PACIFIC AMERICAN STEAMSHIP ASSOCIATION, Re H.R. 15119 unemployment compensation. Hon. RUSSELL B. LONG. Chairman, Committee on Finance, Washington, D.C. DEAR MR. CHAIRMAN: As spokesman for the West Coast maritime industry, I am asked to convey to the Senate Finance Committee our endorsement of the House-passed version of the Administration's bill to modernize the Federal unemployment statutes. We are not convinced that the Federal Government's responsibility in this field should be increased; however, if this must be, H.R. 15119 brings it about with a minimum of dislocation of historic Federal/State relationships. Very truly yours, RALPH B. DEWEY, President. STATEMENT OF WILFRED H. HALL, EXECUTIVE VICE PRESIDENT OF THE NATIONAL OIL JOBBERS COUNCIL My name is Wilfred H. Hall. I am submitting for the record the following statement on behalf of the National Oil Jobbers Council. My position is that of Executive Vice President of the National Oil Jobbers Council, with offices at 1701 K Street, N.W., Washington, D.C. The National Oil Jobbers Council wishes to go on record as supporting the modifications in Federal Unemployment Compensation Programs approved by the House in its H.R. 15119 with certain alterations. We offer this statement as constructive suggestions which will help keep our Nation strong and flexible. The National Oil Jobbers Council represents the Nations approximate 12,000 independent oil distributors through amalgamation of 34 state or regional organizations. A list of these associations is appended. Surveys show that over half of these small businessmen sell under 1 million gallons of gasoline or fuel oil per annum. This would indicate gross sales of under $200,000 a year, mostly at wholesale. Operating results surveys, attached) illustrate that the cost of product runs about 81%, leaving a gross before expenses of less than $38,000, from which labor, truck expense, rent, etc, must be taken. Profits for this group run 3-6% before taxes, or $6,000 to $12,000 annually, from which new equipment and growth capital must be provided. These 6,000 oil firms are typical of thousands of small businessmen in other lines of endeavor whose interest the Congress should carefully consider. Both large and small jobbers have a direct interest in 141,000 service station outlets through which they sell petroleum products. We feel that the newer House version (H.R. 15119) alleviates most objections that the larger wholesalers had to the earlier H.R. 8282 (and S. 1991). For simplicity, we should like to express ourselves in two areas. First, why we feel the Senate should consider modifications made in the House, and secondly, we should like to suggest modifications which might be made to further improve the Bill. 1. Features which we feel should be considered favorably a. Retention of experience rating system. This feature encourages continuing employment of an individual, and serves as a small reward to firms who gear their businesses to full year employment. Though the oil business is seasonal by nature, jobbers have thus far successfully provided full time employment in most cases. We feel that they should be encouraged to do so by a continuation of the experience rating which lowers contribution by those employers who make the effort and keep individuals from the necessity of becoming unemployed. b. Retention of the disqualification of benefits to those persons who quit work without good case, are fired for misconduct or who refuse to take suitable work offered.-Employees who receive benefits from the Federal (or State) Government as a result of their dishonesty, misconduct or false pride encourage these qualities in others. A law designed to reward these actions has the potential of undermining morality itself. Expansion of theft and dishonesty and an inordinate increased cost resulting from fraudulent claims for unemployment benefits are bound to result from allowances of this proposal. The present system of disqualifying persons from benefits who fall into these categories is just and proper, we feel. c. Payment of claims should be limited to recession periods.-Presently, unemployment is at its lowest level in years. Job retraining, relocation, and opportunities for service and education are available to nearly all who wish to avail themselves of opportunity. It would appear ill-advised to design a system to compensate those who appear to be without motive or desire to improve themselves and/or seek employment. If Federal benefits are to be extended, the payments into the fund in periods of high and full employment can cushion the affects of any future recession, thereby helping citizens and businesses unable to cope with any deep and wide recessional period. d. Payments and hence benefits should not be doubled because of the effects on businesses.-Doubling of the total wage, while increasing the rate of payment in order to provide 26 weeks of U.C. benefits would place undue burden on smail businessmen. While some argue that this would force more rural states to provide benefits not now given, the effect in all states would be to place a heavy burden on small businessmen who typically are not effected greatly by swings in the economy, nor move their business from one region to another. Also, an oil jobber with a handful of employees keeps his employees year-round, does not ordinarily vacillate his work force with auto production swings, etc. Hence, the smaller businessman will in effect be paying significantly into a purse which will be drawn upon principally by large manufacturers. The small businessman should not be imposed upon with significantly higher payments principally because his employees will take relatively fewer dollars from the fund. 2. Desirable alterations in present proposals Under existing law, the Congress in its wisdom, excluded firms with fewer than four employees from Federal unemployment reporting and contributions. We feel that this was and is desirable. Present legislative proposals before the Congress would erase this exclusion so that an employer hiring one or more persons would fall under the act. This extension of coverage is undesirable for several reasons but before examining these reasons, however, let us define who would become newly covered by this change. Dry cleaners, service stations, retail specialty stores, fuel oil dealers, barbers. tree surgeons, sporting goods stores, drug stores, pet shops, tailor shops, and similar retail establishments are in the service sector. The "U.S. Retail Census of Trade" of 1958 listed nearly 1.8 million businesses in these areas. They hired 7.9 million employees, or an average of 4.3 employees per business establishment. Obviously, many of the 1.8 million fall below the 4.3 employee per business average. In some industries the variation in number of employees being predomi nantly under 4 is clear. For example, this same census indicated 211,473 serv ice station establishments employing 519,812 people or on the average of 2.5 per sons per establishment. Thus, the majority of service station establishments are typical of thousands of similar service groups to be brought under the present proposals. In dealing with these truly small businesses, it should be understood that record keeping is a problem. Usually a wife or the owner himself may devote a portion of his or her time to this activity. When the owner takes his time for bookkeeping, he is in a real sense, non-productive so far as his business income is concerned. Typically, an accountant comes in annually to draw a statement since the business often runs on a month-to-month cash basis. When we burden this small, often family operated business entity with a new form to fill out, this is frequently not a simple matter for this firm to reckon with. Often those in the newly-established small enterprise elect to take low wages, no overtime and few, if any, side benefits just to get the business going. Thus, they build capital, credit, and confidence. If we insist that they pay themselves overtime, and contribute to unemplayment compensation plans not designed for them, etc., we may materially reduce their ability to survive in the formative years of their business. Providing exclusion to the business with under 4 employees merely allows it to grow to a size where it will have more than 4 employees at which time it will be included under the system. It should be pointed out that the small business must compete somehow for employees. Also, that a worker for this small enterprise has complete freedom to work where he will. Thus, unless some special reason, such as growth or experience is present, an employee would not work for the small establishment without fringe benefits as eontrasted, to say, General Motors. If we over-burden this small business establishment with taxes which it cannot absorb, we may dry up the little man's ability to find workers, or the opportunity employees presently find at this level. The very small firm cannot be a training ground, build equity and grow if it can't be competitive. And by the very nature of size, this small business can't efficiently do these small bookkeeping chores. Thus, special privilege is in order. Secondly, we are in the midst of a "service" shortage. It is forecasted that the service sector of our business economy will grow faster than manufacturing, as our population increases. Thus, with growth forecast and a current shortage, we must not further discourage an individual from starting or operating his own small business. Finally, increasing social security expenses via medicare, together with wage and hour regulations already well underway, will make the small entrepreneur's life more difficult. Will the addition of federal unemployment compensation costs now be added? Who is to say that this may not be the straw that makes the new entrepreneur decide that it's easier to work for a giant corporation. Is this what we desire? The argument that this proposed increased cost is non-inflationary is questionable. If we force a significant sector of our business economy to begin to pay unemployment taxes, regardless of how small the individual payment may be, the total amount is still staggering and ultimately will have to be added to the cost of the service provided, thus causing higher prices. Hence, for these reasons, we plead for continuation of exclusion for those establishments with fewer than 4 employees from any future unemployment compensation proposed. The following is a list of the membership of the National Oil Jobbers Council: Alabama Petroleum Jobbers Association, Inc. Arkansas Oil Marketers Association, Inc. California Oil Jobbers Association. Colorado Petroleum Association. Connecticut Petroleum Association. Empire State Petroleum and Fuel Merchants Association, Inc. Fuel Merchants Association of New Jersey (Jobber Division). Georgia Oil Jobbers Association. Illinois Petroleum Marketers Association. Independent Oil Marketers Association of Indiana, Inc. Intermountain Oil Marketers Association (Idaho, Nevada & Utah). Iowa Independent Oil Jobbers Association, Inc. Kentucky Petroleum Marketers Association (Jobber Division). Louisiana Oil Marketers Association (Jobber Division). Michigan Petroleum Association. Mississippi Oil Jobbers Association. Missouri Oil Jobbers Association. Nebraska Petroleum Marketers Association, Inc. Independent Oil Men's Association of New England (Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. New Mexico Petroleum Marketers Association (Jobber Division). North Carolina Oil Jobbers Association. Northwest Petroleum Association (Minnesota and North Dakota). Oregon Oil Jobbers Association. Pennsylvania Petroleum Association, Inc. South Carolina Oil Jobbers Association. South Dakota Independent Oil Men's Association. Tennessee Oil Men's Association. Texas Oil Jobbers Association. Virginia Petroleum Jobbers Association. Washington Oil Marketers Association. Wisconsin Petroleum Association. Wyoming Oil Jobbers Association. CHICAGO FEDERATION OF LABOR AND Hon. RUSSELL LONG, Chairman, Senate Finance Committee, Washington, D.C. DEAR SENATOR LONG: The Chicago Federation of Labor and Industrial Union Council (AFL-CIO), which represents over 500,000 families in the Chicago area, is deeply interested in the enactment of a strong bill to reform the unemployment compensation system. Accordingly, we are actively supporting the unemployment compensation program as originally proposed by President Johnson and outlined in S. 1991. The inadequacy of unemployment legislation in Illinois requires periodic efforts by labor to secure upward adjustments in benefits and coverage. Our General Assembly has not kept pace with the advances necessary to make our unemployment compensation legislation the kind of measure that will genuinely reinforce the basic living standards of jobless workers. For example, while our average factory wage is about $115.00 per week, unemployment compensation benefits are about $41.00 per week, or about 30 percent of the wage. Workers in the highly skilled trades get a much smaller percentage of their pay in unemployment compensation when they are out of work. This is especially serious in the seasonal industries, such as construction. We endorse the provisions of S. 1991, which would establish federal standards in the benefit structure, adjust benefits for the long-term unemployed, provide uniform disqualification penalties and modernize the financial foundation of the unemployment compensation system. Those of us in urban, industrial centers realize that unemployment pays no attention to state boundaries. Unemployment's causes and remedies are national in scope. The benefits system for the jobless should have national standards. We would appreciate the inclusion of this statement in the record of the hear ings of the Senate Finance Committee. Sincerely yours, WILLIAM A. LEE, President. STATEMENT OF JAMES F. MALONE, PRESIDENT, PENNSYLVANIA MANUFACTURERS' ASSOCIATION, PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY, PHILADELPHIA, PENNSYLVANIA Pennsylvania Manufacturers' Association is a voluntary employer association representing business and industry in the Commonwealth of Pennsylvania. We represent 9700 members of which some 7900 employ less than 100 employees We are more representative of the smaller employer rather than the giant corporations. The Pennsylvania Manufacturers' Association Insurance Company is a casualty insurance company licensed in Pennsylvania to write all lines of casualty insurance. INTENT OF CONGRESS The Social Security Act of 1935 left entirely to the States to choose the benefit, eligibility and disqualification provisions in unemployment compensation. While the federal tax has been increased, coverage requirements changed from eight employes to four or more, the taxable wage base held at $3000, there has been no change to dictate to the States concerning benefits, eligibility and disqualifications. There have been suggestions from the federal government including a Repuilican and several Democratic Presidents to up-date State UC laws-some with more force than others by introducing federal standards bills to the Congress from time to time. Then twice we have had federal recessionary measures of extended benefits-1958 and 1961. Pennsylvania was a party to both programs and still paying off the cost of the earlier one. Since we have a federal-state program which is exclusively supported by employer tax money-and not from either general state or federal treasury money, employers feel-and rightfully so that problems of benefits, eligibility, disqualifications—and yes, taxing of their payrolls is a matter to be settled in the respective States. It was clearly the intent of Congress when the original legislation was enacted that since the states were to be given the responsibility for the financing and payment of benefits, they should have complete discretion in determining who should be eligible for benefits and for setting benefit levels. Some advocating federal standards become concerned because there are disparities between states as to terms and conditions under which workers become eligible for unemployment compensation and as to the amount and duration of such benefits. Congress on the other hand has always recognized that the problem of unemployment varied with the degree and nature of industrial development. An adequate program in an agricultural state is not wholly adequate in an industrial state. Alaska whose economy probably depends largely upon one or two major industries and these mostly seasonal, is certainly much different than Pennsylvania. Hence, the Unemployment Compensation Laws of all states will vary according to the need. Arguments have been advanced that the reason for federal standards or eventual nationalization of unemployment compensation is because the states do not react fast enough or not at all in liberalizing their respective UC laws. Therefore, to bring them up to a national pattern of respectability, the only way to do this is by federal standards. EMPLOYER COST Let me make it clear once more, it is direct employer taxes that support the present state programs and all of its administration-including the administration on the federal end at Washington. Pennsylvania employers at the present time pay $33-34 million each year as their federal unemployment tax requirements. Some $30 million is returned for salaries of 5000 Pennsylvania Bureau of Employment Security personnel and for buildings, travel, heat, light and maintenance. I presume the other $3-4 million is used for federal administration and perhaps to assist some other states who do not produce sufficient revenue to cover cost of administration. At the same time, Pennsylvania employers are shouldering a state UC tax that this year will produce $300 million for benefits for unemployed workers. The Pennsylvania UC Fund which in 1959 and 1960 was almost bankrupt and caused us to borrow $112 million from the federal government, has now passed the $500 million mark. However, we still owe the federal government $91.5 million because of the 1959 loan and cost of the federal extended benefits program of 1958. Thus we are rapidly rebuilding the Fund and liquidating our federal debts. No one told us how to do it but ourselves. How Pennsylvania bounced back from the brink of fiscal disaster under an unemployment compensation program that was liberalized along the lines of the proposed federal benefit standards under H.R. 8282, makes "The Pennsylvania UC Story" as dramatic as some fiction novels. While benefits were increased and a recessionary extended benefits program adopted, a corresponding tightening up in qualifications for benefits was instituted and employer taxes increased to pay for the increased benefits and to rebuild the Fund. PMA SUPPORTS H.R. 15119 It is a matter of record that PMA recognizing the federal-state relationship in this program, supports the right of the federal government to draw certain guidelines in the non-benefit area, but strongly resists any federal tampering with benefits, eligibility and disqualification provisions. PMA supports the additional coverage of employees who heretofore have been excluded from protection of the act. It should be pointed out that Pennsylvania Law has included coverage of one or more employees since the law was passed December 5, 1936. The addition of certain agricultural processing workers, other employees who under common law rules were previously excluded should present no real problems. Coverage extended to non-profit organizations generally (including institutions of higher learning) should likewise offer no problems. We are not so sure about hospitals (state or private) where labor turnover has been quite high in the service and maintenance occupations. PMA supports the work requirement test before an individual may file for a second consecutive year of benefits (prohibiting the so-called "double dip" without intervening employment). |