Independent State-by-State financing requires higher reserves and lower benefit amounts than would otherwise be necessary. Fear of unemployment compensation fund insolvency has contributed to keeping benefits down. (2) Competition among States for industry.-Employers argue for lower benefits and lower taxes by threatening the State with loss of industry. Here is the typical employer argument: Manufacturers Association of Connecticut: "Our State is competing today for more plants and new industries. To hike the cost of doing business in Con necticut is not the road to more jobs, but to less jobs." Ohio Chamber of Commerce: "Before the CIO campaign (for better unemployment compensation) it could have been foretold that a central issue would be whether the proposal would put Ohio at a competitive disadvantage with other industrial States ***” General Electric in Kentucky: "No other southern State except Arkansas and Alabama-have seen fit to extend benefits. These southern States represent our major competition for the new jobs of expanding business and industry." The unequal incidence of unemployment on States, and employer pressures to keep down benefits causes great extremes in costs: In 1958, the average tax rate in Rhode Island was seven times that in Virginia. In Michigan, one-fourth of the employers paid a rate over 2.7% to the fund; nine-tenths of the employers in Colorado paid a zero percent rate. The Federal standards bill would remove cost differences in two ways: (1) A system of reinsurance would backstock any States faced by an emergency of continuous heavy payments. This alleviates the dangers of separate State financing, removes the financial objection to higher benefit amounts, and to some extent shares the cost of concentrated unemployment. In such disasters as droughts and floods, the entire Nation provides assistance to the stricken area. Reinsurance grants would provide the same kind of joint security against our economic storms. (2) Federal benefit standards would remove differences due to extreme variations in benefit amount and duration. In the words of Governor Meyner, of New Jersey, "The Federal Government having initiated the program on a basis calling for State administration has wholly failed to prevent some of the States from adopting programs so inadequate as to be almost meaningless. * * single State by itself is powerless to legislate in any effective way to cure this condition." A The Federal standard bill on unemployment compensation will bring substantial improvement in every State law and yet it does not change the present Federal-State unemployment compensation system. When a State law does not meet the Federal requirements or standards, it is "out of compliance," and employers do not receive the offset. There are now according to the Secretary of Labor, 34 standards a State law must meet and most of these have been in the Federal law from the beginning. But there were no benefit standards in the original Federal Act. The wide State-by-State disparity in benefit levels and unemployment compensation costs that has developed was not anticipated. Inflation has required higher benefit levels, but many States have held back. The Federal standards bill would add two benefit standards and two eligibility standards, and amend an existing financial standard. There would be no change in the present Federal-State relationship. Interstate differences in benefits and costs would be diminished. If the bill passes this session, a State would have until July 1, 1960, to bring its own law into compliance. There would be no change in the amount of the Federal tax. The Federal offset of 2.7 percent is about twice the longrun cost of unemployment benefits, and more than enough with even the new benefit standards. No appropriation from general Federal revenues is necessary to implement the proposed bill. STATE ACTION ON UNEMPLOYMENT COMPENSATION IN 1959 AS OF APRIL 8 The Nation's jobless, told by President Eisenhower to look to their State legislatures for improvements in unemployment compensation, have been given scant hope for optimism by the legislatures, themselves. With 46 of the 49 State legislatures meeting this year, only 12 have enacted any change in either the amount or duration of jobless pay. The improvements that have been voted thus far, however, fall far short of even the minimum levels urged by the President in his repeated exhortation of the States to take action. In most of the 12 States, the gains chalked up in the form of higher benefits or longer periods for receiving jobless aid have been offset, to some extent, by enactment of more rigid qualification requirements. Four other State legislatures have wound up their 1959 sessions either with no action at all on long-overdue improvements, or with defeat of measures to provide some liberalization of existing programs. Here is a State-by-State breakdown of the action taken in legislatures thus far: Arkansas: Raised minimum benefits from $7 to $10, and the maximum from $26 to $30; increased the maximum benefit period to 26 weeks. Colorado: Boosted maximum benefits from $35 to $42 a week; extended maximum benefit period from 26 to 32.5 weeks. Georgia: Legislature adjourned without action. Idaho: Enacted temporary employment benefit program providing a formula for extending benfit period 50 percent when joblessness hits certain levels. No benefit improvements. Indiana: Raised maximum benefits from $33 to $36; extended maximum benefit period from 20 to 26 weeks. Kansas: Boosted minimum from $5 to $10, and maximum from $34 to $40; extended maximum benefit period from 20 to 26 weeks. Montana: Bill passed by legislature to liberalize benefits vetoed by Gov. J. Hugo Aronson (Republican). North Dakota: Raised maximum from $26 to $32, but eliminated dependents' allowances; extended period to flat 24 weeks. South Dakota: Raised benefits from $28 to $33; extended period from 20 to 24 weeks. Tennessee: Increased the amount of wages on which benefits are computed, which will result in slight rises in aid. Utah: Maximum duration extended from 26 to 36 weeks. Vermont: Maximum benefits raised from $28 to $36, and at 50 percent of average weekly wages after 1960; additional benefits for dependents up to $10. Washington: Raised maximum from $35 to $42; extended maximum period from 26 to 30 weeks. New Mexico: Maximum benefits raised to $36, duration extended to 30 weeks. West Virginia: Senate Finance Committee bottled up House-passed measure calling for higher benefits, longer periods. Legislature adjourned without a vote in Senate. Wyoming: Legislature adjourned without action. After 10 weeks of legislative sessions, measures to improve jobless aid are still pending in Connecticut, Illinois, Nebraska, New Jersey, North Carolina, Ohio, and Wisconsin. The following States have further extended temporary duration: Ohio to December 31, 1959; Illinois to June 30, 1959, or until State unemployment declines below 4.375 percent, whichever is later; Maryland to July 1, 1959. TABLE I.—Since 1952, 23 States have restricted the weekly benefit amount formula (under the maximum) to a smaller proportion of wages. Only 10 have liberalized it to a larger proportion Source: "Adequacy of Benefits Under Unemployment Insurance," October 1958, BES, U.S. Department of Labor. |