The CHAIRMAN. Senators Pepper and Holland, distinguished Senators from Florida, have asked to have inserted in the record a statement on H. R. 6000 by Mr. Sherwood Smith, Welfare Commissioner of the State of Florida. We are very glad to incorporate it in the record. (The statement referred to is as follows:) STATEMENT BY SHERWOOD SMITH, WELFARE COMMISSIONER, STATE OF FLORIDA Florida is one of many States it is believed whose people favor expansion of the social-security law. Because of its situation in regard to its aged population and its economy, it is confronted with public-assistance problems in which expansion of the act would be of particular help. Long before enactment of the original social-security bill in 1935, Florida was faced with difficulties in meeting the needs of its residents who were unable to provide for themselves. More recently, with constantly rising living costs and the shrinkage of the value of the dollar, this cordition has improved only because Florida has been able to administer a public-assistance program with the aid of Federal funds. Broadening the scope of the social-security program, as embodied in H. R. 6000, it is believed will help the people of this State who are in need. Some amendments already proposed to your committee are recommended which would help solve the economic problems of the needy aged in Florida. While shrinkage of the dollar value has worked against those retired persons who came to our State thinking they could live on savings and investments-and now find that those are insufficient-many others among our aged have spent part or all of their productive years in "uncovered" occupations with relatively low wage rates; and as a result have never had the benefits of the old-age and survivors insurance features of the Social Security Act; or an opportunity to build a personal retirement fund on which they could rely during those years when they can no longer provide for themselves. Understandably when practically all employed persons build a retirement fund they will in their declining years be better able to provide for themselves, and there will be less demand upon their taxpaying neighbors. In Florida, approximately one-third of our population above the age of 65 years is included in old age assistance payments for varying amounts. Only a small proportion of them receive old age and survivors insurance benefits. Extension of this coverage would be helpful. That brings us to a further belief that if early benefits were increased and if the period of required participation were shortened in order to be covered under the old age and survivors insurance program as has been proposed, more of our own citizens would no longer have to rely on a public assistance program. Those who are near the age of retirement and are just getting into covered employment should have the advantage of this program. There is no need to recite to you the economic pressure under which many of our citizens-not only in Florida, but elsewhere-live. When disability comes before the age of retirement, many of them have nowhere to turn. An insurance program as protection against permanent conditions of this kind would lessen a great deal of suffering; and provide sustenance to members of families deprived when disability comes to the wage earner. Responsibility in a democracy to those in need certainly extends to those who are unable to produce for themselves or to care for themselves because of total and permanent disability. Services to children which are made possible through the Social Security Act already are showing encouraging results. It is gratifying to note that further expansion of this program is included in H. R. 6000 with an increased appropriation, and that an even further increase is suggested in proposed amendments to the bill. The Federal matching provisions of H. R. 6000 providing for increased financial participation by the Federal Government in low-income States meets with our approval. The benefits which have come to needy people and our whole economy through the Social Security Act are manifold and evident; and that there is a need for expansion of its provisions so that benefits can be extended to those not now covered on a contributory self-financing basis seems equally evident. This also will reduce greatly the heavy tax load for public assistance. The CHAIRMAN. Congressman James J. Delaney, one of the Representatives in Congress from the State of New York, was expected to appear before the Senate committee in person during these hearings but he is now submitting a brief, which will go into the record, in which he deals with various phases of social security but particularly emphasizes the necessity for some provision for unemployment compensation benefits to the Federal employees who have been dismissed or go out of their positions with the Federal Government. (The statement referred to is as follows:) STATEMENT OF HON. JAMES J. DELANEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK Mr. Chairman, after passage of H. R. 6000, there was brought to my attention the plight of 2,500 Federal employees who were laid off at the New York Navy Yard. These workers were thrust into the ranks of the unemployed without the protection of unemployment compensation because Federal employees are ineligible for such compensation. Had I known of this situation before H. R. 6000 came before the House, I would have pressed for an amendment which would have extended to Federal employees the unemployment compensation benefits now provided for workers already covered by the Social Security Act, or to be covered by amendments in H. & 300, Before H. R. 6000 goes before the Senate I would like to give my support to S. 2760, a bill introduced by Senator Pepper to bring Federal employees under the unemployment compensation provisions of the Social Security Act. In the case of the lay-offs at the New York Navy Yard, many of those discharged had served 15 years or more in the yard. When the reduction in force became effective, these men found themselves jobless without the assistance of either serverance pay or unemployment compensation. Had they been employed in private industry, they would have been assured of unemployment compensation as provided in the Social Security Act. The navy yard workers' problem is a graphic and particular example of the general problem faced by all Federal employees. It is true Federal workers are assured a retirement annuity through the Civil Service Retirement Fund. but that retirement system makes no provision for automatic benefits for a persa laid off in a reduction in force. Faced with the necessity of obtaining ready cash, apart from dipping inmediately into savings, the Federal employee when discharged with less than 20 years' service, and within that limitation only, can apply to the Civil Service Retirement Fund for a refund of money he contributed while on a Federal pay roll. After a reduction-in-force discharge, the workers in the eligible group-with more than 1 year of service but less than 20-may withdraw their contributions plus interest. But outside that service bracket, there is this restriction: workers with more than 20 years in Federal service cannot get a refund-their money must remain untouched until they reach the retirement annuity benefit age of €2 Those who do withdraw their money from the retirement fund can restore it when reinstated in Federal service, to get the full benefits of the system The restoration is not compulsory. If we were to equate withdrawals from the retirement fund with unemy ment compensation, we must first note that this resource is made available only to those whose Federal service falls within the permitted range of years—no more than 20. The Federal employee with more than 20 years of service cannot touch the money he contributed to the retirement fund, no matter how desperate his need at the moment. Thus, as a matter of fact, the money in the retirement fund cannot be regarded as funds for unemployment benefits, even in a restricted personal sense, since the money comes from a fund which is neither collected nor administered as an unemployment benefit fund. Further, the fund is 14 available to all Federal employees. If, in desperation, the worker with less than 20 years' service does mate a withdrawal, he is taking care of present needs at the expense of future brevla The money he properly regarded as an insurance for old age he must, instead put to use in his working years. By contrast, the discharged worker covered by social security can provide for present needs through unemployment compensation without actually taking the money from what has been set aside for his old-age benefits. It is true the unemployment compensation will not match the average take-home pay, but the money does provide a sum that is readily expendable. It stands as the worker's first financial resource in time of unemployment; in this connection, his savings might be regarded as his second resource. Just the opposite is true in the case of the discharged Federal worker. His first financial resource is his savings, and he must immediately dip into savings for household and other current expenses. Even if he is eligible to make withdrawals from the retirement fund, he is using money which is, in fact, savings under another name. There is a further disadvantage, in the long run, for the discharged Federal employee who does withdraw money from the retirement fund. For him to gain the full benefit of the retirement annuity should he be reemployed in Federal service, he must restore to the fund all the money he has withdrawn, plus interest. While restoration would obviously be to his advantage, actually restoring the money would certainly prove burdensome to a person set back by any extended period of unemployment. Thus, against the many known benefits of the civil-service system, there stands this denial of unemployment compensation. This inequality has become especially trying at this time because of the extensive reductions in force and delays in finding new placement in Federal service for displaced career employees. To provide unemployment compensation for Federal employees, four bills were introduced in the House in the first session of the present Congress. None of the bills was incorporated in the amendments to the Social Security Act now before this committee. A bill to meet this problem, S. 2760, introduced by Senator Pepper, has been referred to this committee. S. 2760 is a companion bill to H. R. 6433, introduced by Mr. Lynch of New York. Mr. Pepper's bill would, I believe, best solve the financial problem of the Federal employee in the matter of unemployment insurance. The amendment would eliminate the financial disability now imposed on the Federal worker, and would assure him a source of funds for necessities while he is seeking new employment. There is another section of the amendments of 1949 which I would like to commend to the special attention of the committee as requiring revision and clarification. I refer to section 218 (a) (1) which provides for voluntary agreements for a coverage of State and local government employees. While it is true such agreements would be made only at the request of a State, an impression has been established that this section would make mandatory the transfer of State and local civil-service employees from their own retirement system to Federal socialsecurity. In such case I urge that adoption of an amendment prepared by Senator Lehman, which would specifically exclude from the application of this section all public employees in positions covered by a retirement system as previously defined in the act. The change sought is an important one. Senator Lehman's amendment would leave undisturbed those civil-service employees of cities, counties, and States who are now covered by actuarily sound retirement systems. There is no good served anyone by moving workers out of a sound retirement system into another system. On the contrary, such a change would be a backward move in those instances where the local retirement system pays greater benefits than the Federal system offers. It is true the proposed coverage of local civil-service employees would benefit employees of many small municipalities, counties, and some States, wherever local retirement systems are not provided at all, or where the benefits payable under them are inadequate. As this committee is aware, representatives of small municipalities have supported the proposed new coverage, while representatives of civil-service employees in the larger States and municipalities have opposed the change. In the case of the latter, the opposition has been to transfer from actuarity sound local retirement systems to the Federal social-security system. That is a sound position to take. I would add my support to the petitions of these civil-service groups for an amendment such as Senator Lehman proposes. I believe it will be generally agreed that the Social Security Act is intended to protect those left unprotected, not to interfere with any soundly established retirement system. The CHAIRMAN. The National Federation of American Shipping, Inc., requested permission to appear as witnesses and present their views on this bill. However, the schedule was filled and in lieu of their personal appearance I am inserting in the record at this point a letter signed by their counsel, Mr. A. U. Krebs. The federation is assured that their comments and recommendations will be given the same consideration that would be given, had they been presented orally. (The letter referred to is as follows:) Hon. WALTER GEORGE, NATIONAL FEDERATION OF AMERICAN SHIPPING, INC., Chairman, Committee on Finance, United States Senate, Washington, D. C. Dear Senator GEORGE: The National Federation of American Shipping, Inc., representing the owners of approximately two-thirds of the privately owned dry cargo and passenger merchant vessels and approximately one-half of the privately owned tank ships under the American flag, desires to make the following recommendations and comments with respect to H. R. 6000 amending the Social Security Act, which is the subject of hearings by your committee: INCREASE IN LIMITATION ON WAGES SUBJECT TO CONTRIBUTION H. R. 6000 provides for a $600 increase in the present $3,000 limitation on annual wages subject to contribution and used in the computation of benefits. Appropri ate increases in benefits can be made without an increase in the tax and wage base. Although such an increase in the wage base would be of benefit to older workers, particularly those retiring in the next few years, it would add 20 percent more to the taxes paid by and on behalf of younger workers over their lifetime. Furthermore, such an increase would considerably complicate existing voluntary pension and welfare plans, which have been integrated with the present $3,000 wage base. The federation urges that the present $3,000 wage base be retained. COVERAGE OF WORKERS OUTSIDE THE UNITED STATES H. R. 6000 provides for the coverage of American citizens employed by an American empl ver outside the United States. Many of the Americans employed outside of the United States are covered under foreign social-insurance schemes for all purposes. Other such workers must pay taxes under foreign schemes although their opportunity to benefit from the schemes is relatively slight. The federation recommends that the provisions receive very careful study prior to adoption. EXTENSION OF COVERAGE TO PUERTO RICO AND THE VIRGIN ISLANDS H. R. 6000 proposes to extend coverage to employees in Puerto Rico and the Virgin Islands. The economy of these islands does not justify the introduction of a social insurance scheme based on the higher wage levels prevailing in the United States. This is particularly true when consideration is given to the proposed heavy weighting of the benefit formula on the first segment of wages, and the proposed minimum average monthly wage of $50 and a minimum benefit of $25. The Federation is, therefore, opposed to the proposed extension of coverage. DEFINITION OF "EMPLOYEE" H. R. 6000 proposes a new definition of "employee." This definition bears no relation to existing concepts of the employer-employee relationship, and would include persons commonly considered to be independent contractors. Thus, the definition would make it impracticable, if not impossible, for employers in many cases to withhold social-security taxes. The Federation urges that the proposed definition be deleted. BENEFIT FORMULA H. R. 6000 proposes a new formula for the computation of benefits The proposed formula contains several unsound factors. In addition to the unjosti fied increase in the benefit base previously referred to, the formula unwisely retains the annual increment added to the basic benefit amount for each year of coverage. This annual increment is both unnecessary and unsound, and will lead to excessively high benefits in future years. Benefits should be sufficient to afford the desired basic value of protection now, and not 20 to 40 years from now after they have been automatically increased by an annual increment factor. The Federation is, therefore, opposed to the formula. ELIGIBILITY REQUIREMENTS FOR DISABILITY BENEFITS The Federation recommends that the eligibility requirements for disability benefits be much more strict than those proposed by H. R. 6000. In inaugurating a new type of benefit, an extremely cautious approach should be employed until there is an opportunity to measure the drain on the insurance fund. REDUCTION OF DISABILITY BENEFITS H. R. 6000 provides that an individual entitled to disability benefits under the Federal social-security program and under workmen's compensation statutes on account of the same disability for the same period of time will have his socialsecurity disability benefit reduced by an amount equal to one-half of whichever of the two benefits is the smaller. Where disability insurance benefits have already been paid, the required deduction will be made by deductions from any other benefits, such as old-age or survivors benefits or subsequent disability benefits payable on the basis of the individual's wages or self-employment income. When a workmen's compensation benefit is paid on other than a monthly basis, reduction of disability benefits must be made in such amounts as will most clearly approximate the prescribed reduction in the case of those paid on a monthly basis. Seamen who fall ill or are injured in the service of a ship do not receive benefits under workmen's compensation statutes but are furnished maintenance and cure (medical care) by the shipowner under the general admiralty law. Seamen are also entitled to indemnity for injuries resulting from unseaworthines of the ship or negligence of the employer. H. R. 6000 should be amended so as to give the same recognition to maintenance and cure, and court awards for damages, that is given to benefits under workmen's compensation statutes. This can be accomplished by the following amendments: On page 92, line 4, insert the following immediately after the word "individual": ", or maintenance and cure benefits have been received by such individual when employed as a seaman,". On page 92, line 14, insert the following immediately following after the comma following the word "benefit": "or receipt of the maintenance and cure benefits,". On page 92, line 19, insert the following immediately after the word "compensation": "or maintenance and cure". On page 92, line 20, beginning with the parenthesis, strike out all through the parenthesis, line 22 and insert the following: "or if an individual employed as a seaman receives a lump sum payment for the same disability for the same period of time pursuant to a court award for damages,". On page 93, line 6, insert the following immediately after the word "compensation": "Or maintenance and cure". On page 93, line 7, insert the following immediately after the word "benefit": ", or a lump sum payment,". On page 93, line 9, insert the following immediately after the word "compensation": "or maintenace and cure". On page 93, line 10, insert the following at the beginning thereof: "or lump sum payments." WAITING PERIOD FOR DISABILITY BENEFITS H. R. 6000 provides that in order for an individual who is totally and permanently disabled within the meaning of the bill to qualify for disability benefits such an individual must, among other things, serve a waiting period. Except for certain claimants who filed delayed applications during a prescribed grace, period, the waiting period consists of the month which includes the day on which disability is determined to have occurred and the six calendar months following such month. |