only force a liberalization of State laws currently less advanced than our Massachusetts statute, but also push benefits, duration, and eligibility provisions in the most liberal State far beyond present levels. Without question these proposals would take a currently solvent system, supporting itself without Federal handouts, and blast it into insolvency and force it to become depending on Federal funds. Associated Industries of Massachusetts is obviously opposed to any such scheme. To favor the application of such a suggestion in Massachusetts at a time when expenditures under the existing program already threaten the destruction of experience rating and the eventual annihilation of reserves would be decidedly unsound from either a social or economic aspect. Exhibit 1, attached, presents facts about the current Massachusetts employment security program which are based primarily on statistics from the Massachusetts Division of Employment Security and the U.S. Department of Labor. Let me refer to certain key facts from exhibit 1 about the Massachusetts employment security law which will show why it is the most liberal of any such law in the country and why Massachusetts employers in 1958 had a higher average unemployment tax rate than employers in 10 of the 13 leading industrial States. There have been many assertions by the proponements of so-called Federal standards that State laws do not provide benefits of adequate amount and duration to a sufficient number of workers. The number of claimants exhausting benefits under State laws has been pointed out as an example of this inadequacy. Under the I do not believe that such criticisms can be applied in fairness to our Massachusetts program. Approximately 85 to 87 percent of all employment is covered by unemployment compensation in Massachusetts. Massachusetts was one of the first States to cover employers of one or more employees. Massachusetts statute the ratio of total maximum benefits for a claimant to the base period earnings that the claimant would be required to earn in order to qualify for these benefits is $2.94 in wages required to earn $1 of benefits. Proposals before this committee would change this to what is believed the unreasonable ratio of 77 cents of wages to earn $1 of benefits. The last detailed published study of exhaustees under the Massachusetts program was made 10 years ago. It is disappointing that in spite of the tremendous importance of this subject, there is not a more recent study which the committee could consider in its evaluation of the subject proposals. The Associated Industries of Massachusetts respectfully submits that a study is urgently needed and should be effected before possible irreparable damage to current State programs results from the enactment of new legislation. I believe such a study would show conclusively that the majority of claimants exhausting benefits under the current Massachusetts law are seasonal workers, secondary casual wage earners and retirees, and that a large proportion of such exhaustees, by the very nature of their chosen employment exhaust their claims year after year. My belief is somewhat supported by a check of benefit payments for a recent week showing that more than 60 percent of such payments were to individuals regularly unemployed from seasonal employment. A spot check by Associated Industries of Massachusetts indicates that 30 percent of the claimants drawing their first payment under this program were retirees. No doubt a detailed study would reveal that the vast majority of exhaustees under this program had as little attachment to the active labor force. The fact that the average claims duration for all claimants fluctuates between 7 to 11 weeks, considerably less than the maximum duration, of benefits also supports this thesis. III. With respect to the Massachusetts industrial economy, such proposals, by arbitrarily increasing the cost burden of unemployment compensation on employers, strike a body blow to manufacturers who provide (exclusive of Government employees) 44 percent of the total employment in Massachusetts. In Massachusetts at least half of the total bill for unemployment compensation is met by taxes on industrial payrolls, and Massachusetts takes a higher percentage of State income from taxes on corporations (22.6 percent) than any other State. These and other critical manmade costs have weakened our industrial economy. The Massachusetts Division of Employment Security has reported a net loss of 37,800 jobs in manufacturing industries during the 10-year period between 1947 and 1957. This is a decrease of 5 percent in Massachusetts, while the national average shows an increase of 10 percent. On the basis of the current average factory wage, this is a loss every single year of over $145 million in income for Massachusetts employees and their families. So great is the dependence of Massachusetts workers, whether employed or unemployed, on the Commonwealth's manufacturers, and so great is the dependence of the State's economy on the financial strength and growth of Massachusetts industry, that any new legislation which establishes additional manmade obstacles to the creation of new manufacturing jobs in Massachusetts is not in the best interest of the citizens of the Commonwealth. EXHIBIT 1. THE MASSACHUSETTS EMPLOYMENT SECURITY PROGRAM 1. Massachusetts employers have paid over a billion dollars for the State's unemployment compensation program since it was initiated in 1935. Approximately half of this figure as well as at least half of total annual unemployment taxes result from taxes on manufacturing payrolls. 2. Unemployment compensation is one of the three highest costs, of doing business in Massachusetts imposed by the legislature-unemployment compensation, workmen's compensation, and corporate taxes. In some years, the Commonwealth's employers pay more for unemployment compensation than for either of the other two programs. 3. Massachusetts spent more for unemployment compensation benefits in 1958 than in any other previous year-$124 million, exclusive of some $22 million additional expended from Federal loan funds for extended benefits. This 1958 expenditure was almost twice as much as was spent in 1957 and about three times as much as was spent in 1956. Yet, I believe it is a tribute to the soundness of the Massachusetts program that through 20 years' experience, encompassing two depressions, an employer-financed, State-administered unemployment system remains solvent today and continues to provide a greater percentage of weekly wage loss replacement for beneficiaries than any other Federal or State program. 4. Massachusetts employers have consistently had an average unemployment compensation tax rate higher than the national average every single year for the last 11 years. 5. The Massachusetts Legislature has consistently increased benefits to keep pace with the increasing average weekly gross wage in the State, as shown in the following table: 1 Massachusetts Legislature is currently considering a further increase to $40 and to 39 weeks, duration. 6. With respect to other provisions of the statute, the Massachusetts Legislature has modified the employment security law every single year since 1935 except 1940, 1942, and 1944; and has thus realistically demonstrated its ability to relate the program to the changing needs and economic conditions of the Commonwealth. For example, the more liberal provisions of the law in effect during the first quarter of 1958 (a year of high unemployment) resulted in a record benefit expenditure during the quarter which was almost double the amount expended in the first quarter of 1949 when weekly claims were running approximately 25 percent above the 1958 figures. In other words, 25 percent fewer claims in the first quarter of 1958 cost almost twice as much as total claims during the first quarter of 1949. 7. Based upon latest 1957 figures, in terms of the average weekly wage for Massachusetts employees, the current Massachusetts Employment Security Law replaces a higher percentage of wage loss than any State in the Nation. The CHAIRMAN. Our next and last witness is Mr. George W. Coffey. Could you identify yourself for the record by giving us your name, address, and the capacity in which you appear. STATEMENT OF GEORGE W. COFFEY, SILVER SPRING, MD. Mr. COFFEY. Mr. Chairman, my name is George W. Coffey, of Silver Spring, Md., and I thank you very much for asking me here. Mr. MASON. Do you represent any organization? Mr. COFFEY. Myself, sir. Mr. MASON. Just yourself? Mr. COFFEY. I am sure that 5 minutes of your time is worth at least a lifetime of mine, and I will do my best to justify its allotment. I represent no one but myself. Therefore, I have the advantage of being responsible to no one but myself. I have prepared a statement, which I have given to your clerk for inclusion in the record if you so desire. Being last on the agenda has given me the advantage of being able to amend my statement as I listened to the testimony of the others present. Please note these changes. Before I begin, if I may, I would like to remark in passing that I just do not believe that double cost of living at four times wages of 1938, presented by the gentleman from Indiana. I know that in 1938 I bought a new Chevrolet for less than one-half a year's salary. In 1958, the same Chevrolet cost me three-fourths of a year's salary. Mr. Roach must be a statistician. I, too, am somewhat of a statistician, and I know what can be done with statistics. On the subject of Federal income taxes, I expect to be able to speak for 50 million people. On the subject of unemployment compensation, however, I can speak only for myself. The gift or dole of unemployment compensation fosters indolence, laziness, and even crime, the crime of falsifying applications therefor. At the one extreme, there are those who will falsify an application for unemployment insurance, or compensation. At the other extreme, there are those who will not apply, even though they are legally entitled to it, because they do not feel morally entitled to it. Between these extremes, almost no one can accept a dole without a twinge of conscience. In addition, such acceptance is degrading. And you can repeat that it is insurance as often as you like; it is still something for nothing. It is still a blow to the pride. It is still degrading. Has anyone here ever stood in line in front of a State unemployment office? I doubt it. Much better would be a flexible Government work program, flexible in the sense that it could hire 5 or 6 million or exist with a skeleton force, something useful, something similar to the old WPA, where a man who needed work could have it at a minimum wage, simply by applying for it. No worry about 16 weeks, 15 weeks, 39 weeks. Let him have it if he wants it. Not a desirable job, perhaps, but a job to tide a man over a layoff or until he could find a better one. With such a work program, the one extremest would be foiled. The other could draw his pay with a clear conscience. Nearly all would cheerfully accept a regular job when it became available, which is not always the case under existing legislation. Furthermore, unemployment breeds low morale. With a Federal work program, there would be no unemployment. In conclusion, gentlemen, I beseech you, for the sake of a man's self respect, for the sake of a man's dignity as an individual, for the sake of the general welfare of all the people, I implore you: Give a man a job, not a dole. Thank you. The CHAIRMAN. Mr. Coffey, we thank you, sir, for coming to the committee and expressing your viewpoint on this matter for our enlightenment. Thank you, sir. (The prepared statement of George W. Coffey is as follows:) STATEMENT OF GEORGE W. COFFEY On the subject of Federal income taxes, I expect to be able to speak for 50 million people. On the subject of unemployment compensation, however, I can speak only for myself, as follows: The gift, or dole, of unemployment compensation fosters indolence, laziness, and even crime-the crime of falsifying an application therefor. At the one extreme there are those who will falsify an application for unemployment compensation. At the other extreme there are those who will not apply, even though they are legally entitled to it. Much better would be a flexible Government work program, flexible in the sense that it could hire 5 or 6 million, or exist with a skeleton force; something useful; something similar to the old WPA; where a man who needed work could have it at a minimum wage simply by applying for it. Not a desirable job perhaps, but a job to tide a man over a layoff, or until he could find a better one. With such a work program, the one extremist would be foiled-the other could draw his pay with a clear conscience. Nearly all would cheerfully accept a regular job when it became available, which is not always the case under existing legislation. The CHAIRMAN. That concludes the calendar for today, and without objection, the committee will adjourn until 10 a.m. tomorrow. (Whereupon, at 5:22 p.m., the committee adjourned, to reconvene at 10 a.m., Thursday, April 9, 1959.) UNEMPLOYMENT COMPENSATION THURSDAY, APRIL 9, 1959 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met at 10 a.m., pursuant to recess, in the main Ways and Means Committee hearing room, New House Office Building, Hon. Wilbur D. Mills (chairman) presiding. The CHAIRMAN. The committee will please be in order. The first witness this morning is our colleague from Pennsylvania, the Honorable William S. Moorhead. Mr. Moorhead, please come forward to the witness table. We are glad to have you with us this morning, sir, and you are recognized. STATEMENT OF REPRESENTATIVE WILLIAM S. MOORHEAD, OF PENNSYLVANIA Mr. MOORHEAD. Thank you very much, Mr. Chairman. I am William S. Moorhead, Representative of the 28th District of Pennsylvania. The CHAIRMAN. You succeeded a former member of the Ways and Means Committee, Mr. Eberharter. Mr. MOORHEAD. Mr. Erberharter, yes, sir. Mr. Chairman [reading]: Unemployment is a figure in a Government report, as dreary and lifeless as the Federal debt or the death rate. Unemployment is people-the individual hardship and heartache of 4,749,000 Americans willing and able to work but unable to find suitable jobs. This is the way the New York Times of March 16 began its report in depth on unemployment. I repeat it here by way of emphasizing that unemployment figures must not, in fact, cannot-be separated from the individual suffering and community disruption which unemployment brings. During last week's recess, while home in my district in the very heart of the great city of Pittsburgh, I talked with the unemployed, the small businessman now feeling the effects of unemployment and the union officials and other community leaders now searching for solutions to the problem. I went into the home of an unemployed steel worker. I sat in the kitchen of a family who has exhausted their Pennsylvania unemployment compensation benefits. There are 72,500 such exhaustees in Pennsylvania now and 18,800 in the 4-county Pittsburgh labor market, according to the latest figures just furnished me by the Pennsylvania Department of Labor and Industry. |