WASHINGTON, D. C., April 7, 1959. Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Means, DEAR MR. MILLS: In pursuance of the action of the Committee on Ways and Means in leaving the record open for a supplemental statement, occasioned by the conflict of testimony between myself and Mr. Wayne Glenn today, I desire to submit the following statement for inclusion in the record of the committee: In testimony before the Committee on Ways and Means April 7, 1959, a witness, Mr. Wayne Glenn, disputed my earlier testimony that Associated Industries of Arkansas, Inc., and the Arkansas State Chamber of Commerce had not opposed a bill increasing Arkansas' maximum weekly unemployment benefit amount to $30 and the duration to 26 weeks. In hearings before a committee of the Arkansas House of Representatives, our witnesses contended that this bill was undesirable unless it contained a provision expressly disqualifying for benefits those persons whose unemployment resulted from participation in a labor dispute. The absence of such a provision was the basis for our criticism of the bill. When, however, the bill was reported to and passed by the house and sent to the senate, Associated Industries of Arkansas and the Arkansas State Chamber made no further representations to the senate committee to which the bill had been referred and, in fact, gave assurances to the administrator of the employment security division that we had no further objection to the measure. The reason was that the legislature approved as a separate bill the provision regarding strikers which we had advocated. This statement is being submitted solely because of Mr. Karsten's remark that my testimony would be evaluated in terms of Glenn's inaccurate testimony. With kindest regards, Very truly yours, FRANK A. CANTRELL, Managing Director, Associated Industries of Arkansas, Inc., Arkansas State Chamber of Commerce. The CHAIRMAN. Are there any further questions of Mr. Glenn? Mr. Glenn, I want to thank you again for coming to the committee. You made a very fine witness. We appreciate your coming here today. Mr. GLENN. Thank you, Mr. Chairman. I appreciate the privilege and I want to say to Mr. Mason before I leave that as a citizen of Arkansas, we appreciate those kind remarks that you made about the chairman of this committee. We think he has brought honor to our State. Mr. MASON. I do not make remarks that I do not believe. Mr. GLENN. I am sure of that, sir. The CHAIRMAN. Thank you both. The CHAIRMAN. Our next witness is Mr. E. Russell Bartley, director of industrial relations of the Illinois Manufacturers' Association. Mr. Bartley, we are pleased to have you with us today. You are recognized, sir. STATEMENT OF E. RUSSELL BARTLEY, DIRECTOR OF INDUSTRIAL RELATIONS, ILLINOIS MANUFACTURERS' ASSOCIATION Mr. BARTLEY Mr. Chairman and members of the committee, my name is E. Russell Bartley, director of industrial relations of the Illinois Manufacturers' Association in Chicago. The Illinois Manufacturers' Association, which is the largest and oldest association of its kind in the country, embraces in its membership practically every representative manufacturing firm in Illinois, large, small, and medium size, which is engaged in a wide variety of production. I wish to register opposition to the several bills which are under consideration by this committee, which would impose Federal standards on the unemployment compensation programs of the various States. Mr. Rees who is also from Illinois will more thoroughly cover certain of the points that I have. These proposals, if enacted, would require the States to amend their laws to increase the amount of their benefit payments, to increase the number of weeks of duration of payment of benefits, and to reduce the qualifications which a claimant must meet in order to draw benefits. One of the bills which is being considered by this committee, H.R. 3547, would require that each State unemployment compensation law be amended to (1) Provide a maximum weekly benefit amount of at least twothirds of the average weekly wage of the State's covered workers. (2) Provide that the weekly benefit amount, exclusive of dependents' allowances, for any unemployed worker be not less than one-half his prior average weekly wage, or the maximum weekly benefit amount, whichever is the lesser. (3) Establish minimum standards of qualifying base period wages or length of employment. (4) Provide that all unemployed workers may receive a uniform 39 weeks of benefits in a benefit year, regardless of base period earnings. H.R. 3547 would also— (1) Extend the coverage of the Federal Unemployment Tax Act to employers of one or more workers. It now covers employers of four or more. (2) Permit the States to substitute systems of uniform tax rate reduction for their present experience rating systems. (3) Abolish the loan fund created by the Reed Act, and establish a reinsurance system under which Federal grants would be made to States with depleted funds. Problems of States are not uniform: The Federal-State structure of our unemployment insurance system has remained basically unchanged since the enactment of the Social Security Act in 1935. A State law must meet a number of procedural requirements in order to qualify for grants to defray the cost of administering its unemployment compensation law and in order to receive credit against the Federal tax for money to be used for the payment of benefits. But, aside from these procedural requirements, the States have had full discretion in framing the provisions of their unemployment compensation laws. The development of these laws and their administration have, from their inception, been the function of the legislatures of the individual States. The amounts which should be paid in benefits, the eligibility provisions which claimants must meet, and the number of weeks of benefits which they can draw have been related to the economic situation in each State. The State laws have been periodically revised to reflect changes in economic conditions. Upon several occasions, in past years, the Congress has considered proposals for the establishment of Federal standards pertaining to benefit eligibility requirements and benefit amounts and duration with which the State laws would have to comply. Congress has rejected these proposals. We respectfully urge you to reject the current proposals. Federal controls are not desirable: Federal standards mean Federal controls. The imposition of Federal minimum standards is a long step toward nationalization of the unemployment insurance system. Once the principle of Federal standards is accepted, additional requirements might be anticipated in the future which may remove from the States and real discretion in this area. Federally imposed benefit standards cannot adequately take into consideration the real differences among the States in general economic conditions and in wage structures. The determination of benefit formulas should be left to the States whose legislators are familiar with their local economies and wage structures and can best determine benefit adequacy. Federal control of benefit formulas is not desirable because it would impair or destroy State initiative. Under present arrangements, the States have had the responsibility of improving their laws and they have met that responsibility. Over the years, they have reduced their waiting period requirement from several weeks in a benefit year to 1 week, or have eliminated it entirely. Many States have extended the coverage of their laws beyond that of the Federal Unemployment Tax Act. States have steadily increased their weekly benefit amounts and the duration of benefits. Benefits have increased much faster than the cost of living and the increase in spendable wages. Both the maximum benefit amount and the duration have been at least doubled in most of the States since 1939. For example, in Illinois in 1939, a beneficiary received a maximum of $15 for 16 weeks, or a total of $240. A beneficiary with four children can now receive $45 a week for 26 weeks or $1,170, nearly five times as much. Under our extended emergency benefit program this is increased another 50 percent. A serious result of federalization would be destruction of experience rating and the incentive for employers to stabilize their employment. In the introductory declaration of policy in nearly all of the State unemployment compensation laws there appears the statement that one of the purposes of the laws is to encourage employers to provide more stable employment. Employers have an incentive for stabilization of employment through experience rating, whereby they can earn a lower tax rate. Destruction of experience rating would remove the incentive to stabilize employment; in fact it would have the op posite effect and would lead to intermittent layoffs, unsteady employment, and higher costs of unemployment compensation. This legislation would do violence to the unemployment compensation laws of all of the States. It would require a drastic increase in benefits which would tend to destroy the incentive to work. Unemployment benefits would compete with wages. For example, under the present Illinois law, a single person who earns $2,425 in the base period year can draw an additional $780 in benefits at $30 per week. A person with four or more children who earns $2,925 can draw $1,170 in benefits at $45 per week. Under H.R. 3547, the maximum weekly benefit amount would be increased to $62 for a single person and he would have to earn only $1,860 in base period wages in order to draw $2,418 in benefits, 30 percent more than he earned in wages. Similar drastic and unwarranted changes would be required in the laws of all of the States. Remember that unemployment benefits are net pay. There is no deduction for income tax, social security, transportation to and from work, lunch money, or work clothes; $62 is the equivalent of wages of $75 per week with only the income tax and social security tax deducted. Illinois is proud of its progress. Recent action in Illinois furnishes convincing evidence to demonstrate that the States can meet their own needs without the whiplash of Federal coercion. In June 1958 the Governor of Illinois called the general assembly into special session for the purpose of enacting a temporary amendment to the Illinois Unemployment Compensation Act to provide for a 50 percent extension of benefits to individuals who had exhausted. their benefits under the regular program. The general assembly passed this legislation in the record time of 5 days. Based upon the principle that the State of Illinois is best qualified to take care of its own needs, independently of Federal action and without the use of Federal funds, which would have been available under the Temporary Unemployment Compensation Act of 1958, such extended benefits in Illinois have been paid out of the Illinois trust fund. Recognizing the fact that 25,000 Illinois workers would have had their extended benefits discontinued as of March 31, 1959, the date of the expiration of the temporary amendment, the Illinois General Assembly has recently extended the expiration date to June 30. It further enacted a permanent provision in the Illinois law for payment of extended benefits for exhaustees in future periods of recession and abnormal unemployment. Illinois was the first State to develop and adopt the principle of variable maximum benefits, in which the weekly amount which is paid to an unemployed worker is based upon both his family responsibilities and his base period earnings. A number of other States have recognized the merits of such a system and have adopted the variable maximum benefit principle. Illinois is one of the few States which have changed the experience rating provision of the law to provide for a maximum employer tax rate in excess of 2.7 percent. Our belief is that employers should "pay their way" and that an employer whose ex-employees draw more out of the fund than the employer paid in taxes should pay a higher tax and his unemployment cost should not be financed by the other employers of the State who have been able to stabilize their employment. The maximum employer tax rate in Illinois has been 3.25 percent during the past several years. At the instigation of employer organizations and representatives of employers on the advisory board, it is proposed to increase the maximum tax rate to 4 percent during the current session of the Illinois General Assembly. The employers of Illinois recognize and accept the responsibility that the trust fund must be kept in sound financial condition in order to pay benefits to unemployed workers. The original Illinois Unemployment Compensation Act, as well as all changes made therein during the intervening years, have been the result of agreement between representatives of employers, workers, and the public on an advisory board, which is created by statute. This method of handling this matter has been acceptable to all concerned. Our advisory board is now working to develop further improvements in the Illinois act for submission to the general assembly which is now in session. We expect that these changes will again be resolved in a satisfactory manner. Illinois Senate resolution: Now I would like to submit for inclusion in the record a resolution which has been adopted by the Senate of the State of Illinois. The CHAIRMAN. Without objection, that resolution which is appended to your statement will appear in the record at this point. (The resolution is as follows:) SENATE RESOLUTION 19 Resolved by the senate of the 71st general assembly Whereas there is legislation pending in the Congress of the United States, relating to unemployment compensation, which would compel the various States to drastically amend their unemployment compensation laws to conform with Federal standards; and Whereas Illinois is firmly dedicated to the belief that the individual States are best qualified to determine the provisions of their unemployment compensation statutes based upon the economic conditions of the States and the needs of their citizens; and Whereas the Illinois General Assembly, over the years, has made amendments to the Illinois Unemployment Compensation Act through mutual agreement of a tripartite board which has provided for equitable treatment of employees and employers and the general assembly is now in session considering further improvements in its unemployment compensation programs; and Whereas the Illinois General Assembly recently enacted legislation to pay extended benefits independently of Federal action and without the use of Federal funds: Now, therefore, be it Resolved by the Illinois State Senate, That it opposes Federal legislation which would compel the various States to provide minimum unemployment compensation standards in conformity with Federal laws, thus depriving the Illinois General Assembly of its rightful authority and responsibility in such matters; and be it further Resolved, That a copy of this resolution be sent by the secretary of state to the President of the United States: Secretary of Labor of the United States; Senate minority leader, Everett McKinley Dirksen; Senator Paul H. Douglas, and all Members of the U.S. House of Representatives from Illinois. Adopted by the senate, March 25, 1959. JOHN WM. CHAPMAN, President of the Senate. EDWARD E. FERNANDES, Secretary of the Senate. CHARLES F. CARPENTIER, Secretary of State. |