On the Labor Department’s Final Rule Allowing States to Privatize Employment Services

Washington, DC—Following is a statement from Michele Evermore, senior researcher and policy analyst with the National Employment Law Project, on the U.S. Labor Department’s issuance today of a final rule—the Wagner-Peyser Act Staffing Flexibility rule—that eliminates longstanding, legally required merit-based staffing for the Employment Service and permits states to contract out Employment Service functions to private entities:

“With this latest regrettable move, the Trump administration will inevitably erode the quality of services that jobseekers throughout the nation need and deserve. This rule allows states to privatize essential Employment Services functions such as job search, training, and placement assistance for jobseekers, and recruitment services for employers seeking to hire workers. But instead of these services being administered by dedicated, conflict-free public service professionals, this rule opens the door to private companies controlling these public-serving functions, with no accountability to the public.

“A principal component of a public system are the state government employees who are hired and promoted on the basis of merit under a civil service system. For that reason, it has always been the U.S. Labor Department’s position, as it argued in State of Michigan v. Alexis M. Herman, that merit-based staffing is required under law. This rule tries to rewrite that history. The original proposal went so far as to cite three states that were allowed to experiment with privatization as success stories, even though a study commissioned by the agency proved otherwise.

“Perhaps most disturbing and offensive, this rule eliminates hiring requirements that ensure diversity in staff serving migrant and seasonal farmworkers. This provision has been in place since the courts found that these workers were receiving inferior services in the early 1970s. At the same time that privatizing these functions will likely result in these workers not being properly served, the workforce itself would no longer be covered by key protections against racial discrimination. Furthermore, current staff are well trained to ensure that workers are treated appropriately and that housing meets basic standards. Outsourced non-governmental staff will likely lack the necessary authority to enforce the kinds of legal protections that these longstanding rules were designed to ensure.

“The fact is that public workers providing quality services saves money in service delivery and promotes the best outcomes for jobseekers. Given the strong evidence that privatizing these services will produce worse results, we urge states to avoid implementing new non-merit-staffing. Workers, employers, and their communities will depend on it.