In summary I want to reemphasize the two basic points of my testimony. First, the organizations for which I speak are strongly opposed to the imposition of Federal benefit standards on the State unemployment compensation programs. We believe such action would be wrong in principle. We think that Congress has been right in the past when it held that the States should be responsible for maintaining sound, reasonable unemployment compensation programs. Second, we believe the States have successfully carried out their responsibility in this regard. Therefore, neither as a matter of principle nor as a matter of necessity can a sound case be made for congressional usurpation of a long established and accepted State responsibility. The member State and regional chambers of commerce in the Council of State Chambers of Commerce which have endorsed this statement are: Alabama State Chamber of Commerce Empire State Chamber of Commerce (New York) Ohio Chamber of Commerce State of Oklahoma Chamber of Commerce Pennsylvania State Chamber of Com merce South Carolina State Chamber of Com- Greater South Dakota Association Virginia State Chamber of Commerce Missouri State Chamber of Commerce merce Mr. HORMAN. I should also like to mention that I am filing a formal statement and with your permission I should like to file a formal statement on behalf of the Missouri State Chamber of Commerce. The CHAIRMAN. Without objection, that will also appear in the record. (Statement referred to follows:) STATEMENT OF MISSOURI STATE CHAMBER OF COMMERCE IN OPPOSITION TO H.R. 3547, PROVIDING FOR FEDERAL UNEMPLOYMENT BENEFIT STANDARDS The major purposes of this statement are to demonstrate that: (1) It would be dangerous to give the Federal Bureau of Employment Security additional authority when it is now abusing its present authority by attempting to dictate to the Missouri Legislature. (2) Missouri, like other States, is now revising and has continuously revised its unemployment benefit program to meet the needs as they exist in Missouri much better than can be done by Federal standards which must be based on the national situation rather than the peculiar needs of a particular State. (3) By following prudent policies Missouri has been able to maintain its unemployment fund in a financially sound condition and if left alone Missouri will have adequate funds to pay unemployment benefits when needed. Missouri is not anxious to help pay for the imprudent action of other States. FEDERAL BUREAU ATTEMPTS TO DICTATE TO MISSOURI Missouri's "crime" is being different One of the main strengths of our Federal systems is that it permits individual States to experiment with different ways of solving problems which permits States to profit from the experience of other States. Yet Missouri presently is being harrassed by Federal bureaucrats who are attempting to dictate changes in the Missouri law to the Missouri Legislature because Missouri has tried to strengthen its unemployment benefit program through a provision that has worked very successfully since it was enacted in 1957, but is different than procedure followed in other States. 39678-59-27 The provision which has offended the Federal bureaucrats is that the tax account of an employer who lays off a worker is charged with benefits first whether that employer is in the worker's base period or not, if he had previously hired that worker away from another employer by offering him a better-paying job. This provision results in always charging the account of the last employer with benefits which result because he laid off an employee which he had hired away from another employer. Since Federal law requires only that an employer's tax rate be based on "his experience with unemployment ***” there is clearly no conflict with Federal law. Nevertheless, the Federal Bureau of Employment Security has had the audacity to threaten Missouri with nonconformity with Federal law because Missouri enacted this provision and is now refusing to repeal it despite pressure from Federal bureaucrats. That Missouri's only "crime" is daring to be different was practically admitted by a representative of the Federal Bureau who came to the Missouri Capitol Building in 1957 to attempt to frighten the legislature into taking this provision out of a bill that was agreed to by representatives of business and labor organizations and the Missouri Division of Employment Security. In 1957 the Missouri division took the position that this provision did not conflict with Federal law. However, now as a result of the Federal Bureau's purse-string control over the Missouri division's administrative funds, including salaries, the Missouri division is being forced to act as an agent for the Federal Bureau in pushing for Missouri Senate bill 231, which would repeal this provision that dares to be different and show other States how they can handle this problem in a fairer and more equitable manner than most of them are now doing. MISSOURI IS MEETING MISSOURI NEEDS Missouri has and is continuing to keep its unemployment benefit law up to date through regular revisions designed to meet Missouri's needs. In 1957 the maximum benefit was increased by $8 to $33 for 26 weeks. The Missouri Senate has recently passed a bill (Senate bill 168) increasing this maximum another $5 to $38. This will put the Missouri maximum benefit well above 50 percent of takehome pay for most workers. Between 1939 and 1958 the average weekly benefit increased by 217.6 percent whereas the cost-of-living index during the same period went up a lesser amount of 108.2 percent. As a matter of fact, the increase in the cost of living in Kansas City and no doubt much of Missouri was less than this, but the proposed Federal standards would not take into consideration these varying cost-of-living conditions as can be done by State legislatures. Another feature of the bill (Senate bill 168) which has passed the Missouri Senate and is now being considered by the Missouri House would extend the duration of unemployment benefits by 50 percent. This extension would take place when unemployment has been in excess of 6 percent for 6 consecutive weeks. This 6 percent "trigger point" may be the right figure for Missouri, yet the neighboring State of Illinois has recently approved a trigger-point figure that is entirely different which may also be the right figure for Illinois. The point is that Federal standards or Federal unemployment benefits would not provide sufficient flexibility ot meet the varying needs of the various States. MISSOURI'S FUND IS SOUND Missouri has over $200 million in its unemployment benefit reserve fund which has been built by following prudent policies and so is in a position to meet its own unemployment benefit needs if left alone by the Federal Government. When the Missouri fund gets down to 71⁄2 percent of taxable wages, and it is just about there now, a higher tax scale is applied in order to replenish the fund. Missouri is not likely to need any Federal grants or "loans" unless the Federal Government imposes such extravagant standards as to bankrupt the Missouri fund as well as other State funds. Missouri is not particularly interested in helping through Federal taxes to bail out States that have followed less prudent policies. The CHAIRMAN. We thank you, sir, for bringing these views to the committee. Mr. Machrowicz has one question. Mr. MACHROWICZ. Do I understand that you believe that this bill would deprive the States from using the experience rating which is used at the present time? Mr. HORMAN. That is my understanding, sir. Mr. MACHROWICZ. I might correct you in that. That is not true. It certainly is not included in the bill. What this bill does is exactly what you are suggesting. It gives the States the option of two methods, but it does not remove the possibility. I suppose that would probably remove most of your objections to the bill? Mr. HORMAN. No; it would not, because the bill would destroy individual employer experience rating. Our primary objection to the bill is that we feel that unemployment compensation benefits should be administered at the State level. Mr. MACHROWICZ. And we are doing that in this bill. We are giving the State more rights than they had previously and more option in that respect. Mr. HORMAN. In the one respect, yes; and thank you for that correction. Mr. MACHROWICZ. You are not objecting to that? Mr. HORMAN. Not to that principle; no. Thank you for making that correction. The CHAIRMAN. Thank you again, Mr. Horman, for coming to the committee. (The following letter was received by the committee:) AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES, Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, DEAR SIR: The American Federation of State, County, and Municipal Employees, AFL-CIO, is a labor union comprised of 200,000 members in 46 States. We are greatly interested in the provisions of H.R. 3547, which is known as the Karsten-Machrowicz bill. This proposal will extend coverage, establish Federal standards, improve benefits, and generally strength the unemployment compensation law. We support the proposed legislation and feel that our views on the necessity for Federal standards have been adequately expressed by the other spokesmen for the AFL-CIO, who have appeared before your committee and filed statements urging that the committee favorably report the bill to the House of Representatives. In view of the testimony which you have heard, we do not feel it necessary to elaborate at great length regarding the necessity for Federal standards. We should like to take this opportunity to express our concern over the failure of the bill to extend coverage to employees of nonprofit organizations. Although the majority of our membership is among the State, county, and municipal employees who must be covered by individual State action, we also have in membership a large number of community and social welfare agency employees. Their employers are exempt from the provisions of the various State unemployment compensation laws. Under the proposed bill, these employees of nonprofit agencies again will not receive unemployment compensation coverage. It is in behalf of these people that this letter is submitted with the request that it be made part of the record of your committee hearings. In a period of recession as we have faced over the past year, unemployment compensation benefits are literally a lifesaver for many unfortunate workers who lose their jobs. In 1958, nearly $4 billion was distributed to workers who, through no fault of their own, found themselves without means of support. Employees of nonprofit organizations are no different than are millions of other workers in other industries throughout the Nation. They too suffer from instability in employment. We submit that it is not fair and equitable for them to be denied the benefits of unemployment compensation merely because they are employed by nonprofit agencies. In 1955, unemployment compensation coverage was extended to Federal workers. Prior to that time, it was contended that these workers also did not need nor should not have unemployment compensation coverage. However, within the first year after extension of unemployment compensation to Federal workers, 166,000 unemployed Federal workers received payments amounting to nearly $29 million. In the States of Connecticut, Michigan, Minnesota, New Hampshire, New York, Oregon, Rhode Island, and Wisconsin, where State legislatures have seen fit to cover State employees by unemployment compensation, there has been similar experience. Social security is another Federal program which exempted employees of nonprofit organizations for many years. In 1950, provision was made for the employees of nonprofit groups to elect social security coverage. It is significant to note that of these nonprofit organizations which could elect such coverage, 90 percent have done so. This merely confirms what we have learned from our years of experience in collective bargaining in this field. Nonprofit organizations want their employees to be protected by such programs. Nonprofit employees themselves desire this protection, they deserve this coverage, and they need it. We respectfully submit that you seriously consider amending the proposed bill to extend unemployment compensation benefits to employees of nonprofit organizations. Very truly yours, GORDON E. BREWER, The CHAIRMAN. Our next witness is Mr. George Meany. STATEMENT OF GEORGE MEANY, PRESIDENT, AMERICAN FEDERA- Mr. MEANY. Good morning. The CHAIRMAN. Good morning, Mr. Meany. We are pleased to have you appear before the committee today in behalf of the legislation that is presently being considered. We know that you are the president of the American Federation of Labor-Congress of Industrial Organizations, and you are recognized, sir. Mr. MEANY. Thank you. The CHAIRMAN. Mr. Meany, we recognize those that are with you at the table, but for purposes of the record, though they have been identified many times in the past in hearings before the Ways and Means Committee, will you identify them? Mr. MEANY. On my right is Mr. Andrew Biemiller, the director of legislation of the AFL-CIO, and on my left is Mr. Cruikshank, the director of our social security department, and Mr. Ray Munts, assistant to Mr. Cruikshank. May I first express on behalf of the AFL-CIO our appreciation for the opportunity which this committee has given us to be heard on the important legislation which you have under consideration. The outcome of your current hearings will affect the well-being and the economic security not only of the 1312 million members of unions affiliated with our federation, but of every man and woman in this country who works for wages. Because their economic welfare is the very foundation of our national economic life, the improvements in the Federal-State unemployment insurance system contemplated in the measures before you which have been introduced by Congressmen Karsten and Machrowicz and six other members of this committee, along with some 120 of your colleagues in the House, can make a significant contribution to the continued strength and stability of our country. Nothing can be more important in this time of worldwide unrest than maintaining this Nation's leadership capabilities. The whole free world looks to this country. We are here to review the needs of our system of unemployment insurance. It is not necessary for me to say that, while we consider this program an important part of our economic structure, we do not rely on it wholly as a means of preventing unemployment, nor for the individual wage earner is it a satisfactory substitute for a steady job at good wages. Improvement in our unemployment insurance system is but a part, although a very important part, of the broad program for recovery and for maintenance of a high-level economy which the AFL-CIO is seeking to have enacted during this session of the Congress. Your consideration of the needed improvements in unemployment protection is most timely. This is true, first, because despite the series of glowing predictions of the imminent end of this recession, unemployment as a pressing problem of major urgency is still with us. It has failed to heed admonitions just to disappear quietly from the scene. It cannot be brushed aside. The stark, hard statistics of its extent belie the efforts of the economic soothsayers. And to the individuals behind the statistics, it remains the crushing reality of hunger and despair. According to the latest figure, there are 4,360,000 totally unemployed. In addition, nearly 22-2.4 million are compelled to work part-time schedules. This represents an equivalent of 1.1 million more totally unemployed. Furthermore, there is a hidden unemployment of some 300,000 young people who would normally have entered the active labor market but who are now discouraged from looking for jobs because there are no jobs for them. True, unemployment therefore is now about 5.8 million, or the equivalent of 7.6 percent of the labor force. There is substantial unemployment in 74 of the Nation's 149 major industrial areas and in 193 smaller industrial communities. About 20 percent of the Nation's productive capacity, plants and machines, is idle. These hearings are timely not only because of the present emergency situation, but because they afford us an opportunity to review our experiences with this program in the light of 20 years of experience. I remember vividly the difficulties facing all of us when unemployment compensation was established in the 1930s. The defects in the program, which we had to accept at that time in order to make a beginning, have come back to haunt us with an increasing persistency. These committee hearings provide us now with an opportunity not available 25 years ago. We now have long experience on which to base careful judgments. The last 10 years have been a period for reviewing the performance of the system, for weighing alternative ideas, and for deciding what new underpinning is necessary. |