of any further federal standards. Any federal standard will erode the "partnership" ideal by handing to the federal partner dictatorial powers. The seven standards proposed by the Administration and our reason for opposition to each are listed below. 1. A Federal standard would establish a prohibition against the double dip Including the District of Columbia and Puerto Rico, there are 52 jurisdictions subject to the federal law. Only twenty of these permit the double dip. 32 states prevent the so-called "double dip" by requiring intervening work or by having so drafted their laws as to preclude such a possibility. In the twenty states where a double dip is still permissible, the benefits paid are much lower and the number of claimants involved is not great. The trend in the states is definitely toward elimination of this admittedly undesirable situation. Even if this were not so, we believe a federal standard would be even more undesirable. 2. A Federal standard would prohibit a state from denying benefits to trainees Presently, 29 states (including the District of Columbia and Puerto Rico) will pay benefits during periods of approved training. In 23 states, trainees are ineligible for benefits. Back in 1966, when the House Ways and Means Committee was considering H.R. 15119, only 22 states would pay benefits to trainees. In the intervening years, seven additional states have amended their laws to permit such payments. Here again, the trend of state legislation is toward desirable ends. Also, it should be noted that a good many of the trainees are recruited from the long-term unemployed; such persons would have very little eligibility for unemployment benefits. In addition, many of the training programs provide allowances for the trainees so that they are not entirely without funds. Federal legislation in this area would attempt to set up national standards to solve a problem which has no national scope. 3. A Federal standard would prohibit denial of or reduction of benefits resulting from an individual residing in another state Similar provisions were incorporated into HR 15119. However, at that time there were three states which had such provisions. These were Ohio, Alaska and Wyoming. Since that time, Ohio has eliminated the practice, leaving only two states involved. These two states contain only 2/10 of 1% of the total work force. Besides this, in the special situation of Alaska, because of its extremely high benefits and wages, there may be some justification for such a provision in Alaska law. In any event, the problem does not seem to have any real significance on a national basis sufficient to justify federal legislation. 4. A Federal standard would require that all states participate in an arrangement whereby wages are combined There would seem to be almost no necessity for this standard. Of the 52 jurisdictions subject to federal law, all have adopted a combining plan with the exception of Alaska, Mississippi and Puerto Rico. Even in these states, a basic plan for interstate payments has been voluntarily established. A federal standard simply isn't needed when all 52 states pay interstate claims and 49 of the 52 already combine wages. 5. A Federal standard would prohibit a state from paying benefits to individuals involved in a labor dispute or strike On the surface this would seem to be a very desirable standard; however, only two states-New York and Rhode Island-would pay benefits to workers involved in a labor dispute. In the case of New York, a worker involved in a strike would have to wait seven weeks, and, in the case of Rhode Island, six weeks, in order to receive benefits. It is our understanding that even in these states only a few benefits have actually been paid to striking workers, the reason being that very few disputes last long enough to make an employee eligible. Here again, the number of people who would be involved in the situation is so negligible that one wonders why a national federal standard was proposed in the first place. 6. A Federal standard would prevent the cancellation of wage credits or benefits for any separation reason other than misconduct, fraud, or the receipt of disqualifying income. The principle reasons for which an employee might receive benefit cancellation other than those listed are voluntarily quitting his job or refusing to accept 35-277 0-69 -37 suitable work. Presently, only five states would cancel all benefits as a result of voluntarily quitting and only four states would cancel all benefits for the refusal of suitable work. In addition, twelve states would reduce benefits for voluntarily quitting and eleven states would reduce for refusal of suitable work. In other states, the penalty is more flexible and is applied in accordance with the facts in the particular case. We believe that the idea of penalization of an employee by denying or refusing benefits when the employee brings about his own unemployment is consistent with the purpose of unemployment compensation. The program was originally designed and is still motivated by the desire to provide benefits to those persons who are unemployed through no fault of their own. A person who commits misconduct, who perpetrates a fraud, who voluntarily quits or who refuses a suitable job has brought about his own unemployment. It seems only right to us that such an individual should not participate in the unemployment benefits provided to the same extent of a person who lost his job by being laid off through no fault of his own. 7. A Federal standard would require at least 15 weeks of work (or a wage equivalent) in order to qualify for benefits. At the present time, most states require an even greater degree of attachment to the labor market (either more wages or more weeks of work) than the standard specified in the Administration Bill. The provisions would seem to have no effect at all in 30 states and only moderate effect in 22 states. The greatest change would come in those few states which permit persons to qualify for benefits with a flat dollar amount of wages, although, in such states, the eligibility requirements may be a bit lenient. A federal standard to correct a minor fault does not seem justified. To summarize our position on the seven federal standards, we believe none are justified. The illnesses that the federal standards purport to cure are, for the most part, already on the mend and the cure provided by federal mandate may well do the patient more harm than the minor indisposition from which he suffers. By and large, we believe the states to be doing a good job. Admittedly, improvements are needed, but the states have demonstrated their ability to make needed improvements without federal control. Let's continue that system which allows the states full participation in a "creative partnership." JUDICIAL REVIEW Presently, the Secretary of Labor has tremendous and arbitrary power to affect adversely the economy and employers of any given state. Under present law, the Secretary of Labor may withhold grants for administration and he may deny a tax credit to the employers of a state if a state fails to meet certain requirements specified in Section 3304 of the Internal Revenue Code. Such a finding by the Secretary of Labor is final and binding. No court has the power to review a "non-conformity" finding by the Secretary of Labor. Such a power on the part of the Secretary of Labor is almost one of life and death over a state's economy. Presently, the major protection that a state and its employers have from the abuse of arbitrary power on the part of the Secretary of Labor is the "Knowland Amendment." Under this amendment, before the Secretary of Labor may make a finding of a "non-conformity" all of the administrative and judicial remedies available under state law must have been exhausted. It is only this provision that prohibits the Secretary of Labor from interfering in the day-to-day operations of the various state agencies. Even so, additional protection is needed. Any finding of non-conformity, even after exhaustion of state remedies, to be fair, must be subject to review by the appropriate federal courts. The Administration Bill (HR 12625) makes a stab at it but misses the mark. And, in addition, the Administration Bill would do away with the "Knowland Amendment." The judical review provided in the Administration Bill would require that a court must support the findings of the Secretary of Labor at a conformity hearing if the findings of the Secretary are "supported by substantial evidence." In the bill enacted by the House in 1966 (HR 15119) it was provided that the Secretary of Labor's finding would be conclusive unless contrary to the "weight of the evidence" and, furthermore, that bill did not destroy the protection now offered by the so-called "Knowland Amendment." To summarize, HR 12625, the Administration Bill, would do away with the "Knowland Amendment" and would provide that the court must support the Secretary if there is substantial evidence to support him even though the weight of the evidence may be to the contrary. The prior Bill, HR 15119, leaves intact the "Knowland Amendment" and would allow the federal court to examine all of the evidence and determine whether or not the Secretary's findings were supported by the preponderance or "weight of the evidence" submitted. This seems to us to be far superior to the provisions of the Administration Bill and we urge the Committee to adopt those provisions regarding judical review which were contained in HR 15119. EXTENDED BENEFITS Twice in the past once during 1958 and again in 1961-the Congress was called upon to adopt programs providing for extended benefits. In both of these cases, the country was in the throes of a recessionary period which was causing an excessive amount of unemployment. We commend the Administration for suggesting that an extended benefit program be enacted on a permanent basis in a period of relative economic stability and full employment. The Congress will have an opportunity to give a more deliberate and judicial consideration of the kind of program which should be enacted. An examination of the programs enacted in the past by the Congress would seem to indicate that such programs were not entirely satisfactory. Much economic opinion has been expressed that such programs came too late and lasted too long. The Administration proposal, HR 12625, would trigger in a national provision for extended benefits based upon national unemployment figures and would be financed solely by the Federal Government. Again, back in 1966, after careful and deliberate study, the House Ways and Means Committee adopted and the House of Representatives passed a bill which proposed a system of extended benefits. That bill would have triggered in and triggered out extended benefits on a state-by-state basis and a national basis. The system would have been financed by both the State and Federal Governments on a 50-50 basis. One economic fact is obvious that is, recessions do not occur over the entire country at the same time. Recessions begin locally and their spread is spotty. The national effect is by evolutionary development. If only a national trigger is used, many states are triggered into the extendedbenefit program long before it is needed and keep it long after its usefulness is at an end. A state-by-state triggering device would seem to be not only logical, but warranted by simplicity of administration and by its response of an economic need in each state as it develops. Also, it makes sense under a "creative State partnership." The Administration Bill (HR 12625) would require 100% federal financing for the extended benefit program. The prior Bill (HR 15119) would have required financing by both the Federal and State Governments on a 50-50 basis. We support a 50-50 basis for financing because it is further evidence of the Federal-State partnership. The other provision of HR 15119 dealing with extended benefits seems to us to be important. This was the provision which would have allowed states to determine eligibility for such benefits. It seems reasonable that a person who is to receive extended benefits should have had a substantial attachment to the labor market. The provision of HR 15119, which would have permitted the states to require additional employment during base period to make a claimant eligible for extended benefits, seems reasonable. ADDITIONAL REVENUE The Administration Bill (HR 12625) purposes to finance the extended benefit program solely from federal revenue. The method by which such revenue would be garnered would be by raising the federal tax base from the present $3,000 to $4,800 in 1972 and to $6,000 in 1974 and thereafter. We oppose this method of raising federal revenue because (if the principle of 50-50 federal-state financing is adopted) the Federal Government will not need that much revenue. We also oppose the wage base increase because it is very detrimental to the stability of the merit rate provisions of the various states. Every state (except Alaska) would be forced to make substantial increases in its taxable wage base. A total of 27 states would be required to double their taxable wage base which would jump from $3,000 to $6,000 in 1974. Such an increase in state taxable wage bases would play havoc with their experience rating provisions. Reserve ratio or other changes would be necessary to adopt the state experience rating program to the federal taxable wage base. In the past, the states have always had the responsibility and the freedom to adapt their tax rates, and their tax base and their experience rating formulas to their own specific requirements. In total, 22 states have elected to increase their taxable wage base. If a wage base increase is desirable, it should be determined by the individual states. Even if a federal taxable wage base increase is deemed to be advisable, it could be accomplished without a concomitant effect upon the state taxable wage base. It would only be necessary for the federal law to provide for a federal wage base increase, but, for purposes of state law, and for purposes of the calculation of the federal tax credit allowed for payment of state taxes, the federal wage base should remain at the $3,000 level. There is already precedent in the federal law for this procedure. Currently, for purposes of calculating the federal tax credit allowed for payment of state taxes, the federal tax rate remains at 3% although the actual federal tax rate has been raised to 3.1%. If the Congress should determine that it is not feasible to raise the necessary revenue by freezing the federal tax base at $3,000 for purposes of the state tax credit, then, and in that event, we would favor a Federal tax rate increase as opposed to a taxable wage base increase. LUMBERMEN'S ASSOCIATION OF TEXAS, Austin, Tex., October 3, 1969. Re Public Hearing on H.R. 12625. Chairman, Ways and Means Committee, U.S. House of Representatives, Longworth House Office Building, Washington, D.C. DEAR MR. MILLS: This letter is written on behalf of the Lumbermen's Association of Texas, a retail lumber dealer's association, composed of slightly more than 900 Texas dealers. Our association has always taken an interest in legislative matters and particularly those which deal with our employees. We have supported our State Legislature in the enactment of constructive legislation in this field. Generally speaking we favor unemployment compensation legislation which provides interim support for persons who have been deprived of employment through no fault of their own, but at the same time encourages the unemployed to seek and secure other employment. It is our opinion that the present law in Texas on this subject is more than adequate. Our examination of H.R. 12625 reveals weaknesses which we believe would be detrimental to this program. For this reason our association wishes to officially register its opposition to this bill at this time and urge that it not be approved by your committee. My DEAR CONGRESSMAN: I am transmitting herewith, a brief statement of our position on HR 12625, together with some supporting statistical material compiled by the California Department of Employment in December 1965 as a result of an Assembly Resolution. We are assured by the Department of Employment statisticians, the data included in this report stands up under the labor market conditions of today in California. You will note that my testimony relates primarily to California. Other Western states, notably Washington and Hawaii would have comparable though not identical problems with HR 12625 but I have emphasized California both because it has more than a quarter of a million Teamsters residents and because the Unemployment Insurance program in California is among the best in the country. If HR 12625 were enacted in its present form it would require the California Legislature to make many adjustments in the present law and would provoke bitter controversies. The Teamsters would, of course, welcome the extensions of coverage proposed in the bill but they would strongly oppose the weeks of work test proposed in Section 121 (12). The effect of these restrictions would be to eliminate about 30% of those currently covered by the California act. I might add that for the past three sessions of the California Legislature, we have opposed such tests of eligibility. These weeks of work tests were far from securing passage in Committee and did not have majority support in either house. I should be happy to amplify the enclosed statement but I thought it would be better at this stage to concentrate upon the major points of the bill and its drastic effects on some of our programs in the West. Sincerely yours, EINAR O. MOHN, Director, Western Conference of Teamsters. STATEMENT OF EINAR O. MOHN, DIRECTOR, WESTERN CONFERENCE OF TEAMSTERS The reaction of the Western Conference of Teamsters to HR 12625 is mixed. We suport the extensions of coverage proposed by the bill although very few of our members would directly benefit. We have some members in agriculture (many of whom are already covered by the provisions for voluntary coverage in California); some salesmen and delivery men; and a very few in non-profit and educational institutions. Of the 380,000 covered in California by the proposed extensions of coverage, I seriously doubt that three thousand California Teamsters would benefit. But we have and do support the principle of extending coverage, although I cannot refrain from pointing out that the 190,000 agricultural workers in California who would be covered constitute scarcely 50% of our farm labor force. We are emphatically opposed to the weeks of work test proposed in Section 121 (12). For three successive years we have successfully opposed similar proposals in the State Legislature. We have based our opposition on the grounds that (1) such tests are based on the attractive but fallacious concept of "attachment to the labor market," and (2) that they result in gross inequities for certain age groups, occupational groups, ethnic groups and localities. 1. THE CONCEPT OF ATTACHMENT TO THE LABOR MARKET The Teamsters certainly do not wish to have benefits paid to anyone not genuinely ready, willing and able to accept suitable work. We recognize that to apply the test of availability to individuals is very difficult. However, all attempts to measure the availability of groups and classes of individuals by the numbers of weeks worked or the number of quarters in which wages are earned, must result in inequities because they are based on the fallacy that opportunities for work afford a yardstick for measuring an individual's willingness, ability and readiness to work. Consider the historical fact that in 1933 some 25% of the work force was unemployed and that many skilled workers had been unemployed for years, whereas in 1943 under 2% of the work force was unemployed and most of them only briefly. Does this fact mean that in the decade from 1933 to 1943 some millions of workers had developed a new attachment to the labor market, or does it reflect an increase in the opportunities for work? |