Certain fundamental principles are basic to the proper functioning of the unemployment compensation system. Demands made on the system will vary from State to State because of differences in industrial, economic, and social characteristics. What may be sound policy for one State may be unsound for another in this as well as other programs. It is neither fair nor sound to establish a standard based upon a high industrial economy for application in a non-industrial State or a semi-agricultural-industrial community.

As the economy of a State changes, the Legislature recognizes it immediately and acts to adjust its programs, including employment security, to meet the challenge of the new economic structure. In principle H.R. 8282 implies that the Legislatures have not done this and therefore do not have the capacity to determine what is best for the general good.

The bill provides :

(a) Extension of coverage to certain workers effective July 1, 1966; and (b) Establishment of Plans as soon as possible to extend coverage to all groups with first attention to agricultural workers, migratory workers, domestic workers in private households and employees of States and their political subdivisions.

(a) Extension of Coverage to Certain Workers Effective July 1, 1966

(1) Anyone who pays wages to an individual on any day (unless that worker is specifically excluded by federal law) would be subject to the tax. (2) Employees of religious and non-profit organizations not presently covered would come under the law if they received $15 or more per week. (3) Agricultural organizations now exempt would no longer be exempt if in any calendar quarter they used 300 or more “man-days” of farm labor. A "man-day" is defined as any day on which a hired person worked, regardless of the time worked.

Examples would be 4 men for 75 days, or 10 men for 30 days or 30 men for 10 days or 300 men for one day. Should any of these or other combinations exist in a calendar quarter, the farm or organization would be subject to tax on all of its employees for the calendar year.

Organizations, now exempt, which would be subject include stock, dairy, poultry, fruit, fur-bearing animal and truck farms, plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural commodities, orchards, etc.

(4) Other workers, now exempt, such as agent-drivers, outside salesmen and similar occupations.

Here again the Louisiana Legislature must have had good and sufficient reason to legislate for the general economic good of the State and its people and in the interest of employment stabilization and security. These same measures have often been proposed and the Legislature in its combined knowledge and judg ment consistently declined to enact them.

Obviously, the Committee on Ways and Means could not be expected to have the benefit of the many discussions, hearings and deliberations of Legislative Committees on this subject year after year for the past decade. Neither can a concise summary of all of these now be submitted. However, a few basic objeetions to coverage now proposed might afford the Committee a sample of the objections in each of the above categories, as follows:

(1) There is no accurate count of the additional small Louisiana employers now proposed to be brought under the statute. However, a recent estimate is about 25,000 small businesses, comprising small service shops, retail outlets, lawyer, doctor, accounting and non-professional offices and others with one, two or three employees.

Ordinarily there is little or no turnover except to advance to a better paying job in these categories. Among the many objections, the tax that would be imposed is minor. The major objection is that it becomes more difficult to keep employees who are more critically essential in continuous operations of a small unit when unemployment benefits, particularly where no disqualifications may be imposed, become greater and greater. This becomes aggravated when jobs are plentiful and easily secured after benefits have been exhausted.

(2) A large percentage of employees of religious and non-profit organizations work sporadically. There has always been a dearth of such workers in Louisiana. It has been considered bad for the economy to encourage such workers to seek tax-free benefits for 26 weeks as soon as they have

worked 20 weeks, thus increasing the dearth of workers in the many worthwhile and even vital services performed by such organizations.

(3) Various independent groups have made exhaustive studies in various fields of seasonal work in Louisiana, so that:

(a) In 1952 the Louisiana Legislature unanimously excluded those engaged for a very short time each year in drying rice.

(b) In 1956, it again overwhelmingly excluded those engaged a very short time each year in ginning moss and in the handling, care and sale of nursery stock.

(c) In 1960 the Louisiana Legislature adopted a seasonal provision applicable to annually recurring production periods in agricultural related production that did not exceed 16 weeks. Workers in those periods can draw benefits commensurate with their earnings in the posted season. In each of these cases, studies had been conducted for a long period. Among the paramount reasons for adoption was that the Legislature was fully convinced that the vast majority of workers engaged in such production did not have this occupation as their principal pursuit, and that benefits became supplemental to their continuing self-employment income during the non-posted period. Among such pursuits are fishing, trapping, hunting, truck-farming, etc. Practically all Louisiana farm owners and operators, to the maximum extent possible, spread the work of improvement and maintenance to provide continued employment, outside of planting and harvesting season, for their regular work force who do not have self-employment.

Considered opinion of those groups coordinating good farm management is that if benefits are made available to such workers, there will be no incentive to the worker or the agricultural producer to stabilize employment. Inevitably the taxes paid on the earnings of those workers would be insignificant compared with amount of benefits drawn. A subsidy tax thereby falls on all empolyers and government. Vast improvements accomplished during the past several years in Louisiana in farm connected production management with the aim of a completely self-supporting industry would thereby be impaired. Louisiana's dependence on agricultural production is far greater than many states. The effect of H.R. 8282 on that industry here would be considerably greater than in those states.

(4) Coverage proposed for agent-drivers, outside salesmen and similar groups is in effect making unemployment benefits available to the selfemployed. The natural sequel would be to extend benefits to individuals in independent trade, occupation, profession or business and obtain the tax from the businesses they served. Such a bill was submitted in 1964 with no success to the Louisiana Legislature.

(b) Establishment of Plans to Extend Coverage as soon as Possible to all
Groups with First Attention to all Agricultural Workers, Migratory
Workers, Domestic Workers in Private Households and Employees of
States and their Political Subdivisions

H.R. 8282 sets up machinery to plan to extend coverage as quickly as possible to:

(1) All agricultural workers

(2) Migratory workers, who apparently would have no incentive to work as soon as they had enough weeks of employment to draw full benefits

(3) Domestic workers in private households, who certainly would be sorely tempted by tax-free remuneration for not working

(4) Employees of Louisiana and of all of its political subdivisions. There are presently 143,000 such employees. Annual comparative employer unemployment taxes, federal and state, would amount to more than $31 million to come from any source determined by the Legislature The coverage of the above, according to the bill. is in the planning stage. It does not provide for the Louisiana Legislature to have a voice in the determination other than to provide the tax money.

VII. Conclusion and recommendation

Every proposal made in H.R. 8282, with the exception of paying federal unemployment benefits, has been presented time and time again to the Louisiana Legislature for its consideration.

The Legislature Consistently Declined to Adopt a Single One of Such Proposals.

H.R. 8282 would demand that the Legislature now rescind or amend the entire structure of its statute, principally among which are: R.S. 23:1471— 1472-1536-1540-1542-1592-1595-1596-1600-1601-1711-1713.

The result would be a federally dictated law with a Louisiana label. Louisiana, and presumably every other State, had good and sufficient reason to enact and subsequently amend practically each section of its law during the past 28 years. If enacted, the bill could be considered an indictment by the Congress of the United States that the Louisiana Governors and the Legisla tures did not then nor do they now have the capacity to govern.

Certainly, the Committee on Ways and Means would find it difficult to fully evaluate the financial, economic and sociological effects that the mandatory changes would have on Louisiana. Presumably, the United States Department of Labor did not properly evaluate the possible effects when it issued its estimates uniformly to all State Employment Security Divisions, to the effect that the average increase in benefit costs by reason of formula change for high quarter states would be 8% for the first two years, 14% for the next two years and 17% thereafter.

Confidence of Louisiana diminishes year after year in the assumptions and estimates presented to Congress by the Department of Labor. As an example, only two years ago that department's estimate for hospitalization for the aged was that it could be financed by as little as $24 per year per worker. Its revised estimates this year resulted in the enactment of an additional tax for that purpose amounting to as much as $105.60 per year per worker.

In fact, Title III-Miscellaneous, Section 301 of H.R. 8282, infers at the outset that the Secretary of Labor doesn't know the effects. Accordingly, that section provides that the Secretary, a major proponent, independently name an Advisory Commission to begin its studies of such effects three years after enactment and report its findings to him five years after enactment.

In these times of relatively full employment and numerous federal cover-all programs, there is no urgency for passage of this type of legislation.

Louisiana Business respectfully urges the Committee on Ways and Means to reject the proposals of H.R. 8282 and preserve to Louisiana the right and the responsibility of legislating in the field of employment security according to the will of the people.

LOUISIANA BUSINESS RECOMMENDS

Enactment of a requirement that an Advisory Commission be established within and by each State, comprised equally of members of management, labor and the public, named in a manner prescribed by its Legislature. Such Commission would be required to study and timely report its findings and recommendations to the Legislature. The Legislature would be required to make its report and recommendations to the House Ways and Means Committee. Until that was accomplished no changes in the Federal Unemployment Act would be proposed to the Congress.

There are ample funds available in the Federal Unemployment Account to appropriate sufficient money to the States to do this job.

Coordinated, endorsed and respectfully submitted by:

American Rice Growers Cooperative Association.
American Sugar Cane League of the U.S.A., Inc.
Automotive Wholesalers Association of Louisiana.

Baton Rouge Chamber of Commerce.

Chamber of Commerce of the New Orleans Area.
Construction Industry Association of New Orleans.
Deep South Farm and Power Equipment Association.
Deep South Retail Bakers Association.

Louisiana Automobile Dealers Association.

Louisiana Building Material Dealers Association.

Louisiana Dairy Products Association, Inc.

Louisiana Farm Bureau.

Louisiana Highway & Heavy Construction Branch of Associated General Contractors of America.

Louisiana Laundry & Cleaners Association.

Louisiana Manufacturers Association.

Louisiana Oil Marketers Association.

Louisiana Restaurant Association.

Louisiana Retailers Association.

Louisiana State Chamber of Commerce.
Louisiana Wholesale Grocers Association.
Louisiana Wine & Spirits Foundation, Inc.

New Orleans Steamship Association.

Shreveport Wholesale Credit Men's Association.

The Waterfront Employers of New Orleans.

I Hereby Certify that the Position of Louisiana Business, as outlined in the foregoing, has been coordinated and endorsed by the business and trade associations named above.

Respectfully yours,

L. L. WALTERS,

Coordinator, Council of Louisiana Business

and Trade Associations.

Senator TALMADGE. Senator Williams?

Senator WILLIAMS. No questions.

Senator TALMADGE. Senator Gore?

Senator GORE. No questions.

Senator TALMADGE. Senator Morton?

Senator MORTON. I take it from your statement that you do not want anything, but if you have to take something, you will take the House bill; is that about it?

Mr. LACEY. That just about summarizes it; yes, sir.

Senator TALMADGE. Thank you very much, Mr. Lacey.

Mr. LACEY. Thank you.

Senator TALMADGE. The next witness is Mr. Paul P. Henkel, Council of State Chambers of Commerce.

You may proceed, sir.

STATEMENT OF PAUL P. HENKEL, CHAIRMAN, SOCIAL SECURITY COMMITTEE, COUNCIL OF STATE CHAMBERS OF COMMERCE; ACCOMPANIED BY WILLIAM R. BROWN, ASSOCIATE RESEARCH DIRECTOR

Mr. HENKEL. Mr. Chairman and members of the committee.

My name is Paul Henkel. I am manager of payroll taxes for Union Carbide Corp. and I am chairman of the Social Security Committee of the Council of State Chambers of Commerce. I appear here today to present the views of that committee and the member State chambers of commerce in the council which have specifically authorized me to appear in their behalf and which are listed at the end of this statement. Appearing with me today is Mr. William R. Brown, the associate research director of the council.

Mr. Chairman, in the interests of time, I will try to abbreviate my statement and request that the statement and the attachments be included in the record as though read.

Senator TALMADGE. Without objection, they will be inserted in the record following your oral presentation.

Mr. HENKEL. We are appearing today to urge that your committee refrain from amending H.R. 15119 by adding provisions of H.R. 8282 or its counterpart S. 1991 which were rejected by the Ways and Means Committee and the House of Representatives. We recommend that you give favorable consideration to H.R. 15119 as passed by the House.

At the outset we wish to point out that our statement represents the broadest positive approach obtainable in reflecting the varying opinions of State chambers of commerce and individual companies, both large and small. We urge your committee to consider the import of this broad consensus of the employer community that H.R. 15119 should be approved without further amendment. Surely it is no secret that employers throughout the country were forced by the extreme provisions of H.R. 8282 to rise up in protest. It should be significant, therefore, that business and industry is coming forward at this time to support H.R. 15119 despite the fact that some of its important provisions are not consistent with the views of the employer community.

Senator GORE. May I ask a question there?

Senator TALMADGE. Yes.

Senator GORE. Isn't this the first time that the business community has given its support to an unemployment compensation bill?

Mr. HENKEL. As a whole bill, sir, perhaps that is true. I would imagine that there have been previous times where business and industry have supported portions of a bill.

Senator GORE. I do not raise that as a point of criticism. In the years that I have been closely associated with this program and this legislation, I believe this is the first time I have seen this broad, possible support for a bill to improve unemployment compensation. Mr. HENKEL. Yes, sir.

Mr. BROWN. If I might add, Mr. Chairman, I believe there was some legislation some years ago regarding the Reed loan fund which had general business support, but they have not generally supported Federal changes. It is quite common for business groups to support improvement in State laws at the State level.

Senator GORE. One other point, with respect to your statement: You referred to the employer consensus; I hope there is an employee consensus that is worthy of consideration.

Mr. HENKEL. Certainly there is, sir, but we cannot speak to that

consensus.

Senator GORE. I was not asking you to speak to that.

Mr. HENKEL. If I might add, sir, we have seen a private opinion. poll which indicated that some 7 or 8 out of 10 individuals do not favor the Federal Government creating benefit standards for the States or setting maximum duration.

Senator GORE. You are referring now to the so-called Federal Standards?

Mr. HENKEL. Yes, sir.

Senator GORE. Thank you very much.

Senator TALMADGE. You may proceed, sir.

Mr. HENKEL. H.R. 15119 is, as the Ways and Means Committee said in its report, "the product of the broadcast and most intense review this committee has given to the unemployment compensation program since it was enacted in 1935." This remarkable task, performed with the aid of the Interstate Conference of Employment Security Agencies, and the overwhelming 374-10 vote of approval in the House, compel the conclusion that this bill will be generally acceptable to the public.