the same type of theory work if such an incentive work in the Unemployment Compensation Law?

Mr. FISHER. Senator Hartke, you have that penalty today in the experience-rating program.

Senator HARTKE. HOW?

Mr. FISHER. If you do not provide stability in your employment, you are penalized through additional unemployment taxes, you see. So now, I do not believe it is needed to do more. I do not think you can tax a business out of business either.

Senator HARTKE. I am not interested in taxing a business out of business.

Mr. FISHER. I know you are not.

Senator HARTKE. I am interested in providing stabilization of employment. I do not want to proceed too far down that line. The only thing about it is, you might find yourself meeting yourself one of these days before one of these committees when we come back to what is ultimately going to be a serious question, and that is whether you are going to have a guaranteed annual wage through a guaranteed annual wage system or a guaranteed annual employment system. Mr. FISHER. I would like to accept that challenge.

Senator HARTKE. Yes.

The Senator from Kentucky.

Senator MORTON. Along this line, Mr. Fisher, I think you made your point clear when you referred to those who poured the concrete. This is not in your business normal for you to keep 20, 25 people pouring concrete. This was an unusual situation. You met it, and I think the question of a national wage or a guaranteed wage, guaranteed annual wage, we must take into account differences in industries. In certain industries, this is not a problem, but in many industries, where you have a high seasonal fluctuation or even, let us take the automobile industry, where you have period of retooling of some several months, this year longer than usual perhaps, because of Mr. Nader and others, but the fact remains that you cannot just say that everyone could guarantee an annual wage. We would have a lot of companies that would go out of business, and you would have a lot of jobs lost if you did that.

I do not think the argument or the position that you made necessarily makes an annual wage inevitable, because I think the two problems are entirely different, and I think the illustration of those in pouring the concrete clearly indicates that.

I know that Minnesota Mining or Minnie Mouse, as I call it, has a lot of diversified products and diversified operations.

At the same time, I do not think that you keep those who pour concrete on as a regular part of your business. This was an unusual and a special situation.

Mr. FISHER. This is correct, Senator Morton. It is unusual, and we do have lots of operations that have seasonal implications.

Senator GORE. I concur in the observations of my colleague from Kentucky.

As I understand your point of view in advocating the continuation of employer experience rating, you wish to give an incentive to stabilize employment.

Mr. FISHER. Emphasis on employment rather than unemployment,

Senator GORE. Like Senator Morton, I recognize that some types of industry, many types of industry, can take advantage of this, and I know from my personal experience that many do, in order to take advantage of it, they hesitate to lay a man off. They try to find something for him to do because if they maintain a satisfactory employment record, then their rate of taxation for unemployment compensation is reduced.

Now, this is one program with which I have been closely associated for many years.

As commissioner of labor in my State some years ago, I inaugurated the administration and helped write the act which set up the first unemployment compensation program in my State. Therefore, having set up the program in my State and having been intimately involved in it, I have, as a legislator, closely followed it, and I have been greatly interested in it.

I would certainly recognize from a practical standpoint the merits of the employer rating system. I think it does contribute to stability of employment.

Mr. FISHER. We know it does, Senator.

Senator GORE. This must be measured, however, against the I will not say unfair burden, but the disproportionate burden upon those types of businesses described by Senator Morton as being seasonal in nature or in which because of retooling, et cetera, there are periods of maximum employment and periods of minimal employment.

I have always, even though I have been intimately associated with this program, been torn between the merits and demerits of this system. Now, you have described well the merits of it. As an experienced businessman, what would be your attitude toward these businesses, like the automobile industry, like the feed business, in which Senator Morton and I in our private lives used to be associated? In the wintertime the cows have to be fed. In the summertime, they can graze. How does a feed manufacturer keep steady employment? Mr. FISHER. Senator, in my opinion, this is the cost of those businesses doing that kind of a business, and they ought to assume those costs or they ought to in some way provide for employment to take up the slack where the slack exists. But these are individual situations that ought to be absorbed and handled by the individual employer, and an incentive ought to be provided so that he will do something about it personally in the individual instance.

Senator GORE. Well, Mr. Fisher, the other argument is that these are unavoidable situations, and the individual business in this particular case ought not to bear all the burden but instead it should be absorbed in the entire unemployment compensation system. Maybe we can make the same arguments supporting the same point. It depends on who bears the burden, or to put it another way, whose pocketbook is open.

Mr. FISHER. Well, this is the cost of goods produced by that company, in my opinion, and they are the ones that ought to handle the problem or be given a less tax forgiveness in this particular kind of an instance. We find to be true, you see, in our seasonal business, as you know or maybe do not know, because we have a roofing granule

operation where we provide materials that go into the construction of roofs, the ceramic-rock-type material.

Well, in our part of the country, especially in Minnesota, you do not put on very many roofs in the wintertime. So, as a roofer, we do have a seasonal fluctuation of employees. The employment count goes up and down, based on the seasonal fluctuation.

We have paid unemployment compensation for a good many years before we became smart enough to realize that we could make pallets for moving materials around in this plant during the wintertime, so we put the people to work that were working on the roofing granules in the summertime and making pallets in the wintertime, and we eliminated these costs. This is the type of thing employers will come to if they find it is going to be costly not to.

Senator GORE. I agree with you. I have seen it; I have witnessed it, and in numerous instances. You have cited another.

Well, now, just as the incentive system operates to encourage stability of employment on the part of those industries and businesses in which it is possible, the high costs to the employer who cannot attain a merit rating surely encourages him to lay off a man at the very first possible opportunity.

Mr. FISHER. This is true. But at the same time, if the high cost of unemployment compensation exceeds the cost of trying to find some other work for him, then, of course, he is going to try to find some other work for him.

So, I think the incentive really ought to be increased rather than lessened in this area, because the name of the game is putting the fellow to work; isn't it, really?

Senator GORE. Some of these times, I would love to invite you out to my apartment for dinner some night and then get another gentleman who is in the type of business that cannot take advantage of the merit system, and then I will sit back and enjoy the argument.

Mr. FISHER. I would really like to do it because, you see, you have to work this into the price of the product.

We have both kinds in our business, and we scramble with both types. I, unfortunately, or fortunately rather, state to you that my company is expanding rapidly, and, as a result, we are able to maintain a high level of employment. Mr. Hartke knows this to be true, in Indiana certainly. We hope that this is always going to be the emphasis that our economy is going to be an expanding economy so that we can always maintain a high level of employment. This is really the answer.

Unemployment compensation, guaranteed annual wage, all these things are a negative approach to the problem. The positive approach, in my opinion, is to maintain the economy at such a level that there is not any unemployment, that we maintain jobs for people because people want to work. This is the first premise we have to operate on, in my opinion.

Senator GORE. I agree with you completely on that.

I thank you.

Senator HARTKE. Mr. Chairman, I would like to say that the 3M's is a progressive organization, and I in no way want to take away from it. These examples which you cite are very commendable, and certainly could be extended nationwide into every industry; even

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though those which are capable of it today are not trying to do it in many cases, unfortunately. I do not think necessarily, it is a case of intentions, it is probably as much neglect as anything else.

But the point of it is, as I understand the basic theory of stabilization of employment, that one of the items upon which it is premised is not employment for the job's sake alone, but rather providing a steady income to the employee; isn't that the whole idea of stable employment?

Mr. FISHER. I do not think you can separate the two, sir. Senator HARTKE. This is what I am trying to say, really. When you talk about stabilization of employment, you are talking about providing for stabilization of income.

Mr. FISHER. Well, you are doing more than that, sir. I do not think providing income without a job is very dignified.

Senator HARTKE. I think that providing income without a job is not alone foolish but it is also very dangerous, I agree with that.

But the point also remains: If the incentive system works toward stabilization of employment under the workmen's compensation law, why wouldn't it then be advisable to provide for an overall incentive system? We could provide such a severe penalty that unemployment compensation would no longer be attractive to anyone and, at the same time, provide for continuous employment for all workers.

Mr. FISHER. Well, I think your premise is a little faulty, in that you are assuming that they have a job, just because you are going to pay them a wage. This is not necessarily true, and I do not believe

Senator HARTKE. I am assuming they are going to receive wages because they have a job.

Mr. FISHER. But you cannot reverse it, sir. You cannot assume they are going to have a job, because they are receiving wages.

Senator HARTKE. I understand that. But the point about it is that if you have an incentive to stabilize employment, wages will be stabilized with them, will they not?

Mr. FISHER. If you have a job.

Senator HARTKE. If you have a stabilization of employment.

Mr. FISHER. This is true of those who have jobs to provide, right; this is true.

Senator HARTKE. If you have

Mr. FISHER. I agree with you.

Senator HARTKE. If you have labor stabilized, if you have all of the workable labor force employed and stabilized on an annual basis so they are not in a seasonable category, such as Senator Morton implied, the net result of it will be that you will have a guaranteed annual wage for those people.

Mr. FISHER. In effect, this is what occurred.

Senator HARTKE. That is right.

Mr. FISHER. But you do not have to force this, because this will be true regardless of legislation or anything else.

Senator HARTKE. All right. But the incentive method-all I am coming back to is that if the incentive method is good enough under the unemployment compensation laws to achieve this type of individualized result, why would it not also be good enough to achieve the overall effect?

Mr. FISHER. I just cannot conceive that the two are compatible. I do not believe that the unemployment compensation

Senator HARTKE. I do not want you to see it and accept it as a challenge, but I think the logic, if it is logical on this basis, has to be logical on the broader spectrum.

Mr. FISHER. Well, I would like to debate that with you sometime. Senator HARTKE. I am not interested in debating it. If you want to think about it, that is all right.

Mr. FISHER. All right.

Senator HARTKE. Let me ask you one other question.

One important and significant factor involved in these examples to which you refer, and the thing to which you alluded a moment ago is that we have an expanding economy now, and have had for the last 512 years, although there are some dark clouds on the horizon at the moment. Whether they are going to materialize into a storm is hard to say, but they are there.

The truth of it is: If you had not had an expanding economy you probably would not have been able to achieve all of these results, or possibly any of them; isn't that true?

Mr. FISHER. I think they could, in some instances.

Some of these items I have cited occurred much prior to 5 years ago, and it has been our contention that this our responsbility. When we assumed the responsibility of employing an individual, we like to think that we just do not have him come and go like the wind; that we have a responsibility to try to continue that person's employment, either with us or with someone else.

Now, we are not able to achieve this in every instance, but I believe if all employers made the same kind of an effort that this could be improved upon a great deal, sir.

Senator HARTKE. And if all employers do not make this kind of effort, which you have to admit they do not, isn't that true

Mr. FISHER. Well, a good many of them do it, more than I thought did.

Senator HARTKE. Yes, I know. But a great many of them do not do it.

Mr. FISHER. A lot of them.

Senator HARTKE. And a great many of them are not in position to do it.

Mr. FISHER. Where it is possible to do it.

Senator HARTKE. In other words, you have those who can and won't, and you have those who can't.

Mr. FISHER. In the communities which are relatively small, and you are the principal employer, it is a little difficult to work out this problem.

Senator HARTKE. So if this is good for 3M, why isn't it good for the country as a whole? Why isn't it good as a social approach? Mr. FISHER. The securing of employment?

Senator HARTKE. Yes.

Mr. FISHER. Well, that is the effort being emphasized here.

Senator HARTKE. All right. I am just going to say that if the incentive system on the rating experience is a good method here, I would say that it certainly deserves consideration for effectuating the requirements of the Employment Act of 1946.