Press Briefing by Secretary of Labor Robert Reich

The Briefing Room

12:10 P.M. EST

SECRETARY REICH: We spent the morning at the Omni talking to people who have been on welfare or who have been unemployed and have been exposed to a system -- an unemployment insurance system, a welfare system -- various bureaucratic mazes, as these people refer to them.

The first session was on what's wrong. These people have a very difficult time finding a way through these mazes. And this is not just people at the bottom rungs of the economic ladder. There were a number of mid-level managers who talked about suddenly being out of work, given all the corporate downsizing and defense downsizing and technological changes, and found themselves suddenly without resources; didn't know where to turn; needed some guidance. And the first session was on, frankly, what does not work.

We talked about the fact that too -- there are too many lines, too many forms. The unemployment insurance system was designed and functioned primarily as a system for helping tide people over until they got their old jobs back again, but the old jobs are not coming back, even though we're in a recovery. We used to use the term, "layoff," suggesting that there was a condition of being back on, but in point of fact, very few people are going back on their old jobs.

People on welfare, 70 percent of them get off welfare within two years, but many of them fall back on to welfare again. And one of the primary goals of welfare reform is to keep people off welfare. One of the primary goals of unemployment reform or changing the unemployment insurance system to a reemployment system, as the President noted in the State of the Union, is to help people get the next job, not just pay them while they wait for the old job to come back.

The purpose of today was to talk to real people out there, listen to their problems. The second panel was the more encouraging one. It was designed to show places around the country that have achieved enormous success in getting people jobs -- places like the NOVA Center, job center in Sunnyvale, California; the Baltimore Works Center here in Baltimore; Job Links in Louisville and several other places.

What they're doing -- and, again, it came out in the discussion because we had both a lot of people who had been through these programs and we also had providers of the programs. There is no magic bullet, there's no easy answer; but there is an approach. And the approach is, number one, to put all of these funding streams together so that when somebody needs help they can go to one stop, they don't have to find their own way around and through these bureaucratic mazes. They have somebody there.

Somebody used the analogy of a primary care physician, who is basically your own guide, helping you assess your needs, give you assistance in terms of what help is available, give you assistance in terms of getting the kind of job training that's necessary and job search assistance.

A theme this morning was that short-term training doesn't work, particularly doesn't work for disadvantaged teenagers. Long-term training does work. I said last week, one other thing that doesn't seem to be working, although it did not come up this morning, was the targeted job tax credit. And the administration is not going to be seeking an extension of that tax credit because all of the evidence shows that employers would have, in almost every case, employed those people anyway and, therefore, get a windfall from the targeted jobs tax credit. Better to use that money to help people get jobs.

We talked, in terms of what works, also about the importance of early intervention. In fact, some union people from Boeing machinists and also Morty Barr of the communications workers talked about a new approach that unions are taking. Rather than seek job security in an environment in which there really isn't any longer job security for anybody, they are seeking employment security, helping their people get the job skills they need, the information and job search assistance they need to move relatively easily from job to job.

And people on the panels were struck by how similar the innovations between places like Boeing and the communication workers, how similar those innovations were to the innovations in job centers around the country. Federal money is involved in all of these innovations. The point is to do more of what works and less of what doesn't work, to shift money out of what doesn't work into what works.

The President is going to be hosting the third panel this afternoon in which he will be talking and I will be talking to more people who have been through the system successfully. They will be telling him their stories. And it will be in the context of what should the federal government be doing with regard to helping Americans get jobs -- reforming with a question -- reform of the welfare system and also reform of the unemployment and reemployment systems.

Let me just say one general word. Although jobs are coming back, we are now firmly in a jobs recovery -- as you know, 2.6 million private sector jobs last year -- there is still a problem. In fact, there are several problems. We have very high rates of long-term unemployment. People are getting stuck between jobs. Corporate downsizing continues. Defense downsizing continues. International trade is good for the country, but it does have a buffeting effect -- changes industries. And technological change continues unabated. We used to have a lot of telephone operators; we now have automated switching equipment. We used to have a lot of bank tellers; we now have automated teller machines.

As we get to work on reforming the health care system there will be additional job changes. The net job effects should be -- as we talked about before, are negligible, but undoubtedly, there will be fewer or at least the growth in certain kinds of health jobs will slow down. And I'm talking specifically about what I've called the paper health jobs -- the form filling, file claiming, computer data processing -- all of the red-tape jobs that now so plague our health system.

But there are likely to be many, many more home health care jobs as hospital beds simply become too expensive. They are too expensive right now, and there will be many more people who are

needed to provide home health care. And that is high-quality care. Many people do better at home than they do in the hospital.

But that also signals an occupational shift. As so much of America has to shift occupations because of defense downsizing, corporate downsizing, changes in the health care system, technology, international trade, we need a system that helps ease the transition. Similarly, for welfare. If we're talking about getting people from welfare to work or keeping them off welfare, we need to talk systematically about all of the way in which Americans can keep jobs and be continuously trained and upgraded for the jobs that are opening up.

Let me end on that note and answer any questions any of you have.

Q: You mentioned that the TJTC is a program that doesn't work and the administration's not going to recommend extending that. What are some other existing federal programs that the administration would like to phase out or eliminate and pour that money into something else?

SECRETARY REICH: Well, as I said, all of the evidence shows that short-term job training for disadvantaged teenagers doesn't work. And our plan is to shift those dollars -- we are -- I'm not at liberty to give you the budget numbers at this time, but I can assure you that the President will be recommending an increase in funding for the disadvantaged, job training and so forth. But we're going to move those dollars to where they do seem to work -- longerterm training, for example, training that combines work-based learning with classroom learning, and also training that has specific jobs attached to it where the private sector has been involved in shaping the curriculum and provided some assurance that there are jobs at the end.

In fact, this morning, some people who were discussing various programs in terms of what works -- one program that was highlighted was the CET program, originating out of San Jose, California, focusing on disadvantaged workers, many of them welfare recipients -- a very encouraging track record in getting people employed because they are working with employers and asking employers what they need and employers are having a major role to play in creating those training programs.

I've mentioned the unemployment to reemployment; that's another goal. I think -- I doubt very much -- I'm not at liberty to say at this particular point, but I doubt very much whether the federal government is going to be spending what it spent last year on extended unemployment insurance. As many of you know, that bill totaled almost $14 billion, on top of the normal federal-state employment insurance system which is about $22 billion.

Now, that system did not help people get new jobs. It simply provided them income support while they were on long-term unemployment. We have record numbers -- record percentage of unemployed workers who are long-term unemployed. But the federal government cannot continue that sort of expenditure.

Q: Can you talk a little bit about what would happen to people after they've run out of welfare benefits after two years? Are you thinking about some kind of community work like a WPA-type system?

SECRETARY REICH: There are many, many ideas being considered, and we're costing all of those ideas out. The goal is to get people into work as fast as possible and keep them into work. A job is better than a welfare check. A job is better than an unemployment check.

There is job growth in the United States. There has been some discussion about public service employment, but it has not gotten beyond the discussion stage and there are very many options being considered. But that is a last resort. Obviously, the hope is private sector employment.

Q: Sir, when you assessed that program that you all had, the job training where you pay $10,000, I believe, to employers to train veterans --

SECRETARY REICH: The veterans training -- let me introduce to you, by the way, our Assistant Secretary for Employment and Training Doug Ross. Doug has much of the responsibility and all of the burden -- not all the burden. We have a great team. But Doug specifically with regard to Ms. McClendon's question on the training of veterans and -- do you want to respond to that?

ASSISTANT SECRETARY ROSS: Much of the training of veterans that goes on still goes on through separate programs that have been earmarked for veterans. And with a variety of --

Q: I want you to assess this program that has been in effect for some time that doesn't seem to be worth a damn. A jobtraining program whereby you pay $10,000 to an employer to put veterans to work.

ASSISTANT SECRETARY ROSS: Is it worth a damn? I don't know if that one's worth a damn. It's not done through the Department of Labor, which was one of our difficulties -- at least it's not my understanding that it's done through us.

SECRETARY REICH: Let me just say -- we'll check on that and get back to you. Let me just say, we are going carefully through all of our programs assessing what works and what doesn't because in this time of budget stringency, especially -- I mean at all times, but particularly in times of budget stringency, it's absolutely essential that we make every dollar work for Americans who need jobs.

Q: The White House says that you're going to be having a series of announcements maybe within a couple of weeks on your whole program. Can you give us an idea of where you're going and what the parameters are of what you're looking at?

SECRETARY REICH: Yes. Just to set this in context again, there are three programs which all relate to one another. One is school to work. Right now it's gone through the House, it's waiting Senate time on the floor -- a lot of bipartisan support. The issue here is that it is very, very difficult for many young people to move from school to work if they're not going on to college.

We in this country have the best system of university education in the world. I speak as somebody who has a little bit of interest in that, but I think objectively we do. But we have one of the worst systems in the industrialized world for getting young people from school to work if they are not going on to college. This program is not a large program in terms of money, but it's a terribly important piece of the puzzle for providing incentives to states to set up school-to-work transition programs, give young people skills after high school.

The second leg of the stool is welfare to work, and you'll be hearing more about that. The third leg of the stool is going from an unemployment insurance system, premised on the notion that you'll get your old job back again, to a reemployment system, providing at one stop a collection of services as soon as possible to people after they lose their job. This would be job search assistance, job counseling, also long-term training for those who

could use it and extended benefits -- unemployment benefits -- for people in long-term training. To do so, we have to consolidate a lot of what's out there, prune back what doesn't work, but also we're going to need some additional funding. And you'll find out more about that on Monday.

Q: Monday is when it's going to be announced.

SECRETARY REICH: Well, because that's when the budget is going to be announced.

Q: On measuring the jobs that we do have, what's the potential for confusion? On Friday your BLS had -- Katherine Abraham said she wouldn't be surprised if the unemployment rate for January shoots up to 8 percent under this new system. What's --

SECRETARY REICH: I'm making no predictions at all about the unemployment rate on Friday. (Laughter.) But I do want to say that we are using a new survey instrument. That survey began -- work on that survey began in 1988, actually, after many, many years of criticism by specialists in the field who saw biases in the current unemployment survey. One major bias against women, because when the survey -- people who did the survey used to go to the houses and knock on the door, and somebody came to the door; the normal question was, "What did you do last week? Did you work?" -- in order to find out whether there was employment or unemployment. But if an adult woman came to the door, the questioner was instructed in the manual to ask, "Last week were you a housewife or were you looking for work?" You get the "or were you looking for work." And so that systematically understated the number, particularly of women, who were counted as looking for work.

And that systematic bias has been there for decades, but particularly in the '70s as women moved into the work force and wanted careers, that bias became more and more important.

There's also improvements in the computerization of, in fact, hand-held calculators, so it's not by pencil. The net effect of that, there have been runs by the Bureau of Labor Statistics -- you're going to have to get briefed by them -- but they will continue with an estimate of what the unemployment rate probably would have been under the old system, and you'll get that estimate on Friday. In addition, you will get the new figure.

Q: Should we trust the new figure?

SECRETARY REICH: Trust? Well, for a few months there's going to be some -- quote, unquote -- noise in the system. That is, every new survey instrument needs a couple months to settle down. But certainly, in terms of trust, I would say that the new survey instrument is a more accurate gauge of the nation's employment picture, as it has been for decades. And I want to stress that.

Q: A number of governors from big states who have legal immigration costs were here the other day, and they said there's a task force being formed. What's your department's role going to be in that and what can the Labor Department do to help those states with those costs?

SECRETARY REICH: We are part of the task force with regard to immigration. The Labor Department does have some enforcement roles with regard to immigration. Never lose sight of the fact that one of the reasons that employers hire illegals is because they feel that they can provide substandard working conditions and subminimum wages. One means, therefore, of reducing the incentives for employers to hire illegals is to crack down on illegalities with regard to subminimum wages and substandard working

conditions. And I am very committed, as Labor Secretary, to reviving labor law enforcement.

As some of you know, yesterday we cited the first major citation under the lead standard -- and the lead standard was years in coming. We're going to enforce the laws diligently.

Q: To go back to the welfare reform question that was posed earlier, there have been some published reports to the effect that if the President's proposal or concepts on welfare were to be implemented, several hundred thousand jobs would have to be created. Are those estimates reasonable? And, if so, is the economy going to be able to create that level of jobs at a time two or three years down the road when the administration's own economic forecasts suggest that the unemployment rate is going to be down at levels that are normally associated with or have been associated with full employment?

SECRETARY REICH: Well, let me say a couple of things. First of all, the welfare reform initiative is still on the drawing boards. We are still debating options and have not yet presented to the President final options.

With regard to employment, the figures that were being bandied about last week were very, very, very high. They were far higher than any figures that we have been using. I'm speaking specifically to the figures on community service employment.

We are aware of all of the down sides and costs of a public service employment program. As I said before, the first and best option is to get people into private employment and keep them in private employment. Are there going to be enough jobs? Well, let me just say this -- and it pertains to today's program, as well -- the American job machine is back running. Last year's figures are encouraging. I anticipate 1994 will also be very encouraging.

Does that mean everybody is getting a job who wants a job or needs a job? No. There are mismatches with regard to jobs and skills. But, undoubtedly, our key prerequisite is economic growth. And although corporations are downsizing, small- and mediumsized companies are upsizing. Many individuals are going into business for themselves. In fact, a new provision under the unemployment insurance laws permits individuals to start their own businesses and collect unemployment insurance for a limited amount of time while they start their own business. That has been shown to be enormously successful in certain states. We're going to propose several other changes in the unemployment insurance system, which will also enable individuals to move off of unemployment faster and into jobs.

I'm sorry, we have to go. We'll talk again, I'm sure. Thank you.

END 12:34 P.M. EST