of an adequate program, I would urge the committee to provide an initial increase of at least $4,500, effective in 1968 instead of 1969. The present taxable wage base of $3,000 was added to the program when the use of this base differed little from the base of total covered wages which it replaced. In the quarter of a century since then, wage levels have almost quadrupled, and a base that once constituted 98 percent of wages in covered employment now allows half the wages in covered employment to go untaxed. This has created serious financial problems for the program. It has become increasingly difficult to raise the necessary revenue, State or Federal, without resort to inequitable tax rates. It has created inequities between employers and between States with respect to unemployment taxes as a proportion of total payrolls. Employers with high-wage levels, and States with high-average wages, enjoy lower effective tax rates—that is, lower tax rates as a percentage of total payrolls-than do employers and States with lower wage levels. Saddled with an unrealistic taxable wage base, the ranges of rates in many States have so contracted as to render meaningful experience rating impossible. Even with an increase in the taxable wage base in 1968, however, it will be necessary to provide an increase in the tax rate to meet administrative costs of the program and to begin building a fund for the extended benefit program. Title III of H.R. 15119 provides for an increase in the Federal unemployment tax rate from 3.1 to 3.3 percent, effective January 1, 1967. The net Federal portion of the tax is thereby raised from 0.4 percent to 0.6 percent. The 0.6 percent net tax is earmarked with 0.1 percent to be used for financing the extended unemployment compensation program provided in title II of the bill and 0.5 percent available for administrative expenses. These amounts should be adequate to finance the proposed benefits and administrative costs, assuming approval of the proposed increases in the wage base to $6,600 as recommended by the administration. The revenue from the present 0.4 percent tax on a $3,000 wage base has become insufficient to finance current administrative costs of the program. With enactment of the improvements proposed by this legislation, including the need for funds for the extended benefit program, the disparity between tax revenue and costs will become even greater. Unemployment insurance can never substitute for a full employment economy or for positive programs to educate and train our work force. But it does automatically rush reserves into the inevitable gaps, and performs an essential holding action while other weapons in our arsenal can be brought to bear, and thus remains a major arm of the Nation's poverty-fighting establishment. It is worth every cent we pay for it. It is the quickest-acting and most automatic response we have yet provided to protect our most prescious national resource-our manpower. The greatest abundance of high-quality goods and services ever produced by any national work force the world has ever known, was not produced by malingerers and job shirkers. It was produced by the hardest working, most dedicated and most skillful group of workers in history. We proposed to buy for society, and for the worker who has worked and earned it, only a decent level of protection against short-term and long-term unemployment. Both our society and our workers need and should have at least this measure of protection if our war on poverty is to be won and the Great Society is to mean something to those citizens most responsible for creating it. This is extremely important in terms of the recognition that, although we are doing very well in general, there are a lot of people that aren't. It is this averaging that bothers us. We have used before here, I guess, this point about the law of averages sometimes proving only that if a man has one foot in the refrigerators, the other foot on the stove, he is on the average comfortable. We get into a little of that problem here. In terms of averages, we are doing mighty well, but it leaves out a lot of people, and those are the people we are talking about here. Thank you. The CHAIRMAN. Senator Williams? Senator Curtis? Senator CURTIS. I would just ask one question. How do you reconcile the total number of unemployed in the country with the fact of shortage of help in almost every section of the country? Secretary WIRTZ. There are several elements to that answer, Senator, and let me simply list them. A large part of the unemployment which shows up in the monthly figures is the seasonal unemployment. It is one of the least realized aspects of it. It shows up particularly in the construction trades, building and construction, and in the agricultural industry. It is the largest single unrealized factor. Another factor is the lack of training for the jobs which are skilled jobs. Another is the lack of-well, as far as the unskilled jobs are concerned-the right people being in the right place. Another factor is the factor of transition from one job to another. Those are the principal factors to explain that. A good deal of the unemployment now is less than 5 weeks, a good deal more than it was before, which represents the movement from one job to the other. I think about a quarter of the unemployment is the seasonal unemployment. Senator WILLIAMS. How do you determine the rate of unemployment? By actual statistics on those receiving unemployment benefits, or is it rather by a survey? Secretary WIRTZ. It is by a survey for the overall rate of unemployment, and by actual statistics for those seeking unemployment benefits. That figure, the insured unemployment rate, is considerably lower. That is about 1.6. Mr. NORWOOD. About 1.8. Secretary WIRTZ. About 1.8 percent. The determination on total unemployment is made on the basis of a monthly survey. It is a sampling survey of 35,000 households every month all over the country, to determine that, and we get the figures from that. Senator WILLIAMS. In other words, a Gallup poll type of survey. Secretary WIRTZ. Yes, but a quite extensive one, and I mean no odious comparison with the Gallup poll. It is worked out very carefully in terms of what households we take. With a shifting number, we shift a quarter of them each time we take it, and it is worked out on a very refined basis. Senator WILLIAMS. Has your procedure for taking this poll or this survey changed in the last few years? Secretary WIRTZ. It has not changed. However, at the present time we are making an additional, an additional spot sampling each month as a testing of our regular program, and we are probably going to make some suggestions within the next 2 or 3 months about slight modifications. Senator WILLIAMS. Has there been a change Secretary WIRTZ. There has not. Senator WILLIAMS (continuing). In your method of gathering these statistics which would change the overall reported figure? Secretary WIRTZ. There has not. It was reviewed by an outside committee, of which Mr. Ruttenberg was at that time a member, the so-called Gordon Committee, in 1961, and they found no necessity in these changes. There has been no change in that survey since about 1953 or 1954. Senator WILLIAMS. I noticed, Mr. Secretary, a good bit of your statement is in support of S. 1991. Of course, you realize the Finance Committee couldn't, even if it wished, report that bill. We can only act on a House measure. We have no right to originate a bill on this side, since it doesn't raise taxes, so the Senate committee's approval of that bill is out of the question, unless we take it as a complete substitute. Now, do I understand that you are recommending that S. 1991 be accepted as a complete substitute, or are you recommending some of both? Secretary WIRTZ. Some of both. Senator WILLIAMS. In that event, will you furnish to the committee a series of amendments in written form, so that they could be printed and available for the study of the committee, and for the industry likewise, which will be wanting to testify on this bill, and have those amendments relate to the House bill? Secretary WIRTZ. Yes, sir. Senator WILLIAMS. At the appropriate place. Secretary WIRTZ. We are prepared to do that immediately and would. Senator WILLIAMS. I would assume that the chairman or somebody can introduce those on your behalf, and they would be printed and available. Secretary WIRTZ. I will be glad, on that, Senator Williams and Mr. Chairman, to introduce such a set of amendments in the record at this point, if that is the committee's desire. Senator WILLIAMS. Just in the event that the Senate committee did not approve of those amendments, then we are confronted with the question of reporting the House bill 15119 as is. That may not happen but it is a possibility. In that event, does the administration recommend that we proceed to report and act on H.R. 15119, or would you rather just have no bill? Secretary WIRTZ. I would not be prepared at this point to support it without qualification. Senator WILLIAMS. Then you would Secretary WIRTZ. I don't know the answer. You have put the question in a perfectly proper showdown term, and I don't know what the answer would be." Senator WILLIAMS. I wasn't trying to Secretary WIRTZ. No, no, it is a fair question. Senator WILLIAMS. I appreciate the fact that you are making dif ferent recommendations and you have agreed to put those in writing, haven't you? Secretary WIRTZ. Yes, sir. (These recommendations are contained in the committee print entitled: "Amendments Recommended by the Labor Department to H.R. 15119, Unemployment Insurance Amendments of 1966.") (The committee print follows:) |