03.16.21

Ranking Member Burr Questions Labor Nom Julie Su on Failures, Fraud in CA’s Massive Unemployment Crisis

Today, the Senate Health, Education, Labor and Pensions (HELP) Committee held its nomination hearing for Julie Su, the California and Workforce Development Agency Secretary, to serve as Deputy Secretary of Labor.

In his prepared opening remarks, Senate HELP Committee Ranking Member Richard Burr (R-NC) outlined California’s economic failures, which include its high unemployment rate and its mass evacuation by businesses to better markets, such as Texas and North Carolina. Ranking Member Burr also criticized Secretary Su’s role in failing to address the massive fraud within California’s unemployment insurance system and questioned whether Secretary Su has the skills to lead a larger department.

HELP Hearing Final March 16

WATCH: Ranking Member Burr delivers opening remarks before Julie Su’s nomination hearing 

Key excerpts:

“California is not a model to emulate for the country. 

“According the Bureau of Labor Statistics, California’s unemployment stands at 9%, the second highest in the country and has had one of the worst increases in unemployment over the last year of COVID.

“The state has imposed some of the most onerous restrictions on businesses and individuals and has been one of the slowest to recover from the pandemic. California is also known for high taxes, and that applies both to individuals as well as businesses, and those rates aren’t likely to go down anytime soon considering the staggering amount of state liabilities on the state’s balance sheet.

“The tax and regulatory burden weigh heavily on employers, and it is another reason why we are seeing businesses flee California in favor of states with more reasonable policies. Maybe that explains why so many companies are moving from California and bringing their jobs with them to North Carolina, Texas, and elsewhere.

“Turning to our nominee, you have a few challenges to gaining support for your nomination.

“First, some of your friends have made it clear that they think you will be a shadow Secretary, when the role of Deputy Secretary is really that of a Chief Operating Officer…I hope you can convince the Committee that you understand the job you’ve been nominated for. I also hope you can demonstrate that you aren’t aiming to drag Mayor Walsh away from the sensible agenda he committed to pursuing when he was sitting where you now sit.

“Second, and more importantly, I’m even more concerned about the failures and fraud in the California Unemployment Insurance system. California has suffered from some of the largest fraud in our nation’s history during the pandemic. Over $11 billion, perhaps as much as $30 billion, in fraud occurred in California’s unemployment system. Even death row inmates received unemployment checks.

“What’s worse about the fraud committed on California and U.S. taxpayers is that it was entirely preventable.

“It’s my understanding that an auditor made a series of recommendations just as you took office, specifically recommending that California exclude sensitive information, including Social Security numbers, from its identification system.

“But nothing changed.

“In fact, when the fraud was ramping up, and billions being stolen from taxpayers, California actually made things worse. You ordered the agency to eliminate some important safeguards to speed up payments, which led to even more fraud.

“What’s worse is that California has received hundreds of millions a year, every year, over the past decade, in federal funds for administration of their unemployment systems, but no changes or improvements to those systems were made.

“As we discussed yesterday, it is true that all states struggled, but California’s struggles swamp everyone. And none of their Secretaries of Labor are here today seeking a promotion.

“So, while you may not be personally responsible for every case of fraud that happened, the fraud did happen on your watch.

“Please help this Committee understand why that is an experience the Senate should reward with a promotion.

“I’ll keep an open mind as we go through this hearing, and I appreciate you being willing to discuss these issues with us today.”

To read Ranking Member Burr’s full opening remarks, click here.