permanent disability? Should he receive payments in the form of a pension payment for the rest of his life, or should he get a lump sum payment? You remember I said in the case of a lump sum payment, you might give him $10,000 and 12 months later he is on welfare. What is your position between the pension payment and the lump sum payment in those cases?

Mr. STERN. This man was talking about the California Act where there is a pension. Under the Longshoremen's Act there is no pension, there is no lump sum payments. In order to get a lump sum payment under the Longshoremen's Act now, a large sum of money at one time, it has to be approved by the Bureau in Washington, and an investigation must be made. All the safeguards are there for a good reason. Many people cannot handle large sums of money. I have seen people time and time again who have had third-party suits. That is the only way they can get a lump sum, and I have seen that money go. Unless there are proper safeguards, I am opposed to lump sum payments. Senator YARBOROUGH. May I ask one question? Senator MORSE. Certainly.

Senator YARBOROUGH. In your experience, when a man without money gets a large sum of money, or relatively large sum of money or, say, not too large a sum, two, three, four thousand dollars, what is the first thing he generally does?

Mr. STERN. He pays his back bills. The reason he pays his back bills is because he can't live on $70 a week.

Senator YARBOROUGH. I mean if he gets the lump sum, he gets that much cash.

Mr. STERN. The average person, Senator, does many foolish things. Senator YARBOROUGH. Goes and buys an automobile, that is my experience.

Mr. STERN. That is right.

Senator YARBOROUGH. Excuse the interruption, that was just a little side thought.

Senator MORSE. It isn't only for me that we clear the record with regard to this matter of permanent disability.

Section 7 of the bill, which I will read and then you see if my interpretation of this operation is correct, reads like this:

In any case in which an employee having an existing permanent physical impairment suffers injury, the employer shall provide compensation for such disability as is found to be attributable to that injury based on the average weekly wages of the employee at the time of the injury. If following an injury falling within the provisions of Section 8(c) (1) (20), the employee is totally and permanently disabled and the disability is found not to be due solely to that injury, the employer shall provide compensation for the applicable prescribed period of weeks provided for in that section, or for one hundred and four weeks, whichever is the greater. In all other cases of total permanent disability or of death, found not to be due solely to that injury, of an employee having an existing permanent physical impairment, the employer shall provide, in addition to compensation under Paragraphs (b) and (c) of this section, compensation payments or death benefits for one hundred and four weeks only. After cessation of payments for the period of weeks provided for herein, the employee or his survivor entitled to benefits shall be paid the remainder of the compensation that would be due for permanent total disability or for death out of the special fund established in Section 44.

The reading of that makes clear we will not have the pension issue about which I was talking.

Mr. STERN. That is correct. There isn't any pension issue involved. Senator MORSE. Furthermore, it spells out the weeks for which the payment shall be paid. That does not involve payments for the rest of his life.

Mr. STERN. That is correct, sir.

Senator MORSE. That clears it up sufficiently.

Mr. STERN. There is one other section of the bill that the employers oppose and we are in favor of, and that is the increase of 834 percent for an injury, if a man has dependents. We think it is fair and proper. Senator MORSE. Why do you advocate payment of 813 percent more for dependents?

Mr. STERN. NO. 1, I think the Oregon Act, the Oregon Compensation Act, provides for it. It seems to me when an employer hires a worker he weighs his good points and bad points. To some degree the employer has to assume that the worker might have a family, might have children going to school, might have a lot of things that a single man might not have. We are not penalizing the single man, we are not penalizing the man for being married. It isn't a penalty to have a wife and children. We feel that the compensation that is provided that is assumed to take the place of wages to some degree should also be assumed to have a standard of living of that injured man remained at certain levels. What it means, then, or what it will mean if it is enacted into law, is that a kid going to school with an injury might have hot lunches that he might not otherwise be able to get.

Senator MORSE. Mr. Stern, unless the hiring practice in the industry has changed considerably in recent years since I have handed down some awards on the hiring hall policies, the employer doesn't make the choice between "A" and "B" on the basis of whether or not he is single or married. The union sends the employees out of the hiring hall, isn't that correct?

Mr. STERN. It is a joint venture, the union and employers build the hiring hall. However, if a man wants to become a longshoreman, the fact that he is single or married doesn't have any bearing on it; however, the employers prefer a stable working force. A man that is married and has children will be on the job more often than a single

man.

Senator MORSE. I know it is a joint venture. We made it a joint venture when the hiring hall was set up, but it is primarily administered by the union as far as the selection of the gangs are concerned and the personnel of the gangs. They are sent out irrespective of the marital or nonmarital status. That is why I want to get this record perfectly clear as to why you think the employers assume some greater financial obligation in regard to the compensation aspects of the industry when the hiring hall sends out a married man than when it sends out a single man, and the man is injured.

Mr. STERN. Again we have to come down to the concept of workmen's compensation, rather than the hiring hall, as such. The concept, of course, is to take care of an injured man. When you take care of him, to some degree you have to take care of his family.

Senator MORSE. Is your argument of the practice under compensation laws on the state basis and in other industries?

Mr. STERN. Once in a while, unlike the other side, I usually leave the states alone, because the record will show from 1955 up to now,

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I have a 1955 record, the increase of workmen's compensation for the States is a terrible mess, but I know

Senator MORSE (interrupting). You are a very good witness; you get ahead of me all the time.

I was about to suggest that you make an argument now that this committee ought to go through state compensation laws and select the beneficial items and ignore those that would be very costly to you. If I were your lawyer I would say never mention State compensation laws in connection with this bill.

Mr. STERN. That is correct.

Senator MORSE. If your argument is that we ought to consider the dependents because the Oregon compensation law, for example, has something in it regarding dependents, I will educate myself with regard to that. I am sure it does mention this because that is what you said. I have to be honest with you, I have a lot of doubt in my cranium as to whether or not I ought to consider the dependent 813 percent item simply because some State compensation laws provide for it.

You know, one of the problems we are going to have with this bill on the part of those who oppose its separating longshoremen from other employers with a special bill, they are going to argue State compensation laws. I have always fought for this bill. You referred to the Morse-Magnuson bill of 1955. I supported it long before that on the ground that we are dealing here with an industry which, in its labor relations, is pretty singular and in many other respects. You are dealing here with a Longshoremen and Harbors Act which has had remarkable cooperation over the years from the industry as well as from the union. I think we have to have a stronger justification for including the dependent provision than the argument you have given me so far, Mr. Stern, that it is in some other compensation law.

Mr. STERN. All I can say, Senator, is that when the Federal Employees Compensation Act was heard, the arguments, Congress felt that Federal employees should have an additional compensation for dependents. If it is good enough for Federal employees, we feel we ought to come under the same umbrella.

Senator MORSE. I suggested, if you recall, in my colloquy yesterday, as I was trying to figure out why this is in the bill, it might be there is social philosophy involved, namely, employers know when they hire their labor supply that in most instances they are hiring an overwhelming majority of married people with families who settle in the community, who buy homes and become a part of the community life. They provide the employers with a steady, permanent, responsible labor supply, not a shifting supply. The reservoir of that labor supply is of great value to them. I raise the question as to whether that might be the basis for that amendment. I find from neither side that that is involved in the provision.

Mr. STERN. Well, if I can highlight the social aspect a little bit more, say a man is injured. When a single man is injured, it is just himself, but I think the record will show that when a married man is injured his wife feels it and the children feel it. They are innocent victims of this injury. There is some social adjustment there. If the employer says they like their employees so much, I assume they mean their families and children, too. I don't think the costs would be prohibitive.

Senator MORSE. Counsel, is there anything you wish to add?
Counsel HARRIS. No, sir.

Senator MORSE. Do you have any comments on any section of the bill other than the third-party section, which I will come to momentarily, and the amendments that you have already discussed? Can you tell us what your position on the amendments may be, in contrast to the employer's position? I want to find out and be sure this record shows what the two sides agree on and what the two sides disagree on. The employers have gone through the bill, section by section, and made a record on each section of the bill. You haven't done that yet. You have done much of it. Your statements cover most of it, but I want to be sure that either now or with a supplemental memorandum you make your record perfectly clear as to just where the union stands on each section of the bill, in contrast with where the employer stands on it, because your testimony thus far indicates that you are not apart at all on large segments of the bill.

Is there any other segment of the bill in which you want to tell the committee you are in agreement? Then will you tell us what other sections of the bill you are in disagreement with the employes, that you haven't already covered?

Mr. STERN. Section 5, 8(c) (20), we are not particularly concerned with disfigurements. To a large extent we will agree with the employers on that. The act now provides for serious disfigurements. When any longshoremen have scars on their legs, minor scars on their arms and backs, they will open up a Pandora's box.

Senator MORSE. The employer witness testified on that yesterday, Mr. Stern. They didn't think any payment should be made until there was a wage loss. I raised a question about that.

What is your position on that point?

Mr. STERN. The foundation of the act provided wage loss and loss of wage earning capacity. It is true, any longshoreman, in many instances, earns more money after the injury than he did before the injury, but his capacity to earn a living in the open labor market is a criteria, not the actual wages. The courts have determined this time and time again. The carriers have raised it time and time again. There is nothing new, so we will stand by the courts' decision. A loss of wage earning capacity supersedes a wage loss, and that is the reason it is in the act now.

Senator MORSE. Are you and Mr. Murnane taking the positionand I judge from his comment on this, too, that you probably are—that regarding a disfigurment section of this bill, the payments should be made on the basis of the disfigurement and not on the basis of subsequent proof that the disfigurement caused a wage loss? To cite a hypothetical, you urge payment on the basis of the disfigurement because it is impossible to say, when longshoreman X is denied a job, that he is being denied a job because of the disfigurement, but you think that might be the case. Is that part of your argument?

Mr. STERN. The criteria, again, is the open labor market. Let's assume he has a pretty bad looking scar. He can work in the hold of the ship and there is no problem, but suppose he has the opportunity to advance himself and go to some other occupation where a scar would be a definite handicap, what would happen to him? There is nothing in the act that says the act has to be applicable to longshore workers. The open labor market is the criteria. So if a man has a

paralyzed arm and he is given a job as a boss sitting in a box all day, his earning might be doubled what they were prior to the injury, but there is no question he has a definite handicap. He should be compensated for the handicap.

Senator MORSE. Am I correct, then, in saying it is my conclusion from the union's position that you are asking for compensation for the disfigurement period?

Mr. STERN. Correct; that is right.

Senator MORSE. Is there any point of agreement or disagreement that you have with the employees on sections of the bill other than the third-party matter, on which you want to make comment at this point? Mr. STERN. Senator, I think we have hit the highlights. One of the reasons we haven't gone section after section is the ILA is going to testify in near future, and our relationship with the ILA on compensation is very close. That is the reason I am waiting to see what their comments are. It may be that the ILA and the ILWU may issue a statement on these other aspects, but again, the main thrust is the increase in compensation benefits.

Senator MORSE. Please understand that my comment about your presentation of the case and the employers' presentation of the case does not mean I think you ought to run through the bill section by section. You are offering the bill. You are standing for the bill. Those that want it changed have the burden as far as this committee is concerned to show why it should be changed. At the same time, I wanted to give you an opportunity to point out your agreements and disagreements with the employers' position of the bill.

Now I come to the third-party suit issue. I don't think there is much more you can say. You told us why you wanted it continued. It is for this committee to go into the legal analysis or the legal issues that have been raised by the employers. As you know, we have a good many people working on that, but I want to be sure I understand the major thrust of the position of the union. You do not feel, in view of the Supreme Court decision, that this committee should limit the members of your union to adjust the benefits under the section of the bill in regard to compensation aspects, if, in a given case it is decided that they ought to have the right to go to court under the seaworthiness doctrine upon which many of these cases are based, and bring in action outside the framework of the compensation aspects of the law. Is that your position?

Mr. STERN. True. When the bill was enacted in 1927, Senator, it was pointed out that there may be a lot of accidents not caused by the man's employer. In the raw, you see, the place of work for longshoremen is a vessel. Every time that vessel comes into port it is never the same. There are hazards in that vessel that the employer knows nothing about. The shipowner knows, the master of the vessel, or whoever it is.

So, here is a seaman, for example, who comes under the Jones Act. He is a ward of the U.S. Government. To some degree, a longshoreman is a semiward. He is performing work that a seaman usually does, but he has no way of knowing how safe his place of work is, and his employer has no way of knowing that.

Look, one of the interesting things in this whole particular deal is that the longshoremen would assume at the present time if he sues the