market by adding to their cost of production. Only through changes in the federal minimum standards can they all act simultaneously so that all workers may be adequately protected without endangering their own jobs through competitive disadvantage.

"It is, moreover, obvious that unemployment fails unequally on the several states and that a high incidence of long-term unemployment affects adversely those state unemployment insurance funds least able to bear the cost of benefits adequate in amount and duration. Only the federal government through special financial aids to the states and through federally-financed long-term benefits can solve this major problem.

"3. Unemployment insurance for workers in nonprofit organizations.—In view of our general support for a more effective and broadly inclusive national unemployment insurance system, it would be obviously inconsistent not to favor the extension of protection against income loss due to unemployment to our own workers. A spot study by the National Social Welfare Assembly showed that such unemployment, while not extensive, does in fact occur among the employees of voluntary non-profit organizations and that some of their employees move between covered and currently non-covered employment, thus endangering their benefit rights. On the other hand most voluntary organizations would be extremely hardpressed to share in the costs of carrying the higher-risk employers without endangering their ability to perform the services for which they receive contributions from the public. We, therefore, predicate our support for the extension of compulsory coverage to the employees of non-profit organizations on a special financing provision, such as that included in H.R. 8282, which would permit states to limit the cost to employing organizations to the actual amounts of benefits extended to their own workers."

Mr. ULLMAN. We thank you, again, for appearing before the committee, Professor Wickenden.

Without objection, the committee will stand adjourned until 10 a.m., tomorrow morning.

(Whereupon, at 11:40 a.m., the committee adjourned, to reconvene at 10 a.m., Friday, October 3, 1969.)

AMENDMENTS TO FEDERAL UNEMPLOYMENT

COMPENSATION LAWS

FRIDAY, OCTOBER 3, 1969

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

Washington, D.C.

The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth House Office Building, Hon. Richard Fulton presiding.

Mr. FULTON. The committee will come to order, please.

Our first witness this morning is Mr. Donald W. Jackson, who is appearing in behalf of the Tennessee Taxpayers Association and the National Taxpayers Conference.

Mr. Jackson, we are pleased to welcome you to the committee this morning and, if I may, just for a moment, I would like to state to my colleagues and for the benefit of the record that I have known Mr. Jackson for many years and served in the Tennessee State Legislature while he was representing the Tennessee Taxpayers Association. We are very proud of the work that he does in the State of Tennessee, and I certainly am very proud to chair the committee hearings in your presence, Don.

STATEMENT OF DONALD W. JACKSON, APPEARING IN BEHALF OF TENNESSEE TAXPAYERS ASSOCIATION AND NATIONAL TAXPAYERS CONFERENCE

Mr. JACKSON. Thank you, Congressman. I want to express my appreciation for the opportunity to present this information on what I consider to be a very important subject, a tax that is very costly to the taxpayers of Tennessee as well as to other States, but nevertheless a tax that is used for a spending program that is equally important.

I am also representing today, in addition to the Tennessee Taxpayers Association, the Citizens Public Expenditure Survey of New York, which is an organization similar in nature to the Tennessee Taxpayers Association.

I have broken down the various items on which I would like to speak into the subjects indicated by the underlined headings.

SUMMARY OF STATEMENT

(1) We support an extension of coverage of unemployment compensation to small employers. We suggest that your committee refine this proposal by defining a covered employer as one who employs one or more employees in 20 weeks of the calendar year, or who has a total payroll of at least $1,500 in a calendar quarter.

Because the above extension will take time to digest, we urge a delay in the coverage of farmers, hospitals, and state universities.

(2) We support the principle of extended benefits during a recession. It is our hope that you will consider a plan to finance 50 percent of such benefits from state taxes. Further, we urge a state by state trigger point rather than a national trigger.

(3) We oppose the numerous federal standards proposed in H.R. 12625. We believe that if the principle of federal standards is established in relatively ineffective areas, then it will be an easy step to develop more rigorous standards. (4) We suggest that the increased federal administrative costs be supported by an increase in the federal tax rate instead of a higher taxable wage base. When higher benefits in the states produce the need for more revenue, each state should be permitted to produce this revenue from higher tax rates, or a higher base or any combination of the two.

My name is Donald W. Jackson. I am executive secretary of the Tennessee Taxpayers Association which represents employers in Tennessee, including manufacturers, retailers, wholesalers, utilities, insurance companies, and banks.

COVERAGE OF ADDITIONAL EMPLOYERS

We support the principle of coverage of employers of one or more employees. Such employees need unemployment compensation benefits as much as claimants who have worked for employers of four or more. We are advised by the administrators of the Tennessee program that they can handle this broadened coverage without serious difficulty.

We suggest that your committee give further study to the coverage of employers with a payroll of $300 in a calendar quarter. This $300 figure is too low, in our opinion. It would be better to draw the line so that employers would be covered if they have one or more employees in 20 weeks during the current or preceding calendar year, or who have a total payroll to all employees of $1,500 in a calendar quarter. In other words, we are simply trying to say that we believe your definition of which employers should be covered needs reexamination. We are not quarreling at all with the principle of additional coverage. It is just that we believe a better way of defining employer can be developed.

We oppose the extension of coverage to farmers and to nonprofit hospitals, State hospitals, and State universities. Please let us digest the increased coverage of employers of one or more employees first. Extension of coverage to farmers needs additional study, and we would like to avoid the cost to State governments of the extension of coverage to hospitals and universities.

JUDICIAL REVIEW

We expect other persons who will testify before this committee to explore this subject in detail. At this point, let me say the taxpayers in Tennessee are opposed to the provisions of H.R. 12625 on judicial review because they restrict the scope of the review permitted.

EXTENDED BENEFITS

Here again, we agree with the principle of the payment of extended benefits during a recession. However, we suggest that 50 percent of

the cost of extended benefits be supported by State taxes instead of the 100-percent Federal financing proposed by H.R. 12625. Such a plan would stimulate the interest of the taxpayer in the maintenance of better control over the expenditure of the benefits.

In addition, we believe that it would be better to establish a trigger point in each State to determine the time when extended benefits become available, as well as the time when they are terminated. The unemployment rate in a future recession is apt to vary from State to State, and a national trigger point is therefore undesirable.

Finally, Tennessee is a State which has a relatively high number of seasonal workers and claimants who exhaust the present 26 weeks of benefits.

We have, in Tennessee, a large number of persons employed in tobacco processing and in food processing who may be in the labor market for only a portion of the year and it is this group I am talking about when I refer to seasonal workers.

We would like to have the opportunity in our State to establish some rather strict rules for the payment of benefits to claimants after 26 weeks. I have in mind that we might want to require claimants who draw benefits for as much as 39 weeks, which would be the 26 weeks plus the 13 weeks, to have been continuously employed for a number of weeks larger than the number now required to draw benefits for 26 weeks.

MISCELLANEOUS STANDARDS FOR STATE UNEMPLOYMENT COMPENSATION PROGRAM

H.R. 12625 would require States to eliminate benefits to strikers and a second round of benefits based upon the same earnings. This is often referred to as the double dip. The bill would also require 15 weeks of earnings in order to draw benefits, the eligibility of claimants taking training, and a prohibition against cancellation or reduction of benefit rights for voluntarily quitting, refusal of suitable work, or filing of a claim in another State.

We are opposed to all of these standards in Federal legislation because we believe each State should be permitted to determine its own standards. Most States have reasonable provisions on disqualification of claimants. As evidence of this belief, laws of most States already conform to the proposals listed above.

I would like to say at this point that all of these standards that I have listed are already in the Tennessee law. We have already done every single one of these things that is proposed in this legislation.

We believe that if the principle of Federal standards is established in relatively ineffective areas, which we believe these to be, then it would be an easy step to develop more rigorous standards, such as interference with State laws on claimants who voluntarily quit, refuse suitable work, are guilty of misconduct, and so forth.

TAXABLE WAGE BASE

We urge this committee to avoid the substantial increase in the wage base to $4,800 in 1972 and $6,000 in 1974, as proposed in H.R. 12625.