(The statement referred to follows:) UNITED STATES SENATE, Hon. WALTER F. GEORGE, Chairman, Senate Finance Committee, Washington, D. C. MY DEAR CHAIRMAN: I am submitting the attached statement from the National Brotherhood of Packinghouse Workers with the request that it be considered by your committee and made a part of the record of the hearings. Your consideration of this request will be appreciated by the undersigned. Sincerely, GUY M. GILLETTE, STATEMENT FROM NATIONAL BROTHERHOOD OF PACKINGHOUSE WORKERS Our union, the National Brotherhood of Packinghouse Workers, CUA, approves, in principle, extension and improvements to the Federal old-age and survivors insurance system, to amend the public-assistance and child-welfare provisions of the Social Security Act, and for other purposes as set forth in H. R. 6000. We feel that in one respect, at least, especially with reference to temporarily of permanently and totally disabled workers the bill (H. R. 6000) does not make ample provision. The effective date should be immediately after passage. Since the cruel effects on those afflicted with polio and heart disease, or permanently disabled by industrial or other accidents, is a matter that should no longer be ignored. All statistics on the permanently and totally disabled in our population are estimates subject to a very large chance of error. No census of the disabled has even been taken. As the disabled are not entitled to any special benefits in this country, there also is nothing resembling automatic registration of these people. The estimate of 750,000 as the total number of all people who are under 65 and permanently and totally disabled comes from the Social Security Administration. It is based upon sample surveys made in the year 1945. This figure includes only people permanently and totally disabled who are in the employable ages, that is, from 16 to 65. Permanent total disability, as used in this estimate. takes account only of disabilities which have lasted more than 6 months. H. R. 6000 will provide benefits for only a small percentage of all of the people who are permanently and totally disabled. To qualify for benefits, not only must the disability be of such nature as to completely prevent employment and have already lasted at least 6 months, but the claimant must be able to establish that he was fully or currently insured. In most cases this will mean that only people who have had pretty regular employment up to the time that they become permanently and totally disabled will be able to get any benefits. Many disease conditions, however, are of such a character that disability comes on very gradualy Many such people will not be able to attain or maintain the status of being cur rently and fully insured, as that involves at least employment in covered indus tries in half or quarter years. Workers who are newly brought under coverage by the amendments to the Social Security Act made in H. R. 6000 will not be eligible to any total and permanent disability benefits until 1956 at the earliest Approximately how many people will be able to get permanent and total dis ability benefits should H. R. 6000 become law is even more of a guess that the total number of permanently and totally disabled persons. The best guesses on this point are those given in the report of the Advisory Council on Social Security on permanent and total disability insurance which was made to the Senate Committee on Finance in May 1948. On pages 15 and 16 of that report occurs the following estimate regarding the proposal for including permanentand total-disability benefits in old-age insurance benefits which was made by the Advisory Council: “After the program has been in operation for a few years, the number of new disability claims arising annually will range from 20,000 to 50,000, although after perhaps a decade or so, when the full effect of the extension of coverage has made itself felt, this number will rise to perhaps 40,000 to 100,000. Eventually the total number of disabled persons who are on the benefit roll and who are under age 65 will number roughly 300,000 to 800,000. The eventual annual cost of the proposed permanent- and total-disability benefits as a percentage of pay r will probably range from somewhat more than 0.1 to possibly as much as 03 per cent of pay roll: in terms of dollars this corresponds to about 200 to 500 million dollars a year." The recommendations of this Council were more liberal in this respect than H. R. 6000 but, in general, will also serve as an estimate of how many people will get benefits under H. R. 6000. Another estimate relates to H. R. 6000 as passed by the House of Representatives. This was published last October by the House Ways and Means Committee as a separate document and is entitled "Actuarial Cost Estimates for Expanded Coverage and Liberalized Benefits Proposed for the Old-Age and Survivors Insurance System by H. R. 6000." These actuarial cost estimates were prepared for the use of the Ways and Means Committee by Robert J. Myers, actuary to the committee. As appears on page 7 of this report, the total number of beneficiaries who are expected to qualify for disability benefits under H. R. 6000 by the year 1955 is 190,000 to 594,000. Totals will increase in future years. The very wide range in the possible numbers is explained on the basis of varying assumptions, but it is made clear that the lower estimate is the more likely. From the same report it appears on page 9 that by 1955 the cost of permanentand total-disability allowances will range from 12 one-hundredths of 1 percent of pay rolls to 34 one-hundredths of 1 percent. The ultimate costs (by the year 2000) are estimated at 36 one-hundredths of 1 percent to 93 one-hundredths of 1 percent. At the present time approximately 2,000,000 persons, aged 14 to 64, who would otherwise be gainfully employed, are affected with serious disabilities which have continued for more than 6 months. It has been estimated that the chief causes of disabilities lasting more than 45 days fall into the following classifications: Latest available figures from the national office of vital statistics show deaths from cardiovascular diseases and congenital malformation of the cardiovascular system in United States in 1947 between ages of 25 and 64 were 211,758 according to Edward Robbins, national labor representative of the American Heart Association. When disability strikes a wage earner, it may be economically more disastrous for him and his family than unemployment, death, or forced retirement; for, in addition to the loss of wages, there are the costs of medical care, hospitalization, special diets, the expense of moving to a more favorable climate, etc. The problem is being met, to a minor extent, in a number of ways. In some cases the workers receive payments from the workmen's compensation funds of his State. However, such payments are possible only where the disability has arisen out of the worker's employment. There are also some companies which make payments to their disabled employees. In some instances the worker carries insurance against disability either as an individual or in combination with his fellow workers. In recent years, a few States have provided by statute for disability insurance. However, these various methods provide protection for only about 27 percent of the workers who are covered by unemployment-compensation laws. The only adequate solution of the problem is the establishment of a national plan. Only a national plan can give country-wide coverage and lifetime protection. There is a constantly occurring mobility between both industries and States. After disability occurs, it may be necessary or desirable for the disabled person to change his place of residence. A national system would allow this mobility much more easily than other plans. Under a national plan the cost burden in the case of varying rates of disability between localities, due to epidemics, catastrophes, varying age, sex and occupational characteristics, would be equalized. This national system should be operated in conjunction with the present old-age and survivors insurance plan. The existing facilities of this plan, with its wagerecord system and field organization, could be used in the administration of disability benefits. Employers would have to keep only one set of records. Contributions could be kept in a single trust fund which would provide greater flexibility in financing. There would be no overlapping of functions, and the number of administrators would be kept at a minimum. However, the provisions of the proposed H. R. 6000 relating to disability benefits do not go far enough. The proposed bill provides disability benefits for only those workers who are totally and permanently disabled. The problem of the temporarily disabled worker is also of large proportions. Each day about 2,000,000 persons are kept from their jobs by disability which has lasted less than 6 months. In addition, there are large numbers of workers whose physical condition is such that they should not be at work, but who are there because they cannot afford the loss of wages. It has been estimated that the annual wage loss to the labor force through temporary disability is between 3 and 4 billion dollars. In addition to this wage loss, the labor force also is subject to a medical cost of 31⁄2 billion dollars. Temporary disability also means a loss in productivity which is a vital loss to the Nation. It has been estimated that this loss of productivity equals the total of the wage loss and the medical cost. This hidden loss must be deducted from profits or passed on to the consumer in the form of higher prices. In addition to the economic loss which the worker suffers as a result of temporary disability, he also suffers indirect losses. Among these are impairment of occupational efficiency, risk of permanent disability, lowering of the standard of living, and the psychological effect of want. The bitter fight which is being made on permanent- and total-disability benefi ́s in connection with the old-age insurance system centers around the possibility that the provisions for benefits may be greatly liberalized in future years. Under the restrictive conditions of H. R. 6000, both the total number of people who will get benefits and the cost of these benefits will not be great. The private insurare companies, however, do not want the Government to pay any permanent- and total-disability benefits, although this is a feature of the old-age insurance systems in practically all other countries. Logically, also, a man who is permanently and totally disabled before 65 is from an economic point of view in substantially the same position as the person who is unable to work by resson of old age. Old age is itself for many people a condition of invalidity. Those who do not want us to get a decent old-age and survivors insurance system. however, oppose the logical step of providing benefits for people who are permanently and totally disabled before they reach old age. DON MAHON, President, National Brotherhood of Packinghouse Workers and Vice The CHAIRMAN. All right, Mr. Whittet. Will you please identify yourself for the record? STATEMENT OF LOWELL WHITTET, ASSISTANT CONTROLLER, ED. SCHUSTER & CO., INC., MILWAUKEE, WIS., AND MEMBER, SOCIAL SECURITY COMMITTEE, NATIONAL RETAIL DRY GOODS ASSOCIA TION Mr. WHITTET. I am Lowell Whittet, assistant controller of Ed. Schuster & Co., Inc., department store, Milwaukee, Wis., and member of the social-security committee of the National Retail Dry Goods Association. I wish to thank the committee for extending to me the privilege of appearing here today on behalf of the National Retail Dry Goods Association which is composed of approximately 7,000 department and specialty stores throughout the United States. The annual sales of the members of this association exceed $10,000,000,000 and they employ more than 800,000 workers. Our organization has had an active committee on social security since the early part of 1935, which, as you know, antedates the passage of the Social Security Act. We have continuously endeavored to study the entire subject of social security from the broad view of the general welfare of all the people. It is because of this deep interest by retailers in this subject that I am appearing today. Our organization believes that the social-insurance program should be extended to include all employed individuals, including self-employed, not now covered by the act because it is the democratic way of life to provide equal rights to all members of our society. The confusion resulting from an individual moving between covered and noncovered employment should be eliminated. We definitely favor the insurance rather than the public-assistance approach in meeting the problems of old age retirement. In other words, we favor a program based on a "right earned" rather than on a "dole or needs" basis. We believe that through universal coverage of workers gainfully employed there can be a substantial reduction in the public-assistance program, and that the Federal Government can eventually withdraw from part, and possibly all, of these programs. We are frankly fearful of the trends of the two programs-OASI and public assistance-and unless coverage is extended in the insurance program, it will be undermined by and eventually collapse in favor of an outright public-assistance program. We favor the retention of the definition of "employee" which is now in the Social Security Act. If there is universal coverage, there is no need to tamper with the definition of "employee" and such retention would make it unnecessary for the Federal agencies involved to exercise their discretion in the field of employee-employer relationship by the proposed new and untried formula. Senator MILLIKIN. Mr. Chairman, may I ask a question, please? The CHAIRMAN. Yes, Senator. Senator MILLIKIN. By "universal coverage," do you mean that everyone should be covered? Mr. WHITTET. Yes, sir. Senator MILLIKIN. Even if one is not a worker, in the common acceptance of that term? Mr. WHITTET. I would say he should be attached to the labor market. Senator MILLIKIN. A man who looks after his own investments, for example? Mr. WHITTET. He should have been attached to the labor market, in my opinion, in those employments which the bill would incorporate as "self-employed," or farmers, or domestics. Senator MILLIKIN. He should be brought into the system one way or another? Mr. WHITTET. Yes, sir. Senator MILLIKIN. You have no exceptions? Mr. WHITTET. No, sir. Senator MILLIKIN. Thank you. Mr. WHITTET. We favor the retention of the present formula, contained in the Social Security Act, for computing the average wage, rather than that proposed in bill H. R. 6000 which is complicated and will be exceedingly difficult to explain or understand. If the objective of the program is to provide a minimum floor under fluctuating living standards, then you may want to consider the thought that any change in benefit amounts might be properly related to cost-of-living indices. In view of the constant changes in living costs a fairly constant floor under living standards can be maintained through such a relationship. In any event, whatever action might be taken to increase benefit amounts, we believe that the present $3,000 wage base should be main tained as against increasing the base to $3,600 as proposed. Any desired increase in benefits can be secured by applying a different formula to the $3,000 base. It has been argued that, unless the $3,600 base is adopted, there will be a marked tendency for benefit amounts to be uniform under present wage conditions. However, this is in no manner inconsistent with our concept of providing a basic minimum. On the other hand, it is clear that an upward progress in the wage base once started may eventually lead to the substitution of a complete national insurance program for private savings and private insurance. We think a particular objection against any increase in the wage base would be the far greater percentage increases in the benefits to those earning over $3,000 than to those earning $3,000 or less. Presumably, it is this latter class that are more in need of benefit increases at this time. Senator MILLIKIN. Mr. Whittet, I am a little bit uncertain as to the meaning of the sentence which you have read: "On the other hand, it is clear that an upward progress in the wage base once started may eventually lead to the substitution of a complete national insurance program for private savings and private insurance." What is your reasoning on that? Mr. WHITTET. The reasoning is that it may be $3600 this year, $5000 next year, or $10,000 the year thereafter. And as we increase that wage base level, we may simply be substituting a governmental program for a private plan. Senator MILLIKIN. In other words, you feel there is a field for private insurance which should be protected? Mr. WHITTET. Yes, sir. As an additional consideration for the maintenance of the $3,000 wage base, we wish to point out that the wage base figure in the Federal Unemployment Tax Act and State unemployment compensa tion laws is $3,000. There would be a reporting complexity for employers if they were called upon to report on one wage base for OASI and another wage base for unemployment compensation purposes. Also to be considered is the fact that thousands of private pension plans are now integrated with the $3,000 base. The change in that base would bring about substantial maladjustments that could only be cleared through detailed negotiations. We believe this is par ticularly undesirable since in our estimation it is entirely unnecessary. We favor a revision in the present provision which permits a retired worker to earn only $14.99 per month without forfeiting his OASI benefits. This requirement has worked an unwarranted hardship upon many of our older people due to the increased cost of living. We believe that the allowable monthly earnings should be increased to $50. If there are any earnings in excess of this amount, then the individual should simply be entitled to receive either his total earnings or his benefit, whichever is the larger. We are opposed to that provision which provides for the payment of benefits to insured persons age 75 or over without consideration of their earnings. Our organization wishes to register complete opposition to the establishment of either a national permanent disability or temporary disability program. |