I share the widely held view that at present the State programs generally do not afford workers with sufficient protection against the ills of unemployment. If an unemployed worker's existence is to remain supportable and dignified through unemployment insurance, the benefits of the program must be in sufficient amount and for a sufficient period of time to hold the hardships of involuntary idleness to an irreducible practical minimum. It must, however, be acknowledged that such a program is bound to be expensive. And, it is financial considerations which have impeded the efforts of the States to construct ideal programs. As you are aware, this has particular application to the situation in our State. Only recently the Rhode Island law was amended and, although improvements were made, our program still falls far short of the public expectations. However, it is clearly apparent that unilateral action in Rhode Island to liberalize unemployment compensation further would cause economic dislocation of such dimensions that the net effect of the action would be to harm our State. The imposition of further financial burdens upon our employers at this time is out of the question. It would obstruct our now promising efforts to inject new vigor into our economy. We are now engaged in an all-out effort to attract new industries. We are encouraging plant modernization and product diversification in our present industries. Our goal is more job opportunities, with a more stable, year-round employment pattern. These efforts have already produced heartening results and our industrial structure now has a broader and better balanced foundation than in the past. It remains for us now to build upon this foundation. We are hopeful of the future. But for the present we must continue to be concerned over the state of our unemployment insurance program. When all sides of the problem are examined, one fact stands out in bold relief. If we are to make further improvement in Rhode Island, if we are to offer our workers the protection they deserve, Federal financial assistance must be forthcoming. This appears to be true in a growing number of other States. For the reasons cited above, we are hopeful that the committee will initiate action which will assure Federal support to the State unemployment insurance programs. With best wishes, CHRISTOPHER DEL SESTO, Governor. COMMITTEE ON WAYS AND MEANS, House of Representatives, Washington, D.C.: WATERBURY, CONN., April 15, 1959. The city of Waterbury, Conn., is suffering from long-run unemployment, and has only very moderately shown any signs of recovering from the recession. The problem of unemployment is still very much with us. I urge Congress to establish Federal standards for unemployment compensation as outlined in Karsten-Machrowicz bill. It is one way Congress can help us on the road to economic recovery. RAYMOND E. SNYDER, Mayor, City of Waterbury, Conn. APRIL 15, 1959. Hon. WILBUR MILLS, Chairman, House Committee on Ways and Means, DEAR CONGRESSMAN MILLS: In supplement to my telegram of April 15, 1959, indicating that extenuating circumstances prevented my appearance before your committee concerning the Karsten-Machrowicz bill (H.R. 3547), which provides for Federal standards for unemployment compensation, I am submitting the following statement for inclusion in the printed hearings and respectfully request that the enclosed 60 copies be made available to committee members and the interested legislative and executive department staffs. The additional copies are for the convenience of the chief counsel, Mr. Leo H. Irwin, for distribution to the press and interested public. STATEMENT As chief executive of the city of Torrington, Conn., I am deeply concerned with, and in support of, legislation at both levels: (a) At the State level in order to raise Connecticut's benefits to the minimum standards proposed by President Eisenhower et al.; and (b) at the Federal level in order to put an effective floor under the unemployment compensation program throughout the country. WHY WE NEED THIS BILL FOR CONNECTICUT 1. Measured against the standards of H.R. 3547, Connecticut falls short on all three counts: (a) Average benefit measured against average weekly earnings in 1958 was 38.6 percent-the bill provides a minimum of 50 percent. (b) Average duration of benefit in 1958 was 22.8 weeks-the bill provides a potential duration of 39 weeks. (c) Coverage in Connecticut is compulsory for an employer hiring three or more employees-the bill provides coverage for one or more. 2. In all States, experience rating, now imposed by Federal enactment, has served as an incentive for the introduction of harsh and capricious eligibility and disqualification clauses. This bill would permit all States to develop alternative financial arrangements. Some of the States attempting to meet the unemployment compensation needs themselves have been pushed to the verge of insolvency. They need reinsurance grants that would be provided by this measure. In other States, competition for industry has kept benefits and tax rates down. Federal benefits standards would end competition in unemployment taxes among the States. WHY WE NEED THE KARSTEN-MACHROWICZ BILL FOR TORRINGTON 1. The Torrington labor market, in the northwest corner of Connecticut, includes the towns of Torrington, Litchfield, Harwinton, Burlington, Morris, New Hartford, Goshen, Cornwall, Sharon, Salisbury, North Canaan, Canaan, Norfolk, Colebrook, Hartland, Barkhamsted, and Winchester. We first felt the effect of the recession in this labor market area in December of 1957, when unemployment rose to 8.2 percent of the total labor force. Since January of 1958, unemployment has never fallen below 10 percent, with the exception of 2 months. The number of unemployed in March 1959 was 11.2 percent of the labor force, or roughly 3,000 persons (total labor market: 26,700). 2. Those who have exhausted their unemployment compensation benefit rights in Torrington during 1958 totaled 1,530 (770 men and 760 women). This exhausted figure represents 9.4 percent of the total number of workers covered under unemployment compensation in our labor market area. During the first quarter of 1959, 478 claimants exhausted their benefit rights. 3. At the same time that unemployment and exhaustions were maintaining record highs, total factory jobs were declining from 10,880 in October of 1957 to 9,800 in March of 1959. The population of the area increased by 1,000 over the same period of time (72,200 to 73,200). 4. It is apparent from the above that Torrington is suffering from long-run unemployment, and has not recovered from the recession to any appreciable degree. A multipronged attack is necessary to relieve the problem in Torrington and in other areas similarly distressed. The establishment of Federal standards for unemployment compensation represents one important step which the Congress can take to help us on the road to economic recovery. Residents of Torrington were pleased to learn that 15 State Governors have joined in supporting this bill, including our own Gov. Abraham A. Ribicoff. May I add my own support as mayor of Torrington for this vital measure. In conclusion, I would like to emphasize the need and the urgency of a favorable report by the Ways and Means Committee, thereby providing for the hope and means of coping with the economic hardship directly related to chronic unemployment. It is the desire of the mayor's office to be of assistance to you in any possible way and if further information would be helpful, please do not hesitate to contact me. Sincerely yours, ANTHONY C. GELORMINO, Mayor. WHY DO WE NEED THE KARSTEN-MACHROWICZ BILL IN BRIDGEPORT? 1. The Bridgeport labor market includes the towns and cities of Bridgeport, Stratford, Milford, Fairfield, Trumbull, Monroe, and Easton. We first felt the effect of the recession in this labor market area in November of 1957, when unemployment rose to 6.1 percent of the total labor force. Since January of 1958, unemployment has never fallen below 9.3 percent. The average for all of 1958 was 10.9 percent. The number of unemployed in March 1959 was 9.6 percent of the labor force, or roughly 13,500 persons (total labor market in March 1959: 140,600). The Bridgeport area has suffered from curtailments in the machinery, aircraft, and electrical equipment industries. A number of plant closings have also left deep marks on the area. 2. Those who exhausted their unemployment compensation benefit rights in Bridgeport during 1958 totaled 9,560 (5,640 men and 3,920 women). This exhaustee figure represents 9.8 percent of the total number of workers covered under unemployment compensation in our labor market area. During the first quarter of 1959, 2,648 claimants exhausted their benefit rights. 3. At the same time that unemployment and exhaustions were maintaining record highs, total factory jobs were declining from 69,360 in October of 1957 to 61,270 in March of 1959. The population of the area increased by 8,600 over the same period of time (307,700 to 316,300). 4. It is apparent from the above that Bridgeport is suffering from long-run unemployment; there is little indication of any marked recovery from the lows of the recession period. A multipronged attack is necessary to relieve the problem in Bridgeport and in other areas similarly distressed. The establishment of Federal standards for unemployment compensation represents one important step which the Congress can take to help us on the road to economic recovery. Residents of Bridgeport were pleased to learn that 15 State Governors have joined in supporting this bill, including our own Gov. Abraham A. Ribieoff. May I add my own support as mayor of the city of Bridgeport for this vital DEAR CONGRESSMAN MILLS: The House Ways and Means Committee is currently holding hearings on legislation relating to Federal standards for unemployment compensation. The House version is H.R. 3547, and the Senate version is S. 791. I want to file this statement with your committee in support of this legislation and encourage favorable action by your committee in reporting the measure out. I am sure that with the economic trends we are experiencing in this country that it is necessary for the Federal Government to guard very closely against inadequate unemployment compensation payments. Inadequacies arise either with respect to the amounts paid for unemployment compensation or for the period of time during which a person might receive payments during unemployment. Legislation of the nature before your committee establishes certain standards which would be an assist in maintaining a better economic standard for our Nation's unemployed. Clearly, this in turn is of benefit to the economy generally, and the bill merits favorable consideration because of its impact on the other elements of our country's economy as well as recognizing the needs of the unemployed. I do believe that it is necessary as a general philosophy for the Federal Government to examine circumstances of this nature with the thought in mind that the general welfare of the country requires favorable action on this legislation. In so many parts of our country today, unemployment compensation is either totally inadequate or the period of time for payments is too limited considering the difficult employment market in some areas of our country. For the foregoing reasons, I urge favorable action on thsi legislation and sup port of it after the committee has reported the matter out for congressional action. Respectfully submitted. IVAN A. NESTINGEN, Mayor. OFFICE OF THE MAYOR, WAYS AND MEANS COMMITTEE, (Attention: Representative Wilbur Mills, chairman.) HONORABLE MEMBERS OF THE COMMITTEE: I desire to express my support for the Federal unemployment compensation standards bill which is known as the Karsten-Machrowicz bill. While the problem of exhausting unemployment compensation in Wisconsin has not been as great as in other States, there is still something of a problem in this State. In addition, there is the problem of technological unemployment which many Milwaukee workers have felt and which more will feel as automation becomes more and more prevalent. Representatives of employees have told me on several occasions of the problem of the pool of unemployed in their respective unions largely due to automation. They have stated that even with a recovery from the recession of recent months, their union members are not finding work because the output of industry has increased without increasing labor. It will be very difficult to find work for many people owing to the fact that they will. need to be retrained and owing to the fact that new types of industries will have to be established in order to give such people work. In addition, the prospect of shortening the workweek and increasing wages is not very great so that people will not be absorbed by this type of change in the economy. Consequently, I think that there should be some extension of unemployment benefits and that this can best be done by setting up certain Federal standards which will induce the States to conform to those standards. I, therefore, wish to be recorded in favor of the Karsten-Machrowicz bill which I think is a good beginning in this direction. Yours respectfully, FRANK P. ZEIDLER, Mayor. A STATEMENT CONCERNING THE ECONOMIC FACTORS UNDERLYING H.R. 3547 RELATING TO FEDERAL UNEMPLOYMENT INSURANCE BENEFIT STANDARDS (By Lawrence C. Lockley, Dean, School of Commerce, University of Southern California) Any modification of our unemployment compensation plans must be approached from the point of view that extensive periods of payment or rates of payment constituting a substantial proportion of the normal wage rates of recipients will in fact do more harm than good to those who are unemployed. For the last 25 years, we have been attempting to find ways of shielding workers from the dynamics of an industrial economy because they are not always able to take care of themselves. Only some 50 years ago, we were much nearer to the farm, and a consequential proportion of our workers could find shelter and food on the farms of relatives and friends. But as mechanization has come to both agriculture and to industry, individual workers are less and less able to fend for themselves in periods of unemployment, and are less mobile between kinds of work. In our zeal, and possibly under political pressures, we have attempted to protect various groups by legislative enactment, and by the appropriation of funds for rather direct relief. A penetrating analysis of the effects of such legislation is a highly technical task. Yet certain conclusions can be stated with considerable definiteness. We have acted on a statement of a series of "economic rights of man" which represent a noble aspiration, but which may not represent accomplishments possible by legislation. We can no more legislate the distribution of a given flow of economic goods and services-that is, a particular level of standard of livingthan we can legislate that all couples have happy marriages, or that all people have good health. We have accepted the responsibility, for the Federal Government, of maintaining a suitable economic climate. This acceptance was made by means of the Employment Act of 1946. Under this act, the Government's fiscal actions maintain conditions under which employers are able to offer broad employment opportunitites. It is clear that some direct payment to individuals from public funds is necessary. We have always had to support those among the aged who could not support themselves. We have had to support the incapacitated. We cannot, however, support broad groups of workers from public funds except during transitional periods without doing the economy great harm and reducing their future opportunities. It must be remembered that we are not living in a land of vast accumulated consumer goods. The elements of our standard of living come to us as a flow of goods, as those commodities are extracted, processed, or manufactured. Even our large and accumulated surpluses of agricultural products are not at a consumable point, but must be processed and distributed before they are ready for consumption. Steady rates of employment bring a smooth flow of consumer goods for the support and sustenance of our people. Goods cannot be created by legislation. What can be created is new money. Thus, unless every payment to individuals (for home relief, for unemployment compensation, for military pension, for compliance with certain agicultural programs, or whatever else) comes from taxes levied against individuals, such payments either depress business or contribute directly and greatly toward continued and increased inflation. Let me try to explain this statement-which is almost a truism to economists. Funds used for the payment of various programs of consumer support must come from: (1) Taxes against business, (2) taxes against the individuals, or (3) the creation of new money by the Federal Government. Taxes against business add to the cost of doing business, and this militates against profit expectations, and discourages business expansion. In fact, such taxes may help to eliminate marginal businesses. Insofar as possible, we should rely on normal business activity to support our economy and ourselves; therefore, we should attempt to avoid taxes which discriminate between businesses, or taxes which fluctuate. We should keep our tax levy against business as modest as our needs will allow. It is well known that business profits constitute a small percentage of sales, ranging typically from around 1 percent to rarely more than 5 percent. The fact that we have as large a volume of profits in the United States as we have is due to the large number of companies contributing to the whole. Business profits are a small part of our gross national product. We have no great pool of resources here to draw upon. The taxation of individuals brings about what economists call transfer payments. The consumption possibilities of one family are decreased by the amount transferred to another family for its consumption. And again, we have no great pool of wealth handy for taxation among the so-called rich. In 1956, the last year for which I have a report on individual income tax returns (Federal), I find that only 2.02 percent of those returning tax reports had adjusted gross incomes of over $15,000. I am aware of the fact that people put their poorest |