Area molesed in deuble vertical lines indicates ONLY period when wage credits are uniformly due in all States
2nd Q.

N.H., Idaho, & Wash. (7).

The CHAIRMAN. Are there any questions? We thank you very much for bringing these views to us.

Miss TETRAULT. Thank you.

The CHAIRMAN. Our next witness is Mr. James R. Tobin. If you will identify yourself for our record, we will be glad to recognize you, Mr. Tobin.

STATEMENT OF JAMES R. TOBIN, CHAIRMAN, EMPLOYMENT SECURITY COMMITTEE, NEW JERSEY MANUFACTURERS ASSOCIATION

Mr. TOBIN. Thank you, Mr. Chairman. My name is James R. Tobin. I am director of community relations for Becton, Dickinson & Co., in Rutherford, N.J. My company is a manufacturer of medical instruments and supplies. I appear today in my capacity as chairman of the employment security committee of the New Jersey Manufacturers Association. The association is representative of over 14,000 manufacturing, commercial and service companies; which vary in size from very small to very big. Over 75 percent of the membership, however, employ less than 25 employees. We are grateful for this opportunity to present a short statement in behalf of the New Jersey Manufacturers Association.

We were privileged to appear before your committee in 1965, when you had under consideartion H.R. 8282. As a result of those hearings and your subsequent deliberation, H.R. 15119 of 1966 was developed. Our committee was not opposed to this legislation and would be favorably inclined to it today.

FEDERAL STANDARDS

There are certain features of H.R. 12625 which we believe objectionable. Under section 121, "Provisions Required To Be Included in State Laws," the Federal Government would not only legislatively but also administratively affect the very heart of State unemployment compensation systems by prescribing who shall and who shall not be the beneficiaries of unemployment compensation benefits. We strongly believe that these are matters best left for determination by the individual State legislatures and their respective constituencies who are closer to those situations requiring their special attention. Neither has been insensitive to the needs of the unemployed.

Not one of the requirements in this section 121 affect New Jersey: 1. New Jersey requires an individual who has received compensation to have had work in order to qualify for benefits. New Jersey uses a wage-qualifying period of 52 weeks preceding the week of filing a claim.

2. New Jersey does not deny an eligible claimant unemployment compensation benefits where he is in training approved by a State

agency.

3. New Jersey does not reduce or deny benefits to a claimant because he resides in another State.

4. New Jersey participates in wage-combining plans with other States or the Federal Government or both.

5. New Jersey does not pay benefits to persons involved in a labor dispute. In fact, the people of New Jersey overwhelmingly expressed themselves 2 years ago in opposition to payment of benefits to strikers when repeal of a newly enacted labor dispute benefit payment provision in the unemployment compensation law was a major election issue. 6. New Jersey does not cancel wage credits or reduce benefit rights, except for fraud, where only a part of the benefit entitlement is reduced.

7. New Jersey meets the requirement in H.R. 12625 of at least 15 weeks of employment to qualify for benefits. New Jersey has a wagequalifying requirement of 17 weeks of work in which a minimum of $15 per week must have been earned or, alternatively, earnings of $1,350 or more in a base year.

These provisions were not a part of the original New Jersey law passed in 1936. All were enacted subsequently and some as late as 1968. A majority of the States have acted similarly, and some have enacted several if not all of these provisions.

Undoubtedly, there are persons who believe that progress is too slow, but each year State unemployment compensation laws give evidence of their dynamic quality through amendments added thereto annually. We are convinced that it is only a question of time before all of these provisions, with local preferments, will eventually become part of State laws if for no other reason than the changing economic times. It is difficult for us to perceive that these proposals should be of national concern because of the relatively few people affected. In our view, once enacted, such provisions would not only be expanded, or even eliminated, but would require enlarged Federal agencies to enforce uniform application. We sincerely request that you permit the States to retain control of such detailed decisions enabling them to deal with their own peculiar economic circumstances.

EXTENDED UNEMPLOYMENT BENEFITS

H.R. 12625 would provide for extended unemployment compensation payments where claimants have exhausted their entitlements during periods of economic slowdown. Our experience with two previous Federal programs of extended benefits led us to testify in favor of such a recession hedge before this committee in 1965 on H.R. 8282. Our reservations then, as they are now, were directed to the need for relating such benefits to earned benefit entitlements and the most effective method of starting and financing such payments.

H.R. 12625 does contain provision for payment of additional duration equal to one-half a claimant's State entitlement. This is acceptable.

H.R. 12625, however, would have a national "on" and "off" indicator. Signs of economic downturn, including substantially increased unemployment sometimes are not only slow in developing but also do not uniformly affect each area of the country or even each area of a State simultaneously. It is notable that during past periods of "good times," nationally, a few of the States experienced serious unemployment problems while the rest of the country did not. Under such circumstances use of a State "on" indicator would more quickly trigger in an extended program of benefits and more effectively supply needed

economic stimulus. We are hesitant to endorse a single national rate of unemployment as the sole determinative of the need within State borders for extended unemployment benefits. This could prove to be too little and too late.

We would suggest that H.R. 12625 be amended to provide for a uniform State-by-State mechanism enabling the payment of such benefits as well as a national one requiring all States to do so.

H.R. 12625 provides for full Federal financing probably due to the national triggering in of extended unemployment benefits. Consistent with the above proposal for a national-State trigger, we would suggest that this program be financed 50 percent by the States and 50 percent by the Federal Government. This would indicate the basic Federal-State interest in maintenance of a sound program of benefits payments, free of abuse, and an additional stimulus within State borders for minimizing unemployment. It would enable the States, if they so desired, to provide for experience rating of a part of such costs importantly affecting not only the program of extended benefits but also the overall financing of the States' unemployment compensation system.

FINANCING

H.R. 12625 would increase the taxable wage base for Federal unemployment tax purposes from the present $3,000 to $4,800 for calendar year 1972-1973 and to $6,000 for years thereafter.

Section 302 provides that "the taxable wage base for the Federal unemployment tax should be at a level reasonably related to the average annual wage in covered employment."

This section requires "the Secretary of Labor to recommend changes in the taxable wage whenever the taxable wage base is no longer reasonably related to the average annual wage in covered employment."

If we can accept a literal reading of this provision that its purpose is to increase the "take" of the Federal unemployment tax then it is our view that the suggested taxable wage is excessive. On the other hand, if this is a device to increase the States' unemployment compensation reserves it is also our view that the suggested taxable wage base is excessive.

In order to put the proposal in proper perspective, it is well to see what New Jersey has done with its unemployment compensation law. Briefly, effective January 1, 1968, New Jersey increased its weekly benefit maximum to 50 percent of the average annual wage per covered job, recomputed annually. The New Jersey benefit was $62 weekly in 1968, $65 in 1969 and will be $69 in 1970. In 1971, it is our estimate that the weekly benefit rate will be about $73 or $74. To finance the higher benefit the New Jersey taxable wage base was increased to $3,600 beginning in 1968. Costs to both New Jersey employers and employees rose accordingly. New Jersey is one of three States which provides for an employee contribution of one-fourth of 1 percent of taxable wages.

Thus, while New Jersey unemployment benefit amount continues to escalate annually, the New Jersey unemployment trust fund has also continued to increase. The reasons, therefore, can be ascribed to exceptionally stable economic activity, experience rating in the U.S.