There are several immediate steps that should be taken in this direction. The earnings ceiling should be lifted from the present level of $4,800 to $6,000 annually. Benefits should be computed on the basis of the years of highest earnings for people with many years of coverage. Higher primary benefits should be provided for persons who choose to work beyond the age of 65. The retirement age for women should be reduced to 60 so as to conform with the average 5-year discrepancy in the ages of man and wife. This would facilitate the retirement of men who wish to do so at the age of 65. In order to assure that the purposes of the social security system are met in the future, we support the principle of adjusting the size of benefit payments to any fluctuations in the Consumer Price Index.

The exclusion from coverage of workers disabled before the age of 50 should be eliminated. Persons under 65 who are unable to work or to find steady employment should be afforded more liberal disability insurance and extended unemployment compensation.

Labor also advocates liberal Federal matching grants for all types of public assistance programs and the abolition of residence requirements, so long as our social security system does not extend to all.

This

Labor vigorously disagrees with the present policies permitting the Treasury Department to borrow from the OASDI fund at an interest rate of only 2% percent while paying as much as 5 percent in the private money markets. represents a loss of close to a half billion dollars annually to the fund and constitutes an unwarranted subsidy by our older citizens for other governmental programs. Legislation requiring the Treasury to pay the same rate of interest to OASDI as it does to private lenders is highly in order.

OTHER PROGRAMS ESSENTIAL TO WELL-BEING OF SENIOR CITIZENS

There are additional areas where Congress could make a contribution to the well-being of our senior citizens. One such area would be the creation of a food stamp plan with liberal eligibility requirements for our older citizens. Such a program should include a greater variety of food than has been embraced in the past and the utilization of established retail outlets in the distribution process.

We would like to point out that, aside from the broad moral reasons why our Nation should enjoy a Fair Employment Practices Act, a very substantial portion of our older workers have definite stakes in such a measure. Those older and retired workers who are members of minority groups have been denied even the opportunity to accumulate equal savings and credits toward retirement benefits as a result of discrimination in employment based upon race, color, and creed. There can be no equal treatment for such groups under our social security system until the basic problem of employment discrimination is eliminated.

The California Labor Federation, AFL-CIO, would also like to warn against one of the most ominous threats to all social legislation affecting retired workers in the form of proposals to curb the powers of the Supreme Court. Such legislation, now before Congress, would prevent Federal law from taking precedence over State law unless Congress specifically declared its preemption in a given field. Such legislation could reduce labor, civil rights, and social welfare statutes to a shambles and would precipitate unending litigation and confusion. We urge also a thoroughgoing Federal program of research into types of housing which could best provide low-cost living quarters for elderly couples and individuals. The need for housing legislation for elderly people grows ever greater, and despite the frustrations of Presidential veto, we urge the subcommittee to exert the utmost vigor in searching for ways and means to enact such programs on an integrated basis that does not isolate the aged from other age groups.

In closing, we would like to point out that the body of citizens directly affected by the employment and retirement problems discussed above constitute almost half of our voting population. We believe that failure to conscientiously to their needs would constitute a serious blow to democracy itself. One form of this weakening is seen in many of our communities where economically hard-pressed older citizens understandably give vent to their resentment by voting against local school bond proposals. By failing to face these problems squarely, we are encouraging this basic antagonism and creating artificial divisions within our national and local communities.

Senator MCNAMARA. Now you may proceed. Thank you.

STATEMENT BY DON VIAL, ASSISTANT TO THE SECRETARYTREASURER, CALIFORNIA LABOR FEDERATION, AFL-CIO, SAN FRANCISCO, CALIF.

Mr. VIAL. Senators, naturally we are very happy that you have come to California to study some of our problems of the aged and the aging. We in the labor movement are concerned with these problems and naturally so because in many respects the greater longevity of the people in this State and the Nation is in no small respect due to the improvements that have been brought about through the labor movement in working conditions, wages, hours, health, and safety, and so forth. We are proud of the contributions which we have made in improving the welfare of older workers and the retired, both through economic activity and legislative activity. But, on the other hand, we know that our contributions have been inadequate to do the job in the face of a growing population composed of older workers and senior citizens.

Unfortunately, despite what labor has been able to do through collective bargaining and legislation, we find that many of our senior citizens as they reach the age of retirement are forced to go into semislum areas, or areas of housing that border on the periphery of deteriorating housing areas which are completely unbefitting to the contributions which they have made to the wealth of this great Nation. We find that as they go into retirement, when their medical needs are increasing most and when their savings are likely to be not as adequate as they should be, that this is the period where they are also being more or less blocked out from the area of adequate medical

care.

MINIMUM BUDGET

Any proper study of the hardships of our aging population, we believe, involves intense study of economic, cultural, and social factors. We believe, however, that there is one figure which we could give you at this time which indicates a complete lack of adequacy of the present provisions for our citizens. This is the Industrial Welfare Commission budget figure for the State of California which is a minimum adequacy budget for a single working woman. $2,557.74 a year. Now, compare this with what the senior citizens are receiving under OASDI. At the present time, as you know, the average in 1959 was $72.19, and widows are averaging less than that, $54.14.

INCOME MAINTENANCE

It is

We believe this transition period from working status to a retirement status poses many difficult problems which cannot be solved by the millions of senior citizens who lack adequate retirement incomes. Certainly all the figures we have seen produced by your committee indicate that the vast majority of people going into retirement do not have the money to sustain themselves. They are almost totally dependent upon their social security benefits and their supplemental benefits at a State level, if they are entitled to any at all.

HEALTH CARE

We find that while medical care expenses are increasing, voluntary plan coverage is likely to decrease. The Health, Education, and Welfare Department of the United States has indicated quite clearly that the income of retired people is grossly inadequate to meet their medical care costs. It would be a great folly in our opinion to think the voluntary plans could do the job. Seventy percent of the people are covered by voluntary plans; yet, they pay only 25 percent of the medical bills. Forty-six percent of the OASDI beneficiaries have some kind of voluntary health plans; yet we know of the inadequacy of those plans and their high costs.

I wish I were able to come before you and say that we in organized labor have partially closed the gap through negotiated health and welfare programs, but I am afraid I cannot do so. We in California are very proud of the developments in the field of health and welfare benefits through negotiated programs. Yet, we called to your attention a study by the State division of labor statistics and research issued a few years ago. This was a large contract covering some 850,000 employed persons under the health and welfare programs. Under those contracts, a full 93 percent of the workers lost their coverage upon retirement. There were limited conversion privileges; yet, we know that these limited conversion privileges must be financed by the retired individual, at a greatly diminished benefit. Of course, when it comes to dependency benefits, they are even more greatly reduced.

DISCRIMINATION IN EMPLOYMENT

In regard to the unemployment problems of those who are approaching 40, 45, or whatever we might want to call the age of-well, I should say the problem area of employment-I do think it is necessary to go into the basis for such discrimination. We have a number of studies now by the Bureau of Employment Security and others which indicate that many of the discrimination reasons are entirely fallacious, and that they can be overcome by education and other means. However, I want to point out that the ramifications of this type of discrimination go far beyond the mere exhaustion of unemployment insurance. Such discrimination vitally affects the wage base of social security, and we feel it is most tragic that because of this discrimination there is an erosion of our social security system in the provision of benefits as a matter of right when our senior citizens become eligible for retirement.

On the matter of recommendations for action-what the Federal Government may do to eliminate some of these problems or to help correct them—we would first appeal to this committee and to the Congress, not to become so involved in some of the detail as to lose sight of what must be done in the main tent. In this regard, we are most concerned that the Congress of the United States recognize that many of the problems of older people stem from a lack of an adequate growth rate in our economy. We believe that the administration's policies in the past 5 years, with excessive concentration of monetary control and inflation, have drastically halted the growth of this economy far below what is necessary to maintain full employment. Accordingly, this has drastically cut, especially the opportunity for

employment for the older people. Therefore, we must not become excessively involved in all the smaller problems of employment of older workers and at the same time ignore the basic problem of maintaining our economy, expanding at a rate to maintain full employment and especially the opportunities for employment of our older citizens.

GNP LOSS

In the last 6 years, according to the Conference on Economic Progress, with which the AFL-CIO staff is in full agreement, we have lost as a result of our slow growth rate $150 billion. The significance of this loss in relationship to some of the problems of our senior citizens can be seen in that in the same 6 years toal benefits paid out under social security amounted to only $33.3 billion. Here we see that while we were losing great wealth in the Nation, we were losing it at a rate five times as great as what we are paying out in the way of benefits for our senior citizens. And this to our organization is a most tragic waste.

We appeal to the Federal Government for assistance in this area because the Federal Government has the tax base to do the job. If we depend too greatly on the States, we run constantly into the arguments that one State is going to overtax to the point of destroying incentives for industry to come in. Whether these are realistic or not, they are arguments which we are facing on the State level, and, in many instances, they are blocking, effective legislation.

FEDERAL GRANTS FOR EMPLOYMENT PROGRAMS

In regard to specific areas of action, we would urge the Federal Government to expand first of all its program of special assistance for employment of the aged. Grants have been made for the employment of specialists in the various State employment services, and in California we are very pleased with the current administration in that 35 specialists are now operating in the State in this capacity. This is grossly inadequate, however. We feel these programs are more in the order of pilot programs. They should be greatly expanded and primarily through Federal action in providing the funds and allocating them to the States.

LEGISLATION TO PROHIBIT DISCRIMINATION

However, we do not think that providing the services alone will do the job. We believe also that there is a need for legislation which will prohibit discrimintaion on the basis of age alone. We have long been urging enactment of such legislation in California. However, we believe that the Federal Government must also recognize its responsibilities in this regard. A few States-I believe nine of them-have acted thus far, but there is obviously too great a timelag and a need for Federal action at this point.

I think also it should be pointed out at this time that legislation to prohibit discrimination based on age and legislation to prohibit discrimination based on race, religion, and so forth, go hand in hand. We must remember that many of the minority groups denied employment are in fact also being denied the opportunity to create a

wage base for social security benefits when they are ready to retire. A number of States have made the prohibition against age discrimination part of their FEP programs. We in California labor are urging the State to do likewise as we push for such legislation before the State legislature.

FINANCING MEDICAL CARE

In the area of social security improvements, we think the most important step to be taken at this time is in the provision of medical care benefits. I have indicated to you our belief that voluntary programs are almost totally inadequate. We believe now that it is only a question of determination on the part of the Congress as to whether or not the medical association is going to succeed in postponing this program. Medical care is going to come just as surely as the social security program itself came a number of years ago. We find it discouraging that the medical association should be using the same arguments that the NAM used when they were fighting the social security program, but, on the other hand, we are pleased because we know those arguments were overcome, and we hope the Congress will overcome them this year and enact the Forand bill at the next session in 1960.

INCREASE OASI TAXABLE WAGE BASE

We believe also that there is a great need for improvement of the overall level of benefits under the social security system. Certainly the beginning step should be an increase in the taxable wage base to at least $6,000 so that this in turn will automatically provide for a greater benefit amount related to earnings. We believe also that higher benefits should be paid to those who choose to work beyond 65 years of age. We believe that there should be regular adjustments based on the cost of living for those who are presently drawing benefits under social security.

These are but a few of our recommendations. Generally, we follow completely AFL-CIO policy on these improvements. They are based on thorough research and study by the Social Security Department of the AFL-CIO. We believe that large steps can be taken in the near future to implement some of these recommendations and at the same time maintain the financial integrity of the system as a whole through necessary increases in contributions.

HOUSING

In regard to other areas of needed action, very briefly I would like to mention at least one, the area of housing. In our opinion most of the housing that is being provided for our senior citizens is simply a disgrace. The reason basically is that the Nation has been content to gear its housing policies not to housing needs, but to the profit motives of financiers and banking interests. Unfortunately, our housing programs are always directed toward providing funds through these private agencies regardless of how much they may demand in high interest rates. We believe that the problem of providing decent housing for our senior citizens cannot be solved through these programs because the aged do not have the income to pay for housing which