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The Public Employment Service in the United States Over the last decade, labour market policy in the United States has been undergoing a period of significant restructuring. In the face of welfare reform initiatives, persistent unemployment and declines in real income SERVICE EMPLOYMENT PUBLIC THE among some groups (particularly the less skilled), and continued economic expansion, there is pressure on the public employment service (PES) to improve effectiveness. But, it must also come to terms with resource limitations. How have reforms fared so far – what seems to be working well or not so well? Which of the new approaches may require revision in the event of an economic downturn? Where might adjustments lead to improved D effectiveness? While considering such questions, this publication provides an in-depth look at the PES and IN THE TTHHEE PPUUBBLLIICC recent policy initiatives in the United States. Areas of concern about recent reforms are outlined and options for STATES UNITED making policies more effective are presented. EEMMPPLLOOYYMMEENNTT C SSEERRVVIICCEE IINN TTHHEE UUNNIITTEEDD SSTTAATTEESS E OECD (81 1999 02 1 P) FF 200 ISBN 92-64-17011-1 9:HSTCQE=V\UVV\: O -99 File: $1$DIA3:[PAGER.SAVE.PUB]COPYR–1623E.;8 REGNIER Seq: 1 Page: Free: 4140D Next: 0D VJ: J1:1 6-JAN-00 10:22 OECD, 2000. Software: 1987-1996, Acrobat is a trademark of ADOBE. All rights reserved. OECD grants you the right to use one copy of this Program for your personal use only. Unauthorised reproduction, lending, hiring, transmission or distribution of any data or software is prohibited. You must treat the Program and associated materials and any elements thereof like any other copyrighted material. All requests should be made to: Head of Publications Service, OECD Publications Service, 2, rue Andr´e-Pascal, 75775 Paris Cedex 16, France. THE PUBLIC EMPLOYMENT SERVICE IN THE UNITED STATES ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became Members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996) and Korea (12th December 1996). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention). Publié en français sous le titre : LE SERVICE PUBLIC DE L’EMPLOI AUX ÉTATS-UNIS © OECD 1999 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, Tel. (33-1) 44 07 47 70, Fax (33-1) 46 34 67 19, for every coun- try except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: http://www.copyright.com/. All other applications for permission to reproduce or trans- late all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France. Foreword This study examines the public employment service (PES) in the United States. PES agencies are at the centre of current policy debates on how best to design and implement efficient and equitable employment-oriented labour mar- ket and social policies. Given the range of issues addressed, this study is broadly defined to include the public labour exchange, unemployment insurance, referral mechanisms for active labour market programmes, and certain employ- ment-related aspects of social welfare programmes. In order to highlight the decen- tralised structure of the PES, the review includes an in-depth look at policy implementation in two leading states where policy changes have been quite exten- sive – Connecticut and Wisconsin. The review is part of a series on the PES in OECD countries, with 18 countries covered to-date. Other recent editions include The Public Employment Service: Greece, Ireland and Portugal (1998), The Public Employment Service: Belgium (1997), Labour Market Policies in Switzerland (1996), The Public Employment Service: Denmark, Finland, Italy (1996), and The Public Employment Service: Austria, Germany, Sweden (1996). These reviews also contribute to the follow-up of the OECD Jobs Study. They pay particu- lar attention to institutions and practices, which are essential for the effective pur- suit of labour market policies. A synthesis of the findings and conclusion of earlier reviews was published in The OECD Jobs Strategy: Enhancing the Effectiveness of Active Labour Market Policies (1996). This volume is based on a visit to the United States in March 1998 by Secretar- iat staff from the Directorate for Education, Employment, Labour and Social Affairs, as well as extensive OECD correspondence with the state and national authorities during the period February to September. The report has been prepared by Robert Fay and Douglas Lippoldt of the Secretariat. It was discussed by the OECD's Employment, Labour and Social Affairs Committee in October 1998 and is pub- lished on the responsibility of the Secretary-General of the OECD. 3 OECD 1999 Table of Contents Chapter 1. Introduction ............................................................................................................ 9 Chapter 2. The American Labour Market and Basic PES Structure ............................... 13 A. Labour market overview........................................................................................................... 13 B. The structure of unemployment ............................................................................................. 18 C. Earnings and income ................................................................................................................ 22 D. Employment protection ........................................................................................................... 30 E. The origins of the public employment service in the US.................................................... 31 F. Key labour market policy institutions and actors ................................................................ 33 G. US Department of Labor and the state employment security agencies.......................... 34 H. Staffing......................................................................................................................................... 40 I. Funding the PES system .......................................................................................................... 43 J. Key programmes and benefit schemes................................................................................. 45 Annex 2A. Selected FUTA and Social Security Act Requirements for Participating States ........................................................................................... 48 Chapter 3. Unemployment Insurance in the United States: Regular and Extended Benefits ......................................................................... 51 A. Unemployment insurance .................................................................................................. 51 B. Basic aspects of funding unemployment insurance........................................................ 53 C. UI tax rates and experience rating.......................................................................................... 55 D. Coverage and eligibility under UI........................................................................................... 57 E. Disqualifications, denials and adjudication issues.............................................................. 61 F. UI benefit duration and levels ................................................................................................64 G. Trends in receipt of UI benefits ..............................................................................................68 H. Fraud control and performance monitoring.......................................................................... 68 I. Recent innovations in the UIS system ................................................................................... 70 Chapter 4. Job-broking and the Development of One-stop Centres ................................. 73 A. Quantitative indicators of job-broking activities.................................................................. 73 B. Job-broking and employment policy ....................................................................................
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