We support, without amendment, H.R. 15119 and urge its approval by this committee and subsequent passage by the United States Senate.

The provisions constituting H.R. 15119, as reported by the House Ways and Means Committee and passed by the House of Representatives, reflect necessary, significant and time improvements in the federal-state system of unemployment compensation. H.R. 15119 received the bipartisan support of the membership of the House Ways and Means Committee after that committee completed the most thoughtful and deliberative examination of the entire system of unemploy ment compensation since its establishment in 1935. The character of the House Ways and Means Committee study is stated in its report accompanying the bill. It said: "The bill (H.R. 15119) is the broadest and most intensive review your committee has given the unemployment compensation program since its enactment in 1935 as part of the Social Security Act.”

After more than three weeks of public hearings producing more than 2,000 printed pages of testimony from the most informed and knowledgeable specialists in the field of unemployment compensation which covered every facet of unemployment compensation and after seven weeks of extensive work and study in executive sessions, the House Ways and Means Committee approved a new bill, H.R. 15119. 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 unemployment compensation and economic needs.

The Ways and Means Committee and the House of Representatives, in taking the action of virtually unanimously approving H.R. 15119, deliberately rejected the Administration's proposal, H.R. 8282, and its notions of federalization of

unemployment insurance.

The Associated Industries of Massachusetts is in accord with the views of the House Ways and Means Committee and the House of Representatives. It supports and urges Senate approval of H.R. 15119 without modification and Senate rejection of S. 1991, the Senate bill identical to H.R. 8282.

We have said that H.R. 15119 would make major improvements in unemployment compensation within the existing federal-state concept of unemployment insurance. We should like to elaborate upon this thesis.

I. EXTENSION OF COVERAGE

Under the new bill three million new workers would be added to the existing 49.7 million workers who are protected by unemployment compensation. This, we submit, is a most significant extension of coverage in the system of unemployment insurance. In Massachusetts, for example, coverage has since 1950 extended to employers of one or more individuals on one day in each of thirteen weeks in the calendar year. Under H.R. 15119 coverage would be extended from the present employers with four or more individuals in each of twenty calendar weeks in a calendar year to employers of one or more individuals on one day in each of twenty weeks in a year.

II. FEDERAL-STATE EXTENDED UNEMPLOYMENT COMPENSATION PROGRAM H.R. 15119 would establish a permanent system of extended benefits to be "triggered in" during periods of defined high unemployment either on a state or national basis and payable to workers who exhausted their basic entitlement under state programs. 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 long-term unemployed who had exhausted their state benefit rights and the national economy. Enactment of a permanent extended benefits program as contemplated by H.R. 15119 would obviate the future nedes of ad hoc Congressional action whenever economic conditions warrant such action-an approach that is often ineffective because such programs are enacted under the coercion of emergency situations during recession periods that have been underway for some time. H.R. 15119 presents a program for extended benefits that would become effective as the need arises and end as the need passes.

We also feel that the approach to compensating long-term unemployment under H.R. 15119 is entirely consonant with the federal-state system of unemployment compensation. The extended benefits would be paid under the provisions of state laws, thus recognizing that the states have a responsibility in meeting the problems of high unemployment. Additionally, in providing an

alternative "trigger in" point on a state or national basis, H.R. 15119 recognizes the principle that oftentimes there is an uneven incidence of unemployment among the states; that long-term unemployment in one state does not necessarily mean that the same unemployment exists in another state; and that a state may be experiencing a problem of high unemployment even though the nation as a whole is not.

To avoid discouraging states from providing regular compensation for longer than twenty-six weeks, the Federal Government will also pay under the extended benefit program in H.R. 15119 one-half of the regular compensation in excess of twenty-six weeks in a benefit year, if such regular compensation is paid during an extended benefit period.

In sum, the extended benefit concept in H.R. 15119 is infinitely preferable to the extended benefit program contemplated by S. 1991 whereby extended benefits would be paid automatically to any person who exhausted his state benefit rights under any economic conditions.

III. JUDICIAL REVIEW

H.R. 15119 affords the states to obtain judicial review of the findings of the Secretary of Labor which would result in the denial of certification for payment to a state of costs of administration or the denial of certifications relating to tav credit to employers in the state. Judicial review of administrative action traditionally protects against arbitrary interpretation of the law. The Congress, by the Administrative Procedures Act of 1946 and numerous other statutes, provides for judicial review of administrative and agency decisions. H.R. 15119 logically extends this right of court review to decisions by the Secretary of Labor in relation to unemployment compensation matters. It will properly protect employers and the states against possible administrative excesses of the Department of Labor.

IV. H.R. 15119 HAS NO FEDERAL BENEFIT STANDARD

We are especially pleased that H.R. 15119 does not contain a federal benefit standard. We agree with the deliberative judgment of the House Ways and Means Committee that a federal benefit standard is, for a variety of reasons, inadvisable at this time. It should be pointed out that the Ways and Means Committee thoroughly studied the impact that the proposed federal benefit standard would have on various state laws which provide for the payment of dependency benefits on top of their basic benefit entitlement or pay benefits under the variable maximum system. They pondered the question of how to impose a benefit standard on weekly benefit amounts in these states without distorting the benefit structures in these states. They were not able to find a solution and ultimately determined a federal benefit standard was not feasible and ought not to be imposed.

Unemployment compensation needs, like other economic needs, vary from state to state and region to region. This fact principally accounted for the establishment of the federal-state concept initially in 1935. The validity of this concept is no less persuasive today than it was thirty years ago. Some of the factors causing this variance are geographical location, composition of the economy and its work force, type and extent of unemployment and others. Also the ability of employers and employer-made products to pay for the unemployment compensation programs similarly vary from state to state and region to region. It would be most unwise then to impose an inordinately high level of unemployment compensation requirements for all states and regions in the manner contemplated by S. 1991, thereby forcing all states to conform to this federal standard without an unmistakable demonstration of the need in all the states.

Individual states, generally, and particularly the industrial states of which Massachusetts is one, are meeting their own peculiar unemployment compensation needs in designing their own programs. The social and economic forces at work in the individual states in large part contribute to the current adequancy of these state programs. The history of unemployment insurance in the United States generally has shown that invariably these forces will cause the levels of the various programs to rise to meet the needs of the unemployed in a manner consistent with the economics of the community and the policy and purpose of the program itself. State legislatures generally are becoming increasingly responsive to these forces and are designing their programs in accordance with their demands.

We disagree with those who assert that unemployment compensation can be dealt with effectively only through high-level national standards and a nationally coordinated program. Individual states generally, and Massachusetts in particular, have evolved and are developing their programs tailored to meet their needs and adapted to conditions prevailing within the state with only minimal federal requirements. They should be allowed to continue to do so. Thank you Mr. Chairman and Members of the Committee.

SUMMARY OF STATEMENT OF THE ASSOCIATED INDUSTRIES OF MASSACHUSETTS, WILLIAM J. MCCARTHY, ASSOCIATE COUNCIL

In general the testimony of the Associated Industries of Massachusetts will be in support of H.R. 15119, without amendment. We also urge rejection of S. 1991. H.R. 15119 reflects necessary, significant and timely improvements in the federal-state system of unemployment compensation. This bill is the product of the broadest and most intense review of unemployment compensation by the House Ways and Means Committee since the enactment of the program in 1935 as part of the Social Security Act.

EXTENSION OF COVERAGE

H.R. 15119 significantly extends coverage of the unemployment compensation system by adding three million new workers to the existing 49.7 million workers who are now protected by unemployment insurance.

FEDERAL-STATE EXTENDED UNEMPLOYMENT COMPENSATION

PROGRAM

H.R. 15119 provides for the establishment of a permanent federal-state system of extended benefits to be "triggered in" during periods of defined high unemployment either on a national or state basis and payable to workers who have exhausted their basic benefit entitlement under state programs. Enactment of this permanent extended benefits program is entirely within the existing federalstate concept and would obviate the future need of ad hoc Congressional action whenever economic conditions warrant such action. Under the bill, a permanent program for extended benefits would be established whereby benefits would be payable as the need arises and end as the need passes.

JUDICIAL REVIEW

H.R. 15119 provides for a needed system of judicial review of the findings of the Secretary of Labor in matters of unemployment compensation. This court review procedure is a logical extension of and in keeping with a multitude of other federal statutes providing for judicial review of administrative matters.

H.R. 15119 HAS NO FEDERAL BENEFIT STANDARD

We agree with the deliberative judgement of the House Ways and Means Committee that a federal benefit standard, for a variety of reasons, is not feasible and ought not to be imposed. Unemployment compensation needs, like other economic needs, vary from state to state and region to region. It would be unwise to impose a high level benefit standard for all states and regions in the manner contemplated by S. 1991, thereby forcing all states to conform to this standard without an unmistakable demonstration of the need in all the states. Individual states, generally, and particularly the industrial states of which Massachusetts is one, are meeting their own unemployment compensation needs in designing their own programs without a federal benefit standard requirement. They should be allowed to continue to do so.

The CHAIRMAN. Our next witness is Mr. Otto Christenson, Minnesota Employers Association.

STATEMENT OF OTTO CHRISTENSON, EXECUTIVE VICE PRESIDENT, MINNESOTA EMPLOYERS ASSOCIATION, ST. PAUL, MINN.

Mr. CHRISTENSON. Mr. Chairman, gentlemen of the committee, my name is Otto F. Christenson. I am the executive vice president of the Minnesota Employers Association with headquarters in St. Paul, Minn.

This is a statewide association consisting of over 1,820 member companies, about three-fourths of them being firms engaged in manufacturing operations. Most of the principal industries in the State are members of the organization. The association membership is from all areas of the State and it includes over 1,000 employing firms which would be classified as small employers.

At the outset let me make it clear that our association, although we have reservations on certain points, supports the enactment of H.R. 15119 without any changes. This bill is a compromise of widely divergent views presented to the House Ways and Means Committee and, as you gentlemen know, it was developed only after the longest public hearings and executive session consideration of unemployment insurance since the original act established the Federal-State system in 1935. Proponents of the sweeping changes in the system put forward in H.R. 8282 and S. 1991 decry the effectiveness of H.R. 15119 and some have called it a watered down little bill. Gentlemen, any objective appraisal of H.R. 15119 will indicate that this bill entails more fundamental change in the Federal-State unemployment insurance system than has been previously enacted in all the bills passed by Congress since the birth of the program in 1935. I do not intend to take your time with a recital of the basic changes with which you are certainly familiar. I do wish to stress two fundamental changes:

(1) The Federal tax rate and tax base are substantially increased-the rate by 50 percent; the base by 40 percent. By 1972, employers will find their present Federal unemployment tax more than doubled.

(2) The protection of workers under the program is vastly improved by extending coverage, by lengthening the duration of benefits in times of recession, and by strengthening the financial resources of both the State and Federal laws.

The proponents of H.R. 8282 and S. 1991 continue to urge you to incorporate in H.R. 15119 some of the most objectionable features of these bills which the House rejected. They continue to reiterate the slogan that the States have "failed to keep pace with the times." Gentlemen, I simply do not believe that such a charge can be substantiated and as to my own State of Minnesota, I know from over 20 years of firsthand experience that the assertion is without merit. In our 1965 legislative sessions the maximum weekly benefit amount was increased from $38 to $47.

If I may interpolate in my prepared statement, this is more than a 20-percent jump in 1 legislative year. In 1939, it was $15-so the present level represents an increase of over three times. Our tax base was increased from $3,000 to $4,800, one of the largest in the United States, and our maximum tax rate from 3 percent to 4.5 percent, also one of the largest in the United States-all designed to strengthen the financial resources of the Minnesota fund. By the end of 1966 our State officials, including Mr. Brown who was your first witness this morning, estimate that the Minnesota reserve fund will be $46 million-more than double the reserve at the end of 1964. Gentlemen, this is but one evidence of State initiative in taking drastic steps to meet its responsibilities to its citizens without any Federal coercion or standards. And, I am sure such instances could be multiplied many times over.

Our legislature made many other changes in the Minnesota program in 1965 as they have consistently done over the years. I will not take your time to detail all of these improvements, but their net effect was to greatly broaden the protection afforded the legitimately unemployed claimants and at the same time provide the funds from increased employer taxes to meet these increased liabilities.

I would like to take my remaining few minutes to discuss just one of the most objectionable features of H.R. 8282 and S. 1991 which was considered and rejected by the House. I refer to the proposal to include in the Federal law for the first time a requirement which would impose upon all States minimum standards as to State weekly benefit amounts. The administration proposal would have required each State to pay eligible claimants at least 50 percent of their average weekly wage up to a maximum-initially 50 percent of statewide average weekly wages and eventually 662% percent of such wages. Although this is only one of several new proposed Federal standards, it is almost certainly the big issue. We strongly urge your committee to reject the inclusion of this standard in H.R. 15119 because it is both unnecessary and undesirable.

The basic argument of the Federal standard proponents is that it is necessary to insure the adequacy of benefits under the State systems. Adequacy is then measured by comparing benefits with the average wage of all covered workers, a figure which is nothing more than an interesting statistic. It is not the average wage of the unemployed who claim benefits-tests in many States clearly show that the average wage of claimants is substantially lower than the average of all covered workers. Even as to covered workers, it represents the gross wage-not the "take home" pay on which the workers' standard of living depends.

The proponents of this Federal weekly benefit amount standard have no answer to the clearly provable fact that the average weekly benefit today buvs at least 50 percent more goods and services than the average benefit paid in 1939. Since that year the cost of living has gone up 128 percent-the average benefit has increased 240 percent. And when we look at the total amount of benefits a worker can receive today as compared with 1939, the States' case is even stronger. Minnesota's 1939 total maximum benefits of $240-16 weeks at $14 a week-was typical of the majority of States. Today we pay 26 weeks at $47 a week-a total maximum benefit of $1,222. Compared with any index you can use, this increase of five times is certainly "keeping pace." If you wish to look at the overall record, you will find that today 42 States have total maximum benefits in excess of $1,000 and 25 of them, like Minnesota, are over $1,200. In 1939, the most liberal State paid $300 and most, like Minnesota, paid a maximum of $240.

There are many other reasons-both as to the principle and as to substance why Federal benefit standards are undesirable. A single uniform standard cannot produce equitable results among the States. It cannot be designed to take into account all the variations which State legislatures have seen fit to include in their laws. The proposed standard would actually outlaw the present benefit formulas of some States and seriously impair the ability of others to continue paying higher benefits to family men than to single persons. But, these are all