The CHAIRMAN. Without objection, Mr. Meany, these tables will be included in the record at this point immediately following your

statement.

Mr. Meany, I want to thank you sir, for coming to the committee yourself in presenting the statement of the AFL-CIO in behalf of certain of the legislative proposals that are pending before the committe. We appreciate the fact that you have appeared personally. Are there any questions?

Mr. MACHROWICZ. Mr. Chairman.

The CHAIRMAN. Mr. Machrowicz will inquire, Mr. Meany.

Mr. MACHROWICZ. Mr. Meany, I also want to congratulate you on a very masterful statement, and I think a very comprehensive statement. I just want to comment that your statement of the dual character of the manufacturers' representatives in their position taken here before us in Washington and that in their respective States has been borne out by testimony here.

Whereas here they tell us, "Leave it to the States; we'll take care of our problems," it has been shown here already by testimony thus far presented that those same representatives go back to the legislatures and urge them to do nothing because it is a national problem.

I think probably one of the saddest things about this whole situation is that whereas the Secretary of Labor has publicly told labor groups that Congress should do something in this matter, and I understand in his statement to the unemployed a few days ago was very sad about the fact that Congress is doing nothing about this matter, nevertheless he did not have time to come before this committee. His representative before this commitee has opposed any Federal action on this very matter.

I do want to say something else, though.

In the testimony that has been presented here yesterday and the day before, there has been raised the issue of whether or not unemployment compensation is properly related to wages or whether it should be related to the cost of living.

I wonder whether you would have any comments on that subject. Mr. MEANY. Back some 24 years ago, I was active in the legislative work in labor in the State of New York, and at that time in 1935 we passed the State Unemployment Compensation Act.

I would like to point out that at that very time the argument was used in New York State against the State act on the ground that there was no Federal law, and of course the very same people were arguing here in Washington that the Federal Government, the Congress, should wait for the States, especially leading States, and they were

1 Classified by type of plan in effect at end of 1957.

All rated and unrated accounts; excludes accounts newly subject after State cut-off dates for preparation of reports.

3 National totals and total for payroll variation plan exclude data for Rhode Island, which did not assign employers any reduced rates for 1957 rate year. National totals also exclude data for Alaska, which repealed experience rating provision as of Jan. 1, 1955.

For Alabama, Arizona, Florida, Georgia, South Carolina, and Texas, data exclude newly qualified employers assigned reduced rates after computation data.

Includes effects of voluntary contributions made toward credit for 1957 rates.

Less than 0.05 percent.

When reduced rates are assigned in Washington, the rate variations are achieved through the use of tax credit offsets. Employer accounts in this State are classified by rate for current rate year on the assumption that each employer's taxable payroll would remain the same as in the preceding year.

Source: BES, U.S. Department of Labor.

pointing out the fact that the State with the largest population had no law. At that time there was quite a bit of debate about unemployment compensation in 1933 and 1934.

Of course, we were meeting the full impact of the depression at that time. The depression, while it had started in 1930, actually didn't really reach its full impact on the country until 1932, 1933, and 1934, and, as I say, there was much debate about unemployment insurance and about certain principles.

There were arguments, for instance, on whether this should be through the use of separate funds for each employer, a merit rating system, also quite a bit of debate on whether it should be a contributory system, a system in which the employees contributed, or in which the employer made the sole contribution, or should be a joint contribution, and there was also the argument about relating this to the question of need.

The position that labor took at that time, and which we still hold, was that this is insurance and that the sole purpose of this is to place upon industry the responsibility for the economic effects of its failure to provide continuous employment, that question of need requirement should not enter into this, that this was not relief, that this was something that the man earned when he worked, and it was based on an insurance principle that it was a proper charge against industry to pay for the economic effects of unemployment, just as industry set aside in its contingent funds money to replace machinery that wore out, just as they paid out for workmen's compensation against accident and injury on the job, so insofar as the relation of this to the actual cost of living or the need requirement in the individual family, we have never accepted that idea.

We figure this is insurance, and when you insure something, certainly you insure it on the basis of that which is lost, and surely it should be related, we feel, to the earning capacity of the man at the particular time he lost his employment and not tied to a cost-ofliving figure.

Mr. MACHROWICZ. Mr. Meany, as you have pointed out on page 3 of your statement, in the typical average State in 1939 maximum benefit amount was 65 percent of the average State's weekly wages, and today it has dropped down to 40 percent, which indicates stronger than anything I can think of that the States have certainly fallen down on their duty in this respect. Am I correct?

Mr. MEANY. Yes, sir.

Mr. MACHROWICZ. That is all, Mr. Chairman.

The CHAIRMAN. Are there any further questions of Mr. Meany? Mr. Mason will inquire.

Mr. MASON. Mr. Meany, I have gone through your statement or your argument, and it all tends toward a centralized standard, centralized supervision, and centralized authority over the unemployment compensation setup.

Why do you not argue for complete federalization of it and not have a State-Federal handling of it, but complete federalization of the program?

Mr. MEANY. In this legislative work, we try to stay within the realm of the possible.

Mr. MASON. You do not think then at the present time it would be possible to pass legislation federalizing the whole program?

Mr. MEANY. I think that from a practical point of view you change legislation of this type and you change it a little bit at a time.

Mr. MASON. However, the final objective would be federalization? Mr. MEANY. No; I haven't said that is the final objective.

Mr. MASON. That is all, Mr. Chairman.

The CHAIRMAN. Mr. Forand will inquire, Mr. Meany.

Mr. FORAND. Mr. Meany, I am not going to ask any questions, but I do want to compliment you on your statement. You set forth here very clearly and very forcefully, much better than I can, many of the arguments that I have advanced in the past.

As you know, this type of legislation has been a pet of mine for a number of years and I have met with disappointment over and over again, but I have not lost my interest in it.

However, I do want at this time to tell you publicly that I think we have in Rhode Island, perhaps as good as you have in any part of the country, an AFL-CIO group that is fairly representative not only of the worker, but of all the fairminded people of our State, and I want to pay a compliment to them.

At this time, Mr. Chairman, I ask unanimous consent that following the testimony of Mr. Meany, there be included in the report a statement by the AFL-CIO of Rhode Island.

The CHAIRMAN. Without objection, that will be included at this point in the record.

(The above-mentioned statement is as follows:)

STATEMENT IN SUPPORT OF H.R. 3547 IN REGARD TO ESTABLISHING FEDERAL STANDARDS FOR UNEMPLOYMENT COMPENSATION

The Rhode Island AFL-CIO wishes to make this urgent appeal to the members of the House Ways and Means Committee to solicit their approval of H.R. 3547, sponsored by Congressmen Karsten of Missouri and Machrowich of Michigan. This bill will establish up-to-date Federal standards for unemployment compensation.

Experience has shown that it is now time to modernize the Federal standards for unemployment compensation. Establishing Federal standards for unemployment compensation is no new innovation. There are already 36 Federal standards that must be met by States before participation is permitted in the Federal program. We believe that the time has now come for the Federal standards to be expanded in six specific areas.

(1) Unemployment compensation benefits are now limited because States now impose unrealistic maximum benefit ceilings. We believe it is now time that benefits be established at not less than 50 percent of the worker's weekly wage, or not less than two-thirds of the state's average weekly wage, whichever is smaller. With this arrangement, an eligible claimant in Rhode Island shall receive 50 percent of his weekly wage, or a maximum amount of $48 based on the two-thirds average weekly wage in Rhode Island. The present Rhode Island maximum is now $36 and the average Rhode Island unemployment compensation payment during 1958 was only $26.36, an insignificant amount on which to support a family.

(2) Duration of benefits should be extended to a maximum of 39 weeks. Once again experience has shown that, because of the lack of employment opportunities, workers have not been able to secure employment within the present 26-week period. During 1958, 29,346 unemployed persons exhausted their benefits before jobs could be found. This is 44.2 percent of those who had filed for benefits. Exhaustions are running at an alarming high rate.

(3) Limitations on eligibility restrictions must be standardized throughout the country so that employees and employers in different States will not be subjected to varying requirements.

(4) Universal coverage should be extended so that every employee who is employed at any time during a tax year, will be covered under employment security. (5) Uniform methods to improve financing for State systems must be adopted so that States will be permitted to provide for uniform rate reductions to all employers as well as individual experience-rated reductions.

(6) At the present time, the Federal Unemployment Trust Fund Account has a reserve of $7 billion. Some of this reserve should be used in grants to those States which are in financial difficulty because of high unemployment.

Unemployment is America's most serious domestic problem. The national administration has shown little desire to alleviate the suffering caused by massive unemployment. National unemployment is now at almost 5 million and there are thousands more working short time *** the underemployed.

During the year 1957 there was an average of 232,275 covered by employment security in all industries and this number is shrinking each year. During 1958 there was an average of 11.5 percent of the Rhode Island labor force out of work. In January of this year, there was 39,300 unemployed, or 11.2 percent of the labor force and 2,138 exhausted their benefits.

In February, there was 36,600 or 10.5 percent unemployed and 1,645 exhausted their benefits.

We make this urgent appeal at this time because we do not look to any reduction in the army of unemployed during the present year.

Mass unemployment is not a local condition. Unemployment is a national problem and we must look to our enlightened House Ways and Means Committee to display leadership in proposing meaningful legislation. The national administration lacks leadership, initiative and ability to present a program that will ease the suffering and hardship heaped upon our unemployed.

RHODE ISLAND AFL-CIO,
THOMAS F. POLICASTRO,
EDWIN C. BROWN,

President.

Secretary-Treasurer.

APRIL 3, 1959.

The CHAIRMAN. Mr. Curtis will inquire, Mr. Meany.

Mr. CURTIS. Mr. Meany, just to get the record straight on the question that Mr. Mason asked you, whether the final objective is federalization, you said that you did not say that. I agree with you. that you did not, but I would like to ask you is that the final objective? Mr. MEANY. I would not say so at this time. I haven't even given any thought to it.

Mr. CURTIS. I think it is very important to know.

Mr. MEANY. We are dealing with a condition that we are faced with now and we are trying to improve this.

Mr. CURTIS. I appreciate that; but also, in trying to improve anything we have goals, and the reason I think this is very important to know is because, apparently, if that were so, you would not recognize any desirable values of the State-Federal system we have. Mr. MEANY. I don't want to say that, Mr. Curtis.

What we want to do is try to make this system work.

Mr. CURTIS. I agree with that.

Mr. MEANY. I can assure you if we can make this work, we are not going to worry about trying to change it to something else. The main objective is to make it work.

Mr. CURTIS. The next observation I would like to make is: Should we not be viewing a system like this on the basis of an economic cycle rather than on just one aspect of an economic cycle?

39678-5930

The reason I make that point is that I think some of your statistics refer to only one aspect of this economic cycle. You would agree, would you not, that in trying to evaluate a system like unemployment compensation, we ought to look at it through a complete turn of the economic cycle?

Mr. MEANY. I agree with you completely.

Mr. CURTIS. Incidentally, I did mean to say this, Mr. Meany: I thought your paper contained a great deal of very valuable information, and it certainly bears right on the subject and is very helpful to me in trying to get some of my ideas on this matter straightened out. On page 7 you used the word, I think, of the employers "policing" the system, which, of course, they do under the setup and was one reason why I thought that the experience rating requirement was valuable. If the employers did not do the policing, where would the policing come from to be sure that the system was not abused, because I think you do recognize that there can be abuses?

Mr. MEANY. Policing the system to prevent abuses is one thing. Mr. CURTIS. That is right.

Mr. MEANY. Policing the system to defeat the very purpose of the law in order to save taxes is entirely another thing.

You say who should police the system?

Mr. CURTIS. Yes.

Mr. MEANY. I think the advisory committees that are set up in the various States, the administration. I think that is part of their job. I know that was my job when I sat on an advisory committee.

Mr. CURTIS. Is not this actually, though, what happens: The incentive is on the employer and you can say his incentives are to get lower taxes, but he is in there trying to resist a claim that he thinks is not justified?

Mr. MEANY. We have absolutely no objection to that, Mr. Curtis, but if you set up an agency, and if you pay somebody to resist every claim that is made, then you are not just resisting the claims that you feel are justified.

Mr. CURTIS. Let's put it this way: Theirs is not the ultimate decision. They simply are taking one point of view, and I presume the unions where there are unions will take the other point of view, and I daresay that they will defend almost all cases.

Mr. MEANY. That is not so.

Mr. CURTIS. It is not?

Mr. MEANY. No, sir.

Mr. CURTIS. Why is it not?

Mr. MEANY. We have no machinery set up to defend all cases, as you said.

Mr. CURTIS. Where would a man go then for help if he thought he had a legitimate claim and the employer was resisting it?

How would he get his case presented so he would get a fair shake? Mr. MEANY. Naturally, he would come to his union, but that isn't defending all cases.

Mr. CURTIS. Wait. I was taking your remarks as a hyperbole, and if we are going to get down to it, you do not really mean that the employer resists every single case?

Mr. MEANY. In some cases, yes.

Mr. CURTIS. You can argue that they resist a great many, and certainly the incentive is on their part to resist it.