out the mathematics here of course had in mind the fact that there would be higher benefit rates, and these might of course require somewhat higher standard rates.

Mr. CURTIS. I think that is a fair comment.

I will say I tried to get into the breakdown of that which would come as a result of higher benefits, the increase in taxes, and that which would be the other limit of the tax, the experience rating, and I was unable to get any exact figure, but you could not have any employer go below 1.2 percent, as I understand this bill.

Mr. WILLIAMS. I have a slightly different interpretation here, but I cannot put it together quickly enough.

Mr. CURTIS. Governor, we could leave the record open at this point and you could submit it.

Mr. WILLIAMS. Yes.

MINIMUM CONTRIBUTION RATE

The relevant language may be found in section 1201(a)(12), with respect to calendar quarters commencing after the computation date for the first taxable year beginning after December 31, 1961, and prior to the computation date for the first taxable year beginning after December 31, 1966; and in section 1201 (a) (3), with respect to calendar quarters commencing after the computation date for the first taxable year beginning after December 31, 1966. I quote section 1201 (a) (3) below. (Par. 2 of this section is identical except that it relates to the taxable years during the interim period extending from 1962 through 1966.)

"(3) A State shall not be entitled to a reinsurance grant for any calendar quarter, commencing after the computation date for the first taxable year beginning after December 31, 1966, if with respect to any year within the five most recently completed taxable years ***

"(A) the balance in the State's unemployment fund on the computation date for such year was less than an amount equal to 6 per centum of the most recent annual taxable payroll or less than the amount of the compensation paid from such fund under the State unemployment compensation law during the two years immediately preceding such date, whichever amount is greater; and"

"(B) the minimum rate of contribution required to be paid into the State fund during such taxable year was less than 1.2 per centum."

The two preceding criteria appears to me to mean that if the balance in the State's unemployment fund on the computation date for any taxable year within the five most recently completed taxable years was at least equal to the greater of (1) 6 percent of the most recent annual taxable payroll and (2) the amount of compensation paid out of the fund during the 2 years preceding the computation date, the State can assign rates for the taxable year less than 1.2 percent (even including zero rates) without thereby affecting its right to reinsurance grants. Only if the amount in the unemployment compensation fund of the State is less than the greater of these two amounts would the State be required to have a minimum rate of 1.2 percent in order to maintain its eligibility for reinsurance grants. Thus, the contribution rates now in the Michigan law could be largely retained without prejudicing the State's rights to reinsurance grants if the following changes are made:

(a) In the heading for the intermediate schedule, change "5 percent" to "6 percent."

(b) In the heading for the least favorable schedule, change "5 percent" to "6 percent."

(c) In the least favorable schedule, make all contribution rates 1.2 percent for employers with rating account percentages of 7.2 percent or more. (d) Add a proviso that no employer's contribution rate under any schedule may be less than 1.2 percent whenever the fund balance on the applicable June 30 computation date is less than the amount paid out in benefits during the 2-year period ending on such computation date.

These changes would give effect to the criteria in the Karsten-Machrowicz bill and would still permit rates as low as zero under the proper fund balance conditions.

Mr. CURTIS. I am just trying to understand this.

Mr. WILLIAMS. I appreciate your fairness.

Mr. CURTIS. Two final points I wanted to establish.

First of all, we have been trying to determine who are the unemployed. Michigan's system actually breaks the unemployed down into categories, does it not?

Mr. WILLIAMS. Yes, sir; into family classes.

Mr. CURTIS. Yes.

Therefore, I imagine we could get some pretty good statistics from the State of Michigan as to at least who the unemployed in Michigan

are.

Mr. WILLIAMS. We can, and Mr. Barcus here works with that and he may be able to give you some general figures right now.

Mr. CURTIS. Rather than take the time of the committee, I want them mainly for the record so they will be available to the committee when we go into executive session.

(Information referred to follows:)

TABLE 1.-Number of 1958 claimants with benefit rate equal to 50 percent or more of average weekly wage under present law, by family class

TABLE 2.-Number of 1958 compensable weeks which would have been increased under Kennedy bill, by family class and amount of increase

TABLE 3.-Amount of payments for total unemployment under present law and under benefit formula of Kennedy bill, by family class, 1958

1 Figures shown based on effect of benefit rate standard only. Duration effects not included.

TABLE 4.—Average payment for week of total unemployment, under present law and under benefit formula of Kennedy bill, by family class, 1958

TABLE 5.-Summary of cost effects of minimum application of the Kennedy bill standards for benefit formula, 1958

Item

Present law Kennedy bill

1. Average weekly wage in covered employment (fiscal year ending June 30, 1958).

4. Extension of duration to 39 weeks, uniform:

3. Added cost of making all benefit rates at least 50 percent of wage, up to 33 of State average weekly wage.

(a) Additional weeks compensated..

(b) Additional cost.

5. Total cost (based on year 1958).

6. Cost as percentage of annual taxable wages..
7. Cost as percentage of annual total wages.
8. Percentage increase in costs over present law.

49.49

Percent who received benefits

EXHIBIT A

COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC. ADEQUACY OF BENEFITS UNDER NEW YORK UNEMPLOYMENT INSURANCE LAW The following table presents the percentage of the weekly benefit amount under the New York unemployment insurance law to (1) the average weekly gross wage, (2) the take-home pay of a single person, and (3) the take-home pay of a married man with two children. Take-home pay is the average weekly wage less withholding and social security taxes.

1 These percentages are from "Operations" (February 1959) published by New York Division of Employ. ment.

45

47.4 57.2

52.6

45

45.0 54.2 50.5

TABLE 6.-18t payments by number of dependents payable and family class1State unemployment compensation, 1946–58

1 Amendments to the Michigan act effective June 26, 1954, provided for separate benefit rate schedules for 6 different family classes.

Mr. CURTIS. One other question.

Would those statistics reveal the wages of those unemployed, or wouldn't you have those statistics compiled?

Mr. WILLIAMS. We would have the averages, but I don't know whether we would have the specific ones.

Mr. CURTIS. Average and classes of those who are unemployed. That is what we are trying to get.

Mr. WILLIAMS. We can do it for those who are receiving benefits, not the unemployed.

If you would like to frame your questions and give them to us in writing so we will understand exactly, we will try and get exactly what you want.

Mr. CURTIS. Maybe I can explain quickly here.

I have been trying to get some sort of idea of just who are the unemployed and who are getting the unemployed benefits; for example, as to whether they are heads of families, whether they are single people, whether they are secondary wage earners in the family; and then also to try to estimate what were the last wages of the unemployed so we can determine how well the States have been doing in relating benefits to the last wages of those who actually are the unemployed. In other words, the original formula in 1935 was set up on the basis of benefits being 50 percent of the previous wages of the unemployed, and there is some real indication that the States have not kept up with that. Yet most of the figures we have relate not to the wages of the unemployed, those who are actually receiving the benefits, but are related to the labor market.

There is some indication that the majority of the unemployed tend to be from the unskilled and lesser skilled groups, and therefore would be in the lower than average wage bracket, so it is figured along those lines, and I would just leave the record open.