Yesterday, EPI Director of Policy Heidi Shierholz, Director of Government Affairs Celine McNicholas, and Policy Associate Margaret Poydock submitted comments to the Department of Labor (DOL), opposing the proposed Wagner-Peyser Act Staffing Flexibility rule, which would remove the longstanding, legally required, merit-based staffing rule for the Employment Service (ES) and allow private entities to receive Wagner-Peyser Act funding.

The proposed rule would allow states to use state and local employees, contractors, other personnel, or a combination thereof, in the administration of the ES program. These rule changes could result in the privatization of multiple ES activities, including job-search assistance, job-referral and placement assistance for jobseekers, reemployment services for unemployment insurance (UI) claimants, and recruitment services for employers with job openings.

“The changes would make it less likely that job seekers get high quality services when they most need them and will likely reduce job quality for those providing these important services,” said Margaret Poydock, EPI’s policy associate.

In the comment, EPI urges the DOL to withdraw the proposed regulation. The proposal would likely reduce services for unemployed workers. Such changes stand to disproportionately negatively impact black and Hispanic workers whose unemployment rates remain high relative to white workers in almost every state. Ensuring that the ES provides services to unemployed workers on an unbiased basis is essential to eliminating longstanding racial disparities in employment outcomes. Furthermore, privatizing the ES serves only one constituency—corporate interests that stand to profit from gaming a system designed to ensure that unemployed workers receive employment search assistance.

“We know what that system looks like because it was the corruption of the private system that led to passing the Wagner-Peyser Act and establishing the merit-staffed Employment Service in the first place. Privatization does not produce greater efficiencies or cost-savings,” write Shierholz, McNicholas, and Poydock. “Instead, it creates a situation in which unemployed workers may receive biased job counseling and placement services and it reduces the job quality of professionals in the ES. The proposed rule threatens the administration of our nation’s UI and ES systems and should be withdrawn.”