an increase in weekly payments can mean of weeks, with no overall improvement.

decrease in the number

A Federal standard for regular State duration is the necessary basis for any satisfactory extended benefit programs. This can be seen in the context of the extensions that Congress authorized in the 1961 recession. At that time, the Federal Government made available additional benefit weeks, even in those States where short duration of benefits suggests the State legislature had shirked its responsibility. Why should the Federal Government provide additional weeks of benefits in a State where a large percentage of claimants cannot even qualify for 20 weeks or even 15 weeks? Does not the State have at least a minimal responsibility? Can Congress be asked to provide Federal financing of benefits after 26 weeks in some States and after only 13 weeks in others?

I urge your consideration of this problem because the House bill would perpetuate a confusion of responsibility. By providing extra weeks under recession conditions paid for in part with Federal funds, and failing to require minimal performance by the States for their own regular benefits, the House is offering very bad law. Not only is there a confusion of responsibility as between the Federal and State Governments, but there is a built-in reason for the weaker States not to liberalize their provisions.

The concept of a 26 weeks' or 6 months' watershed of responsibility is useful because it suggests where State financing is appropriate and where Federal financing should begin. Just as Federal financing should not impose on the States up to 26 weeks, so the States should not be expected to carry the full burden of long-term unemployment beyond 26 weeks.

When you look at long-term unemployment beyond 26 weeks, the circumstances that cause it suggest that Federal financing is more appropriate. The half-million persons last year who exhausted 26 or more weeks of benefits were not unusual. Many had been employed in the same job for a long time. They were the victims of economie change. In some cases their plants closed down under competitive. pressures; in some cases their jobs were automated out of existence: in some cases they couldn't find employment because of age limits in hiring; in some cases they were victims of shifting defense orders.

Any approach to the serious problem of long-term unemployment has got to take two facts into account. First, as I have said, the Federal Government has a responsibility for financing the benefit cost of long-term unemployment, and, second, we must recognize that longterm unemployment exists in good times as well as in recession periods. We have vigorously supported the benefits for the long-term unemployed that would be provided by S. 1991. This bill would establish a "Federal unemployment adjustment benefit" payable only to those with a well-established work record who had exhausted their State benefit. It would have continued weekly payments through the first full year of unemployment, if needed that long. This proposal got very little attention in the House, and yet it still seems to us the only way to assure that you get benefits to the right persons at the right time, and within the framework of a reasonable cost.

The House proposes instead that extended benefits be paid to "exhaustees" in recession conditions only. Let me summarize now the shortcomings of this approach as we see it:

First, without a Federal standard for the regular State duration, the Federal recession benefits take over after a different number of weeks in different States, and this badly clouds the question of where Federal responsibility for financing begins.

Second, by offering 50 percent Federal financing of the additional weeks, the proposal acts in a manner to discourage any further liberalization by the State and also to discourage a full realization of State responsibility for benefits up to 26 weeks.

Third, by providing half again as many additional weeks as the number compensated under State law, the House proposal increases the discrepancies that already exist between State laws. Some States. will allow only 12 weeks of benefits to an unemployed worker whereas if that same worker had been employed with the same earnings and work history in a different State, he would have received 26 weeks of benefits. By allowing him half again this duration in additional weeks, the discrepancy is thereby widened to 18 and 39 weeks in different States for the same kind of worker. In this way the Federal Government becomes a party to intensifying the inequities.

Fourth, the proposal does nothing for long-term unemployment except in recession conditions. As I have already indicated, there are continuing forces at work in relatively good times that produce some long-term unemployment even among steady workers.

Fifth, the maximum of 13 weeks in additional benefits is not a long enough time under recession conditions. This was demonstrated by the high rate of exhaustions of the extended benefits in 1958 and 1961.

It is too abundantly clear that there are weaknesses in both the concept and the details of the triggered recession benefits. Nothing can be done to make a fundamentally unsound program worthwhile, but there are steps that could be taken to alleviate some of the shortcomings. Establishing a standard for the duration of State benefits would be a good beginning. If a weaker standard than that in S. 1991 were established, the additional weeks of benefits should be uniform for all exhaustees, that is, the same number of weeks for all. There clearly should be full Federal financing for extended benefits paid from a uniform increase in the Federal portion of the tax contribution. Lastly, the number of weeks of benefits should be more than 13 to do the job under the kinds of recession we have recently experienced.

However, under the best of circumstances there is no way to make a triggered recession-type program do the job that is needed for the long-run unemployed whose luck can run out at any time, and that is the reason we still like the "Federal unemployment adjustment benefits" in S. 1991.

Since the House has already expressed itself so forcefully, there may be a compromise that can be reached involving 13 weeks of "Federal unemployment adjustment benefits" and 13 weeks of recession-type benefits.

Year after year, our State labor organizations have fought for better unemployment compensation, for the benefit standards that Republican and Democratic administrations have recommended for 15 years. From these experiences we are absolutely convinced that a stronger role is needed for the Federal partner in the program.,

There are three basic reasons why the States cannot do the job unaided by the Federal Government:

First, most State benefit provisions are geared to insufficient financing arrangements. Benefit levels are adjusted to the fund reserve level instead of the financing being tailored to provide adequate benefits. The history of several State programs in recent years tells this story-Pennsylvania, Ohio, Minnesota, Wyoming, and others. There has been a lack of interest in sound, long-term financing. Experience rating and the dwindling tax base have substantially reduced reserves. So long as legislative policy is controlled by those whose first concern is the tax rate rather than the needs of the unemployed, the benefit structure is going to suffer.

Second, separate State programs financed entirely apart from one another leave the whole system vulnerable to the unequal incidence of unemployment. The specter of insolvency is called forth to discourage each State from liberalizing its benefits.

The third reason that the Federal Government must set standards of performance arises from the fact that many States consciously pursue a policy of underfinancing as part of an industrial development program to attract new industry through low payroll taxes. I doubt whether the small variation in rates between States actually has any significant influence on plant movement, but the lower rates effective in some States are frequently among the sales arguments of those States.

If unemployment insurance is to be insulated from interstate competition, either the tax rates must be standardized, or there must be a minimum standard applied to benefits. Nothing could be clearer from our quarter-century experience with this system.

We will not be deterred by false cries of "Federalization." The AFL-CIO is not asking that the Federal Government take over the basic program that should apply to the first 26 weeks of unemployment. We do not urge that separate State funds be abolished. We do not argue that States cannot have different benefit schedules such as those providing more than 50 percent compensation at lower wage levels. There is plenty of room for further experimentation with dependent allowances, with measures of attachment and rules of entitlement.

All we ask is that the Federal Government no longer allow moneys raised by the Federal Unemployment Tax Act to go for State benefit payments unless that State program does a creditable job. This is not federalization. It is fiscal responsibility in intergovernmental relations.

There is nothing new in the concept of Federal standards for the distribution of moneys raised by a Federal tax; it is not even new to unemployment insurance where some 30 standards, mostly of an administrative nature, already exist.

The modernizing of unemployment insurance-of focusing it to the problems of the 1960's-is at base simply a problem of clarifying original purposes which have been corroded with time.

Meaningful wage insurance is the human element in a nation that gives wide freedom to the allocation of capital. We should be willing to refurbish our institutions so they will serve move vigorously the objectives of a self-respecting society.

The CHAIRMAN. Mr. Meany, I want to thank you for what I think is a truly great statement.

Let me announce that on the first round of questions of Mr. Meany, I am going to impose on myself and every other Senator a 10-minute limitation and thereafter a Senator can ask as many questions as he

wants to.

I note that from the tenor of your statement, and from something which I read in the press of occasion, that labor feels somewhat frustrated about this Congress; that the two political parties, and the Democratic Party in particular, made a number of commitments that have not been fulfilled, and that some of the main commitments that labor was most interested in did not happen.

It is worth pointing out that your ship did not run aground in this committee. You came here with medical care for the aged and retired workers, and this committee went a lot further than the House did; on the public welfare sector we went a lot further; in the taxcut area we shed more sympathy for the kind of thing that your organization, representing workers, had advocated, than the House did; and in most instances we prevailed on those things in conference with the House.

The argument that this program should be absolutely sacred in that the Federal Government should have no minimum standards whatever is somewhat inconsistent with the views that have been taken on everything else, is it not?

Mr. MEANY. Well, it is inconsistent with the Federal tax which was imposed 30 years ago, and a portion of it rebated back to the States on the basis of the States meeting standards. So the idea of Federal standards in this very field itself is not new, I mean, for the distribution of Federal tax money.

The CHAIRMAN. Even in this field.
Mr. MEANY. In this field; yes, sir.

The CHAIRMAN. We do tell the States how they must administer the program as far as their own employees and their own State organizations are concerned, don't we? They are required to have a merit system and things of that sort.

In addition to that, I notice that in dealing with public welfare we have put a lot of standards in there to tell the States that they must do this and they must do that if we are going to match them with Federal money.

One of those, I recall, was a pass-on provision which said that we are going to increase matching but if these States take advantage of this to simply reduce their own contribution without benefiting the needy they do not get that matching. We did this in this last social security bill, and I think we had worked on that many times, and the only reason it had not been done earlier was that there just was a technical difficulty of how to work it out. Everybody agreed the States should be made to carry out the intent that we had in mind if they were going to take our money in the program, and it would seem somewhat inconsistent to me, and I would ask you if you would not agree to that, for us to take the view that in every other program where the Federal Government has a Federal-State relationship we could tell the States, "Here are certain minimum things you must do," then say, "Wait a minute, on this program, this is absolutely sacred; we cannot impose any sort of Federal standards in order to carry out the intention of this program."

Mr. MEANY. Senator, it is not only a question of the Federal Government's right to set standards but when you look at the whole program and the whole idea of unemployment insurance, there must be some standardization or else the program fails.

Now, I was in this back in the early days in my home State, and I can remember that we were keenly conscious of the relation between the benefits and the wage that the worker got at the time. There was a definite relation.

In other words, we had a $15 limit, but it was against a $23 average. Now, if that was a proper standard at that time, surely the standards applied on a percentage basis should apply today.

The CHAIRMAN. You have also made a statement here on page 13 of the statement before me that in some respects here-by having no minimum standards you say, "Many States consciously pursue a policy of underfinancing the unemployment insurance program"

Mr. MEANY. Yes.

The CHAIRMAN (continuing). "As a part of an industrial development program to attract new industry through payroll taxes."

Now, I was somewhat amused when a spokesman for the U.S. Chamber of Commerce on yesterday denied that to be the case.

Before I came here, before I ran for U.S. Senator, I was executive counsel to the Governor of Louisiana, I was his lawyer in helping him prepare his bills, and that is the argument they made to us all the time, that "Here, if you provide any more of these benefits that is going to so up the costs of our program that is going to make it difficult for us to attract new industries here," and every time there has been a discussion in our State legislature of the problem of providing more adequately for these uninsured workers, that is the first argument they have always made. I must say that it kind of gave me the impression that the national chamber ought to get in touch with the State chambers of commerce.

Mr. MEANY. There is no question they use it, Senator. We do not think it results in an exodus of plants from one State into another, but it is used, and it may have some influence,

The CHAIRMAN. Well, I pointed out an example of the benefit to my State, and I would like to keep it that way insofar as the advantages are concerned, but as far as justice and fairness and equity, it does not seem quite right.

Here we are bidding for a $50 million shipbuilding contract against Maryland, a Maryland shipyard. We underbid them by $100,000 on a $50 million contract. That is one-fifth of 1 percent.

Well, in our State, the minimum unemployment tax is 0.9 percent, and here is a shipyard with a $500 million backlog of work that it is doing. On the other hand, here is this Maryland outfit with all sorts of people out of work. With all those people out of work, they have a poor rating, and that means a tax rate of 3.9 percent. We beat them. 2.8 percent just on that one item.

Some States permit the unemployment tax to go down to zero, and so one State competing with another can say, "Here is a way to keep our shipyards full of business. Let us just do nothing for our unemployed workers that we just do not absolutely have to do."

It would seem to me there should be at least some sort of minimum tax in this program, and to that extent I think you are right.