We are pleased that your Committee is making a review of these developments. We strongly and sincerely urge Committee approval of the provisions of S. 1991. Thank you for this opportunity to submit our views. Very truly yours, GORDON M. FREEMAN, NEW YORK STATE AFL-CIO, Senator RUSSELL B. LONG, Chairman, Senate Committee on Finance, DEAR SIR: The New York State AFL-CIO representing more than two million organized workers in New York state wishes to go on record in support of amendments to the Federal unemployment compensation program as embodied in the bills S. 1991 and HR 8282. It is our position that such legislation is badly needed to correct inequities and failures in the New York unemployment insurance system. It takes but the simplest arithmetic to realize that this system falls far short of the needs of our economy and our under-employed: 1. According to most recent statistics published by the New York State Divísion of Employment (Employment Trends, May, 1966) the total unemployment in May 1966 amounted to 325,000 or 4.1% of the state's labor force. This figure is obviously too optimistic since it fails to reflect an invisible army of unemployed composed of those people who were forced out of the labor market some time ago, who are willing and able to work but have become too discouraged to search for a job. Adding this "invisible army" to the official statistics would raise the unemployed to some 500,000 or 6% of the total labor force. However, in the same month of May, 1966, only 132,500 persons received unemployment insurance benefits, thus leaving some 60% of the unemployed entirely outside the protection of the law. This is due to a number of reasons: lack of coverage of many workers, exhaustion of benefits, harsh eligibility and disqualification rules, to mention only a few. 2. The erosion of our unemployment insurance program is especially visible in the area of benefits. In 1939, the national average weekly wage in jobs covered by unemployment compensation was a little over $25. Most states-and New York was among them-provided maximum benefits of $15, which was then 60% of the average weekly wage. The weekly wage loss suffered by the unemployed person receiving the benefit was about $10 a week. In 1965, the New York State average weekly wage in covered employment was about $120. Thus, the maximum benefit of $55 is only 46% of the average weekly wage as contrasted to 60% in 1939. The unemployed worker who is fortunate enough to receive the maximum benefit still will suffer a weekly wage loss of $65 or more, as contrasted with a $10 loss in 1939. Neither does our unemployment insurance system adequately meet its proper role as a preventive of poverty. The war on poverty has used a rough average of $3,000 a year for a family of four as the pivotal measure below which poverty should be assumed. Reduced to a weekly figure, this would require an income of more than $57 a week for the elimination or prevention of poverty. However, the average full-week unemployment benefit in May, 1966, was only $41.49 (New York State Division of Employment, Operations. May, 1963, p. 19), which is far below the out-of-poverty level for the overwhelming majority of the unemployed, especially in view of the fact that in that month only 32% of new beneficiaries were eligible for the maximum rate of $55 (Division of Employment, Weekly Summary of Key Statistics, July 7, 1966). 3. The New York State unemployment insurance law is one of the harshest in the nation with respect to depriving workers of benefits through disqualification procedures. In cases of voluntary separation without good cause, refusal of suitable work or misconduct. the payment of benefits is stopped until after the particular worker either works for at least three days in each of four different weeks or else until he earns at least $200. Thus this harsh, abrasive and vindictive provision of the law punishes the unemployed worker even when his continued unemployment ceases to be a matter of his own doing and becomes the result of economic dislocations over which he has no control. No wonder that the number of disqualifications increased in New York state from 385,871 in 1959 preceding the year when the new disqualification provisions of 1960 were put into effect, to 428,987 in 1965, which is utterly inconsistent and inappropriate to a sound social security program. 4. The present structure of the New York state provision for 26 weeks of maximum duration of benefits is clearly inadequate. The bills S. 1991 and HR 8282 provide a minimum of 26 weeks of benefits with 20 weeks of employment and a maximum of 26 weeks of federal benefits to supplement those provided by the states. These changes are necessary to reduce the excessive number of exhaustees which totaled 17.4% of all beneficiaries in 1965. The continuing large number of persons exhausting benefit rights-121,218 in 1965, 152,208 in 1964, 166,945 in 1963, 153,000 in 1962 and 207,000 in 1961-clearly justifies the extension of benefits. The proposal to establish Federal unemployment adjustment benefits is urgently needed to deal with the problem of long-term unemployment, especially in areas of substantial and/or persistent unemployment. According to most recent official statistics of the U.S. Bureau of Employment Security (Area Trends in Employment and Unemployment, March, 1966), there are in New York four labor areas of substantial unemployment and eight areas of persistent unemploy ment. The impact of technological and economic changes on these areas is such that 26 weeks of benefits are not sufficient to enable displaced workers to find alternative employment. A U.S. Department of Labor study of claimants who exhausted benefits under the TEUC program, 1961-62 (Special TEUC Report No. 2 BES No. U-225-2, Feb., 1965) found that in New York state 72% of the exhaustees were still unemployed after exhaustion of extended benefits under the TEUC program. Clearly, a period of 26 weeks in addition to the duration by state law is essential to provide the measure of protection which the long-term unemployed need to help meet the difficulties facing areas where alternative jobs are difficult if not impossible to secure. In view of all these and other shortcomings of our state unemployment insurance system, we most emphatically favor the intent and provisions of the bill S. 1991. It will extend protection to thousands of workers not now covered. establish a Federal program for the long-term unemployed, provide minimum standards for benefits and duration, set up uniform standards for eligibility and disqualifications, increase the taxable wage base so as to obtain a more equitable and adequate financing of the system and provide additional Federal funds to assist the states. Unfortunately the bill HR 15119 which passed the House of Representatives does not meet the objectives of the original bill to extend and improve the unemployment compensation program. For that bill fails to provide for Federal unemployment compensation standards, reduces the number of employees to whom new coverage would be extended, cuts the original wage base proposal from $5,600 in 1967 and $6,600 in 1971 to $3,900 in 1969 and $4,200 in 1970 and does not contain the supplemental benefits provision which would extend benefits for an additional 26 weeks and instead provides for only 13 additional weeks restricted to times of unusually high national unemployment. We therefore earnestly urge this committee to report a bill to the floor of the Senate which would restore the objectives of the original bill and make our unemployment insurance system responsive to the needs of our times. We also respectfully request that this statement be made a part of the hearing record on the respective bills before your committee. Sincerely yours, RAYMOND R. CORBETT, President. HAWAII STATE FEDERATION OF LABOR, AFL-CIO, Hon. RUSSELL B. LONG, Chairman, Committee on Finance, Washington, D.C. DEAR SENATOR LONG: On behalf of more than 30,000 members of the AFL-CIO in the State of Hawaii, I would like to express our feelings on H.R. 8282 and S. 1991-Unemployment Compensation The Hawaii State Federation of Labor, AFL-CIO wholeheartedly endorses the above two bills. The State of Hawaii is most fortunate that it currently enjoys the lowest unemployment percentage in the United States. However, many of our working men and women have experienced hardship and personal embarrassment in trying to receive unemployment compensation which is justly due them. It is most difficult to explain to children in our State or any of our Sister States why there is no meat or bread to go along with rice or potatoes. When the need arises for a member of the rank and file to depend on the benefits of the UC program, it matters little what part of the country you live in. We cannot stress too strongly the need for uniform federal standards for the amount of weekly benefits; the duration of weekly benefits; uniform disqualification penalties; and a minimum of twenty-six weeks of extended Federal UC benefits. We feel that implementation of a strong and just UC program would strongly enhance the President's Poverty Program, which we strongly endorse. We would like to emphasize the point that in any legislation passed regarding UC programs, that any new federal legislation must not reduce the standards established by a State when that State's UC program is higher than the minimum payment program established by Congress. We respectfully request that our position on H.R. 8282 and S. 1991 be printed in the record of your Senate Finance Committee. Sincerely, GORDON H. BEACH, Executive Secretary-Treasurer. NEW MEXICO STATE AFL-CIO, Albuquerque, N. Mex., July 20, 1966. Hon. RUSSELL B. LONG, Chairman, Committee on Finance, Washington, D.C. DEAR SENATOR LONG: It is my understanding that the Committee on Finance will be meeting soon concerning Unemployment Compensation. Some of the problems that we run into in the State of New Mexico concern denial of payment to a claimant for sundry reasons, therefore, forcing the claimant to go to an Appeal Board. In some cases it has been felt that the hearing officers or possibly the judges do not hear the case of the claimant with an open mind, rather, that they are "Employer Orientated". It is the feeling that possibly some broader rules to collect payment could be effected. Our minimum rate in our State is $36.00 per week, with a maximum of $1080.00 or thirty weeks. We feel it imperative that these rates be brought up, however, this is a matter for State Legislature to act upon. If it would be possible for the Federal Government to subsidize in weekly benefits and also in length of benefits it certainly would be to the advantage of the working man, because the way that benefits stand today and the concern of this nation and the poverty program, we can certainly see that these benefits put the worker and his family in a substandard poverty program. It is our sincere desire that your Committee would be able to make great strides in improvement of Unemployment Compensation. I would request that this letter be printed in the record of Committee hearings and if there should be any further information that we could give you from this office, please do not hesitate to advise. Sincerely, (Mrs.) BILLIE L. SPONSELLER, President. Mr. Toм VAIL, General Counsel, Senate Finance Committee, Senate Office Building, Washington, D.C. VIRGINIA STATE AFL-CIO. DEAR MR. VAIL: On behalf of the Virginia State AFL-CIO I would like to submit for the record the following statement in support of S.B. 1991. I might say that a similar statement was made by me before the House Ways and Means Committee where a record is available of my statement. We support the purposes and provisions of S.B. 1991, and I will describe some of the experiences we have had in Virginia that have led us to this position. First, I would like you to direct your attention to the climate of feeling and concern that settles over a state legislature when it grapples with such matters as state protective labor legislation. At such times there are many concerns that rise to the surface in addition to the objectives of the law under consideration. The state, rather than thinking itself one of many, becomes insular, selfpreoccupied, and concerned with its competitive position. It has been pointed out to your committee that this preoccupation is what inhibited states from venturing into the field of unemployment insurance in the first place-a hesitancy that was not broken until Congress paved the way with the Social Security Act. From your vantage point of concern with national problems, it may seem difficult to understand, but I assure you from my experience with state legislation that these pressures are still with us year after year. Every time the question of unemployment benefits for workers comes before the legislature, there arises a smokescreen of concern over the effect any changes will have on employer tax rates, over the state's industrial climate, over business incentive to enter and expand in Virginia. With this line of reasoning, it is possible to justify the weakest benefit provisions, the tightest eligibility requirements, the most severe disqualifications. The state officials who are responsible for the administration of the program seem to us, in their recommendations to the legislature. more concerned with low tax rates than with the plight of unemployed workers who come through their doors. By their standards, it should be a matter for joyous celebration that we have now the lowest unemployment insurance tax rate of any state in the United States. It is true that Virginia is enjoying relatively good times, and we have no objection to lower tax rates when the full standard rate is no required for funding purposes. But it should be a matter of concern to officials in Virginia that the rapidly disappearing unemployment insurance tax is not only a reflection of employment levels, but is also a reflection of our benefit structure. Our weekly benefits are among the lowest in the country; the duration of our benefits is among the shortest of all the states; our disqualification penalties rank with the most severe in the United States; and our test of attachment to the labor force has the distinction of being the most limited and restrictive of all. I do not see any prospects for change in this situation so long as the test for success is "how much cheaper can we make the Virginia law than that in any other state?" By such a test our law is a complete success. Unless the Congress defines what the objectives of the program are, benefit adequacy will have little influence on the public policy in our state, being completely subordinated to these other considerations. I do not want to leave the impression that this attitude toward unemployment insurance is of recent origin. It has not been invented suddenly. It has been made operative in little bits and pieces over the course of many years. When the Virginia State AFL-CIO points out that benefits are falling far behind the movement in wages, an accommodation is worked out in which a small and insufficient adjustment in the maximum is made but at the same time a more restrictive wage qualifying requirement or disqualification provision is also added. There is no doubt that our law has evolved; it has changed with the times. It has changed so that benefits have become a smaller and smaller part of wages lost and fewer and fewer people can qualify for benefits. In the beginning the maximum in Virginia was only $15 but this was 74 percent of the average weekly wage in the state. Yes, the maximum has been adjusted upward six times until it is now $42, but that $42 is only 46 percent of the average wage. The measure of decline in our benefits as wage insurance is from 74 to 46 percent. We urge the committee to enact the benefit provisions of S.B. 1991. By setting the maximum at two-thirds of the average weekly wage, this bill will go a long way-not all the way-but a long way toward restoring the original wage insurance principle that has all but disappeared in Virginia. A great deal is currently being made of the prosperity in Virginia and when many people are working there is a general feeling of well-being. However, this feeling is not shared by all and we cannot forget that last year almost 15,000 people among the unemployed, who had been fortunate enough to establish their eligibility for benefits, still could not find a job before their benefits ran out. A major reason for this is simply that the benefit duration is too short-in our state we cut off benefits as early as the two or three states with the most restrictive duration provisions in the United States. The typical worker who uses up all his benefits has been cut off after 16 weeks. It is true that some workers can qualify for 26 weeks, but there is another provision that limits total benefits to only one-fourth of base period earnings, and it is this formula that cuts many workers off with less than 26 weeks. We urge your support of the duration standard in S.B. 1991 because it will require that our law be brought more in line with others that provide 26 weeks of benefits for most of their eligible claimants. I know personally a lot of workers in Virginia who have tried to make out on unemployment insurance which averages about $27 a week. I can assure the committee that when you have tried to keep body and soul and family together on that little for 18 or 19 weeks, and then you have your benefits cut off altogether, you are well on your way to the poorhouse. You are getting ready to join the poverty war on the wrong side of the battle line. I must again repeat that despite this sorry record of performance, the unemployment insurance program in Virginia is widely regarded as a success because the only test of success that is being applied to it is how little does it cost? In 1964 a whole series of amendments were offered and the package, as a whole, was about typical; a two dollar raise in the maximum, and two week raise in the duration for some persons. Offsetting this, however, were provisions that dropped lower paid workers at the bottom of the benefit schedule, and other provisions that tightened the wage qualifying requirement so that many peoplewe were never told how many-would not be able to qualify for benefits. The effect of those last two requirements was to eliminate from entitlement workers in whole segments of our economy. Virginia went further than any other state, possibly excepting Wyoming, in limiting the definition of who is in the work force. The law was amended to require that base period earnings be as high as 46 times the weekly benefit amount. It hasn't taken long for the effect of those changes to become apparent, and I must emphasize that these changes had the support of the state officials who administer the system. One group of workers knocked out of the program were those in the tobacco fields. Most of them do not have any opportunities for employment except working in tobacco. They work two or three quarters of their base year in tobacco and make anywhere from $700 to $1500. This is their income for the year. Thata is why they are poor people from any definition of poverty that has been developed by the Council of Economic Advisors, the Office of Economic Opportunity, or the Social Security Administration. At the very time when we are concentrating nationally on the problems of poverty, the state of Virginia set about, without making explicit even its objective, to eliminate these people from any claim on unemployment insurance. I have submitted to the Ways and Means Committee of the House of Representatives many copies of claims of these people from the neighborhood of Danville, Virginia. They used to draw benefits, but now, thanks to the requirement that their base year earnings be 46 times their weekly benefit amount, they are denied benefits. Here are four examples for your records: |