fundamental requirement. Reverend Joseph M. Backer, S.J., one of the most impartial and knowledgeable authorities on unemployment insurance, believes this concept of experience rating to be one of the best and strongest features of our unemployment insurance system.

Individual experience rating provides employers with incentives that are consistent with the objectives of unemployment insurance, that is, the stabilization of employment to the greatest possible extent and the payment of benefits only to those claimants legitimately entitled thereto.

HR-8282 would permit any form of pooled experience rating. If any state, because of political pressure, should change its system from individual employer to pooled experience, the important incentives for employers to stabilize employment, to cooperate in maintaining a sound State Unemployment Insurance law and to assist in the policing of benefit payments would be lost. We submit that such a development would not be in the interest of the country's work force and would penalize the most desirable types of employers.

(2) Disqualification Standards: The proposed disqualification standards of HR-8282 are unduly liberal and abort the basic concept of unemployment insurance to the effect that benefits should be available only to claimants who are atatched to the labor market and who are unemployed through no fault of their own. New York has a reasonable qualification for persons who voluntarily left their jobs or were discharged for cause, to the effect that they must demonstrate their attachment to the labor market by subsequently working in employment on not less than 3 days in each of 4 weeks or have earned remuneration of at least $200.

The prohibition against any disqualification of retiring employes, either partial or full, is particularly unreasonable and imposes an unjustifiable burden on employers with liberal pension plans. At Niagara Mohawk, the great majority of retiring employees receives a non-contributory pension, exclusive of any Social Security benefit, greater than Unemployment Insurance benefits. Taking into account their Social Security benefits and tax advantages, if they receive both unemployment benefits and pensions, their net spendable income during their period of eligibility would be substantially in excess of such income prior to retirement.

We believe this is not consistent with the purposes of unemployment insurance, would constiute an unwarranted drain on reserves and inflicts a heavy penalty on employers with liberal retirement plans. New York has a sensible provision in this area, to the effect that a non-contributory pension will be offset against unemployment benefits while 50% of a contributory pension will be offset with the retired employee receiving the difference, if any, in each case. The proposed law would provide what, in effect, would be a bonus to retirees. At Niagara Mohawk we estimate that this bonus would amount to at least $150,000 annually and would constitute an unjustifiable cost to the customers we serve.

(3) Extending Benefits: While we recognize the need for the extension of benefits beyond 26 weeks in certain circumstances, we believe the provisions of HR-8282 lack the necessary safeguards to avoid abuse. Individual cases of unemployment beyond 26 weeks in times and areas of low unemployment rates suggests a problem of a national social nature unrelated to the basic concept on which unemployment insurance is based. They should, therefore, be handled on an entirely different basis, lest the system itself be broken down by their inclusion.

Any extension of the system along the lines contemplated by HR-8282 should be based on a demonstrated lack of employment opportunities by establishing some type of area trigger point geared to unemployment rates and consideration should also be given to restricting eligibility to primary wage earners only.

(4) Excess Benefit Grants: The bill provides for grants, payable from the "Federal Adjustment Account", to states equal to two-thirds of state benefit costs which are in excess of 2% of the states' total covered wages. We believe this is an invitation to profligacy on the part of the states.

Although the Labor Department claims that this provision will decrease the disparity between the tax costs of employers in various states and thereby eliminate competition between the states based on unemployment insurance taxes, we believe the opposite effect will result. For example, based on the record of the past ten years, New York would have received grants of about $14,000,000 during this period while five competitive industrial states would have received about $451,000,000.

(5) Wage Base: Finally, we would like to express opposition to increasing the taxable wage base to $6600, the same base used in the O.A.S.D.I. program. Unemployment Insurance benefits are not computed on the same basis as Social Security benefits and therefore there is no valid reason for following the O.A.S.D.I. base. To do so now would establish an unwarranted precedent for the future and could result in much unnecessary juggling of state tax rates in the future.

Actually, the function of the tax base in unemployment insurance is the production of tax revenue on an adequate and equitable basis. While increasing the base in New York from the present $3000 maximum to $6600 can be partly offset by appropriate adjustments in the tax tables, a substantially increased burden will nevertheless fall on the highest wage employers with the most stable employment. There is at present a disparity against such employers chargeable to the "social" rather than the "insurance" aspects of the unemployment insurance system. While this is accepted as necessary within limits, we believe these limits would be exceeded beyond reason by requiring an increase of 120% in the New York State tax base.

As illsustrated below, the impact of HR-8282 on this Company's Uneloyment Insurance costs would potentially be very heavy. This data assumes a continuation of present pay scales and no change in the New York experience rate tables or in the Federal tax between now and 1971.

Barring repeal of experience rating in New York, an appropriate adjustment in the rate tables could no doubt materially reduce the above State taxes. However, the payment of benefits to retirees in the amount of at least $150,000 annually, to claimants now disqualified and to legitimate claimants in increased weekly amounts, could be expected to offset the tax table adjustments so far as can now be determined.

RUBBER MANUFACTURERS ASSOCIATION, Washington, D.C., July 21, 1966. Subject: Finance Committee hearings on H.R. 15119, proposed Unemployment Insurance Amendments of 1966.

DEAR MR. CHAIRMAN: The rubber manufacturing industry, which is an employer in every State, strongly recommends that H.R. 15119 be favorably reported and enacted in its present form.

Representatives of this Association testified before the House Ways and Means Committee in opposition to H.R. 8282 (S. 1991). As a matter of reference and information to your Committee, enclosed with this letter is a copy of our statement as presented at that time.

In the judgment of this industry, H.R. 15119-meeting previous objection to H.R. 8282-represents a responsible effort to bring about meaningful amendments to the Federal-State Unemployment Compensation program, yet in a manner that maintains the integrity of the program as it is presently administered by the States.

H.R. 15119 would assist the unemployed by extending coverage to some 31⁄2 million workers and by providing extended weekly benefits during periods of statewide or national recessions.

It would provide for the fiscal stability of the program by a realistic increase in the employer's tax and the wage base of the employee to which this tax is applicable, and by making available additional U.C. tax receipts to help support the extended benefits program.

It would promote equity in administration of the program by granting the States the right to seek judicial review of determinations of the Secretary of Labor as to their compliance with Federal requirements.

The 180 rubber manufacturing companies who are members of this Association thus strongly urge that your committee take early and favorable action on H.R. 15119 without amendment.

Sincerely yours,

STATEMENT OF THE MINNESOTA AFL-CIO FEDERATION OF LABOR

Our organization was extremely disappointed with the bill passed by the House concerning federal standards in the field of unemployment compensation. Over the years, we have fought the legislative battle in our state legislature for proper benefits to the unemployed workers, and the record in this state has been a sorry one. Nothing at all was enacted between 1957 and 1965, and the employer-sponsored proposals during this period actually amounted to decreases in total benefits. In 1965, the weekly maximum benefit was increased, but in order to get this, it was necessary to agree to reduced total duration benefits and to accept various employee-penalizing restrictions and disqualifications.

The constant, and apparently impressive argument to many state legislators, advanced by employers every session is that the legislature should not improve the law because this would be an increased cost of doing business and put local employers at a competitive disadvantage in relation to surrounding states. One state vies with another in attempting to hold unemployment tax costs down, with the result that the unfortunate unemployed worker and his family and the social and national objectives of the unemployment compensation program are forgotten.

This is why we strongly favor federal standards as originally proposed in H.R. 8282, the Mills Bill and S. 1991 introduced by Senator McCarthy and others. In this fashion, all employer would be placed on a basic equal footing. and the past inter-state race to emasculate the original purposes of the unemployment compensation program would be at an end.

Although, after eight long years, our maximum weekly benefit was increased from $38 to $47 in 1965 (and based on 50% of an employee's earnings), it is obvious with statewide (which are substantially less than metropolitan) average weekly earnings in construction of $156, in mining of $127, transportation $130. and manufacturing $117, that the great majority of Minnesota unemployed workers are not receiving anything like 50% of their weekly wage during periods of unemployment which is a commonly accepted and desired standard for weekly unemployment benefits. It is also obvious that it is impossible for an unemployed worker to take care of housing, food, utilities and other non-deferrable living expenses for himself and his family on $47 a week.

With respect to duration, the maximum in Minnesota is 26 weeks. However, since duration in Minnesota is based on 70% of credit weeks, only those workers who have 37 weeks of employment in their one-year base period will be entitled to 26 weeks of benefits, and because of the complexities of determining the base period, an average of 20 weeks of the employee's most recent work experience are disregarded. We therefore strongly favor the proposed benefit and duration standards of the McCarthy bill.

We are also much concerned with the minimum 26 weeks of extended federal unemployment benefits. Anyone familiar with the northern part of our state for a number of years, and up until most recent times, is aware of the tragic problems of unemployed workers on the Iron Range and related areas. The same kind of problem can occur in any area with plant shutdowns and other long-term-unemployment-producing economic events.

We think the events of the last 30 years have shown that unemployment prob lems are national problems, and that the individual states are unwilling and individually incapable of properly handling the unemployment compensation program, unless there be minimum federal standards which all states are quired to observe. The amount of the weekly benefit and the durat are the most essential ingredients of the program, and when the

standards in these areas, it left its bill a mere

We strongly urge that the Senate look

a bill adopting its principles, and then in good, strong unemployment compensati eral standards can be achieved.

Hon. RUSSELL B. LONG,

Chairman, Committee on Finance,

U.S. Senate, Washington, D.C.

IOWA FEDERATION OF LABOR, AFL-CIO,
Des Moines, Iowa, July 20, 1966.

DEAR SENATOR LONG: We understand that your committee is now conducting: hearings on proposals for unemployment compensation reform.

The Iowa Federation of Labor is asking your committee to support unemployment compensation reform as outlined in the McCarthy bill, S. 1991.

We feel that uniform federal standards for the amount of weekly benefits and the duration of weekly benefits, plus a minimum of 26 weeks of extended. Federal Unemployment Compensation benefits, are of utmost importance for the working people of this great nation.

As you know, unemployment benefits are the main source of support when the family breadwinner loses his pob. Most jobless benefits, in most states, are inadequate so we again urge you and your committee to support S. 1991.

Will you please have this statement printed in the record of Committee hearings.

Sincerely,

HUGH D. CLARK, President.

STATEMENT OF FELIX C. JONES, GENERAL PRESIDENT, UNITED CEMENT, LIME & GYPSUM WORKERS INTERNATIONAL UNION

The proposals which this Commitee is considering will make the first major improvements in unemployment insurance legislation since the system was enacted in 1935. This modernization of jobless insurance is urgently needed to restore protections to jobless workers that have been eroded over the years. The United Cement, Lime and Gypsum Workers International Union endorses and supports S 1991.

In 1939, the unemployment compensation benefits when first paid, in no state was the maximum less than 50 percent of the average weekly wage. By mid1965, the maximum weekly benefit was less than 50 percent of the average weekly wage in 40 states. In 1939, the maximum was more than 60 percent of the average wage in 34 states. One state achieves level that today.

The decline of maximum benefits relative to weekly wages can be seen in the chart below:

The effect of this development has been to change the program to a flat benefit system for the majority. The wage-related principle that the individual should receive benefits of half their weekly wage is now confined to lower-paid wage

earners.

In addition, the obsolescence of the present unemployment insurance program is manifested in several ways, such as:

State legislatures have added many new disqualifications which now form a network of benefit denial that entraps both the deserving and undeserving. The growing severity of punishment suggests a spirit of vindictiveness which is utterly inconsistent and inappropriate to a social insurance program.

An experience rating device attached to the tax system under which employers contribute to unemployment insurance funds has helped cut reserves, and states hesitate to impose special taxes not paid by competing employers elsewhere. There is no indication that the states can free themselves to place primary emphasis on benefit adequacy and the needs of the unemployed. Instead, the states continue to emphasize low tax rates, small tax bases, low reserve peril points, and

other characteristics of cheap financing. Experience rating schemes function not to stabilize employment, but rather as an arsenal of tax-reducing techniques. Competition among the states for industrial development continues to emphasize tax-reducing methods and thereby undercut any modernization of the unemployment insurance program.

Rapid technological change has created a class of long-term unemployed who have lost a lifetime skill, a career, with loss of jobs, and these became exhaustees-those whose benefit periods have run out. A Federal program of adjustment benefits, beginning with the 27th week of unemployment until the 52nd week if the worker did not find a job in that time, would continue compensation to the long-term unemployed who had exhausted their state rights. The need for the extended Federal adjustment benefits is due to the prevalence of unemployment beyond six months. This varies at any one time from 200,000 to 900,000 persons depending on general conditions, but it persists at the lower level even in good times. Unemployment of this length is also attributable to factors other than automation and other technological developments; there are shifts in defense production and geographical movements of industry not restricted by state boundaries. The wage loss resulting from such factors can be adequately and equitably compensated only by a national program.

The prospects for a restoration of unemployment insurance and adaptation to new economic needs depends on Federal action, both to remove benefit standards from destructive competition among states, and to provide for national financing of the long-term unemployment that is caused by nation-wide economic displacement. Basic reform is needed to put jobless benefits again into the forefront as our first line of defense against current unemployment and future recession. The individual states are unable to achieve this goal. Enactment of S. 1991 by the United States Senate would achieve this goal.

STATEMENT OF THE NATIONAL COAL ASSOCIATION, PRESENTED BY BRICE O'BRIEN, GENERAL COUNSEL

Mr. Chairman: The National Coal Association is the trade association for producers of more than two-thirds of the Nation's commercially-produced bituminous coal. Basically, it is our position that Congress should reject Administration proposals to enlarge and expand the benefits and to loosen the safeguards against abuse beyond the provisions of the House-passed version of H.R. 15119. The coal industry is fully aware of the fact that predominant philosophy today requires an adequate protection by society against the perils of unemployment which can occur without fault on the part of the individual. We believe H.R. 15119 as passed by the House fully accomplished that objective. To go further, as proposed by the Administration, would in our opinion injure the economy of the Nation by tempting the individual whose personal philosophy is readly adapted to becoming a ward of society.

An appropriate system of unemployment compensation should provide sufficient funds for food, shelter, and dignity for those who want to work but who (for reasons not of their own choosing) do not have opportunity to work. H.R. 15119 does that. The Administration proposal, as embodied in H.R. 8282 and S. 1991, goes much further; it would provide benefits competitive with the urge for dignity.

Specifically, the Administration proposal would grant benefits competitive with wages for persons who quit their employment without good reason-and eliminate the employer's incentive to contest such cases, through elimination of the "experience rating" system.

As to the proposed further increase in the taxable wage base and the proposed lengthening of benefit periods, we believe the objections are the same. If society feels it should assume the burden of furnishing a higher standard of living, and a longer period therefor, then the burden should be borne by society in general and not by those industries which have a heavy wage cost.

The coal industry, through mechanization forced upon it in order to remain competitive with imports of foreign residual oil and natural gas, and with government-subsdized hydroelectric power and atomic energy, has reduced the number of job opportunities per unit of production. Unless this had occurred, coal production would have been greatly curtailed, resulting in even fewer jobs and with lower wages. Even so, coal is still a “job opportunity" industry. Payroll taxes can increase this problem-industries which are highly "wage oriented" are put at a severe disadvantage when payroll taxes are unwisely increased.