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That is why we have to start at this early hour.
We very much appreciate your cooperation.

[The press release announcing these hearings follows:]

[Subcommittee on Unemployment Compensation press release of Mar. 26, 1975]


Subcommittee Chairman James C. Corman (D., Calif.), Subcommittee on Unemployment Compensation of the Committee on Ways and Means, today announced that the Unemployment_Compensation Subcommittee will begin background hearings at 8:00 a.m. on Tuesday, April 8, 1975, on existing Unemployment Compensation Benefits Programs. Hearings will continue on April 10, 14, 15, 17, 21 and 22 in the Main Hearing Room of the Committee on Ways and Means.

On April 8, 10 and 14, officials from the Department of Labor and selected State Unemployment Compensation agencies will discuss the operations and status of, and problems_pertaining to, the permanent Regular Benefits and Federal-State Extended Benefits Programs and the temporary Emergency Unemployment Compensation and Special Unemployment Assistance Programs enacted in December 1974. Testimony will be received from employee and employer organizations and the general public during the remaining days of the hearings on these four Unemployment Compensation programs. Because of the limited time available, groups are encouraged to consolidate their testimony.

These are preliminary hearings for the purpose of examining existing Unemployment Compensation programs, including the temporary Emergency Benefits and Special Unemployment Assistance programs enacted at the end of last year. They will be followed in late April by hearings specifically on the issue of extending the Emergency Benefits program. Shortly after the Subcommittee has completed deliberations on the extension of emergency benefits, it will begin consideration of legislation pertaining to the broader issues of expanding coverage, establishing standards, revising financing provisions, and other recommended modifications.

Due to the limited time available for this hearing, it may be necessary to allocate the amount of time available to each witness for the presentation of his direct oral testimony. If so, it will be mandatory on all witnesses not to exceed the time allocated for this purpose. The witnesses' full statements will be included in the record of the hearing.

Cutoff Date for Requests to be Heard: Requests to be heard must be received by the Committee no later than the close of business Friday, April 4, 1975. Requests should be addressed to John M. Martin, Jr., Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515, telephone: (202) 225-3625. Notification as to the witness' scheduled date of appearance will be made as promptly as possible after the cutoff date. Once the witness has been advised of his date of appearance, it is not possible for this date to be changed. If a witness finds that he cannot appear on that day, he may wish to either substitute another spokesman in his stead or file a written statement for the record of the hearing in lieu of a personal appearance, because under no circumstances will the date of an appearance be changed. Requests to be heard must contain the following information:

1. The name, full address and capacity in which the witness will appear.

2. The list of persons or organizations the witness represents and in the case of associations and organizations, their address or addresses, their total membership, and, where possible, a membership list.

3. If a witness wishes to make a statement on his own behalf, he must still nevertheless indicate whether he has any specific clients who have an interest in the subject, or in the alternative, he must indicate that he does not represent any clients having an interest in the subject he will be discussing.

4. A topical outline or summary of the comments and recommendations which the witness proposes to make.

If it is necessary to allocate time to each witness, this amount of time will be strictly adhered to. Witnesses are urged to verbally summarize their statements; the complete statements submitted to the Committee will be included in the printed record of the hearing and will be reviewed and fully considered by the members of the Committee.

It is requested that persons scheduled to appear before the Subcommittee to testify at this hearing submit 75 copies of their prepared statements to the Committee office no later than 48 hours prior to their scheduled appearance. An additional 75 copies may be furnished for distribution to the press and the interested public on the date of appearance.

Any interested person or organization may, in lieu of a personal appearance, file a written statement for inclusion in the printed record of the hearing. For this purpose, statements should be submitted in triplicate by the close of business Tuesday, April 22. Additional copies may be furnished for distribution to the press and the interested public during the course of the public hearing.

Mr. CORMAN. Mr. Frenzel?

Mr. FRENZEL. I have no statement, Mr. Chairman.

Mr. CORMAN. Our first witnesses are William Kolberg, Assistant Secretary for Manpower, and Lawrence E. Weatherford, Associate Manpower Administrator for Unemployment Insurance.

We welcome you before the subcommittee, and you may proceed. STATEMENT OF HON. WILLIAM H. KOLBERG, ASSISTANT SECRETARY FOR MANPOWER, DEPARTMENT OF LABOR

Mr. KOLBERG. Thank you very much, Mr. Chairman.

I also want to compliment the subcommittee on its diligence in holding hearings at such an early hour. I think for me the first appearance in Washington before a committee of Congress at 8 o'clock in the morning.

If I may, I will go into my prepared statement and read it for the subcommittee.

Mr. Chairman and subcommittee members, I am William H. Kolberg, Assistant Secretary for Manpower of the Department of Labor. In this capacity, I am responsible to the Secretary for the administration of the unemployment insurance program.

In the course of today's hearing, you will also hear from Larry Weatherford, who is Acting Associate Manpower Administrator for Unemployment Insurance, and thus in direct charge of that program, and some of his associates, whom we will present to you in the course of this testimony.

I want to express my personal appreciation and that of Secretary John T. Dunlop, who will appear before you later this month, for the initiative taken by this subcommittee in commencing a full-dress review of the unemployment insurance program with a view of examining immediate problems and proposed solutions, and also inquiring into the direction in which the program should go in the future.

I might interpolate here, Mr. Chairman, I had a chance before the subcommittee opened these hearings to read your remarks. I indicated to you in our private meeting with you yesterday we welcome the direction in which you want to take this subcommittee in examining the immediate problems first and taking action hopefully on those as quickly as the Congress possibly can and then begin to look at the longer range structural changes that are badly needed in this system. We welcome that approach.

This is an appropriate time for this congressional review.

Right at this very moment, the Federal-State unemployment insurance system is meeting the most significant challenge it has undergone since its inception. Six and a half million jobless American workers

look to the unemployment insurance system for income maintenance right now-for the cash needed to meet their basic needs of food, shelter and the other necessities of life. That figure is up from just over 2 million 6 months ago and from 2.5 million a year ago.

Not only these unemployed workers and their families are affected. Wholesale and retail trade establishments, manufacturers of consumer goods, utility firms, landlords-in fact, whole communities and, indeed, the entire Nation look to unemployment insurance and its prompt infusion of funds as the first line of defense against the ripple effect of recession.

I might inject here, Mr. Chairman, Mr. Weatherford will indicate and I believe you will find in our exhibits that we, the Federal Government and States, expect to pay out something like $20 billion through the Unemployment Insurance system over the coming year. So, not only is this a system that aids individuals but it is also a system which has a tremendous impact on the macroeconomic behavior of our


Mr. Chairman, the events of the past 18 months are clear to all of us. However, as a matter of background, let me recall that: In October 1973, unemployment reached its lowest level; as the result of the oil embargo, unemployment jumped up significantly, particularly in the automobile industry, during the first half of 1974; and in August, however, the number of unemployed workers in the United States began its sharpest rise in history, to a rate of 8.7 percent in March, the highest rate since 1941.

These events required positive action on the part of this Nation's Government to prevent an economic downturn from which we could not recover. Bold steps were taken by the administration and the Congress and what could have been a chaotic economic situation can now best be described as a very deep recession.

In October, after the economic summit meetings between Congress, the administration and private interests, the President asked the Congress to provide an expanded public service employment program, extended benefits for Unemployment Insurance claimants who exhausted benefits and basic unemployment benefit coverage for workers not protected by the unemployment insurance system.

In December, the Congress responded and provided all that the President asked for. In addition, in December, I, personally, testified for an urgent supplemental budget request and in just 4 days the House and Senate made available $4 billion to implement these programs.

In early January, the State Employment Security agencies began taking claims and paying benefits. Payments were being made at record high levels in an effort to slow the effects of the recession. Subsequently, the President asked for and the Congress passed the tax cut bill designed to turn the economy around.

Mr. Chairman, to my way of thinking, this represents the best and most effective effort between the Congress and the administration that I can recall. We hope that these efforts will provide the stimulus required to restore public confidence in the economy and yield an early turnaround.

We know, however, that recovery will take time and we will continue to be faced with high unemployment for several months. We also know that the prolonged period of this particular recession

will mean that many experienced workers will exhaust their benefits even under the temporary extension. We anticipate a buildup of exhaustions during the last half of this year with well over a million individuals without jobs or income maintenance.

This would increase greatly in 1976.

As you know, President Ford announced in San Francisco Friday night that he would ask the Congress to consider further extensions. of these two temporary programs. The President said:

I recommended to the Congress, and later signed into law, two new measures to aid unemployed workers. One of these measures provided up to 13 additional weeks of benefits for individuals in the unemployment compensation system. The second measure provided up to 26 weeks of special unemployment assistance to workers whose jobs have not been previously covered.

People are beginning to exhaust benefits in both new programs. Accordingly, I will recommend to the Congress as soon as it returns from recess, the following


An additional 13 weeks of benefits to be made available to those individuals who have exhausted their present entitlements under the new Federal Supplemental Benefits Program. This would raise the over-all entitlement of most' workers in the unemployment compensation system to a maximum of 65 weeks. The authorization should continue until the end of 1976.

For the benefit of those 12 million individuals who had not been previously protected by the unemployment compensation program, I am recommending that the present one-year temporary program be extended until the end of 1976, and that benefits be extended to 39 weeks.

In the expectation that the economy will show improvement before the year is out, I am moving to ask that these extended programs have a built-in procedure to reduce or terminate the program when the unemployment rate decreases to a specified level. These procedures will concentrate the limited resources in those areas experiencing the greatest unemployment.

Secretary Dunlop is scheduled to appear before the subcommittee on April 22. By that time, we hope to have before the subcommittee a draft bill which the President has promised which will carry out his request of the Congress and the Secretary, and I and my associates will be prepared at that time, Mr. Chairman, to answer any questions you may have on the specifics of that draft bill.

Again, I want to express my appreciation and that of the Department of Labor for this opportunity to discuss the unemployment insurance system.

I will now turn this presentation over to Larry Weatherford and his associates.

I will remain here to answer any questions.
Mr. CORMAN. Mr. Weatherford.


Mr. WEATHERFORD. Thank you, Mr. Chairman.


Mr. Chairman and subcommittee members, I am Lawrence Weatherford, Acting Associate Manpower Associate Manpower Administrator Unemployment Insurance.

1 would like to introduce on my right Ralph Altman, Acting Deputy Associate Manpower Administrator for Unemployment Insurance, and Margaret Dahm, who is the Director of the Office of Research, Legislation, and Program Policies, Unemployment Insurance Service.

Mr. Chairman, we have prepared and provided to each member of the committee a packet of exhibits which are tabbed. In the course of the presentation, I would like to refer to three or four of these tabs specifically as we proceed.

[The exhibits follow:]




1. Chart-UI Coverage of Wage and Salary Employment-1973.

2. Chart-State Initial Claims, FY 1973, 1974, and 1975.

3. Chart State Insured Unemployment, FY 1973, 1974, and 1975.

4. Chart Insured Unemployment, Extended Benefits, CY 1974 and 1975. 5. Table Key UI Data, 1973-1976.

6. Table Significant Provisions of State UI Laws as of April 1, 1975.

7. Table-Wage and Employment Requirements for Benefits.

8. Table-Wage and Salary Employment Covered Under OASDHI and UI, 1940-73.

9. Table Maximum Weekly Benefit Amount Payable Junuary 6, 1975.

10. Table Estimated Percent of Eligible Claimants in 1973 whose Weekly Benefit Amounts were 50 Percent or More of Their Base Period Average Weekly Wage.

11. Table-Selected UI Data on Benefit Duration of Claimants and Exhaustees. 12. Table Disqualifications for Three Major Causes.

13. Table-UI Regular—Weeks Compensated, Exhaustion, and IUR, CY 1958-74.

14. Table UI Extended Benefit Program, Weeks Compensated and Exhaustions, CY 1970-74.

15. Table State UI Regular Program Exhaustions, CY 1973 and 1974. 16. Chart Duration of Benefits under Permanent and Temporary Unemployment Benefit Program.

17. Chart-Unemployment Benefits Paid or Projected to be Paid.

18. Table Handbook of Unemployment Financial Data: Supplement for 1973 (5 Tables).

19. Table-Average Employer Contribution Rates, by State, CY 1972-74.

20. Table State Reserves, December 31, 1973 and December 31, 1974.

21. Table-Estimated December 1974 Reserve Multiples.

22. Table Advances to States from the Federal Unemployment Account. 23. Table Status of Federal Accounts, 1970-76.

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