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risk of losing industry and jobs to other States with lower standards. This possibility can be removed only with establishment of nationwide standards.

It is essential that we now make permanent improvements in the Federal-State unemployment compensation system-not only to assist the jobless and their families, but to give the Nation a more solid foundation upon which to combat the damaging effects of future economic decline.

An effective unemployment compensation program requires realistic, uniform minimum standards in every State. This will come about only through the enactment of Federal legislation, just as it required Federal legislation to bring about the start of unemployment compensation programs in every State in the 1930's. Wisconsin enacted the first unemployment compensation statute in 1931, but it was not until Congress enacted the Federal-State system as part of the Social Security Act in 1935 that every State followed suit.

Some States have kept their unemployment compensation programs relatively up to date. Most have not. In relation to original benefits and coverage established in the 1930's, we have fallen far behind. A general, permanent uplifting is needed. Congress must do it.

It is interesting to note that the administration advocates improvement in unemployment compensation, and, in many respects, calls for the same standards embodied in H.R. 3547. But the administration would leave the changes up to the individual States. We will never have realistic nationwide minimum unemployment compensation standards if the question is left to the States.

Recovery from the recession has been uneven to say the least. Much-publicized gains in certain segments of the economy do not offset the poor performance in others. We still have well over 4 million Americans unemployed.

The administration has demonstrated no real effort to achieve the goals of the Employment Act of 1946-maximum employment, production, and purchasing power. It is not a hopeful thing to say, but it seems a distinct possibility that we will have an unemployment rate approximating 6 percent of the labor force for some time to come, unless the administration actively strives to meet the Employment Act's goals.

Under these circumstances it is in the best national interest to enact permanent improvements in the unemployment compensation system as contained in H.R. 3547. I urge the committee to act favorably upon this legislation.

The CHAIRMAN. Mr. Reuss, we thank you, sir, for coming to the committee and discussing these problems with us. You have made a very fine statement. We appreciate it.

Mr. REUSS. Thank you, Mr. Chairman.

The CHAIRMAN. Any questions?

Thank you, sir.

We will now hear from our colleague from New York, the Honorable Herbert Zelenko.

Mr. Zelenko, will you please come forward to the witness table? We appreciate having you with the committee this morning, Mr. Zelenko, and you are recognized.

STATEMENT OF REPRESENTATIVE HERBERT ZELENKO, OF NEW

YORK

Mr. ZELENKO. Mr. Chairman and members of the committee, I wish to thank you for permitting me to speak in behalf of H.R. 3591, a bill which I have introduced to provide unemployment reinsurance grants to the States, to revise, extend, and improve the unemployment insurance program, and for other purposes. This bill is one of over a hundred similar legislative proposals introduced by my distinguished and forward-looking colleagues. This legislation is long overdue. It not only will provide temporary sustenance for the working American and his family during periods of unemployment, but will equalize his rights and equities with his working brothers and sisters in all of the other States.

We of the Congress during the recent past have enacted legislation giving constitutional equality and protection in the fields of civil rights, social security and old-age benefits, property rights, security in savings and in other fields, but have not done so in the area of the economic illness of the worker. This legislation will not only rectify these inequities but will afford a semblance of temporary alleviation of monetary hardship.

I urge the favorable consideration of H.R. 3591 or any other similar legislation as soon as possible.

The CHAIRMAN. Mr. Zelenko, we thank you, sir, for coming to the committee and discussing these problems with us. You have made a very fine statement. We appreciate it.

Mr. ZELENKO. Thank you, Mr. Chairman.

The CHAIRMAN. Any questions?

Thank you, sir.

We will now hear from our colleague from Wisconsin, the Honorable Robert W. Kastenmeier.

Mr. Kastenmeier, will you please come forward to the witness table? We appreciate having you with the committee this morning, Mr. Kastenmeier, and you are recognized.

STATEMENT OF REPRESENTATIVE ROBERT W. KASTENMEIER, OF

WISCONSIN

Mr. KASTEN MEIER. Mr. Chairman and members of the Committee on Ways and Means, I appreciate the opportunity to appear before you to ask your full consideration of a group of nearly identical bills to provide for unemployment reinsurance grants to the States and to revise, extend, and improve the unemployment insurance program. In 1931 the State of Wisconsin, which I have the privilege of representing in the House of Representatives, was the first to adopt an unemployment compensation act. Since that historic date, the State of Wisconsin always has been among the leaders in providing realistic benefits for those unfortunate enough to be unemployed.

However, experience has shown that not all States will act on their own to meet the problem confronting them in this area of unemployment compensation. Therefore, I believe it behooves the Federal Government to provide the leadership in order to assure a uniform rate of minimum standards that are in line with the needs of our unemployed men and women.

The bill which I introduced along with some 120 of my colleagues provides for several changes in the existing act. The bill, among other things, would

(1) Establish benefits equal to not less than 50 percent of the weekly wages so long as that amount is not more than two-thirds of the average weekly wage in the State.

(2) Establish a uniform benefit period of 39 weeks.

(3) Permit States free choice in providing for uniform rate reductions to employers as well as individual experience-rated

reductions.

These are worthy improvements which are much needed in the light of the failure of many States to face up to the problem of unemploy

ment.

My bill, however, differs from the others in one important respect. I have retained the "four employees or more" section on coverage. The other bills have extended coverage to those employing one or more persons.

It is my feeling that extension of coverage would place an undue hardship on the rural shopkeeper who works a long day himself and employs one or two persons to assist him. This small merchant already has a multitude of records to keep for himself and his Government-local, State and Federal.

Although there has been some talk in my own State of Wisconsin of extending the coverage to some extent, I believe that our present minimum of four employees is adequate and provides a realistic distinction in the size of the business operation. The shopkeeper who works a full day himself and employs one or two persons to meet the peak demands for service or the dentist or lawyer who has one assistant to do his routine record keeping and typing functions in a markedly different manner than the merchant doing business on a larger scale and with a full staff of employees.

Mr. Chairman, this bill requires no appropriation of funds by Congress, and it does not change the present Federal-State relationship in the operation of the unemployment compensation system. Furthermore, it does not call for any increase in the present Federal tax upon payrolls.

The CHAIRMAN. Mr. Kastenmeier, we thank you, sir, for coming to the committee and discussing these problems with us. You have made a very fine statement. We appreciate it.

Mr. KASTENMEIER. Thank you, Mr. Chairman.

The CHAIRMAN. Any questions!

Thank you, sir.

The Chair has just been advised that the Governor of Michigan will be delayed momentarily, so we will call the next witness and take the Governor following this witness.

Mr. James J. Maher, please come forward.

Mr. Maher, will you identify youself for the record by giving us your name, address, and capacity in which you appear?

STATEMENT OF JAMES J. MAHER, CHAIRMAN, SOCIAL SECURITY COMMITTEE, COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, ACCOMPANIED BY MAHLON Z. EUBANK, DIRECTOR, SOCIAL SECURITY DEPARTMENT

Mr. MAHER. My name is James J. Maher. I appear here as chairman of the Social Security Committee of the Commerce and Industry Association of New York.

With me is Mahlon Z. Eubank, who is director of the association's social security department.

The CHAIRMAN. You are recognized, Mr. Maher.

Mr. MAHER. Mr. Chairman, I have a prepared statement which I would like to enter into the record, and with your permission I would like to comment on some of the highlights of that statement.

The CHAIRMAN. Without objection, the entire statement and the material appended to it will appear in the record, and you are recognized to proceed in your own way.

Mr. MAHER. Thank you, Mr. Chairman.

When the Social Security Act first was enacted in 1935, it left full responsibility and discretion with the States to determine eligibility conditions, benefit amounts, and duration of benefits. Committee reports of both the Senate and House in connection with the original Social Security Act contain the following statement:

Except for a few standards which are necessary to render certain that the State unemployment compensation laws are genuine unemployment compensation acts and not merely relief measures, the States are left free to set up any unemployment compensation system they wish, without dictation from Washington. *** Likewise, the States may determine their own compensation rates, waiting periods, and maximum duration of benefits. Such latitude is very essential because the rate of unemployment varies greatly in different States, being twice as great in some States as in others.

This original concept of State responsibility in unemployment compensation was sound then and is just as sound today. The States are in the best position to adapt their unemployment programs to their particular unemployment pattern, their industrial composition, and their economic circumstances.

What is more important, I think, gentlemen, is that this has afforded the States an opportunity to develop through experience and experimentation programs that are best suited to their individual economic and employment patterns.

By transferring control over the unemployment insurance programs to the Federal Government, we would eliminate a sphere in which the States find their greatest scope of experimentation to meet the everchanging employment pattern and economic circumstances. Our 20 years of experience with unemployment insurance have been marked by constant changes in the laws of the various States. These were the result of individual State experimentation which has been helpful to all of the States.

This has been especially true with respect to benefits, duration, and other areas in the system.

The proponents of this bill by implication are saying that the elected officials and legislators of various States' governments are unwilling to respond to the needs of their citizens. That this is not true is best evidenced by these facts:

In New York during the 1959 session, the legislature passed legislation which broadened coverage to all employers who pay $300 in wages in a calendar quarter. In addition, the New York Legislature passed in 1959, "tapering off" extended unemployment benefits, rather than borrowing from the Federal Government.

New York's Industrial Commissioner Martin P. Catherwood, in referring to this legislation, said:

This is a significant forward step. In providing emergency benefits under our regular State program, it restores State initiative in an area of State responsibility.

Also in New York in 1958, the maximum benefit amount was increased from $36 to $45 following a pattern of setting the maximum at 50 percent of the State's average wage. Entitlement was broadened from 20 weeks in the base period to 40 weeks within a 2-year period, 15 of which must be within the last base year.

Other States have not waited for the Federal Government to act to broaden coverage below four in 20 weeks. Twenty-five States now have a lower coverage provision. All but two of the remaining States extended coverage below the present requirement by common ownership, multiple unit, and contract-tacking provisions.

A study of the various duration provisions in the State unemployment insurance laws has shown that about 75 percent of all covered workers are in States, 35 in all, which provide 26 weeks of uniform duration or 26 weeks of maximum variable duration. This is in contrast with 20 years ago when 42 States limited payments to 16 weeks or less and none paid benefits for more than 20 weeks.

This trend in increasing the maximum amount of duration will be reflected among some more of the 44 States whose legislatures are meeting this year.

We predict that many of these States will take action to extend the maximum duration of benefits in their unemployment insurance laws. Over the past 5 years 45 States have increased their maximum benefits one or more times.

Among the 44 State legislatures which are meeting this year, we expect again a substantial number of them will take action to improve their benefit formulas.

There is a point that I would like to make, Mr. Chairman, and that is with regard to the depressed areas around the country. We fully recognize that these areas present special problems where continued high levels of unemployment persist in prosperous as well as in recession years.

Some advocates of the Karsten-Kennedy bill have contended that this is one of the fundamental problems it would solve, but the extended benefits this legislation would provide by themselves cannot bring about lasting improvement. Actually, in the long run, they may aggravate the problem by discouraging the mobility of labor, and such standards cannot possibly fit the many diverse local conditions that exist in the 50 States, including Hawaii.

These facts do not tell the whole story. Although no statistics are available, it is clear, nevertheless, that a vast majority of claimants today are receiving benefits of more than 50 percent of their takehome pay.

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