said we must have Federal help. Now they say we must have larger and longer benefits for the reconversion period.

Of course, nobody really knows nor can foresee at all what the emergency will be like that we are going to run into in this reconversion period. I believe, and I think Governor Baldwin believes, that almost the worst way to prepare for possible emergencies would be to guarantee everybody larger weekly benefits for an extended number of weeks.

Think of the amount of such benefits that would be payable to persons who are only temporarily in the insured labor force. I refer to persons like housewives, elderly retired persons, students, physically impaired persons. It was estimated this morning that we had 10,000,000 more persons in insured employment than we did before the war and a very large proportion of that 10,000,000 are purely temporary. When the need for their services ceases they will drop permanently out of the insured labor market, but as long as they seem to be wanting work and no specific jobs can be offered them, they must be paid unemployment compensation benefits until their unemployment benefit rights are exhausted. Why increase those benefits? A lot of money is involved. If there were 10,000,000 of them and they were made eligible for $20 a week for 26 weeks, you multiply those three figures together and the result comes out around $5,000,000,000, which I think is a lot of money, even down here. Mr. RUSSELL. You estimate 10,000,000?

Mr. BEERS. Excuse me, that is not an estimate, those are top figures. Somebody said this morning there might be 10,000,000 or 11,000,000 additional workers in the productive system now. I say that, if each of those drew $20 a week for 26 weeks, it would be $5,000,000,000.

Now, if you want an estimate as to what would be paid, you have to discount that quite a bit.

Mr. RUSSELL. I misunderstood you. I thought you said 10,000,000 would withdraw from the labor market.

The CHAIRMAN. You are speaking of a maximum?

Mr. BEERS. Yes. I am giving you an over-all maximum figure and there is something to be discounted, but if it comes out $5,000,000,000 before discounting, it is a lot of money, not any small change.

Next, think of the many employees now dazzled somewhat by their recent boom-time pay envelopes, who think they can get back into high-wage jobs if only they can wait out the "temporary" lay-off they think they are suffering they hope it is temporary. Larger and longer unemployment compensation benefits will make it all the harder for such persons to come down to earth and take the first favorable opportunity of getting into productive employment of goods for sale to civilians.

As you can well see, successful conversion to a peacetime economy depends on the speed and promptness with which all the factors of production start cooperating in actual production for sale to civilians. Of course, great need or great suffering may arise, and if and when it does, let us take what steps are then necessary to cure the actual ills that show up. Let us not take steps now that are intended to alleviate some imagined emergency situation when the steps now taken might easily delay the cure of the actual ills we are going to run into. Mr.

Williams described this morning, very clearly, the ways in which too high unemployment benefits will serve to delay workers from taking the first favorable opportunity to get back into productive employ

ments.

It is claimed that Federal help may be needed because the cost of higher benefits has prevented many State legislatures from increasing their benefits. It must be remembered in that connection, however, that the Federal Treasury is not a rich Treasury, but really is an empty Treasury, except for some borrowed money. Paying longer and larger unemployment compensation benefits is not merely paying more money to a group that needs it. It also means taking that money from a group that needs it, too. If the extended benefits are to be permanent and financed out of the employment tax, we shall be putting a larger obstacle between the unemployed worker and his new job. If we say that the extended benefits are to be financed out of Federal funds, we mean that we shall increase Federal taxes to pay them or increase Federal borrowings, or more likely both.

Unemployment compensation benefits are not a present to anyone. They must in the last analysis be paid by the producers of goods, namely, the workers.

To conclude, I think I can summarize Governor Baldwin's attitude by saying simply that the structure of our unemployment compensation plans is a State problem and should be left to the States to solve.

The CHAIRMAN. You say you have in Connecticut about 400,000? Mr. BEERS. Formerly 400,000 workers and right now 700,000 workers.

The CHAIRMAN. So you have almost doubled that amount?
Mr. BEERS. That is right.

The CHAIRMAN. And you think in Connecticut you can handle the problem without any supplemental appropriation by the Federal Government?

Mr. BEERS. Our computations indicate high hopes that we can get by without any supplemental appropriations, and if we need any, I personally hope that our State legislature will be able to handle it.

Senator TAFT. When I came in you were dealing with the employment office situation and I did not hear it all.

Are you familiar with this present control of employment by which employers can only engage men through the Federal Employment Service?

Mr. BEERS. To some extent; yes, sir. I work is on the wrong side of that rule. now full time.

The company for which
We cannot hire anybody

Senator TAFT. How general is that rule? Mr. BEERS. I believe that it applies only to certain localities where great stringency is said to exist by the W. M. C.

Senator TAFT. There was a notice in yesterday's paper that said, as another measure of control the War Manpower Commission proposes to extend the ceiling system to all the 180 areas in groups 1 and 2 and put a limitation on the number of workers that they may hire.

Mr. BEERS. I think that is so; yes, sir. I am talking about the rule that went into effect about the 1st of May.

Senator TAFT. The War Manpower Commission now proposes to extend over the entire country its priority referral system, which is known as the control referral system, tried in 104 areas. In 10 or 12 only it has been made to apply to all men of all ages. In others it has been limited to certain age groups or occupations. Under this system the employer can only hire workers referred to him or cleared by the United States Employment Service.

Is that in effect in Connecticut?

Mr. BEERS. I am out of my depth. I can only say that in the Hartford territory, which is one territory of Connecticut, the nonessential industries, like an insurance company, cannot hire anyone full time except certain students who are going back to school in the fall. We can hire part-time workers.

Senator TAFT. This refers to war industries.

Mr. BEERS. The reason being that the full-time worker must go to the war industries instead of to us.

The CHAIRMAN. You see no reason why there should necessarily be a national employment service running all employment offices after the war?

Mr. BEERS. I think it very inadvisable after the necesssity of recruiting for war production stops. I think it very advisable that the States handle reemployment for production for sale to civilians. Mr. RUSSELL. How would they handle the migration problem, Mr. Beers?

Mr. BEERS. The facilities for the exchange of information between States as to available jobs probably are just as easily set up under those plans as under Federal plans. Of course, if you think that the offices of one State should be compelled to refer people in that State to jobs outside or vice versa, and that some overriding authority should have the right to see that that is done, then you would need a United States Employment Service. But, if you think that ought to be a matter of judgment on the part of the various States themselves, as I do, then you would be in favor of State control.

Mr. RUSSELL. Well, even if the services are returned to the States for the purpose of integrating them with their unemployment compensation systems so they could control the question of whether they took a job or didn't take it, might not for the immediate transition period such means of integration be worked out so that it would not interfere with that, but still would handle the migration problem through a Federal control, as a temporary measure?

Mr. BEERS. I would be inclined to say it would not be worth while to work out the method of integrating these employment offices with the unemployment compensation departments purely for unemployment compensation reasons until it was desirable to turn the offices back to the States for employment reasons, otherwise they might just as well be left where they are. I think they ought to be turned right back to the States for employment reasons.

Mr. RUSSELL. Mr. Williams testified this morning, you remember, that taking them away from the unemployment divisions had made it very much more difficult for them to make people take jobs and

supervise the taking of jobs where they were drawing unemployment compensation. I was simply trying to tie it in to that testimony. The CHAIRMAN. Thank you very much, Mr. Beers.

Mr. Newton, you are the Rhode Island Unemployment Compensation Board chairman?

We will be very glad to hear you on this matter.

STATEMENT OF MORTIMER W. NEWTON, CHAIRMAN, RHODE ISLAND UNEMPLOYMENT COMPENSATION BOARD, PROVI

DENCE, R. I.

Mr. NEWTON. Mr. Chairman and members of the committee, I appreciate the courtesy in allowing me to say a few words concerning this pending matter.

I came down here at the request of Governor McGrath.

I am going to make a very short statement because I think you have been over the field pretty thoroughly and there is no need of my rehashing some of the arguments that have been presented here today.

As I see it, the question that we are trying to resolve is how we are going to cover those people who are not covered now by State unemployment compensation acts and should we give larger benefits of longer duration.

As far as Rhode Island is concerned, it strikes me that the only people involved are Federal employees and possibly returning soldiers who never had the opportunity to engage in covered employment. I think with respect to those soldiers particularly, that is a Federal proposition and perhaps your G. I. bill has taken steps toward that end.

With respect to employees of the Federal Government, the suggestion was made this morning, which I think is a proper one, why not allow employees who are engaged by instrumentalities of the Federal Government to come under the Unemployment Compensation Tax Act? We in Rhode Island at the present time have a suit pending against the Navy Department wherein we tried to cover employees of ship service. We contend the employees of ship service are not Federal employees, they are not engaged by an instrumentality of the Federal Government.

Senator TAFT. What is ship service?

Mr. NEWTON. Those men who work at navy yards, naval bases. We have in Rhode Island the Quonset Air Base, where there are waiters, barbers, all kinds of attendants in the cafeterias. They really have nothing to do with the Navy, as such. The money is collected and turned into the Navy fund for athletic equipment. Therefore, quite a number of workers engaged in the Quonset Naval Base are not covered and we contend they should be covered by the State Unemployment Compensation Act and we have collected taxes until the Navy stopped paying us. We are continuing suit against the Navy to continue their making payments to us.

I think the States will take the initiative in covering the employees within the States. We cover employees of employers of four or more in Rhode Island. We have legislation pending to reduce it to one or more and I think that finally perhaps the legislature will adopt that amendment to our act and will reach the point where they think one

or more should be covered. But, I think that is a State proposition and the State should have the sole responsibility of seeing that it becomes law and is not forced on them by any Federal law.

We are absolutely firm in our belief that it is a State responsibility, that is, the administration of unemployment compensation.

The situation is as Mr. Williams declared this morning, where some of the wage rates in Texas may be $7.50 a week and I might say that perhaps would be unheard of in Rhode Island, that is, any such wage rate-and to have any uniform system of benefits based upon the wage rate paid throughout the United States would be impossible. I think the States who have high industrial working classes would perhaps be penalized as compared to a State that has a large agricultural working class because the unit of benefit for Rhode Island would be smaller than it is at the present time.

To conclude, we feel that any attempt to place money into any State with Federal standards is interfering with State rights and for that reason we would oppose any such attempted legislation and we express our opinion against any such legislation.

That is all, and thank you.

Acting Chairman TAFT. Thank you, Mr. Newton.

The next person to be heard is Mr. W. R. Curtis, acting chairman, Unemployment Compensation Commission of North Carolina.

STATEMENT OF W. R. CURTIS, REPRESENTING THE INTERSTATE CONFERENCE OF EMPLOYMENT SECURITY AGENCIES

Mr. CURTIS. Mr. Chairman, I am appearing, not as a representative of the Unemployment Compensation Commission of North Carolina, but as a representative of the Interstate Conference of Employment Security Agencies. Mr. Claude Williams also represen→ ted the Interstate Conference this morning. We asked for appearances for two representatives. I want to appear on behalf of the conference and not on behalf of my State.

Acting Chairman TAFT. All right; you may proceed.

Mr. CURTIS. I should like to point out, first, that the State employment security agencies which make up the Interstate Conference of Employment Security Agencies feel that it is a State responsibility to provide for adequate funds to pay for unemployment compensation benefits and to provide adequate unemployment compensation benefits. As an expression of that assumption of responsibility, I should like to read a resolution adopted at the annual meeting of the Interstate Conference of Employment Security Agencies in October 1942.

RESOLUTION IX

Resolved, That the Interstate Conference of Employment Security Agencies fully recognizes the responsibility, especially during these critical times, of each State administrative agency, and of each State legislature, for reappraising its State's unemployment compensation law with a view to recommending and enacting such amendments consistently with the economic conditions and social policies of the State, as well, as far as practicable, strengthen the benefit protection afforded unemployed workers, assure continued solvency, simplify and improve administration, and generally prepare its law to play its full part in meeting the problems of post-war unemployment, with due regard for the limits within which unemployment compensation laws as distinguished from unemployment assistance or relief legislation, can properly operate.