By wiping out the excellent experience ratings now enjoyed by the airlines, the proposal here involved would result in taxes averaging in excess of 500 percent higher than present payments. In the cases of some airlines this would increase annual taxpayments by more than a million dollars. These figures repre-sent substantial percentages of air carrier profits at a time when the airlines: are endeavoring to modernize their equipment and to provide improved service. Rather than higher taxes, it would seem to be better to employ these funds for needed expansion, and increased employment.

We appreciate the opportunity to present our views for the consideration of the committee.

Sincerely,

LEO SEYBOLD, Vice President, Federal Affairs.

STATEMENT OF AMERICAN LIFE CONVENTION AND LIFE INSURANCE ASSOCIATION OF AMERICA

The American Life Convention and the Life Insurance Association of America have a combined membership of 282 companies which have issued approximately 95 percent of the legal reserve life insurance in force in the United States. We are submitting this statement to express our opposition to that provision of H.R. 175 and H.R. 2474 which would amend the definition of "employee" in the Federal Unemployment Tax Act to include life insurance agents who are independent contractors.

At present this act defines "employee" (sec. 3306(1) of the Internal Revenue Code of 1954) expressly to exclude independent contractors and all others who are not common law employees. Section 3(b) of both H.R. 175 and H.R. 2474 would change this definition so as to include, among others, any individual who performs services as a full-time life insurance salesman, if his contract of employment contemplates that he will perform all such services personally, if he has no substantial investment in facilities, and if his services are continuing in nature. This is, of course, the definition of "employee" used in the Social Security Act. The obvious purpose of the proposed amendment is to extend the coverage of the Federal Unemployment Tax Act to some persons who are independent contractors. We believe that this proposal is objectionable on several grounds.

First, the reasons for the broader definition of "employee" in the Social Security Act do not apply in the case of the Unemployment Tax Act. The retirement and survivor benefits of the Social Security Act afford protection against hazards to which independent contractors as well as employees are subject. The unemployment compensation system, however, is designed to protect against loss of wages arising from involuntary unemployment due to lack of work, not to protect the self-employed against lack of success in their business ventures. Hence to extend this act to independent contractors would not be consistent with its purposes.

Second, the inappropriateness of any such extension of the unemployment compensation system beyond employees is particularly demonstrable in the case of life insurance agents who are independent contractors. These agents are not subject to the hazard of being laid off, or having their hours of work reduced, because of lack of work. Changes in general economic conditions may affect their income, just as in the case of all other independent entrepreneurs, but such changes will not affect their hours of labor. In fact, in difficult times they may find it necessary to work longer hours to produce a satisfactory income. They control their own hours, however, and their success or failure depends on a combination of diligence and ability. Moreover, there is in this business no direct relation between hours worked and income. One agent may put in many hours and make few sales, while another may work only a few hours and make many sales. In short, the agent himself determines how many hours he will work in a week, his company will never insist upon shorter hours, and his income will depend at least as much on sales ability as on total number of hours worked.1

1 It is true, of course, that many life insurance agents who are independent contractors are paid solely on a commission basis. Such employment would continue to be exempt under sec. 3306 (c) (14) of the Internal Revenue Code of 1954, which H.R. 175 and H.R. 2474 would not change. Other agents who are independent contractors, however, are paid under varying arrangements, and it is not clear what the effect of the proposed amendment would be as to them. Our position is that all life insurance agents who are independent contractors should remain outside the coverage of the act, entirely aside from the exemption provisions of the statute.

Third, the inclusion under the unemployment compensation system of life insurance agents who are independent contractors would be wholly unworkable. The ability to maintain records of hours worked and wages paid is, of course, necessary to the practical operation of that system. Because of the nature of the business of life insurance agents, however, it would be impossible for the companies to keep such records. These agents spend practically all of their time away from the office calling on their clients, sometimes during the day and sometimes at night. As a result, the companies have no way of knowing when an agent is working, or how many hours he puts in during any particular week. Moreover, in this business it would be impossible to determine what constitutes an hour of work. The production of a life insurance salesman does not depend alone on time spent in actual selling, but depends to a large extent on developing leads through civic or social activities, or even in studying at night to acquire information or new sales techniques which might produce a greater volume of business. To decide which of these various activities should be classified as work, or to attempt to determine the number of hours spent on such activities, would present an insurmountable problem.

Finally, pay cannot be directly related to hours worked in the case of a life insurance agent. An agent may work for an entire week without closing a single case. The following week he may close several cases, some of which he may have been working on for a number of weeks or even months. Thus there is no correlation between the hours worked in any particular week and the remuneration received during the week. Renewal commissions, usually paid on the anniversary dates of policies and continuing for varying lengths of time, present additional complications. Renewals may or may not require work by the agent, and there is no way in which these commissions can be related to the amount of work performed by the agent at the time of renewal, or retroactively to the time of initial sale which may have taken place several years before.

For all of these reasons, we respectfully submit that the definition of "employee" in the Federal Unemployment Tax Act should not be changed so as to bring within the unemployment compensation system life insurance agents who are independent contractors.

The Honorable WILBUR D. MILLS,

RED LODGE CANNING CO.,
Red Lodge, Mont., April 21, 1959.

Chairman of the House Ways and Means Committee,
Washington, D.C.

DEAR SIR: The purpose of this letter is to express our opposition to the Kennedy-Karsten measure, H.R. 3547, and its companion piece S. 791.

In our opinion this legislation would impose further rigid Federal controls as one more step in the direction of a welfare state. We recognize the need for, and are in agreement with, the general principles of unemployment compensation. Its benefits, however, must not be allowed to become a substitute for employment.

By its very nature our business is seasonal. Many of our employees have no further ambition than to work a few weeks during the summer and then exist on their unemployment compensation for the balance of the year. We have seen this happen year after year among 10 to 15 percent of our seasonal employment. Increased benefits for a longer period of time could only serve to influence others to do likewise. An even more dangerous result is the encouragement for immorality and the destruction of character which may be fostered.

This protest is being submitted in triplicate with the request that it be made a part of the record of the hearings. Your best consideration will be appreciated. Respectfully yours,

B. W. MANN, President.

STATEMENT BY THOMAS J. LLOYD, PRESIDENT, AND PATRICK E. GORMAN, SECRETARY-TREASURER OF THE AMALGAMATED MEAT CUTTERS AND BUTCHER WORKMEN OF N.A., AFL-CIO

Mass unemployment, which threatens to become permanent, today clings to our Nation like an incubus. Only the problem of maintaining world peace rivals this national difficulty in importance. Every possible phase of our national existence is adversely affected by large-scale unemployment.

Some 4,300,000 men and women are without Jobs and many of them have been in this terrible strait for years. Millions more work short workweeks. Tens of millions more live in daily terror of joining the ranks of jobseekers for whom there are no jobs.

Breadlines have formed again in many cities of our country. Suffering is widespread.

Yet, the President tells us, in effect, "tomorrow will be better" and attempts to wish unemployment away. He, apparently, has convinced himself that rising prices are a greater national problem than the suffering of families whose breadwinner no longer have jobs and have no hope of finding any.

Congress record in combating unemployment has not been a happy one, either. A policy of attempting to appease the Eisenhower administration has resulted in legislation which can, at best be described as "too little and too late." The legislation now before this committee is one of the measures which, if it had been adopted in 1958, would have our economy on a proper upswing again. Adequate unemployment compensation eases the suffering of those who are unemployed. It also serves as a brake on the recession, according to the writings and testimony of some of the Eisenhower administration's own former economists. Adequate unemployment compensation can only mean Federal standards for unemployment compensation. We have been treated recently to another dramatic appeal by President Eisenhower to the States to improve their unemployment compensation programs-programs which are universally admitted to be blatantly inadequate. Such Presidential appeals have been made annually with negligible results. One does not have to be a wizard to predict that the same will be true again this year.

You have also heard testimony from representatives of organized business who urge that this is a State matter in which the Federal Government should not set standards. These are, of course, the representatives of organizations which are responsible for the State's failure in this field. It is their lobbying-and very successful lobbying, one must admit-in the State legislatures which makes it necessary to have Federal standards in order that our Nation does not have a permanent group of millions of embittered men and women who have no hope.

Federal standards for unemployment compensation are no more radical than Federal standards for road construction. And they are far more necessary.

We urge you to cast aside the plaintings of the little men to whom profits mean more than curbing and preventing real suffering. They are too hard hearted to see the personal harm-economically, socially, psychologically, and morallyunemployment brings to individuals. They are too near-sighted to see that our Nation could again come to the disaster of a great depression.

You have heard much testimony concerning the seriousness of unemployment in many of our Nation's great industries. We would like to add to the record, the story of the meatpacking industry. This vital food industry provides a graphic and terrible example of permanent unemployment in our country.

The number of production workers in meatpacking wholesale declined from 191,300 in 1956 to 180,800 in 1957 and to 167,100 in 1958. The total job loss in the industry between 1956 and 1958 was 24,200 or 12.7 percent.

But this is only part of the story. For the same period, 1956 to 1958, average weekly hours declined 3.1 percent, in addition. Fewer men had jobs. Many of those who had jobs worked fewer hours. As a result, there has been a 15.3 percent decline in the number of man-hours worked in the meatpackaging industry between 1956 and 1958.

The work loss in the industry was only partially due to the recession. A very important factor was the reduced marketing of livestock by farmers during the 1956-58 period. Because of the ravages of the drought of 1955 and early 1956, farmers were forced to rebuild their herds and cut down on the sale of livestock for slaughter.

However, the cause is of almost academic concern. The important point here is that many of those who have lost their jobs will never get them back again. Two factors operate in the meat industry which indicate this terrible situation.

In the first place, tremendous increases in worker productivity have taken place in the meatpacking industry. In 1951, meatpacking production workers turned out 52.7 pounds of red meat for each hour of work. In 1957, they turned out 65.9 pounds; in 1958, 68.6 pounds. Currently, the average rate is 71 pounds and experts are convinced that the remainder of 1959 will see a still further increase in productivity.

Each of these advances in productivity has cost men jobs.

A second factor is the increasing tendency of companies to meet the need for additional work force by increasing the hours worked, rather than recalling the laid-off workers. Last year, our union took two surveys of the unemployment situation in our industries. The first report taken in February 1958, shows that 8.6 percent of our packinghouse members were laid off and that 17.5 percent of those who were still on the job worked less than 36 hours a week. The second poll, taken in April 1958, showed an increase in unemployment to 9.5 percent, but a substantial cut in the number of workers on short hours. Only 8 percent worked less than 36 hours as compared with 17.5 percent 2 months before.

Apparently, employers would rather pay time and a half than recall workers who have been laid off for long periods of time because of both economic and public relations reasons. They save money by working a smaller labor force longer hours, as a result of having to pay less in fringe benefits. The firms also fear the public relations problems of often announcing layoffs.

The job loss in the packinghouse industry is dramatically demonstrated by the many shutdowns of former large plants in recent years. In Chicago. the many decades old Wilson plant was shut down, causing unemployment to 3,500 workers. Many of them never found new jobs. In 1957, Armour closed its Baltimore plant. Hundreds of the plant's former workers were unable to find other jobs in the packinghouse industry. Many were unable to find any new jobs at all.

Most of the operations of large packers in New York City have either been eliminated or drastically reduced in recent years. Armour announced just 1 month ago the permanent closing of two of its southern plants, one in Atlanta, Ga., and the other in Tifton, Ga. And the Fried & Reinman plant in Pittsburgh, Pa., announced last week it was liquidating after having closed down a few months previously. Some 300 workers had been employed there.

The shutdowns are dramatic examples of unemployment in the meatpacking industry. But plants which continue to operate and operate profitably— bear the same sad story. Our local 538, Madison, Wis., reports that for the first time since the large Oscar Mayer Co. plant began operations there, men have lost their seniority because they have been laid off more than 2 years. Some 200 men and women are already in this unfortunate group and the list is growing. Our local 78, in East St. Louis, Ill., which is the collective bargaining agent of the giant Swift plant there, also reports a permanent layoff of 200 workers.

We have used the meatpacking industry as an example of the problem facing men and women who have lost their jobs through no fault of their own and cannot find another one. Actually, this situation exists in many other industries in which our union has collective bargaining relationships.

The leather industry, for example, also has shown a very high increase in worker productivity. A heavy loss of jobs has accompanied this rise. Plant shutdowns are common. And so is permanent unemployment.

Consider, for example, the case of the leatherworkers once employed by the Northwestern Leather Co. in Saulte St. Marie, Mich. Here was a plant of 500 workers, the largest employer in the area. Over the years the absentee owners of the company allowed it to run down. The lack of adequate replacement of machinery became a major factor in preventing the firm from being able to compete with other leather manufacturers.

About a half year ago, the plant closed its doors. Men with 25 to 30 years of service were thrown out of work. Other industries of the area-mainly a small chemical industry and some tourist trade could not absorb these men. Anyway, many of them are too "old" according to employers, to be hired. Many of them will never get other jobs, according to present indications. Many are already on relief.

These are human tragedies. These are tragedies dangerous to the men and women who suffer from them-and dangerous to every single American. Our economy cannot afford this loss of manpower. Our society cannot afford the development of a large group of embittered men and women for whom there is no hope. Our national sense of morality cannot afford to let these people suffer.

Obviously, legislation aimed at two objectives is needed: (1) Legislation which will alleviate the suffering of those now unemployed; and (2) legislation to put the unemployed back to work.

As stated above, adequate unemployment compensation works toward both goals. It is the most important means of providing aid to men and women who are unemployed and it is a vitally important boost to the economy.

In view of these facts, we urged you to speedily approve H.R. 3547. Its provisions are desperately needed. The enactment of this vital legislation is demanded by the dictates of conscience and human justice.

STATEMENT BY HARRY BOYER, PRESIDENT, PENNSYLVANIA CIO COUNCIL, IN SUPPORT OF H.R. 3547

Gentlemen, I am Harry Boyer, president of the Pennsylvania CIO Council with offices in Harrisburg, representing some 650,000 members of affiliated AFL-CIO unions.

Since 1946, I have been privileged to serve as a member of the Federal Advisory Council on Employment Security. I participated late last year in the discussions and recommendations of the tripartite body on new Federal minimum standards for jobless insurance.

I am most pleased to be permitted to submit a brief to your committee urging early passage of H.R. 3547, known as the Karsten-Machrowicz bill.

Achievement of the long-sought goal of overhauling the unemployment compensation system through higher Federal minimum standards for benefits and duration of payments would indeed be a boon to Pennsylvania.

No other State is more vitally in need of the improvement that we feel certain can be achieved only by favorable action at the Federal level. We have 10.5 percent of our work force unemployed, better than 490,000 human beings.

No other States has so many distressed areas. Of the 344 areas in the Nation listed by employment security statisticians, Pennsylvania has 24 and of these 21 are classed as truly distressed. In fact, the only sections of our State not listed in this unfortunate category are the three areas with headquarters in Harrisburg, Lancaster, and York. Some of the distressed areas have been listed year after year since the shooting war ended.

For the week of March 23, the Harrisburg headquarters of the Bureau of Employment Security reported 270,000 claims for benefits had been accepted in the State. The average benefit check called for $29 that week. About 40 percent of the benefit recipients collected the maximum of $35 a week.

Federal standardization of benefits by the passage of this proposed law would ease much of the burden now being borne by Pennsylvania and several other forward-looking States which try to maintain a decent standard of benefits but which are thrown into ruthless competition with States whose benefit schedules are of lesser amounts. It is our conviction that these States which pay meager benefits and for shorter duration cannot and will not achieve necessary basic reforms by action at their own legislative level.

States are interdependent economically upon each other. None can be totally dependent by and unto itself. In fact, employment in any State must be and is directly related to the economic condition of the country as a whole. The needs of an unemployed worker and his family are not materially less by reason of where he lives. Yet benefits and duration vary greatly as between States. There can be no moral or otherwise good reason for justification of such disparities.

Much of the unfair competition from States with meager benefits and duration would be removed for Pennsylvania by passage of this law as recommended by 16 public and labor members of the Federal Advisory Council last December. In specific terms, it would mean, if in force now, that the jobless in hardpressed Pennsylvania would put into our economy through purchasing power approximately $6 million more per week, by reason of additional benefits ranging from $7 to $21 a week and duration extended by 9 weeks.

It is proposed in this law to increase each individual's primary benefit to not less than 50 percent of his weekly wages or two-thirds of a State's average weekly wage, whichever is less, for not less than 39 weeks.

Latest Bureau of Labor Statistics reports show Pennsylvania's average weekly factory earnings to be $84, which would make possible under this formula a maximum benefit rate of $42 for half of a worker's weekly wage, or $56 on the basis of two-thirds of the State's average weekly wage.

We in Pennsylvania have been proud of improvements in our Unemployment Compensation Act in the past 4 years, although there is currently in progress at