way to handle this issue is to define attachment to the labor force in the wage-qualifying requirement and then provide a uniform duration against the single contingency of prolonged unemployment.

WAGE-QUALIFYING REQUIREMENTS FOR ELIGIBILITY

It has been estimated by the Department of Labor that about 15 percent of the applicants for unemployment insurance in the District do not have sufficient wage credits to establish their eligibility. While the wage-qualifying requirements of the present law are designed to establish attachment to the labor market, the fact is that to define attachments by distribution of earnings in the base year is arbitrary by its very nature.

Many of those now unemployed in the District, not drawing unemployment insurance, are seriously interested in working, are able and available for work but do not have sufficient wage credits in many cases through no fault of their own. The Morse bill would more justly define the wage-qualifying requirements.

DISQUALIFICATIONS IMPOSED

Between 4 and 5 percent of the insured unemployed have been disqualified under the District law. These people have had their benefits canceled for a period of 4 to 9 weeks. The Morse bill, and the Beall bill, S. 1214, would limit those disqualification penalties to a 6-week postponement of benefits rather than any outright cancellation. We accept the principle that claimants who are discharged for misconduct, who refuse suitable work or who voluntarily leave their employer should be disqualified for a period of time, but we do not believe that they should have their benefit rights canceled.

FINANCING AND COST

We in labor have long been cognizant of the difficulty faced by any State or jurisdiction that wishes to improve its law substantially but which feels it cannot step out ahead of other States because a higher tax rate may put the employers in that State or jurisdiction at a competitive disadvantage. This is the reason we have always favored Federal minimum benefit standards in order to put all States on a basis of equal advantage.

The board of trade has raised this objection to a model bill for the District of Columbia, but in this instance the argument has no substance because the employers in the District are paying about the lowest unemployment compensation tax rates in the country. The average tax rate of employers in the District in 1957 was only 0.7 percent of taxable wages (the first $3,000 for each employee). Only two other States had lower average tax rates during 1957. Even these low average figures obscure the fact that under experience rating the actual tax paid by three-fourths of the employers in the District every year in recent years has been only 0.1 percent. The savings to employers under experience rating run about $12 million a

year.

Despite these low tax rates the reserve fund in the District has continued to grow until now it is over $57 million which is enough to pay benefits for 10 to 15 years even if there were no income at all.

The low tax rate and high reserve in the District are due first to the low benefit levels and second to the relatively steady employment experienced by the District even when the rest of the country is in a major recession. It is crystal clear that the District can afford a model law without putting employers here at any competitive disadvantage.

The time is overdue for improvement in the District of Columbia unemployment compensation law. We urge the Senate to reiterate its support of a good law for the District as it did in 1955. Congress can provide the leadership that States appear not to have found in the President's often repeated recommendation to the States for improvements in benefits. The Congress in both Houses is vitally concerned with the shortcomings of unemployment insurance although there are differences of opinion on what should be done. These differences do not arise in considering the District of Columbia law where Congress has full responsibility. It will be an anomalous situation indeed if the District is ignored at this time, but we have confidence that this committee is well aware that both justice to employees in the Nation's Capital and timeliness of interest both suggest immediate enactment of a fair unemployment insurance bill for the District of Columbia.

Senator MORSE. I am very glad to have your statement, Mr. Mason. Mr. Munts and Mr. McGuigan, would you like to supplement Mr. Mason's statement with any comment before I ask only one question that I have to ask?

Mr. MUNTS. Mr. Chairman, I might make one observation. Just prior to Mr. Mason's testimony the subcommittee was presented with an estimate of the cost, of the additional cost of the Morse bill, and as I recall, the figure was 55 to 60 percent.

Senator MORSE. Fifty-five to fifty-six, I think.

Mr. MUNTS. What was the cost estimate?

Mr. MACKALL. Between 55 and 56 percent.

Mr. MUNTS. 55 percent. The average tax rate for the District having been last year seven-tenths of 1 percent, just making these calculations in my head, I arrive at a cost of slightly over 1 percent or 110 percent, which would have been the cost had the Morse bill been in effect last year. This is still below the average tax rate paid by the employers in the United States for unemployment insurance programs, which was 1.3 percent during 1957, so I think that there is no grounds for any fear that the Morse bill would put the employers in the District of Columbia at any disadvantage with employers in other States.

Senator MORSE. Any further comment?

Mr. MCGUIGAN. Mr. Chairman, the only thing that I have to add is that I am certainly pleased to see the urgency with which the subcommittee is approaching this problem, and we certainly hope that the full Senate and the House of Representatives will likewise feel the sense of importance to moving very promptly.

Senator MORSE. Now, gentlemen, I have one question to ask you. You may wish to cover it in a memorandum in detail, after you have had time to reflect on it. I am inclined to think that one of the attacks that will be made on the Morse bill will be that it allegedly goes beyond the realm of unemployment insurance and seeks to pro

vide relief rather than insurance. Do you have any comment you want to make at this time in regard to that allegation?

Mr. MASON. I cannot see any basis for calling your proposal a relief program. In fact, it is the reverse. Back in 1939 when the original District of Columbia Unemployment Compensation Act was enacted, the benefits paid at that time were approximately 60 percent of the average wage here in the District, and now you can see how far the District of Columbia has lagged behind in benefits where today it is only 333 percent of benefits. Surely fixing fair benefits, and with the tax rate for 75 percent of the employers here in the District for 1957 only one-tenth of 1 percent, and with only 1 or 2 other States that have a lower percentage rate, is not getting away from insurance but trying to write a better insurance policy. I believe that unemployment insurance is the same as life insurance.

When you take out life insurance and whether it is paid for 3 or 4 weeks or if it is paid for 30 or 40 years, you are entitled to the same benefits. I think the District of Columbia has experienced a number of years since 1939 of full employment which is the basis for their building up the high reserves that they have today.

The benefits for 1957 only amounted to approximately $6 million. Even with the high unemployment that they had in 1957 compared to other years, the reserve that they have at the present time would pay for another 10 years without any tax rate paid into it at all. I do not agree with the previous witness that we are getting away from insurance.

Senator MORSE. Mr. Mason, I may say that when you submit your statement on Wednesday by 5 p. m., setting forth your comments on the Commissioners' new bill, will you also file a supplemental memorandum setting forth your position in answer to an allegation that the Morse bill may go beyond the purview of the insurance principle and seek to bring in a program of relief to unemployed, and attach it to your comments on the unemployment reserve benefit bill? Certainly it is not the chairman's intention to set up a relief program, but it is my intention to set up an adequate unemployment insurance benefit program. Because it increases the amount, it does not follow in my opinion that we have entered the realm of relief, but such a contention when it is made in good faith has got to be met and if it can be substantiated the bill will have to be modified accordingly. I do think you will help the committee a great deal if you file a statement on that without our calling you back for rebuttal testimony.

Mr. MASON. I will do that, Mr. Chairman, but I do want to say in my opinion that your bill follows out and carries out the intent of Congress back in 1939.

I would like to mention that back in 1939 there were 35 States along with the District of Columbia that paid maximum benefits of say 59 or 60 percent, and now none of those States are meeting that average. They are all below. It is not only the District that has lagged behind but it is all of the States, and we hope that the Congress will accept the responsibility that they have here for the District of Columbia, which may set a pattern for the States.

Senator MORSE. You include such documentation in your statement. I am now making a plea on behalf of Mr. Gulledge, Mr. Lee, and the other staff members of the committee, because if you do not supply

the chairman and the other members of the committee with such material, they are going to have to. Therefore, you go ahead and supplement that in your statement if you can, so that it will document your position in regard to this point.

Mr. MUNTS. Mr. Chairman, could I make one point that I think is relevant here? The basic distinction, of course, between a relief concept and an insurance concept is that in the relief concept you are paying people on the basis of need. The Morse bill very clearly defines in one section, section (c), page 3, what the requirements for attachment to the work force are.

Previous employment is required. A certain distribution of earnings in the base year is required. Money has to have been put into his account by his employer. He has to be covered, and there is certainly no concept at all in the Morse bill of relief or dole or the need criteria for receiving the benefit.

Senator MORSE. I surmise, however, that one of the bases for the allegation is the provision in the Morse bill that does modify the employment qualifications. It broadens it out so that some people that are not now qualified would be qualified.

I haven't studied it through yet. I am curbstoning, which is always dangerous, but I surmise that part of the claim that it may go beyond the insurance principle is that we are now going to encompass in the law numbers of people that aren't presently qualified under our present employment qualification provisions. I am just curbstoning, as I say, and you have got to have that in mind when you prepare this memorandum.

Mr. MUNTS. Mr. Chairman, not having access to the wage distribution figures for the District of Columbia as the Employment Security Agency here does, perhaps this is just a suggestion-would it be in order to request the Agency to make an estimate, perhaps based on a sample of how much further these wage-qualifying requirements, how many additional people would be eligible, what percentage of increased eligibility would result from the wage-qualifying requirements specified in the Morse bill?

Senator MORSE. That is certainly information that the committee would have to have in any event.

Mr. Gulledge, will you perpare a suitable memorandum to the proper officials and ask for that information, unless it is already available to us in some other form? Anything further?

Thank you, gentlemen.

The next witness will be Mr. Frank Gunther, chairman of the employment and security committee, Washington Board of Trade. Mr. Gunther, will you take the stand and proceed in your own way?

STATEMENT OF FRANK GUNTHER, CHAIRMAN, EMPLOYMENT AND SECURITY COMMITTEE, WASHINGTON BOARD OF TRADE

Mr. GUNTHER. Mr. Chairman, I am Frank A. Gunther, executive vice president of Security Bank, and I am appearing here today in my capacity as chairman of the employment and security committee of the Washington Board of Trade.

The comments I will make on the bills under consideration reflect the conclusions of the employment and security committee, which have been reviewed and authorized to be presented by the board of directors of the board of trade.

We appreciate this opportunity to express our views respecting S. 1214, S. 2419, and S. 3493.

It seems unnecessary to comment on S. 1214 inasmuch as the proposals contained therein for enacting uniform benefit duration and for reducing penalty provisions will be dealt with in some detail in our comments on Senator Morse's bill, S. 3493. For the record, however, let me say that we oppose passage of S. 1214.

With respect to Senator Bible's bill, S. 2419, I merely wish to say that the provisions are largely administrative. We have no objection to their being included in the District of Columbia law.

S. 3493 is substantially the same bill as S. 1835 which was considered during the 1st session of the 84th Congress and upon which hearings were held by the Senate committee on April 28 and May 4, 1955. We presented voluminous material at that time in opposition to S. 1835 which the Congress failed to enact. Now I wish to review our objections to S. 3493 and submit some charts and statistics comparing provisions of the District law with those of the several States.

A number of highly debatable issues are raised in S. 3493. The bill would amend the District law to provide for uniform duration without amending some features of the law designed for variable duration, and that is perhaps the most questionable issue.

For the most part supporters of the uniform duration principle, that is, if a person qualifies for benefits at all it must be for a prescribed potential maximum, generally hold that unemployment compensation benefits should only be paid to those who have a high degree of attachment to the labor market.

Supporters of uniform duration usually argue that those having intermittent employment should not come under the program and that, therefore, some qualifying standard defining attachment to the labor market should be established.

Claimants having met those standards should be entitled to full duration, which under the terms of this bill is 9 months. Claimants who do not meet these standards would according to this theory get nothing.

This appears to be a reasonable and logical approach. However, it is interesting to note that only 13 States have adopted it while 35 employ the variable duration principle. It is also interesting to note that Kentucky which did adopt the uniform duration principle has now abandoned it and readopted the variable duration provision, making the number of States paying uniform benefits fewer than was the case 3 years ago. I wish to submit for the committees information at this time a list of those States.

Senator MORSE. There will be inserted in the record at this point a table entitled "Benefit Data-Uniform States" compiled by the Washington Board of Trade, Research and Tax Department, April

1958.