Third, I recommend that adequate methods should be required to provide benefits for workers who move from one State to another. Clearly, a worker who is employed in two different States during a year is as entitled to unemployment insurance benefits when out of work as a worker who is employed in only one. The States have generally recognized this, and have attempted voluntarily to work out methods for paying benefits in such interstate cases. They have, however, been only partially successful. Interstate workers generally must wait much longer to receive benefits than intrastate workers. Furthermore, the benefits of many interstate workers are lower than if they had worked in only one State. It is a difficult problem to develop adequate methods for paying benefits promptly and equitably to interstate workers in our Federal-State unemployment insurance system. Nevertheless, it is in the national interest to encourage the mobility of labor, since that is indispensable to economic expansion in a free society like ours. Consequently, I believe that the States should be required to adopt such methods as are necessary to provide fair and adequate protection for interstate workers. Fourth, I recommend that both Federal and State laws concerning fraud and disqualifications should be revised and improved. It was a weakness in the original Federal legislation that it did not clearly require the States to deal adequately with the question of fraud. Some Stateswithout going to uneconomical extremes in inspection and policing-have instituted effective methods for preventing or detecting fraudulent claims. I believe, however, that the Federal law should be clarified so that all States can be required to have adequate means for dealing with those few individuals who attempt to obtain benefits through misrepresentation. During the last few years some States have considerably enlarged the number of reasons for disqualifying workers who seek unemployment benefits and have increased the severity of penalties for disqualification. These excessive disqualications have operated to prevent persons who are genuinely out of work through no fault of their own from receiving benefits. These oversevere disqualification provisions, which penalize the innocent along with the guilty, should be corrected. Fifth, I recommend, at this time, two improvements in the financing arrangements for unemployment insurance: Since the beginning of the program, a small part of the unemployment tax has been collected by the Federal Government and included in general Federal revenues. The administrative costs of the program-both Federal and Statehave been paid out of general Federal revenues, and have never been as large as the Federal unemployment-tax collections. I propose that the Federal unemployment tax be paid into a special Federal unemployment account in the unemployment trust fund (which now includes the separate State reserve accounts for the payment of benefits). This account would be used exclusively to pay the cost of State and Federal administration of the employment security program, and the cost of reinsurance grants, to be available to States who encounter temporarily severe financial difficulties. Experience has demonstrated that the cost of unemployment insurance varies widely among the different States. This is mainly due to differences in each State's economic structure and in the incidence of unemployment in certain industries, which are beyond the control of the individual State. It has become evident that a few States, while able to finance an adequate system of unemployment insurance in normal periods, may not be able to maintain the solvency of their unemployment funds in a period of severe unemployment under the present financial provisions provided in the Federal legislation. So that these States will not be forced to increase their tax rates unduly during periods of declining employment and payrolls, the legislation should be amended to provide assistance to such States through reinsurance grants when their funds approach exhaustion. This will be a major step toward strengthening our Federal-State system of unemployment insurance, since it will, without detracting from the independence of State action, gain some of the advantages of pooled reserves. A strengthened unemployment insurance system not only will furnish more adequate aid to those who become unemployed, but also will do more to maintain the high volume of consumer purchasing power so necessary to the welfare of the entire economy. Thus it is a strong element in our program to support growth and expansion in the economy. Our essential economic problem is to put to sound, productive use our increasing technical knowledge and our growing labor force. To this end, we need imaginative and enterprising investment—in plant capacity, in new equipment, in basic resource development. To this end, we need vigorous competition and a growing number of new businesses. To this end, we need a stable agriculture, sensible wage-price-profit decisions, and mature labor-management relations. To this end, we need an expanding world economy, with a productive flow of international trade and investment. Both private and public policies must be directed to these purposes, and I have recommended a series of measures to the Congress for Federal action. My present proposal to strengthen our unemployment insurance system is one of these measures. I am particularly urging action at this session of Congress on unemployment insurance because State legislation must follow the Federal amendments. Action by the Congress this year would clear the way for State action in 1951, when practically all of the State legislatures will be meeting in regular session. But the primary reason for congressional action is the real need of those who are unemployed. The unemployment insurance system is a tried and proven means of assisting them. That system urgently needs strengthening. I therefore request favorable consideration of these recommendations at this session of Congress. HARRY S. TRUMAN. THE WHITE HOUSE, April 6, 1950. [H. R. 8059, 81st Cong., 2d sess.] A BILL To extend and improve the unemployment compensation program, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Employment Security Amendments of 1950". SEC. 2. Effective January 1, 1951, sections 301 and 302 of the Social Security Act, as amended, are amended to read as follows: "FEDERAL UNEMPLOYMENT ACCOUNT "SEC. 301. (a) There are hereby appropriated to the Federal unemployment account in the Unemployment Trust Fund for the period beginning January 1, 1951, and ending June 30, 1951, for the fiscal year ending June 30, 1952, and for each fiscal year thereafter, amounts equivalent to 100 per centum of the taxes (including interest, penalties, and additions to the taxes) received after December 31, 1950, under the Federal Unemployment Tax Act and covered into the Treasury. There are also authorized to be appropriated to the Federal unemployment account such additional sums as are required to carry out the provisions of this title. "(b) For the purpose of assisting the States in the administration of their unemployment compensation laws, and in the establishment and maintenance of a system of public employment offices in accordance with the provisions of the Act of June 6, 1933 (48 Stat. 113), as amended, there are hereby authorized to be expended, for payments to the States, from the Federal unemployment account in the Unemployment Trust Fund for the fiscal year ending June 30, 1952, and for each fiscal year thereafter, sums not to exceed the amounts, including amounts to be expended only in the event of unforeseen changes in conditions, specified by Congress in the appropriation Act or Acts for the Department of Labor for each such fiscal year, and such amounts as may be agreed upon by the Department of Labor and the Post Office Department for the payment in such manner as said parties may jointly determine of postage for the transmission of official mail matter in connection with the administration of their unemployment compensation laws and their systems of public employment offices by the States. "(c) There is authorized to be expended from the Federal unemployment account for the fiscal year ending June 30, 1952, and for each fiscal year thereafter, a sum not to exceed the amounts specified by Congress in the appropriation Act or Acts for the Department of Labor for administration by the Department of Labor and the Department of the Treasury of their functions under the Federal Unemployment Tax Act and under this title and titles IX and XII of the Social Security Act, as amended, and the Act of June 6, 1933 (48 Stat. 113), as amended. "PAYMENTS TO STATES "SEC. 302. (a) The Secretary of Labor shall from time to time certify to the Secretary of the Treasury for payment to each State which (i) has an unemployment compensation law approved by the Secretary under the Federal Unemploy ment Tax Act and (ii) is found to be in compliance with the Act of June 6, 1933 (48 Stat. 113), as amended, such amounts as the Secretary determines to be necessary for proper and efficient administration of such unemployment compensation law during the fiscal year for which such payment is made. The Secretary's determination shall be based on (1) the population of the State; (2) an estimate of the number of persons covered by the State unemployment compensation law and of the cost of proper and efficient administration of such law; and (3) such other factors as the Secretary finds relevant. The Secretary shall not certify for payment under this subsection in any fiscal year a total amount in excess of the amount specified for such purpose in the appropriation act or acts for the Department of Labor for such fiscal year. "(b) The Secretary of the Treasury shall, upon receiving a certification under subsection (a), pay from the Federal unemployment account in the Unemployment Trust Fund, to the State agency charged with the administration of the State unemployment compensation law, prior to audit or settlement by the General Accounting Office, in accordance with such certification." SEC. 3. (a) Paragraph (1) of subsection (a) of section 303 of the Social Security Act, as amended, is amended by inserting after the words "when due" a comma and the following: "and such methods for the prevention, detection, and administrative adjudication of cases involving willful misrepresentation or nondisclosure of material facts as are found by the Secretary to be reasonably calculated to insure the payment of compensation only to an individual entitled thereto". (b) Subsection (a) of section 303 of the Social Security Act, as amended, is further amended by adding at the end thereof a new paragraph (10), to read as follows: "(10) Participation in plans and methods for the combining of wage credits earned under the State law and wage credits earned under the unemployment compensation law of other States or the Federal Government, and for the payment of interstate claims, as are found by the Secretary to be reasonably calculated to assure the prompt and full payment of benefits in such situations." SEC. 4. Title III of the Social Security Act, as amended, is amended by adding at the end thereof a new section 304, to read as follows: "SEC. 304. The term 'State' when used in this title includes Alaska, Hawaii, Puerto Rico, and the District of Columbia." SEC. 5. Effective January 1, 1950, title XII of the Social Security Act is amended to read as follows: "TITLE XII-GRANTS TO STATE UNEMPLOYMENT FUNDS "SEC. 1201. (a) (1) Except as provided in paragraph (2) of this subsection, a State shall be entitled to a reinsurance grant for any calendar quarter, commencing with the quarter beginning on July 1, 1950, if the balance in such State's unemployment fund on the last day of the preceding quarter is less than the amount of the compensation paid from such fund under the State unemployment compensation law during the six months' period ending on such last day. "(2) A State shall not be entitled to a reinsurance grant for any calendar quarter commencing after the computation date for the first taxable year beginning after December 31, 1952, if with respect to any such taxable year— "(A) the balance in the State's unemployment fund on the computation date for such year was less than an amount equal to 6 per centum of the most recent annual taxable payroll or less than the amount of the compensation paid from such fund under the State unemployment compensation law during the two years immediately preceding such date, whichever amount is greater; and "(B) the minimum rate of contribution required to be paid into the State fund during any such taxable year was less than 1.2 per centum. "(3) A reinsurance grant shall be an amount estimated by the Secretary of Labor to be equal to three-fourths of the excess of the compensation which will be payable under the provisions of the State unemployment compensation law during the calendar quarter for which such grant is made over 2 per centum of the taxable payroll for such quarter: Provided, That after June 30, 1953, in computing the amount of the excess of the compensation which will be payable under the provisions of the State unemployment compensation law, such computations shall not include the estimated increased compensation which is payable by reason of any change made in the State law which becomes effective during any period in which the State receives a reinsurance grant or which became effective at any time during the four quarters preceding such period. "(4) As used in this section, the term 'computation date' shall have the same meaning as when used in section 1602 of the Internal Revenue Code as amended. "(5) As used in this section, the term 'taxable year' means the year for which rates imposed under the State unemployment compensation law are effective. "(6) As used in this section, the term 'unemployment fund' means a special fund, established under a State law and administered by a State agency, for the payment of compensation. Any sums standing to the account of the State agency in the Unemployment Trust Fund established by section 904 of the Social Security Act, as amended, shall be deemed to be a part of the unemployment fund of the State. "(b) The Secretary of Labor is authorized and directed, on application of the State agency administering a State unemployment compensation law to make findings as to whether the conditions entitling a State to a reinsurance grant provided for in subsection (a) hereof have been met; and if such conditions have been met, the Secretary is directed to certify, to the Secretary of the Treasury, from time to time, the amount of such grants, reduced or increased as the case may be, by any sum by which the Secretary of Labor finds that the amounts granted for any prior quarter were greater or less than the amounts to which the State was entitled for such quarter. The application of a State agency shall be made on such forms, and contain such information and data, fiscal and otherwise, concerning the operation and administration of the State unemployment compensation law, as the Secretary deems necessary or appropriate for the performance of his duties hereunder. "(c) The Secretary of the Treasury shall, upon receiving a certification under subsection (b), transfer from the Federal unemployment account in the Unemployment Trust Fund, to the State's account in the Unemployment Trust Fund such amount, prior to audit or settlement by the General Accounting Office, as is in accordance with such certification. "(d) All money transferred to a State's account in the Unemployment Trust Fund under this title shall be used solely for the payment of not more than threefourths of the unemployment compensation exceeding 2 per centum of the taxable payroll during the quarter for which a reinsurance grant is made; and any money transferred under this title which is not used for such purpose shall be returned to the Treasury and credited to the Federal unemployment account when such State is found to be no longer entitled to a reinsurance grant." SEC. 6. Subsection (h) of section 904 of the Social Security Act, as amended, is amended by striking out the words "December 31, 1949" in the second sentence thereof and inserting in lieu thereof the words "December 31, 1950" and by striking out the third sentence thereof. SEC. 7. (a) Effective July 1, 1952, subsection (a) of section 1603 of the Internal Revenue Code, as amended, is hereby amended by striking out paragraph (5) thereof, by renumbering paragraph (6) as paragraph (5), and by adding at the end thereof five new paragraphs numbered (6), (7), (8), (9), and (10), to read as follows: "(6) Compensation is payable to an insured individual for a week of total unemployment in amounts (up to a maximum of at least $30) substantially equivalent to at least 50 per centum of the weekly wages of such individual if he has no dependents, 60 per centum (up to a maximum of at least $36) to an individual with one dependent, 65 per centum (up to a maximum of at least $39) to an individual with two dependents, and 70 per centum (up to a maximum of at least $42) to an individual with three or more dependents; "(7) Compensation will not be denied to an insured individual (except in the case of willful misrepresentation or nondisclosure of a material fact) by reason of exhaustion or reduction of his benefit rights or cancellation of his wage credits until he has been paid within his benefit year an amount equal to at least twenty-six times the weekly amount of compensation which he is entitled to receive for total unemployment; "(8) An individual shall be insured for compensation (if such law provides for a qualifying requirement computed as a multiple of the individual's weekly benefit amount) if he has been paid in his base period as much as thirty times his weekly benefit amount excluding allowances for any dependents, or (if such law provides for a qualifying requirement computed as a multiple of his high-quarter wages) as much as one and one-half times his high-quarter wages, or (if such law provides for a qualifying requirement based on weeks of employment) if he has been employed by an employer in as many as twenty weeks in his base period; "(9) Compensation will not be denied, except by reason of exhaustion of benefit rights, to any insured individual who is able to work and is available for suitable work: Provided, That such approval shall not be withheld because of provisions denying compensation under any of the following conditions: (A) For the first week of unemployment occurring within the benefit year; (B) for a period not in excess of six weeks immediately following the week in which (i) the individual left suitable work without good cause; or (ii) the individual was discharged or suspended for misconduct connected with his last work; or (iii) the individual refused suitable work without good cause; (C) for any week in which an individual left or lost his employment due to a stoppage of work which exists because of a strike at the immediate factory, establishment, or other premises at which the individual is or was last employed and for any week in which an individual, having so left or lost his employment, continues to be unemployed due to such stoppage of work and the individual is participating in or directly interested in the strike or is a member of a grade or class of workers any of whom are participating in or directly interested in the strike; (D) with respect to any individual who makes a false statement or representation with respect to a material fact knowing it to be false, or who knowingly fails to disclose a material fact with the intent to obtain or increase any payment of compensation; (E) with respect to any individual who has been discharged for gross misconduct connected with his last work which has resulted in his conviction for a crime; "(10) Work shall not in any event be deemed suitable for any individual- "(B) if the wage rate, weekly earnings, hours, or other conditions of the work are in violation of law or are substantially less favorable to the individual than those prevailing for similar work in the locality; "(C) if, as a condition or consequence of being employed, the individual would be required to join a company union or to resign from, or refrain from joining, any bona fide labor organization." SEC. 8. Effective January 1, 1952, subsection (f) of section 1606 of the Internal Revenue Code, as amended, is amended by adding a new sentence at the end thereof, to read as follows: "Compliance by the State with the conditions and limitations of this subsection in utilizing the provisions thereof shall constitute a requirement for purposes of approval and certification under section 1603 of the Internal Revenue Code, as amended, and all of the provisions of such section shall apply with respect to such requirement." SEC. 9. Effective January 1, 1952, subsection (a) of section 1607 of the Internal Revenue Code, as amended, is amended to read as follows: "(a) EMPLOYER.-The term 'employer' means any person who, at any time during the taxable year, has one or more individuals in employment." SEC. 10. (a) Effective January 1, 1952, subsection (b) of section 1607 of the Internal Revenue Code, as amended, is amended to read as follows: "(b) WAGES.-The term 'wages' means all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash; except that such term shall not include "(1) That part of the remuneration which, after remuneration (other than remuneration referred to in the succeeding paragraphs of this subsection) equal to $4,800 with respect to employment has been paid to an individual by an employer during any calendar year, is paid to such individual by such employer during such calendar year. If an employer during any calendar year acquires substantially all the property used in a trade or business of another person (hereinafter referred to as a predecessor), or used in a separate unit of a trade or business of a predecessor, and immediately after the acquisition employs in his trade or business an individual who immediately prior to the acquisition was employed in the trade or business of such predecessor, then, for the purpose of determining whether such employer has paid remuneration (other than remuneration referred to in the succeeding paragraphs of this subsection) with respect to employment equal to $4,800 to such individual during such calendar year, any remuneration with respect to employment paid (or considered under this paragraph as having been paid) to such individual by such predecessor during such calendar year and prior to such acquisition shall be considered as having been paid by such employer; "(2) The amount of any payment made to, or on behalf of, an employee under a plan or system established by an employer which makes provision for his employees generally or for a class or classes of his employees (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment), on account of (A) retirement, or (B) sickness |