Eligibility qualifications

I am in favor of the provisions of H. R. 6000 which would establish a third alternative of qualification regarding quarters of coverage inuring especially to the advantage of newly covered workers and of other liberalizing changes such as relate to survivor benefits in connection with dependent children. I am also very much in favor of the provision which would increase the income limi tation of a beneficiary in covered employment from $14.99 to $50 a month. The proposed exemption is realistically related to real wage levels.

Disability insurance

Disability, which is one of the major causes of dependency, is in essence involuntary, premature retirement. The recognition of this factor is essential to an adequate social insurance program. It has been shown, for example, that the disability of one or more parents is an element in almost one-third of the cases requiring public assistance aid to dependent children. Public protection now available to workers generally in connection with disability and illness is confined, for the most part, to benefits payable under the various workmen's compensation laws for work-connected disability or disease. Although I do not believe that completely accurate figures are available on the point, it is estimated that only a small number of cases of disability are work-connected or compensable under applicable laws. Disabilities appear to be more prevalent in lower income families by reason of generally unfavorable economic circumstances and such families can ill afford to meet the combined misfortune of loss of income and heavy medical expense. Such emergencies must often be met through relief or public institutional care. The Railroad Retirement Act already provides benefits for workers who are totally or permanently disabled for regular employment if they have reached the age of 60 or have rendered the minimum required years of service in the railroad industry. In addition, sickness benefits, including maternity benefits, are available under the Railroad Retirement Act in certain circumstances. I am in favor, therefore, of the provisions of H. R. 6000 which would establish insurance benefits, related as are retirement benefits to wage, for incapacitated workers. H. R. 6000 does not provide for any benefits for the dependents of incapacitated workers. I feel that the economic plight of the dependents of wage earners is as serious when the income of such wage earners ceases by reason of incapacity as by reason of retirement, and that similar benefits should be provided for such dependents in both contingencies.

DEFINITION OF "WAGES" FOR FEDERAL UNEMPLOYMENT TAX ACT

Section 208 of H. R. 6000 would amend the definition of "wages" in the Federal Unemployment Tax Act to bring the definition into substantial accord with the definition of "wages" in the Federal Insurance Contributions Act. The principal difference is in the wage base upon which taxes are collected in the respective acts. The wage base proposed for old-age and related benefits would be $3.600, whereas the wage base under the Federal Unemployment Tax Act would continue to be, when amended by H. R. 6000, $3,000.

As I have indicated in this statement, I think the realistic wage base for contributions toward old-age and survivors' insurance and related benefits is $4,500. My comments regarding this subject are equally applicable with respect to the wage base which I think is feasible under the Federal Unemployment Tax Act I sincerely hope that early and favorable action will be taken by your committee to improve, expand, and liberalize our social insurance system as I have indicated.

The CHAIRMAN. The first witness is Mr. George F. Kohn.

Will you have a seat, sir? You are president of the Precision Grinding Wheel Co. of Philadelphia?

STATEMENT OF GEORGE F. KOHN, PRESIDENT, PRECISION GRINDING WHEEL CO., INC., PHILADELPHIA, PA.

Mr. KоHN. That is correct, sir.

The CHAIRMAN. All right, sir. We will be glad to hear you on this social-security bill.

Mr. KOHN. What I have here, Senator, is not a very long statement, but I did not know whether you would prefer that I should read this

or whether I should speak a little more extemporaneously and give an opportunity for you and others to question me. I will do whichever

you prefer.

The CHAIRMAN. You may proceed as you prefer.. If you wish to put your statement in the record and speak to it, so to speak, we should be happy to have you do that.

Mr. KOHN. Perhaps I should do that; because there has been so much said by those who have preceded me, here, and I feel that most of the statements that I have to make have been pretty fully covered. So I will sort of high-point this and put the rest of it in the record through giving you a copy of the statement afterward.

The CHAIRMAN. Yes, sir.

Mr. KOHN. The principal things which I think I would like to touch upon here orally are coverage, cost, and benefits; and I would also like to take up the matter of total and permanent disability insurance and say a few words on what I think should be done with regard to the retirement age.

I feel, as do most of the people, I believe, who have already testified, here, that the coverage which is proposed under H. R. 6000, while it is a big step forward from what we have had heretofore under our law, is still insufficient. The present program covers about three out of every five jobs. Your H. R. 6000 contemplates an increase in coverage of about 11,000,000. But if my figures are correct--and I am not an expert in this-it still leaves about 14,000,000 who are not covered.

Now, I don't know how practical it is to cover all of those, but I do feel that it is rather important that our farm group be included. I recognize that there are certain administrative difficulties to be overcome to effect that properly, but I believe that you people who work out our salvations, with others to help you, probably can find some way to do that.

My great fear with regard to not having as full coverage as is possible is that sometime later it will be found necessary to include these people, and that your burden then to the participants is going to increase tremendously, and you are going to have additional burden upon those who are covered previously for the benefit of those who come into the over-all insurance picture later. I feel that we are going to have some of those problems as you increase now, if you take in only the 11,000,000. But I think the best way we can meet the situation is to do it forthwith, rather than to do it piecemeal some time in the future, which, as I said before, I feel is going to be necessary. I am very much in favor of having as little participation as was the intent of the original social-security law by the Federal Government in our old-age assistance program. I have covered that somewhat in my brief, but I do want to make note of it here in talking to you.

I realize that it has been completely necessary presently, because the benefits under our old-age and survivors insurance law have been insufficient, with the devaluation of our money, to properly take care of those who require care in later life. But I think that if we do increase the benefits we should, as soon as possible, remove as much as possible our national Government from the old-age assistance in our various States. To me that is primarily a State and local problem, and I would like to see, if possible, over a period of years, the gradual diminution of the Federal aid in those States and local communities.

Now, as far as the benefits are concerned, I am in complete accord with the requirements, as you see them, or as they have been envisaged. for increase of approximately 70 percent. That is roughly in line with the change in the purchasing power of the dollar since the program was initiated. However, I am not in favor of an increase, at this time, from $3,000 to $3,600 or $4,200 or even $4,800, as has been at times suggested.

I would like to see the permanent and total disability insurance provisions removed from this statute. I feel that it is not in keeping with old-age benefits. To me, one is a different kind of an insurance or benefits program than the other. And I feel that your permanent and total disability problem is one that needs close investigation on a local level and should therefore rest not in a Federal law, but should be part and parcel of the problems of the individual localities in which these disabilities occur.

One of the things that is disturbing to me is the tendency which we apparently have in this country to feel that at 65 years of age we have reached the time at which people should retire from active work. We have in our company, which is not a large company but employs between 250 and 350 employees, depending upon the industrial situation of the moment, a great many older employees working, and we have been able to find ways and means for them to continue. If we have, in the years to come, as it seems we will, quite a change in the relationship of people under 65 and over 65 from the 1 to 8 ratio which exists today to the 1 to 5 ratio which is envisaged in 1980, unless we are able to keep these people at work for a longer time we are going to find to few productive workers supporting too many nonproductive workers. I am afraid it will throw a burden upon our funds for social security which will be so severe that the dollars required for the suc cess of the program will require much greater taxation, and, of course, on that basis, further inflation. This will decrease the value of the funds which people will have available for them.

The main reason now, of course, as I see it, that it is necessary to recommend an increase in the amounts to be paid out is because of the devaluation of the dollar as far as its purchasing power is concerned.

I think it is important that we do not have our benefits at any time sufficiently attractive that it is almost as pleasant to retire as it is to work. I think that is very important to us. I think there should be a minimum layer of protection and that people should, from there on, particularly those who are in a position to so afford, build up sch supplementary insurance as they can for themselves.

I want you to understand that in approving of an increase in the amounts to be paid I have no selfish motive. My own company has a pension plan with its union which is completely divorced from the provisions of social security, and any changes or liberalization of the bill will place a greater burden upon us than we have had heretofore: so I think I can say that I am not motivated by any selfish consideration in this.

Those are the main points, briefly given to you, that I have placed in this short brief. As I say, if I had come down here early in the days of this hearing, I might have carried it forward in a little more detail, but there have been so many people who have made these presentations, experts in this field, who have expressed the same opinions and thoughts

that I have, that I think with those few remarks, supplemented by the brief, I will have said all that has really marked bearing on the subject.

The CHAIRMAN. Thank you, sir. You may put your brief in the record by handing it to the reporter.

Are there any questions?

Senator MILLIKIN. I would like to ask what kind of operations you have in your business that are of a nature that permits you to keep the older fellows on? Do you have a mass-production line, or is it a hand-operation business?

Mr. KOHN. Well, we have very little assembly-line operations. The grinding wheel business is a type of industry in which that is not particularly practical. But we do have some continuous operations, Such as watching ovens, in which the manual labor is minimum. It is more or less a question of watching instruments to be sure that they are operating properly, to push a few trucks into a dryer, which are on an overhead trolley, a monorail system, which makes it quite easy to do. We have some jobs in our shipping department, such as putting blotters onto our product, jobs of that kind, where the amount of time one is on one's feet, or the manual effort required, is a minimum. Senator MILLIKIN. Do you think there is a large field of that kind over the country that could be exploited to keep at work the elderly people?

Mr. KOHN. I feel that there is. I travel a great deal for my company, and I am in the field in all types of plants about 20 or 21 weeks a year. And I would say not only are there quite a few opportunities for that, but it is my observation, though I can't speak as to all types of businesses, that basically in American industry they are making a good deal of effort to continue older people in employment.

Of course, there has been recently a tendency in private pension agreements to make the age of 70 about a maximum for compulsory retirement, even though there has been some encouragement to continue past 65.

Senator MILLIKIN. The larger companies that operate under mass production feel that it takes the alertness and agility of youth to run these assembly lines, and I can see how possibly that is true. One fellow that is to slow on the line spoils the performance of the line. And so you find pretty early human junking in businesses of that kind.

I have often wondered whether, as a matter of industry statesmanship, those concerns should not, if necessary, have some little subsidiary businesses where they could give room for the play of hand operations where the elderly could work as long as they want to work and perhaps during the period of the day that they can work effectively. Mr. KOHN. As a matter of fact, Senator, your large corporations today are engaged in, I would say, multifold activities. I mean, I would think, if your philosophy is right, it answers its own question. Because you take the United States Steel Corp., for instance. They have ever so many subsidiaries, which are doing all different types of work. Now, whether or not, from the manipulative standpoint, it is practical to move workers from one plant into another plant and from one geographical area into another I don't know, but from the standpoint of the potential of jobs which might be done by older people, I would think that was a fact.

Senator MILLIKIN. It seems to me we have had quite a little testimony that there is a lot of thinking going on about it and a lot of committees working on it, but in the aggregate the net result of all their thinking so far appears not to have produced great results. Maybe they are just getting ready to produce great results. I hope that is true.

Mr. KOHN. I think that your small business, which never gets into the forefront of the public eye as much as your large corporations. where you don't have as much mass production, probably does a great deal more presently toward taking care of its older employees than do these large corporations.

Senator MILLIKIN. I was born and raised in a manufacturing town. and I can remember very clearly that there were many hand-operation jobs where men worked until they were very, very old, and wanted to. and did a good job. They perhaps were a little slower than they were when they were young, but they kept working, and their bosses seemed to be content with the economic aspects of the thing.

Mr. KOHN. Well, in Philadelphia, where my plant is, we have a couple of very large companies; not massive, but large in the general sense. I have been in them, and, of course, they are traditionally old-fashioned, I guess, in more ways than one. And I always used to think in these places where I went that it looked like the 'old-folks home.

Senator MILLIKIN. Thank you very much.

The CHAIRMAN. Thank you, Mr. Kohn.

(The prepared statement of Mr. Kohn follows:)

STATEMENT OF GEORGE F. KOHN

MARCH 21, 1950.

My name is George F. Kohn. I am president of the Precision Grinding Wheel Co. of Philadelphia, a relatively small enterprise, employing between 200 and 350 people, depending on business conditions.

Many of the earlier witnesses before your committee have been qualified by training and experience to give expert testimony in the field of social security I do not profess to such a background. With your indulgence, my remarks will be limited to a few fundamental considerations from the viewpoint of a citizen, a taxpayer, and a small employer.

We have had some 15 years of experience with Federal attempts to provide protection against the economic hazards of old age. It is appropriate at this time to reexamine the problem in the light of the additional facts now available to us and to bring into harmony our objectives, our approach, our methods, and our capacities.

Our present course is unrealistic and dangerous. The original intent of Congress was to establish a basic benefit system which would be supplemented temporarily by Federal participation in the public-assistance programs of the States. It was conceived that the benefit program eventually would embrace most of the workning population, resulting in a decline in the need for an assistance program and the withdrawal of Federal participation therefrom.

There was, and still is, substantial agreement that this approach is sond Nevertheless, we have departed from this path and have shown remarkabr little disposition to return to it. We are in the unhealthy position whereit, the number of recipients and the amount of benefits under public assistance be a very distorted relationship to the number of recipients and the amount of benefits under OASI.

For example, in February 1949, in my own State of Pennsylvania 221.84 people received $4,591,000 in old-age and survivors insurance benefits (82 each). In the same period, 87,058 people received $3,470,000 in old-age assistance ($39.86 each). The tremendous sums being paid out as old-age assistance constitute a serious threat to our contributory old-age-benefit program.