Mr. PURCELL. Yes, yes. He had a nice job with the Government, making about $8,000 a year but he was an ambitious fellow and he wanted to make some more, so he worked in the evening as a porter in one of the buildings. The CHAIRMAN. Now, he was working for you as a porter. Were you a contractor hiring him? Mr. PURCELL. Yes. The CHAIRMAN. And so then to trigger his unemployment benefits, I take it, you must have found that he was a satisfactory worker or something of that sort, I take it. Did you dismiss him or did he voluntarily quit? Mr. PURCELL. He had a disability. He retired from the Government on disability. He had a heart condition, was retired and was told he could not go back. This was true. It was substantiated by a medical statement and so forth. The CHAIRMAN. Yes. Mr. PURCELL. But people with heart conditions sometimes recover, but he got his disability from the Government-disability retirement. He had been with them 25 years or so. Then he applied for unemployment compensation as a result of working for us as well, and his request was allowed. The CHAIRMAN. Now, the unemployment compensation did not result from the Government employment, that related to work of his employment by you? Mr. PURCELL. Yes. The CHAIRMAN. How did he become unemployed, did you fire him or did he quit? Mr. PURCELL. No, sir: he became unemployed as a result of submitting a medical certificate that he was no longer able to work. The CHAIRMAN. So he submitted a certificate to the Government, I take it? Mr. PURCELL. He submitted a certificate to us as well. The CHAIRMAN. He was no longer able to work and he therefore wanted to draw his unemployment? Mr. PURCELL. He applied for unemployment compensation shortly thereafter, and we took this medical certificate down showing he was unable to work, and they said they could classify him as an observer. The CHAIRMAN. So, you either had to pay him the unemployment compensation insurance or put him on the payroll as an observer? Mr. PURCELL. Yes: and we had no jobs as an observer. The CHAIRMAN. The work he had been doing for you was janitor work? Mr. PURCELL. Yes, sir. The CHAIRMAN. And you were required, in other words, you felt about the best, to make the best out of a bad situation, about the best you could do would be to provide him a chair to observe some other janitor working? Mr. PURCELL. Yes; this would create morale problems among the others. The CHAIRMAN. This concludes this morning's hearing, and the committee will meet tomorrow morning at 9 o'clock. (Whereupon, at 12 o'clock noon, the committee recessed, to reconvene at 9 a.m., July 21, 1966.) UNEMPLOYMENT INSURANCE AMENDMENTS OF 1966 THURSDAY, JULY 21, 1966 U.S. SENATE, COMMITTEE ON FINANCE, The committee met, pursuant to recess, at 9:05 a.m., in room 2221, New Senate Office Building, Senator Russell B. Long (chairman) presiding. Present: Senators Long, Anderson, Douglas, Gore, Talmadge, Hartke, and Williams. Also present. Tom Vail, chief counsel. The CHAIRMAN. The meeting will come to order. Until today most of the witnesses who have testified have urged the adoption of the House-passed bill. Today we hear a different viewpoint. We will hear from those who feel that the House-passed bill is not satisfactory and should be strengthened by the addition of Federal standards governing the benefits which should be paid under unemployment compensation. Our first witness is Mr. George Meany, president of the American Federation of Labor-CIO. Mr. Meany, we are very happy to have you with us today. We know you have traveled a long way to be here, and we very much appreciate your presence. We hope you will just proceed in your own fashion, and take such time as you think necessary. STATEMENT OF GEORGE MEANY, PRESIDENT, AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS; ACCOMPANIED BY ANDREW BIEMILLER, LEGISLATIVE DEPARTMENT; AND RAY MUNTS, SOCIAL SECURITY DEPARTMENT, AFL-CIO Mr. MEANY. Thank you, Mr. Chairman. May I express the appreciation of the AFL-CIO for the opportunity of presenting our views on the need for improving the Federal-State unemployment insurance system. The CHAIRMAN. If I might interrupt you, I would like to note that Mr. Andrew Biemiller is with us as one of your assistants. Mr. MEANY. And this is Mr. Munts of our social security depart ment. As I am sure every member of this committee understands fully, we have some concrete views on this matter and a great deal of experience in the main, highly unsatisfactory experience with the present setup. Our international unions and our State central bodies, which have worked for many years trying to improve unemployment insurance at a State level, were most anxious to testify before this committee. Each of our State organizations could have come before you with detailed accounts of the shortcomings of jobless pay in their State. And they could have recounted their continuing but unsuccessful efforts to make basic improvements while working on a State-by-State basis. However, we felt it would expedite the work of your committee if the record were not burdened with oral testimony. Therefore, we have asked these affiliates not to testify but rather to submit statements on particular points for the record. On the basis of our 30 years' experience, let me make these points quickly and then I will expand on several of them: 1. H.R. 15119 is a completely unsatisfactory measure. much of the problem untouched and is, at best, a mere token measure. 2. S. 1991, introduced by Senators McCarthy, Douglas, Metcalf, and others, focuses on the real problems. It is a genuine response to the needs of workers and their interest in a modernization of the program. 3. We trust this committee will take a fresh look at the problems and we believe such an independent appraisal of the unemployment compensation system will result in a bill that will do the job that is so necessary. Before I go into detail, let me add this: If there are any points we can clear up by putting them in writing, Mr. Biemiller of our legislative department, and Mr. Munts of our social security department, who are here with me, will be glad to supply the committee with whatever information it may require. Last year President Johnson proposed that the Congress look at the unemployment insurance program, even though unemployment was decreasing. His recommendation demonstrated both imagination and a sense of history as well as real concern for working people. Those who oppose modernizing unemployment insurance tend to dramatize current levels of employment as evidence that no action is needed now. This is a little like the farmer who won't repair his tractor in the winter since he does not need it until the spring. In the recessions of 1958 and 1961, hundreds of thousands of people every month were using up the last of their benefits with no job in sight. We urged the Congress at that time to consider the underlying weaknesses in the jobless pay program that were causing such suffering. Instead, Congress enacted a program of temporary extension of benefits. It helped many people for a short period. It offered nothing for similar contingencies in the future. And it left the program saddled with debts that still have not been paid. Why is it that Congress is unable or unwilling in such times-when unemployment is high, when millions have to live on their benefits only to watch them run out-to make substantive reforms? I think the answer lies in a political reality. At such times there is demand for immediate alleviation and the Congress responds as quickly as possible because the suffering is current and present. The Congress postpones a more thoroughgoing evaluation of the jobless pay system, not wishing to enact basic reforms in an atmosphere of haste that might lead to ill-considered remedies. I recall this history to you this morning because the subject of these hearings is leftover business, and if we hold this matter over until another recession, it will continue to be leftover business. Unemployment insurance is a Federal-State program and both the Federal and State partners have to mesh their activities. Any effort by the Congress to define more precisely the performance standards of the program must be followed by action in the State legislatures. Some of these meet only every other year. There would be, therefore, a timelag of 1 to 3 years before an enactment could be actually translated into results for the unemployed. This is why modernization of the system is not undertaken in a recession period when immediate results are needed. This is why I think President Johnson was so wise to put this issue on the agenda of this Congress. And this is why the cool appraisal, the considered diagnosis, and the appropriate prescription should be made now. I do not want the members of this committee to think that unemployment insurance is not important or needed for many persons even under present circumstances. It is true that the number of insured unemployed has been decreasing for the last few years, but there are now about 820,000 persons in any given week drawing unemployment insurance. The first question that this figure raises is why is the total of insured unemployed such a small part of the total number of persons unemployed? It is estimated that there are over 3 million persons in the labor force who are out of work. Some of these are new entrants and some may have been separated from their jobs under conditions that should not entitle them to benefits. I will not argue that all of those unemployed should receive benefits, but it seems to me that a great many more should. For example, there are altogether too many people-about 15 million employees who work in jobs where they have no protection, and if some of them are among the unemployed, they get no help. Then there are some people who use up all their benefits but continue to be jobless. At the present time about 17,000 persons a week do not find employment before their rights are exhausted. There are some who have been denied benefits because they live in States with excessively tight eligibility requirements. A modernized unemployment insurance program could do considerably more to reduce the proportion of the unemployed who get no help or insufficient help from jobless benefits. As I said, at this moment the lucky ones among the unemploved are about 820,000 persons, the number drawing benefits. This is a kind of snapshot picture at a given moment, but it does not begin to describe the number of persons who will use jobless benefits at some time during the year. We must remember that the group of claimants drawing unemployment benefits changes each week. Next week some will get jobs, some will use up their entitlement, others will be newly laid off and apply for first payments. In other words, there is a constant turnover. Now, if you take all the persons during this year who will draw benefits for 1 week or more as sometime or another during this year, the number will add up to 41⁄2 or 5 million persons. And this is comparatively a good year. In a recession period, it will be two or three times as many. So we are not talking about just a few irregular employees. We are talking about a great many people and their families. We are talking about the way a free economy operates and the cost of keeping it free. Businesses are dying and being born every day. Plants that have stood for generations are suddenly closed down, even in good times. Competitors are bought out, mergers negotiated, and speculative ventures launched all the time. Along with these activities should go a good, dependable cushion of wage insurance for the employees affected. The 60 million wage and salary earners in this country should not have to wait and watch in anxiety as economic changes or business considerations threaten the lifeline of their families' well-being. In a humane society, adequate wage insurance is the logical corollary to free movement of capital. I would like now to make some specific comments about the bills before your committee. About 25 percent of wage and salary employees are not now covered. This is about 15 million persons. Secretary of Labor Wirtz has given you a breakdown of this unprotected group. H.R. 15119 puts about 3 million additional persons under coverage. S. 1991 adds 5 million to coverage, and from our standpoint, it is preferable since it extends benefits to more people. But I am aware that the Ways and Means Committee in the House spent a great deal of time on some difficult problems about the financing of benefits for nonprofit employees. Also, that committee felt it necessary to include comparable State-run institutions that some nonprofit organizations regard as competing. Both steps reduced the opposition of the nonprofit organizations affected by these changes. If this House effort broadened the base of support for extended coverage, Mr. Chairman, I see no reason for this committee reworking that area. It is very technical and there are so many other areas the House left untouched, that it seems to us a waste of time for the Senate to replow the territory of nonprofit coverage. We are prepared to accept what the House has done in this area. However, we believe that the provisions in S. 1991 that would cover farm employees on large farms or some other approach to the same end is highly desirable. Farm employees should no longer be considered unworthy of unemployment insurance. Workers on large farms are employees in the same sense anybody else is an employee. We must prefer the provisions in S. 1991 that would extend coverage to establishments with one or more persons at any time. Many States now do this and there is no doubt about its feasibility. House coverage of small establishments is unnecessarily restrictive. The Both bills propose extension of coverage to include Great Lakes seamen whose employers have evaded responsibility by exploiting the differences in State laws. Apparently, there is wide agreement on this matter. Lastly, we would like to suggest that the committee consider the problems of multistate workers who have no protection from States that are not participating in interestate agreements; a special problem arises from the fact that the base periods in States are different and some workers suffer loss of credits and lower benefits as a result. I think there is wide agreement that unemployment benefits provided through a social insurance program should not create a kind of |