Page images
PDF
EPUB

CALIFORNIA EMPLOYERS AND ASSOCIATIONS ON WHOSE BEHALF THIS STATEMENT

IS MADE

California-Western States Life Insurance Company
General Telephone Company of California
Pacific Gas & Electric Company
Occidental Life Insurance Company
Pacific Lighting Service and Supply Company
Pacific Mutual Life Insurance Company
San Diego Gas & Electric Company
Southern California Edison Company
Southern Californa Gas Company
Southern Counties Gas Company of California
Association of Motion Picture and Television Producers Inc.
California Banking Association
California Manufacturers Association
California Newspapers Publishers Association
California Retailers Association
California State Chamber of Commerce
California Trucking Association
Merchants and Manufacturers Association
Motor Car Dealers of Southern California
Western Oil and Gas Association

Senator TALMADGE. Senator Williams?
Senator WILLIAMS. No questions.
Senator TALMADGE. Thank you very much, Mrs. Beideman.

The list of witnesses having been concluded, the committee will stand in recess until 9 a.m., tomorrow morning.

(Whereupon, at 10:20 a.m., a recess was taken until 9 a.m., Wednesday, July 20, 1966.)

UNEMPLOYMENT INSURANCE AMENDMENTS OF 1966

WEDNESDAY, JULY 20, 1966

U.S. SENATE,
COMMITTEE ON FINANCE,

Washington, D.C. The committee met, pursuant to recess, at 9:15 a.m., in room 2221, New Senate Office Building, Senator Vance T. Hartke presiding.

Present: Senators Long (chairman), Gore, Hartke, Williams, and Morton.

Also present: Tom Vail, chief counsel.
Senator HARTKE. The committee will come to order.

All the testimony we are going to receive today comes from business groups. The first witness today is Mr. Lyle H. Fisher, vice president, Minnesota Mining & Manufacturing Co., St. Paul, Minn., representing the Chamber of Commerce of the United States. Mr. Fisher, you may proceed in any way you like. Your entire statement will appear in the record as it is presented. All right, sir.

STATEMENT OF LYLE H. FISHER, REPRESENTING THE CHAMBER

OF COMMERCE OF THE UNITED STATES; ACCOMPANIED BY KARL SCHLOTTERBECK, MANAGER OF ECONOMIC SECURITY, CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. FISHER. I am Lyle H. Fisher, vice president in charge of personnel and industrial relations for the Minnesota Mining & Manufacturing Co. of St. Paul, Minn. I appear before this committee as a witness for the Chamber of Commerce of the United States, and have served as a member of its committee on labor relations. With me is Mr. Karl Schlotterbeck, manager of economic security matters for the national chamber.

Senator Hartke, to preserve time, I would like to present the salient points of the prepared testimony, but would appreciate it if the entire presentation were to be included in the record.

Senator HARTKE. As I indicated, the entire statement will appear in the record as though it were read.

Mr. FISHER. Thank you, sir.

The national chamber appreciates this opportunity to present its views on H.R. 15119 and S. 1991, dealing with the problem of unemployed workers.

We support H.R. 15119 as a reasonable bill, effecting certain changes in the existing Federal-State system of unemployment compensation. We do not support S. 1991 because it contains:

1. Certain provisions dealing with both the short-term and the long-term unemployed through the existing Federal-State unemployment compensation system which violate sound unemployment insurance principles;

2. Other provisions dealing with the very long run unemployed through a new Federal program which propose the same solution in good times and in recession, although the character of the prob

lem is not the same under both condtions. Such provisions are fundamentally unsound, and S. 1991 should be rejected in its entirety.

We recommend, instead, two courses of action contained in H.R. 15119. The first would strengthen State freedom and flexibility so every State may continue to make needed and sound, constructive improvements in unemployment compensation, as they have for the past quarter century. The second would provide additional protection to those regularly attached to the labor force against very long term unemployment in time of recession, when job openings are not readily available.

In this presentation we will discuss, first, those provisions in S. 1991 which would directly and adversely affect the existing Federal-State unemployment compensation system; and second, the other provisions in S. 1991 dealing with the problem of very long term unemployment.

Finally, we will turn to H.R. 15119.

PROPOSED CHANGES IN STATE UNEMPLOYMENT COMPENSATION PROGRAMS

S. 1991 contains numerous provisions amending the existing Federal-State system of unemployment compensation. Briefly, these would

(1) Permit any State to allocate its benefit costs on a basis other than the unemployment experience of individual employers;

(2) Establish for the first time Federal requirements for State unemployment compensation relating to cost-determining factors;

(3) Provide a Federal subsidy to any State with so-called excess benefit costs;

(4) Require States to increase the taxable wage base from $3,000 to $5,600 in 1967 and to $6,600 in 1961. Advocates of these various changes have contended that the existing Federal-State system of unemployment compensation has "not kept pace with the times.” They have stated that “the twin recessions of 1958 and 1961 exposed the system as being largely obsolete *** It was plain that the system constructed in the 1930's was too fragile for the 1960's, that it could not withstand the major crisis." These and similar contentions are reflected by the broad accusation that “no major improvements have been made since its original enactment 30 years

ago."

We believe that a fair, objective appraisal of the independent performance by the 50 States during the past quarter century refutes these contentions.

INDIVIDUAL EMPLOYER EXPERIENCE RATING

One provision of S. 1991 (sec. 208) would permit a State to abandon experience rating. This is a device by which a State adjusts its tax rate for each employer according to his unemployment experience. This mechanism is in line with the original concept for unemployment compensation as expressed by President Roosevelt in his 1935 message to Congress :

An unemployment compensation system should be constructed in such a way as to afford every practicable aid and incentive toward the larger purpose of employment stabilization,

Senator GORE. May I ask a question there, Mr. Fisher?
Mr. FISHER. Yes, sir.

Senator GORE. You say that S. 1991 would permit a State to abandon experience rating. I thought States could do that now.

Mr. FISHER. No, not now. Experience rating is part of the requirements of the present Federal law.

Senator GORE. Is to each individual employer.
Mr. FISHER. That is correct.

Senator HARTKE. I see some people shaking their heads out there. Do we have somebody here from the Labor Department?

Mr. FISHER. You see, they cannot reduce tax rates unless they do it by experience rating.

Senator GORE. I see. That clarifies it.

Mr. Fisier. Maybe we could say it would encourage the elimination of experience rating by permitting the reduction in the State unemployment compensation tax rate on a flat uniform basis.

Senator Gore. That clarifies it. Thank you.

Mr. Fister. Today, when one of our national goals is to stabilize employment, individual employer experience rating should be preserved in every State program.

I can prove from the experience of my company that, in those States where a sound experience-rating plan exists, we make every possible effort to regulate our employment. For example, one of our plants in Wisconsin providd only seasonal employment for about 20 employees on one production job. When we laid them off, we had a potential benefit cost liability of around $20,000-year after year. We found that we could transfer production to this plant and provide regular year-round jobs for these 20 people, and thus saved roughly $20,000 a year in unemployment compensation benefit tax costs.

In a plant in Minnesota we provided seasonal employment for about 130 women in connection with a product for the Christmas holiday season. Here our potential benefit-cost liability totaled approximately $10,000 a year when we laid them off. By careful rescheduling and better production planning, we were able to provide full-time, year-round jobs for 80 of these people, with substantial savings in tax costs.

In another operation some 2 or 3 years ago we were planning to lay off 140 workers permanently. The potential benefit-cost liability was approximately $120,000. Some of our staff were assigned on a full-time basis to find new jobs with other employers for these 140 people so they could start work on a new job immediately upon separation from our company. It was concluded we could well afford at least $40,000 of special staff expense, if it were necessary, to find other employment for a majority of these. We succeeded and realized a very substantial savings in benefit costs. And we found it didn't cost us $10,000 to do it.

Recently, we constructed a new building at our research, services, and administration complex in St. Paul. We handled some of the const ruction job with our own company personnel. In connection with pouring the concrete, we took on 40 common laborers. When the concrete work was completed, these workers-employees of ourswere to be separated from our employment. If we allowed them to become unemployed and register at the employment service, we were faced with a considerable potential benefit cost liability. Rather than allow them to become unemployd, then wait for the employment service to find them jobs, and for unemployment compensation benefits to be paid in the meantime, certain staff people were assigned to contact other possible employers in the Twin City area and succeeded in finding them jobs immediately upon their separation from us.

Senator HARTKE. Mr. Fisher, as I understand your contention, it is that the desirability of requiring the retention of the employer experience rating is that it encourages employers to find, according to these examples it encourages employers to find regular work for at least a substantial part of those who ordinarily would be part-time workers; it that true?

Mr. FISHER. This is for the purpos of stabilizing employment, that is correct.

Senator HARTKE. For the purpose of stabilizing employment.

Mr. FISHER. The emphasis is on the stabilization of employment in This case, yes.

Senator HARTKE. In other words, what you are trying to do is to provide for them wage stability so that they will have a waga throughout the entire year rather than depending upon valleys and peaks. That is, by an employment wage and then an unemployment check; is that true?

Mr. FISHER. That is correct.

Senator HARTKE. So, then, you would be willing to advocate a guaranteed annual wage for employees if you had an incentive method which would provide this; is that correct?

Mr. FISHER. That is not the point at all.

Senator HARTKE. Why would not the two be compatible and why would not the theory be basically the same?

Mr. FISHER. You see, you indicate that you provide an income by employment and also unemployment compensation. Our point is that we ought to provide employment and not unemployment compensation.

Senator HARTKE. I agree with that. I mean I would rather see, and I think most workers would agree that they would rather have a job than an unemployment check.

Mr. FISHER. Yes, but a guaranteed annual wage does not guarantee a job.

Senator HARTKE. What we would have to do is have the type of incentives provided, or put a penalty on an employer who could not provide a guaranteed annual wage and employment. I mean, wouldn't

« PreviousContinue »