many changing elements, the CIO has nevertheless tentatively tried to estimate what costs are involved in substituting its own proposals in place of those in H. R. 6000. We estimate that the cost of this program would involve a longrange level premium somewhere between 7 and 8 percent. Unlike some of the other estimates which were presented to you, we are frank to admit that ours is very tentative and is based, to a considerable extent, on measures which have been used by the Federal Security Administration and others which in the past have proven to be somewhat faulty. We believe that regardless of what program is set up and what the eventual costs may be, at no point should workers contribute more than 2 percent of pay roll. Furthermore, we believe it quite proper that as the system develops, a substantial part of the total cost might be financed out of the general revenues of the Federal Government. There are many good and sufficient reasons for this procedure. Clearly these costs are a kind of general social charge which society should properly meet, in part at least, through the general taxing and revenue powers of Government. This also enables the Government to keep a firm hand within the system to prevent abuses, etc. Keeping the pay-roll tax on wage earners down to no more than 2 percent will also conform to the economic needs of the country. As the Council of Economic Advisers concluded in its recent economic report to the Nation, we shall not "be completely out of the woods" until we are "successful in raising the level of consumption, which is not now sufficiently high for sustained maximum production and employment.” Pay-roll taxes are highly regressive and harm consumption. Consequently, any increases in pay-roll taxes work counter to the development of a high consumption economy and should be avoided wherever possible. Confining the payroll tax to 2 percent on workers therefore makes good economic sense. A first-rate economic power cannot afford to accept a second- or third-rate system of social security. The program the CIO is proposing is well within the economic strength of the United States and, indeed, over the long pull it will buttress that strength. OUTLINE OF RECOMMENDATIONS BY THE CONGRESS OF INDUSTRIAL ORGANIZATIONS FOR IMMEDIATE IMPROVEMENTS IN PROPOSED LEGISLATION ON OLD-AGE AND SURVIVORS INSURANCE For the convenience of the Senate Finance Committee the following outline follows the order and terminology of the tables in the committee's publication. The Major Differences in the Present Social Security Law, The Recommendations of the Advisory Council and H. R. 6000. 1. COVERAGE Universal coverage along the general lines of the administration bill in the House (H. R. 2893). Nonprofit employees would be covered on the same basis as other employees with the exception of ministers and members of religious orders. Agent laundry drivers should be covered as indicated in a special brief prepared by the Amalgamated Clothing Workers of America. Employees of State and local governments engaged in proprietary functions should be covered like other employees. Other State and local employees should be eligible by agreement for voluntary coverage with appropriate safeguards for existing retirement plans. For example, present beneficiaries should be excluded from elections held on participation. II. INSURED STATUS Liberalize provisions for fully insured status by the new-start provision recommended by the Advisory Council to the Senate Finance Committee. This new-start provision requires 1 quarter of coverage for each 2 calendar quarters elapsing after 1948 (or after attainment of age 21, if later) and before death or attainment of retirement age, but in no case less than 6 quarters nor more than 40 quarters. Quarters of coverage earned any time after 1936 count toward meeting the requirement. III. BENEFIT CATEGORIES Reduce the age of permissive retirement for women from 65 to 60, with similar reduction for wives, widows, and dependent mothers. IV. BENEFIT AMOUNTS A. Average monthly wage.-Should be calculated on taxable wages in the highest quarters in each of the five consecutive years with highest total taxable wages. B. Worker's primary benefit amount.-Increase amounts received by present beneficiaries in line with those for new beneficiaries. Retain provision in H. R. 6000 for taking 50 percent of the first $100 of the average monthly wage but liberalize the rest of the formula by adding 20 percent of the balance of the average monthly wage (up to $400), plus 1 percent of the sum thus obtained for each year of coverage. Avoid severe penalties for periods of noncoverage, eliminating the specific provision for a reduction of benefits by the continuation factor now in H. R. 6000. C. Minimum primary benefit.-Raise to $50 a month. D. Maximum family benefit.-Eighty percent of the average monthly wage, without the flat maximum of $150 proposed in H. R. 6000. E. Dependents' and survivors' benefits (as related to primary benefit).—Raise widows' benefit to 100 percent, and benefits for first child and dependent parent of deceased worker to 75 percent. V. EMPLOYMENT INCOME LIMITATION FOR BENEFICIARY (WORK CLAUSE) Increase the present limitation on earnings to $50 with no limitation for individuals aged 75 and over (same as in H. R. 6000). VI. FINANCING A. Maximum taxable amount-Wages and self-employment income of $4,800. B. Tax rate. C. Appropriations from general revenues.-Retain present authorization from congressional appropriation of sums from general revenues that may be required to finance the program. As recommended by the Advisory Council, postpone any further increase above present 12-percent rates until the current receipts of the trust fund, including interest, no longer equal current benefit payments plus administrative costs. Government contribution from general revenues based upon progressive taxation should in time match employer and employee contributions along the lines of the Advisory Council report. (For CIO recommendations on other phases, see Mr. Rieve's general statement to the Senate Finance Committee and CIO testimony before the House Ways and Means Committee, March and April 1949.) (The following letters and statement were submitted for the record:) INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION, Hon. WALTER F. GEORGE, Chairman, Senate Finance Committee, Washington, D. C. DEAR SENATOR GEORGE: The International Longshoremen's and Warehousemen's Union and the National Union of Marine Cooks and Stewards are submitting the enclosed statement on behalf of the membership of both unions. Both these unions join in supporting the broad program for enlarged socialsecurity benefits outlined before your committee by the spokesmen for various trade unions. We would emphasize two other special problems deserving prompt remedy by your committee. These are: (1) The continued exclusion from coverage of the Social Security Act of the thousands of pineapple and sugar workers of Hawaii, all members of the ILWU. We urge most strenuosuly that these workers and thousands of other agricultural workers employed on commercial farms throughout the United States, be covered by broadening the present provisions of the law and amending H. R. 6000 along the lines indicated. (2) The need to bring about a substantial increase in old-age pensions. Increasingly, the insecurity of the older members of both unions is becoming a. major problem. Only through adequate Federal legislation can this be met. The attempts to meet this need through piecemeal collective-bargaining agreements has obvious disadvantages. Congress must act to institute a real old-age pension program. I would appreciate it if this letter and the accompanying statement were included in the record of the hearings on H. R. 6000 before your committee. Very truly yours, WILLIAM GLAZIER, Washington Representative. STATEMENT ON AMENDMENTS TO THE SOCIAL SECURITY ACT BY THE INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION AND THE NATIONAL UNION OF MARINE COOKS AND STEWARDS The International Longshoremen's and Warehousemen's Union and the National Union of Marine Cooks and Stewards desire to aline themselves with those who have appeared before this committee in support of measures designed to render existing social security legislation more nearly adequate. H. R. 6000, as passed by the House, represents an important advance over the present law, but it, too, is inadequate both in coverage and benefits. We support the standards adopted by the CIO committee on social security and incorporated in the CIO statement to this committee. And we particularly wish to endorse and support the statement submitted by Russ Nixon of the United Electrical, Radio and Machine Workers of America. This committee is fully cognizant of the facts and of the arguments in support of broadened coverage and higher benefits. We do not intend to reargue the case. We do not believe that this committee or the Senate itself will wish to stand before the American people in support of the present niggardly and penurious benefits or in support of the present serious exclusions from coverage. We wish to emphasize only two points. Among the membership of the ILWU are some 20,000 workers on Hawaiian sugar and pineapple plantations. Most of these workers are excluded from coverage under the Social Security Act because they are engaged in agriculture. Most of them would continue to be excluded if H. R. 6000 were enacted. The employment of these workers is in no significant respect different from the employment of factory workers. Their insecurity is no different from the insecurity of those engaged in manufacturing or other covered employment. When they become too old to continue working they are just as much in need. There are no administrative difficulties involved in their coverage. The only basis for their continued exclusion is the differential advantage obtained by employers of such workers who do not have to pay the 11⁄2 percent pay-roll tax. Even this is no real reason for continued exclusion because the employers would pass the tax on to consumers of agricultural products. We do not believe that the American people who consume Hawaiian pineapple and Hawaiian sugar wish to be party to the continued exclusion of these workers from benefits accorded to millions of other workers. On behalf of these workers and others like them employed in commercial farms throughout the United States, we urge this committee to broaden the present coverage, and to amend H. R. 6000, to include agricultural workers under the act. The other point we wish to emphasize is the importance, from the standpoint of industrial peace, of a substantial rise in old-age pensions. The movement for industrial pensions through collective bargaining has gained great momentum since the end of the war. First the coal miners, then the steel workers and now the auto workers-to mention only the largest groups of workers-have demanded and secured pension plans through union agreements with their employers. These plans leave much to be desired. They furnish only very inadequate support to the older worker, and only a very small proportion of older workers are covered. They nevertheless represent an advance. The workers who do benefit receive pensions substantially greater than their Federal pensions under the Social Security Act. To secure these plans, however, the workers involved have had to go through long and costly strikes. The miners struck in 1946 for their pension plan. The steelworkers and the auto workers had to strike in 1948 for theirs. Chrysler workers are on strike right now for the same objective. Through its failure to amend the Social Security Act to provide an adequate Federal pension system, Congress has itself been responsible for these major industrial tie-ups. On the west coast, the CIO maritime unions, including the ILWU and MC and S, have contracts which expire on June 15, 1951. These contracts were obtained only after a long a bitter strike in the fall of 1948. For the first time, these contracts are for a period in excess of a year. They provide all the machinery necessary for the maintenance of industrial peace until their expiration in June 1951. All these unions are concerned over their older members. They are concerned that these men who have devoted their lives to the maritime industry shall not suffer an indigent old age. They are concerned to find ways and means of retiring the older members and thus to help meet the crushing unemployment problem facing the membership of these unions. A pension plan, financed by the shipping industry is almost certain to be demanded by these unions in the 1951 negotiations. We submit that substantial liberalizatoin of the old-age benefits of the Social Security Act can play an important role in preventing interruption of shipping to and from the west coast. In the ILWU, there are more than 1,000 longshoremen on the Pacific coast who are 65 years of age or older. This is nearly 10 percent of the men. These men are doing heavy physical labor and should be eligible to retire if anybody is eligible to retire. But they cannot live on the outrageously low pensions now payable under the Federal act. It is no wonder the union is pushing for pensions. The ILWU and MC and S would rather have adequate pensions provided by law than pension plans won by collective bargaining. But we intend to secure protection for our older members and some assistance on the unemployment problem even if it means a pension plan by union contract and even it a strike is necessary to secure such contract. Dated: February 23, 1950. INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION, Hon. WALTER F. GEORGE, DEAR SENATOR GEORGE: On February 23, 1950, a statement on behalf of the International Longshoremen's and Warehousemen's Union and the National Union of Marine Cooks and Stewards was submitted to you, urging that certain amendments to the Social Security Act be enacted by the Senate Finance Committee. Specifically, we are concerned about extending the coverage of the act to agricultural workers and bringing about a substantial rise in old-age pensions. Since that date I have been in communication with the members of our union who are employed on the sugar and pineapple plantations of Hawaii. Speaking through the union, these workers, both in the fields and in the sugar mills and in the pineapple canning and processing plants, have asked that specific notice be taken of the discrimination against them that exists in the present law. As you are well aware, the agricultural workers as such are outside the coverage of the act. These workers, 20,000 of whom are members of the ILWU in Hawaii, have been excluded from old-age and survivors' insurance and unemploy ment insurance as well. There is no question that these workers are as much in need of coverage as industrial and commercial employees. Originally, they were excluded when the act was enacted in 1935, on the theory that their coverage would put an onerous burden on the "small farmer" who employs them. The fact is that the vast majority of agricultural workers excluded from coverage are employed by vast commercial operations which are a far cry from the "dirt farmer" about whom so much concern was shown in 1935. These workers should be covered by the act, and it would be no problem to exclude, if this were felt to be necessary, the farm hand employed by the small farmer, while protecting the agricultural worker employed on the large commercial farms throughout the United States. However, we see no need even for such exemption under the law. Secondly, we urge most strongly that the amendment to the Social Security Act passed in 1939, which excluded thousands of workers engaged in what are essentially commercial or manufacturing processes on agricultural products, be repealed. As you well know, the 1939 amendment excluded workers originally covered when the act was passed in 1935, such as workers employed in packing sheds, the processing of dried fruits, cotton gins, etc. Workers employed in essentially industrial processes were excluded wholesale from the protection of the Social Security Act. There is no reason for such discrimination. We urge most strenuously that your committee amend the Social Security Act to cover all agricultural workers, including both field and mill or shed workers. Respectfully yours, WILLIAM GLAZIER, Washington Representative. The CHAIRMAN. We have one other witness. Dr. Eveline Burns? Dr. Burns, we again express our regret that we could not hear you Friday, but we are glad to now have the opportunity to hear you. Will you please identify yourself for the record? STATEMENT OF DR. EVELINE M. BURNS, ECONOMIST AND PROFESSOR AT THE NEW YORK SCHOOL OF SOCIAL WORK, COLUMBIA UNIVERSITY, APPEARING ON BEHALF OF THE NATIONAL CONSUMERS' LEAGUE AND THE CONSUMERS' LEAGUE OF NEW YORK Dr. BURNS. My name is Eveline M. Burns, and I am an economist and professor at the New York School of Social Work, Columbia. University. I have been studying social security problems for over 25 years and am the author of numerous books and articles on the subject. I am making this statement on behalf of the National Consumers' League and the Consumers' League of New York, of which I am president. The Consumers' League, as I think you gentlemen know, has been in existence for over half a cenutry. It is an organization of nonpolitical groups of citizens who are interested in social welfare. And right from the very first we have been supporters of the Social Security Act. We desive to urge you gentlemen to extend the Social Security Act to make the principle of contributory social insurance more generally used for meeting the problems of economic security. We do so because we believe that the social-insurance principle, the contributory social insurance principle, is the best available device for meeting the needs of our people for adequate minimum security, and yet at the same time protecting the taxpayer and permitting a minimum of interference with the running of our economy. With your permission, sir, I should like, if I may, to put my prepared statement in the record and then just highlight for your consideration certain points to which we attach considerable importance. The CHAIRMAN. We would be pleased to have you do so. Dr. BURNS. We believe it is extremely important in considering this difficult problem to bear in mind the basic factors of American life which explain why the institution of contributory social insurance is valued by our people. As we see it, the facts we have to bear in mind are, first of all, the growing numbers of the aged, which means, on the one hand, a very large demand for adequate security from a vocally effective voting |