as long as H.R. 15119 is already extending coverage to such institutions at the State level. We believe that the employees of State and local governments who render such important services to our Nation are deserving of unemployment compensation protection like all other workers. While their jobs are relatively stable, it must be noted that there is unemployment among them. May I say here incidentally, that an adequate measure of unemployment among State and local government employees is not available. The rate calculated by the Labor Department is limited to employees in "public administration." Service and other blue-collar workers employed by State and local governments are not included in this rate, and it is probable that the true rate of unemployment for those employees of State and local governments who need unemployment compensation most is probably twice as high as the present level of 1.4 percent. That is this public administration rate. In conclusion, we would like to briefly summarize our position by saying that we believe that unemployment compensation insurance should be extended at least to all wage earners in the United States. We believe that no person should be denied unemployment compensation protection simply because he happens to work in a small establishment or in a nonprofit institution or for a State, county, city, or local government. The proposals for the extension of unemployment compensation coverage that are contained in H.R. 15119 as well as the suggestions for the extension of coverage suggested by Secretary Wirtz, President Meany, and our own testimony would extend protection of unemployment compensation insurance to millions of low-wage workers who are particularly in need of such protection. This extension would contribute to the war on poverty and would be an excellent forward step in the direction of universal coverage. We ask that the members of this distinguished committee recommend that action to the U.S. Senate. We want to thank you for this opportunity to be heard, Senator. (Mr. Weinlein's prepared statement follows:) STATEMENT OF THE BUILDING SERVICE EMPLOYEES' INTERNATIONAL UNION, AFLCIO, SUBMITTED BY ANTHONY G. WEINLEIN, DIRECTOR OF RESEARCH AND EDUCATION My name is Anthony G. Weinlein and I want to express the appreciation of President David Sullivan and our entire Union, the Building Service Employees' International Union, for this opportunity to speak briefly on the proposed amendments to the unemployment compensation statutes. I will identify our union only by saying it is an organization of approximately 350 thousand men and women engaged in various kinds of service occupations. and employed by private industry, government and non-profit institutions. Many thousands of our members are not currently covered by unemployment compensation laws. A large portion of them are employed in non-profit hospitals and universities. Many of them are employed in establishments which have fewer than four employees, and many others are employed by state and local governments. It is on behalf of these members particularly that we present this statement. SUPPORT OF AFL-CIO STATEMENT With regard to H.R. 15119 in general, and with regard to the need to improve the entire unemployment compensation system, we wish to associate our organization with the remarks of President George Meany of the AFL-CIO. We are entirely in support of those views. With Mr. Meany we hope that the Senate will reincorporate uniform federal standards for the amount of weekly benefits and the duration of such benefits, as well as a minimum of 26 weeks for the extended federal benefits program. In the rest of this testimony, however, we will limit ourselves solely to the question of coverage. NONPROFIT INSTITUTIONS We applaud the House of Representatives in its action in supporting the extension of unemployment compensation coverage to the employees of nonprofit hospitals and institutions. We have no objections to the exemptions from such coverage as written into H.R. 15119, nor do we object to the special tax arrangements which can be made by states for nonprofit institutions under 15119. We call upon the members of this distinguished committee and upon the Senate as a whole to grant unemployment compensation coverage to the employes of nonprofit hospitals and other nonprofit institutions. Employees of such institutions are among some of the lowest paid workers in our nation, despite the fact that large numbers of people are thus employed. Hospitals account for the largest grouping of nonprofit employees. Because of the way in which hospitals have developed historically and because of the traditions and sentiments that have grown up with the institution, hospitals are often looked upon as a kind of special enterprise which should not be subject to the rules that apply to other enterprises. Our nation must, however, recognize the fact that in their economic activities hospitals behave pretty much like all other organizations. They pay standard rates for the products and services which they purchase from the outside; they attempt to accumulate an income that exceeds expenditures; and their administrators and staff professionals naturally work to maximize their own personal incomes. Hospitals represent a huge enterprise in the United States. In the view of the American Hospital Association, they constitute the fifth largest industrial complex in a nation of large enterprises. The fact that nonprofit institutions are given special tax status does not immunize their employees from the hazards of unemployment. We believe that hospitals must accept the fact that the payment of unemployment compensation taxes are essentially a part of modern economic life. The failure to protect hospital and other nonprofit institution employees with unemployment compensation in the past has been an injustice which should now be rectified. It has, incidentally, led to some anomalous situations in cases where profit-making activity is carried on by the nonprofit institutions, and some employees of an institution are covered while others are not. There is unemployment among the employees of nonprofit institutions, even though the rate may be somewhat lower than it is for manufacturing. In those states where hospital workers are covered (like Hawaii and Colorado, for example) there is clear evidence of unemployment and periods of unsuccessful job hunting. The non-professional employees of hospitals and of nonprofit institutions generally are relatively low wage employees and have almost no opportunity to accumulate personal savings to protect them against periods of unemployment. We believe that it is most urgent that the employees of all nonprofit institutions be protected by unemployment compensation. SMALL ESTABLISHMENTS H.R. 15119 would cover those small employers who have one or more employees in 20 weeks or who pay wages of $1,500 in a calendar quarter. Mr. Meany has suggested that the coverage of small establishments be extended. Secretary Wirtz has specifically supported the use of the Interstate Conference of Employment Security Agencies' recommendation that coverage be extended to those employers who have one or more employees if the employer had at least a $300 payroll in a quarter. This amendment of H.R. 15119 would add about 350 thousand more employees of small establishments to the 1.2 million that would be covered under H.R. 15119. We heartily support this recommendation. There seems to be no genuine reason for denying unemployment compensation coverage to the employees of small establishments. Twenty-four states have already covered some or all of the employees of such establishments and this action on the part of the states has brought unemployment compensation to 1.2 million employees. Our Union is particularly concerned with small establishments since many of our members are service workers in buildings that employ only a few people. While we cannot cite specific instances, we assume that the inroads of automation as, for example, through the installation of an automatic elevator as a substitute for a manual elevator, could reduce the number of personnel employed by a building covered by unemployment compensation to a number of employees fewer than four, so that the remaining employees who did not lose their jobs through automation would, however, lose their unemployment compensation protection. We are accordingly asking that the coverage be extended to employees of small establishments using the definition suggested by Secretary Wirtz. EMPLOYEES OF STATE AND LOCAL GOVERNMENTS In testifying before the House Ways and Means Committee last year, we pointed out that only about a half million employees of state and local governments are protected by unemployment compensation, and we suggested that Congress incorporate into the present bill a policy statement indicating that it is the policy of the federal government to encourage states to cover their own employees and employees of subsidiary governments as well as other persons who are not covered by federal statutes. Since that time, progress has been made in the two areas of fair labor standards and unemployment compensation coverage of state and local government employees. On May 26 of the present year the House of Representatives passed amendments to the Fair Labor Standards Act which would extend the minimum wage coverage to approximately 8 million workers, including school custodians and employees of state and municipal hospitals. Subsequently the House passed H.R. 15119 which would extend unemployment compensation coverage to the employees of state hospitals and colleges. Last Friday the Senate Labor Subcommittee approved, with only one major change, the House-passed amendments to FLSA. We are grateful for this turn of events, but we would like to suggest that the Senate now go the whole way and extend coverage completely to the employees of state and local governments. At very least, it would be logical to extend coverage to employees of city, county and other local governmental hospitals and institutions of higher education, as long as H.R. 15119 is already extending coverage to such institutions at the state level. We believe that the employees of state and local governments who render such important services to our nation are deserving of unemployment compensation protection like all other workers. While their jobs are relatively stable, it must be noted that there is unemployment among them. May I say here incidentally, that an adequate measure of unemployment among state and local government employees is not available. The rate calculated by the Labor Department is limited to employees in "public administration". Service and other blue collar workers employed by state and local governments are not included in this rate, and it is probable that the true rate of unemployment for those employees of state and local governments who need unemployment compensation most is probably twice as high as the present level of 1.4 percent. CONCLUSION We can briefly summarize our position by saying we believe that unemployment compensation insurance should be extended at least to all wage earners in the United States. We believe that no person should be denied unemployment compensation protection simply because he happens to work in a small establishment or in a non-profit institution or for a state, county, city or local government. The proposals for the extension of unemployment compensation coverage that are contained in H.R. 15119 as well as the suggestions for the extension of coverage suggested by Secretary Wirtz, President Meany and our own testimony would extend protection of unemployment compensation insurance to millions of low wage workers who are particularly in need of such protection. This extension would contribute to the war on poverty and would be an excellent forward step in the direction of universal coverage. We ask that the members of this distinguished committee recommend that action to the United States Senate. Senator DOUGLAS. Thank you very much, sir. Now that concludes the list of officially listed witnesses. Mr. Heath Wakelee, who represents the Electronic Industries Association, has been scheduled to appear at this time. Is Mr. Wakelee in the room? If he is not, he has submitted a letter in lieu of a personal statement supporting the House bill. Without objection by other members of the committee, his letter will be made a part of the record at this point. in the proceedings. (The letter, with attachments, follows:) ELECTRONIC INDUSTRIES ASSOCIATION, Hon. RUSSELL B. LONG, Chairman, Committee on Finance, Washington, D.C. DEAR SENATOR LONG: The Electronic Industries Association wishes to be recorded in favor of H.R. 15119, now being heard before your Committee. Our Association strongly urges that this bill, as approved overwhelmingly by the House of Representatives on June 22, be reported favorably by your Committee. Last August the Association, represented by Mr. James J. Brant, appeared before the House Ways and Means Committee, testifying on H.R. 8282 (companion bill S. 1991). In his detailed statement (a copy of which is attached for purposes of incorporation in the Record of your hearing), he reviewed for the House Ways and Means Committee the interest of the Association in the sound development of the Federal-State unemployment insurance programs. (Pages 895-902 of the House Ways and Means Committee hearings on H.R. 8282.) The views then expressed accurately reflect the Association's current thinking in this area. While it would be repetitious to restate here EIA's position, especially in view of this recorded testimony and the subsequent passage by the House of H.R. 15119, we believe it appropriate to underline three major points we made last August and which undoubtedly will be considered in your deliberations. First, the Association desires to again underscore the dramatic progress that has been made under the present system in terms of increasing benefit protection. Today's average benefit check will buy at least 54 per cent more in goods and services-in terms of constant dollars-than its 1939 counterpart. The belief that Federal benefit standards, as proposed in H.R. 8282, are needed because the State programs have been unfortunately laggard in keeping benefits updated, is not based on fact. H.R. 15119 correctly recognize the facts and does not incorporate, therefore, any Federal benefit standards. We believe the facts also justify your support of this conclusion. Second, the House passed bill wisely rejected the provisions of H.R. 8282 which we believe would have, in effect, repealed the desirable experience rating provisions-which encourage more stable employment through better planning and provide the fairest allocation of unemployment insurance costs among employers. We urge your support of this position. Third, EIA has endorsed, and hopes your Committee will endorse, the House approved recession extended duration program. We believe it makes sense to extend the normal duration of benefits only during periods of high level unemployment. In summary: EIA believes that H.R. 15119 merits the Committee's approval and we urge its speedy enactment. Yours very truly, HEATH WAKELEE, Director, EIA Industrial Relations Department. ATTACHMENT A SUMMARY OF STATEMENT OF THE ELECTRONIC INDUSTRIES ASSOCIATION 1. EIA endorses the existing nation-wide federal-state unemployment compensation system which has made a major contribution to the economy over the last 30 years. 2. The present system is a dynamic one, in which both the Congress and the states have made significant improvements. 3. Contrary to the opinions of some, the facts show that benefit protection has expanded greatly since 1939. The record of progress shows that state legislatures have continually adjusted benefit levels and that actual benefit protection has more than kept up-to-date. Today's benefits have more than 50% greater purchasing power in constant dollars than its 1939 equivalent. The majority of claimants, according to best available data, are receiving at least 50% of their wages. In view of this record, we believe there is no need for additional benefit eligibility disqualification standards. 4. EIA suggests that, if there still remains any doubt as to the fact that the majority of beneficiaries are receiving at least 50% of their wages (and a much larger percentage in after-tax income dollars), the U.S. Labor Department commence gathering from the states and publishing this relationship. 5. EIA supports the extension of coverage to employers of one or more empolyees as long as it is a reasonable test of employer status (20 weeks work in a year). 6. EIA believes that the proposed removal of the present federal experiencerating requirement would be most unfortunate and undesirable, being contrary to the underlying purposes of encouraging efforts to regularize employment and most equitably allocating costs of unemployment. 7. EIA supports the concept of a stand-by program to extend the duration of benefits during periods of recession when jobs are harder to find. Appropriate federal enabling legislation should give the states all necessary flexibility to design and finance the programs within the existing state system. ATTACHMENT B STATEMENT OF THE ELECTRONIC INDUSTRIES ASSOCIATION My name is James J. Brant. I am Staff Vice President, Personnel Administration, Radio Corporation of America. Our corporation is active in the Electronic Industries Association, and I am Director of the Industrial Relations Department of that association. I appear today in behalf of the Electronic Industries Association. INTRODUCTION The Electronic Industries Association (EIA), while one of the older industry organizations, founded in 1924, represents an expanding industry which is the fifth largest manufacturing group in the country, with shipments in 1964 of $16.1 billion and with about 875,000 employees. EIA, with 274 members, represents about 75% of the dollar volume of the electronics industry business. As might be expected from this brief background, our membership is not only vitally interested in the public unemployment program, which so directly affects electronics industry employment and costs, but we can also come before this Committee without any long-standing, preconceived ideas about the program. EIA looks upon the public unemployment insurance system as an essentially sound and necessary program in our increasingly industrialized and more urbanoriented economy. We can endorse philosophically the existing unemployment insurance program as a wholly workable blending of both federal and state responsibilities. Our review of the history of the federal-state partnership indicates that Congress wisely passed, in 1935, what is essentially enabling legislation encouraging the states to enact unemployment insurance laws. Congress correctly expected that the individual states would continue to experiment with a variety of approaches which would develop the most meaningful programs to suit the varied conditions found across the country. Certainly "perfection" wasn't expected-nor has it been obtained. Unemployment insurance is a dynamic, changing program which has more than kept pace with the times. If the present system bad stood still or if the program was a sham, Electronic Industries Association would hope to be in the forefront of a movement to demand drastic reform. We do not believe, however, that the proponents of H.R. 8282 have made out either a good or convincing case for their omnibus bill. We are concerned seriously with the fact that, except for the schedule of projected higher federal tax rates, there is a seeming absence of data on what the short and long-range cost impact of the so-called standards would be under the state programs. We cannot see how it is possible to have a thorough discussion or evaluation of any such program without taking these facts into consideration. This general evaluation does not mean that EIA disagrees with some of the major objectives of the proponents but only that some of the means proposed are inappropriate or that the objective has already been achieved in large measure. |