is a necessary barrier to uncontrolled demands on unemployment compensation funds. Furthermore, the maximum amount of work-20 weeks-which a state would be permitted to require as necessary to be eligible for benefits is inconsistent with the required period for the extended benefits under the extended program now in S. 1991. An extension of the benefit period to 52 weeks may be necessary in a limited number of cases, but it certainly goes a long way to encourage a claimant who in all reality is not seeking employment and who has virtually removed himself from the labor market. The need for assistance beyond the benefits contained in state laws should be provided by retraining or other allowances, except in recession periods when employment in other industries or areas is also at a low level. As an alternative to the FUAB provisions of S. 1991, the Secretary has proposed a dual program of extended benefits. One, voluntary for the states, would provide extended benefits with a 50-50 federal-state sharing, and in addition, a fully federally-financed program triggered for an individual state or for the nation in the same manner as is proposed in H.R. 15:19. We do not oppose some type of standby legislation to extend benefit duration when a substantial number of workers in a state exhaust their regular benefits. The framework of such a plan has been incorporated in H.R. 15119. We could support this proposal if it were to be financed wholly by state funds, letting the states determine the method of financing. Denial of an offset against Federal Unemployment taxes could be the tool to enforce compliance. THE INCREASE IN TAX BASE AND RATE The proposals in S. 1991 to increase the base and the rate are made on the contention that the added revenue "is needed for both Federal and State taxes”. It is also claimed that such increases are needed to meet "administrative costs, build the balance in the loan fund and the employment security administrative account". Part of these increases are considered necessary to finance the extended benefit program. With wholly state financing of this program, certainly the drastic increases proposed by S. 1991 are unnecessary and the rate and base changes in H.R. 15119 could be reduced as no well defined need has been demonstrated. DISQUALIFICATIONS We believe that the proposed seven-week maximum postponement of benefits for voluntary quits or discharges for cause proposed by S. 1991 is totally inadequate. Nor can we accept the Secretary's alternative proposal for a maximum of 13 weeks delay, even though it is sugar coated by a suggestion that an employer's experience rating account should not be charged with benefits paid for unemployment which follows a disqualifying act. This merely transfers the cost of benefits from one employer to all the employers in the state. The original and underlying purpose of the unemployment compensation system was to provide benefits for a worker who lost his job through no fault of his own. Those who were discharged for cause were completely excluded from benefits. There is still great merit in this position. An individual who voluntarily quits should be required to demonstrate some further attachment to the labor market before becoming eligible for any benefits. A short postponement of benefits is not of sufficient impact to eliminate this invasion of the basic philosophy. EXTENSION OF COVERAGE TO SMALL RETAILERS We are concerned about the proposal in S. 1991 to cover an employer who employs one or more persons at any time. We are equally concerned about the Secretary's alternative to cover employers of one or more who have a $300 payroll in a calendar quarter. Our concern stems from the fact that retailing is largely composed of small, unincorporated businesses. The 1963 Census of Business shows that, of a total of 1,707,931 retail establishments, 838,275 had sales of less than $100,000 a year, and were operated by individual proprietors. In these small establishments, there are part-time and sporadic employees who could never qualify for benefits; including them will only result in additional bookkeeping and tax problems for the small business man. The provisions of H.R. 15119 appear to us to be more realistic, if these smaller businesses are to be covered at all. EXPERIENCE RATING We were pleased by the Secretary's statement before this Committee that, contrary to the provisions of S. 1991, he did not urge a change in the experience rating provisions of the present law. We believe that experience rating helps to stabilize employment and safeguard fund balances in the various states. We see no need for any legislation in this area. CONCLUSION Retailing represents about 40 percent of the Gross National Product through consumer purchases. It employs nearly 9,000,000 and operates nearly 2,000,000 establishments. Naturally, in an industry as large as ours, there are differences of opinion. Some of the members of the American Retail Federation would prefer certain provisions included in an unemployment compensation law and others omitted. However, we believe that, in general, H.R. 15119 represents a reasonable compromise between widely varying views. We support it with the reservations already noted. Thank you. The CHAIRMAN. Our next witness is Mr. Robert J. DeFlaminis of the Greater Boston Chamber of Commerce. Proceed, sir. STATEMENT OF ROBERT J. DeFLAMINIS ON BEHALF OF THE GREATER BOSTON CHAMBER OF COMMERCE Mr. DEFLAMINIS. Mr. Chairman, members of the committee, our basic position that is being taken with respect to 15119 is that we feel that the bill as drafted reaches into the past and projects into the future for an unemployment compensation system that will meet the needs and the challenges of what is in front of us, with specific reference to the triggering of the Federal extension of unemployment compensation benefits either within a State basis or National basis. We, of course, in the State of Massachusetts exhibited back in the late forties and early fifties a significant change in our industrial base, namely, when the textile industry moved to other States. At that time our particular program provided for a maximum of 26 weeks of unemployment compensation benefits. However, with this tremendous industrial base moving and leaving large unemployment in its wake, we found many individuals who had exhausted their unemployment compensation benefits and, of course, this created an economic situation within the State of Massachusetts. Senator ANDERSON. Excuse me. What page are you on? Mr. DEFLAMINIS. I am not reading. The CHAIRMAN. He is summarizing. Mr. DEFLAMINIS. I am summarizing at the chairman's suggestion. So, therefore, with the triggering in at the individual State level, we feel that this will provide for the changes that will come in the future and that we will be able to protect the basic economic level of those States in which this does occur. With respect to the taxable wage base, a provision such as this, Massachusetts, as you know, has a taxable wage base which reached into $3,600 by legislative act of 2 or 3 years ago. So thereforeSenator ANDERSON. To what figure, please? Mr. DEFLAMINIS. To $3,600, which is now the taxable wage base in the Commonwealth of Massachusetts. Senator ANDERSON. You are going to comment on whether it should be that of $5,600 or what? Mr. DEFLAMINIS. No. We feel we have gone up to $3,600, that the additional $300, raising it to $3,900, would create some increases in the taxable wage limits in the State and also it would provide for the further extension of unemployment compensation benefits. So we are not going to comment specifically as to whether we want this to be increased to $6,600 or $5,600. We feel that our individual State system has met the need at this particular point and that 15119 has asked for some increases, and I think we can support the increases that have been indicated in 15119. So, basically, the position that we have taken has been one of which we felt that the House committee has done a statesmanlike job in putting together 15119, and we feel that it will meet the needs presently and will project into the future. The CHAIRMAN. Thank you very much. The CHAIRMAN. Senator Talmadge? Mr. DEFLAMINIS. You are welcome, sir. (The prepared statement of Mr. DeFlaminis follows:) STATEMENT OF Mr. Robert J. DEFLAMINIS, CHAIRMAN, SUBCOMMITTEE ON UNEMPLOYMENT COMPENSATION, GREATER BOSTON CHAMBER OF COMMERCE My name is Robert J. De Flaminis, a Partner in the firm of Weaver Associates of Boston, Massachusetts, consultants to industry on matters dealing with unemployment compensation. I am also Chairman of the Sub-Committee on Unemployment Compensation of the Greater Boston Chamber of Commerce, and it is in this capacity that I appear before this Committee today. The Greater Boston Chamber of Commerce is a corporation organized under the laws of the Commonwealth of Massachusetts, having its place of business in the City of Boston. Its basic objective is the promotion of sound and equitable laws and procedures designed to strengthen commerce and industry in the Greater Boston area. The Chamber, acting through its Board of Directors, represents over 3,200 businessmen and firms in the Boston metropolitan area. A cross section of the area businesses including manufacturing, retailing, finance, insurance and service industries make up its membership. Our position in support of H.R. 15119-The Unemployment Insurance Amendments of 1966-came about after detailed study and analysis of the impact of H.R. 8282 on the economy of our area. We found H.R. 8282 to be an unreasonable and unwarranted burden on business in our region. Our opposition to this bill is a matter of public record for it was submitted to the House Ways & Means Committee during their extensive hearings on the bill. Several amendments to H.R. 8282 which we believed necessary and which were supported by other business oriented groups have been included in H.R. 15119. In support of our position favoring H.R. 15119, we would like to make some pertinent observations concerning the impact of this bill on Massachusetts business which may assist the Committee in its deliberation. Massachusetts has long been one of the nation's leaders in formulating progressive unemployment compensation legislation. We candidly say that Massachusetts has met the economic challenge of providing a system of unemployment compensation benefits that is consistent with our times. In 1935, President Franklin D. Roosevelt established a Commission on Employment Security which brought forth, after long and arduous consideration, four basic guidelines for the establishment of an employment security system: First, try to find a job for the unemployed individual; Second, if no job is available, provide partial replacement of income for a temporary period of time; Third, benefits should not be in an amount more attractive than a job; Fourth, the system should be supported by the employer through a tax which encourages him to maintain full employment. These guidelines were accepted by the Federal Government and the states, and through their successful practical application over the past thirty-one years, have proved their lasting value. We believe that we should seriously reflect on what experience has revealed to be successful. It is significant that in laying down the foundation for state employment security systems, the Federal Government in principle and in practice, reserved to the states the traditional right to administer their own programs, to finance their own benefits, and to establish their own standards for eligibility and disqualifications. In this way, the Federal Government gained its objective and arrived at a compatible federal-state relationship; namely nation-wide protection for the unemployed with individual state system to meet individual state needs. We feel that the House Ways and Means Committee in reporting H.R. 15119 has done a statesmanlike job in its approach to amending the Nation's Employment Security Law. This has been clearly evidenced by the strong bi-partisan support this bill received this past month in the House. The provisions of this bill will provide a national trigger for extended unemployment compensation benefits during a period of recession which eliminates the legislative lag period we have witnessed in the past. In addition, the bill goes a step further in providing a state trigger point for extended unemployment compensation benefits. We have all seen in the last ten or fifteen years the considerable mobility of industry and its impact on the industrial bases of the states. This is vividly illustrated by the case of the textile industry in the Commonwealth of Massachusetts which was a substantial part of our industrial base, and which moved to other states leaving high unemployment in its wake. The Massachusetts Employment Security System, at that time, provided for twenty-six weeks of unemployment compensation benefits. After this twenty-six week period had elapsed, no further partial replacement of income was afforded to the unemployed worker. Needless to say, this condition had a serious impact on the Commonwealth's economy. The provisions that have been included in H.R. 15119 to provide for state triggered extended unemployment compensation benefits could aid in the resolution of this problem. In Massachusetts we have recognized also a responsibility to the unemployed worker whose family unit may be larger than another's by providing him with dependency benefits. From 1957 to 1964, $84.7 million has been paid out. There are only a handful of other states that provide dependency benefits in the amount receivable by an unemployed Massachusetts worker. H.R. 15119 also protects the basic foundation of the unemployment security system by its provisions to retain experience rating by the states, something we consider to be fundamental. In conclusion, the Greater Boston Chamber of Commerce recommends Senate approval of H.R. 15119. This legislation will strengthen the unemployment security system measurably by preserving from the past and projecting into the future, provisions that will provide the nation with a financially sound and equitably structured Employment Security Law. On behalf of the Board of Directors and the membership of the Greater Boston Chamber of Commerce, may I express my appreciation for being permitted to present our views on this important matter. The CHAIRMAN. Mr. William J. McCarthy, of Associated Industries of Massachusetts. STATEMENT OF WILLIAM J. McCARTHY, ASSOCIATE COUNSEL OF ASSOCIATED INDUSTRIES OF MASSACHUSETTS Mr. McCARTHY. Mr. Chairman, members of the committee, I should like to briefly review my statement. My name is William J. McCarthy. I am a counsel for the Associated Industries of Massachusetts. We want to be recorded in favor of H.R. 15119 and urge its passage by the U.S. Senate. The provisions of H.R. 15119 constitute in our judgment significant, timely, and necessary changes in the Federal-State system of unemployment compensation. This bill received the bipartisan support of the House Ways and Means Committee and virtually unanimous approval in the U.S. House of Representatives after the committee gave the matter the most deliberative and thoughtful examination of unemployment compensation in this country since its inception under the Social Security Act of 1935. The character of the House Ways and Means study is stated in the report. The bill is the broadest and most intense review given the unemployment compensation program since the enactment in 1935 as part of the Social Security Act. After more than 3 weeks of public hearings, 2,000 pages of printed testimony, covering testimony of every facet of unemployment compensation from the most knowledgeable and expert people in the area of unemployment compensation, the House Ways and Means Committee approved this bill. In doing so the committee made substantial changes in the unemployment compensation system while wisely reserving to the States autonomy to design their own programs tailored to their peculiar needs, economic, and unemployment compensation needs. The House Ways and Means Committee after this thoughtful examination deliberatively rejected H.R. 8282 and its notions of federalization of unemployment compensation. We are thoroughly in accord with the view and judgment of the House Ways and Means Committee and the House of Representatives on this matter. This bill has been characterized as an anemic bill. We have described it as having made substantial and important changes in the unemployment compensation program. I should like to elaborate on this thesis. Extension of coverage of this bill: This bill would add 3 million additional workers to the already 49.7 million workers protected by the unemployment compensation in this country. We submit this is extensive coverage. Under the new bill employers of one or more individuals in each of 20 calendar weeks a year would be covered in the bill. In Massachusetts we have since 1950 covered employers of one or more individuals on 1 day in each of 13 calendar weeks. Federal-State extended unemployment compensation program: The extended benefit program under this bill I think is a most significant aspect of it. It will establish a permanent system of extended benefits to be triggered in during periods of high unemployment, either on a State or a National basis, and will be payable to claimants who have exhausted their State benefit rights. Twice within the last decade, in 1958 and 1961, the Congress has found it necessary to enact an extension-of-benefits program to alleviate the economic needs of both the |