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Two, Federal standards to permit unemployed workers in all States to draw benefits for as long as 39 weeks if they are still unemployed and meet all other conditions of eligibility.

Three, a national reinsurance fund financed out of Federal unemployment insurance taxes to underwrite the State reserves when they are levying the full amount of the tax and are still unable to meet their benefit obligations.

I submit it is time we modernized our unemployment insurance system and placed it on a permanently sound basis which will both serve the needs of the unemployed worker and bolster the economy in time of recession. The temporary expedients of supplementary Federal benefits enacted last year and this year have not corrected the basic inequities and weaknesses of the system. With $7 billion in the State unemployment reserves, it makes no sense for the Federal Government to pay out nearly half a billion in Federal supplementary benefits at the same time paying nearly a quarter of a billion dollars to the States in interest on their idle reserves, and still not meet the needs, when the Congress could set standards which would require the use of the reserves for the purposes for which they were intended and give unemployed workers the protections to which they are entitled.

You have

The CHAIRMAN. Senator Humphrey, we thank you, sir, for coming to the committee and discussing these problems with us. made a very fine statement. We appreciate it very much. Senator HUMPHREY. Thank you, Mr. Chairman.

The CHAIRMAN. Any questions?

Thank you, sir.

The committee will adjourn until 2 o'clock this afternoon when our first witness will be our colleague, Mr. Van Zandt.

(Whereupon, at 12:50 p.m. the hearing was adjourned until 2 p.m. of the same day.)

AFTERNOON SESSION

The CHAIRMAN. The committee will please be in order.

Our next witness is our colleague from Pennsylvania, the Honorable James E. Van Zandt.

Mr. Van Zandt, tell us the district in Pennsylvania you represent and you will be recognized.

STATEMENT OF REPRESENTATIVE JAMES E. VAN ZANDT, OF

PENNSYLVANIA

Mr. VAN ZANDT. Thank you. The 20th District of Pennsylvania The CHAIRMAN. We have otherwise identified you. We are glad to have you with us today.

Mr. VAN ZANDT. Thank you.

Mr. Chairman, the opportunity to appear before this committee is deeply appreciated. As many of you know, it was my privilege to appear here last March 28 in support of legislation to extend the unemployment compensation period 13 weeks.

Since that date Congress not only extended the benefit period 13 weeks, but further amended the law by extending the temporary period of benefit to July 1 of this year. The two bills authorizing the two extensions of the benefit period had my approval.

In appearing before you today, it is for the purpose of emphasizing the acute unemployment situation that exists in Pennsylvania, and especially in my congressional district, comprising Blair, Centre, and Clearfield Counties. In this connection the temporary extension of unemployment compensation has proved a godsend to thousands of Pennsylvanians who find themselves unemployed through no fault of their own.

For the information of the committee, Pennsylvania's unemployment is nearly a half million or 10.7 percent of its labor force. For years the State's unemployment rate has exceeded the national rate, which is now about 7 percent.

In other words, what I am trying to stress is that recovery as far as Pennsylvania is concerned is moving at a snail's pace. The result is that the Bureau of Unemployment Security in Pennsylvania is literally working night and day processing hundreds of thousands of unemployment checks weekly.

In getting back to my congressional district, chronic unemployment for many years has plagued two of the three labor markets to the extent that in the Altoona area, which is my hometown, we have 7,000 unemployed, or 13.1 percent of the labor force, while in the ClearfieldDuBois area we have 5,100 unemployed, for an average of 13.8 percent. The greatest unemployment in Pennsylvania is in the southwestern part of the State where 24 percent of the work force is unemployed in the Uniontown-Connellsville area. When you take the Altoona labor force and consolidate it with neighboring Johnstown, the AltoonaJohnstown area has 16 percent unemployed and is second to the Uniontown-Connellsville area in the number of jobless in Penn

sylvania.

Mr. Chairman, from these figures, I am certain it is not difficult to understand the acute and chronic unemployment problem we have in Pennsylvania. Frankly, these unemployed, all good Americans, are desperate and have no place to turn when they exhaust their eligibility for unemployment compensation except to go on the rolls of public assistance and surplus commodities.

A moment ago I mentioned the hundreds of thousands of unemployment compensation checks being issued weekly in Pennsylvania to the State's unemployed. Naturally, prolonged unemployment in the Keystone State has had its effect on the compensation fund to the point where it has reached its lowest balance in history.

At this time I wish to inform the committee that the State senate in Pennsylvania is fully aware of the acute fiscal situation and recently approved a resolution calling on Governor David Lawrence to name a committee to study the unemployment compensation fund for the purpose of plugging existing loopholes which permit payments of benefits to persons not entitled to them.

That concludes my statement, Mr. Chairman.

The CHAIRMAN. Mr. Van Zandt, we thank you, sir, for coming to the committee with your views.

Are there any questions?

Mr. Machrowicz?

Mr. MACHROWICZ. Do you approve of the bills pending in this committee for Federal standards on unemployment compensation?

Mr. VAN ZANDT. There are some 50 bills pending in the Congress. Mr. MACHROWICZ. That is right.

Mr. VAN ZANDT. I understand that 46 of them are before this committee and I am waiting for the hearings to be concluded and a digest made available so that I can intelligently decide how the program should be improved.

Mr. MACHROWICZ. Forgetting the individual bills, do you favor the philosophy that there should be Federal standards on unemployment compensation benefits and duration?

Mr. VAN ZANDT. Yes, I do.

The CHAIRMAN. Thank you, Mr. Van Zandt.

The CHAIRMAN. We will now hear from our colleague from Michigan, the Honorable Louis C. Rabaut.

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

STATEMENT OF REPRESENTATIVE LOUIS C. RABAUT, OF MICHIGAN

THE NATION'S RESPONSIBILITY FOR ITS UNEMPLOYED

Mr. RABAUT. Mr. Chairman, not long ago the Detroit Free Press carried a picture of a 29-year-old unemployed worker-a veteran of 13 months of fighting in Korea-who was picked up by the police as a vagrant because he was searching in garbage cans for food. He informed the judge that he was not a vagrant because he had a homea pup tent. Asked how he had managed to stay alive during Detroit's zero weather he replied that he had a big shaggy dog that slept with him to keep him warm. His problem-he was able and willing to work, but he couldn't find work. And so this man who had, in defense of his country, slept in tents in the hills of Korea was now forced by circumstances beyond his control, to sleep in a tent and seek food in garbage cans in one of the great cities of the wealthiest Nation in the world.

I begin my remarks with this story because I want to emphasize the point that while we deliberate and, I'm afraid, procrastinate on what to do about our unemployment insurance plan, we are compounding human misery. Let us always remember that we are talking about men and women who until they were laid off, were accustomed to providing their family with a weekly paycheck. During the subsequent weeks of discouraging job hunting they learned to squeeze an existence out of minimal income provided by unemployment insurance. When they exhausted the unemployment benefits their situation became really desperate and most of them had to fall back on the already swollen general relief rolls.

When we are told, therefore, that unemployment in this country rose to 4,749,000 in February of this year-the highest for any February since the war with the exception of 1958-let us never forget that these alarming statistics are not just ledger entries. They are concerned with our own fellow Americans. And I believe I speak here today for the 434 million people now out of work, for the approximately 2 million workers who will exhaust their benefits in the year ahead, and the 10 to 12 million Americans who will become unemployed for some substantial time during the year ahead.

Mr. Chairman, Congress has not come to grips with the real and permanent problems of unemployment in this country. We have

known, during sunny weather, that the cracks in the roof were growing wider and deeper, and when storm clouds have appeared on the horizon we have, from time to time, stuffed a little paper into these growing gaps. But it seems to me to be abundantly clear that the facts of our time call for a whole new roof, and a temporary tarpaulin to protect us until we can build that roof.

The statesmanlike approach to this problem, in my considered opinion, is contained in two proposals now before this Congress. The first, S. 1323, the McNamara-Hart bill, provides the temporary tarpaulin in the form of Federal grants of up to 16 weeks for the approximately 2 million unemployed workers who have currently exhausted. their rights to State and Federal benefit or who were never covered by unemployment insurance and are still unemployed. In addition, about 112 million persons who exhaust their benefits in the coming year will receive payments under the bill. The second, H.R. 3457, the Karsten-Machrowicz bill, builds the kind of roof which provides genuine and equitable protection for the problems we are facing now and which will inevitably grow in the future. I firmly believe that if the Federal standards in this bill as to benefit amount and duration were now in effect, the terrible tragedy of the current recession would be significantly reduced both for the unemployed and for the entire economy. We must pass these standards this session to prepare our Federal-State unemployment insurance system for future recessions. We in Michigan-and in other hard hit States-are particularly interested in the reinsurance provisions of the Federal standards bill. This was one of the points made by the eight Governors who visited President Eisenhower on Monday of this week. They stated: "We favor adequate Federal advances to meet emergencies where the problems of unemployment are beyond the ability of the affected State governments." Michigan, I am afraid, fits this description. Its unemployment compensation system paid out about $324 million in benefits in 1958, while collecting only about $122 million in taxes and interest. Our State had to borrow $113 million under the Reed Act and through December 1958 it had obligated itself for another $64 million under the expiring Temporary Unemployment Compensation Act. The situation has gotten so bad that some Michigan employers have volunteered to pay their unemployment tax early so that benefit payments could be met. The Karsten-Machrowicz bill, which provides that the Federal Government will pay three-fourths of the money for benefits payments which exceed 2 percent of taxable payroll, is a reasonable way to approach the situation where an unemployment emergency has pushed a State unemployment compensation system to the wall.

If we are willing to look at the facts, it must become clear to all of us that we are not here concerned with a temporary problem which yields to the kind of passive patchwork approach which has so far prevailed. The cold fact is that although industrial production and the gross national product have improved, unemployment has increased steadily each month since last November. Some 256 major and minor labor areas are now on the critical list, with more than 6 percent of their total work force unemployed. Some 80 areas in 20 different States have, during the past 24 months, had more than 6 percent of their work force unemployed for a period of 18 months out

of 24 months. My own State of Michigan, one of the Nation's leading producers of durable goods, has felt the brunt of the nationwide business recession of last year. As of February 15, Michigan had 364,000 unemployed, or 12.4 percent of the total labor force. In Detroit we have 229,000, or 15.4 percent of the total labor force unemployed.

Moreover, we have not only a problem of numbers but of depth. For, as Max Horton, director of the Michigan Employment Security Commission told the Senate Finance Committee last Friday, of the 229,000 unemployed workers in Detroit some 85,000 are "what we call hard core unemployed. In other words, they have been out of the factories so long and they have no attachment, and for that reason we feel that we have an economic disaster."

We face a situation, Mr. Chairman, which is not going to be solved by reassurances from the administration that we have nothing to worry about. There are many reasons why unemployment hangs on. Automation is permanently eliminating many jobs in industry. On February 6 of this year the Federal Reserve Board pointed out that if the level of production in the automotive industry as of December 1958 is compared to that of December 1956, production in 1958 was only 4 percent less but the number of workers required was 20 percent less. Automation is making similar inroads in the electrical industry, in steel, and in the coal industry. We must recognize that the man who loses his job to a machine-especially if he is middle aged or over-is not going to find it easy to find another one, nor is his son going to be able to take over his father's old job.

The rate of economic expansion is too slow to provide new jobs for displaced workers or to absorb new entrants into the labor force. At the same time, the growing pool of unemployed helps to prevent wages from rising to supply needed purchasing power.

I am aware of the fact that the Governor's conference has just issued a statement to the effect that the States do not want Federal standards. But I remind the Congress that most of these States have failed to respond to the repeated exhortations of the administration that they act themselves to liberalize their own laws.

I am also aware of the fact that some of our more fortunate communities do not face the heavy problem we face in Michigan. But I have tried to indicate that our situation reflects the kind of industrial changes which are, increasingly, going to affect other communities in the land.

We face a situation which will not be solved by any source. It will not be solved by honeyed phrases. It will not be solved by conferences or councils. It must be solved by the Congress acting courageously and because we care. I believe that the measures here presented are that kind of program.

The CHAIRMAN. Mr. Rabaut, 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. RABAUT. Thank you, Mr. Chairman.

The CHAIRMAN. Any questions?

Thank you, sir.

We will now hear from our colleague from New Jersey, the Honorable Peter W. Rodino, Jr..

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