At the present time, there are two interstate plans for combining wage credits the "basic plan" and the "extended plan" for wagecombining. The purpose of these arrangements is to avoid the possibility that an unemployed worker may be denied benefits, or have his benefits reduced, because his recent work has been covered by several different state laws.

The "basic plan" covers the person who has earned wages in two or more States but is not eligible for benefits in any one State, separately considered. This arrangement permits the claimant to become eligible in some one State in which he has worked by combining the wages he has earned in all the states. All States except Alaska, Mississippi and Puerto Rico participate in this plan.

Under the "extended plan" for wage combining, the wage credits earned by a claimant in more than one State are added together in order to increase the amount or duration of benefits. All States except Alaska, Mississippi, Nebraska, North Carolina, Puerto Rico, and Virginia have subscribed to this plan.

It is unsound for the Federal Government to move into this area. States originated and developed the plans which are now in operation. At this stage of the game, it is hardly appropriate for the Federal Government to intervene and control the terms of the plan to which the States must subscribe. We urge this committee to delete this provision from the bill.

Payment of benefits to strikers

The bill would prohibit payment of unemployment compensation benefits to participants in a labor dispute. Presently, there are only two States New York and Rhode Island-where active strikers receive unemployment compensation benefits. New York pays benefits to strikers after 7 weeks of suspension of benefit eligibility and Rhode Island after 6 weeks.

This type of State law provision is certainly at complete variance with the sound principle that an unemployment compensation law should be completely neutral, as between the parties to a labor dispute. In other words, it should leave the parties in the same position in which they would be if there were no unemployment insurance law. It is wrong to force an employer to finance a strike against himself by paying unemployment compensation benefits at his expense to those involved in a labor dispute. Many of our members have been working hard and unremittingly to get these two State laws amended in line with that sound principle.

However, the national chamber does not agree that the Federal Government should step in and force New York and Rhode Island to change their laws in this respect. It is better for the parties involved to work toward a solution than to have it imposed by outside authority. Cancellation of benefit entitlement

Under the bill, States would be prohibited from cancelling all of a claimant's benefit entitlement except in cases where the claimant is fired for misconduct, files a fraudulent claim or receives disqualifying income (such as a company pension or Social Security benefits).

At the present time, there are only 11 States which cancel benefits in instances where the claimant quits a job, refuses suitable work or

leaves to be married. These States are Alabama, Colorado, Georgia, Indiana, Iowa, Montana, Nebraska, Texas, West Virginia, Wisconsin, and Wyoming. Moreover, in many of these States, the cancellation is limited to wages from the employer involved.

This proposed standard for governing State laws well illustrates the complicated problems which Congress would face if it ever embarked on a policy of controlling the substantive provisions of state unemployment compensation laws. A State which wanted to continue its existing cancellation policy could do so, without violating this proposed provision, by suspending the claimant's benefit eligibility until his rights to benefits based on the employment in question have lapsed under the law's benefit formula.

The National Chamber recommends that the parties should be left to work out this situation without Federal compulsion in the few States that still have such provisions.

Minimum work requirement.

Under the bill, a person would be unable to draw unemployment compensation benefits unless he had at least 15 weeks of work, or wages roughly equivalent to that figure during his base period.

Presently, most States require a greater degree of attachment to the labor market—more wages or more weeks of work than the standards specified in H.R. 12625. Information supplied to this committee by the Labor Department indicates the standards specified in the bill would have no effect on 30 States, while 22 States would be required to modify their laws to meet this new "work standard."

The bill illustrates the difficulty, if not the impossibility, of imposing requirements on all States that can be translated into meaningful terms as applied to the widely varying benefit formulas of the individual State laws. Only 14 States determine qualifications for benefits based on the number of weeks in which the claimant worked within his base period. Consequently, the bill must provide a formula for converting the other qualifying tests, used in the majority of States, into an equivalent number of weeks of work. The conversion formulas provided in the bill are grossly inaccurate-so much so that the States using the alternative tests would be permitted to qualify claimants having as few as 2 or 3 weeks of work in their base periods.

Congress should not specify how much work should be required from a claimant in order for him to qualify for benefits. This provision should be deleted from the bill.

JUDICIAL REVIEW

Section 131 would grant to the States the right to judicial review of the Secretary of Labor's decisions dealing with State unemployment compensation programs. The bill proposes to limit review to the "substantial evidence" test and would change the "Knowland Amendment" to the point of virtual nullification.

The national chamber strongly supports giving States access to the Federal courts for review of decisions of the Secretary of Labor concerning the conformity of State law, or of its administration, with existing Federal requirements. The bill, however, should be amended to allow a judge to decide whether the preponderance of the established

facts in a case support the Secretary of Labor or the State. In other words, the judge's decisions should be based on the "weight of the evidence" rather than by "substantial evidence." Moreover, the Secretary of Labor should not be permitted to step into an issue in a State until all judicial remedies have been exhausted. The Knowland amendment is a sound provision and should not be amended to make it ineffective when an interested party fails to exercise his rights to review under the State law.

EXTENSION OF TAX COVERAGE

Sections 101-104 would extend Federal unemployment tax coverage to very small business, to certain agent or commission drivers, traveling or city salesmen, hired farm labor, agricultural processing workers, nonprofit organizations, and State employees of hospitals and institutions of higher education. According to the U.S. Department of Labor, these changes, if enacted, would cover about 5.3 million more jobs as follows:

The national chamber favors making unemployment compensation protection available to as many workers as possible, providing the decision on further extension of tax coverage to employers, employees and employment is determined by each State in the light of local conditions. We would prefer that this be accomplished without Federal intervention.

At the same time the Federal Government has a responsibility, and it has taken action in this area on previous occasions. If this committee believes that Federal action is warranted-for example, because present Federal law serves as a deterrent to State progress-then we suggest that you base your decision on these considerations

(1) Administrative feasibility;

(2) Whether the experience rating in the State laws is far enough advanced to assure that the employers to be covered will bear a reasonable share of the costs of compensating unemployment attributable to the newly covered employers;

(3) Whether the type of employees to be covered are regularly attached to the labor market-that is, the type of employment covered should not be of a short-term or casual nature.

We have several suggestions for changes in the bill which should result in better criteria for determining who should be covered and which should minimize the added tax cost impact on employers presently covered by the State laws.

Extension of coverage to small firms

Present Federal law covers employers of four or more in each of 20 weeks. Today there are 25 States that limit tax coverage to four or more in 20 weeks and another 27 States, including the District of

Columbia and Puerto Rico, which have gone beyond the present Federal definition on their initiative. Twenty-three Štates cover employers with one or more employees. (See U.S. Department of Labor, "Significant provisions of State Unemployment Insurance Laws," July 6, 1969.)

H.R. 12625 would extend tax coverage to an employer if he paid wages of $300 or more in a calendar quarter or in the preceding calendar year. Presently only California, Idaho, Nevada, New York, Oregon and Utah cover an employer with such a small amount of quarterly payroll.

In our view this figure is much too low. It would, for example, result in coverage of employers who furnish only short-term or casual employment, such as committees which are set up by political candidates for Congress, which normally operate for 6 weeks within a 2-year period. Obviously, this is an extremely temporary operation which is not within the intent of the law.

Moreover, this very low wage figure of $300 could result in applying the tax to many employers whose employees do not earn enough in the course of their employment to qualify for benefits. In this connection, it is interesting to note that under section 121 of the bill the Labor Department wants to raise minimum eligibility requirements for benefits in some States. No State would be allowed to qualify a claimant for benefits unless he has worked at least 15 or more weeks (or wage equivalent) in the preceding year. For a worker at the minimum of $1.60 per hour this $300 criterion would result in coverage if one employee worked in as few as five 45-hour weeks.

The national chamber recommends that Congress adopt a much more realistic test of whether an employing unit is enough of an employer to be liable for unemployment taxes. The test proposed in the "Unemployment Insurance Amendments of 1966" (H.R. 15119) seems to be better suited to this problem. That bill set a coverage threshold of $1,500 in wages in a quarter of some employment within 20 different weeks in calendar year. (See Committee on Ways and Means, "Un employment Insurance Amendments of 1966,” House Report No. 1636, 89th Cong., 2d sess., p. 6.)

Coverage of hired farm labor

The bill would extend coverage to hired farm labor on farms employing four or more persons in at least 20 weeks per year. Roughly 65,000 farmers, with an average employment of about 400,000, would

be covered.

At the present time all States except the District of Columbia, Hawaii and Puerto Rico exclude agricultural labor from coverage.

In Hawaii the coverage test is much more stringent than proposed by H.R. 12625. Agricultural labor is covered, if there are 20 or more persons in each of 20 weeks in the current or preceding calendar year engaged in agricultural employment. Moreover, agricultural employers may elect to be covered instead by the Hawaii agricultural unemployment compensation law, which is not part of the Federal-State unemployment compensation system. This special program provides for different conditions of eligibility and separate financing of pro

gram costs.

The national chamber recommends that this committee defer any extension of tax coverage to farm labor until much more experience is gained. There is practically no information available to establish the financial feasibility of coverage of farmworkers generally. The costs of coverage of this particular group would be abnormally high— much more than taxes imposed on farmers-because of the very nature of their operations. (Testimony presented to the Ways and Means Committee in 1966 by the American Farm Bureau Federation indicates that covering farmworkers would be very costly. In North Dakota, which permits voluntary coverage of nonseasonable farmworkers, benefits paid have been over twice tax collections. (See statement of M. Triggs, assistant legislative director, American Farm Bureau Federation, hearings, "Unemployment Compensation." Committee on Ways and Means, 89th Cong., first sess., pp. 1321-26.)

Special experience rating provisions for small employers

Section 122 of the bill proposes to ease the tax impact on the very small employers who would be brought under the law by enabling States to adopt specially tailored experience-rating provisions. States would be able to assign reduced tax rates (but not less than 1 percent) on a basis other than individual experience with unemployment, providing the different basis is "reasonable."

Such a loose definition may seriously undermine the basic experience-rating structure of State laws. Congress should carefully define the alternative basis which will be acceptable for allowing reduced rates to newly covered employers.

Nonprofit employment

Section 104 of the bill would require States to cover nonprofit organizations with four or more employees in 20 weeks. Included in this group would be faculty and administrative personnel in institutions of higher education and professional personnel in hospitals or hospitalconnected research organizations. In addition, any State must give these nonprofit organizations the option of paying taxes or reimbursing the fund for benefit costs.

The proposed financing arrangement for this nonprofit coverage involves statutory approval of adverse selection against the fund. It is a very bad principle to get started.

The national chamber has no objection to a State putting all of its nonprofit institutions on either a reimbursement basis or on a benefit basis. However, we are strongly opposed to letting institutions choose the less costly of two alternatives.

State employees

Section 104 of the bill would require the States to extend tax coverage to employees of State hospitals and to State institutions of higher education. Employers would be denied tax credit if a State did not implement this provision.

This committee is well aware that the U.S. Constitution prohibits the Federal Government from taxing the States. We are opposed to the use of the credit offset provision to compel the States to cover employments to which the Federal Government's authority to apply the Federal unemployment tax is open to question. A denial of credit