under the microscope and bring them into step with local need and demand? Shall we disregard the days and days of State legislative investigation and automatically accept the goals of the representatives of the National Government rather than those expressed by the State administrators in behalf of their respective governing bodies? We think that H.R. 15119 has clearly answered this question and we sincerely hope your committee will ask the Senate to endorse this answer and pass this measure in its present form.

Peculiarities of the requirements upon the individual State unemployment compensation programs have long been the subject of discussion by students of this employee benefit system. They have consistently recognized that legislative action which solves a particular problem in one State would not necessarily afford a solution in another. As a matter of fact, one State's solution to a problem can often compound a similar problem when applied in another State. Those who recognize the diversity of economic structures in our several States fully appreciate why a program such as the unemployment compensation system cannot effectively be applied in a like manner to all areas of the Nation.

Frankly, we believe that S. 1991, like its former House companion H.R. 8282, would serve to put the States back years and years in their efforts to improve their unemployment compensation programs. Let us look at Florida for a moment. We think our situation is typical.

The business community of our State has endorsed every increase in benefits which have been accomplished in Florida in the last decade. But, the business community made it perfectly clear that unless and until the eligibility structure was cleaned up and made to serve those for whom the program was intended, any further efforts toward benefit increases would be opposed. Much has been accomplished in this direction. We now consider our State to have as close to a fair law— eligibility and taxwise-as could be reasonably hoped for. In our State a worker must be a part of the labor market; he must have lost his job through no fault of his own; he must be actually seeking employment to be eligible for benefits.

H.R. 8282 would have and S. 1991 would undo much of our housecleaning at the very time we are prepared to move in new furniture in the form of increased benefits.

In another vein, let me point out that the Florida Industrial Commission has calculated the added annual tax cost of H.R. 8282 and S. 1991 to be 295 percent of our present State and Federal U.C. tax. These measures would increase State and Federal U.C. taxes in Florida by $119.4 million annually. H.R. 15119 will increase our taxes but not beyond reason. We are willing to accept an increase under the circumstances and conditions laid down in H.R. 15119.

We think H.R. 15119 is a classic example of the legislative process at work. It offers something for the worker-not as much as he might want, but more than he now has and coverage for more workers than now protected under this law; it offers something for the employer-not as a benefit to him but in the form of much less added cost than its predecessor, H.R. 8282; it offers something for the State agencies by allowing them for the first time judicial appeal from the arbitrary decisions as to conformity with the Federal law; and

finally it offers something for the Department of Labor in the form of more than doubling the Federal tax.

Florida management recognizes H.R. 15119 for what it is-a realistic compromise of points of view gathered after weeks of exhaustive study and testimony. Therefore, we sincerely hope this committee will report this measure in its present form and that you, Senators, will encourage your Senate colleagues to pass H.R. 15119 without amendment.

Thank you for your attention. If you have any questions, I will do my best to answer them.

The CHAIRMAN. Here is what troubles me about this whole matter. We started out with a program where the States provided the weekly benefits averaging about 65 percent of what their wage base had been. Over a period of years, due largely to the depreciation of the value of money and the fact that the benefits were not increased to keep up with it, the average weekly benefits now work out to be about 45 percent. So about two-thirds of the average weekly benefit has been lost due mainly to inflation and to the failure of States to adjust upward to take care of that.

What objection would you have if we didn't take anything from you but simply provided an incentive for all States-Florida, which, incidentally, is a much wealthier State than Louisiana, and has lower benefits-Florida, Louisiana, and all States to get their level of benefits more in line with what they were when the program started out?

Now, what is your objection to that?

Mr. WOODARD. Senator, in our State we are presently-industry and government and labor are studying this whole situation of the actual dollar benefits.

As I said in the testimony, I believe that we have a good, workable law in our State today.

We have, because of the peculiarities of our economy, great seasonal workers, we have had to readjust our own tax structure to take care of deficit employees, those who are a constant drain on the fund, and those with good experience rating.

The CHAIRMAN. Well, now, are you required by law, by Federal law, to take care of those deficit employees or are you doing it by State law?

Mr. WOODARD. By State law, as I understand it. We have to maintain a certain balance in the fund.

The CHAIRMAN. Yes.

Mr. WOODWARD. Incidentally, our fund is about, if my memory serves me right, approximately sufficient to take care of 311⁄2 years, in fact our fund is so solvent, so self-sustaining, that for the past 2 years we have had a tax credit for certain employers.

The CHAIRMAN. Would you say you are doing some things for people who come into the State, who are now residents of Florida, that you are not required to do by law, by Federal law; is that right or am I wrong about that?

Mr. WOODARD. We are try to make it as fair, and we would love to have those people to come in, we want an incentive for them to

come.

The CHAIRMAN. Well, the thought occurs to me that in Louisiana we have higher benefits than you have in Florida. Your per capita income is far higher than ours.

Mr. WOODARD. Yes, sir.

The CHAIRMAN. Our maximum benefits shown in this table are $40. I believe the State legislature just raised that to $45 but your maximum benefit is $33 in Florida.

Mr. WOODARD. Yes, sir.

The CHAIRMAN. And your per capita income is a great deal more, your prosperity is booming there. Even in Louisiana, though, I have complaints from my people in labor that that $45 amounts to about 45 percent of the average weekly wage, and that when the program went into effect the weekly wage was about $20 and the average maximum was about $18, so the maximum was about 90 percent of the average weekly wage. My thought is if we just provided some type of incentive which you could either take or reject, provided it was not of such a nature that you could not afford to reject it, something that you could take if you wanted to take it and not take it if you did not want to take it, what would be your objection to that? What would be your objection to an incentive for the States to raise their levels of benefits and to give the States credit for all the things that they do that they are not required to do by law, all in an effort to try to get the level of benefits up to somewhere as it was when we started the

program.

Mr. WOODARD. Don Summers, chief of the statistical section of the Florida Industrial Commission, tells us that approximately 55 percent of the claimants receive at least 50 percent of their wages. Those are the wages, those are the figures, of the Florida Industrial Commission. In direct response to your question as to the incentive program

The CHAIRMAN. But you are talking about low-wage claimants, and your maximum benefit does not affect low-wage claimants; but as far as those who are making a substantial income is concerned, that $33 maximum would obviously mean that they would get less than half of what they had been making on a weekly basis.

Mr. WOODARD. I think that we would be interested in studying and looking at any proposal concerned with incentives. I think this is one of the bases of our economy, incentive profit motive.

The CHAIRMAN. Yes, sir.

Senator Anderson.

Senator ANDERSON. I was just interested, at the top of page 4 of your statement, do you know how much 8282 would raise costs and how much S. 1991 would raise costs? You do not say how much H.R. 15119 would.

Mr. WOODARD. Approximately double our tax. I can get that figure of the amount that was paid in if you would care to have it. Senator ANDERSON. Do you think the passage of H.R. 15119 would about double your tax?

Mr. WOODARD. Yes, sir.

Senator ANDERSON. Is $15 million a rough figure for it?
Mr. WOODARD. Something like that, yes.

Senator ANDERSON. You do not have to answer this question if you do not want to. Are you a salaried employee of the association?

65-992-66- -40

Mr. WOODWARD. No, sir.

Senator ANDERSON. What is your business?

Mr. WOODWARD. I am in the grocery business.
Senator ANDERSON. Thank you.

The CHAIRMAN. Senator McCarthy.

Senator MCCARTHY. Did I understand there is a loan program that you have for employees who are unemployed?

Mr. WOODWARD. We do not have a loan program.

Senator MCCARTHY. I just heard it when I came in. I did not get the full description.

What was the special program you had——

Mr. WOODWARD. I said that

Senator MCCARTHY (continuing). Of workers in Florida as part of this program?

Mr. WOODWARD. A loan program

Senator MCCARTHY. I did not get what it was, but you said you were glad to have people come in.

Mr. WOODWARD. Oh, the Senator asked me concerning our wealth and Florida's economic situation, and people coming in. I said we were glad to have them come in.

Senator MCCARTHY. You do not have a special benefits program under the unemployment compensation program?

Mr. WOODWARD. No, sir.

Senator MCCARTHY. Not like dependency allowance like they have in Massachusetts?

Mr. WOODWARD. No, sir.

Senator MCCARTHY. Yours is just a straight unemployment program?

Mr. WOODWARD. Yes.

Senator MCCARTHY. I caught the end of your statement and I got the impression that you were paying benefits out of the unemployment compensation that were somewhat different from the ordinary unemployment benefits.

Mr. WOODWARD. One of our big problems, of course, in unemployment compensation, in the unemployment compensation picture in Florida, is the seasonality of workers in Florida, Senator. We have these deficit accounts to a rather large extent because of various seasonal workers, the canners and the packing plants, and things like that. Senator MCCARTHY. You would be particularly affected by the extension of coverage.

Mr. WOODWARD. Yes, sir.

Senator MCCARTHY. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much.

Mr. C. W. Tuley of the Tennessee Manufacturers' Association. Mr. Tuley's statement was inserted. He was unable to get transportation because of transportation difficulties which we have these days. (The statement referred to appears on p. 285.)

The CHAIRMAN. Mr. John Post of the National Petroleum Refiners Association.

STATEMENT OF JOHN POST, NATIONAL PETROLEUM REFINERS ASSOCIATION

Mr. PosT. My name is John Post. I reside in Houston, Tex.

I am here on behalf of the National Petroleum Refiners Association. The association is composed of 90 employers which operate over 90 percent of the refining capacity in the United States.

From 1954 to 1962 I was a member of the Federal Advisory Council on Employment Security to which Mr. Lesser referred in his oral

statement.

In the hearings last year before the House Ways and Means Committee, I appeared on behalf of the 60,000 Texas employers and also filed a statement on behalf of this association.

We recommend that the committee adopt H.R. 15119 as passed by the House of Representatives.

For emphasis and to be brief, I will confine my own statement to two major points:

1. The proposed tax increase, and

2. The proposal in S. 1991 for minimum benefit standards.

I will also refer to some extent to some aspects of interstate tax competition partly because Mr. Lesser referred to that, and I may comment on your last questions to the witness about the accuracy of the benefits as measured by 1939.

I do not have to tell this committee that House bill 15119 bears very little relationship to H.R. 8282, which was the springboard for the hearings before the House, and that H.R. 15119 is basically a bipartisan bill which was passed almost unanimously by the House of Representatives.

We are glad that your committee is giving it thorough consideration, because, as your staff report indicates, this bill represents the most comprehensive revision of Federal-State program of unemployment compensation Congress has undertaken since the system was inaugurated in 1935.

Turning to the subject of the proposed tax increases, I stated above that our association endorses H.R. 15119 as passed by the House. We do this with reluctance because we seriously question the need to increase the Federal unemployment insurance taxes to the extent proposed by H.R. 15119.

Just to increase the Federal tax from its present four-tenths of 1 percent to five-tenths of 1 percent, by one-tenth of 1 percent, on the present tax base of $3,000 will generate in fiscal 1968, $136 million more in taxes, of which $129 million will be available for State administrative expenses.

This $136 million figure is derived from your staff report on page 7 in the middle of the page. This sets forth the amount of the extended benefit program and the same amount will be made available for administrative purposes.

Now, from the staff report on page 33, it also indicates that in fiscal 1966, under present laws, State administrators

The CHAIRMAN. Let me ask you this question. It would generate. $129 million unless the States changed their program to reduce taxes by modifying the experience rating, wouldn't it?

Mr. PosT. No, sir. This is the Federal tax.