Senator VANDENBERG. And that is the problem we have to find an answer for at once, and I am very much afraid that if we undertake to explore the entire field-heaven knows it should be accomplished when we can get at it but I am desperately afraid that if we wait for that we will not produce the emergency answer which the human aspect requires. And I would be very grateful if the Social Security Board-I have the greatest respect for it in spite of some of our spectacular disagreements-the thing I would welcome from the Social Security Board would be a concrete emergency program. Mr. BIGGE. We haven't drawn up any concrete emergency program, Senator Vandenberg. We have worked on various programs that have come through. You will recall the war-displacement proposal which was initiated by certain labor groups several years ago. I think that was developed in a way so it could have been operated without too much difficulty. But there was opposition from State agencies who felt that it was an intrusion of the Federal Government into this area of unemployment compensation, and that it might lead to federalizing the entire program. I think the general approach that was represented in the war displacement benefit is again presented in several of the proposals now. The object is to use the State agencies who have competent people, they have their offices and so on, and could be used in determining eligibility and paying the benefits. The Federal Government could pay all or a portion of the cost above a specified level. I think that is a feasible method for Congress to do whatever is necessary by way of an emergency program. We would much rather see the States administer it than to have the Federal Government administer a parallel system of benefits. Senator VANDENBERG. I wouldn't want to involve a clash between the policy board on which Dr. Altmeyer sits and the Social Security Board on which he sits but I still say that Social Security Board is the authoritative source for us for information on this subject, and I am still expressing the feeling that an adequate and specific emergency program from your sources would be very welcome so far as I am concerned. Mr. BIGGE. May I say then, Senator Vandenberg, I will speak to Mr. Altmeyer about it and see if we can develop such a recommendation. Senator VANDENBERG. Don't you think, Mr. Chairman, that a definite recommendation from the Board would be most helpful to us? The CHAIRMAN. Yes; if Dr. Altmeyer and the Board can submit a concrete definite emergency program to meet this problem indicated by Senator Vandenberg, we will be very glad to have it. It will be very helpful to us. Mr. RUSSELL. Mr. Chairman, might I suggest that all of the State representatives who want to be heard are coming in on May 31, June 1 and 2 and that it might be helpful if the recommendations were made before that time so we would have them before us? Senator VANDENBERG. Are they coming in to be heard on the general problem or the emergency problem? Mr. RUSSELL. On any change. We have had a number of wires. They all indicated opposition to any change. Senator VANDENBERG. Well, I don't want to see any delay in meeting this problem and if there is any way to short-cut to an answer to the emergency I think we ought to pursue it. The CHAIRMAN. If the Board could submit us an emergency program or some suggestions, if you haven't time to work it out completely within 10 days, 10 or 12 days, it would help us. Mr. BIGGE. We will do our best, Mr. Chairman. (The following was later submitted for the record:) Hon. WALTER F. GEORGE, FEDERAL SECURITY AGENCY, SOCIAL SECURITY BOARD, Washington, D. C., May 29, 1944. Chairman, Senate Special Committee on United States Senate, Washington, D. C. DEAR SENATOR GEORGE: During Mr. Bigge's testimony before the Senate Special Committee on Post-war Economic Policy and Planning you requested a statement of the Social Security Board's views with respect to improving the unemployment-compensation program to meet the needs in the readjustment period. In our opinion the basic problem with reference to unemployment compensation in this period is the inadequacy of the benefits payable under the present State-byState system inadequacy in duration, in coverage, and in weekly benefit payments. The financial problem is wholly secondary at the present time. The total reserves of all States combined is already in excess of $5,000,000,000 and should be close to $6,000,000,000 by the end of the calendar year 1944. Therefore, generally speaking, the States already have ample funds to pay more adequate benefits. The State unemployment-compensation laws are operating under a system initiated originally by the Social Security Act passed by the Federal Congress and are supported by a tax assessed by Congress. The Federal Unemployment Tax Act provides for a 3-percent Federal pay-roll tax on all employers of eight or more employees engaged in industry and commerce but a 90-percent offset is credited to employers in States which adopt unemployment-compensation laws which the Social Security Board finds meet very general requirements of the Federal law. The Board's certification of these State laws is not conditioned upon any standard of their adequacy in providing protection against unemployment. Furthermore, the Federal Unemployment Tax Act permits the States to establish State experience-rating systems which reduce the contributions paid by employers to amounts below the standard rate established in the Federal act, irrespective of the adequacy of benefits provided under the State law. Thus, experience-rating systems exist in 43 States with the result that most employers are paying less than the standard contribution rate of 2.7 percent of pay roll. In some States the average rate paid by employers is now 1 percent of the covered pay roll and some employers in some States are not paying any contributions at all to the State fund. In considering the policy the Federal Government should follow during the readjustment period to enable the States to pay adequate unemployment benefits, it would seem inconsistent for the Federal Government to make large sums available to the States to pay more adequate benefits at the same time that the States themselves have reduced the total contributions below the standard rate. One suggestion that has been made to meet the existing situation is for the Federal Government to establish a system of supplementary unemployment benefits financed by the Federal Government, which would bring each State up to a minimum level which the Congress thought desirable. We believe we should present this suggestion to you for your consideration, although we do not recommend it except perhaps as a very temporary expedient to cover the few months prior to the effective date of another plan which we shall outline later after we have described this first suggestion. Under this first suggestion, the Federal Government would pay the total additional cost of benefits not now provided under State laws. The States would be free to pay the additional benefits either by liberalizing their State unemployment compensation laws or by acting as agent for the Federal Government by paying supplemental benefits outside of and in addition to the benefits provided under the State unemployment compensation laws. In the event that a State did not elect to pay additional benefits, no additional benefits would be paid in that State unless, of course, the Congress should provide for direct Federal administration of unem ployment benefits in such a situation. A certificate by the Governor of a State that the State is meeting the Federal standards could be made binding upon the Federal Government if that were considered desirable. Provision could be made so that there would not be any review by any Federal agency of a State's determination relative to an individual's entitlement to benefits. At the present time, any such proposal as the foregoing is subject to the criticism that the Federal Government would be called upon to provide large sums of money for the payment of benefits although the States already have over $5,000,000,000 in their unemployment reserves. Moreover, such a plan for supplemental Federal payments would reward the States which do the least in providing adequate unemployment benefits under their own State laws. If it is desired to build upon the tax-offset approach of the Federal-State arrangement provided in the present law, we believe there is a more logical approach which would be far less costly to the Federal Government. We believe that the Federal Government might very well undertake to guarantee the solvency of all State funds and require the States in return to pay under their own laws at least a minimum level of benefits as prescribed by the Congress. The Federal Government could establish a fund to guarantee the payment of benefits if and when a State's reserve declined to a certain level and the current revenues at an average rate of 2.7 percent (the standard rate now specified in the Federal Unemployment Tax Act) proved insufficient. Such a reinsurance fund could be established by appropriating the unspent balance of $450,000,000 collected by the Federal Government under the Federal Unemployment Tax Act during the past 8 years as well as the excess of about $150,000,000 which is being collected each year. In return for this Federal guaranty of solvency, the States should be required to pay under their own laws at least a minimum level of benefits as prescribed by Congress. This could be brought about by amending the Federal Unemployment Tax Act to make such action by the States a condition for their employers obtaining the tax offset credit under that act. This requirement could be made effective July 1, 1945. In the interim, the first plan we outlined could be permitted to function. The reason we suggest July 1, 1945, for the effective date of the plan we recommend is to afford the State legislatures a reasonable opportunity to make whatever amendments to their laws as may be necessary. With respect to coverage of employees under unemployment compensation, the Board has recommended for several years that the Federal Unemployment Tax Act should be amended to cover employers of one or more. This would bring in an additional 3,000,000 workers. The present act applies only to employment for employers having in their employ eight or more persons in each of 20 weeks during a year. More than half the States have already extended their coverage beyond these limits to smaller employers. The Federal Unemployment Tax Act could be amended by Congress to apply to the same employment as that under old-age and survivors' insurance. If this were done, the States would have a genuine inducement to extend coverage similarly, since otherwise the Federal Government would collect the entire 3 percent from employers not covered by State laws. There remains the problem of those classes or groups of workers in the Nation who cannot appropriately be brought into the system by the above device. One group exceedingly difficult to handle under the present State systems are maritime workers. A special Federal system to cover such workers has been under consideration by the House Committee on the Merchant Marine and Fisheries for some time. We believe that this group could be best handled under a Federal unemployment insurance law. The large group of Federal employees, particularly those working in Government arsenals and Navy yards, should be protected by unemployment compensensation. We believe these can be most appropriately covered under a separate Federal unemployment insurance plan with funds provided from the Federal Treasury. The railroad workers are now covered by a Federal unemployment insurance law. Proposals for making more adequate protection to these workers are contained in bills which are now pending before the Congress. If there is anything further that you would like to have us do, please do not hesitate to call upon us. Sincerely yours, A. J. ALTMEYER, Chairman. The CHAIRMAN. Senator Hawkes, any questions? Senator HAWKES. No. Mr. RUSSELL. I have one or two things I would like to get in the record. Mr. Bigge, what is the latest date at which figures are available as to the size of the various unemployment funds? Mr. BIGGE. In the individual States? Mr. RUSSELL. Yes. Mr. BIGGE. Mr. Cohen says he thinks a copy has already gone in. (See table 13.) Mr. RUSSELL. What is the date? Mr. BIGGE. April 30. TABLE 13.-Funds available in State unemployment reserves as of Apr. 30, 1944 $5, 180, 201, 156 | Region VII-Continued. Total__ South Carolina___ Region VIII: Iowa. Minnesota___. Region IX: Arkansas... Region X: Louisiana_ Region XI: Colorado... Utah... Region XII: Arizona_ Territories: Alaska Hawaii $29, 719, 202 55, 586, 355 Alabama.. Florida Mississippi. 17, 610, 182 Mr. RUSSELL. Well, would there be any possibility of projecting an estimate of what that would be the first of the coming January that would be reasonably accurate? Mr. BIGGE. Well, I wouldn't want to undertake that. Mr. COHEN. No. Because we are not in a position to know. Mr. BIGGE. You see, if it were an over-all national figure it might be different, but in individual States a cut-back may cause havoc. The total revenues we could estimate but in an individual State we couldn't estimate what would happen between now and January. Mr. RUSSELL. Well, as to individual States do you have an estimate of the covered workers and is it possible also to find the number of workers in the States? Mr. BIGGE. Covered workers? Mr. RUSSELL. The covered workers and the total workers so we can get the percentage of the covered to the total. (See table 14.) Now, I also have a synopsis of "Significant provisions of State unemployment compensation laws"-a compilation of August '43. Is that the latest of those compilations? Mr. BIGGE. Yes. Mr. RUSSELL. Now, Mr. Bigge, the maximum and the minimum benefits: There is a considerable variation in the maximum, but the minimum varies all the way from $2 a week to $10 a week. Does the board have any recommendation with reference to minimum standards that they would want to make? TABLE 14.-Estimated employment of wage and salary workers, December 1943, by State1 1 Excludes self-employed and unpaid family workers. An employment count of all wage and salary workers is not available for periods more recent than March 1940; consequently, the figures in column (1) have been estimated from available data. While the figures for the United States are fairly accurate. the figures for individual States may be subject to considerable error due to the effect of interstate migration of workers between 1940 and 1943. 2 Calculated from unrounded figures. 3 Excludes Alaska and Hawaii. 4 The figures for the District of Columbia are probably low in column (1) and high in column (3) because census data (total employed wage and salary workers) are understated by the allocation of workers employed in District of Columbia to State of residence (Virginia, Maryland, etc.). 2,500,000 2, 100, 000 84 500,000 260,000 51 470,000 320,000 68 2,800,000 2,600,000 92 91 55 |