we wish to give our endorsement to and concurrence in the opinions expressed in Mr. William R. Pouder's letter of December 15, 1950, addressed to yourselves, a copy of which is attached hereto. Yours very truly, GEORGE M. PAINTER, AIME J. FORAND, ADAMS BROS. SALESBOOK Co., Chairman, Subcommittee on Unemployment Insurance, Washington, D. C. DEAR CONGRESSMAN FORAND: Thank you for your letter of December 15, 1950, informing me that the hearings now being held by the House Ways and Means Subcommittee on Unemployment Insurance will be confined to the McCormack bill, H. R. 8059, and to the Knowland amendment to the Sodial Security Act of 1950. While the filing of a formal brief is a rather large order for me, I would like to express my views on these very important matters, speaking as a midwestern businessman. In so doing, I believe I am echoing the opinions of a good many of my colleagues in this area. Both the McCormack bill and the Knowland amendment contain many technical provisions, but essentially they boil down to one fundamental issue: the balance of power and responsibility between the States and the Federal Government. Stripped of their technicalities, both the McCormack bill, if adopted, and the Knowland amendment, if repealed, lead down a one-way road to eventual undesirable federalization of unemployment insurance. The present unemployment compensation system offers a good example of Federal-State cooperation in meeting a large-scale program. It recognizes both the economic interdependence among the States and their political and industrial diversity. Any program of government which can meet these objectives of centralization and decentralization at the same time is deserving of close study and improvement-but certainly not radical change to upset the balance of power and lead to most certain complete Federal domination, and eventual abolition of experience rating. The McCormack bill does contain some attractively baited provisions, such as: To provide for the extension of coverage to firms having one or more employees; to provide more adequate benefits in terms of current wage levels; to assure that disqualification provisions do not go beyond reasonable needs; and to safeguard the solvency of individual State funds in the event of high-level unemployment. Yet, in the guise of achieving these goals, the basic effort being made is to convert the Federal-State system into a pure national system-with a tremendous price tag. I am, therefore, opposed to the McCormack bill for three basic reasons: (1) It is plainly offered as the first step toward a completely national system; (2) it far overshoots the mark in offering to the Nation as a whole a basic maximum weekly benefit rate of $30 per week, plus dependency benefits up to a total maximum of $42 per week, as a so-called minimum standard for all States which has not even yet been reached as a maximum standard by any State; and (3) the States individually are continually strengthening their own systems. On this last point, witness the far-reaching liberalization of the Kansas law in 1949 achieved by labor, management, and the administration working together in close harmony. Likewise, the Knowland amendment in my opinion simply represents a modest bid on the part of the States to solidify in the law what clearly was the original congressional intent to secure substantial compliance with Federal standards in order for a State to be approved for Federal tax credits. In short, it is an attempt to secure some relief from the assumed authoritarian power of the Secretary of Labor over State administration, as demonstrated in the California and Washington conformity cases. Reinstatement of that power in the hands of the Secretary of Labor by repeal of the Knowland amendment can only have one purpose, to which I am opposedto further centralize power over State unemployment compensation systems in the Federal Government. The fact that State administrators generally all over the country joined in support of the Knowland amendment provides clear evidence that the States desire and should have some latitude and discretion in matters of administrative interpretation and decision with regard to their individual State laws, as passed by representatives speaking in behalf of their local constituents. It becomes more and more apparent that unless the Federal Government learns how to administer great social benefit programs in a way to avoid discrediting their original and fundamental purposes, we shall have to maintain strictest watchfulness over their extension by the federalizers. To this end, and to the end of maintaining a desirable balance of power between the States and the Federal Government in this cooperative endeavor, I reiterate my opposition to the McCormack bill and to repeal of the Knowland amendment, and will appreciate your bringing this letter to the attention of your colleagues on the subcommittee. Yours very truly, J. T. BRINK, Treasurer. STATEMENT OF George D. Riley, Member, Legislative Committee, AMERICAN FEDERATION OF LABOR These remarks are in support of those provisions of the bill H. R. 8059 having to do with establishment of unemployment benefits for Federal Government employees. The Congress has enacted forward-looking legislation on retirement and disability compensation for Government employees, leaving the field of unemployment still uncovered, so far as the Government groups are concerned. There probably will be no great need for the benefits of this proposed legislation at any time soon due to the hiring and rehiring and shifting of personnel for more vital activity due to the war effort. However, the machinery should be ready to go into motion at any time when mass lay-offs or even individual lay-offs occur. To place the Government employees under unemployment benefits is only to join the issue with private employment, which long ago was compelled by legislation to recognize the equities involved in fair treatment to the less fortunate persons who through no fault of their own have been rendered jobless. The American Federation of Labor is proud to array its support for this legislation and to stand as it always does with its affiliated unions while seeking passage of this really worth-while legislation. Secretary of Labor Tobin and Mr. Robert C. Goodwin, Director, Bureau of Employment Security, already have presented your committee with ample explanation of the technical points and purposes of the present bill H. R. 8059. Therefore, there appears to be no necessity for us in the American Federation of Labor to become repetitious. The purpose of this statement is to bespeak full support of the provisions of the bill which will establish the processes whereby unemployment of Government employees can be met head on with humaneness and fair play. Separation from the service following the two World Wars well demonstrated the manner in which helter-skelter shrinkage of the Government work force can bring untold misery to the employees and their dependents, and so needlessly. Agencies which are vanishing and their employees necessarily must fight a rear-guard action at such time when appropriations are expiring or agencies' programs are becoming exhausted. These are offered merely as examples of how unemployment compensation logically and reasonably belong in the general job program. Further, it should be noted that, as already satisfactorily demonstrated in private employment, compensation payments not only are directly helpful to the individual and his family but constitute an important contribution to the aggregate steady purchasing power of the community and the Nation at large. It is fully realized that there will not and cannot be enactment of this legislation in the few remaining days of the present Congress. However, the value of the record made here on this bill certainly will serve as a definite guide to your committee and the Congress and the supporters of the legislation. The American Federation of Labor hopes your committee will give this bill or a successor bill your unanimous endorsement, and that this needful legislation will soon become a part of the law of the land. STATEMENT BY VICTOR CANZANO, DIRECTOR, TEXTILE WORKERS UNION OF AMERICA, CIO, FOR RHODE ISLAND NEED FOR IMMEDIATE REVISION OF UNEMPLOYMENT INSURANCE LAWS It is an absolute necessity that labor, management, and the community of Rhode Island as a whole secure immediately in Congress improvements in the unemployment insurance system. Proposals were made for such improvements and extended protection in April by President Truman. They have our hearty support and should receive the support of all forward-looking managements as well. As textile workers in a predominately textile State, we feel we have a responsibility to be special pleaders in this cause. Rhode Island made history last year when the rate of unemployment and unemployment compensation payments set an all-time record in the Nation. Rhode Island paid out in benefits an amount equal to 6.3 percent of the State's taxable payroll, almost three times the national average of 2.2 percent. The Rhode Island fund last year received contributions of $8,285,000 and paid out benefits of $31,386,000. It is a sad commentary that only a world crisis and war mobilization may save Rhode Island from possibly having the first insolvent State unemployment fund in the country. A recurrence or continuance of last year's economic slump would in all probability have knocked our employment security fund flat on its face. The danger of the situation in Rhode Island is not over today and will not be overcome until Federal action as recommended by President Truman is taken. Our history-making experience shouts out this answer at every turn-Rhode Islanders in all walks of life recognize and accept this fact-that Federal action is our only way out. And yet it is seldom mentioned by powers that be and is seldom seen on the front pages of the papers. We remember an editorial of April 10, 1950, by the Providence Journal entitled "Right in Principle" when even though we did not agree with the entire editorial we can endorse the following paragraph: * * Many States have benefit standards far below ours, with the result that industries there pay compensation taxes at rates far lower than are possible here. The application of uniform minimums would eliminate most, if not all, of those differentials, and hence put our industries in a distinctly better competitive position than they now occupy. It is thus clear that the basic principle underlying the President's benefit proposals is in the interest of this State." In the recommendations of Thomas H. Bride, administrator of Rhode Island Department of Employment Security, as published by the Evening Bulletin of December 14, 1950, we note the position of the administrator is first that his recommendations will "prevent unwarranted expenditures and insure the solvency of the fund." Bride contradicts himself when at the end of his recommendations he admits "more fundamental changes both from a short-term and a longrange point of view will be required to keep the program on a sound basis and to avoid the risk of continual loss of reserves and even ultimate insolvency.” What Rhode Island experience shows is that in order to spread the costs of unemployment insurance more equitably among the States a Federal law should require States to maintain uniform standards of coverage, taxation, amount of benefit payments, duration of benefit periods; and there should be Federal reinsurance of State unemployment compensation funds. Further, the Federal Government must retain the power to insist on conformity by the States to these standards. The Knowland amendment must be repealed. Rhode Island has an unemployment compensation law which, in terms of benefit rates, duration of payments, and disqualification provisions, could be considered a comparatively liberal law. This, we believe, was the intent of the National Congress and the Rhode Island Legislature. And in a highly industrialized State like Rhode Island it is of the utmost importance to have a liberal law as an adequate first line of defense against lack of work and loss of a job. The $31,000,000 of benefits paid to Rhode Island's unemployed workers in 1949 was purchasing power of the utmost importance to the merchant, and, in turn, kept the wheels of many local industries turning. The $31,000,000 in employment security benefits paid last year met, in large part, needs which public welfare would otherwise have been obliged to meet with funds from the State's treasury. Nevertheless, even relieved of this huge benefit payment, social welfare was staggered by the unemployment situation in the State. The reason for this is twofold: 1. Twenty percent of Rhode Island workers are not covered by unemployment compensation law. 2. Fifty thousand workers exhausted benefits between April 1949 and April 1950. In this situation general public assistance was an accurate barometer of the adverse changes in the labor market in Rhode Island. GPA paid out twice as much in 1949 as in 1948 ($3,911,000 against $1,923,000). Welfare department figures show that approximately 90 percent of the_net increase in case loads for 1949 was caused by unemployment. They also show that in 1949 as compared to the year previous, twice as many families had to resort to public welfare for the first time in their lives. This experience clearly reflects the fact that, liberal as Rhode Island unemployment compensation benefits and durations are supposed to be, they were grossly inadequate to pay many families in the summer of 1949—and would be even less adequate now because of the increased cost of living. Textile workers' experience in Rhode Island even in these times of relatively high employment continues to prove that Federal action is urgently needed. We must improve the Rhode Island unemployment-compensation program and to do it we need some uniform Federal standards so that the cost of the improved program will not be prohibitive. The textile industry is rapidly becoming a modern industry. Our research department reports that in the cotton and rayon branch of the industry there has been a 12 percent increase in productivity since 1948. Productivity per man has increased in all branches of the textile industry since 1948. This means, of course, that fewer workers in the industry are required to produce the same amount of cloth. We of the TWUA meet the problem of technological displacement every day. No department of the mill has escaped this modernizing and streamlining process. The workers who are displaced are temporarily out of work. It is a gross injustice that these workers, many with families to support, are entitled to a maximum unemployment compensation benefit of less than half their former pay. The average Rhode Island textile worker's pay in November 1950 is $56.88; the maximum Rhode Island unemployment compensation benefit is $25 per week. In many cases displaced workers have to take jobs in employment which is not covered by this law, in which case they lose their job security altogether, after years of service under the law. This situation again reflects the need for a more inclusive law. As we approach the legislative sessions of 1951 both in Rhode Island and nationally, the unemployment compensation program will be a No. 1 problem. It is no secret that some quarters in Rhode Island will continue to ask workers to tighten their belts where unemployment compensation benefits are concerned. But neither is it a secret that tightening the belt will never insure the solvency of the Rhode Island fund. All it will do is eventually bring us to starvation and depression. The Textile Workers Union of America, CIO, asks you urgently to recommend enacting into law a program of uniform minimum standards for the various States, together with and expecially for Rhode Island, Federal reinsurance provisions. In closing we reemphasize that the only insurance we of Rhode Island can have if we have another 1949 era is Federal help. STATEMENT OF J. WILLIAM BELANGER, PRESIDENT, MASSACHUSETTS STATE CIO INDUSTRIAL UNION COUNCIL, BOSTON, MASS. UNEMPLOYMENT COMPENSATION IN MASSACHUSETTS There can be no sound unemployment insurance system in a highly industrialized nation such as the United States as long as each State operates on a separate and different basis. The CIO proposal for a Federal system is the only fundamental solution of this problem. In particular, the many variations in the several States of the merit or experience rating systems have the effect of keeping payments too low. The jobless worker simply does not draw a benefit sufficient to meet reasonable subsistence costs. In Massachusetts in 1949, the average tax was 1.41 percent. In dollars and cents the tax yielded a total of $46,000,000. Yet in this same year the Massachusetts fund paid out more than twice the amount received by the Commonwealth from the 1.41 percent tax. The actual amount paid out to idle workers in 1949 was $115,000,000. The Massachusetts merit rating plan is particularly unsound. When employers are best able to pay increased taxes their payments are lowest; when less able to pay, their taxes are increased considerably. During the World War years, under the Massachusetts merit rating system employer contributions averaged around 0.8 percent. Clearly, in face of certain liability for increased sums to meet compensation claims in the postwar period, the taxes should have been near or at the maximum of 2.7 percent. While our Massachusetts experience for several years has been yearly compensation payments far in excess of yearly income, it should be pointed out that had the full 2.7 percent taxes been collected since 1942 when the merit rating system was installed, our fund would have been increased by $350,000,000. Including the present balance, this would have given us a total of $442,000,000. Such an amount would be ample to meet the demands we have experienced for the past several years and would provide the cushion to meet unusual conditions such as developed in 1948-49. Our Massachusetts dependency provision of $2 weekly for each dependent child has been under constant fire by employer groups. The depleted condition of our fund brought about by merit rating has been a major argument of those who desire to repeal the needed and socially desirable dependency benefits. No single State can meet the problem of unusual employment conditions in certain industries, particularly where such an industry is concentrated in a particular area as is the case in the textile centers of Massachusetts. Not long ago, Lawrence, Lowell, New Bedford, and Fall River experienced periods of acute unemployment because of a drastic slump in certain branches of textiles. Similar situations are found in other Massachusetts manufacturing centers, especially in such industries as shoes, jewelry, plastics, and even steel and electrical manufacturing. The Congress should act now while employment is at higher levels and push through the necessary legislation requiring that adequate reserves be built up so as to protect all workers against a possible recurrence of the tragic conditions which resulted from the serious slump in one-industry towns or regions. The workers in Massachusetts who were idle for months after their unemployment benefits had been exhausted will, for the rest of their lives, be uneasy that such a situation could occur again. For the sake of the national morale we urge and insist that Congress act without delay to overhaul our unemployment insurance laws. STATEMENT OF LUTHER C. STEWARD, PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES Mr. Chairman and gentlemen, I am addressing myself to title 14 of the bill now under consideration by the committee, having to do with unemployment compensation for Federal workers. In order that recruitment of manpower for Federal agencies engaged in the present all-out defense effort may be carried on to the best possible advantage and without delay, it is imperative that an existing discrimination running against civilian Federal employees as compared to employees of private business and industry be removed. I refer to the fact that those employed by private corporations or firms, when separated from their jobs, receive unemployment compensation in accordance with the law of the State where employed. Federal employees have no such protective provision of law. It must be apparent, therefore, that in the interest of our people as a whole, of the Government as an employer, as well as to correct an injustice now imposed upon civilian Federal employees, there should be enacted into law without delay the provisions of title 14, in order that recruiting of essential personnel may proceed without delay at the present time, and when the inevitable reduction in force occurs employees who have rendered faithful service for the Federal Government in a time of emergency may be placed on a parity with those in private employ and be afforded an equal cushion to tide over during a period of unemployment. |