be helpful. I apologize for its lack of brevity but several careful editings have made it impossible to shorten the content.

During the 1957 session of the legislature I testified before the labor and industries committee of the senate on the subject of unemployment insurance as it applied to my company, a typical plant processing canned and frozen seasonal berries, fruits, and vegetables.

At that time I took the position that our industry was one which contributed more to employment rather than to unemployment and that too many of our seasonal employees were habitual drawers of unemployment insurance and that their abuse was contributing to the drain on the fund in a totally unwarranted manner in respect to the intent of the law as it was originally intended.

The two years that have gone by since that time further emphasizes the condition, for in calendar 1958 Blue Lake Packers, Inc., paid into the fund $36,525.98 and were charged by withdrawals of our seasonal employees in the amount of $92,971.82. I again emphasize "seasonal" employees for the only unemployment insurance drawn by what we consider full-time employees was $411.30.

During 1958 we had 1,907 employees of which better than half were high school and college students; 149 are employed full time and about 800 were adult seasonal workers. The large majority of these adult workers are housewives who, ever since the beginning of our industry have looked forward to working during our season in order to augment their family incomes and would not take full-time employment if the job required. Frankly, we cannot get along without them-they are splendid workers but they are not on the year-around labor market nor, as such, in our estimation, were ever intended to be recipients of unemployment benefits. The students, of course, are ineligible to draw benefits and, with the exception of the three full-time employees mentioned above who drew the $411.30, all of the remainder of our full-time employees were continuously employed. Of the 800 seasonal workers, 476 drew the remaining $92,560.52.

Thinking that an analysis of these 476 workers would be helpful to your committee, we have grouped them by general classification into five groups, and we will further analyze the largest segment of the major group, namely, the female workers who are the annual applicants for unemployment insurance:

Seniority by union agreement is arrived at by having worked 30 continuous working days. As shown, women on this list have drawn approximately $55,000 of the total withdrawn by all of our employees totaling almost $93,000. To demonstrate the repetition of unemployment insurance withdrawals by these seasonal workers we are detailing in the following table the first 100 women on our seniority list by seniority and the number of years that each has drawn unemployment benefits: 26 have drawn for 9 years; 10 have drawn for 8 years; 8 have drawn for 7 years; 13 have drawn for 6 years; 24 have drawn for 5 years; 10 have drawn for 4 years; 7 have drawn for 3 years; and 2 have drawn for 2 years.

All of these women have not been on the list for the 9-year period but it is clearly evident that there is a year-in year-out habit of working during our season and then drawing unemployment insurance during the months we cannot operate because of the nature of our business.

It is of further interest to note that only 1 of these 100 women has had any other reportable income during the past 2 years. Is it not fair to assume that if these workers were on the year-round market that a small percentage at least would have found other employment?

Again let me apologize for the length of this letter. I hope its contents, which can be further elaborated on, should you desire, will be helpful. Sincerely,

BLUE LAKE PACKERS, INC.,
N. W. MERRILL,

Executive Vice President and General Manager.

39678-59 -32

The CHAIRMAN. Mr. Benson, I just want to see if I can better understand your thinking about this generally.

Yours is what I would consider to be a highly seasonal type of industry, is it not?

Mr. BENSON. Very much so.

The CHAIRMAN. To operate you must have labor available at a certain time of the year when you have work that has to be done at that specific time?

Mr. BENSON. That is right.

The CHAIRMAN. If there are other jobs for these workers after they have served your purpose, then there is no unemployment problem, of course?

Mr. BENSON. No, sir.

The CHAIRMAN. If there is no other type of employment for these workers and they desire employment, it has been argued by some who have appeared before the committee that the cost of your overall labor bill should include some element of unemployment compensation for such workers as desire work and cannot find it when you have completed your seasonal operations, and that that should be reflected, as are the wages that you pay, in the actual cost of the can of peas that you sell.

Do I understand your thought to be that, since these are seasonal employees, not annual employees of your industry, you are entitled to a lower tax rate?

Mr. BENSON. No, sir. What we are saying is that most of our employees are seasonal employees, as I pointed out, people who are not considered in the labor market. They are schoolchildren going to school, college students, married women, local married women, and so forth, that are not looking for jobs other than at that time.

The CHAIRMAN. I can understand the distinction that someone could make in a schoolchild working for 2 or 3 months during the summer in your industry, going to school and so on. Certainly that person has not gained such a degree of connection with the labor force that there is to be any great suffering if every States does not take care of that situation when the job is over, because that person is really not in the labor force.

Mr. BENSON. No; he is not.

The CHAIRMAN. What I am talking about is situations which I know about and from my own experience, where the canning industry does use local citizens who are a part of the labor force, and they use them for these periods, these seasonal periods. They definitely want employment.

Shouldn't those costs be a part of your total labor costs in production, and should you not have to pay in some degree for that unemployment?

Mr. BENSON. The industry, Mr. Congressman?

The CHAIRMAN. How can you have those people there ready for you at all times and available for your employment without feeling some degree of responsibility for their unemployment?

Mr. BENSON. The industry does feel that responsibility, and, because of the varying conditions between States, each State is doing a fine job, I am sure, of recognizing these conditions that exist as to what impact the canning industry has on the rest of the total industry of the State, which is illustrated as to what the qualifications are between States.

The CHAIRMAN. You are not arguing then, as I thought I detected, that you are entitled to a lower tax rate just because you are a seasonal activity?

Mr. BENSON. No, sir; but we believe that this obligation, responsibility, can best be handled by employers under the present setup where each State will run their own programs.

The CHAIRMAN. Do you have the thought that the Congress itself really has no responsibility in this area?

Mr. BENSON. No; I am not inferring that at all, sir.

The CHAIRMAN. Mr. Mason.

Mr. MASON. I am sorry I missed your testimony. I shall read it, however, because a good deal of the canning work done in Illinois is done in my district, DeKalb, and so forth.

What is the length of the canning season there for peas, beans, corn, and the rest of it that is canned? About 3 months, 4 months? Mr. BENSON. About 3 months, sir.

Mr. MASON. And at DeKalb there it is mostly done by these seasonal workers who look forward to that period when they can earn a little extra money, like housewives and the college students and so forth. Mr. BENSON. Yes, sir.

Mr. MASON. They are not a regular part of the working force, are they?

Mr. BENSON. They are not, sir.

Mr. MASON. They just look forward to this period when they are having vacation or when the women want to earn some extra money for clothes and so forth.

Then, it seems to me, if they are not a definite part of the working force of Illinois, there should be some allowance, at least consideration that they, not being a part of the regular working force, could not collect unemployment insurance when the season is over and they go back to their regular work or back to school or other activity. Is that the point you were trying to make?

Mr. BENSON. That they are not entitled?

Mr. MASON. Yes.

Mr. BENSON. No. But we want to set up the qualifications by State areas. We believe that the qualifications can best be handled at the State level, and certainly there is no thought of shirking the responsibility along those lines. That is not the point.

Mr. MASON. One of the principal qualifications is the length of time they work?

Mr. BENSON. Yes.

Mr. MASON. Would this bill here lower that length of time so they would qualify much more easily if they only worked a month, say? Mr. BENSON. No; I would not say that. What I have been trying to point out is that I think the qualifications can best be handled at

the State level because of the conditions that vary between the States in their industries and in the impact upon the total industry.

Mr. MASON. I would not argue that at all because I agree perfectly with you.

The CHAIRMAN. Are there any further questions?

Mr. Knox.

Mr. Knox. Is it not true that States have special provisions for seasonal employees under their unemployment compensation act? Mr. BENSON. They will vary between States.

Mr. KNOX. There are special provisions?

Mr. BENSON. Yes.

Mr. KNOX. And under the mandate of this bill, special provisions would be wiped out. Is that correct?

Mr. BENSON. That is my understanding of it, sir.

The CHAIRMAN. Are there any further questions?

If not, Mr. Benson, again we thank you for coming to the committee. Our colleague from Tennessee, the Honorable Clifford Davis, is in the room and desires to present to us Dr. Frank Groner of the American Hospital Association.

Mr. Davis.

STATEMENT OF REPRESENTATIVE CLIFFORD DAVIS OF

TENNESSEE

Mr. Davis. Thank you, Mr. Chairman and gentlemen of the committee.

I can assure you that I will not take over 10 or 15 seconds, having had some experience on that side of the table and hearing long introductory speeches, but it is my pleasure to introduce to you gentlemen Dr. Frank Groner, the administrator of the Baptist hospital at Memphis, Tenn., a well-informed, fine gentleman.

I certainly wanted to introduce a long-time friend, and I am sure that you will give him the courteous attention that you give all witnesses.

Thank you very much.

The CHAIRMAN. Mr. Davis, we appreciate your taking off from your busy schedule to come to the committee to introduce Mr. Groner to us.

Mr. DAVIS. Thank you so much.

The CHAIRMAN. Thank you, sir.

Welcome Dr. Groner, and will you please come to the witness stand?

Dr. Groner, you are recognized without going through the formality of qualifying yourself.

STATEMENT OF DR. FRANK GRONER, MEMBER, BOARD OF TRUSTEES, AMERICAN HOSPITAL ASSOCIATION; ACCOMPANIED BY KENNETH WILLIAMSON, ASSOCIATE DIRECTOR, AMERICAN HOSPITAL ASSOCIATION

Dr. GRONER. Thank you, Mr. Chairman.

I am accompanied by Mr. Kenneth Williamson, the associate director of the American Hospital Association, and I am speaking on behalf of the association.

The hour is late. We have provided 10 pages for the committee, and we would like to request that the complete statement be included in the record.

The CHAIRMAN. Without objection, it will be included. (The statement follows:)

STATEMENT BY FRANK GRONER, ADMINISTRATOR, BAPTIST MEMORIAL HOSPITAL, MEMPHIS, TENN., ACCOMPANIED BY KENNETH WILLIAMSON, ASSOCIATE DIRECTOR

Mr. Chairman, and members of the committee, my name is Frank Groner, I am administrator of the Baptist Memorial Hospital, Memphis, Tenn., and am a member of the board of trustees of the American Hospital Association. I am appearing today on behalf of that association, which includes in its membership 3,078 private nonprofit hospitals.

At the present time the private nonprofit hospitals that fall within section 501(c)(3) of the Internal Revenue Code, and are thus exempt from Federal income tax, are also exempt from the Federal Unemployment Tax Act. This group includes virtually all of the nongovernmental community hospitals of the country. These institutions are exempt also under State unemployment compensation laws except in Hawaii and, with respect to some employees, in Alaska. We would respectfully urge that the exemption from the Federal act be continued. We do so primarily on the ground that hospitals produce so little involuntary unemployment that the principal effect of coverage would be to impose a financial burden on the hospitals, and thus on their paying patients, which we think unwarranted. A secondary reason is that as State and local public hospitals will certainly continue to be exempt from this Federal tax, we believe that it would be fairer to continue to treat the two groups of institutions alike. I want to develop each of these points briefly.

Beginning as early as 1940, the American Hospital Association advocated the coverage of nonprofit hospitals in the OASI system, and was one of the chief proponents of the inclusion of nonprofit organizations in that program. Under the optional coverage that was adopted, very nearly all-some 3,500— of these hospitals have elected to be covered. Hospitals are covered also by workmen's compensation. Both these kinds of social insurance seem to us wholly appropriate, because both deal with risks to which hospital employees are as much exposed as others are. Unemployment compensation, on the other hand, protects against a risk to which hospital employees, we are convinced, have very little exposure. That being so, we have consistently opposed coverage under the Federal unemployment tax, and in conspicuous contrast to the record under OASI, no more than a handful of hospitals have elected coverage under State unemployment compensation laws.

It is true that a few profitmaking enterprises may produce as little unemployment as hospitals do, and that such enterprises are accorded reduced contribution rates rather than being wholly exempt from the unemployment tax. But the two situations are not parallel. The same rationale that has led to the exemption