Mississippi Manufacturers Association Associated Industries of Nebraska New Hampshire Manufacturers Association Virginia Manufacturers Association West Virginia Manufacturers Association The Conference of State Manufactureis' Associations is opposed to the imposition of Federal benefit standards upon State unemployment compensation laws. Federalization of benefit policies would take from the States the right and responsibility to determine unemployment compensation policies. It would completely disregard the experience gained over many years by members of State legislatures who have become thoroughly familiar with this complicated and technical field of legislation. It is completely contrary to the principle this same committee stated in 1935 that: "Except for a few standards *** the States are left free to set up any unemployment compensation system they wish without dictation from Washington." Under a federally dictated, uniform system, as proposed in the measures presently before this committee, concepts completely foreign to a well-balanced unemployment compensation system would be embraced. States would be required to pay the same benefits for the same length of time to everyone, regardless of whether the unemployed person had worked only a few weeks or 5 years. Benefit payments would be so high, in many cases, that very little margin would exist between weekly benefits and the take-home pay an individual might expect to earn if he should seek a job. The States would be prohibited from denying benefits to applicants who quit their jobs without cause and refuse to accept suitable jobs. The States would be invited to reduce their own taxes, to finance benefits from Federal funds, and to confine their experience rating programs within such a narrow range as to severely limit, if not eliminate, the existing incentives for employment stabilization. Misrepresentation has been used in attempts to support federalization. Those who exhaust present State benefits are not necessarily dependent upon wages, as has been stated, and, in fact, about half are usually young people and women who are not family heads. Unemployment compensation has been criticized for its failure to meet problems of long-term unemployment when it was never intended for that purpose. Unemployment compensation was designed to provide partial compensation during a relatively short period. Proponents of federalization have stated that payments are generally inadequate, without backing up the charge with anything more factual than their own opinions. State laws have been criticized as not fulfilling the original intent of the Social Security Act of 1935 when, in truth, States are paying far more in benefits than was originally contemplated; benefits are being paid sooner; benefits are being paid longer. In short, the Conference of State Manufacturers' Associations believes unemployment compensation is a State matter which has been and can be handled successfully by the States. We also firmly hold that the preservation of a sound unemployment compensation program in the United States depends upon protection of the integrity and independence of State systems. To the Chairman, Hon. Wilbur D. Mills, and the Committee on Ways and Means, U.S. House of Representatives, Washington, D.C.: We respectfully request consideration of the position of Louisiana business as outlined herein on the various proposals before your committee to specify Federal standards for employment security and tax increases which the States would be forced to meet. This position is coordinated and endorsed by the trade and business associations of Louisiana whose names are subscribed hereto, the membership of which totals some 50,000 businessmen. POSITION OF LOUISIANA BUSINESS ON FEDERAL STANDARDS REGARDING EMPLOYMENT SECURITY AND UNEMPLOYMENT COMPENSATION Recommendation of the President's Committee in 1935 was for a Federal-State unemployment compensation system, with the States to establish the benefit amount, duration, eligibility requirements, and disqualification provisions, subject to a minimum standard restricted to the following: (1) Benefits must be paid through employment offices. (2) All contributions collected by the State must be deposited in the unemployment trust fund in the United States Treasury. (3) All money wihdrawn from the fund must be used solely for the payment of benefits, with certain exceptions. (4) Benefits may not be denied to a person for refusing to accept new work under any of the following conditions: (a) if the position offered is vacant due directly to a strike lockout, or other labor dispute; (b) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality; and (c) if as a condition of being employed the individual would be required to join a company union or to resign or refrain from joining any bona fide labor organization. The House committee report and the Senate committee report on the provisions of the bill which was finally enacted into Federal law contained the bases on which the Federal-State system was adopted. Since then, all State and Territorial legislatures, hundreds of State management-labor committees, advisory councils, and thousands of experts have worked millions of man-hours to develop fair and realistic unemployment compensation systems and the State governments themselves have spent even more time in their proper administration. Each State and Territorial legislature can do what is proper for its State and it knows its State's problems. Is it realistic for the Congress to assume that the work of the States and local people has been all wrong, and that the Federal Government could do a better job than all the people in the States have been able to do in nearly a quarter of a century? The decision of whether an unemployment compensation system is adequate or inadequate should rest with the people of the State involved. The law establishing such a system should reflect the desires of the people of that State. Certain fundamental principles are basic to the proper functioning of the unemployment compensation system. The demands made upon the system will vary from State to State because of the differences in industrial, economic, and social characteristics. What may be sound policy for one State may not be sound for another. It is neither fair nor sound to establish a standard of benefits based upon a high industrial economy for application to a low-wage nonindustrial State, or to apply low benefits to a high-wage industrial State. As the economy of a State changes, the legislature recognizes changing conditions and acts to adjust its unemployment compensation law to meet the challenge of the new economic structure. To deny the legislative processes of the States is to deny the propriety of the very basis of our constitutional system, which recognizes the sovereignty of the constituent States and the capacity of the people to govern. Accordingly, the position of Louisiana business is very clear as expressed in the following: I. Louisiana business is dedicated to maintain the constitutional relationships between the Federal and State Governments. In resisting changes by usurpation, it is resisting the process of death in the elimination of the legitimate rights of the States to keep governmental responsibility and authority in the hands of their people. II. Louisiana business therefore witnessed with deep regret the usurpation of States rights in the field of unemployment compensation by the Congress of the United States when in 1955 it amended Federal standards to tax employers of four or more rather than eight or more as originally adopted in 1935 and as then proposed to the States. The States were not permitted to concur in or ratify such action but by the device of an overhanging vast Federal tax increase were constrained to amend their laws. Such action could be construed as not affecting the rights of the State of Louisiana since that State in 1940 (or 15 years before the 1955 usurpation of rights) had seen fit to enact voluntarily identical legislation for the good of its economy and the employment security of its people. Nevertheless, the action of the 1955 Congress infringed upon the rights of Louisiana and now further usurpation is proposed to your committee. III. Confidence of Louisiana business was stimulated by the action of the House Ways and Means Committee in— (a) Rejecting the Sidney Hillman war displacement bill in 1942. (c) Voting down supplementation proposed in the administration war mobilization and reconversion bill in 1945. (d) Rejecting the proposal in the Moody-Dingell bill of 1952. It is prayed that the House Ways and Means Committee in 1959 will again consider inviolate the rights of the States to amend their laws on employment security as they find advisable without interference by the Congress of the United States. IV. Louisiana business considers that the rights of the State of Louisiana would be usurped by any action of Congress which would force the State by means of an overhanging vast Federal tax increase to extend coverage when its legislature has consistently refused to do so during the past 8 years. During those years the Louisiana Legislature has not deemed that such measure would contribute to employment security in this State. Thirty-one other State legislatures have rejected similar proposals. The recommendation before your committee proposes to remove their right to judge this matter and to repeat the usurpation of that right by the 1955 Congress of the United States. V. Louisiana business doubts the propriety and questions the competency of any person or small group, particularly those not citizens of this State, to categorically state as is done in the enacting clause of some of the bills before your committee that: (a) The State of Louisiana has not carried out the purposes and objectives of the Social Security Act of 1935. (b) Substantial categories of workers are not covered for such benefits. (c) Benefit payments are inadequate to provide the worker and his family with the basic necessities of life. The State of Louisiana has most closely adhered to the purposes and objectives of the Social Security Act of 1935 despite the efforts of outside forces to change them. These purposes and objectives are: (a) Unemployment benefits were originally and now are intended only for those out of work through no fault of their own, who are able to work, available for work, and willing to accept suitable work at the prevailing rate in the community. (b) Unemployment benefits are a partial replacement of wages to meet basic necessary living expenses. (c) Such benefits should be on a sound economic and fair basis both to the worker and to business, without reducing incentive to work and to seek work and without destroying the incentive to employers to stabilize employment. As late as 1958 the Louisiana Legislature by its actions confirmed these purposes and objectives and rejected every proposal made to depart from them. Proposals before your committee, in principle, seek to repudiate the action of the Louisiana Legislature and to require it to adopt almost identical measures which it has just rejected, as being unsound and a deterrent to employment security in Louisiana. In 1938, the year benefits were first paid, Louisiana was primarily an agricultural State with its manufacturing confined principally to lumbering, food products, and textiles. The population was largely rural. Since then, there has been a change in our economy to one tied to oil and gas, with increased industrial activity and reduced agricultural development. The population has shifted much from rural to urban. While industry required an investment of $7,000 per employee in 1938, today an investment of some $80,000 is needed for each employee in new manufacturing establishments. Industrial development brought about higher wages, greater employment, and higher standards of living. The Louisiana Legislature has adjusted its employment security law through the years to take into account economic changes. Here is how it has met the challenge: ! As will be seen later the Louisiana Legislature did not see fit to adopt recommended increases proposed. In the States computing weekly benefits as a percentage of highest quarter earnings, Louisiana is among the five States which give the highest percentage. In the States computing maximum benefits on a percentage of base period earnings, Louisiana is second in the Nation. During the past 21 years Louisiana's average weekly wage has risen from $22.19 to approximately $78. Average weekly benefits have risen from 37.9 percent of average wage to 41.3 percent of average wage, or from an average weekly benefit of $8.41 to an average weekly benefit of $31. While Louisiana's average wage has increased 251 percent during that time, the average weekly benefit has increased 268 percent. The present buying power of Louisiana's unemployment compensation benefit is 75 percent greater than in 1938 as compared with the national average increase in benefit purchasing power of 37 percent. Meanwhile, the Louisiana Legislature in 1952 placed financing safeguards in the Louisiana employment security law to accelerate average tax rates directly in proportion to increased benefit payments. In this respect, no other State law has so adequately provided. VI. The paramount question is whether Congress or the Louisiana Legislature shall have the right to determine (a) The weekly amount and duration of State benefits. (b) Eligibility requirements for State benefits. (c) Coverage of employees for State benefits. (d) Effect of such benefits on Louisiana's economy and the stabilization and security of employment of its citizens. However, full consideration should be given to the details of proposals to establish Federal benefit standards and their effect on Louisiana business. (a) Louisiana business sponsored the only bill in the 1954 Louisiana Legislature to increase the weekly benefit amount and duration. In 1956, business sponsored another bill to increase the weekly benefit amount and duration. In 1958 the Louisiana Legislature, after a healthy compromise of Louisiana business and organized labor, increased the weekly benefit amount to $35 and the duration to 28 weeks. Thus, Louisiana is now second in the Nation in duration and close to the top in maximum benefits. The average weekly benefit in Louisiana is now $31. This is the highest in the South and among the highest in the country. |