benefits are entirely inadequate in amount and also are of a far too short duration.

You gentlemen have been supplied with statistics of all sorts that speak, not only of the growing army of the unemployed, but also bear testimony in clear terms that the very small amount of compensation given can hardly cover the ever-rising costs of food, shelter, and clothing-the essentials of life. These irrefutable figures, I need not cite again. But I do ask that you open your hearts to the needs of the suffering millions of men, women, and children. Heed their cries and rest assured that your affirmative action in favor of this muchneeded legislation will not only give a helping hand to those in need, but will prove, in large measure, to be also a factor in stimulating our Nation's economy.

The CHAIRMAN. Mr. Friedel, 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. FRIEDEL. Thank you, Mr. Chairman.

The CHAIRMAN. Any questions?

Thank you, sir.

We will now hear from our colleague from Pennsylvania, the Honorable Herman Toll.

Mr. Toll, will you please come forward to the witness table?

We appreciate having you with the committee this morning, Mr. Toll, and you are recognized.

STATEMENT OF REPRESENTATIVE HERMAN TOLL, OF

PENNSYLVANIA

Mr. TOLL. Mr. Chairman, members of the committee, I appreciate this opportunity to appear before you and submit my testimony on behalf of the Karsten-Machrowicz bill, H.R. 3547.

I am one of those Members of Congress who have asked to be announced in support of this bill and I reaffirm my support now.

At the present time in Pennsylvania, maximum unemployment compensation is $35 per week for a maximum duration of 30 weeks. Even though this is high in comparison with many States, it is evident that $35 is not a sufficient amount to give the expected American standard of living to the average family. Under the proposed bill, the maximum in Pennsylvania would be increased to $55 a week for a duration of 39 weeks.

Under the present law, the maximum total amount an unemployed worker in Pennsylvania can receive is $1,050. Under the proposed law it would be $2,145. This would constitute an increased unemployment compensation of $1,095. It is a substantial difference and an increase that would be welcomed by every unemployed worker in the State of Pennsylvania.

At the present time Philadelphia is classified in group D. Group D is that category in which jobseekers are in excess of job openings and according to Area Labor Market Trends, published by the Department of Labor, this situation is expected to continue over the next 4 months. I hope this is not so, but my own personal feeling is that it will continue much longer than the next 4 months, and I believe we face the grave possibility that the number of unemployed will increase.

I recognize that this bill is a departure from past practice. Like you, I have heard the cry that States rights are being violated. But States rights do not include the right to enforce a substandard level of life upon the unemployed, nor do they include the freedom to look the other way as our economy weakens.

Our economy is integrated. It cannot be separated into segments, some rich, some poor. No States are islands, all are interrelated economically with the other.

Some States may try to retain low compensation benefits in order to keep premium payments down and use this situation as bait for new industry. I regard this a shabby trafficking in the lives of working people. The competitive enterprise system nowhere should mean competition to achieve the lowest living standards possible. Competition between the States in such a direction is surely unhealthy. I am certain that the Governors of the various States will go on record with this committee as welcoming Federal unemployment compensation standards without fear that the rights of their States are being violated.

Unemployment is a great destroyer of the American way of life. It brings despair and poverty to the American family and all too frequently becomes a wrecker of the American home. Therefore, I feel that all of us should work together to move our people closer to the American ideal.

No State by itself can suffer unemployment without affecting other States. Unemployment is not a State problem but a national problem. No one State can remain secure, while other States suffer from unemployment. The decline of purchasing power in any one State is bound to affect all of the States. That is why I feel that we should rise above sectional differences and earnestly strive for a prosperous America.

This bill, of course, will not by itself give us a more prosperous America, but it will give to unemployed workers all over America increased purchasing power and it will reduce the possibility of facing another major depression.

I have stated my earnest belief and I sincerely hope that a great majority of you will vote for approval of the Karsten-Machrowicz bill, H.R. 3547.

Thank you very much.

The CHAIRMAN. Mr. Toll, 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. TOLL. Thank you, Mr. Chairman.

The CHAIRMAN. Any questions?

Thank you, sir.

Our next witness is Mr. Frank Cantrell, a native of my home State and a friend of many years, who is representing the Arkansas State Chamber of Commerce, the Associated Industries of Arkansas, and Conference of Southern Industrial Associations.

Mr. Cantrell, you are recognized.

STATEMENT OF FRANK W. CANTRELL, MANAGING DIRECTOR OF ASSOCIATED INDUSTRIES OF ARKANSAS, INC., ACCOMPANIED BY DAMON HARRISON, DIRECTOR OF INDUSTRIAL DEVELOPMENT FOR THE LOUISVILLE CHAMBER OF COMMERCE

Mr. MASON. Mr. Cantrell, before you start let me congratulate you upon your representation in Congress. You have in my estimation one of the topmost men in the House of Representatives sitting in this chair here, and he does not belong to my party.

Mr. CANTRELL. Thank you, Mr. Mason. It is indeed a great source of pride with all the people of Arkansas that the chairman of this distinguished committee is a native son of Arkansas and in fact all the members of our delegation give us a great deal of pride. We think we have one of the finest in the United States in our delegation.

The CHAIRMAN. You have so well qualified yourself, Mr. Cantrell, that we will just take the time limit off.

Mr. CANTRELL. Thank you, Mr. Chairman.

May I say, Mr. Chairman, that I have with me Mr. Damon Harrison, director of industrial development for the Louisville Chamber of Commerce, who is more of a technician in matters of unemployment compensation than I.

Mr. Chairman, and members of the committee, my name is Frank W. Cantrell. I am managing director of Associated Industries of Arkansas, Inc., a State association of manufacturers and other industrial employers, and I am managing director of the Arkansas State Chamber of Commerce, in which position I have devoted some 15 years of attention to labor-management relations and in whose behalf I appear here today.

appear also in behalf of the Conference of Southern Industrial Associations, of which Associated Industries of Arkansas is a member. The conference is a federation of 17 State and regional associations of manufacturers domiciled in 13 of the Southern States. Among the 14,000 firms comprising the membership of these associations are many engaged in the so-called low-wage industries, such as lumber and wood products, furniture, apparel, textiles, and food products, which constitute an important segment of the South's manufacturing industry.

A list of the conference members is appended to this statement.

Industrial employers of the South as well as other regions of the Nation have long recognized the social and economic desirability of insurance against the hazards of unemployment resulting from factors over which the employee has no control. So it is not our intention to find fault with the concept of unemployment compensation.

We believe, however, that experience has confirmed the wisdom shown by the Congress, when it established the social security system, in leaving to the several States the authority to enact their own unemployment compensation laws in conformity with the Federal legislation. In so doing, Congress gave recognition to the wide differences in economic development, in income levels, and in wage structures as among the States.

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It was emphasized at that time that the States were to have wide latitude in the establishment of their unemployment compensation systems, unless the States turned the unemployment compensation systems into relief programs which it was desired to avoid.

Thus the standards of compensation, the weekly benefit amount, the duration thereof, and the conditions of qualification, have in the two decades of our experience with this legislation tended to reflect an evaluation of practical needs by those grassroots lawmakers, the members of our State legislature.

The argument has been advanced in justification of proposals to impose on the States Federal standards of unemployment benefits, that such legislation is needed because the States are not making adequate provision for their own people faced with loss of earnings during periods of employment.

It is contended that inasmuch as the State legislatures are unwilling to do the right thing, it therefore devolves upon the Congress to whip them into line by the stick-and-carrot method.

This would place the Congress somewhat in the position of the Boy Scout who had such a tough time doing his good deed for the day because the old lady fiercely resisted being escorted across the street.

From whence does the clamor for Federal standards of unemployment benefits arise? Does it come from the States themselves? Are large numbers of our citizens across the country presenting petitions to the Members of Congress requesting federalization? Do all the Governors of the 50 States favor federalization? Do the State administrators of unemployment compensation advocate federalization? I believe you will find a majority opposed to such legislation.

Does not the campaign for Federal standards arise perhaps right here in Washington itself?

The pending legislation it appears would drive one more nail in the coffin of our State governments. It clearly would deprive the States of one more important area of responsibility to their own citizens. It seems intended to further the concentration within the Federal Government, here in Washington, of every last vestige of control over the entire field of labor-management relations.

Proposals to federalize the unemployment compensation program imply that the State governments have neither the will nor the capacity for determining and meeting the needs of their own people; that therefore the Congress must rescue the people from the weaknesses and iniquities of their own State governments. If this be so, then what further need have we for State capitols and State legislatures?

As an attempt to forge one more link in a long chain of legislative enactments and court rulings that have steadily reduced the powers and authority of the States, the pending legislation must be strongly opposed as one more invasion of an area heretofore reserved exclusively to the States.

A

The history of our State employment security statutes over more. than 20 years is one of continuous improvement and refinement. At vitrually every session of every State legislature, amendment of the Employment Security Act is a perennial object of consideration. large proportion of those State acts which result are based on "agreed” bills, hammered out and agreed to in prelegislative negotiations by representatives of labor, management, and the State agency involved.

This very year, 1959, will undoubtedly bring unparalleled increases in unemployment benefits. Forty-four State legislatures are either meeting or have completed their sessions and a State-by-State survey indicates that increases in weekly benefits, most of them very substantial, are expected in more than 30 States, and an increase in duration of benefits in at least 20. This survey indicates that the States will continue to meet, and in some instances exceed, the presidential recommendation of 1959.

By late March, there were 18 States that had either completed their legislative programs for 1959 or had adjourned their sessions without enacting any major legislation in the unemployment compensation field. The following are items of completed legislation:

Eleven States have increased duration, 2 to 24 weeks, 4 to 26 weeks, four beyond 26 weeks, and one with provision for an "emergency" extension of duration triggered by a measure of high unemployment. Several other States are likely to enact a similar provision.

Ten States have increased weekly benefit amounts, with escalator provisions in three of the States.

Four States will count pensions as income deductible from benefits. Indiana and Ohio have approved unrestricted payment of unemployment benefits and supplemental unemployment benefits of the Southern States represented by the Southern Conference Industrial Associations, action to increase the weekly benefit amount or to extend duration has been taken this year by Tennessee, Louisiana, and Arkansas.

Similar action is expected to be taken this year by Alabama, Florida, North Carolina, Oklahoma, and Texas. Kentucky raised its benefit amount last year.

Four States increased the maximum tax rate beyond 2.7 percentthree to 3.7 percent and one to 4 percent.

In this connection in relation to the testimony of the Under Secretary of Labor this morning with regard to an increase in the 0.3 percent Federal tax, I think there is an increasing tendency on the part of the States to increase their tax rate, and of course if more money is needed for the payment of benefits, that would seem to the business associations the way to do it, to keep their funds solvent by increasing their tax.

Four States have increased qualifying wage or employment conditions for benefit eligibility.

As noted above, more than a dozen States are expected to increase duration beyond 26 weeks, about half as permanent extensions of a variable duration formula and half as emergency measures, like temporary unemployment compensation (TUC), triggered by some measure of high unemployment.

Perhaps the members of the committee will permit a few references, for purposes of illustration, to the record in this respect of what has been unjustly termed a "laggard" State-my own State of Arkansas.

Arkansas is known as a low-income State. Its per capita income is less than two-thirds of the national average. It has a predominance. of those industries that pay low wages nationwide. Its average weekly wage in manufacturing, approximately $60, is substantially below the national average. Unemployment benefit levels that might be appropriate for Connecticut or California simply would be unrealistic for Arkansas because the wage base is just not there.