PREPARED STATEMENT OF AUGUST SCHOLLE

The problem of the aged and aging person is no different from the problems of all working-class members of our society. It is simply a matter of survival. The only difference is that at some particular age it is expected that he is entitled to put down his tools and share in the benefits of the wealth he has helped to produce. But many of our older people are being pushed aside long before their time, called useless, and left to fill the ranks of the unemployed, ultimately to accept the doles provided by welfare through taxes upon working members of their communities who are unable to assume these additional burdens. Others are provided with inadequate pensions which do not even furnish the necessary food and shelter they require. They are forced to seek the aid of relatives who often have little to give, or to seek refuge in substandard homes with others who are also cast off and forgotten.

In general terms, the aged fall into one of two basic groups; those who are unemployed prior to reaching retirement age, and those who have reached retirement age.

In the first group we find that men and women from the age of 45, and often 40 (even younger in the case of women) up to age 65 are constantly denied employment. Studies show that while older workers constitute as many as 35 to 40 percent of all job applicants they get only about 18 to 22 percent of job placements made by public employment services. Many private agencies will not even take their applications.

Most employers deny that it is their policy to discriminate in hiring on the basis of age, yet even the orders they place with the public employment offices have been restricted 50 percent of the time, on a national average. Even a cursory glance at the age restrictions in the "help wanted" columns of daily newspapers make their righteous denials a mockery.

In many instances, industry considers people even of 35 or over to be too old for employment in their new industries. They will often hire young graduates of technical and trade schools rather than to go to the expense of retraining semiskilled workers who are laid off from obsolete operations which have been replaced by automated processes. The result is a hard core of unemployed workers, often with many years of seniority, in the 45-65 age group. Hope of employment for those workers over 50 years old is very remote. At age 60, retirement programs could help to take over this burden, as I will point out later. However, retraining and relocation are essential employment aids to workers in the preretirement age groups.

Older workers, and the whole economy, would benefit from improved unemployment compensation standards as well as a more adequate system of job counselling, placement, retraining and vocational rehabilitation. In my testimony before the Special Senate Committee on Unemployment Problems in Detroit last week, I presented suggestions on this subject which would be beneficial both to older workers and others who are denied employment through no fault of their own.

Very briefly, we recommended a five-point program to aid the unemployed:

1. Adoption of Federal standards to assure 39 weeks of duration and other minimum standards for the present State system.

2. A supplementary program provided by congressional action to assure benefits until reemployment for those who have exhausted benefits under Federal-State systems, but who are otherwise eligible.

3. Retraining, reemployment and voluntary relocation programs for those industrially displaced through automation, merger, technological changes, physical injury, age, etc.

4. Financing of items 2 and 3 through a special national fund established by a separate employer tax of 1 cent per hour per employee in covered employment with additional funds, if necessary, through congressional appropriation.

5. Detailed studies of cost of unlimited duration of benefits, and developing and financing programs for retraining, reemployment and voluntary relocation of displaced workers.

Obviously all of these items designed for the relief of the unemployed would be of aid, too, to the aged and aging workers who cannot find employment because of age discrimination. Certainly this kind of discrimination, which prevents people from providing for themselves, like any unreasoning discriminatory act, is a scandalous indictment of our free-enterprise system which should be corrected.

While a national full employment policy and program would go far in solving this problem, the present administration and the Congress have not realistically faced the need for such a policy and the means for implementing it. We would clearly be nearer a solution if the Congress, the States, and the communities would act on the legislative program recommended by the AFL-CIO to put America back to work.

Following is a brief portion of a resolution on aging passed at the recent convention of the AFL-CIO which spells out their legislative program:

1. Improvements in social insurance programs so that the great majority of older people will get adequate cash benefits as a matter of right, with accompanying improvements in public assistance to eliminate substandard levels of maintenance.

2. The addition to old age, survivors' and disability insurance of health benefits to pay the costs of hospitalization and related medical care for the aged and other beneficiaries of old age survivors' and disability insurance. 3. Housing legislation that will assure the availability to elderly couples and individuals of comfortable living quarters at a reasonable cost.

4. Labor legislation that will permit all workers during their years of employment to have the benefits of unionism and a decent minimum wage. 5. Tax, financial and other measures that will promote rapid economic growth and full employment, so that old and young workers alike will have good job opportunities at rising levels of earnings. Rapid expansion of national output will provide the economic basis for good housing, community facilities and services, and other essentials properly desired by all the aged. Such growth in output should not be defeated by wrongly based fears of inflation, now used to defeat essential expenditures for the general welfare.

In short, a meaningful program to aid chronically distressed areas, decent public housing and urban renewal, more liberal programs for distribution of surplus foods, better social security benefits, and realistic standards for disability retirement and earlier retirement at age 60 for both men and women for whom possibility of reemployment is either remote or nonexistent would be important steps in the right direction.

Let's point out one major deficiency in our present social security laws. There is no provision whatsoever for the protection of women whose husbands die prior to the time the women are old enough to be eligible for social security benefits.

Although the husband may have contributed for 20 years or more to social security through deductions from his paychecks, in many instances we find that the widows of covered employees under the social security laws receive no benefits whatsoever for their maintenance for periods extending up to as long as 25 years. Eligibility for pensions should be provided for such widows in the event they are not employable or as a result of circumstances are unable for physical or other reasons to obtain work.

Under the proposals that we have made for unlimited unemployment insurance these widows could become eligible for unemployment compensation provided they made themselves available for suitable work. But as of today, they stand as an outstanding example of a deficiency in our social security program.

Another area of vital concern to the aged worker mentioned in the preceding resolution is adequate health and medical care. By 1970 it is predicted that 11.3 percent of the population will be 65 years of age or older, and will require 34 percent of the total hospital facilities. Needless to say, people on inadequate Federal pensions, or without normal means of support cannot afford the medical needs that become constantly more frequent with increasing age.

But beyond these legislative steps toward full employment and other social benefits, other special legislation is needed to protect the middle-aged and older worker from being denied employment for no reason other than his age. There was a time when the seniority provisions in union contracts were extremely effective in helping the older worker to keep his job. These provisions are still effective as long as the job continues to exist, but we are finding, increasingly, as automation moves inexorably forward in Michigan industry, that even seniority fails to protect the older workers' jobs. Through a little understood process of acceleration middle-aged and older employees are being discarded as a result of processes of reorganization, merger, plant relocation, decentralization and automation. We have tried to protect the worker in collective bargaining by negotiating a broader basis of seniority protection, but the "shaking out"

continues in constantly greater proportions despite our efforts to protect the worker's rights to his job.

By now, the story of the Packard and Hudson workers in Detroit is well known-many of the older men from these plants have spent 7 or 8 years looking for a permanent job, or even a temporary one that would tide them over until they could qualify for a diminished company pension and a woefully inadequate social security benefit. The Packard and Hudson layoffs were dramatic because they involved large and well-known companies which were going out of business, but there are hundreds of smaller establishments and many units of the larger companies which have been similarly affected by the direct and indirect impact of automation. Thus, tens of thousands of Michigan's middle-aged and older workers have been dumped upon the manpower scrap heap by employment policies and practices which make the oft-mouthed management cliche about moral responsibility sound like a mockery of our American moral and ethical standards. For these men and women who are too old to work and too young to retire something specific and positive must be done. One thing that would help is a national law outlawing discrimination in employment on the basis of age with sufficient legal teeth and administrative staff to permit a sound and effective educational and enforcement machinery. Five eastern industrial States-Massachusetts, Rhode Island, Connecticut, New York, and Pennsylvania-now have such laws and many others, including Michigan are considering one. The experience to date indicates that the laws are effective in curtailing outright discriminatory practices, and that they can be enforced where adequate provision is made for administrative staff to carry on both an enforcement and educational program.

Along with this national legislation, we would recommend an amendment to the Wagner-Peyser Act to provide for the establishment of a special job counseling and placement service for middle-aged and older workers with accompanying appropriations to do the job. In 1956 and 1957, the Secretary of Labor requested and spent almost $1 million for research and studies of the employment problems of older workers. The studies showed that there was a real problem and that there were practical solutions. Yet, beyond a token publicity program and a token grant of about $400,000 to finance one older worker specialist in each of about 100 cities in the United States, little has been done by the Federal Government to implement the findings of these studies.

Governor Lawrence estimates that Pennsylvania alone needs an extra $1 million a year in employment security grants to administer this program properly. Michigan would need at least $750,000 for this purpose, and it is estimated that nationally perhaps $10 to $15 million a year could profitably be spent in putting the older workers' skills to constructive use.

We also need a greatly augmented program of training and retraining services in order to refurbish the skills of these displaced and discarded older workers. A few States like Pennsylvania have tried to develop retaining programs. In Michigan the Governor's special commission on employment of the older worker strongly recommended the development of a retraining program closely integrated with the provision in the employment security law which makes it possible for a claimant to draw benefits while engaged in training. But, hard pressed as it is to meet its current financial crisis, Michigan, like many other States, will not be in a position to do very much about retraining without some positive leadership and financial assistance from the Federal Government through Congress.

As we have stated before, unemployment is not a local, but a national problem which is created in great part by technological advances which may ultimately make an even more radical change in our way of life than the industrial revolution once did. The shift from one method of production to another is not one which can ultimately take its natural course on community or State levels. The communities which are overburdened with local unemployment are those which are least equipped to handle it financially.

We therefore recommend that the Federal vocational education program be expanded to provide both administrative leadership and appropriations in the form of grants to States to assist in the training and retraining of older men and women. Industry, through its contribution of a penny an hour mentioned earlier, an average of 40 cents per week per worker, for additional funds to finance longer range unemployment compensation for their displaced workers would be making a moral and ethical contribution to solving our dilemma. There should be a sufficient amount of money left over to aid in this educational

program as well, and the balance could be provided by congressional appropriation. Therefore the cost of these items would be very small in relation to the return. State unemployment insurance reserves would not be steadily drained, and public welfare loads would diminish radically. In addition, the ultimate productivity and economic adjustment of the retrained workers would do much to stimulate the economic growth of the entire Nation, which could result in greater leisure and social benefits for all of our people.

Another major problem relates to those aged workers who have reached the age of 65 and are eligible to retire. If we are ever realistically to cope with this problem Congress is going to have to provide for some type of escalator provisions for both tax collections to adequately finance our whole retirement prgram as well as an escalator clause for retirement benefits. Quibbling over specified amounts of dollars will never be an adequate answer to this problem. The average worker, 30 years ago, when wage rates were averaging approximately $25 per week, would have felt heir to a real bonanza if he were to have received our present pension rates.

However, if we establish today a $150 rate per month, or even $300 per month, within 10 years it may prove to be totally inadequate to provide a retiree even a very modest standard of living.

Therefore, Congress should very seriously consider amending the social security laws to provide for cost-of-living escalators which would establish a realistic basis for a pension program which would meet minimum requirements for a decent standard of living. Maximum dollar stipulations will never solve this problem with predictions of inevitable inflation in the future.

We have already referred to the national AFL-CIO program which indicates the necessity for considering other factors such as health insurance, medical care, housing, disability insurance, etc. In addition, whenever economic conditions are such that more than 3 percent unemployment prevails nationally, voluntary retirement with full benefits should be possible for anyone over the age of 60.

In addition, all pensioners should be permitted to earn, in supplement to their pension payments, an amount up to the amount annually determined by the U.S. Bureau of Labor Statistics as necessary for a decent minimum standard of living.

Slowly but surely we are learning in America that we cannot live up to our responsibilities for leadership in the free world unless we can demonstrate that our form of government works best for all the people. We have seen the costs of racial discrimination, of religious intolerance, of political jingoism to our status and prestige in other parts of the world. We have yet to realize apparently, that the problems of the aging and the aged, and the way in which they are handled, also affect our moral and ethical profile around the world. For all the nations of the world, and particularly the Western democracies, also face a critical problem in dealing with older and retired persons. It is therefore important that we do what we can to utilize and develop the potentials of our middle-aged and older citizens not only because it is the humanitarian and the socially sound thing to do, but because in the struggle for survival we may find that we need them fully as much as they now seem to need us.

Senator MCNAMARA. IS Mr. James Deremo here from the American Seating Co. We will be glad to hear from you now, Mr. Deremo. Do you have a prepared statement, sir?

Mr. DEREMO. I have prepared a paper, yes.

Senator MCNAMARA. Will you see the recorder has a copy of it, and we will print it in the record, and if it is a long one we will ask you to summarize it in your own manner.

STATEMENT OF JAMES DEREMO, MANAGER, EMPLOYEE SERVICES, AMERICAN SEATING CO., GRAND RAPIDS, MICH.

Mr. DEREMO. This will be just a summary, Senator. It is not a lengthy paper. It is only two or three pages long. Before we get into any material, I want to preface my remarks by saying most, in fact all of the work was done by myself as an individual. I am not

representing the company for whom I work. Your committee caught us in the middle-like a kid going swimming. He is undressed and ready to take the plunge but he hasn't gotten wet yet. We have all of the material here but we haven't gotten wet. We don't have our plan in operation.

PRERETIREMENT PLANNING

Better than a year ago we were presented the problem of studying the possibility of getting into some type of preretirement planning program. We spent considerable time with Dr. Wilma Donahue, of the University of Michigan, and the University of Chicago, investigating this problem. So what I thought you might be interested in is, at least in our opinion, to what extent industry can get into this problem of retirement planning and just how and why.

When we first looked at this problem we tried to find out, first, Is there a problem? What is it? And to what extent would we be involved in it? You are probably enlightened more than I about the magnitude of problems of all of these people who are 65 years of age and over living in our society after their working careers. We asked ourselves, What does this actually mean to us? We decided these people are definitely a part of our community and what affects our community affects us. This is no secret; there is no question about it. We can't duck it. We did decide the individual is primarily responsible for preparing himself for retirement, but he has to be motivated. We decided it was partially industry's responsibility to help provide this motivation. With that background we then asked ourselves the question, Why is a program good for us? One of the biggest reasons is that for years you pay into a pension plan many thousands and thousands of dollars until you have a very sizable investment. You do that for one of many reasons, but one of the principal reasons you do it is to help provide a better life for the individual after retirement.

Well, if this isn't accomplished and if this individual doesn't have the so-called better life, then you have made a bad investment somewhere along the line. We think it is the other half of the pension program in helping this individual to get the most out of his retirement and get the most out of your investment. There are many other reasons also which we won't get into detail here.

VARIOUS TYPES OF PROGRAMS

We then ask ourselves, What are the various kinds of so-called preretirement planning programs? We asked ourselves such questions as, Who do they cover? Do they cover hourly and salary people equally and, in a different program or the same program? How about the use of magazines and various house organs? How about the typical dinner and gold watch ceremony that has been going on for the last umpteen years? What types of real formal programs are there? Are wives included? Are they held on company time or employee time? Are they held on the premises or off the premises? After researching answers to these questions, we came up with about four or five really basic programs that are being conducted throughout the country today. I think at the time of our study we wrote to just

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