are and have been; thus an adequate and continuing program of research will not in the end cost; rather, it will pay its way. With all due respect for the major importance of so much of the legislation that is considered by this committee, I suggest that favorable consideration of H.R. 12625 may in the long run be one of the most significant actions that can be undertaken in your current deliberations. Mr. FULTON. Thank you, Mr. Rosbrow. Mr. Watts? Mr. WATTS. No questions. Mrs. GRIFFITHS. No questions. Mr. FULTON. There being no questions, Mr. Rosbrow, we want to certainly thank you for your statement and it will be given every consideration during the committee's deliberations. Mr. ROSBROW. Thank you. Mr. FULTON. Dr. Daniel H. Kruger. Dr. Kruger, we welcome you to the committee, and if you will for the benefit of the record, identify yourself and the capacity in which you appear, you may proceed. Mr. CHAMBERLAIN. Mr. Chairman, before Professor Kruger begins his statement. I would like to give him a special welcome to our committee, as he is from my hometown of East Lansing, Mich. We always, Professor Kruger, are pleased to have people from Michigan State University appear before this committee and they have made valuable contributions to the important legislative issues that we have been considering. Although I am not personally acquainted with Professor Kruger, nor have I had the opportunity to peruse his statement, I am certain Mr. Chairman, that he will make a valuable contribution to the problem that we have before us. Again, a special welcome, Professor Kruger. STATEMENT OF DR. DANIEL H. KRUGER, MICHIGAN STATE UNIVERSITY Dr. KRUGER. Thank you very much, Mr. Congressman. Mrs. GRIFFITHS. Mr. Chairman, I would like, also, to point out that Michigan State, which is one of the greatest universities, does have other distinctions than a great football team. Dr. KRUGER. That will be determined tomorrow, Madam Congressman. Mr. Chairman, and members of the committee, I appear before the committee this morning as a professor of industrial relations at Michigan State University, and a longtime student of employment security. In addition, though I am not speaking in that capacity, the Governor of our State recently named me chairman of the State manpower commission, and one of our responsibilities is to look over all aspects of our employment security as it relates to our State of Michigan. One of the important objects of public policy with respect to manpower is to provide security against the hazards of unemploy ment. The Federal-State unemployment insurance program was designed to provide a measure of economic security for wage earners in covered employment through partial compensation for wage loss incurred through involuntary short-term transitional unemployment. Unemployment insurance is, therefore, an important aspect of manpower policy in a job economy. Job economy is more than a descriptive phrase. Our economy has, in fact, become a job economy. The overwhelming majority, of over 90 percent, of the Nation's total labor force make their living through having a job. This has not always been the way Americans have earned their livelihood. In earlier periods in the Nation's history, a substantial proportion of the people worked on the land. At a later time, millions of persons were, in effect, "working for themselves" in self-owned professional, business and service activities. As our society evolved into a highly urbanized and industrialized economy, self-employment declined; and working as an employee in private enterprise and in Government increased significantly. The job, and I want to emphasize that, became the most important economic activity in the lives of most Americans because it provided the central means for earning income. It is the centrality of the job which is the most distinguishing characteristic of the job economy. Consequently, preparing for a job, getting, holding, and separating from a job, having income when laid off to tide one over between jobs, and, finding another job to replace the one lost are crucial matters for large numbers of American workers. Unemployment insurance plays an important role in the job economy. The evidence is clear as to the economic impact of unemployment insurance. Unemployment insurance provides the first line of economic defense for unemployed workers in covered employment. The income maintenance features of unemployment insurance are well known. There is, however, another dimension to unemployment insurance and this is its impact on manpower. The coverage, benefit amounts, and duration, the applicatiton of eligibility requirements, and the disqualification provisions of the State laws all affect workers in covered employment. The bill, H.R. 12625, the Employment Security Amendments of 1969, inter alia, recognizes that an effective unemployment insurance program must take into account national manpower policy. The unemployment insurance program, in a sense, operates in a new environment in which greater attention is being given by the Congress to manpower policies designed to improve the development, maintenance, and utilization of the Nation's labor force. Such manpower policies, except in wartime, did not exist prior to 1960. These manpower policies have several objectives: creating more job opportunities for the unskilled; improving the employability of the hard-code unemployed and young, inexperienced workers; reducing structural unemployment and reducing the inflationary pressures by retraining programs which increase the number of workers in short supply. The Nation, it would appear, is becoming more manpower conscious. Consequently, unemployment insurance and the Nation's manpower policies and programs must be related. It must be stressed, however, that although the relationship between unemployment insurance and the national manpower programs must be strengthened, each plays a different role. Subordination of one program over the other must be avoided. My testimony will focus primarily on the implications of H.R. 12625 on manpower policies. There are two dimensions of manpower policy to which I want to address myself. The first is what I call external manpower policies which are policies related to the world of work and the labor force. The second dimension of manpower policies is internal and relates to the development and more effective utilization of the staff of the Unemployment Insurance Service, U.S. Department of Labor and the State agencies administering the unemployment insurance programs. RELATIONSHIP OF H.R. 12625 TO EXTERNAL MANPOWER POLICIES COVERAGE This bill will provide coverage for an estimated 4.8 million additional workers who are now outside the program (title I). One of the goals of unemployment insurance is to cover everyone who works for an employer and who is subject to the risk of unemployment. These additional workers to be included under the bill are in need of protection against the hazards of unemployment. Many are low-wage workers with little or no job security. Many are minority workers. Estimated coverage to the proposed categories will make these jobs more attractive, especially in agricultural labor, in nonprofit hospitals, and State hospitals. Job opportunities in nonprofit organizations such as hospitals and in State hospitals and in institutions of higher education are increasing. These employers have to compete in the labor market with other employers. Prospective workers are interested not only in the salary but in the benefits provided by the employer. Unemployment insurance is one such benefit. Benefits including unemployment insurance in service-type employment should be comparable to those in the goods-producing sector of the economy. The extended coverage provided by this bill is a step in this direction. MOBILITY OF WORKERS The bill (sec. 121 (a) (9) (A)) recognizes the importance of mobility of workers. States are required not to deny or reduce benefits solely because an individual files a claim in, or resides in, another State or Canada. Consequently, interstate and multistate workers will not be discriminated against. An increasing number of workers are engaged in activities which take them across State lines. This provision may facilitate the mobility of workers in that they will not be denied benefits. The bill also makes it mandatory for the States to participate in wage combining arrangements for workers crossing State lines who file for unemployment insurance benefits (sec. 121 (a) (9) (B)). Currently the combined wage arrangements are based on a voluntary agreement between the Department of Labor and the individual States. ENCOURAGING TRAINING OF CLAIMANTS Federally supported manpower programs have expanded during the last 7 years. These programs helped unemployed workers to gain new skills so that they could compete more realistically in the labor market. When these programs were instituted, many States discouraged retraining by denying benefits to workers participating in such programs on the ground that they are not "available for work." In 1969 only 25 States plus Puerto Rico and the District of Columbia have removed these restrictions. Section 121 (a) (8) of the bill makes it mandatory for all States not to deny unemployment compensation benefits to individuals participating in approved training programs. This provision should encourage individuals to take training. Furthermore, claimants would not have to choose between taking training that offers possibilities of a new job or receiving benefits. EXTENDED BENEFITS This bill fills a void in the Federal-State unemployment insurance program in that it provides extended benefits to unemployed workers who have exhausted their regular unemployment compensation benefits (title II). These benefits will be triggered in when the national rate of unemployment compensable under State programs reaches 4.5 percent for the last 3 months. Once triggered in the program would continue for at least 13 weeks and until the national unemployment rate for a month was less than 4.5 percent and the total number of claimants exhausting their regular benefits in the last 3 months was less than 1 percent. This provision is needed because the present unemployment insurance system is not designed to meet the problems of experienced workers with firm labor force attachment and who are unemployed because their job has vanished or their skills have become obsolete. A worker's ability to find a job is decreased when there are many other workers looking for jobs at the same time. This provision makes the unemployment insurance program an integral part of manpower policy and its automatic triggering is especially important. The triggering mechanism is responsive to changes taking place in the job economy. The reliance on the national unemployment rate in covered employment will not, in my judgment, be responsive enough to high levels of uemployment in individual States. The economic composition of the States vary significantly. The Michigan economy, for example, is based primarily on durable goods, and, therefore, has wide fluctuations in the levels of unemployment. Below is a table comparing the annual unemployment rates for the United States and Michigan for the years 1956-68. Year 1956. 1957. 1958. 1959. 1960. 1961. 1962. ANNUAL UNEMPLOYMENT RATES FOR UNITED STATES AND MICHIGAN, 1956-68 Source: Michigan Manpower Quarterly Review, summer 1969, Michigan Employment Security Commission. It is seen that in 9 of the 13 years the unemployment rate in Michigan was higher than the national unemployment rate. If the trigger is based on the State unemployment rate of 4.5 percent other than the national rate, this would enable the extended benefits program to act more quickly as an economic stabilizer. I, therefore, strongly suggest that the committee consider the extended benefits program triggered both nationally by national unemployment experience and in individual States by the State's unemployment experience. Furthermore, this extended unemployment compensation program should include provision for vocational guidance, job training, and retraining. The current federally supported manpower programs are geared to increasing the employability of workers who, for the most part, do not qualify because of previous work experience for unemployment insurance, young workers who never held jobs, the disadvantaged, and the hard-core unemployed. The unemployed workers with a firm labor force attachment are also in need of manpower services in order to qualify for suitable jobs. It is apparent that manpower services for this group have declined as a result of the emphasis on providing such services to the disadvantaged. According to the Manpower Report of the President for 1969 only 8.9 percent of the MDTA trainees enrolled in institutional training programs in fiscal 1968 were unemployment insurance claimants. By comparison with fiscal 1963 when the MDTA program became operational, 31.5 percent of the MDTA trainees were claimants. In view of the decline of manpower services to unemployment compensation claimants I urge the committee to add a provision to the extended benefit title to provide manpower services including vocational guidance, testing, job training, and supportive services to claimants. These services would be of particular significance to the longterm unemployed and those who have exhausted 26 weeks of benefits. This provision could be called the vocational readjustment provision of the bill. Under the vocational readjustment provision I am suggesting that there would be another kind of extended benefit which would not be related to the national indicator. The vocational readjustment benefit would be paid to a claimant who has exhausted 26 weeks of benefits and still has not found a job. It would be extended to a claimant for another 26 weeks provided, and this is extremely important, provided he is willing to take the necessary steps toward his vocational readjustment, including training or retraining. This vocational readjustment benefit is significantly different from the unemployment compensation benefit. The latter is a matter of right |