Employment Service

Pursuant to a congressional request, GAO reviewed the implementation of the Employment Service Act to determine whether additional actions might be taken to better ensure that private employment agency resources are appropriately utilized to reduce unemployment.

GAO found that: (1) Department of Labor and state employment services have made little effort to use private employment agency resources; (2) 20 states have policies and practices explicitly prohibiting referrals to private agencies, even when jobseekers are not charged fees, because there is concern that increased referrals to private agencies could lead to displacement of employment service offices and staff; and (3) since there are no Labor regulations requiring states to make such referrals, state employment agencies continue to decline referrals to private agencies. GAO also found that: (1) when two welfare programs referred jobseekers to private employment agencies, the agencies increased placements and reduced the time taken to find jobs; (2) private agency placements were at least as cost-effective as placements under state employment services; (3) private agencies are a useful supplement to state employment services because they have additional job openings and, unlike state employment services, are not paid unless they place jobseekers successfully for a specified time; (4) reduced unemployment insurance and welfare outlays can be expected from increased placement of employment service jobseekers; and (5) including private agency jobs in state employment service listings might beneficially broaden the employment services' job opening base and help them serve a more useful clearinghouse function.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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