The CHAIRMAN. But it is a fine thing to keep costs down and to provide for efficient management when somebody can obtain some temporary manpower help for a problem rather than have to carry people on that they don't really need.

Mr. FRANK. You see, we keep these people employed because they may work for one of our customers today and another customer tomorrow, so while they may only be temporary at this one customer's place of business they are working continuously for us, but I appreciate your recommendation.

The CHAIRMAN. You undoubtedly have a problem, somebody decided it is about time to take a vacation and just decide it is time to start drawing unemployment insurance.

Mr. FRANK. That is correct. We appreciate your recommendation and we have been thinking in those terms, it is not always the easiest thing in the world to put that point across. But I appreciate your reading this statement, and I think you have the message, and we thank you very much for giving us the opportunity to appear.

The CHAIRMAN. Thank you very much, Mr. Frank.

Mr. James E. Purcell, the National Association of Buildings Service Contractors.

Mr. PURCELL. Most of the previous witnesses talked about specific things. I would just like to read a general statement.

The CHAIRMAN. All right.

STATEMENT OF JAMES E. PURCELL, PRESIDENT, SPACE CLEANERS, INC., WASHINGTON, D.C.; PRESIDENT AND CHAIRMAN, GOVERNMENT AFFAIRS COMMITTEE, NATIONAL ASSOCIATION OF BUILDING SERVICE CONTRACTORS

Mr. PURCELL. My name is James E. Purcell. I am president of Space Cleaners, Inc., Washington, D.C., and am appearing here also as president of the National Association of Building Service Contractors representing contract cleaners throughout the Nation.

The contract cleaning and building maintenance industry, although a newcomer to the national scene, has had a steady growth pattern and now is approaching the billion-dollar industry mark, employing more than a half million persons in the field. The National Association of Building Service Contractors was created to serve the companies involved in the furnishing of building maintenance service to the business community as well as to the Government.

The contract janitorial service is a natural outgrowth of American economic progress. At the turn of the century, each building owner or plant manager was responsible for maintaining cleanliness. and sanitation. The efficiency of his cleaning operations depended to a great extent upon whatever personal skills he could provide in training his work force. With the changing economic picture the increasing problems involved in labor, maintenance of accurate cost records, hiring, training, supervising-it became increasingly evident that there was a definite advantage in using a specialized cleaning company, equipped managementwise and equipmentwise, to cope with the expansion into special service areas. The pioneers of this new concept are today the leaders in the contract cleaning industry.

Most of these leaders are represented in and by the National Association of Building Service Contractors.

As president of NABSC-and as chairman of the government affairs committee of our association, I am happy to appear here today before you to add my wholehearted support and the support of our membership to the passage of H.R. 15119. We strongly urge the passage of this piece of legislation in the form it now appears before your committee. We have followed the activity of the unemployment compensation amendments in the Congress, and feel that the compromise represented in H.R. 15119 is one to which we can certainly subscribe.

Although the bill means a bigger tax bite from our profit dollar, since the taxable base is broader and the percentage is greater, H.R. 15119 will be far less costly in the long run than S. 1991 would be. We are in firm agreement with the action of the House Ways and Means Committee in eliminating the objectionable features of the Senate bill, such as Federal subsidies to States with high benefit costs. We firmly agree with the action of the House in refusing to tamper with experience rating as a factor in determining unemployment compensation.

The contract cleaners of the United States would oppose any Senate amendment to H.R. 15119, even one which might be introduced to improve the legislation because we feel that the House has given the Senate a bill which appeals to the business community as being a sensible compromise. We strongly support the provision in H.R. 15119 to allow Federal court review of the decisions of the Secretary of Labor. We feel that this provision is more in keeping with American traditions of justice.

Cleaning contractors further are prepared to live with the longer duration of benefits in recession times as provided in H.R. 15119. We feel that the respective States should be allowed to make individual determinations with respect to imposition of unemployment compensation tax on smaller employers just as they have in the past.

As a representative of the contract cleaning and building maintenance industry, and as president of NABSC, I strongly urge the Senate to pass H.R. 15119 without change or amendment.

Thank you.

The CHAIRMAN. Thank you very much, Mr. Purcell.

I would just like to make this observation: that the chairman of this committee always has been in favor of laborsaving devices to improve the efficiency of the Senate since we came here, and he has for some time urged that we acquire the latest equipment to make copies of various and sundry things that come our way.

Now, Mr. Peavy was here 10 minutes ago with a statement of which he had no copy and we have copied it in the 10 minutes which have transpired since that time. We hope to reduce the cost of Government by using some of these laborsaving devices.

I would like to ask that this be made a part of the record at the conclusion of Mr. Peavy's statement.

Mr. PURCELL. I would like to make one comment which in our experience has been a rather ridiculous abuse of the unemployment compensation.

We have over 300 employees and 75 percent of them are part-time employees, a lot of them work for the Federal Government. Within the past 6 months we had an employee who had been retired for disability reasons from the Federal Government who had been working for us at the same time. He had a heart condition, and he applied for unemployment compensation.

We went to and tried to get the hearing thrown out on the basis that the man was not able to work because of physical disability, and we were not his prime employer at the time he became physically disabled.

We lost in the hearing. The man was classified later on on appeal as an observer. We couldn't find out what an observer was, but this is what he could do. An observer, maybe a pigeon watcher or something like that in the park. But, anyhow, we couldn't find a location for him as observer and he took the full benefits and when the full benefits ran out 2 weeks later he appeared at our door and was interested in coming back to work for us. This is an abuse of unemployment compensation.

The CHAIRMAN. Well, Mr. Purcell ———
Mr. PURCELL. This is an exceptional case.

The CHAIRMAN. I don't know whether we can have our cake and eat it, too. I don't know whether we on this committee would be privileged to take the view that we will set no Federal standard on the one hand and try to get at abuse in the program on the other. But if we get into it, I would, of course, be interested in exploring this subject and seeing what we can do to help.

Maybe we can help by just recommending to States they ought to do something and it occurs to me that is one possibility of how we might get these programs to adopt the best features of each. I think I have attended some of their conventions on one occasion and talked about this program about how it could be improved, but I really do think that every member on this committee would be interested in cooperating in a measure to see to it that these people administering the program don't let folks do the kind of thing you are talking about. You say you had a man working for you and doing nothing and they classified him as an observer.

Mr. PURCELL. Yes. We were satisfied to put him back to work and not pay him these benefits. We felt as though if a man was entitled to them, well, fine. But we wanted to put him back to work, so we offered him a job and they came up and classified him as an observer.

We have these in our records, and we have it right here in the District of Columbia. Why, it was so ridiculous that we sort of let it go, but the irony of it was that 2 weeks after his benefits had expired, he could walk from his home to the office to reapply for a job with us. We turned him down.

The CHAIRMAN. Let's see if I understand it now.

This person who was a retired Federal employee

Mr. PURCELL. Federal employee; yes.

The CHAIRMAN. And then he proceeded to apply for a job with you, I take it.

Mr. PURCELL. Yes; he worked for us in the evening part time while he was working for the Government.

The CHAIRMAN. While he was working for the Government?

Mr. PURCELL. Yes, yes. He had a nice job with the Government, making about $8,000 a year but he was an ambitious fellow and he wanted to make some more, so he worked in the evening as a porter in one of the buildings.

The CHAIRMAN. Now, he was working for you as a porter. Were you a contractor hiring him?

Mr. PURCELL. Yes.

The CHAIRMAN. And so then to trigger his unemployment benefits, I take it, you must have found that he was a satisfactory worker or something of that sort, I take it. Did you dismiss him or did he voluntarily quit?

Mr. PURCELL. He had a disability. He retired from the Government on disability. He had a heart condition, was retired and was told he could not go back. This was true. It was substantiated by a medical statement and so forth.

The CHAIRMAN. Yes.

Mr. PURCELL. But people with heart conditions sometimes recover, but he got his disability from the Government-disability retirement. He had been with them 25 years or so. Then he applied for unemployment compensation as a result of working for us as well, and his request was allowed.

The CHAIRMAN. Now, the unemployment compensation did not result from the Government employment, that related to work of his employment by you?

Mr. PURCELL. Yes.

The CHAIRMAN. How did he become unemployed, did you fire him or did he quit?

Mr. PURCELL. No, sir: he became unemployed as a result of submitting a medical certificate that he was no longer able to work.

The CHAIRMAN. So he submitted a certificate to the Government, I take it?

Mr. PURCELL. He submitted a certificate to us as well.

The CHAIRMAN. He was no longer able to work and he therefore wanted to draw his unemployment?

Mr. PURCELL. He applied for unemployment compensation shortly thereafter, and we took this medical certificate down showing he was unable to work, and they said they could classify him as an observer. The CHAIRMAN. So, you either had to pay him the unemployment compensation insurance or put him on the payroll as an observer? Mr. PURCELL. Yes; and we had no jobs as an observer.

The CHAIRMAN. The work he had been doing for you was janitor work?

Mr. PURCELL. Yes, sir.

The CHAIRMAN. And you were required, in other words, you felt about the best, to make the best out of a bad situation, about the best you could do would be to provide him a chair to observe some other janitor working?

Mr. PURCELL. Yes; this would create morale problems among the others.

The CHAIRMAN. This concludes this morning's hearing, and the committee will meet tomorrow morning at 9 o'clock.

(Whereupon, at 12 o'clock noon, the committee recessed, to reconvene at 9 a.m., July 21, 1966.)

UNEMPLOYMENT INSURANCE AMENDMENTS OF 1966

THURSDAY, JULY 21, 1966

U.S. SENATE,

COMMITTEE ON FINANCE,
Washington, D.C.

The committee met, pursuant to recess, at 9:05 a.m., in room 2221, New Senate Office Building, Senator Russell B. Long (chairman) presiding.

Present: Senators Long, Anderson, Douglas, Gore, Talmadge, Hartke, and Williams.

Also present. Tom Vail, chief counsel.

The CHAIRMAN. The meeting will come to order.

Until today most of the witnesses who have testified have urged the adoption of the House-passed bill.

Today we hear a different viewpoint. We will hear from those who feel that the House-passed bill is not satisfactory and should be strengthened by the addition of Federal standards governing the benefits which should be paid under unemployment compensation.

Our first witness is Mr. George Meany, president of the American Federation of Labor-CIO.

Mr. Meany, we are very happy to have you with us today. We know you have traveled a long way to be here, and we very much appreciate your presence. We hope you will just proceed in your own fashion, and take such time as you think necessary.

STATEMENT OF GEORGE MEANY, PRESIDENT, AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS; ACCOMPANIED BY ANDREW BIEMILLER, LEGISLATIVE DEPARTMENT; AND RAY MUNTS, SOCIAL SECURITY DEPARTMENT, AFL-CIO

Mr. MEANY. Thank you, Mr. Chairman. May I express the appreciation of the AFL-CIO for the opportunity of presenting our views on the need for improving the Federal-State unemployment insurance system.

The CHAIRMAN. If I might interrupt you, I would like to note that Mr. Andrew Biemiller is with us as one of your assistants.

Mr. MEANY. And this is Mr. Munts of our social security depart

ment.

As I am sure every member of this committee understands fully, we have some concrete views on this matter and a great deal of experience in the main, highly unsatisfactory experience with the present setup.