State Employment Service and Unemployment Insurance in US – Staffing policy

Experience teaches us that the resolution of contested public policies is often delayed by public officials until events force them to act. The swirl of political winds sometimes challenges long-standing policy no matter how useful or wise. Both of these axioms of public administration are revealed in the federal tug-of-war over merit staffing policy—the requirement to directly hire public servants based on their skills and qualifications—during the past thirty-year stretch of state-operated employment service (ES) and unemployment insurance (UI) programs. This report analyzes the purpose and evolution of federal–state merit staffing policy; chronicles federal decision-making, enforcement, equivocation, and turnabouts; and examines contested state actions relative to workforce development objectives. It explores government merit staffing policy in ES and UI programs from its origins in the Roosevelt administration through the Biden administration’s restoration of mandatory merit staffing, and makes observations about the future of merit staffing policy.

In this crucial political moment, this report provides policymakers with a comprehensive review of state ES and UI merit staffing policy. The idea that complex and inherently governmental decisions should be made by impartial career government employees has been critical to the success of both programs. At a time when the potential return to the White House of a past administration that—for a brief period mostly during the COVID-19 pandemic—allowed states to use non-merit staffing arrangements to delivery ES and UI services, and a Heritage Foundation presidential transition report, known as Project 2025, calls for additional roll backs in federal civil service protections,2 the in-depth analysis presented in this report examines why the various challenges to merit staffing in state ES and UI programs in recent decades occurred, persisted, did not succeed, or were overturned. The authors’ goal is to produce the first extended policy review of merit staffing in ES and UI programs in order to demystify federal policy changes. Their interest is to place this account in the public square so as to advance policy discourse.

Merit staffing ensures that when tax dollars for unemployment benefits are disbursed it is done so with impartiality and under public scrutiny. When referrals to job openings are made, merit staffing guarantees that they are performed without favoritism. Meritocracy prevents political cronies and profiteers from acting under government auspices. It shields the evenhanded delivery of public services and checks the abuse of power. The diluting of merit staffing may provide added flexibility to state governors in the administration of ES and UI programs, but also weakens the credibility of public administration. Flexibility should not be a euphemism for dismantling government protections. To assist federal policymakers, the authors believe that a rigorous evaluation should be undertaken by the U.S. Department of Labor that examines past and present state ES and UI staffing arrangements.

The authors argue that tensions persist in administering state workforce development policy and in the politics of merit staffing. Federal lawmakers should address these policy tensions, including extending the statutory merit protections in state UI programs to state ES programs. Moreover, without enhanced and reliable federal funding, state governors may be under increased pressure to abandon merit staffing and use private service providers. The authors assert that merit staffing is a federal intervention to safeguard public confidence in state-administered ES and UI programs. As a condition for receipt of federal ES and UI grants-in-aid to states, the authors conclude merit staffing has averted patronage, favoritism, and partiality, which in turn fortifies the legitimacy of state government service delivery.

Source: Merit Staffing in State Employment Service and Unemployment Insurance Programs: Putting the Toothpaste Back into the Tube