they are inactive. State advisory councils on employment security should be encouraged to assume an active role in the program. Promoting Improved Efficient and equitable administration is of the utmost importance in unemployment insurance, since a large number of administrative decisions must be made continually and rapidly to determine if a person is eligible for benefits. The need for high quality in administration is most apparent in those aspects of the program which involve the determination of current eligibility for benefits and direct contact with claimants. In these aspects of the program, efficient procedures for claims taking, interviewing, and reconsidering claims and appeals are essential to adequate fact finding and correct determination of rights to benefits, a determination that assures both full and prompt payment of benefits to claimants entitled to them and denial of benefits to those who are not eligible. The Council recognizes that responsibility for the fair and efficient administration of the unemployment insurance programs is primarily the responsibility of each State. The quality of administration will necessarily depend in large part on the caliber of the personnel selected to do the State job. There can be no substitute for a career service with high standards of job performance and careful training for the complicated task of administering unemployment insurance. The Federal Government, however, has an important role in administration in enforcing minimum standards and in providing administrative funds. which will provide additional funds for State administration of unemployment insurance. These funds would enable some States to pioneer in administration and do more than the minimum which the Federal Government is willing to approve as necessary for all States. The purpose can be accomplished by providing that some funds which could be used for administration be automatically assigned to the States. Because of great variation in work loads depending on the level of unemployment, a large contingency fund should be authorized in addition to the regular appropriations to the States and the Social Security Administration. Although the Federal law provides specific authority for requiring "such methods of administration as are reasonably calculated to insure the full payment of compensation when due," equally specific authority is not given to require methods that will prevent improper payments. The Council has proposed that this situation be corrected. The Federal Government has a particular responsibility for the protection of employees who move from State to State. In both war and peace, it is important that people should be free to move and that those who move should not be discriminated against either in regard to their benefit rights or their right to prompt payment. The Council proposes the establishment of Federal provisions to assure the coordination of the individual State laws in such cases. Disqualifications The Council believes that the Federal interest requires the establishment of a standard on disqualification provisions. In 22 States employees who are disqualified not only are denied benefits for unemployment immediately resulting from the voluntary quit, refusal of suitable work, or discharge for misconduct, but also lose accumulated benefit rights which would otherwise be available to them if they are subsequently employed and suffer a second spell of unemployment. The Council can see no justification for these punitive provisions in a social insurance program and recommends that they be prohibited. Fed eral action is apparently needed to correct this situation, since the number of States with such provisions has been increasing. In 1937, seven States reduced or canceled benefit rights for causes other than fraud or misrepresentation; in 1940, 12; and in 1948, 22. The Council also believes that the postponement of benefits as the result of a disqualification should be for a limited period only and recommends a period of 6 weeks as the maximum. This is probably the longest period during which it is reasonable to presume that the original disqualifying act continues to be the main cause of unemployment. The Federal standard should also prohibit interpretations of "misconduct" which tend toward making inability to do the work a basis for a finding of misconduct. Study of Supplementary The State-Federal system of unemployment insurance should pay benefits of sufficient duration to permit most covered workers in normal times to find suitable employment before their benefit rights are exhausted. Furthermore, the Council has recommended that the State-Federal public assistance program be strengthened to meet more adequately the needs of unemployed workers ineligible for insurance benefits or with inadequate insurance rights.' These dual provisions for the unemployed through the State-Federal programs would suffice, the Council believes, unless the country is again plunged into a period of severe economic distress. In that event, additional Federal action would clearly be needed for the relief of the unemployed. A depression has an uneven impact upon different cities and regions, and many States and localities are not capable of meeting the greatly increased expenditures necessitated by mass unemployment. In such a period only the Federal Government has sufficient credit and sufficiently broad eventual tax resources to meet the full need. 1 Recommendation 2 in the public assistance report provides for Federal grants for "general assistance." Public Assistance, A Report to the Senate Committee on Finance (S. Doc. 204, 80th Cong., 2d sess.). The Council has not been able to make a thorough study of the alternative lines of action open to the Federal Government for providing income maintenance for the unemployed in such a situation and has therefore made no specific recommendations on this point. We recommend, however, that the Congress should direct the Federal Security Agency to study in consultation with other interested agencies various methods for providing income security for workers who do not have private or public employment and to make specific proposals for putting the best methods into effect. PRESIDENT'S (Continued from page 11) "The total of budget expenditures for social welfare, health, and security also is expected to rise in the fiscal year 1950, to nearly $2,358 million, exclusive of expenditures from trust accounts. The increase over the fiscal year 1949 is $394 million, of which $147 million is in transfers to the railroad retirement trust account and $86 million is for increased grants to the States for public assistance under present Federal law. Most of the remainder of the increase is divided between present programs for the promotion of public health and proposed new legislation for medical care insurance and public assistance. "Excluding trust account transactions, new appropriations requested for social welfare, health, and security for the fiscal year 1950 are estimated at $2,271 million. In addition, $92 million of new contract authority will be needed, making a total of $2,363 million of new obligational authority for these programs. This does not include $40 million of appropriations necessary to liquidate contract authority made available in prior years, mainly for hospital construction grants. Of the new appropriations in budget accounts, $84 million is for proposed legislation. All the rest is for programs under present laws. "Public assistance to the aged and other special groups.-The public assistance programs of the Federal Government are all carried on in cooperation with the States, and the expend Temporary Disability The Council has also been unable to devote the time necessary for making policy decisions in the field of temporary disability. We have included in this report, however, a section which discusses the need for protection against wage loss due to illness and the methods that have been suggested by various groups to provide this protection. Importance of a Broad No social security program can be effective unless those who are entitled itures are almost entirely in the form of grants to State governments. "By far the largest amounts are for assistance to the aged, the blind, and dependent children, for which Federal Government expenditures under present laws are estimated at $1,064 million in the fiscal year 1950. Each State determines its own scale of benefits to individuals in these public assistance categories, and the Federal Government reimburses the States for from 50 to 75 percent of the payments in each case, up to maximum individual benefit rates specified in the Federal law. The level of these matching payments was raised by action of the last Congress. "Because of this grant arrangement, the amount of Federal expenditure for public assistance in any one year is not directly subject to Federal budgetary control, but is determined by the action of the several States in fixing benefit rates and approving individual claims for assistance. The total amount of Federal expenditures has steadily increased as the rising cost of living has compelled the States to give more assistance and the number of needy aged persons in our population has continued to rise. This increase in public assistance expenditures would be slower, and should ultimately be reversed, if other contributory insurance are made adequate to carry most of the load. "The Budget includes $65 million as the tentative estimate of first-year expenditure under proposed legislation to improve the present public assistance system and to help cover State relief payments to persons not now eli "Placement services and unemployment compensation administration.— Public employment services and administration of unemployment insurance will require approximately $150 million or about 80 percent of all expenditures for labor programs. Except for $11 million for the railroad unemployment insurance program, these funds are expended principally through grants to States. "Provision has been made, in the reserve for contingencies, for any added cost which may arise because of future statutory increases in State salary rates or because of unexpected increases in State workload. "Trust accounts.-Total unemployment benefit payments are rising above the 1948 level, in large part because of increased labor turn-over, the return of prewar seasonal patterns and because many insured workers have exhausted their claims to veterans' unemployment allowances from the Federal Government and collect State benefits when unemployed. Growth of the labor force and liberalization of State laws are also factors. Receipts are below the 1948 level because of changes in the law relating to railroad unemployment. "My proposal to strengthen the unemployment compensation system contemplates that coverage will be extended to workers in small establishments, Federal employees, and other workers not now insured. It contemplates that in some States the level of benefits will be raised and their duration extended." Notes and Brief Reports State and Local Expenditures for Assistance in Relation to Income Payments In 1947, income payments to individuals reached an all-time peak of almost $190 billion, yet public assistance expenditures continued to grow in spite of this unprecedented prosperity. Expenditures from State and local funds for old-age assistance, aid to dependent children, and aid to the blind also rose to a peak of $720 million. With general assistance payments included, such expenditures amounted to approximately $903 million. A combination of several factors gave rise to this seemingly anomalous situation. In the first place, most welfare agencies continued to adjust assistance payments upward in 1947 in an attempt to keep pace with the steady postwar rise in the cost of living, particularly in the cost of food and clothing. Moreover, many persons with formerly adequate resources found themselves needing assistance as a result of the general rise in prices. Most States, also, were in a relatively strong fiscal position during 1947. This factor, in conjunction with the liberalized Federal public assistance matching provisions, which became effective in October 1946, permitted broader recognition of need that may have existed for some time, particularly in the low-income States. addition, the changed composition of the population in recent years-the increase in the proportion of aged persons and of children in the total population-brought a rise in the need for assistance. In As a result of these various factors, all but three States (Maine, South Dakota, and Washington) spent more from State and local funds for assistance in 1947 than in the preceding year. However, in only 23 States did these amounts comprise a larger proportion of income payments than in 1946. In four States there was no 'Represents expenditures for the fiscal year 1947-48 in the 48 States and the District of Columbia. See footnote 1, table 1. change in the ratio of assistance expenditures to income payments, while in the remaining 17 States the funds used for the support of the assistance programs represented a smaller proportion of income payments in 1947 than in the preceding year. Assistance expenditures from State and local funds increased nationally 18.8 percent from 1946 to 1947. The percentage changes for the individual States varied widely from this national average, ranging from a decrease of about 5 percent in South Dakota to an increase of almost twothirds in Colorado. Twenty-one States raised their assistance expenditures more than 20 percent; 10 other States, between 10 and 20 percent. In general, the low-income States increased their assistance expenditures to a greater extent than did the Nation as a whole. Table 1.-Percentage change in income payments and in State and local expenditures for public assistance payments from 1946 to 1947 and State and local expenditures for assistance as a percent of income payments, 1946 and 1947, by State Total. Alabama. Arizona. Arkansas. California. Colorado. Kansas. Kentucky. Louisiana. Maine. State Income payments State and local expenditures for assistance Percent of income payments 1946 1947 Percentage change, 1946 to 1947 +10.8 +18.8 0.44 0.48 +9 +13. 5 +26.7 .31 +14.3 +11 +5.1 .69 .63 -9 1 Expenditures for public assistance from State and local funds exclude amounts spent for administration and are for fiscal years 1946-47 and 1947-48; these expenditures are related respectively to income payments for calendar years 1946 and 1947 For all States combined, income payments to individuals increased 10.8 percent from 1946 to 1947. Here again the individual States varied widely from the national average, the range being from one-half of 1 percent in Iowa to 43 percent in North Dakota. In only three States did the increase exceed 20 percent; it was between 10 and 20 percent in 28 States. Inasmuch as the percentage increase in assistance expenditures exceeded that for income payments for all States combined, the ratio of expenditures to income payments rose from 0.44 percent in 1946 to 0.48 percent in 1947. This small percentage change, however, represented an increase in assistance expenditures from State and local funds of $143 million. The individual States varied widely from the national average of 0.48 percent; the range was from 0.10 percent in the District of Columbia to 1.63 percent in Colorado. Similarly, per capita assistance expenditures from State and local funds showed a wide variation from the national average of $6.28, ranging from $1.14 in Virginia to $24.21 in Colorado. This wide range reflected State differences both in fiscal capacity, as measured by per capita income, and in fiscal effort, as measured by the ratio of assistance expenditures to income payments. Variations in per capita assistance payments among the States making equal efforts were sizable. For example, Connecticut and Mississippi, with approximately equal fiscal effort, spent $4.21 and $1.73 per capita, respectively, for assistance. In general, the fiscal effort to finance assistance is high among the Mountain and Pacific Coast States and low among the Southern, lowincome States. Although the fiscal effort of many of the high-income States is substantially below the national average, monthly payments per recipient of assistance in most of these States are above the national average because of their relatively favorable fiscal capacity as compared with the need for assistance. In contrast, in the low-income States, where the incidence of poverty is greatest, the general tendency is to spread the limited assistance funds among proportionately greater numbers of needy persons. As a result, monthly payments per recipient are among the lowest in the Nation and well below the national average. Most of the low-income States could increase their assistance expenditures considerably if they were to exert the same effort as all States combined. To approximate the national average expenditure per inhabitant, however, they would find it necessary, because of relatively low fiscal capacity, to exert an inordinate effort. If Mississippi, for example, were to equal the national average in the proportion of income payments that it spends for the assistance programs, the State's per capita assistance expenditures would be $3.16 or approximately half the national average of $6.28. Yet even if Mississippi did exert fiscal effort comparable to the national average, its payments to needy persons would continue to remain below the national average because of the proportionately larger numbers of people in need in Mississippi than in the Nation as a whole. No clear-cut pattern emerges with respect to the allocation of available funds among the old-age assistance, Table 2.-Per capita income payments, 1947, and per capita State and local assistance expenditures, fiscal year 1947–48, by State and program aid to the blind, and aid to dependent assistance is added, however, it is clear that low-income States allocated proportionately much less to that program than did most of the States. In the aggregate, general assistance expenditures represented 20 percent - of total assistance expenditures. Mississippi and Tennessee, however, allotted 2 percent of total assistance funds to the general assistance pro- gram; Arkansas, Georgia, Kentucky, about 7 percent; and North Carolina, 9 percent. While the national aver- age per capita expenditure for general assistance was $1.27, Mississippi spent 3 cents, Tennessee 7 cents, and Arkan- sas, Georgia, Kentucky, and North Carolina from 14 to 20 cents. Al- though this pattern of assistance ex- penditures in the low-income States is undoubtedly the result of many factors, it may be attributed in large measure to the absence of Federal participation in financing the general The Social Security Administration has recently prepared estimates of the number of persons 65 years of age and over, by State, for the years 1940- 48. The Bureau of the Census regu- larly prepares and releases current estimates of the total population by State, but it does not currently make estimates of the aged population. The present estimates, shown in the accompanying table, were derived from published and unpublished materials furnished by the Bureau of the Census and the National Office of Vital Statistics and have had the benefit of critical review by the Bureau of the Census. The method used is briefly as follows: Census esti- mates of total aged population in the country as a whole on July 1 of each of the 9 years, by 5-year age-sex- race classes, were divided by the number of deaths during the year re- ported to the National Office of Vital Statistics for persons in these classes to obtain an average number of per- State deaths in these classes. The result represented the preliminary estimate of aged persons in the State on July 1. The final estimate re- flected adjustments for: (1) chance fluctuations from year to year in the State's death rate; (2) any constant difference between the State death rate and the national death rate; (3) biases in the reporting of age in the 1940 census; and (4) any difference between the sum of the State esti- mates and the national total esti- mated by the Bureau of the Census. The basic premise behind the esti- mates is that any change in the num- tion of the United States, by Age, Color, and Sex: 1940 to 1946 (Population-Special Reports, Series P-47, deaths of aged persons. If, for ex- ample, the number of aged persons in a given State is raised substantially by additions of individuals reaching age 65 and by immigration, the num- ber of deaths of aged persons reported in that State will probably increase also. Thus, the use of mortality statistics for estimating population groups takes into account the factor of migration, as well as the effect of natural increase. Migration trends among aged persons, however, were assumed to be fairly smooth and not greatly distorted by the sharp fluctu- ation in wartime employment oppor- |