sive and require certainly a considerable amount of labor so far as this committee and the full committee and as far as the House and Senate are concerned before a bill in any form can be enacted into law, which, of course, contemplates time. Now, the committee spent 6 months on a similar revision of the Social Security Act before it finally got into the House; then it took another year to get it through the Senate. I am wondering what your reaction would be to a suggestion that this problem of coverage for Federal and postal employees be treated separately from the over-all provision, at least to let you get something, and then, as whatever we have is broadened, liberalized, extended, or revised, you will be in the picture at that time, anyway. Mr. WALTERS. As I said in my statement, for many years we have endeavored to have enacted into law dismissal pay, severance pay of some form, and so far have been unsuccessful. That particular question you ask has not been discussed by the members or the officers of the Government Employees Council, but my personal opinion would be that they would support legislation either separately or jointly if, in the committee's opinion, they thought it was more helpful for the Federal employees to follow that procedure. I do not know that we would have objections to having separate legislation. And by that same token, if this committee and the Congress will do a similar job to the unemployment insurance, even though it might take you 6 or 8 months, as you did to the socialsecurity law, I think it would be time well spent, and you would certainly do a good job. Mr. BYRNES. That took 2 years to get the social-security legislation through. What I am thinking of is the practical situation with which you are confronted and the fact that this group of employees has nothing. Mr. WALTERS. That is right. Mr. BYRNES. And you are also moving into a period of expanded Federal employment and whether, under those circumstances, for the over-all good, particularly for the good of this group, it would not be advantageous to recommend that special consideration be given to this specific problem, at least at this time, rather than to have it wait through the whole process of a general revision. I would like to get your reaction to that. Mr. WALTERS. I have an idea my people would be most anxious to support that. It would bring this complexity about, I guess: if we were covered by the amendment, we will say, we would go under the provisions that exist now, and then, when you went into this full study of making the benefits and the amounts more liberal, of course, we would be considered along with the other groups. Mr. BYRNES. That is what I would have in mind. Mr. WALTERS. I think our folks would be most happy to support that; because, as you well stated, our main objective is to get something, to get them covered; because many of our people suffered in the last 2 years due to the fact that they had no coverage, just as the chairman, Mr. Forand, so well and ably stated. Mr. MASON. I want to make one thing clear, if I may. Mr. Walters, you recognize the fact that if Government employees and their problems were taken out, that would be a much simpler problem as a whole than the whole thing, because that would not 76344-51-10 impinge on State rights or anything else; it would be just Government employees. I do not know, but perhaps the subcommittee and the Ways and Means Committee could handle that much simpler problem more easily, and it could be done with more speed and dispatch. Those are things we have to consider. Mr. WALTERS. That is right. We will be glad to fully cooperate with you on that and do anything we can to assist in helping this amendment get put over. That is all I have. Mr. FORAND. We thank you very much, Mr. Walters, for your contribution. Mr. WALTERS. Thank you, sir. Mr. FORAND. If the committee has no objection, at the request of Mr. Gregory, I will submit for the record a statement by Mr. Hugh H. Cardon, president of the National Association of Employees of Collectors of Internal Revenue; also a statement by Mr. C. L. Miler of the Industrial Commission of Wisconsin. Mr. BYRNES. May I ask if you are including with that letter the excerpts from the biennial report of the Industrial Commission of Wisconsin, in addition to his letter? Mr. FORAND. No; I was not including the letter. The letter just requested that the excerpts be included. Mr. BYRNES. I ask that the letter be included along with the excerpts. Mr. FORAND. Without objection, that will be done. Mr. BYRNES. The letter addressed to you. Mr. FORAND. Without objection, it is so ordered. I also submit a letter from Mr. E. L. French, of the Missouri State Chamber of Commerce. (The matters above referred to are as follows:) Hon AIME J. FORAND, THE STATE OF WISCONSIN, Chairman, Subcommittee on Unemployment Compensation, DEAR MR. FORAND: We have just learned that your subcommittee is starting hearings today, December 12, on various proposals for Federal legislation in the unemployment compensation field. We understand, however, that the interested Federal agency, located right in Washington, had several days' advance notice. We submit that your schedule has afforded very limited notice-for at least this one of the many State agencies charged with the responsibility of administering the several State-enacted unemployment compensation laws. Wisconsin's Industrial Commission has, by law, a proper interest in any proposal for Federal legislation to change the existing system of unemployment compensation. The State laws are bound to be affected by such Federal amendments. That's especially true, and important, considering that many of the proposals for Federal legislation aim to restrict and place further limits on State action in this field. At this writing we do not know which issues and proposals-in this rather technical and controversial field-your subcommittee plans to explore. So we are at a loss to know what kind of oral or written testimony would be relevantfor any hearings record you may be making. Even if we knew, adequate testimony would take considerable time to prepare. We do not know, further, how long your hearings will last, or whether the entire Committee on Ways and Means will in due course (as in past years) hold more comprehensive hearings on clearly stated unemployment compensation issues (or on a single concrete bill of proposed unemployment compensation amendments), before seriously considering action on the far-reaching questions involved. Under these circumstances, we hereby submit-for the record-the attached pages from the 1948-50 biennial report of the Industrial Commission of Wisconsin. They relate to various unemployment compensation "federalization" issues. We are, further, sending you- under separate cover-a bulky October 1950 report (referred to in the attached pages) as to the long-range financing of unemployment benefits, under State unemployment compensation laws. That interstate committee report is directly relevant to the issue of Federal "loans" to State unemployment funds, as against Federal "gifts" (politely called "reinsurance" grants). Many pages of that report belong in your hearings record, in case you consider that issue at all. The above items are hereby submitted on a stop-gap basis, pending further information as to the scope and nature of your unemployment compensation hearings. This hasty letter may at least suggest that many State governments have a vital interest in any proposals affecting the State unemployment compensation laws, and should have adequate notice and opportunity to be heard. Sincerely, INDUSTRIAL COMMISSION OF WISCONSIN, (Submitted for the record by C. L. Miler, Industrial Commission of Wisconsin:) "FEDERALIZATION" ISSUES Efforts to "federalize" all State unemployment compensation programs are still under way in the Nation's Capital. Persistent attempts have been made in Washington, for some years now, either (a) to replace the State programs entirely, by a uniform national system; or else mainly, of late-(b) to secure partial federalization by imposing more Federal "standards" and controls over State unemployment compensation laws and their administration. Wisconsin's industrial commission has consistently opposed the various federalization efforts of recent years, pursuant to its statutory mandate. But new showdowns are still in prospect. Federal benefit "standards."-The federalizers have long favored imposing new Federal "standards"-which all State unemployment compensation laws would have to meet-as to benefit amounts, durations, disqualifications, etc. That approach wouldn't leave much room for State initiative or State experimentation. So it would soon end State progress, and standardize the State unemployment compensation laws into a uniform national pattern (easy to run nationally). Yet such a Federal-control plan is seriously suggested-by some of its advocates-as the best way to strengthen and "preserve" the State unemployment compensation laws. (Some such proposal-patterned along the April 1950 lines-may even be up for active consideration by the 1951 Congress.) So far, the steady improvement of the State laws has been a major factor in defeating all such "partial federalization" efforts; but they'll doubtless be renewed, in due course. As the commission has repeatedly noted, in its previous reports: "In the future, as in the past, the best argument against federalization is progress by the States themselves-in improving their own laws and administrative performance. The better the State laws, and the better their administration, the stronger the case against federalization-and the weaker the public demand for further centralization of Government functions. Suitable action by the States, to provide more adequate benefit protection for their own citizens, is the best way to head off-or defeat-renewed federalization' efforts." Interstate benefits.-Interstate cooperation has long been recognized as basic to our Nation-wide system of State unemployment compensation laws. Such cooperation is especially vital in handling interstate benefit claims-across State lines. So the States soon developed a cooperative plan for paying interstate benefit claims, which has now been operating for more than a decade. That plan applies whenever a worker, who has earned benefit rights in one State, is seeking work and filing claims (against those rights) in another State. The second State serves as an agent for the first, in receiving, investigating, and forwarding the worker's benefit claims, and in helping him to find a job. Every State at one time or another serves as an agent for every other State, on a systematic reciprocal basis. This interstate benefit plan has handled the claims of several million workers, claiming across State lines. Its details, and its administration, have repeatedly been modified and improved, especially during the past year, to make sure that each State will do a prompt and adequate job as agent for the others. But the whole plan could quickly be undermined, if the several States began to restrict their laws-either by amendment or by interpretation-to require current residence in the liable State, or availability for work offered in that State, ás a condition precedent to benefit eligibility and payments. Such restrictions would soon render interstate benefit cooperation a nullity; and would give major impetus to the movement to scrap the State laws in favor of a single national law-under which State lines would be ignored. Benefit financing. Each State is now responsible for collecting enough contributions and for building enough reserves-to assure payment of the unemployment compensation benefits promised by its own law. Shifting that responsibility-even from a few States-to Washington would undermine our whole system of State unemployment compensation laws, and invite their federalization. So that's exactly what the "federalizers" favor-Federal gifts (politely called reinsurance grants) to bail out any State unemployment compensation fund when insolvency threatens it, for any reason. True, a few State unemployment compensation funds might someday need a temporary life belt, to help them meet their benefit promises during hard times. But the States have an answer for such cases-in line with continued State responsibility for unemployment compensation benefit financing. Congress has already provided for a Federal "loan" account, and for emergency advances, without interest, to any depleted State fund. Repayable loans should safeguard State funds, and preserve (and encourage) State responsibility. The Federal loan provisions, enacted in 1944, were extended in 1950, through 1951. The Federal "loan" fund should be made permanently available, by 1951 action, with provisions to assure automatic repayment by any borrowing State. (Compare the 1950 Report on the Long-Range Financing of Unemployment Benefits, Under State Unemployment Compensation Laws, prepared by an interstate committee, for which Wisconsin's unemployment-compensation director served as chairman.) Experience rating. The federalizers have never like the State systems of individual employer "experience rating." They argue that varying the contribution rates of employers, in accordance with their varying experience, means too much interest by employers in low contribution rates, in low benefits, in policing benefit claims, in resisting "federalization" proposals, etc. Attempts to undermine the State rate-variation systems have taken various forms, designed as "sucker bait" for employer groups. Thus, one approach suggests (rather plausibly) that each State be allowed to choose either a genuine experience-rating system or a flat-rate reduction scheme (treating all employers alike, regardless of their varying records). Those alternatives are really opposites. If flat rates finally prevailed, a national law could readily apply them. Another approach would eliminate all State "experience rates" by cutting the Federal unemployment tax rate. It would hope to lure support from employers, not only by taxing them all (perhaps temporarily) at a very low flat rate but also by proposing an equal unemployment-compensation tax on workers. In due course, various other appealing schemes will doubtless be devised to kill off employer experience rating and thereby deaden employer interest, and thereby pave the way for a uniform national program. Financing administration.-Adequate administration of each State unemployment-compensation law, by the responsible State agency, is clearly essential to satisfy the State's own citizens, and also to prevent federalization of all the State unemployment-compensation programs. So, the present system of "100-percent Federal" grants to finance and control State administration of the State unemployment-compensation laws is basically unsound, as many State Governors and State administrators have recognized. (And it doesn't always assure enough money for adequate State administration.) State laws and State administration may not endure if the present "100-percent Federal" system of administrative financing continues. That system largely separates authority from responsibility, with Federal control over operating funds, despite State responsibility for actually operating the State laws. Yet the administrators in many States now favor perpetuating the basic features of that system, instead of moving toward more State financing and more State control. 145 State employment services.-Each State unemployment-compensation law must That's be administered through adequate public employment offices, operated by the State, to really apply the law's work test and control benefit claims. important even during a total war, to use manpower effectively, as the States learned during World War II. Late in 1941, the States "loaned" their employment services for the war But they gradually discovered that Washington wanted to keep emergency. the State services permanently, as leverage for nationalizing the State unemployment-compensation laws too. Two years ago, the commission's 1948 biennial report reviewed that 1942-46 wartime experience as follows: "It took a long and strenuous campaign to return the 'loaned' State employment services to State control (in November 1946) after nearly 5 years of Federal operation * * "If another national manpower 'emergency' should arise, the State employment services might better be kept by the States and operated by them, pursuant to such national rules as the emergency may require." Those principles of State operation and full cooperation may soon need remembering; in view of the Korean War and possible further developments. STATEMENT OF HUGH W. CARDON, PRESIDENT, NATIONAL ASSOCIATION OF EM- Gentlemen of the Ways and Means Committee, please accept the thanks of the employees of collectors of internal revenue in every State of the Union and our two fine Territories, Hawaii and Alaska, for the privilege of permitting us to testify before your important committee relative to H. R. 8059. The We believe it apropos to preface our statement by briefly mentioning the history and objectives of the organization which we are honored to represent. National Association of Employees of Collectors of Internal Revenue, as the name signifies, is wholly composed of employees in the offices of internal-revenue collectors. There are 64 collectors' offices in the country, including one located in Our organization has issued charters in all of these offices, Honolulu, T. H. and the vast majority of collectors' employees are members of the National AsBecause our membership sociation of Employees of Collectors of Internal Revenue, which, for the sake of brevity, will hereinafter be referred to as NAECIR. is composed entirely of individuals making their careers in the highly technical field of collecting Federal taxes, and because of this variance of interest with other Federal employees, we are not affiliated or connected with any other organization. NAECIR operates entirely on a basis of mutual interest and, consequently, none of its officers receive any salary or other pecuniary remuneration for their services. Further, we do not employ a representative or lobbyist or maintain an office in Washington for the purpose of attempting to influence Members of Congress on legislation in which we are interested. The members of NAECIR appearing before your committee have sacrificed part of their annual leave or vacation time to appear here in behalf of their fellow employees. We are vitally interested in the passage of H. R. 8059, which would extend the coverage of Federal unemployment compensation to Federal employees. The provisions of the bill, as introduced, insofar as they relate to Federal workers, exactly parallels the position of our group, and we could not have asked for more This bill is democratic in that it places favorable consideration or treatment. Federal workers on exactly the same footing or basis of those employed in private As a matter of fact, the National Government has industry and commerce. been placed in a rather awkward and embarrassing position by enacting legislation requiring private business to protect its employees from the ills of unemployment, yet failing to extend the same protection to its own employees. As tax collectors, we know how embarrassing it has been on numerous occasions to attempt to justify the Government's position in this respect when we were enforcing collection of the Federal unemployment tax from private citizens. In asking for the passage of H. R. 8059, we as Federal employees are only requesting the Congress to extend to us the same protection and coverage which it has wisely seen fit to award to our fellow citizens in private employment. It will be recalled that there has been considerable criticism by a few Members of Congress concerning the Government's leave system. Our employees have been censured because they have accumulated large amounts of annual leave |