sonal employment. Payment of benefits to workers with such incidental attachment has resulted in general attacks on the unemployment insurance program. Under the bill, if the State qualifying requirement were expressed in weeks of work, the minimum requirement would be 15 weeks. A State could require more some now require 19 or 20 weeks and could continue to do so. A "week of employment" was intentionally left for the State law to define. States which now use this test have various definitions. The definition should be related to the minimum weekly benefit amount payable in the State, and thus to the wage rates in the State's low-wage industries and occupations.

Equivalents are specified for the formulas based on wages instead of weeks of employment. Clearly, the equivalent of 15 weeks cannot be met by employment entirely within a 13-week quarter. Therefore, both equivalents specify that a claimant must have wages in at least two quarters of his base period. Since weekly benefit amounts are, except at the maximum, designed to replace half of the worker's usual weekly wages, total wages of 30 times the weekly benefit amount would be equivalent to 15 weeks of work; if the qualifying requirement is expressed in the State law as total wages representing a multiple of high quarter wages, the multiple must be at least 1.2 times either the individual's own wages, or the high quarter wages required for the maximum weekly benefit amount. A State may use a higher multiple of either the weekly benefit amount or high quarter wages.

Section 122-Reduced Rate for New Employers-Section 122 amends the Federal experience rating standards to permit, but not require, a State to allow a reduced rate, not lower than 1 percent, to an employer who has not been subject to the law long enough to have his rate computed under the experience rating provisions. Such rates may be allowed on any reasonable basis.

Federal standards now permit reduced rates to be allowed to new employers on the basis of their experience so long as they have had experience for a period of at least one year. The 3-year experience period which was originally applied to all employers, and now applies to employers who have been in the system long enough to have acquired three full years of experience, has been retained by many States for all employers.

Because of the low unemployment over the past few years, the average employer whose rate is based on experience is paying a rate much below the standard rate which is at least 2.7 percent and higher in some States. Consequently, a new employer-or one newly covered by extension of the law-pays an unemployment tax rate significantly higher than most other employers. The financial impact of unemployment taxes on new or newly covered employers could be lessened if a State legislature took advantage of this new provision. Reduced rates could be assigned on any "reasonable" basis. For example, all new employers could be assigned the State average rate (if it is at least one percent), or each such employer could be assigned the average rate applicable to the industry in which they are engaged.

A similar provision was contained in H.R. 15119.

Section 123-Credits Allowable to Certain Employers-Section 123 would amend section 3305 of the FUTA, the section which gives States permission to require unemployment contributions from types of employers in whom the Federal Government has a special interest-Federal instrumentalities, national banks, and maritime employers. The permission to tax is accompanied by conditions designed to require equal treatment of the employers or the workers. The present Federal law contains no enforcement provision for failure to comply with these conditions. Section 123 would provide that if a State law does not meet the conditions of section 3305 with respect to any category of employer, the Federal unemployment tax liability of employers in that category is to be determined without allowance of tax credit for payments to that State.

An identical provision was included in H.R. 15119. At that time, one State had for 20 years refused to correct a discrimination against seamen. Since then, that State has amended its law. Other States have had provisions which discriminated against seamen, and such provisions have been proposed in additional States. Therefore, it would be desirable to provide for enforcement of the Federal conditions.

The section makes clear that a Secretary's finding under section 3305 is a finding which the State may appeal to the court under the judicial review procedure established by Part C of title I of the bill.

Part C Judicial review

Although interest in judicial review of adverse action by the Secretary goes back to at least 1950, this is the first Administration bill which has proposed to add judicial review provisions to Title III of the Social Security Act (SSA) and the FUTA. Such provisions are contained in section 131 of H.R. 12625.

A Secretary's finding with respect to a State's conformity or compliance is made after a State agency has been afforded a hearing before an independent hearing officer at which the State was free to present any evidence it desired and make any arguments it believed pertinent. On the basis of the record and the recommended decision of the hearing officer, the Secretary makes his finding which includes findings of fact and conclusions of law.

The bill provides that the Secretary's findings of fact would be conclusive if supported by substantial evidence that is, by "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." This is the scope of review of the Secretary's findings of fact contained generally in statutes comparable to the unemployment insurance provisions of the SSA and the FUTA. It is the provision contained, for example, in the Economic Opportunity Act of 1964, the Aid to Dependent Children title of the SSA, the Civil Rights Act of 1964, and the Hospital and Medical Facility Amendments of 1964. It is also the provision in the Administrative Procedure Act. Judicial review provisions in most State unemployment insurance laws provide that findings of fact of the administrative body be final if supported by substantial evidence or less.

The principal difference between the judicial review provision of this bill and that contained in H.R. 15119 is the scope of court review of the Secretary's findings of fact. H.R. 15119 proposed that the Secretary's findings of fact be conclusive unless contrary to the weight of the evidence. Under this rule, the reviewing court would determine independently which way the evidence preponderates. The Secretary's hearing would be turned into little more than a medium for transmitting the evidence to the court.

Under both H.R. 12625 and H.R. 15119, the scope of review of questions of law would be the same. Thus the reviewing court may affirm the Secretary's conclusions of law or set them aside, in whole or in part, even though it upholds the Secretary's findings of fact.

The sanctions involved in the unemployment insurance program are not so different from those under other Federal grant programs as to justify a different provision. The issues that arise under the unemployment tax act are substantially the same as those that arise under Title III of the SSA. If a different scope of review provision were justified because it is a tax act, it should be the scope of review by the court of appeals of tax court decisions, which as you know are decisions by an administrative not a judicial body. The rule followed in such cases is that findings of fact by the tax court are conclusive unless clearly erroneous.

The Administration believes that the provisions for judicial review contained in H.R. 12625 are fair and reasonable.

The judicial review proposed provides an opportunity to clarify a provision in section 3304 (c) of the FUTA which was added by a 1950 Senate floor amendment, the so-called "Knowland Amendment," a stop-gap measure pending reappraisal by the Congress.

The proposed clarification is in the last sentence of section 3304 (c) which relates to the Secretary's authority to act to enforce the labor standards requirements of section 3304(a) (5). The present language provides that the Secretary cannot take such action on the basis of "an application or interpretation of State law with respect to which further administrative or judicial review is provided for the under the laws of the State."

This language has been construed to authorize the Secretary to act on a State's application or interpretation of its labor standards provision that has become final even though it has not been appealed to the highest State court. The change proposed would remove any ambiguity about the Secretary's authority by substituting the words "with respect to which the time for review provided under the laws of the State has not expired or further administrative or judicial review is pending."

This construction is supported both by the Conference Report on the Knowland Amendment that it intended to insure that "no finding may be made unless further appeal or review is impossible in the particular case," and by the differences in language used by the amendment to Section 3304 (c) of the FUTA and to section 303(b) of the SSA. Since the same Amendment used such different language,

Congress must have intended something different by each amendment, and there are sound reasons why it should have. Section 303 (b) which specifies that action by the Secretary can be taken only after the question of entitlement has been decided "by the highest judicial authority given jurisdiction under State law," relates to entitlement under State law in an area where no Federal standards are involved. The language of section 3304 (c), however, relates to Federal standards prohibiting a State's denial of benefits under specified circumstances; as a Federal standard it should be applied uniformly.

The proposed language would assure that no action may be taken by the Secretary while a case is pending review, or the period to obtain such review has not yet expired, that is, unless an application or interpretation of State law in the labor standards area is final.

Benefits are denied in a State pursuant to any application or interpretation of State law that has become final. Precedent actions in a State are not limited to judicial decisions. Comparatively few unemployment insurance cases are ever appealed to the courts. In 1968 of the over four million contested non-monetary determinations in all the States, only 32 were appealed to the highest court of a State. If the Secretary could not act until a case had been heard by the highest court of a State, benefits could be denied under constructions of the State's labor standards provision by lower tribunals which violate the applicable provision of Federal law, and the Federal provision could be applied differently in different jurisdictions. There would no longer be a uniform Federal standard. Such a consequence was not contemplated by the Congress. We propose, therefore, that the language be clarified.

Part D-Administration

The final sections of title I would add some new provisions to strengthen administration, as well as a technical amendment. These provisions are comparable to provisions contained in H.R. 15119.

Section 141-Research Program-Section 141 would add three new sections to title IX of the Social Security Act. The first one, Section 906, directs the Secretary of Labor to establish a research program and to make the results public, and authorizes appropriations as necessary for the research.

There is to be a continuing and comprehensive research program to evaluate the unemployment compensation system, including factual studies on the role of unemployment compensation and the characteristics of claimants. There is also to be research as to the effect and impact of extending coverage to excluded groups, with first attention to domestic workers in private households.

Substantially the same provisions on research were in H.R. 15119, except that the provision on extending coverage did not mention any specific group. The priority for research on domestic coverage is considered desirable for two reasons. With the recommendations in this bill, a start at least will have been made towards covering all other categories of employment. Private domestics, generally a low-paid group with little in the way of job protection or fringe benefits, have generally been ignored. Last year, the President's Commission on the Status of Women called on the Secretary of Labor for an immediate report on the problems and approaches to covering domestics. The Secretary did not have the data on which such a report could be made.

Research can be, and has been carried out under the present law. But since there is no requirement for such a program, it has been difficult to establish and maintain a continuing coordinated effort comparable to the kind of research required under the provisions of the Temporary Extended Unemployment Compensation Act of 1961. The new requirement, and its accompanying authorization of appropriations, should result in improved public knowledge about the unemployment insurance program.

Section 141-Training Program-Section 141 would add a new section 907 to title IX of the SSA, directing the Secretary of Labor to provide for training of present and prospective staff of unemployment compensation agencies, with specific reference to the claims determination and adjudication functions, and specifically authorizing appropriations for such training. The Secretary may arrange with universities or other qualified organizations, including qualified profitmaking organizations, for training programs, and may provide fellowships and traineeships.

As is true of research, the Secretary now may arange for staff training, but is not required to do so.

H.R. 15119 also required a staff training program. The language of the current proposal is quite different, primarily to make it more like comparable provisions in other bills proposed to Congress.

One new feature of the training section is the provision for mutually acceptable detail of Federal employees to State unemployment compensation agencies, and of State employees to the Department of Labor. The bill specifically makes applicable to such assignments the provisions of section 507 of the Elementary and Secondary Education Act of 1965, or similar provisions of a later enactment setting up a more general program of personnel interchange. That section spells out the details governing pay, leave, and other personnel conditions.

Section 141-Federal Advisory Council-The third new section which section 141 would add to title IX is section 908, requiring the Secretary of Labor to establish a Federal Advisory Council on Unemployment Insurance. The Council is to consist of men and women representatives of employers and employees in equal numbers and the public; its members are to receive compensation of up to $100 a day and travel expenses while on Council business. An Executive Secretary, secretarial staff, and pertinent data would be furnished to the Council by the Secretary of Labor. This provision had no counterpart in H.R. 15119.

At present, the Secretary receives advice on the unemployment insurance program from the Federal Advisory Council created pursuant to section 11(a) of the Wagner-Peyser Act. That Act, passed in 1933, required an Advisory Council "composed of men and women representing employers and employees in equal numbers and the public for the purpose of formulating policies and discussing problems relating to employment. . ." The Council's responsibilities were expanded to include unemployment insurance by Reorganization Plan No. 2 of 1949. The Advisory Council requirement is included in the unemployment insurance proposal, because of the anticipation that the responsibility for advising the Secretary on employment would be combined with the advisory function on manpower training. The National Manpower Advisory Committee provided for in the Administration's Manpower Training Act, S. 2838, and H.R. 13472, could serve as the Wagner-Peyser Council on employment. The bill's specifications as to the interests and backgrounds of members are not directed at an interest in social insurance.

Section 908 also directs the Secretary to encourage organization of similar State advisory councils.

Section 142-Change in Certification Date-Section 142 would change the timing and period of the tax credit certifications of State laws which the Secretary of Labor makes annually to the Secretary of the Treasury. Instead of certifying on December 31 for the calendar year, he would certify on October 31 for the 12-month period ending on such October 31. The certification would apply to tax credits for the calendar year in which such October 31 occurred. The change will enable the Internal Revenue Service to include in the printed instructions for the annual Federal Unemployment Tax Return a list of the States which have been certified under the normal and additional credit provisions. Although no State has ever been denied such certification, the possibility has existed so that the forms could not specify the credits allowable for employers in each State. This change, which was included in H.R. 15119, should make it easier for employers to file their returns.

TITLE II-FEDERAL STATE EXTENDED UNEMPLOYMENT COMPENSATION PROGRAM Title II would add to the SSA a new title XX, establishing a Federal-State Extended Unemployment Compensation Program, providing additional Federalfinanced unemployment benefits payable during periods of high national unemployment. The normal provisions of State laws are designed to take care of shortterm unemployment. Duration provisions are generally reasonably adequate for normal times. But it takes a worker longer to find a new job when a lot of other workers are also unemployed and looking for work. In periods of economic recession, when the national rate of insured unemployment is high, substantial numbers of workers experience unemployment which extends beyond the period for which they are protected under State law. The resulting uncompensated unemployment has a serious adverse effect on the nation's purchasing power and overall economic welfare, as well as on the individual workers.

During the last two periods of high national unemployment, 1958 and 1961, the Congress responded to the emergency situation by providing for the extension of unemployment benefits. While these temporary programs were valuable,

part of the unemployment insurance potential for reducing economic downturns was lost because the benefits did not become payable until the recession had been under way for some time.

A program enacted during good times, to be "triggered in" when economic conditions warrant and to end when the emergency has passed, is needed if the unemployment insurance system is to function properly as an economic stabi

lizer.

H.R. 15119 also provided for extended benefits to be triggered in and out by economic conditions. There were important differences between the House and Senate versions of that program, and there are important differences between both 1966 versions and the system proposed in this bill.

The proposed Extended Unemployment Compensation Program would be 100 percent Federally financed, and would be triggered into operation only by specified high levels of national unemployment. States would be relieved of the costs of extended benefits paid during a national recession; they would, of course, be entirely free to adopt a State triggered program designed to meet the particular problems of high unemployment in the State. In general, the substantive provisions of the program are similar to those of the Temporary Extended Unemployment Compensation Program of 1961.

Substantive provisions of the federal-state extended unemployment compensation program, title XX of the social security act.

Payments under the program would be available at any time economic conditions warrant beginning with the 61st day after the bill is enacted. Although no immediate recession is anticipated, there is no reason to postpone the effective date; no State legislation is needed to implement the proposal.

Payments are to be made through agreements with the State agencies; if there is no agreement, however, the Secretary can make other arrangements for payment.

To be eligible for extended compensation, the individual must have exhausted a State claim (including one as a Federal employee or exserviceman under 5 U.S.C. Chapter 85) and must meet the State eligibility conditions unless they are inconsistent with the title. Weekly payments are made at the individual's State rate, including dependents' allowances, for a maximum aggregate amount equal to 50 percent of the total of his regular benefits, 13 times his weekly benefit amount, or 39 times his weekly benefit amount minus his regular State benefits, whichever is the least.

Extended benefits are paid to an individual for weeks in his benefit year which begin during an extended benefit period; if his benefit year ends during an ex. tended benefit period, he may continue to receive his benefit for succeeding weeks beginning in the extended period.

An extended benefit period begins with the third week following three consecutive months in which the seasonally adjusted rate of unemployment, nationally, has been at least 4.5 percent. This is a lower rate of insured unemployment than was provided under the 1966 version. But the unprecedented period of high employment since 1966 has changed our concepts of how much insured unemployment can be tolerated.

Another reason for the change was to assure that the increased purchasing power would get into the economic stream as early as possible.

An extended benefit period lasts for at least 13 weeks, and until there is a month in which the seasonally adjusted rate of insured unemployment is below 4.5 percent, and the three-month total of persons exhausting their State rights is below one percent.

This represents a change from the 1966 trigger provisions, when both the insured unemployment rate and the exhaustion rate were required to start the program, and when declines in either could terminate the program. The changes are intended to start the program earlier in a recession, and to keep it in operation until the need is clearly past.

If a State has regular duration of more than 26 weeks, the Federal Government will reimburse the State for payments in excess of 26 times the regular weekly benefit amount, paid to an individual during an extended benefit period.

The extended benefits are financed from the proceeds of the net Federal tax; one-sixth of the 0.4 percent tax is allocated for extended benefits.