V. Benefit requirements S. 1991 goes much too far in establishing benefit standards. To require that a person whose twelve-month base period total earnings are only five times the average weekly wage in covered employment (which for a person with average weekly earnings would represent only five weeks of work) must absolutely be entitled to twenty-six weeks of benefits is most improper, particularly with the large numbers of intermittent and secondary workers in the labor force. Such a requirement would effectively ban variable duration, and the logic of variable duration is well established in a vast majority of the states. It is, simply put, that the question of attachment to the labor force is for all persons other than full-time, year-round employees, a matter of degree. In short, attachment to the labor force is, for many people, not a black or white issue, but rather one of varying shades of grey. Entitlement to benefits based on this attachment is therefore not an all-or-nothing thing, but should be variable depending upon the degree of attachment. VI. Disqualifications Equally bad, in my opinion, is the proposal that disqualifications (except for fraud, labor dispute, and crime) cannot be more than a six-week postponement. Who can argue that a person who has voluntarily quit a job for no cause and who while drawing benefits is offered thoroughly suitable work but who refuses to accept that work should be entitled to draw a full fifty-two weeks of benefits after only a six-week postponement? We all know that because of the way many state laws are written, it is possible for many people to make drawing unemployment compensation benefits a perfectly legal but thoroughly immoral way of life. Why should the Congress mandate state governments to encourage such immorality? Actually, the subject of disqualification is a very complicated one which few people have given adequate thought to. Employment security laws list a large number of disqualifying acts-fraud, labor dispute, criminal acts against the employer, voluntary quits, pregnancy, misconduct, absenteeism, retirement, drawing other social security benefits, etc., etc. Our problem is the ancient one of making the punishment fit the crime, and there is no more reason to have a single uniform disqualification penalty under employment security laws than to have a single uniform penalty for all crimes under criminal law. Would anyone argue for a $50 fine and a week in jail for every crime committed-whether it be exceeding the parking time limit, murder, rape, or shoplifting? Aside from the areas of fraud and labor dispute, disqualifying acts properly (for employment security purposes) should be grouped into three categorieswith the penalty for the three types being quite different. The first group of disqualifying acts consists of those that demonstrate that the person has quit the labor market and does not want to work-such as when a person drawing benefits is offered suitable work and refuses it or when a person voluntarily quits a job for no good cause. Surely there should in this case be no entitlement to benefits until that person has shown by his action that he is in fact back in the labor market. The second category should include persons whose status indicates they are really not available for work, such as those who quit for such reasons as pregnancy, marital reasons, etc. Surely they should not be entitled to benefits until these reasons for not working have disappeared. A third category consists of acts which carry no implication of withdrawals from the labor forcesuch as job misconduct, criminal act against the employer, etc. The penalty here should simply be one that would discourage such acts. A final separate category is that of retirement. This is a difficult one to devise fair and proper laws to cover, but it has become such a common practice (in Hawaii at least) for all persons who retire to start their retirement with twenty-six weeks of unemployment benefits (S. 1991 would extend this to fifty-two weeks) and this has become such a major drain on our fund that we should certainly have freedom in legislating reasonable means to cope with it. VII. Experience rating Two provisions of the bill are a direct threat to experience rating, and as such contain the inherent possibilities of great increases in costs over time. They are the provisions that (1) would permit reduced rates for pooled funds for any reason even reasons unrelated to the employer's experience with unemployment-and that (2) would have the Federal government pick up two-thirds of the cost of all state programs above 2 per cent. Why worry about program cost if the Federal government will pay for most of it? Why worry about costs if savings are not reflected in reduced rates? 65-992-66-44 VIII. Tax base Raising taxable wages and leaving maximum tax rates the same puts all the financial burden of increased taxes on those industries which employ higher paid employees. Some industries could have their taxes doubled, others would have practically no increase. This is obviously inequitable. INTERNATIONAL ASSOCIATION OF MARBLE, SLATE & STONE POLISHERS, Hon. RUSSELL B. LONG, Chairman, Committee on Finance, Washington, D.C., July 14, 1966. DEAR SENATOR LONG: This International Union is vitally interested in S. 1991, hearings on which are being conducted before your Committee at the present time. We believe that it is necessary to set minimum federal standards in the nation's unemployment compensation system if unemployed workers and their families are to be protected. The movement of industry from one area to another and rapid automation have created many new adjustment problems for workers and their families. When the family breadwinner loses his job, unemployment benefits are the main source of support. However, jobless benefits in most states are inadequate even for short periods. That is why we support President Johnson's proposals to amend the law to include broader coverage, fair weekly benefits, adjustment benefits for the longterm unemployed, uniform disqualification penalties, and modernized financing. I respectfully request that this statement be printed in the record of the Committee hearing. Sincerely yours, WILLIAM PEITLER, BROTHERHOOD OF PAINTERS, DECORATORS & Re S. 1991. Hon. RUSSELL B. LONG, Chairman, Committee on Finance, Washington, D.C. DEAR SENATOR LONG: It is regrettable on my part that I cannot arrange to be at the hearing July 25th when the Senate Committee on Finance considers Unemployment Compensation Bill S. 1991. I am however, including herewith my position on Senator McCarthy's pending bill and I respectfully request that this letter be made part of the minutes of the hearing. The 205,000 members of our International Union have expressed their desires and aspirations on the subject of a modernized unemployment compensation federal standard. They have indicated the real need for a much better coverage. More than four million American workers are not now protected and should be brought under the coverage of the law. Also, our people are in real need of more equitable weekly benefits under the law. The present amount of benefit is completely out of line with the present day economy and then there is the real major problem of long-term unemployment and this long-term idleness presents a real and actual problem for many of our people who are the victims when jobs are either automated or when plants or places of employment are transferred. Surely, Senator, there are far-reaching needs for federal standards which would include a modern type of financing. Thank you and the members of your committee in advance for your kind consideration of this statement which I am hopeful will be made a part of the record. Very truly yours, S. FRANK RAFTERY, General President. PRINCETON UNIVERSITY, INDUSTRIAL RELATIONS SECTION, Princeton, N.J., July 13, 1966. Hon. RUSSELL B. LONG, Chairman, Senate Finance Committee, U.S. Senate, Washington, D.C. DEAR SENATOR LONG: Enclosed is a statement signed by 38 academic specialists in the field of social insurance and labor markets with respect to policies they recommend in connection with revision of the Federal-State program of unemployment insurance. This statement was developed by a group here at Princeton with the assistance of colleagues at other institutions last July. It was prepared in anticipation of legislation during this session of the Congress. A total of 42 persons were invited to sign the statement. Replies were received from 39, of whom 38 signed and one declined to sign because of disagreement with some parts of the statement. On behalf of the group I am requesting that the statement with the list of signers be inserted in the current Hearings being held by the Senate Finance Committee with respect to revision of the Social Security Act as it relates to unemployment compensation. Sincerely yours, RICHARD A. LESTER, STATEMENT OF ACADEMIC SPECIALISTS IN SOCIAL INSURANCE AND LABOR MARKETS WITH RESPECT TO UNEMPLOYMENT INSURANCE The Federal-State program of unemployment insurance was initiated 30 years ago with the passage of the Social Security Act. Since then significant changes have occurred in the composition of the labor force, in the character of unemployment, in wages and working conditions, and in the structure and technology of the economy. The unemployment insurance program, however, has not been properly adjusted to meet the present and prospective needs and problems in its field. It has steadily decreased in effectiveness as a means of stabilizing the economy and compensating jobless workers for part of their wage losses. Congressional hearings are scheduled on bills aimed at revision of those parts of the Social Security Act dealing with unemployment insurance, so as to correct significant weaknesses revealed by experience. This statement indicates the kinds of changes that are needed in order to meet today's unemployment problem without upsetting the Federal-State structure of the program. The undersigned make the statement as individuals who have studied the role of unemployment in our economy and not in support of the detailed provisions of particular bills under consideration. If the unemployment insurance program is to serve its intended purposes, at least four improvements in the law are needed. First, employment under the Federal Tax Act should be expanded to include many sections of the nation's labor force already covered by the Federal OldAge, Survivors' and Disability Insurance program. This means at least the inclusion of firms with one or more workers and many of the industries now exempt from unemployment insurance coverage. Second, one or more standards with respect to State unemployment benefit levels should be included in the Social Security Act. Individual States need an indication of Congressional intent with respect to jobless benefit levels and also some protection against the competition of other States for industry in terms of depressingly low benefit levels. Since 1935, the average weekly earnings of workers have increased fivefold, yet the weekly benefit maximums or ceilings in State laws have, on the average, risen only threefold. The result is that the ceilings curtail the benefits of about half of all insured claimants; whereas in 1939 only 2 States had a maximum weekly benefit amounting to less than half the State's average weekly wage, that unfortunate condition applied to 38 States in 1964. In the case of States where a Federal benefit standard or standards would result in especially heavy unemployment insurance costs for a period of time, arrangements for Federal sharing of such extraordinary burdens would serve to support the achievement and continued maintenance of adequate State benefit levels. Third, advances in the economy since the 1930's have made the wage base for the Federal Unemployment Tax obsolete. From 1936 to 1939 the tax base was the total yearly earnings of the person, but in 1939 it was restricted to the first $3,000 in order to conform to the tax base under Federal Old-Age and Survivors' Insurance. Since 1939 the Old-Age and Survivors' tax base has been raised four times, and pending legislation would make it apply next year to the first $5,600 a person earns per annum. Even a $5,600 base would be a smaller fraction of total covered payroll now than $3,000 was in 1939. Clearly the wage base for financing unemployment insurance should be adjusted to take account of the great increase in weekly earnings since 1939. Failure to make such adjustment has meant a growing separation between the benefit base and the tax base and has had some unfortunate consequences for the program as well as the general economy. Fourth, a means must be provided to supply cash incomes for persons with long attachment to the labor force who suffer a long period of unemployment. Such persons are often victims of technological change, occupational obsolescence, or geographical shifts of industry, and their number has grown large. There is need for a limited additional period of compensation beyond the normal State maximum of 26 weeks while determination is being made of such jobless worker's need to shift his occupation, his residence, or the general character of the work he should seek, and while he is being counseled or is actually making necessary adjustments. Such longer-term provision of income seems logically to be a national responsibility, related to training, transfer, early retirement, and other national programs. The Federal-State unemployment insurance program was designed to compensate for short-term joblessness under insurance benefits provided as a matter of right. The program of longer-term provision should be planned and administered on a continuing basis so that individual workers can make definite plans and the program can serve its intended objectives. In addition to these four improvements in the Social Security Act, the unemployment compensation program needs to increase the effectiveness of its operations. In general, the program suffers from high staff turnover, insufficient analysis and research, and an inability to attract and hold capable persons with professional aims and interests. Recent experience has clearly shown the need for more staff training, more attractive promotion possibilities, and more research to improve both the substantive effectiveness and the administrative efficiency of the program. Remedial action along the lines we recommend has been long overdo. Failure to adopt these measures earlier has already had serious consequencies. Given the lag between Federal enactment and full results at the State and local levels, further delay would be most unfortunate. Signed: Leonard P. Adams, Professor and Director of Research and Publications, New York State School of Industrial and Labor Relations, Cornell University. Charles W. Anrod, Professor of Economics, Loyola University, E. Wight Bakke, Professor of Economics, Yale University. Monroe Berkowitz, Professor of Economics, Rutgers-The State University. Philip Booth, Lecturer in Social Work, School of Social Work, University of Michigan. Douglass V. Brown, Professor of Industrial Management, Massachusetts Institute of Technology. J. Douglas Brown, Professor of Economics and Dean of the Faculty, Princeton University. Everett J. Burtt, Jr., Professor of Economics, Boston University. John J. Corson, Professor of Public and International Affairs, Princeton University. Frank T. de Vyver, Professor of Economics and Vice Provost, Duke University. John T. Dunlop, Professor of Economics, Harvard University. F. F. Fauri, Dean, School of Social Work, University of Michigan. Margaret S. Gordon, Associate Director, Institute of Industrial Relations, William Harber, Professor of Economics and Dean of College of Literature, Science and Arts, University of Michigan. Frederick H. Harbison, Professor of Economics and Director of Industrial Relations Section, Princeton University. Seymour E. Harris, Professor of Economics, University of California, San Jacob J. Kaufman, Professor of Economics and Director of Institute for William H. Miernyk, Professor of Economics and Director of the Bureau of |