at his highest skill before certifying the payment of benefits. The rule that claimants need not grab the first job that comes along, but can, without penalty, wait for something reasonably suited to their training and prior experience means that valuable skills are not dissipated by the desperate necessity of taking any work that offers itself, just to keep from starving. This benefits the employer, too, since during a temporary layoff it is necessary for his trained work force to disperse all over the country to find other work. The most controversial of the claimed economic benefits of our present system is the incentive to stabilization efforts by employers. With so many possible motivations that might account for an employer's decisions, and with this tax motivation so entwined with other factors, it perhaps will never be possible to demonstrate conclusively what the extent of the effect of experience rating on stabilization has been. Two things are clear: First, that there is a reward for the employer who stabilizes, and, second, that in some industries, at least, there is an area of improvement within the control of the employer. This is evidenced by many examples in which, by inventory planning, diversification, new kinds of storage, out-of-season promotion, off-season production of seasonal goods, and so on, individual employers have found it possible to spread out employment even in some difficult industries. So far, in describing what the system should be attempting to do under 1955 conditions, I have suggested that its job is probably not to counteract old-fashioned long-term business cycles, but that it can perform four conventional functions and perform them better: Modified contracyclical financing, maintenance of purchasing power, preservation of skills, and inducement to stabilization of employment. Now, is there anything new that unemployment insurance could be doing that it is not doing to meet the economic challenges of 1955? What is the special nature of our 1955 problem? It does not seem to be the prospect of an orderly business cycle, as many people thought the problem was in the thirties. Nor is it the problem of average unemployment throughout a cycle of 17 percent. Our successful weathering of several business downswings also seems to indicate that the problem is not the prospect of a minor recession snowballing into a major depression. I would venture the suggestion that our most pressing problem in this area is the presence of persistent unemployment among certain groups and in certain areas or industries. Of course, we must do everything in our power to reduce the overall total of unemployment; but the problem of chronic unemployment has, it seems to me, the first and greatest claim upon our ingenuity and resources. For present purposes, I am using the term "chronic unemployment" to refer to the situation of those people who exhaust the full duration of unemployment-insurance benefits and still go on unable to get work, either because of the locality, or of the industry, or because of some other factor that makes them a specialproblem group. During the first 9 months of 1954, nearly 12 million workers exhausted their rights to benefits before finding jobs. There were 200,000 in Pennsylvania alone, over 100,000 in Michigan and New York, and more than 75,000 in 5 other States. I do not mean to say that all these should be classed as chronic unemployed; many exhaustions are the result of short entitlement or short benefit limits in a State, and many of the workers find work within a reasonable time after exhausting benefits, although no one knowns exactly how many. But we know that there is a hard core of unemployed, especially in certain areas, whose problem is no longer the usual one of temporary unemployment for which unemployment insurance as now constituted was designed. Is there any way unemployment insurance can be pressed into service to help with this situation? Since this is a research association, I commend this question to you as one of the most challenging subjects for research that could be found. And I want to assure you that we in the Department of Labor are already at work in this field, with studies on the characteristics of the unemployed, the characteristics of exhaustions and persons who have exhausted benefits, the special problems of older workers, the nature of labor turnover, and the experience of this and other countries with proposals to cope with the specific problem of chronic unemployment. So far as I know, there is no readymade example that we can take over from the history of any particular State or foreign country, but there are some fragments of experience that at least deserve our investigation. We can start with the assumption that the solution is not to make benefits unlimited. Our system is aimed at temporary unemployment, and must continue to be so if it is to retain its insurance character. I think it is equally true that you do not solve the specific problem I am talking about by a mere quantitative extension of the duration of benefits beyond 6 months, to, say, 9 months or 12 months, even if that were within the realm of serious possibility. This alone, for the really persistent type of unemployment, would merely postpone the problem while putting an additional load on the system in areas least able to bear it. But is it possible that the matter could be approached by means of a combination of some extension of benefits, conditioned upon and coupled with an entire new special program aimed at removing the particular individual's cause of unemployment? Should consideration be given to some such devices as retraining of the individual in a trade or skill for which there is a demand; travel allowances to make it possible for him to undertake the training and take up the employment opportunities thus made available to him; perhaps even scholarships for younger people to enable them to get a fresh start? The general idea would be this: When a man has exhausted 6 months of benefits, and still remains unemployed, in spite of the best efforts of himself and the employment service, he is by that fact a special case for attention. As to him, our available insurances and services have broken down. Should we then, relegate him to tax-supported relief? Or should we rather redouble our efforts and concentrate our resources upon him more vigorously than ever before? Although the analogy is not perfect, I should like to make a comparison between this idea, and the relation of rehabilitation to workmen's compensation. Until rather recently, a man with a permanent industrial disability was treated somewhat as we now treat a man with a chronic unemployment status. He was paid whatever benefits the law allowed, and that was that. The modern way to handle the matter, however, which a number of States are adopting, is quite different. A special allowance, beyond normal benefits, is made for the man if he agrees to undertake a rehabilitation course. The cost of support, the cost of training, and the cost of necessary travel are all included. When the course is completed, special efforts are made to place him in suitable work. Now, the chronically unemployed man is in somewhat the same predicament, except that the cause of his unemployment is economic rather than physical. With a relatively small investment, might it not be possible to restore the man to self-sufficiency and to make him an asset rather than a burden to the community? So far as I know, nothing on this scale has ever been attempted. Britain has had various kinds of extended-duration plans, but nothing with this full rehabilitation feature. A number of States before 1937 had extended-benefit clauses, but they never actually took effect, they never had these additional features, and in any case never would have gone beyond 26 weeks. Perhaps the closest thing to it was adopted right here in Michigan in 1942, in the form of a provision for special benefits during vocational training. Under the 1943 amendment, special benefits for 18 weeks could be added for those individuals who, by direction of the Commission took special approved training courses. I understand that about 200 claims were filed and allowed during the early part of World War II, but, when I last looked into the matter, there had not been any claims allowed since World War II. In most States, however, the very opposite of the training objective has resulted, since they have felt it necessary to rule that a man who is undergoing a training course is not available for work and hence not eligible for benefits. At the very minimum, States having the problem of chronic unemployment which might be alleviated by systematic training would be well advised to see whether this training is being actually impeded by their eligibility rules. In any economic rehabilitation plan of the kind I have suggested for discussion, there are many variables and details that should be considered. One is the possibility of a relation between a long steady work history and eligibility for the extension. The British experience can be studied here. An argument can be made that, on an insurance basis, a man with 10 years of steady contributions made on his behalf, and with no debits against him, could be considered entitled to a little extra consideration. This, incidentally, might come to the aid of a class much in need of aid-the older workers. We know that, when they become unemployed, proportionately several times as many of them exhaust benefits as the younger workers, and the difficulties of ever becoming reemployed are multiplied. Another possible question is whether such a program should go into effect only if an emergency is found in a particular locality, under some test based on volume of unemployment or the like. It may be questioned whether the test should relate to a specific emergency or cause, such as the proposals that have been aimed directly at unemployment caused by reconversion or foreign trade policy. Other questions might relate to the way in which you might try to limit the rehabilitation technique to the most pressing cases. Should all claimants be eligible who have exhausted benefits? Or only those with dependents? Or those who have a specially long, steady wage record? Should it be only the principal wage earner in a family who can get the special consideration? Or some combination of all these variables? And how long should the extended period be? Well, since this is a research association, I have no hesitation in leaving all these questions hanging in the air. I do this even more cheerfully, because I know that I am about to be followed by several men who, whatever their other differences, have in common the fact that they are all men of uncommon brilliance. This leaves matters somewhat where they were in the conversation between the discontented grasshopper and the ant. The grasshopper, in a mood of despair, called upon the ant, and poured out the story of his unhappy lot. There was no food; a drought had spoiled the grain; what's more, farmers were always spraying poison on things, and a grasshopper just didn't have a chance nowadays; people were always stepping on you, birds were always dive-bombing you, snakes lurked around every stump waiting for you. How much better it would be to be an ant. "Not so," said the ant. "All day long dragging heavy hunks of sand or dead beetles; lousy accommodations; stuffy and frightfully overcrowded in the anthill; hundreds of relatives; cold in winter, hot in summer, whenever it rains the whole doggone place flooded." "Tell you what," continued the ant, "if you want to be something else, why dont' you be a lark? Boy, there's the life. Soaring about up in the fresh air and sunshine. Sing all day. Go south for the winter. See the whole country. No fears, no worries." "That's for me," exclaimed the grasshopper. "That's exactly what I want. How do I get to be a lark?" "I'm terribly sorry," said the ant. "This is the research and information department. That's an administrative question." And so, having provided a little information and quite a few questions for research, I will now yield to the gentlemen of the panel, all of whom, I believe, have had a wealth of administrative experience and will, I trust, supply some much-needed answers. DISTRICT OF COLUMBIA DENTAL SOCIETY, The Honorable WAYNE MORSE, Health, Education, Welfare, and Safety, United States Senate, Washington, D. C. DEAR MR. CHAIRMAN: We have been informed that your committee will begin consideration of S. 3493, a bill to amend the District of Columbia Unemployment Compensation Act. After analyzing the provisions of this bill and the provisions of H. R. 10625, the District of Columbia Dental Society wishes to go on record as favoring the provisions contained in the House bill. We believe that these provisions would be more equitable to those engaged in professional practice and business in the District of Columbia. We would very much appreciate having this letter inserted in the record of the hearings. With best wishes. Sincerely, E. MILBURN COLVIN, D. D. S., SAMUEL A. LEISHEAR, D. D. S., WASHINGTON, D. C., April 18, 1958. The Honorable WAYNE L. MORSE, Chairman, Public Health, Education, Welfare, and Safety Subcommittee of the Senate District Committee, Washington, D. C. DEAR MR. CHAIRMAN: On behalf of the Hotel Association of Washington, D. C., Inc., which represents 33 hotels, we wish to express the association's strong opposition to the adoption of S. 3493, a bill to amend the District of Columbia Unemployment Compensation Act. This association specifically objects to the following proposed changes: (1) Computation of benefits: This would permit maximum benefits of approximately $61 per week. The present maximum benefits under the District of Columbia law are $30 a week. While some increase in the benefits are justified, there is certainly no compelling reasons to support an increase of more than 100 percent in the maximum benefits. (2) Duration of benefits: This would permit a uniform duration of 39 weeks, regardless of earnings during the base period. The existing law provides for duration of benefits for 26 weeks, or one-third of the earnings during the base period, whichever is the lesser. Again there appears to be no sound basis upon which to extend the duration of benefits for 39 weeks, regardless of earnings during the base period. (3) Disqualifications: The establishment of a flat 6 weeks' waiting period, with no cancellations for persons voluntarily quitting, discharged for misconduct, or refusing suitable work, would in effect approve certain improper conduct on the part of an employee seeking District of Columbia unemployment compensation, which now, under the present law, is subject to some penalties. It is the position of this association that the present law is most fair to the employee and certainly should not be liberalized in this respect. This association also wishes to go on record in support of the statement to be presented by the Washington Board of Trade. Respectfully submitted, Hon. WAYNE MORSE, WILKES & ARTIS, Attorney for Hotel Association of Washington, D. C., Inc. BUILDING OWNERS & MANAGERS ASSOCIATION OF METROPOLITAN WASHINGTON, Washington, D. C., April 23, 1958. Chairman, Subcommittee on Public Health, Education, Welfare, and Safety, District of Columbia Committee, United States Senate, Washington, D. C. MY DEAR SENATOR: The Building Owners & Managers Association of Metropolitan Washington has carefully reviewed the statement of the Washington Board of Trade as presented to your committee by Mr. Frank A. Gunther on Monday, April 21, 1958. We wish to go on record as endorsing the conclusions and opinions expressed by Mr. Gunther in presenting the statement of the employment and security committee of the Washington Board of Trade. Very truly yours, THOMAS D. LANEY, President. THE LAUNDRY-DRY CLEANING ASSOCIATION OF THE DISTRICT OF COLUMBIA, Hon. WAYNE MORSE, Chairman, District of Columbia Subcommittee on Public Health, Education, Welfare, and Safety, Senate District Committee Room, Washington, D. C. DEAR SIR: Submitted herewith in support of the testimony presented by us before your committee in opposition to S. 1214 and S. 3493 on April 21, 1958, are case histories of unemployment compensation benefits paid to claimants under conditions which we feel go beyond the philosophy of unemployment compensation insurance as contemplated by the Congress. We firmly believe that these cases, which are typical in our industry and other industries where supplementary income employment is the rule rather than the exception, substantiate our contention that the disqualification provisions of the existing law are not as effective as they should be and any liberalization of them, such as is proposed in S. 1214 and S. 3493, would tend to compound rather than curtail the abuses under the law. Accordingly, we strongly urge the maintenance of the existing disqualification provisions and the variable rather than the uniform method of qualifying for benefits. We again thank the committee for having been given an opportunity to present this additional information for your consideration. Yours very truly, M. G. LONG, Jr., Member, Legislative Committee. $300.00 Voluntary quit. Went to Tennessee and drew compensation. 400.00 Voluntary quit. Complained of a preexisting physical condition. errors. 296.00 Voluntary quit. Case No. 1. Case No. 4. Case No. 5. Case No. 7. Case No. 8. 2. 55 300.00 Walked out after her attention was called to excessive Borrowed money from the company and disappeared. Voluntary quit. warned about loss of time and effect on work of drink- Dismissed as undependable due to excessive absence of weeks at a time, Voluntary quit. Claimed her physician thought work unsuitable. Voluntary quit. Claimed her physician thought her nerves unsuited Voluntary quit. Claimed her physician advised against laundry work. Dismissed as undependable due to frequent and excessive absence. Voluntary quit. Borrowed money from the company, went to Ohio Voluntary quit. Went to North Carolina and drew benefits. Dismissed for excessive tardiness and absence. NOTE 1.-The case histories presented include some whose benefit period preceded or followed the period analyzed. In such cases, a major portion of their benefits may not be shown. NOTE 2.-The amount of benefits shown are those charged against the Pioneer Laundry only and not necessarily the total benefits drawn. 2 or more employers in a single base period are charged their pro rata share of an employee's benefits. NOTE 3.-These cases represent 90.5 percent of the total cases charged against this firm for the 3-year period ended June 30, 1957, and 91.2 percent of the total dollar benefits paid. THE LAUNDRY-DRY CLEANING ASSOCIATION OF THE DISTRICT OF COLUMBIA, Hon. WAYNE MORSE, Chairman, District of Columbia Subcommittee on Public Health, Education, Welfare, and Safety, Senate District Committee, Washington, D. C. DEAR SIR: Submitted herewith in further support of the testimony presented by us before your committee in opposition to S. 1214 and S. 3493 on April 21, 1958, are the following documents: 1. Proposed amendments to the District of Columbia Unemployment Act, as amended. 24607-58- 8 |