Mr. GREEN. And those who work for a variety of reasons are not really available for work. I do not know what he would mean by that unless he would mean someone who had been fired from a job or severed from his position because of the depression and subsequently had an accident and broke his leg and was not able to go to work but this statement generally as I understand the law in Pennsylvania, certainly would not amount to $40 million or the $28 million that you mentioned. Does that apply to people over 65 or are there other loopholes in the law?

Mr. BATT. There are others in that $28 million figure beside the so-called retirement cases. There are people over 65. There are also some other areas which the State chamber of commerce feels are fringe claimants, that are not truly deserving of unemployment compensation, who were voted in the unemployment compensation program by the 1954 legislature before I was in Harrisburg.

But this unfortunate placing of the statements together as you pointed out, Congressman Green, and I am awful glad you did, this listing of people who apply in no State that I know of are eligible for benefits together with Pennsylvania

Mr. GREEN. In order to keep the record straight, in Pennsylvania anyone who voluntarily leaves his job is not entitled to unemployment compensation?

Mr. BATT. That is correct.

Mr. GREEN. Anyone who is not looking for a job, who has a job offered to him and turns it down is not eligible, either?

Mr. BATT. That is correct.

Mr. GREEN. Thank you.

Mr. MASON. May I ask this, Mr. Chairman?

The CHAIRMAN. Yes, Mr. Mason.

Mr. MASON. I know personally young ladies who have been working for 2 or 3 years at different types of jobs in Illinois who have gotten married and collected 6 months unemployment benefits after they got married and under the law legally they could do that.

Now, I say that that is dipping into the fund that belongs to someone that needs it.

Mr. BATT. That certainly sounds that way, sir.

Mr. MASON. I do not know whether Pennsylvania permits that. Mr. BATT. Not unless they have been fired.

Mr. GREEN. I would say that would not be permissible in Pennsylvania unless a girl worked some place and was going to be married, went to her employer and asked him to fire her instead of letting her leave voluntarily, which can very easily happen.

Mr. BATT. Without collusion from the employer it would be impossible in our State.

Mr. MASON. It would be impossible, you say?

The CHAIRMAN. In any case that would be a most unrealistic law, would it not, that assumed the girl got married, became unemployed, because they tell me they just begin to work when they get married.

Mr. BATT. Yes, sir. And a lot of discussion gone into this morning, it seemed to me, spent a lot of time on these very marginal issues which are not the big problem or what is suitable work. The big problem really is when there is no shadow of a doubt that there is no other work available-the big problem is a recession like we have got

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now where a man is laid off in a steel town like Pittsburgh, and there is no shadow of a doubt, there is no other job we can refer him to.

The CHAIRMAN. Seriously, Mr. Batt, all these laws, I think operate pretty generally alike, in that a person goes to the employment office about once a week to sign up for work and if they do not have work for him or suitable work, whatever the State law says, and he has a work record in his base year or he is within and has not exhausted his benefit year, he gets a check for unemployment compensation, at that point. If they have a job for him that they deem to be a suitable job and he does not take it he does not get his check. Is that the way it works?

Mr. BATT. That is right, sir.

The CHAIRMAN. Even in your State, a man 65 year of age, because he is 65 and drawing social security, but is reporting for work and you do not have a job for him, under your law you have to pay him unemployment compensation.

Mr. BATT. If he has been fired, that is right.

The CHAIRMAN. In other words, he is qualified under your law as being available for work and seeking work, is that it?

Mr. BATT. That is correct, sir.

The CHAIRMAN. That is generally true in all the States, that requirement, is it not?

Mr. BATT. That is right. And we have 500,000, close to 500,000 people jobless and we have now listed in our employment offices vacancies for about 10,000 to 20,000 jobs, a revolving figure. The two are so out of balance that there is just no question that people are refusing suitable jobs. This is nonsense. There just is no work.

The CHAIRMAN. The question came up earlier in the hearing that the unemployment service itself in a State may well not have a list of more than 10 percent of the jobs that may be available at any given time within a State.

Mr. BATT. We think we do about a third of the business of the State. We think we do better than 10 percent. They certainly do not have all of them. We do not get all of the business.

The CHAIRMAN. You think in Pennsylvania you have a list of at least 30 percent?

Mr. BATT. We think so, sir. We don't do all the business. We don't do all the business we like to. Of course our estimates, we have a pretty good estimate, too.

The CHAIRMAN. Since the employment service within the State would not have a list of all of the jobs, it is a weakness in the program that it is only the work that may be known to exist within the employment office that the individual be held to have to take? Is that a weakness in the law? Should he have to do something other than merely be available for work that the employment office may know about? Should he be required to seek other employment, show evidence that he has sought other employment than that the employment office may know about in order to qualify?

Mr. BATT. I do not know how you are going to prove that, sir. The CHAIRMAN, I do not either.

Mr. BATT. We police ourselves for fraud. We find very little fraud in our system and we get back all the money that we lose through fraud. We knew of many cases where people were taking it where they were refusing work.

The CHAIRMAN. There is no way for you to know about all jobs, of course. In a given week there may be a suitable job for this man when he reports for work that you do not know about but it would be difficult, you think, if not impossible, to police a requirement that would presume that he knew about it.

Mr. BATT. I think it would be.

Mr. GREEN. I think, Mr. Chairman, if you will excuse me a minute, in most cases where a man is looking for work and is going to the State employment office in cases where they would not have the contract of the State employment office he would have a job grabbed up before the State employment office would know it.

Mr. BATT. Yes, you make a very good point, though. Our heaviest unemployment is within unionized employment. And the hiring back is done on the basis of your call back list on the basis of seniority. And the fellow getting called back knows that before. We do not get any jobs listed from us from Jones & Laughlin, for example, unless Jones & McLaughlin used up all the call back list. So the fellows drawing unemployment compensation, they are back to work before we have any vacancy listed in our office.

The CHAIRMAN. The availability of the job then is known other than through your office; that is what you are saying?

Mr. BATT. Yes, sir. These things travel through all kinds of grapevines, and the job availability and the lack of jobs is common knowledge in the working community in these towns.

It is no problem. I know it is impossible to administer but I do not think it is any problem.

Mr. ALGER. Mr. Chairman.

The CHAIRMAN. Mr. Alger will inquire.

Mr. ALGER. Mr. Batt, on page 1 of your statement you mention experience rating in a rather derogatory way, saying it opened the Pandora's box of problems. Do you believe experience rating adds any stability in employment in the States?

Mr. BATT. I have never seen, sir. Have you seen the studies? We have never seen the studies of additional stability of employment that has been reached by experience rating. I have never seen any estimates. I do think perhaps I was impressed by the NAM testimony this morning. I think perhaps there might have been some move made by individual concerns to level out their seasonal unemployment in the interest of a lower tax rate. But I would certainly not feel that the experience rating system had done anything to mitigate the depth of the 1938 recession.

The principal utility of unemployment compensation is to offset a national recession, and I would doubt that experience rating affected the depth or length of the 1958 recession one iota. We have seen no indication of it.

Mr. ALGER. I asked your viewpoint because many, many witnesses have stated that experience rating by its very nature is an incentive to the employer not to lay people off. They have given us examples how they will even alternate weeks with existing employees, do everything they can as an incentive to reduce the tax rate."

Mr. BATT. I am sure it is designed for that purpose. We have seen no studies that it does so.

Mr. ALGER. You do not feel it does that. Experience rating does not increase stability of employment?

Mr. BATT. I have seen isolated cases where it helped even out some seasonal unemployment. I have seen no cases where it made a reces

sion less deep or less long.

Mr. ALGER. I am not sure what you mean. has increased stability of employment or not?

I mean do you think it

Mr. BATT. In isolated cases, "Yes." In any substantial amount has it decreased recession, "No."

Mr. ALGER. On page 12 you mention arbitrary disqualifications. 1 observed in the material prepared for us by the staff that one of the reasons advanced for disqualification by States is labor disputes. Mr. BATT. Yes.

Mr. ALGER. That there can be disqualifications at the State level for men who are seeking unemployment compensation because of labor disputes. Do you feel that that is a legitimate reason to maintain the State disqualifications, or not?

Mr. BATT. Yes, sir. The only State in the Union to my knowledge to pay for people out on strike is New York State. We don't pay for people out on strike. Is that your question?

Mr. ALGER. Here is what you say: "We are most strongly in favor of the Kennedy bill provisions to end arbitrary disqualifications." Mr. BATT. That is correct, sir. We would not put that under that classification.

Mr. ALGER. That is part of the State qualifications that are in this bill unless I misunderstand the bill.

Mr. BATT. As I read the bill it doesn't and as our lawyers read it, it does not permit us, not to require us to pay benefits to people on strike.

Mr. ALGER. I hope that your interpretation is right. I see here on page 3, "Compensation shall not be denied to any eligible worker," and so forth.

Mr. BATT. I am no lawyer but that is what our people tell us. If it is not clear I think it ought to made clear.

Mr. ALGER. A gentleman this morning referred to your statement, possibly you were here when Mr. Compton made quite a case presenting here and I thought you ought to have a right to rebut that. He felt in the system that people who quit voluntarily, who are not looking for jobs, who refuse suitable work offered, or drawing pensions

Mr. GREEN. Mr. Alger, that already has been gone into.

Mr. ALGER. I beg your pardon?

Mr. GREEN. I went into that with the Secretary.

Mr. MASON. Quite thoroughly.

Mr. ALGER. I appreciate that and I say to my colleague that I am sorry not to have been here for that exchange.

Thank you very much.

Mr. BATT. In essence, Mr. Alger, it is not true, almost all these items we do not permit benefits.

Mr. ALGER. I am sure he knew what I was going to say but I was wondering about this charge. Let me ask it anyway, now.

About the $40 million that was paid, that is what I am getting into. Is that what you went into?

Mr. MASON. Yes.

Mr. BATT. Yes.

Mr. MASON. According to their record it is only $28 million instead of $40 million.

Mr. ALGER. Was it agreed that a number of these cases could be eliminated?

Mr. BATT. Sir, they are not paid in Pennsylvania. The way this was written it implies.

Mr. ALGER. Let me ask you another way.

Mr. BATT. Mr. Compton implied all these cases were paid in Pennsylvania. None of them are.

Mr. ALGER. Let me ask you another way.

Do you feel under the Pennsylvania law that those who are fraudulently getting unemployment compensation and not seeking or desiring employment, just wanting unemployment pay, this is human to want something for nothing, do you feel there is very much of that in Pennsylvania that you are paying for?

Mr. BATT. No, sir. We feel we have one of the best fraud detection situations and records in the United States. We catch up with our fraudulent cases. We require them to be repaid and our fraud is very small. It is a fraction of 1 percent.

Mr. ALGER. Thank you.

Thank you, Mr. Chairman.

Mr. BATT. And we get all that money back.
Thank you very much, sir, and the committee.

We appreciate the opportunity to make our case.
Mr. KING (presiding). Thank you.

Our list indicates that Mr. L. W. Gray, of the Texas Manufacturers Association is the next witness.

Mr. Gray, will you identify yourself for the record, please?

STATEMENT OF L. W. GRAY, LEGAL COUNSEL AND DIRECTOR OF INSURANCE, TEXAS MANUFACTURERS ASSOCIATION

Mr. GRAY. Yes, sir.

Mr. Chairman and members of the committee:

My name is L. W. Gray, and I am legal counsel and director of insurance for the Texas Manufacturers Association with offices at 902 Capital National Bank Building, Austin 16, Tex. My appearance before this committee is on behalf of the approximately 4,000 business firms in Texas who are members of the Texas Manufacturers Association and most of whom are covered employers under the Texas Unemployment Compensation Act. The Texas Manufacturers Association has adopted as a part of its basic policy the following statement concerning unemployment compensation:

EMPLOYMENT STABILIZATION AND UNEMPLOYMENT COMPENSATION

The Texas Manufacturers Association proposes the following fundamental principles as a guide to interpretation, study, or modification of the existing State law dealing with unemployment compensation:

(1) Unemployment compensation benefits should not be at a level so high as to destroy the desire to seek employment immediately or the incentive to work; neither should they be at a level so low as to require eligible workers to resort to public relief while on benefit status.

(2) Such benefits should be afforded those individuals who comply with eligibility standards established by State law, including the requirements that laid-off workers must (a) register for work, (b) actually seek work, and (c) be able to perform it.