The basis of this proposal is that certain types of unemployment, such as those due to automation, lack of skills and training, etc. can continue for long periods for the persons involved, and can exist irrespective of general unemploy ment conditions. We agree with the objectives to educate and train such unemployed workers and to have unemployment benefits available to them during such periods of training, under proper safeguards as to potential abuse, but here again at the State level.

However, we do not believe that extended unemployment compensation, as such, should be paid during other than periods of severe general unemployment. Also, such conditions should be determined on a state by state basis, tailored to take care of any substantial pockets of unemployment existing either throughout a state, or even in a particular industry or locality when due to the factors just mentioned.

Unemployment insurance is not intended to deal with isolated individuals in otherwise prosperous communities. This is a problem for local welfare programs. These welfare objectives, if we attempt to write them into unemployment insurance systems, are sure to result in a general loosening of the system and a deteriorization of unemployment insurance principles. Liberal benefit amounts will be an inducement to abuse the system for those not intended to be helped. Uniformly long duration available to everyone is also a lure to laziness, and is not justified by the now relatively small percentage of claimants, who exhaust present limits.

There will always be benefit exhaustees. At what point will the problem ever be solved, if we keep on extending the durations as a general right. The Department of Labor's testimony on this fails to bring out that the rates and numbers of exhaustees have been decreasing every year since 1961.

2. CANADIAN DISASTER PROVES OUR STATE SYSTEM IS SAFER

A program of extended benefits, to tie in properly with the existing state insurance system and meet real local needs, should be triggered by state unemploy ment conditions, and should give each state the primary responsibility for financing and setting conditions for benefits. Any attempt to provide extended aid during prolonged individual and personal employment problems by doubling maximum benefit durations throughout the entire nation, cannot help but lead to the welfarization and destruction of the state unemployment insurance system as we know it. The experience of Canada should be a warning for those who would try to combine sound insurance principles with broad welfare aims.

Through relaxation of eligibility requirements, increases in benefit entitlement and creation of a suplementary or seasonal benefit, Canada substantially removed the concept of an insurable risk and changed original unemployment insurance principles to meet welfare objectives-with catastrophic results! H.R. 8282 contains certain similar features. For example, Canada removed special rules for pregnant women and no longer disqualified or restricted retirees from receiving benefits. As a result, reserves created prior to such changes in the program totalling approximately 880 million dollars in 1957 were dissipated to approximately 15 million dollars within a 6 year period. A special Committe of Inquiry at this point recommended that the basic unemployment insurance program in Canada be revised to re-establish the original unemployment insurance principles, and that any payments beyond the regular benefits under the unemployment insurance program be financed through a separate welfare plan to be supported from general taxation.

To prove that only this makes economic sense let me cite just one specific case turned up by the Canadian Committee. The point was reached where seasonal fishermen for whom $2.9 million had been contributed to the fund, had drawn benefits of $26.7 million-roughy 9 dollars out for every dollar in!

I am afraid that if we in the United States allow ourselves to start down this path of federal welfarization, the handwriting is on the wall!

This completes our testimony on what we believe are the unsound provisions in H.R. 8282. We do not deny that there are also meritorious features which could improve the generally effective workings of our present State-focused Unemployment Compensation Systems. Better trained state administrative staffs extension of coverage to additional employee groups, workers retraining without loss of eligibility for unemployment benefits, standby provisions for extended benefits and financing triggered by severe general unemployment conditionsare all desirable objectives. But they can and should be attained at the state level without the mass of federal-oriented provisions built into this Bill. We do

oppose the meaningless minimum, the over-liberal maximum, the more-thandouble tax base, the dangerous precedent of financing from general revenues, the far-reaching federalization of matching grants and extended adjustment benefits, the relaxed rules for benefit qualification-all for reasons already noted. We feel that each is either an unnecessary intervention in a system soundly conceived and sensitive to its own needs, or an unwarranted step toward a massive federalized welfare program.

Most particularly, the members of the Council on Employee Benefits deplore the uniform tax credit and other provisions aimed at destroying the merit rating system. It is our firm conviction that this basic principle, built into our unemployment compensation systems from the beginning, is the most important constructive feature we have.

Merit rating enlists employers in a concerted effort to reduce unemployment. H.R. 8282 is geared instead to paying a bigger premium for it—and so to that extent encouraging it. One tends to curb the disease-the other only alleviates the symptoms.

Our present state systems provide incentive and tangible rewards for increasing and stabilizing employment-the proposed federal program substitutes increased subsidization of unemployment.

Gentlemen, in the final analysis the choice is clear: Are we more interested in providing jobs-or benefits?

TABLE I.-Maximum weekly benefit amounts (as of 1/1/62 and as of 7/1/65)

1 Where 2 amounts are shown the higher includes dependent allowances. In Massachusetts the maximum with dependents is not specified and could go as high as 100 percent of the average weekly wage.

2 Percent increase at lower amounts shown for each State.

3 Effective January 1966.

4 Effective April 1966.

5 Effective July 1966.

TABLE II.-States with taxable wage bases in excess of $3,000

1 1965 legislative change.

TABLE III.-States with maximum tax rates in excess of 2.7 percent 1

Tax rates
above 2.7

1 Maximum rates assigned to employers thus far during calendar year 1965.

TABLE IV.-Consolidated summary survey of unemployment compensation data [Compiled from 110 member companies of the Council on Employee Benefits representing 324 million employees]

INTERNATIONAL UNION,

ALLIED INDUSTRIAL WORKERS OF AMERICA,

Milwaukee, Wis., July 22, 1966.

Re S. 1991.

Hon. RUSSELL B. LONG,

Chairman, Committee on Finance,
United States Senate,

Washington, D.C.

DEAR SENATOR: While we are aware that a tremendous amount of material relating to the hearings on unemployed compensation reform, and in particular S. 1991, have been called to your attention, we feel that the problem presented to your Committee is of such far-reaching significance that we take the liberty of adding our views to the many already expressed.

We are particularly concerned about the present lack of uniform federal standards, both in terms of the amount of weekly benefits and the duration of weekly benefits, as well as the lack of additional unemployment benefits from the federal government.

Ours is an international union. We have members in many states and we have contracts with large corporations which operate in many states. Accordingly, we are often confronted with the serious and contradictory situation in which our members who are employed at separate plants of the same employer and doing essentially the same type of work are laid off about the same time but, only because of an invisible state line, do not receive uniformity of treatment in their unemployment compensation benefits. For example, our members in the midwest area of our country, if on layoff at the same time from the same employer but at different plants in different states, can receive as low as $33.00 a week, or less than 1% of their average weekly wage, in Michigan (exclusive of dependency benefits) to as high as $55.00 a week, or more than 2 of their average weekly wage, in the State of Wisconsin. The benefits in between will range at levels of $38.00 in Illinois; $40.00 in Indiana; and $42.00 in Ohio, all of which will be a different percentage of the average weekly wage. It is our understanding that under the federal standard proposed by the McCarthy Bill (S. 1991) the above figures will be adjusted to result in a minimum weekly benefit of $70.00 in Wisconsin to a maximum of $83.00 in Michigan, with $73.00 in Indiana, $76.00 in Illinois, and $75.00 in Ohio. The important factor here is not so much the increase in benefits as it is that the benefits under the McCarthy Bill will all bear the same ratio to the average weekly wage, which will mean that all the employees will be treated alike in that respect.

In addition to the obvious inequity in the amounts of unemployment compensation in the states we have used as an example, there is also a very serious inequity in the duration of such benefits. While in all of the states mentioned the maximum duration may be set by statute at 26 weeks, the variation in the eligibility requirements for the maximum duration are such that employees working for the same employer but in different states will not receive the full benefit for 26 weeks.

And, of course, the provision of the McCarthy Bill which will permit additional federal unemployment compensation benefits after the 26 weeks would pick up the economic slack resulting from longer periods of unemployment.

While we have emphasized in this letter the need for greater uniformity in the computation of benefits, as well as in duration, we also subscribe to the provisions of the Bill which will require broader coverage of unemployment compensation.

We are enclosing herewith a fact sheet which was published for our membership in our monthly magazine, The Allied Industrial Worker, for July 1966. We would appreciate your making that fact sheet, together with this letter, a part of the records of the hearings before this Committee.

We earnestly urge that your Committee give the fullest and most sympathetic consideration to the McCarthy Bill because of its great forward step in eliminating the economic distortions, as well as the personal suffering caused by unemployment.

Very truly yours,

CARL W. GRIEPENTROG, International President.

[From the Allied Industrial Worker]

NO FEDERAL STANDARDS-SENATE ONLY HOPE AFTER HOUSE KILLS JOBLESS PAY REFORMS

WASHINGTON.—When all but 10 members of the House of Representatives votes for "improvements" in unemployment compensation, it's a safe bet that the improvements will be strictly limited.

This was precisely the case when, by a 374 to 10 vote, it approved a jobless pay amendment denuded of its most vital provisions-federal standards which was knocked out in the House Ways and Means Committee. Supporting the watered-down measure were some of the House's most ultra conservatives.

Organized labor and the Administration are now looking to the Senate to restore this provision and other meaningful changes.

The bill, as passed by the House, would broaden unemployment compensation by bringing in 3.5 million additional workers. The Administration and organized labor had asked extension of coverage to 5 million more. The bill would provide 13 weeks of extended jobless insurance payments during periods of recession. The Administration and organized labor favored an additional 26 weeks of such extended benefits.

Prior to the House vote, Rep. Jeffery Cohelan (D-Calif.) said he was particularly distressed that the bill "ignores the plight of America's farm workers by refusing to bring even a limited number of them under the act."

Rep. William F. Ryan (D-N.Y.), expressing views of both the Administration and organized labor, listed four major respects in which the bill falls short: "The most important shortcoming is its failure to provide for Federal unemployment compensation standards. The Administrations' measure would have required the states to meet minimum standards of compensation-50 per cent of wages, duration at least 26 weeks-and qualification. Thus, unemployment compensation would be propped up in those states which have programs that do not meet these standards, and the whole system would be more uniformly beneficial.

"Second, the committee reduced the number of employees to whom new coverage would be extended. Under H.R. 8282, 5 million workers would have been able to receive for the first time the benefits of unemployment compensation. Under H.R. 15119, the revised bill, only 3.5 million new workers will enjoy these benefits.

"Thirdly, under the Administration's proposal, the wage base would have risen to $5,600 in 1967 and $6,600 by 1971. I might point out that the wage base has not been increased in the Federal law since the inception of the program 30 years ago. Eighteen states have already adopted a wage base well in excess of $3,000. Yet the committee saw fit to cut the wage base proposal. The present $3,000 figure will remain in effect until 1969, when it will rise to $3,900, eventually rising to $4,200 in 1970.

"Finally, the committee did not adopt the supplemental benefits provision, which would have provided extended benefits for an additional 26 weeks after an unemployed worker exhausted his regular 26 weeks of payment. Instead, it has provided for 13 additional weeks, and also restricted the extended program to times of unusually high national unemployment. This is a reversal of the original objective of this provision."

STATE UC SYSTEM PROVIDES LITTLE PROTECTION FOR MOST

America's unemployment insurance system is a patchwork of state programs in which jobless workers in some states, clearly, have far less protection than in others.

To bring about some uniformity-to treat all workers approximately the same the Johnson Administration has proposed that federal standards be estab lished. This proposal has the solid endorsement of organized labor.

Federal standards were included in H.R. 8282, introduced by Chairman Wilbur Mills, (D-Ark.), of the House Ways and Means Committee and introduced as S. 1991 in the Senate by Senator Eugene McCarthy (D-Minn.) and 15 other Senators.

There were provisions in the bill other than federal standards but the principle of federal standards was the heart of the proposal.