Senators Whiff on Challenging Julie Su

On February 28^th – the day President Biden nominated Julie Su to become the next Secretary of Labor – the state of California owed $18,868,506,716.36 to the federal government to repay the money it borrowed to cover unemployment benefits during the pandemic.

Today – the day of Su’s confirmation hearing in front of the Senate Health, Education, Labor, and Pensions committee – California owes $19,258,996,070.59.

That is an increase – in principal and interest – of about $390 million…or $7,467,000 million in new debt every day, which translates into about $318,620 dollars an hour.

That means that California racked up about $637,000 in additional debt during the two hours it took today for Su’s hearing and another $1.9 million will be added before the committee votes next Wednesday.

Despite it being mathematically impossible, during the hearing Su – who oversaw the state’s unemployment program during the pandemic –  continued to blame the Trump administration for the $40 billion loss, a loss twice the size of the debt, a loss that could have been largely prevented.

The hearing itself was surprisingly low-key, with Democrats praising Su’s experience, her “story” as the child of immigrants, and her focus on expanding apprenticeship programs and worker training.  They also pointed out that every state had an unemployment fraud issue and at least two senators claimed California – under Su’s stewardship – had one of the lowest fraud rates in the nation.

That claim is false and Su did not move to correct the statement.

Su claimed today that “95%” of the fraud involved the pandemic-related “PUA” emergency program.  As California spent about $25 billion in PUA and lost overall about $40 billion to fraud that would mean the PUA experienced a fraud rate of about 160% – that, obviously, did not happen.

It was also claimed by committee chair Sen. Bernie Sanders (I-VT) that under Su California was the first state to install safeguards against fraud.  Su herself said “once we saw what was happening, I shut the front door” on fraud.

Both claims are false.

A state auditor’s report noted ““despite repeated warnings, [Su’s] EDD did not bolster its fraud detection efforts until months into the pandemic.”

It was also noted that California had 20% of all unemployment claims in the nation, making Su’s job more difficult.  What Republicans– amazingly – did not point out is that the number is closer to 22% and, more importantly, California has about 12% of the nation’s population.  If California had not been such an easy mark and quickly became known to international fraud gangs as such, the population and number of claims made should have been about the same.

While Su shifted blame to the federal government for not providing proper “guidelines,” Sen. Mitt Romney (R-UT) said Su waived basic security guidelines that could have been in place anyway.  He said “the buck stops at the top” and that he could not support her nomination.

Su repeatedly said “95%” of the fraud was PUA-related, failing to note (and Republicans failed to note, either) that it was the EDD itself that sent out the money.  In other words, ALL funds – state and federal – flowed through the EDD system; the feds cut the checks and the individual states spent – and entirely controlled – the distribution of funds, which means it does not matter where it came from as they were indistinguishable from one another.

The committee touched on a number of other subjects including Su’s implementation of California’s anti-freelance/gig worker AB-5.  Su said she was just doing what the law called for, though when reminded she said those types of jobs are “not the economy we want in California,” she did seem to blanch a bit.  Su said she does not plan to bring AB-5-type regulations to the Department of Labor as that would be Congress’ job to pass such a law, though many organizations remain fearful of a regulatory back-door implementation.

Su also twice used the term “bona fide” to describe “independent contractors,” noting they “have a place in the economy.”

She was not challenged on what she deems a “bona fide” contractor, but the term’s qualificative inclusion in her statement should raise alarm bells for independent workers.

“We are concerned that Ms. Su would continue to pursue an ideologically-motivated agenda towards worker classification that ignores the thousands of small-business truckers that depend on the ability to work as an independent contractor” said Todd Spencer, President & CEO of the Owner-Operator Independent Drivers Association after the hearing. “Make no mistake, if Ms. Su were to advance the same policies that she championed in California, it would force hundreds of thousands of truckers to change their business model and put their livelihood in jeopardy … if Ms. Su is confirmed to lead the Department, we fear that we will see a repeat of what’s happened in California.”

Other Republican senators questioned her ability to be a neutral arbiter in critical labor disputes, citing Su’s history of union advocacy and her extremely limited face-to-face negotiating experience.

Throughout the hearing, Su repeatedly “thanked” and “appreciated” whenever she was asked a question – an off-putting, likely false, attempt to appear supplicative.  And it wouldn’t be a California-related government meeting if Newson-esque jargon was not bandied about: New Hampshire’s Sen. Maggie Hassan used the term “those experiencing a disability” to describe disabled workers and Su herself talked of “crowding in” program funding, working “in this space,” and, of course, working to “meet the moment.”

Stand Against Su, a coalition of small businesses, freelancers, tipped workers, and franchisees responded to Su’s confirmation hearing:

“Su stumbled several times during the hearing, at one point unable to explain her position on joint employer policy. Also notable was her exchange with Senator Markwayne Mullin, during which Su admitted that she has never run a business, balanced a budget, or employed individuals, and therefore has zero firsthand understanding of how policies like AB 5 and the FAST Act can impact business owners and employees.”

The American workforce deserves a Secretary of Labor who will act as an advocate, not a roadblock, for innovation and expansion. Julie Su is unfit, underqualified, and a poor choice for the position.”

The committee will vote on Su’s nomination next Wednesday; it is not clear if and when she will face what will likely be a toss-up final vote of the full Senate.