ing with the end of such benefit year and thereafter while any sum payable to the Board for this fund under this subsection is still due and unpaid,

But it is possible that in cases of the kind subject to the foregoing provision, considerable time may elapse before the false statement or failure to disclose is discovered. Jnder existing law, if the claimant is disqualified, all benefits which have been paid since the date of the fraud become overpayments subject to repayment to the Board. These amounts are frequently out of proportion to the fraud involved. Accordingly, to correct this situation, it is recommended that subsection 19 (e) be amended to specify that a disqualification under such subsection shall not affect benefits properly paid after the date of the fraud and prior to the date of the ruling of disqualification. Further, to make it clear that properly paid benefits are not to be affected, the Commissioners recommend the insertion of the words "otherwise properly" immediately after the word "benefits" in line 17 on page 3 of the bill.

Further, subsection 19 (e) presently requires that "All findings under this subsection shall be made by an appeals tribunal of the Board." The requirement precludes the use of claims deputies, who ordinarily handle disqualification matters, and requires the Board's appeals examiner, who acts as the appeals tribunal, to handle all actions under subsection 19 (e). The number of cases which he is capable of handling is, of course, limited. In order to expedite action on these cases, the Commissioners believe that the act should be amended in such manner as to provide that cases subject to the requirements of subsection 19 (e) may be acted upon by a claims deputy, with right of appeal to the Board's appeal tribunal.

Sec

Section 2 of the bill establishes the effective date of the amendments (except the amendment to section 1 (b) (5) (F)) at the beginning of the calendar quarter after passage in the belief that from an administrative standpoint, it is better to make these amendments effective at the beginning of a quarter. tion 1 (b) (5) (F) is made retroactive to January 1, 1936, in case there are organizations unknown to the Board who have unconsciously failed to register with it. It is proposed that no refunds be made because of any retroactive ruling in order to keep the provisions of the District of Columbia Unemployment Compensation Act in conformity with section 303 (a) (4) of the Social Security Act.

The Commissioners believe that the foregoing amendments, with the exception of the proposed amendment of subsection 4 (d), are desirable improvements of existing law, and accordingly they recommend their enactment. As to the proposed amendment of subsection 4 (d), however, the Commissioners object to its enactment for the reasons set forth in this report.

The Commissioners have been advised by the Bureau of the Budget that there is no objection on the part of that office to the submission of this report to the Congress.

Yours very sincerely,

ROBERT E. MCLAUGHLIN, President, Board of Commissioners, D. C.

(Senator Morse, arriving at this point, succeeded Senator Hoblitzell in the chair.)

Senator MORSE. Are there any more witnesses who wish to be heard on S. 2419?

The chairman regrets that he had plane difficulty getting out of Pennsylvania, and thus is late.

We will proceed then with the witnesses on S. 3493 and S. 1214.

S. 3493 AND S. 1214

Senator MORSE. Commissioner McLaughlin is our first witness.

STATEMENT OF ROBERT E. MCLAUGHLIN, PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA

Mr. MCLAUGHLIN. Mr. Chairman, we have asked this morning that a commissioner's bill be introduced along these lines, and I think in discussing S. 3493 and S. 1214 it would be helpful if we could refer also to the commissioner's bill which we have just brought in. The Bureau of the Budget has stated they have no objection to submission of this draft of the bill to the Congress.

In taking up these rather complex questions, Mr. Chairman, we felt as the Board of Commissioners that the best way for us to present the position of the Board would be to ask that a clean bill be introduced, and we hand you this morning a copy of a proposed clean bill with a report on it.

Of course, it has no number. I hope it will have in the future. Could that bill be inserted in the record, Mr. Chairman?

Senator MORSE. Mr. Commissioner, let the chairman make a very brief statement. There will be included in the record at this point the proposed bill of the District of Columbia Commissioners to amend the District of Columbia Unemployment Compensation Act, and in order that we may make a committee record on the bill, the chairman, unless other arrangements have been made for its introduction, will extend to the Commissioners the courtesy of introducing the bill at the opening of the session of the Senate today

Mr. MCLAUGHLIN. Thank you, sir.

Senator MORSE. -so that it will have a number and to enable us to proceed to make the record on the bill this morning. The chairman will also, without objection, insert in the record at this point a letter addressed to the Vice President of the United States and signed by Commissioner McLaughlin dealing with this particular problem. That letter will be made a part of the record at this time. The letter is dated April 17, 1958. You would like to have that in the record, too?

Mr. MCLAUGHLIN. Yes, if you please, Mr. Chairman. (The letter and bill referred to are as follows:)

A BILL To amend the District of Columbia Unemployment Compensation Act, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 3 (c) (8) of the District of Columbia Unemployment Compensation Act, approved August 28, 1935 (49 Stat. 946), as amended (title 46, ch. 3, D. C. Code, 1951 edition; 68 Stat. 988), is amended by adding the following:

"iv. Any employer, at any time, may voluntarily pay into the unemployment compensation fund an amount in excess of the contributions required to be paid under the provisions of this Act, and such amount shall be forthwith credited to his reserve account. His rate of contribution shall be computed, or recomputed, as the case may be, with such amount included in the calculation. To affect such employer's rate of contribution for any year, such amount shall be paid not later than thirty days following the mailing of notice of his rate of contribution for such year: Provided, That such amount, when paid as aforesaid shall not be refunded or used as a credit in the payment of contributions in whole or in part."

SEC. 2. Section 7 of said Act approved August 28, 1935, is amended (a) by striking Table A in subsection (b) of said section and inserting in lieu thereof the following:

(b) by striking so much of the proviso in subsection (d) of said section 7 as reads "not less than the amount appearing on one of the lines in column (C) above" and inserting in lieu thereof "not less than the amount appearing in column (C) of such table on a line which is not more than two lines above the line on which such weekly benefit amount appears in column (B)"; (c) by amending subsection (d) of said section 7 to read as follows:

and

"(d) Any otherwise eligible individual shall be entitled during any benefit year to a total amount of benefits equal to twenty-six times his weekly benefit amount.";

(d) by striking the figure "$30" at the end of the first sentence of subsection (f) of section 7 and inserting the figure "$40" in lieu thereof.

SEC. 3. This Act shall take effect on the first day of the next succeeding calendar quarter following its enactment.

APRIL 17, 1958.

Hon. RICHARD M. NIXON,

The President, United States Senate,

Washington, D. C.

MY DEAR MR. PRESIDENT: The Commissioners of the District of Columbia have the honor to submit herewith a draft of a bill to amend the District of Columbia Unemployment Compensation Act, as amended.

The first section of the bill provides that any employer may make voluntary contributions to his unemployment compensation account at any time. In the event these voluntary contributions are made within 30 days of the mailing of his rate notice for a calendar year, his rate may be redetermined based upon the

money voluntarily contributed by him. The Commissioners are informed that this provision is desired by the employers of the District of Columbia, and will not seriously affect the Board's income nor its administrative costs. Similar provisions are now law in a number of States.

Section 2 amends the District of Columbia Unemployment Compensation Act to move in the direction of the recommendation of the President in his 1958 Economic Report that the maximum weekly unemployment benefit in the States and in the District of Columbia be set at a level where the great majority of covered workers will be eligible for payments equal to at least one-half of their regular earnings. The rapid rise in wages since 1954, when the present $30 weekly maximum benefit was enacted for the District of Columbia, makes it imperative to raise the weekly maximum if the District of Columbia Unemployment Compensation Act is to provide benefits reasonably related to the present wage levels. In 1954, when the maximum weekly benefit amount of $30 was established, the average weekly wage in covered employment in the District was $68. Today, $30 is less than two-fifths the average weekly wage for private employment in the District of Columbia, which is estimated at approximately $77.50 per week.

As a result of the lag in benefits, too many workers are getting less than 50 percent of their weekly wages. Based on as yet incomplete data for fiscal year 1957, the present $30 maximum allows only 36 percent of the covered workers to receive one-half their gross earnings in benefits. It is estimated that a $40 maximum would provide 58 percent of the covered workers with benefits of at least one-half their gross earnings, and accordingly, the Commissioners believe that the weekly maximum unemployment benefit for covered workers in the District of Columbia should be established at $40.

An increase in the maximum benefit in line with rising wages and living standards is necessary not only to assure an adequate benefit to the worker for loss of earnings, but also to assist the whole community, through maintaining the purchasing power of the unemployed. Where compensation is inadequate to permit a minimum standard of living, many claimants are forced to supplement their benefits through private charities or local public relief sources. costs, which should properly be borne by the unemployment compensation fund, are thus charged to public and private assistance funds, the cost of which are paid by the public and the general taxpayer.

These

The District of Columbia Unemployment Compensation Act presently provides for a variable duration of 26 weeks of unemployment benefits, but such benefits may not exceed one-third of the base period wages. The proposed amendment of section 7 (d) of the act is designed to afford all eligible claimants a uniform duration of 26 weeks of benefits in any benefit year, as recommended by the President in his 1958 Economic Report. Coupled with the amendment providing for 26 weeks uniform duration of unemployment benefits is a proposed amendment of section 7 (c) of the act, adding thereto a "two step-back" provision designed to eliminate fringe individuals who are now being paid benefits for a limited period of time, and to make eligible for benefits only individuals who are substantially attached to the labor market.

It is estimated that the increased benefits provided by this bill will result in an overall average annual increase in the cost of unemployment insurance benefits of about $1 million, or 24 percent of the estimated average cost rate under the present law. The District's unemployment insurance reserve funds are fully adequate to meet this increased cost without any need for an increase in current tax income.

The Commissioners have been advised by the Bureau of the Budget that there is no objection on the part of that office to submission of this draft of bill to the Congress.

Yours very sincerely,

ROBERT E. MCLAUGHLIN, President, Board of Commissioners, District of Columbia. Senator MORSE. I shall also insert at this point a letter addressed to the chairman of the District of Columbia Committee, Senator Bible, dated April 17, 1958, signed by Mr. McLaughlin in behalf of the District Commissioners.

It also sets forth some of the views of the Commissioners in regard to this general legislative problem before the committee.

(The letter referred to is as follows:)

Hon. ALAN BIBLE,

Chairman, Committee on the District of Columbia,

United States Senate, Washington, D. C.

APRIL 17, 1958.

MY DEAR SENATOR BIBLE: The Commissioners of the District of Columbia have for report S. 1214, 85th Congress, a bill to amend the District of Columbia Unemployment Compensation Act, as amended.

The bill amends the District of Columbia Unemployment Compensation Act in two principal respects, (1) by substituting for the present limitation on benefits set forth in section 7 (d) of the act, a two-step-back limitation, to be inserted in section 7 (c) of the act; and (2) by substituting a flat 6-week disqualification period for the present variable 4- to 9-week period which the District Unemployment Compensation Board, in its discretion, is authorized to fix.

Under existing law, a qualified claimant for unemployment compensation is entitled during any benefit year to a total amount of benefits equal to 26 times his weekly benefit amount, "or 33% percent of the wages for employment paid to such individual by employers during his base period." It has been the experience of the District Unemployment Compensation Board that the normal individual is capable of earning his minimum qualifying wages in a period of 18 to 20 weeks if he continues to work 5 to 7 weeks beyond his high quarter at the rate of his wages during such quarter. This would make it possible, were there no limitation fixed on the amount of benefits, for a claimant to be employed for 18 to 20 weeks of his 4-quarter base period, and then to draw benefits for a 26-week period on the basis of the high quarter wages. Because of the manner in which the Unemployment Compensation Act has been constructed, it would be possible, under the circumstances just described, for a claimant to draw, over a 26-week period, unemployment compensation approximately equal to 75 percent of the wages he earned during the period of his employment, were this compensation not limited, as at present, to one-third of such earnings.

The proposed amendment of the Unemployment Compensation Act has the effect of removing from the act the present limitation on unemployment benefits to an amount not more than one-third of the wages received by the claimant during his four-quarter base period, and adding to the act a provision which would have the effect of limiting the claimants for unemployment compensation to those persons who are substantially attached to the labor market. This limitation on the claimants is achieved by adding, in section 7 (c) of the act, a provision which may be referred to as the two-step-back provision.

In order that there be an explanation of the effect of the proposed two-step-back provision, it is necessary that there first be a discussion of the step-back feature in the existing law, as follows:

Referring to table A in section 7 (b) of the act, a claimant for unemployment compensation may have earned, during the high quarter of his 4-quarter base period, an amount between $460.01 and $483. Such earnings during his high quarter, taken with minimum qualifying wages totaling $724 during the entire 4-quarter base period, would entitle the claimant to benefits of $21 per week for 26 weeks. But it might be that while the claimant had one good quarter during his base period, he earned very little during the remainder of the base period. Under existing law, such a claimant could step back down the amounts shown in column C of table A to the amount commensurate with his earnings during the base period. In the present instance, assume these to be $500. In such a case, while the claimant would not be entitled to $21 per week, under existing law he would qualify for benefits of $14 a week, by stepping back down column C to the minimum qualifying wage figure of $483. Since $500 is more than the required minimum of $483, entitling him to $14 per week, but less than $517, entitling him to $15 per week, the claimant would qualify for benefits of $14 per week. Existing law, it may thus be seen, allows persons remaining employed for a relatively short period (but at least 13 weeks) to draw at least $8 per week unemployment compensation for 26 weeks, so long as they earned, during the 13 or more weeks they were employed, at least $276.

This feature of existing law does not have the effect of excluding from unemployment compensation benefits persons who are not substantially attached to the labor market. Conceivably, a housewife, a student, or a retired person might all qualify for unemployment compensation by working little more than 13 weeks during a 4-quarter base period. The proposed amendment of the Unemployment