Is Mr. Sells present? Please come forward to the witness table and identify yourself for the record by giving us your name, address, and capacity in which you appear.

STATEMENT OF DALLAS SELLS, PRESIDENT, INDIANA STATE AFL-CIO, INDIANAPOLIS, IND.

Mr. SELLS. Thank you.

Mr. Chairman and committee members, my name is Dallas Sells and I am president of the Indiana State AFL-CIO, Indianapolis, Ind.

The CHAIRMAN. We are glad to have you with us, Mr. Sells, and you are recognized, sir.

Mr. SELLS. Thank you, Mr. Chairman.

I would like to thank you for the opportunity to testify in behalf of Federal laws setting up minimum standards for unemployment compensation.

As you know, unemployment compensation was a result of Federal action, as it is a part of the Social Security Act passed by Congress in 1935.

In this Federal law, special inducements were made to States that took action establishing State unemployment compensation programs. Indiana took advantage of these inducements and passed an unemployment compensation law that became effective, as far as benefits are concerned, in 1938.

The reason the Indiana State AFL-CIO feels that Federal minimum standards are necessary can best be illustrated by what has happened to the law in Indiana since that time.

But, first, perhaps I should tell you something of the unemployment situation as it stands in the State of Indiana.

I would like to digress for just a minute and say, in regard to some of the comments of the mayor of Detroit, that these people in Indiana who are unemployed are not altogether those who are new in the labor market. Many of them are unemployed who have 15 or 20 years of seniority in the automotive, steel, and some of the other basic industries.

During the year 1958, there were 266,320 claimants for unemployment compensation benefits in Indiana, while in the first quarter of 1959 there were 49,717.

In 1958, 107,422 claimants exhausted their total benefits, while in the first quarter of 1959, 16,140 exhausted their benefits.

I might add here that this seemingly reduction in the number who are drawing benefits or who have exhausted benefits in this year is due to many factors, including the fact that many of them exhausted benefits last year and are not eligible this year, and there is a new benefit year involved.

In 1958 the average weekly benefit amount was $29.55, with the average weekly coverage duration being 12.1 weeks.

It has been estimated by the employment security division of the State of Indiana that there are in Indiana at the present time 136,500 unemployed, while only 56,000, incidentally, are eligible for unemployment benefits.

Indiana has many cities with more than 6 percent of the labor force unemployed. For example: Evansville, 14.1 percent; Fort Wayne, 7.8 percent; Indianapolis, 6.4 percent; and South Bend, 7.6 percent. I have with me a copy of a proclamation issued by the mayor of my home city, Mayor R. R. Ferguson of Anderson, Ind., in which he proclaims "Get America Back to Work Day", issued April 5, 1959, and attached hereto as Appendix A.

In the proclamation, he points out that in the city of Anderson there are 3,260, representing 6.8 percent of the labor force, unemployed through no fault of their own. This proclamation by the mayor of Anderson declared that the citizens shall observe April 8, 1959, yesterday, as "Get America Back to Work Day".

And I might point out in my own personal experience in a General Motors plant in Anderson, the general manager issued a statement 2 weeks ago that the guide lamp division produced more and the sales were the highest in the history, but what he did not point out was that the employment had been reduced from 5,600 in that plant to 3,200 who are doing this production today.

I understand that a proclamation such as I mentioned is being issued by other mayors throughout Indiana and I just received a few moments ago a proclamation that was adopted also by Mayor Edward F. Voorde of South Bend, Ind., along the same line and asking, among other things:

I do hereby call upon the Congress of the United States and the President of the United States to act now to lighten the burden and suffering which has fallen upon millions of Americans who, without fault of their own, cannot find employment; for the President and Congress to proceed without delay to get America back to work.

When the Unemployment Compensation Act in Indiana became effective in 1938, so far as drawing benefits is concerned, the $15 maximum benefit amount represented approximately 50 percent of the average weekly wage paid in Indiana. Today's maximum of $33 represents approximately 37 percent of the statewide average of $99.98, as of December 1958.

Thus the practical effect of Indiana's legislative action has been to create a deterioration in the law, insofar as claimants are concerned. This has been due to the direct legislative activity of the Indiana Manufacturers Association and the Indiana State Chamber of Com

merce.

In 1954 President Eisenhower, through Secretary of Labor Mitchell, sent a letter to the Governors of the 48 States, urging them to give full consideration to liberalizing unemployment compensation laws on the State level, to a minimum of 50 percent of the statewide average wage, with a maximum duration of a uniform 26 weeks.

Since that time, the Indiana General Assembly has met in three sessions and has failed to take a realistic approach to the problems of the unemployed workers. In fact, Howard Friend, research director of the Indiana State Chamber of Commerce, made a statement this year to the labor committee of the Indiana House of Representatives, in which he stated:

There still remains the matter of a direct answer to the question of whether a maximum unemployment benefit of $33 per week is adequate. If the question is that of whether a $33 maximum is adequate to carry out the true insurance purposes of unemployment compensation, providing as a matter of right a limited

partial replacement of lost earnings during periods of unemployment, then, in my opinion, the present unemployment benefit structure in Indiana meets the adequacy test.

That structure, gentlemen, was $33 for 20 weeks, maximum. The employer groups have also stated in Indiana that $33 per week is too high, and that $32 would be sufficient.

In addition to the employer groups keeping benefits at a continuing low level each year, they have managed to have enacted, through the legislature, many restrictive provisions that deny unemployment compensation to many workers in the State of Indiana.

Thus we see, after 21 years of experience in the State of Indiana, the unemployed worker is faced with a number of serious problems because of the fact that benefit levels, in relation to wages, have gradually deteriorated. Disqualifications have become harsher.

One other factor that should be mentioned is the matter of experience rating, insofar as employer contribution to the fund has fared during these 21 years of experience. The contribution rating dropped to an average of seven-tenths of 1 percent in 1952 and 1953, and gradually increased to 1.1 percent in 1958, because of the increase in the unemployment situation in Indiana.

Indiana has received a lot of national publicity concerning new industry locating there. The Department of Commerce and Public Relations of the State of Indiana in their publicity releases brag about the fact that Indiana manufacturers pay less into the unemployment compensation fund than the national average.

We are sure that the citizens of Indiana do not favor industry being subsidized at the expense of workers unemployed through no fault of their own.

Because of the aforementioned factors, we in labor in Indiana feel that the most practical solution to the problems of the unemployed workers in this area of unemployment compensation can best be met by minimum unemployment compensation standards established by the Congress of the United States.

We thank you.

(Appendix A referred to follows:)

APPENDIX A

MAYOR PROCLAIMS "GET AMERICA BACK TO WORK DAY"

Whereas in the City of Anderson there are at present some 3,260 men and women, representing 6.8 percent of our labor force who through involuntary unemployment have been deprived of the opportunity of earning a living for themselves and their families or of contributing to the wealth and economic health of this community and the Nation. This unemployment represents an intolerable waste of human resources and an irrecoverable loss of the goods and services these men and women should be producing. America needs the effort and skill of every available worker to help create abundance for all to realize the potentialities for growth which are inherent in our dynamic free economy and to strengthen our defenses at home and abroad against the forces of Communist dictatorship. We must prove to all the uncommitted peoples of the world by our accomplishments that democracy and freedom hold out greater material as well as greater spiritual rewards than any totalitarian ideology. In order to meet this challenge we must establish vigorous, forward-looking national programs designed to end economic stagnation and put back to useful work all our idle resources, human and materials; and

Whereas on April 8, 1959, men and women from all over the country are meeting in Washington under the auspices of the AFL-CIO in an effort to persuade

the administration and the Congress of the urgency of adopting immediately programs designed to get America back to work: Now, therefore, be it

Resolved, That April 8, 1959, shall be observed in Anderson as Get America Back to Work Day. RALPH R. FERGUSON, Mayor.

(This proclamation sponsored by Madison County UAW Citizenship Council. ) The CHAIRMAN. Without objection, the proclamation appended to your statement, Mr. Sells, will be included in the record.

Are there any questions?

Mr. Machrowicz.

Mr. MACHROWICZ. I want to congratulate you, Mr. Sells, on your statement and advise you that only yesterday Mr. Claude Loesch, the administrative assistant of the Indiana Manufacturers Association, was here and gave us a glowing picture of the tremendous advances made in the unemployment compensation system in Indiana and about the manufacturers association taking part in getting all these ad

vances.

I noticed that you paint a little different picture than was painted by him here yesterday.

Do you have any comments on Mr. Loesch's activity or the Indiana Manufacturers Association's activity in improving the unemployment compensation system in Indiana?

Mr. SELLS. I am very happy to comment on that.

Mr. Loesch is the legislative representative for the manufacturers association. He, along with Howard Friend, do all the testifying for the manufacturers association and the chamber of commerce, and they have consistently opposed every single measure to improve unemployment compensation in the State of Indiana and have supported every single measure that would add to disqualification for unemployed workers.

Mr. MACHROWICZ. I might say further that I presented Mr. Loesch with the statement of Howard Friend in his pamphlet, "Unemployment Compensation Legislative Issues in Indiana, 1959," published by the Indiana State Chamber of Commerce, wherein he said that:

Throughout the years Indiana generally has enjoyed a favorable position among industrial States from the standpoint of being a low-cost State for unemployment compensation purposes.

He completely disclaimed that statement and said he did not want to associate himself with Mr. Friend in that statement, but so far as you know, they both have worked together, have they not, in attempting to keep down the unemployment compensation?

Mr. SELLS. They have always appeared together and testified together in these areas, that is right.

Mr. MACHROWICZ. That is all.

The CHAIRMAN. Are there any further questions?

Mr. Curtiss will inquire, Mr. Sells.

Mr. CURTIS. Mr. Sells, I was wondering about your statement with regard to Indiana bragging about the fact that they pay less in the unemployment compensation than the national average.

Of course, if the contribution theory were working properly, that could be a reflection of the fact that they have had less unemployment in those industries that pay, is that not correct?

Mr. SELLS. But it is also an indication that they managed to get the kinds of disqualifications that deny workers the right to unemployment benefits.

Mr. CURTIS. Yes, I appreciate that; but the point I am making is that in theory an employer should be able to brag about a low unemployment insurance tax rate if it did reflect the fact that he has been doing a pretty good job of keeping unemployment down in his particular plant, or industry, or whatever he is engaged in.

Mr. SELLS. The theory is good, but the practice is that it is because they have denied the workers benefits which they rightfully deserve. Mr. CURTIS. That is what I wanted to get into, not with you necessarily, but to pose the question because the way you present it, you beg the question.

In other words, you assume that the rate is low because of these other things and all I want to point out is that it could be--I am not saying it is because I do not know, though I would like to know-because they have done a good job of keeping down unemployment in their plant. In fact, that is the whole theory, is it not, behind granting lower tax rates to industries that have lower instances of unemployment, to encourage them to try to keep their employees on? Is that not true?

Mr. SELLS. This is true, but on page 2, Congressman, I stated that there were, for example, 107,000 claimants who exhausted their benefits while the average coverage duration was only 12.1 weeks, and as an industrial State this is not something to be proud of.

Mr. CURTIS. No; that part is not, but the point of this is that because of that, their rates are going to increase next year. We have not seen the effect of the recent unemployment in Indiana or any other State on the increased rates through experience, but we will.

However, what I am getting to is, are you in disagreement with the basic theory that we should reflect experience in the rate charge? Do you think we should do away with that theory, which I thought was a pretty good one, to give an incentive to the employer to try to keep the people on his payroll?

Mr. SELLS. We are not in disagreement with that theory. We are in disagreement with the practice that they use to apply that theory, and that is to keep their experience rating low by making all sorts of disqualification provisions to deny the workers that to which they rightfully should have.

Mr. CURTIS. Then what I would like to have to help me in my thinking would be a presentation on that particular point as to how that action is done, rather than for you to present a conclusion.

I respect you. Do not misunderstand me. However, what makes a difference to me is your supporting data, so I go back to another point.

You say there are many restrictive provisions that deny unemployment compensation to many workers in the State of Indiana. We in this committee have been presented with evidence such as that given by the hotel owner in Illinois of the problems that they experience, and we have seen it elsewhere in regard to, if their story is true, and I think in many instances it is, the abuses of the unemployment system through seasonal employees and so forth.