Unemployment Compensation

he is unemployed through no fault of his own and during which time he must make a sincere effort to find employment.

I believe that I am expressing the unqualified sentiments of the average businessman when I say that a law meeting this basic need is not only desirable, but necessary. However, with equal sincerity I feel that any law which goes beyond fulfilling this basic need is not only unnecessary, but is dangerous. I submit that the provisions of this pending legislation, aside from the greater danger of encroachment by the Federal Government into fields which should be reserved by the individual States, go far beyond the basic philosophy of unemployment benefits.

It would be detrimental to employers and the great masses of conscientious working people alike. After all, every dollar that is unnecessarily paid out of an employer's earnings is a dollar that cannot be used to expand operations and thereby employ more people, or otherwise improve their working conditions.

By the same token, the structure of most State laws is such that it is to an employer's best interest to insure at all times possible constant levels of employment. You must not take away from an employer this incentive.

Gentlemen, these observations are not mere speculation or guesswork, but are based on many years of association with an industry which is nationwide in its scope and employs several thousand persons. I submit that this legislation is unnecessary, unwanted, and generally fails in its intended purpose, and moreover, it contravenes the basic principles which have made the United States a world leader in almost every field of endeavor. Very truly yours,

Hon. WILBUR D. MILLS,

ALFRED J. STOKELY, Executive Vice President.

LAFAYETTE DENTAL LABORATORY,
Lafayette, Ind., April 22, 1959.

Chairman, House Ways and Means Committee,
House Office Building, Washington, D.C.

DEAR SIR: I am writing concerning the Karsten bill, H.R. 3547. I would like to place my vote with you to oppose this legislation.

This is another attempt to federalize one more function of the State, taking away more of our States rights.

The Karsten bill makes it even more favorable to sit on compensation by raising the payments too high. It would also allow a person to draw compensation even if he voluntarily quit his job. In the 1957 legislature Indiana improved its unemployment compensation law by prohibiting persons just quitting their jobs from drawing benefits, until they established wage credits by going back to work. This was a real achievement for Indiana. It was fair to both employer and employee. The employee who was laid off through no fault of his own was taken care of, but the job-quitting chiseler who did not want to work could no longer draw benefits.

Your support in opposing this bill would be appreciated as passage would be another step toward socialization in our country, and would also destroy the incentive to work.

Very truly yours,

BUD EDSTROM.

I am sending this in triplicate. Kindly make it a part of record of the hearings concerning this bill.

(Whereupon, at 1:25 p.m. the committee was recessed, to reconvene at 10 a.m. Monday, April 13, 1959.)

UNEMPLOYMENT COMPENSATION

MONDAY, APRIL 13, 1959

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D.C.

The committee met at 10 a.m., pursuant to recess, in the Ways and Means Committee room, New House Office Building, Washington, D.C., Hon. Wilbur D. Mills (chairman) presiding.

The CHAIRMAN. The committee will please be in order.

Our first witness this morning is our colleague from Minnesota, the Honorable Joseph E. Karth.

Mr. Karth, will you please come forward to the witness table?

We appreciate having you with the committee this morning, Mr. Karth, and you are recognized.

STATEMENT OF REPRESENTATIVE JOSEPH E. KARTH, OF

MINNESOTA

Mr. KARTH. Mr. Chairman and members of the committee, I appreciate the opportunity to make a statement to the Committee on Ways and Means on the crucial subject of unemployment compensation.

Before coming to Congress I had the privilege of serving in the Minnesota House of Representatives for four terms-the last two terms as chairman of the labor committee.

It was my experience in the legislature which convinced me that if we are to save the unemployment compensation system as an effective social and economic program to help jobless workers and their families, and the country, that some substantial changes will have to be made in the basic law.

In my opinion, the lofty purpose of providing a substantially adequate level of interim income for unemployed persons has, over the years, been degraded by the nitpicking of employers groups. As the result of countless technical amendments and petty manipulations, thousands of Minnesota jobless workers have been disqualified from receiving benefits or have had those benefits reduced.

Too often, I submit, for a purely nominal dollar amount increase in benefits, new "fishhooks" have been placed in Minnesota's unemployment-compensation laws.

In 1939 when the Minnesota average weekly wage was around $25, the weekly benefit maximum was $15. If we presently maintained the same relationship, the maximum weekly benefit would be close to $50 instead of $38.

501

Thirty-eight dollars is about 47 percent of the average Minnesota worker's weekly wage. This maximum is not necessarily bad in comparison, but with no high quarter formula, only 40 percent of the unemployed drew maximum, and the average was $29.27; minimum is $12, a high minimum of $12 a week, which, although it appears to be quite satisfactory, has for its purpose just the opposite effect, in my opinion.

A high minimum of $12, of course, cuts off from unemployment compensation a great many people who would otherwise qualify for some type of unemployment compensation benefits if we in Minnesota did not have this high minimum.

Minnesota's record in regard to adequacy of benefits until last year was, I am ashamed to say, pretty sorry. In 1953, 46 jurisdictions of 51 had better records, and in 1957, the last complete year, there were

40.

This year in the Minnesota Legislature, a bill known as the Root bill passed the senate committee. It would eliminate another 12 percent of claimants and reduce benefits by 5.6 percent overall.

If the committee would be desirous of me introducing in evidence the contents of the Root bill, I would be very happy to do that at a later date.

The CHAIRMAN. Would it be possible for you to obtain it and place it at this point in the record, Mr. Karth?

Mr. KARTH. Yes, sir; I can give you an analysis of the bill at this point and you can have it placed in the record.

The CHAIRMAN. Without objection, will you include an analysis of it for us?

Mr. KARTH. Yes, sir; Mr. Chairman. Thank you. (Information referred to follows:)

[S.F. No. 244]

A BILL For an act relating to employment security: Amending Minnesota Statutes, 1957, section 268.04, subdivision 25; section 268.06, subdivisions 5 and 8, section 268.07, subdivision 2, section 268.08, subdivisions 2 and 3, and adding a new subdivision 4; and amending section 268.09, subdivision 1, and repealing section 268.07, subdivision 3, and section 268.09, subdivision 2

Be it enacted by the Legislature of the State of Minnesota:

SECTION 1. Minnesota Statutes 1957, Section 268.04, Subdivision 25, is amended to read:

"SECTION 268.04. Subdivision 25. "Wages" means all remuneration for services, including commissions and bonuses and the cash value of all remuneration in any medium other than cash, except that such term shall not include "(1) For the purpose of determining contributions payable under section 268.06, subdivision 2, clause (2), that part of the remuneration which, after remuneration equal to [$3000] $3600 has been paid to an individual by an employer with respect to employment in this state or any other state during any calendar year subsequent to December 31, 1944, is paid to such individual by such employer with respect to employment during such calendar year; provided, that if the definition of the term "wages" as contained in the Federal Unemployment Tax Act is amended to include remuneration in excess of [$3000] $3600 paid to an individual by an employer under the Federal act during any calendar year, wages for the purposes of sections 268.03 to 268.24 shall include remuneration paid in a calendar year to an individual by an employer subject thereto or his predecessor with respect to employment during any calendar year up to an amount equal to the dollar limitation specified in the Federal Unemployment Tax Act. For the purposes of this clause, the term "employment" shall include service constituting employment under any employment security law of another state or of the Federal government;

"(2) The amount of any payment made to, or on behalf of, an employee under a plan or system established by an employer which makes provision for his employees generally or for a class or classes of his employees (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment), on account of (a) retirement or (b) sickness or accident disability, or (c) medical and hospitalization expenses in connection with sickness or accident disability, or (d) death, provided the employee (i) has not the option to receive, instead of provision for such death benefit, any part of such payment, or if such death benefit is insured, any part of the premium (or contributions to premiums) paid by his employer and (ii) has not the right, under the provisions of the plan or system or policy of insurance providing for such death benefit, to assign such benefit or to receive a cash consideration in lieu of such benefit either upon his withdrawal from the plan or system providing for such benefit or upon termination of such plan or system or policy of insurance or of his employment with such employer;

"(3) The payment by an employer (without deduction from the remuneration of the employee) (a) of the tax imposed upon an employee under section [1400] 3101 of the Federal Internal Revenue Code, or (b) of any payment required from an employee under a state unemployment compensation law;

"(4) Any payments made to a former employee during the period of active military service in the armed forces of the United States by such employer, whether legally required or not."

SECTION 2. Minnesota Statutes 1957, Section 268,06, Subdivision 5, is amended to read:

"Section 268,06. Subdivision 5. NOTIFICATIONS.-(1) Benefits paid to an individual pursuant to a valid claim filed subsequent to June 30, 1941, shall be charged against the account of his employer as and when paid[,]. [except that benefits paid to an individual who during his base period earned wages for parttime employment with an employer who continues to give the employee part-time employment substantially equal to the part-time employment previously furnished such employee by such employer or any benefits paid to an individual subsequent to his serving a period of disqualification for refusal to accept reemployment from his base period employer shall not be charged to such employer's account.] The amount of benefits so chargeable against each base period employer's account shall bear the same ratio to the total benefits paid to an individual as the base period wage credits of the individual earned from such employer bear to the total amount of base period wage credits of the individual earned from all his base period employers.

"[(2) When, however, the base period earnings of an individual to whom benefits are paid are less than the minimum qualifying earnings for a valid claim from any given employer, then the proportional benefits which would ordinarily be charged to such employer shall not be charged to him, except that this provision shall not apply if the commissioner finds that the employment practices of an employer result in his separation of employees for whom work is available solely for the purpose of evading charges to his account.

"[In making computations under this provision, the amount of wage credits if not a multiple of $1.00, shall be computed to the nearest multiple of $1.00.]" SECTION 3. Minnesota Statutes 1957, Section 268.06, Subdivision 8, is amended to read:

"Section 268.06. Subdivision 8. ADJUSTMENTS. For the year 1949 and for each calendar year thereafter the commissioner shall determine the contribution rate of each employer on the basis of the relationship of his experience ratio to the contribution rates in accordance with the following schedule of rate categories. When the total amount of money in the account of this State in the unemployment trust fund amounts to $50,000,000 or less at the close of business on June 30 of the calendar year preceding the rate year, then the rates in column (A) shall apply. When the amount of money in the account of th; State in the unemployment trust fund amounts to more than $50,000,000 but less than $100,000,000 at the close of business on June 30 of the calendar year precding the rate year, then the rates in column (B) shall apply. When the amount of money in the account of this State in the unemployment trust fund amounts to $100,000,000 or more at the close of business on June 30 of the calendar year preceding the rate year, then the rates in column (C) shall apply.

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Unemployment Compensation: Hearings Before the Committee on Ways and Means ...