Federated Employers of San Francisco. Furniture Manufacturers Association of California. General Telephone Co., of California. Glass Container Manufacturers Institute, Inc. Los Angeles Clearing House Association. Los Angeles Motor Car Dealers Association. Merchants and Manufacturers Association. Metal Trades Manufacturers Association of Southern California. Monolith Portland Cement Co. Northern California Ready Mixed Concrete & Materials Association. Pacific Gas & Electric Co. Pacific Maritime Association. Pacific Mutual Life Insurance Co. Rexall Drug Co. Riverside Cement Co. San Bernardino-Riverside Counties Rock Products Association. San Diego Clearing House Association. San Francisco Clearing House Association. Southern California Asphalt Plant Association. Southern California Edison Co. Southern California Gas Co. Southern California Restaurant Association, Ltd. Southern California Rock Products Association. Southern Counties Gas Co., of California. Southwestern Portland Cement Co. United Employers, Inc. Western Growers Association. Western Oil & Gas Association. In similar hearings before the Ways and Means Committee last year, the proponents of Federal standards argued that the States were failing to do an adequate job as far as monetary benefits were concerned. Undoubtedly considerable testimony has already been offered during the course of the present hearings concerning the record of the various States since the beginning of unemployment insurance. The development of the California program has been as follows: In addition, the California Legislature in 1946 was the second State (of a total of four States) to enact a program of unemployment compensation for those out of work because of nonoccupational disability. Both programs are serving their purpose well. CALIFORNIA DEPARTMENT OF EMPLOYMENT EXPENDITURES IN EXCESS OF A HALF BILLION IN 1958 In 1958, an alltime high for California was established in the amount of benefits paid under the provisions of the California Unemployment Insurance Code. Over a half billion dollars was paid out as follows: In unemployment benefits, $378,790,500. In unemployment compensation disability, benefits (to those out of work because of nonoccupational disability), $131,755,000 (estimated). These benefits were received by about 1,500,000 individuals. These pertinent figures offer a further means of evaluating the real effectiveness of California law during 1958. 3967859-75 THE CALIFORNIA LEGISLATURE SHOULD RETAIN RESPONSIBILITY FOR UNEMPLOYMENT INSURANCE It is the position of the employers in California that the State legislature can best determine the adequacy of benefits under these programs for workers in California. This legislature, now in session, has before it 98 bills affecting this program. The matter of higher benefits and extended duration will be given serious consideration. For many years the leaders of both labor and management in California have worked closely with the State legislature in developing a fair and sound program. Those who advocate Federal benefit standards would take away the authority of these people who live with the problem and give it instead to Congress which deals with many thousands of bills a year on every conceivable subject affecting the vital existence of the Nation. CONSIDERATION MUST BE GIVEN TO FISCAL PROBLEMS Advocates of Federal standards openly complain that some States cannot afford to pay the higher taxes necessary to finance higher benefits for longer periods of time. They mistakenly feel that the advent of Federal control will be without cost to the program. It should be pointed out that both the Federal and State Governments follow the same procedure in financing unemployment insurance. In California the present tax on employers to finance this program is 3 percent of taxable wages, 0.3 percent being paid to the Federal Government for administration purposes and up to 2.7 percent being paid to the State to finance benefit payments. This type of financing must be kept within carefully confined limits for the following reasons: (a) It is a tax on employment and may tend to restrict employment. (b) It has no necessary relationship to capacity to pay. (c) It will be shifted to consumers in the form of higher prices than would be charged were there no such tax. The average tax rate in California in 1959 is estimated by State officials at 2.07 percent (a total of 2.37 percent with the Federal tax). This tax rate in 1959 will produce only enough revenue to finance the existing State program in a year like 1959. As noted above, the California program will be expanded again this year and tax revenue will likewise have to be substantially increased. Furthermore, the Federal tax rate for California employers is already scheduled to increase to finance benefits currently being paid under the Temporary Unemployment Compensation Act of 1958. Beginning in 1963, the Federal tax on California employers will increase from 0.3 to 0.45 percent; in 1964 to 0.6 percent etc., until all benefit expenditures under this particular program have been met. To those who suggest that the greatly increased cost of Federal standards should be met by increasing the general tax revenue taken from the larger States, it should be pointed out that the per capita State and local taxes in California and New York are already the highest in the Nation. THE MOST IMPORTANT ISSUE WITH FEDERAL STANDARDS IS THE PRINCIPLE INVOLVED It is fundamental to our American system that the Federal Government move into a new area of legislative compulsion only when there is a well-established need for Federal action and a proven failure on the part of the States. The original purpose of the Federal Unemployment Tax Act was solely to persuade the States to enact unemployment insurance laws. That original purpose has been accomplished. It would seem, therefore, that instead of imposing additional Federal control over the State systems that the present Federal control might well be eliminated, or at least modified substantially. With Federal benefit standards, and the Federal standards on finance and other aspects of the program which would inevitably follow, unemployment insurance would become a completely federalized system. Nothing would be left to the States but the ministerial function of government. This would be a radical departure from the philosophy of government upon which the unemployment insurance system was founded and has grown, and a form of political centralization to which we most strenuously object. Respectfully submitted. WILLIAM B. HUBBARD, President. WASHINGTON CONFERENCE ON UNEMPLOYMENT COMPENSATION, Hon. WILBUR D. MILLS, Chairman, House Committee on Ways and Means, DEAR MR. MILLS: The Washington Conference on Unemployment Compensation is a statewide trade association representing the business and industry of Washington State covered by the Employment Security Act. This statement is presented in the name of the conference on its own behalf and on behalf of its members. The purpose of the statement is to oppose H.R. 3547, now pending before your committee and to respectfully petition its defeat. The conference also opposes the companion bill in the Senate, S. 791. We submit that Federal unemployment benefit standards proposed in H.R. 3547 would: 1. Be a fundamental infringement on States rights. 2. Increase unemployment benefits beyond the point of being aid and assistance while looking for a new job. 3. Work an unnecessary and undue hardship on the taxpayers of the Nation. 4. Open State unemployment laws to wider and further misuse, abuses, and inequities. 5. Soon deplete substantial unemployment funds built by some States. In further explanation of our opposition: 1. If passed, these proposals would remove from State legislatures the power to set unemployment benefits and duration and cause all States to comply with the proposed standards. Since States vary widely in economic conditions, unemployment problems, and other conditions, such proposals would severely handicap State legislatures in correcting their own problems, a right that is desirable and inherent. 2. Under proposals in these two bills, it would be possible for an unemployed workman to actually draw more in unemployment benefits than many of his fellow workers on the job full time. In other cases, he would be able to draw nearly as much in unemployment benefits as he could working a full week-with unemployment benefits being tax free. 3. These proposals would open the Treasury of the United States to make nonrepayment grants to States with depleted unemployment funds for the purpose of paying unemployment benefits. Under such a proposal, unemployment would soon no longer be an employer responsibility, but the responsibility of all taxpayers in addition to still heavily taxing the employer at the 3 percent level or higher. Citizens and employers alike, in States where their unemployment was well covered and with a substantial fund, would be taxed through the general taxation program to assist areas where through neglect, loopholes, and inadequacies in State unemployment law, funds had been depleted. 4. Since proposals would for all practical purposes do away with individual employer rating systems, State laws would open to further misuse and abuses due to lack of employer interest. 5. States with substantial funds now would soon deplete them since the twothirds of average weekly wage and 39 weeks' duration would draw heavily from the fund and in many cases employers would pay no more into the fund than they are paying now. This could easily break down the very strength of individual State laws and create a complete "giveaway" philosophy among employers and employees alike since moneys used would be Federal funds of a "free" nature instead of individual tax funds. Therefore, we urge that the committee actively oppose this drastic departure from the normal and more reasonable program of individual State unemploy ment laws. We further urge the Washington State delegation to Congress to oppose these bills and all other attempts to nationalize a program that is funda. mentally a right of the individual State. Respectfully submitted. H. O. FISHBACK, Jr., STATEMENT OF MAURICE ACERS, EMPLOYER REPRESENTATIVE ON THE TEXAS EMPLOYMENT COMMISSION, AUSTIN, TEX. As employer representative on the Texas Employment Commission I represent 70,000 employers who are covered by the Texas Unemployment Compensation Act. As their representative, I am opposed to Federal minimum benefit standards which would remove from this State the right of the Texas Legislature to pass State laws governing unemployment compensation administration in Texas. Members of the Texas Legislature are close to the people of Texas and know the economic needs of the workers of this State. A recent session of the Texas Legislature raised weekly benefits by 40 percent. The Texas Legislature is currently in session. The senate has passed a bill raising the benefit amount from $28 per week to $35 per week. This represents a 25 percent increase in the maximum benefits a person may draw in Texas. It preserves, however, one of the basic principles of unemployment compensation; that is, that the worker be paid benefits according to his earnings. H.R. 3547 would destroy this basic concept. I have heard from and talked with thousands of Texas employers in the past few months, and they recognize the need for increasing the benefit amount in this State. As a matter of fact, Texas employers sponsored the bill which raises the benefit amount by 25 percent and will urge its adoption by the Texas House of Representatives. They are willing to pay the bill, but they urge that the matter of adequate benefits and duration be left to the State. Many State legislatures have this year provided more adequate unemployment compensation for workers of their States. This is further evidence of the awareness of the several States of changing conditions and proves Federal minimum benefit standards are not necessary. The Senate of the State of Texas on February 23, 1959, passed a resolution which said in part: "***The people of Texas are firmly dedicated to the proposition that matters relating to the amount and duration of unemployment benefits should be left to the discretion of the various State governments due to the widely varying economic and other conditions that prevail among the States: Now, therefore, be it "Resolved, by the Senate of the State of Texas, That it opposes legislation which would establish Federal minimum benefit standards and which would compel the States to take similar action, thus depriving the legislature of its rightful authority in such matters; Texans are not "asleep at the wheel." We are ever mindful of the workers of this State and will continue through amendments to the Texas Unemployment Compensation Act to keep pace with the economic growth of the Lone Star State. Unemployment compensation was conceived as a team effort of the Federal Government and the individual States. I hope that this team will not be destroyed. The passage of H.R. 3547 would vest in the Federal Government the right to dictate to the employers of the sovereign State of Texas what unemployment compensation taxes they should pay and would give to the workers benefits that bear no relation to their earnings. H.R. 3547, in fact, makes a relief program out of unemployment compensation. This is not good. I urge the committee to report this bill unfavorably. Re: Unemployment compensation matters AUGUSTA, MAINE, April 15, 1959. Chief Counsel, Committee on Ways and Means, Boys' and girls' summer camps in Maine are bothered a great deal with Federal and State laws that require full unemployment protection to be afforded all counselors and others when only 4 of their employees work any part of 20 weeks in 1 year. The average Maine camp employs perhaps 4 to 7 employees who might work 20 weeks or more and, perhaps 80 counselors who are employed only for the average season of 8 weeks. These counselors are teachers, college men and women who never would be in a position to receive any benefits under the law. The camps so far as possible are cutting their employees for the 20 weeks or more to 3 when they might use more if the tax did not apply to their entire group that is working the 8 weeks. By applying the tax to the entire group, who could not benefit therefrom, sometimes means the difference between a successful and an unsuccessful season. We have no quarrel with paying the tax on the number who might benefit from the provisions of the law, but we would like to have some relief in our unique situation where we now obtain money for protection that is not needed. In other words, if a camp employs 76 for 8 weeks and 4 to 7 for 20 weeks or more, we feel that we should pay the tax only on the 4 to 7. It is true that both State and Federal laws are involved, but our State law follows the Federal law, and if the Federal law was revised, our State law would be revised to coincide with the Federal law. ROBERT D. O'CONNOR, Attorney for the Maine Camp Directors Association, State House, Augusta, Maine. AIR TRANSPORT ASSOCIATION OF AMERICA, Mr. WILBUR MILLS, Chairman, Committee on Ways and Means, DEAR CHAIRMAN MILLS: The Air Transport Association of America, representing the certificated scheduled airlines, wishes to express its appreciation to the committee for the opportunity to comment on several of the issues relating to the subject of unemployment compensation presently before your committee. We will confine our comments to two specific subjects. One of these is the proposal made by Under Secretary of Labor James T. O'Connell in his opening statement that the Federal Unemployment Tax Act be amended to cover employees serving on American aircraft operating overseas. The second is the proposal that the Federal Government establish minimum standards of term and level of unemployment compensation benefits substantially higher than are presently provided in most State laws. Secretary O'Connell proposed an amendment which "would cover services on American aircraft serving overseas if (1) the employees work under a contract made in the United States, or (2) during the performance of their duties, the aircraft lands in the United States. There are about 5,000 such employees. The law already contains similar provisions with respect to employees on American vessels. This proposal would provide aircrews with the same protection now afforded to seamen. The proposal would also bring the Federal Unemployment Tax Act treatment of aircrew employees into harmony with the Federal Insurance Contributions Act, which includes aircrew members under a provision which is essentially the same as we recommend." It is our belief that the magnitude of the problem is substantially overstated. A survey of the scheduled U.S. air carriers operating internationally indicates that the number of people is much less than 5,000 and is, in fact, probably less than 200. We have no information on the origin of the figure of 5,000 but a survey of member airlines operating outside of the United States indicates that only a very few individuals among all such crews are involved. With respect to the question of minimum Federal standards of unemployment compensation, the airlines are deeply concerned with this proposal. The airline industry as a whole has maintained a conspicuously high employment record. As a result of this fine record it has enjoyed the benefits of some of the lowest unemployment tax rates in the States. It is believed that the use of Federal funds to finance nonrepayable grants to States, combined with the increase in the amount of benefits paid, the duration of payment and the relaxing of requirements for eligibility for unemployment benefits, would make it impossible or, at the least, extremely unlikely, for the States to maintain the individual experience rating provisions contained in most State laws at present. Under such a proposal the experience of individual employers probably would no longer be recognized and instead a flat rate would be established for all employers. Such a rate would tend to lower the tax rate level for employers with less favorable employment experience records. On the other hand it would, in effect, penalize those employers who have exerted efforts to maintain stable levels of employment by raising their tax rate. The tax savings attributable to the experience rating system provide a material incentive to maintain stable employment. This may well provide a more realistic cure to the problems of unemployment than increases in taxes and unemployment benefits. |