeholders in the
issues relating to labor. He is a man of good judgment who is
respected by his colleagues.
He understands the need for balance at the Department of
Labor. He knows that regulation cannot come at the expense of
jobs and economic growth and that workers depend on the
Department of Labor for the enforcement of worker protections.
I hope that we will be able to confirm him expeditiously. I
also hope that this hearing will focus on this nominee and his
excellent credentials, and hopefully we will not have a debate
on the Bush administration's regulatory policies, but I know we
will have some comments about those.
I do not believe that Mr. Law's qualifications for the
position of the Deputy Secretary of Labor are in dispute. He is
clearly qualified, and I hope that we in the Senate will
confirm him before we recess this year.
I will just note that looking at his bio was particularly
impressive to me. Senator Kennedy, I did not realize his honors
graduate degree at the University of California was in arts and
music. So I don't know what that means, but it is unusual in
the Deputy Secretary of Labor's position perhaps. He is also an
honors graduate at Columbia School of Law and was an editor of
the Columbia Journal of Law and Arts.
Senator Kennedy?
Opening Statement of Senator Kennedy
Senator Kennedy. Thank you. Thank you very much, Mr.
Chairman. Let me thank you for chairing the hearing, and our
overall Chairman, Senator Gregg, for setting these hearings up.
We are in the final hours of this part of the session, and
there are many important responsibilities that members have and
important considerations on the floor. And I am grateful for
the fact that we have a chance to talk to the number two person
at the Labor Department because one of the great challenges we
are facing in the country is the state of our economy and how
it impacts and affects workers. And the Labor Department is the
friend, or should be the friend, of workers, and we want to try
and understand better at least what the Department's views are
on some of these important matters, because the overarching
issues of unemployment and jobs and joblessness still are
matters of great interest and concern.
I join in the Chairman's recognition of Mr. Law's
outstanding background, both academically at college and also
in law school. There have been a number of individuals who are
strong friends of the Department and who speak for workers that
have urged our favorable consideration of the nominee. I will
include at the appropriate place those communications that we
have. So I thank you.
I will include my full opening statement in the record. It
points out that we are facing increasing numbers of American
workers without health insurance. We now have the Department of
Agriculture pointing out we have 13 million children who are
going hungry every day or are on the verge of hunger. Nine
million Americas are unemployed; 80,000 of them are going to be
losing their unemployment benefits at the end of December. And
7 million workers still wait year in and year out for a minimum
wage increase. And now at the end of this year, if we fail to
act, purchasing power of the minimum wage will be the lowest
perhaps it has ever been. It's been 7 years since we have
raised it, a fact that is obvious for the millions of people
who rely on it primarily women, many of whom have children. It
is a civil rights issue because of the fact that so many of the
people that earn minimum wage are men and women of color, and
it is a fairness issue. And we have worked hard and long to try
to get the Department to look into this.
As I mentioned, we should look at unemployment benefits,
the decline of the minimum wage, the rising number of working
families in poverty, and also the proposal by the Department
for taking away the overtime protections for 8 million
Americans, and recognize that great numbers of those Americans
who would be benefiting from the overtime would be fire
fighters, police, and nurses, who are really on the front lines
of dealing with the homeland security issues. It raises,
obviously, very serious concern, and I am sure you know, Mr.
Law, that Congress has gone on record on the overtime issue and
even as we are here, we understand it is a matter of
consideration even in the omnibus bill, but the Congress has
gone on record here with the 54-45 in opposition to the
regulations, the instruction in the House, 221-203,
Republicans, Democrats, both House and Senate, saying we ought
to give this up for the time being. And at the same time we
have the statement of the administration that they would even
go so far as to veto the appropriations bill that carries the
funding for the NIH, with all of the needs that they have and
the responsibilities, the funding for our education programs,
the funding for our neighborhood health centers. The list goes
on.
And yet it has been the administration's position that if
this provision is included that the President has indicated
that he would veto it. And we know that a President takes into
consideration his senior advisers. When they put out that the
President would veto this, on the basis of advice from his
senior advisers, he is talking about you and the Secretary,
because it is the Department of Labor that makes that
recommendation.
That is enormously troublesome, certainly to me, and I
think to many, particularly those on this committee, who have
worked long and hard on these programs in education and health
and others and see that they are being threatened.
These are going to be two issues, obviously, overtime and
unemployment insurance. I will mention this now. We have not
heard a single word from the Department on the unemployment
insurance. We have tried to extend it. We have modified it. We
are going to face the 80,000 people that are going to be losing
it at the end of December. I know that some in the
administration say, well, the economy is coming back. Most
economists believe that unemployment is going to remain high
through the first quarter of next year. That is the bipartisan
testimony of the Joint Economic Committee.
Even if we have the rate of return of jobs that we had last
month, it would take 19 months to get back to pre-recession job
levels, and these people are going to be long gone, 80,000 a
month long gone, not being able to keep a hold of their
unemployment compensation. And we wonder why.
At the same time, it seems that the administration is
tireless in pursuit of its LM-2 regulations, which are going to
put in place very, very restrictive provisions in terms of
reporting. And it seems to me what is sauce for the goose is
sauce for the gander. And whatever we are going to do in terms
of labor ought to be done in terms of business as well.
The fact that the software needed to comply with these
regulations doesn't yet exist, as well as the burdensome
aspects of these provisions lead one to believe that the
principal focus of the Department has been more in terms of
sort of hassling and harassing workers and workers' leaders
than trying to be helpful and responsive to some of their
needs.
So those are the basic issues. I know we are going to vote
at 10:35, and I know my good friend, Senator Clinton, who is
here, is going to want to ask you questions. So I don't want to
unduly take your time, but let's come back.
Given the fact that the House and the Senate both voted to
include it, can you tell us now what the Department's position
will be if the comference report includes a provision that
would prevent the Department from implementing the new rules
and regs? What would be the position of the Department on
overtime if the rest of the labor appropriations bill was
satisfactory?
Senator Sessions. Before we begin I have a statement from
Senator Enzi.
[The prepared statement of Senator Enzi follows:]
Prepared Statement of Senator Enzi
Thank you Mr. Chairman. Today we will be reviewing the
qualifications of the President's nominee for Deputy Secretary
of Labor. This position is of great interest and importance to
me personally because of my service as Chairman of the
Subcommittee on Employment, Safety, and Training. I am pleased
to announce my support for the appointment of Steven Law to be
Deputy Secretary of Labor.
The Department of Labor plays a critical role in the lives
of the American workforce as well as the operations of our
business community. The Deputy Secretary of Labor, the second-
highest position in the Department, plays a critical role in
ensuring that the Department is functioning effectively and
accomplishing its mission.
Steven Law possesses the background that makes him well-
suited to face the rigors of the position. He has served as
Chief of Staff for the Secretary of Labor since February 2001.
As Chief of Staff, he has coordinated the Secretary's senior
management team and has overseen strategic planning for the
Department. Prior to joining the Department of Labor, Mr. Law
was Executive Director of the National Republican Senatorial
Committee and Chief of Staff for Senator Mitch McConnell.
Mr. Law's knowledge of the inner workings of the Department
and Congress will serve him very well as Deputy Secretary of
Labor. He knows the issues, he knows the players, and he knows
the process. He understands the important role the Department
of Labor plays in protecting the workers of this Nation as well
the impact of regulation of economic growth and job creation.
Mr. Law also possesses outstanding academic credentials. He
received his Juris Doctor degree from Columbia University
School of Law and graduated cum laude from the University of
California, Davis. He is a member of the Bars of the United
States Supreme Court, New York, and the District of Columbia.
Steven Law has demonstrated the ability to build
relationships with key stakeholders and on both sides of the
aisle. His professional and academic qualifications--as well as
his fair and open-minded approach to issues--make him a strong
choice for the position of Deputy Secretary of Labor.
One of our most important duties on this committee is to
provide our advice and consent to the President's nominees for
those positions that fall under our jurisdiction. The President
has chosen an individual with excellent qualifications and sent
him to us for our review and consideration. His choice of
Steven Law as Deputy Secretary of Labor is a good one, and I
strongly support his nomination. I look forward to his speedy
confirmation by the full Senate.
STATEMENT OF STEVEN J. LAW, NOMINEE TO BE DEPUTY SECRETARY,
U.S. DEPARTMENT OF LABOR
Mr. Law. Senator Kennedy, it would be the hope of the
Department that Congress would not attach a restrictive
amendment that would prevent the Department from proceeding
with its rulemaking on the Fair Labor Standards Act white-
collar exemptions. The goal of the rule that we put forth was
to expand overtime eligibility for, we estimate, upwards of 1.3
million low-wage workers and make overtime rights much clearer
for another 10.7 million American workers. We have received
nearly 80,000 comments, very many of them constructive and very
good, and by I do not just mean comments that were supportive
of the proposal but comments that pointed out weaknesses,
unintended consequences. And we have been reviewing those. We
continue to. We think that the best outcome of this would be
for us to proceed to incorporate the comments that we have
received, to rely upon them, to produce a rule that achieves
the goal that we set out to pursue, which is not to move
boundary lines but to make them clearer so that employees and
employers and our own enforcement people will be able to better
enforce the law and guarantee overtime rights.
And our concern is that adding the proposed language would
only make the system worse and create additional complexity. We
believe the best course of action would simply be to allow us
to proceed and complete the rulemaking.
Senator Kennedy. Well, one of these bulletins that has been
out indicates that the Department of Labor refuses to even sit
down to try and work this out--quotes I will just read. This is
in Congress Daily, page 5 out of 20. ``The White House rejected
any compromise, however, and has not come back to the
negotiating table. `Labor Secretary Chao won't even meet us,' a
GOP appropriation aide said.''
Is that currently the position of the Department?
Mr. Law. I am not aware of what that is referring to,
Senator.
Senator Kennedy. These are the negotiations now that are
taking place that Senator Specter is a part of for the Labor,
HHS.
Mr. Law. I am not aware of that report.
Senator Kennedy. But even in spite of the fact of the
actions that have been taken in the House and the Senate, would
it be your recommendation then that the President would be
advised to veto that bill if it blocks your ability to change
the overtime regulation?
Mr. Law. Senator, my understanding is that the senior
advisers have recommended a veto and that veto recommendation
remains in force. Again, it is the opinion of the Department
that the best course of action for us would be to allow us to
proceed with the rulemaking, to put forth a rule that takes
into account the many comments we have received from both
sides, and then after that process, obviously would allow for
Congress to render further judgment on whether we struck the
appropriate balance in responding to those comments and putting
forth a rule that protects workers better.
Senator Kennedy. With regard to the LM-2'--have you thought
about whether this could be applicable as well to the business
community? Because I am sure they have given a good deal of
thought to it.
Let me come back to the issue on the unemployment
insurance. Is there anything you want to say about the
Department's position on unemployment insurance, on extending
unemployment insurance?
Mr. Law. The Department is carefully monitoring the
situation and puts out a lot of information on what is going on
in the employment situation. As we all know, we have
experienced really remarkable economic growth in the last month
or so, and in the last 3 months we have created 286,000 new
jobs, and unemployment is clearly falling, as are initial
unemployment claims, to a considerably low level last month, to
355,000.
At the same time, we are not feeling like we are out of the
woods, in particular with respect to the issue that this would
address, which is long-term unemployed. The long-term
unemployed number continues to be high, although it, too,
dropped last month and shows signs of starting to come down.
So our best approach to this right now as a Department is
to provide the information that BLS and the Employment Training
Administration provides to make the proper assessment.
Senator Kennedy. Well, you are right, because you collect
the data about the unemployment. You run the programs with the
State. And so the question is: What is the public position on
the extension of the program when we are facing 80,000 people
that are going to lose their unemployment every week after
December and we are into the last hours of this congressional
session?
Mr. Law. I know the administration is willing to work with
Congress toward an appropriate resolution of the unemployment
insurance extension issue.
Senator Kennedy. What is your general sense about providing
help and assistance to the long-term unemployed?
Mr. Law. One of the proposals that the administration has
put forth, which we recommended in our previous budget and are
continuing advocate, is personal reemployment accounts, which
would both provide an innovative approach to giving direct
income support to people who are long-term unemployed, while
also creating economic incentives to encourage people to find
work and also to find the training that will lead them to
specific employment opportunities.
Senator Kennedy. Well, I do not have the figures right
here. But the amounts that were being considered were--I would
use the word ``modest'' given the numbers of people that are
going to be losing their unemployment compensation at the end
of this month. It is completely inadequate to try and deal with
the magnitude of the problem and the fact we have not heard
from the Department on this is troublesome.
Let me go into the LM-2 issue and just ask you where we are
on this. My understanding is that we have had a number of our
colleagues, bipartisan, both from this committee and from the
House of Representatives, including 22 Republican members who
have signed a letter to OMB emphasizing that requiring
compliance with the rule, which software does not exist yet,
will provide a very heavy and undue burden.
If that is the case, why aren't we just trying to work out
reasonable kinds of accommodations like they worked out for the
SEC and other agencies in the past? Why do they insist on going
ahead when we know that the software is not there?
Mr. Law. Senator, the Office of Labor Management Standards
has been engaged in extensive compliance assistance efforts all
across the country. In fact, even today OLMS is sitting down
with roughly 200 union accountants from across the country to
work together with them to explain how the new rule would work
and how compliance would work.
I am also told that as of today we will have reached out to
over 80 percent of all LM-2 filers to discuss what compliance
would entail. I would not say that everybody greets the
proposal with warm anticipation, but, on the other hand, there
is a general view that we have encountered that the regulated
community can respond and can step up to the plate with what
the new rule would require.
Senator Kennedy. Well, as I understand, the recent rule
requires that unions file papers--it could be hundreds of pages
long--itemized lists of all payments above $5,000, agrees that
unions--I guess the Department acknowledged the rule is
burdensome, that unions will have to spend 710 hours and over
$116 million the first year in complying with the rule.
Are you familiar with those figures?
Mr. Law. Yes.
Senator Kennedy. $116 million in complying with this, and
they do not have the software. They have to reconfigure their
current software, there will be additional costs as well, as I
understand it.
Well, I thank you, Mr. Law. My understanding is that
meetings are taking place in November and December, and that
between now and January unions have to review the rule, meet
with their accounting staff, to learn what the rule requires,
train the office personnel to keep the records under the rule,
hire a software engineer to begin redesigning their current
accounting program, and adopt and test the redesigned
accounting systems.
Have you gotten word back from OMB about how this complies
with the paperwork initiative?
Mr. Law. As I understand it, the final rule went through
OMB through OIRA, and those issues, Paperwork Reduction Act
compliance, were reviewed and the rule was approved for being
in compliance with the Paperwork Reduction Act.
In addition to that, I would just say with regard to the
software, which has been the source of some concern, the
software that the Department of Labor would provide free of
charge to labor unions who would need to file the revised LM-2
forms is for the purpose of taking data at the end of a union's
fiscal year and organizing it for submission in the report that
is actually given to the Department of Labor. And because of
that, the software does not actually need to be used until, at
the earliest, January of 2005 for a report that would have to
be filed, again, at the earliest, in March of 2005.
The Department has also put out well in advance the
technical specifications of what that software would need, and
we also are planning to get the software out to unions early
next year, early enough for unions to see how it works and to
make sure that it works well.
So there really is a much longer lead time than has been
suggested because the function of the particular software that
the Department of Labor is to provide is not actually needed
until the reports have to start to be compiled for the
Department of Labor's purposes, which is not until 2005.
Senator Kennedy. Well, we are going to have a chance to
come back and revisit this. My time is up. I thank the Chair,
and I thank you very much.
Mr. Law. Thank you, Senator.
Senator Sessions. Thank you.
Mr. Law, I failed to offer you the opportunity to introduce
your family or to make any brief comments you have. Anything
you want to say before I recognize Senator Clinton?
Mr. Law. If the Senator from New York would beg me a brief
indulgence, I would like to just briefly do that. I do want to
thank the entire committee for convening this hearing on short
notice and at an unbelievably busy time of year. I remember as
a staffer these particular months of October and November and,
occasionally December being among the worst, and I appreciate
the time that you are devoting to it.
I will submit my comments for the record as if read, but I
do want to at least take the opportunity to introduce my wife
of over 12 years, Elizabeth Law, who is with me. Thank you. She
is a great source of comfort and wisdom and encouragement in a
high-pressure environment. And I would be introducing my two
children, Charlotte, who is 9, and John James, who is 6, but
they decided that school would be more fun than joining me here
today. [Laughter.] Which shows that we have got some work on
reordering their priorities, but, nevertheless, that is where
they are.
That is all I will say for opening remarks for the moment.
Senator Session. All right. Very good.
Senator Clinton?
Senator Clinton. Thank you, Mr. Chairman, and thank you for
holding this hearing, and thank you, Mr. Law, for being here
with us. And I appreciate your willingness to assume
responsibilities that are quite significant. I think the second
in command at the Department of Labor is a very important
position. The Department, as you know, commands a $56 billion
budget and almost 20,000 employees, so that is quite an
undertaking.
I just want to follow up briefly on Senator Kennedy's point
concerning overtime, and I think, Mr. Law, you must be aware of
the debate and the discrepancy over the impact that the
proposed rules would have. I assume you have been intimately
involved in following this and keeping up with it. Is that
right?
Mr. Law. Fair to say, yes.
Senator Clinton. And because of the high stakes of this
rule, the fact that reputable analysts outside the Labor
Department are concerned that it could deny overtime
eligibility to 8 million Americans--and that would include
450,000 New Yorkers I have a particular concern. And that is
that the kind of people who would be denied overtime are fire
fighters, police officers, nurses, and others, so I find it
difficult to understand why the Department and the
administration will not go along with Senator Specter's
proposal for what would be a compromise and it would break the
logjam in the negotiations over the omnibus, as I understand
it. And basically Senator Specter, as reported in the
newspapers this morning and among our colleagues, has asked
Secretary Chao to accept a proposal that would postpone the
effective date of the new rules by 3 months, while a blue-
ribbon commission that presumably would have people on it that
would be above politics, above partisanship, unrelated,
frankly, to either the administration or organized labor, but,
you know, maybe labor economists and other experts to actually
review these rules and then Congress could vote to uphold or
overturn the regulations.
Now, that strikes me as a very common-sense approach, and
it represents the bipartisan concern that exists in the Senate
and the House over the implementation of these overtime rule
changes.
Could you explain why this is not an appropriate
resolution? Because, I know that I and many other Democrats, as
well as Republicans like Senator Specter, are deeply concerned.
We would like our concerns assuaged one way or the other, and
this would provide us the means for doing that.
Mr. Law. Absolutely. The reason why we are not in agreement
with the proposal that has been put forth is because we think
that a blue-ribbon commission has already been convened, and
that consists of the nearly 80,000 stakeholders who have
already commented on our proposal.
The commission proposal advanced by Senator Specter
outlines 12 different subject areas that that commission could
take a look at, and, in fact, all 12 of those areas are
addressed in the notice of proposed rulemaking, and they have
all been subject to comment by those who have responded to the
proposal. And we think that the best possible approach is,
rather than have a commission that would debate broad policy
and theoretical analyses, the blue-ribbon commission that has
been convened essentially, by analogy, through the
Administrative Procedures Act process has allowed huge numbers
of stakeholders from all sides of the spectrum to offer comment
on very specific proposals.
And we are aware of the concerns of the unintended
consequences of the proposal and the differing views on how
many employees might be impacted. And our goal is to take all
those comments into consideration, to very seriously treat them
and rely upon them in coming forth with a final rule that would
do what we have said we really wanted to do, which is to
guarantee overtime rights for more workers and clarify the
rules so that more workers will know what their rights are, and
hopefully many millions of workers will have overtime who did
not in the past.
And once that final rule is put forth, Congress can
exercise its judgment again as to whether or not we struck that
balance that we set out to do and can either sustain our
proposal or not. But we believe this issue has been studied
extensively. I am told that even the Dunlop Commission looked
at this issue many years back. It has been on the Department's
regulatory agenda since 1979, and we have great faith in the
process that we are in now to yield a result of comments and
discussion of a tangible proposal, with whatever strengths and
weaknesses it may have currently, that we can then formulate a
final proposal for Congress to take a look at.
Senator Clinton. Mr. Law, I have not been around here as
long as my colleagues, but my understanding is that the
Congress has in the past assessed the impact and the need to
modernize or amend the Fair Labor Standards Act, certainly
overtime provisions. This comes really out of the normal course
of events for the Labor Department to take this on itself.
And it does strike me as unfortunate because it raises
quite a bit of mistrust and concern on both sides of the aisle.
And I know what the stated position as you have articulated it
is, but it seems to me that it would be not in any way
undermining the efforts to modernize overtime and do it in a
way that takes into account legitimate concerns to try to
respond to the well-thought-out objections of people like
Senator Specter.
Now, with respect to unemployment insurance, I am concerned
because yesterday Congressman DeLay was quoted as saying that
there would be no extension of unemployment insurance. Now,
there are varying approaches. There is a more comprehensive
approach and a more limited approach that are represented in
legislation already filed in both the House and the Senate. I
know that there are, I believe, three different Republican
proposals for the extension of unemployment insurance in the
House. There is one sponsored by Senator Smith in the Senate.
And it is concerning that we would, on the threshold of going
out before Thanksgiving, have such an adamant declaration by
the Republican Whip. And, obviously, the only way that that can
be overcome is by the administration supporting, again, a
bipartisan proposal to provide for the extension of
unemployment benefits before the holidays.
We went through this last year. We did not act in time. We
acted as soon as we got back, which was at least trying to
resolve some of the hardships posed to people. But it seemed a
little bit mean-spirited not to have done it before we enter
into the holiday season, and once again, we are facing the same
deadline.
Now, I am hopeful and cautiously optimistic--not
convinced--that the economy is picking up, but, nevertheless, I
think even with the signs of some possible growth, the fair way
to characterize the situation is that we are going to be
confronted with very long-term unemployment and very slow job
creation, and that unemployment insurance benefits will
continue to play a necessary role in sustaining people. And the
truth is that the unemployment rate is actually higher than it
was when we passed the temporary extended unemployment
insurance program back in March of 2002. Then we had 8.2
million Americans out of work. Today we have 8.8 million. Back
then we had 130.5 million jobs in the economy. Today we have
130.1 million. Back then we had 1.32 million long-term
unemployed Americans who had been out of work 6 months or more.
Today there are more than 2 million.
And, furthermore, the extended benefits program in the
early 1990s did not end until the economy had created nearly 3
million jobs compared to pre-recession levels. The current
program is scheduled to end while the economy is still
suffering a jobs deficit of 2.4 million fewer jobs.
So I am having a hard time understanding why we cannot all
work together and do what previous administrations did as a
matter of course. I know under the first President Bush,
unemployment insurance benefits were extended 3 times, and it
seems to me, again, that we ought to be looking to try to
provide this safety net for the long-term unemployed until the
economy either does or does not begin to kick in with the
number of jobs that is needed.
There is a second problem that I would like your opinion
about, and that is, there are differences within States, and I
have a very clear example of that. You know, in my State of New
York, the statewide rate is 6.2 percent, about the national
average. The unemployment rate in New York City is 8.2
percent--2 percentage points higher. It has never recovered
from the horrible attacks of September the 11th. In fact, if
New York City were a State, which it very well could be with 8
million people, it would have the highest unemployment rate in
the country by far. Oregon at 7.6 percent would be a distant
second. And it is not just the rate of unemployment. The city
also has the fourth highest raw number of individuals who are
out of work. Yet unemployed workers in New York are only able
to access 39 weeks of unemployment insurance benefits, while
those who are unemployed in Oregon have access to more than 70
weeks. And I certainly do not begrudge workers in Oregon those
benefits. I am glad the system works for those individuals. But
because New York City is embedded in a State that has an
overall lower unemployment rate, workers in New York City, who
have already borne a tremendous burden because of the attacks
and their aftermath, are left out and cannot access the same
benefits.
So would you consider looking at an unemployment insurance
benefit that takes into account significant regional
differences, such as the one I have just described?
Mr. Law. The situation you describe is disconcerting. I
don't know to what extent States have flexibility on their own
to create additional benefits within localities. And I don't
know what currently would be available within the national
system by which we extend unemployment benefits. But we can
certainly take a look at the problem.
It raises another issue, which is the lack of flexibility
that States have in moving funds around through the workforce
investment system, and that is another thing that we would like
to see progress made on. In fact, I certainly commend this
committee for moving ahead WIA reauthorization legislation that
helps give States added flexibility so that when you have those
disparities that you have in your State, that there can be a
response through various mechanisms to get aid to the workers
who need it most in those localities. But we will certainly
take a look at what you are proposing and see what we can do on
that. If I am confirmed, I will take a good look at it and see
what is possible.
Senator Clinton. Well, I would appreciate that because many
individuals in New York have already exhausted all of their
benefits because we have never been able to access these
extended benefits or qualify for extra benefits as a high-
unemployment State. So we have a lot of so-called exhaustees
who have been out of work for more than a year that cannot pick
up and move. They have family responsibilities. They have other
kinds of ties to New York. And, you know, we now know that we
are going to start exhausting State benefits at a rate of about
88,000 a week unless we pass an extension.
So I am hoping that we will not go through what we went
through last year. I am hoping that with the administration's
help--and I would appreciate your taking this back to Secretary
Chao and to the White House. I am hoping that we can try to do
something before we leave here. And despite Congressman DeLay's
adamant objection, there is strong bipartisan support for at
least a simple extension to get people through the holidays, to
get us into the new year. Hopefully, you know, we will see
enough improvement that we will not have to revisit this again.
But in the absence of that improvement, we are putting a lot of
people at risk that I do not think anybody wants to see happen.
Thank you, Mr. Chairman.
Mr. Law. Thank you, Senator.
Senator Sessions. Thank you very much.
Mr. Law, just briefly, the labor reporting regulations that
have been discussed are really designed to effectuate an
existing requirement that labor unions report certain
expenditures and business records, is it not?
Mr. Law. That is right.
Senator Sessions. I have seen some of the records that have
been submitted, and they are just really totally nonresponsive
to the Department of Labor. And the reason this is true, is it
not, is that members are often required to be a part of the
union, their money is held basically in trust for them and we
have had a history of abuse. As a former Federal prosecutor, I
have had the burden of prosecuting several unions and
leadership for misusing the union members' money, sometimes
significant amounts were misused. And that can happen in any
business, but the design of the system was for them to report
so that the union members would have a better understanding of
where their money is going. Isn't that it?
Mr. Law. That is true. The vast majority of union officials
and staff are honorable, hard-working, honest, and dedicated to
their members, certainly every one of them whom I know, and I
know a lot of them and count a lot of them as friends. There
are a few instances----
Senator Sessions. Well, you have gotten support from a
number of them, which I know you are proud to see, for this
particular appointment to Deputy Secretary, and I know you are
proud of that.
Mr. Law. Well, thank you. But there are some instances of
financial fraud and embezzlement that the Department has been
concerned about from an enforcement point of view, and the
purpose of the rule is simply to try to deter and detect that
kind of fraud from occurring and, in addition to that, to give
more quality information to union members so that they can
exercise their democratic rights as envisioned by the Labor-
Management Reporting and Disclosure Act.
Senator Sessions. Because they have to vote, and they have
a right to know how their leadership is managing their money.
So it might be an issue in the campaign as to who is going to
be the next leader of a union.
With regard to these overtime rules, I think I am probably
the only member of the Senate that has filed overtime lawsuits
on behalf of workers. I have never represented a business in an
overtime case. But a friend of mine was a bulldozer operator,
and he thought maybe he was entitled to overtime. We sat down
and looked at the law, and I concluded he was and filed a
lawsuit, and we won it.
I will say it was confusing. I will say that if the rule
had been clearer, the boss would probably have paid him
overtime to begin with.
Mr. Law. Right.
Senator Sessions. But it was a quasi-contractual
relationship, and it was his bulldozer. He was not working on
someone else's equipment. And so it was a confusing matter.
I represented another secretary, a clerk, and eventually
prevailed on that one. That one was a little clearer. But I
would just note that that lady worked for a union, and she was
not paid proper overtime. And I filed a lawsuit, and we got her
her overtime.
These regulations have not been changed since 1954.
Secretary Chao has put forth a regulation that clarifies these
rules. I think they also need to be clarified because of the
nature of work has changed today. Many traditional jobs have
changed, and quite substantially.
But isn't it true that under the current regulations today,
the law today that you are looking at changing, a person
earning $14,000 a year who works behind a counter at a fast-
food restaurant and has been called a manager, that person is
not entitled to overtime? And under your regulations, if they
were not paid at least $22,100 a year, no matter what their job
title was, they get overtime?
Mr. Law. That is true. One of the great injustices of the
fact that there has not been action to update these rules is
the very situation that you cite, where someone could be very
low paid, they could have a little name tag that says
``Manager'' on them, and it is not too hard for an employer to
game the system and call that person somebody exempt from
overtime.
And then the other situations that you described are
precisely the same. I think the Department has the view that it
is just simply not a good situation when a worker has to avail
themselves of legal help, although we are always in favor of
legal help, but to have to avail themselves of a private
attorney, spend money on that to find out what their overtime
rights really are. We ought to make the rules clear enough that
employers know what is expected of them, particularly small
businesses who are not going to be inclined to hire a large
labor and employment law firm, but, more importantly, the
workers know what their rights are so they can defend
themselves.
And we have also found in our Department that our own
investigators find the current rules so outdated and
complicated, they are very, very difficult to carry out and
effectively enforce.
Senator Sessions. Well, you know, I keep hearing colleagues
say, in the press and on the floor of the Senate, that they
talk about policemen and firemen and all being hurt by these
rules. But isn't it true that the president of the National
Fraternal Order of Police, Chuck Canterbury, who represents
police employees and union members, said this, ``Thanks to the
leadership of Secretary Chao, we have no doubt that overtime
pay will continue to be available to those officers currently
receiving it, and if the new rules are approved, even more of
our Nation's police officers, fire fighters, and EMTs will be
eligible for overtime. This development was possible because
this is an administration that listens to the concerns of the
FOP and because of their commitment to our Nation's first
responders.''
So it is just not true that police and fire fighters are
opposed to this and they are going to be losing overtime, is
it?
Mr. Law. That is true. There have been a number of concerns
expressed about the rule, all of which we treat seriously, and
many of them are highly valid. But there are also a lot of very
serious misapprehensions and mis-information about the rules.
Senator Sessions. Well, in that regard, what you have done
is you have gone through a process in which you have proposed
rules, and you have got 80,000-plus comments on them. Now it is
your job to listen to those comments and alter the rule if
there are any problems with it before presenting a final rule.
Is that right?
Mr. Law. That is true.
Senator Sessions. And so now you are in the process of
evaluating the comments, and you have never proposed a final
rule as of this date. Is that right?
Mr. Law. Not yet, no.
Senator Sessions. Well, I think those are matters that are
important for us to know. I just know that Secretary Chao is
determined to make the lives of working men and women better. I
was with her when we had a coal-mining accident in Alabama at
10 o'clock at night, and she had a 5 o'clock plane the next
morning, and she stayed down there and met every family member
that was there at that union hall. And I know you share those
same concerns for improving the lives and safety of labor union
members.
But having a union do a better job of reporting, as they
are already required to do, their income and expenditures so
that union members can evaluate their leadership is not a bad
idea and is not anti-union. I believe a reform, the first since
1954, of overtime rules is overdue. I believe you could make it
more clear. I believe fewer people could be taken advantage of
if we clarified those rules, and I think, as I understand it,
the numbers are as much as 10 million workers will have their
positions clarified without question that they are entitled to
overtime today and that really are not so clear under present
law.
And I just would say this: We have had some good news on
the employment front. Last week, we had a 12-percent drop in
first-time claims for unemployment compensation. That is real
number that I think is indisputably significant. Wouldn't you
agree?
Mr. Law. Very encouraging, yes.
Senator Sessions. And we have also seen a surge of 300,000
new jobs in the last 3 months, which is also good, a great
growth rate. If we can keep this economy humming, I think we
will see a lot of our problems go away and be reduced.
And I will tell you, things like this energy bill, this
energy bill is going to create employment. And it is being
blocked on the floor today for reasons I do not fully
understand. And so I tell you, that could create a million new
jobs in the United States of America, reduce the amount of our
wealth sent overseas to foreign countries for energy sources
that could be produced here, creating jobs here, creating
taxpayers here, creating families with health care and
insurance benefits.
So I thank you for your leadership, for undertaking this
task, and I think you can tell from the comments that have been
made today and from what I am hearing around the Senate, you
are well respected from your time in the Senate. You have
developed a reputation of integrity and good judgment and fair
play, just the kind of person Secretary Chao would want at her
right hand to help run the Department of Labor. I believe that
you will do a great job, and we hope that we can move forward
expeditiously.
Is there anything else you would like to say?
Mr. Law. Senator, thank you for those very kind remarks. If
I am confirmed, I will work with both sides of the committee to
make sure that what we are doing is receiving all the input of
all of you and do my best to serve the President and the
Secretary and American workers.
Senator Sessions. Well, you are the best of the best, and
you have a reputation of that already, so I think now that is
going to be true.
If there is nothing else, I will keep the record open for 7
days. If there is nothing else, we will adjourn this meeting
today. Thank you.
Mr. Law. Thank you, Senator.
[The prepared statement of Mr. Law may be found in
additional material.]
[Additional material follows.]
ADDITIONAL MATERIAL
Prepared Statement of Steven J. Law
Mr. Chairman, Senator Kennedy, and Members of the Committee, I want
to thank you for convening this hearing at a time that is so busy for
all of you.
In deference to your time, I will keep my statement very brief. I
am joined this morning by my wife of over 12 years, Elizabeth Law, who
is a tremendous source of strength, wisdom and perspective in this
high-pressure environment. I have two children, Charlotte--who is 9--
and John James, 6, and they both decided that school would be more fun
than joining me today.
It is a privilege and an honor to be considered for the position of
Deputy Secretary of Labor, and I am very grateful to the President for
nominating me. I also appreciate the gracious support of the Secretary
of Labor, Elaine Chao, for the chance to take on a new challenge and
new responsibilities.
There are several reasons why I hope to have the opportunity to
serve in this new role, but the most important one is that the
Department of Labor has more of a direct impact on the daily lives of
all Americans than any other Cabinet Agency.
The issues this Department handles are the ones people talk about
around the kitchen table: Job security. Career goals. Am I making
enough money? Do I have enough saved for retirement? How will I get
health care coverage for my family? Do I feel safe at work?
These everyday concerns are the Department of Labor's stock in
trade. And if I am confirmed, I look forward to helping the Secretary
of Labor fulfill her responsibility to protect and prepare America's
workforce.
The second reason I hope to have this opportunity is that I think
the Department of Labor has a tremendous group of career
professionals--at every level and all throughout the country. They are
dedicated to what they do, they have a wealth of practical experience,
they believe in the mission of the Agency, and they are open to new
ways of doing our job better. I can't think of a better group of people
to work closely with, for as long as I would be allowed the privilege
of serving in this capacity.
I am certain that many of you have questions and concerns, and I
will try to respond to them as best as I can. Thank you again for the
opportunity to be here this morning.
[Whereupon, at 10:56 a.m., the committee was adjourned.]