STATEMENT OF C. WEBER TULEY, NASHVILLE, TENN.

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

I regret the necessity for this interruption of the hearings by this committee. I will have a statement sent to the committee for filing in the record.

Senator TALMADGE. Without objection, the statement will be received and inserted in the record.

Mr. TULEY. Thank you, Mr. Chairman. It will be substantially along the lines presented by others here representing the business community, except that it will be confined almost exclusively to a rebuttal, if I may call it that, to the proposals made by Mr. Wirtz relating to the 1 to 13-week disqualification for voluntary quits and misconduct discharges. We have some facts and figures on that subject which we think will be of interest to the committee, and my statement will be confined almost exclusively to that subject.

Thank you very much.

Senator TALMADGE. Thank you.

Senator GORE. Would you be able to supply additional copies to the clerk of the committee to mail to the offices of each member of the committee?

Mr. TULEY. Yes, sir.

Senator WILLIAMS. Mr. Tuley, may I ask a question?

Do you support substantially the House-passed bill as it passed without amendments?

Mr. TULEY. Yes, sir, without amendments.

Senator TALMADGE. Senator Gore, any questions?

Thank you, Mr. Tuley.

(The prepared statement of Mr. Tuley was received, and follows:)

STATEMENT OF C. WEBER TULEY, ON BEHALF OF TENNESSEE MANUFACTURERS

ASSOCIATION

Mr. Chairman and Members of the Committee, my name is C. W. Tuley. I am a resident of Nashville, Tennessee and occupy the position of Executive Vice President-Secretary of the Tennessee Manufacturers Association on behalf of which organization this statement is submitted. The Tennessee Manufacturers Association is a General Welfare Corporation chartered by the State of Tennessee in 1912. It is an Association essentially of business operating in the State of Tennessee engaged in manufacturing, processing and mining. Its membership is composed of some 1,000 firms employing an estimated 90% of the labor force in the state engaged in the classifications of industry described. Association policy is formulated by an elected Board of Governors of 51 members together with past presidents as ex officio members. The position and views to be expressed in this statement are fully supported by long standing formally adopted policy of the Association on the subject to be covered. To further demonstrate my personal interest in the subject I should like the Committee to know that for many years I have had the honor of serving as a member of the statutory State Advisory Council of the Tennessee Department of Employment Security.

I should like to express deep appreciation to the Chairman, the Committee and its Council for making it possible for us to file this statement in lieu of personal appearance as generously granted for July 26th which appearance appeared to be impossible because of transportation difficulties resulting from a current strike of certain airline personnel.

As set out in my letter requesting permission to present our views to the Committee on the subject now under consideration I wish to offer support of H.R. 15119 and to oppose amendments to it which have been proposed during the course of the hearings.

Proposals for amending the Bill have been presented by the Department of Labor through the testimony of the Honorable W. Williard Wirtz, Secretary of Labor. Secretary Wirtz proposed numerous amendments and other witnesses are presenting the general views of the business sector of the economy on many such proposals. This statement will be confined to an expression of support for H.R. 15119 and in general opposition to the amendments proposed by Secretary Wirtz with specific emphasis on the proposal that an individual who voluntarily leaves his employment without good cause connected with his work and an employee who is discharged for misconduct be paid full benefit entitlement after a waiting period of not more than thirteen weeks.

The original proposal on the subject of Unemployment Compensation considered by the Committee on Ways and Means of the House of Representatives was H.R. 8282. That Bill proposed that no state could disqualify a voluntary quit, a person discharged for misconduct or a person who refused to accept suitable work when directed to so do by the State Administrator, for more than a waiting period of six weeks. This, as evidenced by H.R. 15119, was rejected by the Committee on Ways and Means and the House of Representatives.

Secretary Wirtz now proposes that unemployment compensation may not be denied by a State to an otherwise eligible individual by reason of a State disqualification provision for a period in excess of thirteen weeks with certain exceptions such as labor dispute cases and those involving fraud in connection with the claim.

While we are not aware of the availability of recent statistics on the subject some years ago we requested a special study of the extent of the application of the waiting period of those unemployed under the disqualifying circumstances in question. At that time the State of Tennessee provided that a voluntary quit or a person discharged for misconduct could be disqualified for a waiting period of from one to six weeks after which he could be entitled to receive Unemployment benefits to the maximum duration of his benefit eligibility. At the time the study was made the average so called "penalty" in such cases was approximately two and one-half weeks or about one-third to one-half the penalty which could have been invoked. Thus should Secretary Wirtz's proposal of not more than a thirteen week waiting period be adopted, in all likelihood, the average penalty would be less than six weeks.

It should be pointed out also that a somewhat new approach to "extended benefits" was made by Mr. Wirtz. It is now proposed that, without regard to economic conditions either locally or nationwide, there be an extended benefit payment for thirteen additional weeks beyond the original twenty-six weeks of benefits.

Thus should these two proposals of Secretary Wirtz be adopted an individual who voluntarily quits his work without good cause attributable to the employer or in connection with the work or who is discharged for misconduct or being unemployed, refuses to accept suitable work when directed to so do by the State Administrator, could be expected to suffer a penalty of some six weeks of waiting for benefits and then begin receiving his full entitlement and continue to receive such sums each week for thirty-nine weeks which is, of course, three calendar quarters.

For many years the Tennessee Manufacturers Association has been greatly concerned with the moral as well as the high cost problem arising from law which provides for payment of Unemployment Compensation Benefits to persons who leave employment voluntarily without good cause connected with their work and those who are discharged for misconduct.

To review briefly the basic principle of Unemployment Compensation Insurance reference is made to that portion of the Tennessee statute enacted in 1936 (which is quite similar to that of most states). and to this day unamended, which pronounces public policy with repsect to the subject of involuntary unemployment. The declared State Public Policy of the 1936 Act of the General Assembly of Tennessee is as follows:

“Involuntary unemployment is therefore a subject of general interest and concern which requires appropriate action . . ." for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own."

Nothwithstanding this clear and unequivocal statement of policy it is astounding-yes, almost unbelievable. that subsequent sections of the original Unemployment Compensation law of Tennessee and that of many other states in which policy was pronounced provided for payment of benefits to those who

voluntarily quit their work or who were discharged for misconduct subject only to a waiting period, in most instances of up to but not more than five or six weeks.

In the days and years following enactment of Unemployment Compensation laws, employers were, to say the least, not overly pleased with the added cost to them of doing business. But as the years moved along and experience rating was adopted it developed that the remaining principal complaint which the employer taxpayers harbored was that most irritating provision of law which required payment of benefits to a voluntary quit, a person discharged for misconduct and to a person who failed and refused to accept suitable work when directed to do so by the Commissioner or Administrator of Employment Security. The payment of benefits to such persons caused the law to become a mockery of justice and equality. Such payments brought about not only loss of respect and acceptance on the part of the employer taxpayer but of the general public as well. More importantly, respect for and confidence in the law by the honest, industrious worker was lost when he could see the Trust Fund, ostensibly being created and funded to assist him whe he should become unemployed through no fault of his own, raided and depleted, in some cases almost to insolvency, by freeloaders, malingerers and persons not truly in the labor force.

So it was as the years have gone along that many States have taken effective steps to bring their laws into conformity with public policy defined by statute which provides that benefits shall be paid only to persons who have demonstrated by a work record a real attachment to the labor force and who are unemployed through no fault of their own.

The Amendment proposed by Secretary Wirtz would completely destroy these worthwhile, logical, honest and moral protective features of law designed by the respective States as their legislative and executive departments have found to be in the best interest of their state, their people and their peculiar economy.

Since the enactment of the first Unemployment Compensation law in Tennessee in 1936 every Amendment to the Act has been adopted by the General Assembly as a result of suggested legislation submitted by the Department Administrator and Governor following extended conferences participated in by members of the State Advisory Council, the Administrative staff, representatives of organized labor, representatives of employer taxpayers and other competent, qualified individuals. Because of the careful and thoughtful attention given to amendments and with full consideration being given to the needs of the people of Tennessee and to the protection and perservation of a solvent and actuarially sound Unemployment Compensation Trust Fund, changes in the Tennessee Law relating to eligibility and disqualification have been few. At the same time the benefit schedule has been changed repeatedly to provide greater benefits in keeping with the economy, the tax base has been increased and provisions for penalty rate for deficit employers enacted to further assure Trust Fund solvency.

In 1963 by conference, negotiation and compromise the executive and public advisory group mentioned was able to recommend to the General Assembly effective legislation to rid Tennessee of the iniquitous and immoral practice of paying any unemployment benefits to persons who voluntarily quit their jobs without good cause connected with their work or who were discharged for misconduct or who refuse to accept suitable work as directed by the Commissioner or Administrator.

Because, as indicated, the experience of Tennessee in this area is perhaps the latest available for statistical comparison we should like to report it to this Committee.

In 1961 more than 15,000 claimants who voluntarily quit or who were discharged for misconduct were awarded benefits in a total amount of something more than $5 million. The Amendment to the Act adopted in 1963 which disqualified for benefits such categories of unemployment until the claimant should re-enter the labor force and earn five times his weekly benefit amount. resulted, for the period April 1964 through March 1965 in the disqualification of some 11,154 claimants. During this period the average weekly benefit payment was $27.24 and the average duration of payment was 13 weeks. Of the total number of disqualified claimants approximately 7,300 had voluntarily quit their work and 3,821 were disqualified for other reasons. While it must be assumed that a voluntary quit would draw benefits for the maximum duration of 26 weeks, even at the average, the cost to the Trust Fund of paying benefits to all disqualified claimants could have depleted the Trust Fund by an estimated approximate $4 million. Thus, should H.R. 15119 be amended as proposed, the

Trust Fund of the State of Tennessee and a large number of other states would be substantially depleted, experience rating seriously jeopardized and the employers of the State saddled with additional heavy and burdensome taxation and at the same time the incentive to provide full employment as contemplated by public policy with respect to unemployment compensation would be virtually destroyed.

Secretary Wirtz attempts to soften his proposal for paying benefits to voluntary quits and those discharged for misconduct by suggesting providing a “non-charge" to the account of the affected employer whose account otherwise would be charged with benefit payments thereby affecting his tax rate under the experience rating formula. This is no answer to the moral questions involved as previously pointed out and certainly could not serve in most cases to protect the affected employer. Under the experience rating system the balance in the Trust Fund is a significant factor in determining applicable rates and should the Trust Fund be substantially reduced in balance on a given date the rate of every employer would thereby be affected adversely.

In conclusion we would again like to express to the Committee our support of H.R. 15119 and strongly urge that this measure, after mature consideration by the Finance Committee be reported to the Senate without amendment in any respect. In requesting this action by your Committee, and perhaps being repetitious, may we remind the Committee that H.R. 15119 is the result of long and arduous months of study in which the views of every conceivable interested person or group were considered. It appears to us to be a well balanced Bill even though some of its provisions are highly objectionable to many employer taxpayers. Notwithstanding these objections it would seem to us that it would be to the best interest of all that such a well balanced piece of legislation not be subjected to amendments which would bring it to an imbalance.

We are quite certain the Committee is aware that the system providing funds for the payment of Unemployment Compensation benefits is in effect, if not actually, an insurance program. The Congress, in enacting the Unemployment Insurance Program as a part of an overall Social Security system, contemplated and required the establishment and maintenance of the Unemployment Compensation benefits portion of Social Security upon sound actuarial principles. By no reasonable interpretation of statutory language can it be asserted that the Congress intended the Unemployment Compensation program to provide social welfare benefits or that it should ultimately become a welfare program.

It is our considered view that should H.R. 15119 be adopted sound actuarial principles applicable to a social insurance program will be fully sustained and that the high principle, the basis for the original enactment, will not have been nullified and destroyed.

Senator TALMADGE. The next witness is Mr. Clarence Mitchell, representing the National Association for the Advancement of Colored People.

You may proceed at your pleasure, Mr. Mitchell.

STATEMENT OF CLARENCE MITCHELL, DIRECTOR OF THE WASHINGTON BUREAU OF THE NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE

Mr. MITCHELL. Mr. Chairman and gentlemen of the committee, thank you for having me. If I may insert my full statement in the record, and if I may summarize it

Senator TALMADGE. Without objection, that will be done.

Mr. MITCHELL. That will be appreciated.

What happened a few minutes ago is characteristic of your congenial and courteous manner in handling people that I have noticed ever since you have been a Member of the U.S. Senate.

Senator TALMADGE. Thank you, sir.

Mr. MITCHELL. I think that the record ought to show that a committee of the U.S. Senate, if it chose to do so, can call witnesses in any

order that it would care to call them, but you were generous and courteous enough to ask whether the witnesses objected to having someone being called out of order. Of course, we did not object.

But I always appreciate a generous and courteous act, and, if I have the opportunity, I would like to make it a part of the permanent

record.

Senator TALMADGE. Thank you. I am deeply grateful indeed for the witness' comments. I think everyone in the U.S. Senate tries to be courteous to all witnesses, but at the same time we necessarily have to remain to some degree flexible to accommodate witnesses who travel from long distances and under the existing order of things when plane tickets are scarce and hard to get, I felt that the committee and the witnesses would concur in receiving the witness from Tennessee out of order.

I want to thank not only you, Mr. Mitchell, but Mrs. Beideman for that same courtesy.

Senator GORE. I thank you, too.

Mr. MITCHELL. I might say, Mr. Chairman, what I said about your courtesy certainly applies to the Senator from Tennessee, in fact to all members of this committee who have always been more than considerate to those of us who come presenting views. It does not necessarily follow they agree with our views, but they have always given us a courteous hearing.

Senator TALMADGE. Thank you.

Mr. MITCHELL. I would like to point out, Mr. Chairman, in 1960 more than one-half million Negro men were in service trades usually associated with menial jobs, and one-half million Negro women were similarly employed. Over 100,000 worked in the laundry and dry cleaning industry. We believe that these people should be covered by unemployment compensation.

I would also like to point out that in 1964, more than a quarter of a million Negro men were farm laborers, an occupation that has been traditionally low pay, unstable, and now more recently affected by automation.

We believe that it would be a step forward to include workers on large farms.

We endorse the principle that all farmworkers should be given every right and every protection enjoyed by the industrial worker. Anything short of this is second-class citizenship.

Further, we believe that compensation of 50 percent of one's weekly wage will be a step forward, and particularly helpful to those on the bottom of the pay scale. But we agree with the AFL-CIO that 65 percent is a more realistic figure.

I would like to say also that our organization believes that uniform Federal standards will help to insure unemployment compensation programs will not be set up or administered in a discriminatory fashion.

In conclusion, Mr. Chairman and members of the committee, I would like to say that we associate ourselves with the statement submitted by Senator Clifford Case of New Jersey in which he pointed out that he believes that the House bill does not go far enough. He suggested that S. 1991 would boost the current coverage of 49.7 million by 4.7 million, by including groups not covered by the House bill.