STATEMENT BY W. R. BULL, DIRECTOR OF SOCIAL SECURITY AND INSURANCE DEPARTMENT, NEW JERSEY STATE CHAMBER OF COMMERCE, NEWARK, N. J.

INTRODUCTION

Mr. Chairman and members of the Senate Finance Committee, my name is W. R. Bull. I am director of the social security and insurance department of the New Jersey State Chamber of Commerce, and secretary of the social security committee of the State chamber.

The membership of the State chamber consists of more than 1,500 business and industrial firms in New Jersey. The social security committee is composed of 40 executives from representative firms all of which are affected by and interested in the Social Security Act and its impact upon our present and future economy. The State chamber and its social security committee have given much time and careful consideration to the problem of revising the provisions of the Social Security Act. The basic premises from which we began should be clearly stated. - General concepts

We believe that the old-age and survivors' insurance provisions of the Social Security Act should provide a basic floor of income at retirement and that coverage under these provisions should as far as possible be universal. We feel that any changes should be made within the confines of the present law and within our ability to meet not only the present costs of this program but also the future costs, which must of necessity rise.

We are hopeful that as a result of the study of social security by this committee the present imbalance between the old-age and survivors' insurance program and old-age assistance will be corrected. Despite the fact that the original intent of the Social Security Act was to supplant old-age assistance payments by insurance payments this goal has not been reached. There are at this time about 60 percent more persons receiving old-age assistance than are being paid benefits under the old-age and survivors' insurance program; furthermore, the average old-age assistance payment is nearly 100 percent larger than the average benefit under old-age and survivors' insurance.

In view of this situation we feel that the provisions in H. R. 6000 calling for increased Federal matching contributions to States for old-age assistance are not in accord with the basic tenet of our social security system. We therefore recommend that our insurance program be strengthened and extended so the Federal Government may withdraw at the earliest possible time from the StateFederal public assistance program and the statutory requirements necessary to carry out this provision should be included in the law.

It is in the light of these primary concepts that we respectfully submit the following recommendations.

Extension of coverage

We recommend that coverage under old-age and survivors' insurance be extended even beyond the limits set forth in H. R. 6000. In fact, we are in favor of universal coverage insofar as it is practicable, whereby a basic, minimum floor is provided for virtually all gainfully employed persons. By providing the broadest possible coverage the problem encountered at the present time with individuals who fluctuate between covered and uncovered employment would be largely eliminated, thus reducing in large part the need for future old-age assistance payments.

Retention of present tax base

To keep our system in line with this basic floor concept, which is the basis of all social insurances, we strongly urge that the taxable wage base remain at -$3,000 and that benefits be computed from that base. We deem this basic floor concept essential if we are to preserve our traditional incentives of thrift and self-reliance, whereby the individual may build for himself additional security when he has earnings greater than his basic requirements.

Revision of benefit formula

Payments to beneficiaries under old-age and survivors' insurance do not provide a basic floor income when measured by the present cost of living. Accordingly, we recommend that the benefit formula be increased. We are concerned, however, that both the present and the future costs be kept in mind when an increase in the benefit level is considered. We, therefore, suggest that the minimum primary benefit be increased to $25; but we also suggest that the maximum primary benefit proposed in H. R. 6000 should be altered in view

of the basic income concept of this type of legislation. We must remember that certainty of income and not some hypothetical figure termed "adequate" is the primary criterion in any social insurance. It is recommended, therefore, that

benefits be computed by use of the following formula:

Fifty percent of the first $100 of the average monthly wage plus 15 percent of the next $150 up to the maximum wage of $250. We are in accord with the advisory council on social security to this committee in their unanimous reconmendation that the 1 percent increment factor be eliminated because of the annually increasing cost.

It is our opinion that the $150 maximum benefit for survivors' insurance proposed in H. R. 6000 should be reduced to $125. The maximum benefit must not be set so high that it will destroy private initiative and personal planning for additional financial security.

Definition of average annual wage

The existing definition of the average annual wage should be retained in favor of the complicated and complex continuation factor set forth in H. R. 6000. We are in accord, however, with that provision which permits a beneficiary to earn up to $50 a month without suffering loss of benefits. The existing $15 limit is undoubtedly too low and this increase will both encourage and permit individuals to lead useful economic lives to the benefit of themselves and society. Lump-sum death benefits

It seems to us that the provision in H. R. 6000 requiring payment of a lumpsum death benefit in all cases should not be approved. The voluntary provision by large numbers of covered workers for meeting burial and last-illness expenses has been brought to the attention of this committee. It thus appears unnecessary to add this cost to the old-age and survivors' insurance program. Our organization favors the retention of the existing provision in the Social Security Act regarding lump-sum payments.

Definition of employee

Because we regard the extension of coverage to the widest practical base as desirable, the provision in H. R. 6000 redefining the term "employee" is felt to be necessary. Any individual employer or employee should know whether or not he is under the old-age and survivors' insurance program from a statement of the law rather than being dependent upon an arbitrary and discretionary administrative ruling. The proposed changes will in our opinion unnecessarily compi cate the problem of covering the new wage groups.

Permanent and total disability

We believe that the proposal before this committee to provide permanent and total disability coverage under the old-age and survivors' insurance program should not be adopted. Disability protection is one of the most complicated and costly fields of insurance. Claims are very difficult to administer and control even with a competent and adequate staff since disability is a subjective and intangible concept which cannot be determined with any accuracy in most instances The almost disastrous experience of private insurance carriers in this field should be carefully considered. We assert that the solution to this problem lies in State and local jurisdiction and control.

Cost of the program

In view of our recommendations to extend coverage and to increase benefits. we deem it highly important to emphasize the matter of paying for these liberzations. In our opinion the tax burden should continue to be divided equally between employer and employee. We also feel that a beginning tax rate of 2 pr cent on employers and 2 percent on employees should be established, and that the tax increases which will be required in the future be stipulated in the legidation that is approved by this committee. It is essential that the citizens of this country realize now that any increase in a social-insurance program must be paid for (1) by increased production from those who are gainfully employed or (2) by a reduction in take home pay; or (3) by a reduction in other Govern. ment services. It should be clearly understood by all of us that we cannot ob tain more benefits than we are willing to pay for, and that our payment must be in terms of production.

In conclusion, we wish to point out that a sound Federal fiscal policy, one which will prevent further inflation and provide a steady purchasing power for wage earners as well as old-age and survivors' insurance beneficiaries, is the only foundation upon which any real security for our citizens can be built.

STATEMENT ON BEHALF OF THE FOOD, TOBACCO, AGRICULTURAL, AND ALLIED WORKERS UNION OF AMERICA, BY ELIZABETH SASULY, WASHINGTON REPRESENTATIVE OF FTA

My name is Elizabeth Sasuly. I am the Washington representative of the Food, Tobacco, Agricultural, and Allied Workers Union of America.

Our union, FTA, speaks on behalf of 100,000 organized workers in the food, tobacco, and cotton-processing industries, for several thousands of agricultural workers who are members of our union, and for the millions of unorganized agricultural workers who have no means of making their needs known to Congress.

The original exclusion of agricultural workers from the Social Security Act was indefensible on grounds of humanity, economics, and reason. These workers, historically and notoriously the most underpaid and lease secure of all American workers, have always had the greatest need for such protection.

When the exclusion of agricultural workers in 1939 was extended to processing workers, by the device of calling these workers "agricultural," the injustice became doubly indefensible. FTA, therefore, urges your committee to take the following steps:

1. Extend full coverage of the social-security law to agricultural workers. 2. Repeal those sections of the definition of agricultural labor which at present designate close to half a million industrial workers employed in packing fresh fruits and vegetables and in other operations as agricultural workers (Sec. 1426 (h) of the Internal Revenue Code).

Stamp system proposals made by the Commissioner for Social Security Administration and endorsed by the Commissioner of Internal Revenue outline entirely workable plans for applying the law to agricultural workers. In the case of processing workers excluded by being called agricultural, procedures already in use for other industrial workers can be reapplied.

Over 200,000 workers are engaged in the preparation and packing of fresh fruits and vegetables for market. A large portion of these workers are members of FTA and work under FTA contract.

These workers were covered by the Social Security Act when it was passed in 1935. Four years later, in 1939, they were suddenly informed that they were now "agricultural" workers, and therefore not eligible for coverage. Congress had decided to call them so-without explanation. Their work remained the same. Their need for coverage remained the same. The bitter comment of many of these workers was this: "I guess we don't grow old any more."

The shed workers who ask this question work in modern, highly mechanized industrial plants. Arthur J. Altmeyer, writing in the Social Security Bulletin in 1945, said:

"There is little to distinguish the conditions under which workers perform services in these plants from those in ordinary urban factories. Except for the product handled, the work is virtually identical. The inside of a typical

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citrus-packinghouse is a maze of conveyor belts and machinery." Shed workers cannot possibly be classified as "agricultural." They turn to agricultural work only in periods of economic depression, and this in turn is understandable since agricultural work has always been the lowest paid and the least protected of any labor in the Nation.

Shed workers are therefore on a par with factory workers, in that they require training, experience, and skill in performing highly industrialized and mechanized tasks.

During the war, a number of shed workers went into war plants in order to contribute to war production. But because this employment was temporary, their wage credits were usually insufficient to give them an insured status entitling them to old-age and survivors' benefits. Shed workers are among the 31,700,000 people reported by the technical staff of the House Committee on Ways and Means in 1945 to have insufficient wage credits to make benefits possible because of frequent shifts between covered and noncovered employment.

Because of the nature of their work, shed workers need protection against insecurity more than other industrial workers. The bulk of shed workers-who pack the lettuce, carrots, tomatoes, citrus and other fruits grown in specialty crop production areas and shipped by rail express to terminal markets throughout the country-are forced to migrate from one area of the country to another during the year. The employers need their skills and the workers need the jobs. But the workers must pay for transportation covering hundreds of miles, for temporary housing and for other items that are not in the budgets of other industrial workers.

A typical lettuce packer often covers the following itinerary: He works in Salinas, Calif., from May through October. Some are lucky enough to work the entire Salinas season from April through November. Then he must go to the Salt River Valley in Arizona-700 miles away-for 6 weeks of work. In January he goes to the Imperial Valley in California-another 500 miles- for a 2-month season. During this time, he takes his family with him, paying for transporta tion, paying high rent for temporary quarters, or he leaves his family behind. paying double rent and being deprived of their company.

It is obvious that such an itinerary does not leave much margin for saving against old age. And when the worker decides to settle down, say in Salinas, he of course loses work and income as the result.

But the effect of the 1939 exclusion of shed workers is more far-reaching than this. Stimulated by the action of Congress in 1939, a majority of the States changed their definition of agricultural worker to conform to the Federal statute So the shed workers suffered still further as they were deprived of unemployment compensation.

Attempts have been made to carry this exclusion process still further, most notably in the many campaigns to secure exemption of shed workers from the protection of the National Labor Relations Act. Such attempts, of course, were laid to a proclaimed desire to aid small farmers, whose products were packed by cooperatives, while large growers packed their own in large establishments on their own farm enterprises.

But if such inequity existed, surely the way to remedy it was not at the expense of the shed workers, but rather by giving such workers the same coverage that is extended to others.

We urge most strongly that your committee act promptly to remedy this situation. We urge that even if coverage is extended to agricultural workers, shed workers be removed from the definition of 1939 which arbitrarily made them "agricultural" workers.

There are no problems of administering the law in such an event. It can be done merely by striking from paragraph (4) of section 1426 (h) of the Internal Revenue Code the words "or, in the case of fruits and vegetables, as an incident to the preparation of such fruits and vegetables for market."

It is simply a question of restoring coverage in the manner in which it was applied before 1939. The same type of situation holds for processing worke excluded by other sections of the 1933 amendments; those engaged in processing dried fruits, employees of bean cleaning elevators, cotton gin workers, poultry hatchery employees, and employees of nurseries and greenhouses. Summary, agricultural laborers employed by labor contractors and hired out in large gangs should not be included in the definition of agricultural labor.

Agricultural workers are the lowest paid, the least secure and the most exploited of all workers in the country.

Congress has consistently seen fit to exclude them from every piece of legis lation which has provided benefits to industrial workers and also, with one exception, from all farm programs which have provided benefits for farmers. A cultural workers have been degraded to the status of second class, grade B citizens-insofar as our laws are concerned. Their status under State laws equally poor.

Four million people work as agricultural workers during the course of the year. During periods of industrial unemployment, such as we are in at the present time, the number naturally becomes much greater. Declining fam income, also marked at the present time, forces thousands of formerly operating farmers into agricultural labor. It should be noted, too, that the bulk of agicultural labor today is employed on big, commercial scale farms. The tra tional "hired man" on the family size farm no longer represents agricultura labor.

Both the Democratic and Republican Parties have recognized the great ned of social security coverage for agricultural labor and in their platforms have called for its extension to cover them.

The report of the House Committee on Ways and Means in 1946, entitled "Issues in Social Security," made the following recommendations:

"It seems particularly important to cover agricultural workers as (1) ma of them also work at times in covered employment and make contributions Fig? still have insufficient coverage for protection; (2) they have low incomes"_a° (3) a large proportion of them have heavy family responsibilities There is no group in the population less able to provide for old age and family security, or who need OASI protection more."

FTA calls on the committee and the Congress to act on these generally agreed upon recommendations.

The only objection that is raised to such inclusion is the fallacious one that workers might lose the books in which stamps indicating the contributions made by worker and employer might be lost, or that errors might be made.

Yet every day errors are made, cards are lost, records are confused in situations involving industrial workers. Such errors and replacements are constantly being worked upon by the Social Security Administration and no one claims that administration is impossible because of them.

Our union, like all others, uses a stamp-book system to record payment.of dues and the standing of the individual member. These books are highly valued by the members, and are not lost. Thousands of our members travel from the asparagus fields of Stockton, Calif., to the Alaska salmon canneries each year, yet they do not lose their books. We are convinced that a valuable record of social security contributions, representing security for old age, would be equally cherished by the workers.

We know that the Social Security Administration has carried on studies for many years on the most feasible method of administering the law under increased coverage. The system of stamp books they have proposed has been found workable in other countries. We are convinced it would be workable here.

In conclusion, our organization wishes to stress the importance and the immediate need, as well as the feasibility, of removing shed workers from the unfair exclusion put upon them in 1939, and of extending coverage to agricultural workers who need it as much and more than any other group in the Nation.

Common justice and equity to a large, hard working and heavily exploited section of the American people demands that it be done.

Jos. S. LAWRENCE, M. D.,

American Medical Association,

SIOUX FALLS, S. DAK., March 11, 1950.

1523 L Street NW., Washington, D. C.

DEAR DR. LAWRENCE: Reading your Capitol Clinic No. 9, of March 7, the first paragraphs concerning flaws in the permanent and total disability clause of H. R. 6000, brings to mind many instances in my own experience which might better be reported.

At the present time I am examining for the rating boards of the Veterans' Administration center here in Sioux Falls. Each of the rating boards, not wishing to turn down any eligible veteran seeking total and permanent disability benefits accorded to World War I veterans who are now 60 years of age or older, make a special point to insist on excessive examination and laboratory work. For instance, it is well known by the members of the rating boards that a certain amount of arthritis exists in every individual having reached the age specified, so that, whether or not the veteran in his statement has mentioned rheumatism or arthritis, the rating board adds in their request for physical examination these words, "General medical, special orthopedic, with X-ray of all affected bones and joints." Of course this indicates to me, when examining the veteran, if I find any stiffness, any swelling of any joint, which would include the small joints of the hands, the entire spine, in most instances both hip joints, etc. If the examination shows stiffness, and shows X-ray changes, then it becomes a problem of the rating board to determine if enough joints are affected to make the veteran totally and permanently disabled.

It is quite plain, then, that "total and permanent disability" rests on the judgment of a board of laymen, who have a medical report before them, plus a number of more or less accurate "sworn" statements of other laymen, and occasionally other physicians, supporting the case.

It is quite generally accepted here that it is the duty of certain veterans service officers to seek out all veterans who have attained the age at which they are eligible to apply for the benefits mentioned, see that they fill out a claim form, and include in the claim that they are suffering from arthritis particularly of the spine. Many veterans, who are not disabled, and who do not need these benefits refuse to file such claims, and will not perjure themselves to make such claims. Many veterans who do file the claim are eligible for such benefits because they are permanently and totally disabled; I would guess this figure to be about 60 percent of all those examined need the benefits or are entitled to the