STATEMENT OF TYRE TAYLOR, GENERAL COUNSEL OF THE SOUTHERN STATES INDUSTRIAL COUNCIL At a meeting held at Sea Island, Georgia, on May 23-25, 1966, the Board of Directors of the Council unanimously reaffirmed the following statement: "Unemployment and Workmen's Compensation. The states should have latitude in the solution of unemployment problems peculiar to their localities. The Council strongly opposes any federalization of the unemployment program or Workmen's Compensation program, including federal payment of benefits or the imposition of Federal standards for the payment thereof." We should like to concede at the outset that the bill passed by the House (H.R. 15119) represents many and great improvements over the administration bill (H.R. 8282). For example: The administration bill would have established Federal benefit standards, both with respect to amount and duration, to which all state systems would have been required to conform. The administration bill would have prohibited a state from disqualifying a worker from receiving benefits for a period longer than 6 weeks, except for extreme cases, limited to the filing of a fraudulent unemployment insurance claim, the conviction of a crime in connection with his work, or a labor dispute. A worker could no longer have been disqualified from benefits for misconduct on the job, voluntarily leaving his job, or a refusal to accept suitable work. In such cases, the maximum penalty was a suspension of benefits for 6 weeks. In the administration's bill the experience rating system-essential to the insurance concept-would no longer have been required as a basis for granting the credit against the federal tax. All of these proposed changes were rejected by the House. H.R. 15119 does not prescribe benefit standards, or make any substantial change in the provisions with respect to disqualification. States are permitted to etsablish benefit and eligibility standards without federal control. The experience rating concept is retained. For workers who exhausted 26 weeks of state benefits, the administration's bill automatically provided an additional 26 weeks of benefits irrespective of the state of the economy. For 20 weeks of work, a worker could receive 52 weeks of unemployment compensation. The unemployment insurance system would have been converted from an insurance program-where benefits are related to the amount of covered wages-into a welfare program. The Committee bill provides for 13 weeks of extended unemployment compensation during periods of recession, either within the state or nationality. Perhaps the most constructive departure of all from the administration's bill is the provision for judicial review of determinations by the Secretary of Labor with respect to the qualifications of state plans of unemployment insurance. For the first time a state, threatened with the loss of the tax credit by arbitrary action on the part of the secretary, is permitted to appeal to the courts. Having said this much in favor of H.R 15119, it may strike some as mere nit-picking to call attention to some of its infirmatives or possible infirmitives. One of these at least in our view-is the provision-also contained in the administration's bill-making it apply to employers of one or more employees (present federal law applies only to those employers who have 4 or more workers in their employ in 20 weeks in a calendar year). Small business has enough trouble staying in business under the most favorable conditions. We do not think it will be helped any by imposing this additional burden and expense. The administration bill would have increased the taxable wage base from $3,000 under existing law to $6,600 by 1971. Under the House bill, the wage base is increased to $3,900 beginning in 1969 and to $4,200 beginning in 1970. In his dissenting views Representative Thomas B. Curtis (R. Mo.) said: "I think the financing of H.R. 15119 gives too much money to the federal administration under guidelines entirely too lose. Although I favor some increase in the tax base to facilitate a better experience rating system on the part of the states, the increase in the base provided by H.R. 15119 is entirely too much." We have no way of knowing whether Mr. Curtis' suspicion is well founded, but we hope this committee will find out. In conclusion, I wish to quote from a statement made by the Council to the House Ways and Means Committee last year: "I should like to reiterate and underscore what, to the Council at least, is by far the most cogent and, under existing circumstances, relevant argument that can be made against federalization of the unemployment insurance system. This is that the Federal Establishment is already too big and costly and cumbersome without adding anything to it. The concept-first enunciated in 1869 by the Supreme Court in the case of Texas vs. White, 7 Wall, 200-of an indestructible union of indestructible states is being eroded at an ever-accelerating rate at the expense of the states and the aggrandizement of the Central Government." Thank you. INTERNATIONAL CHEMICAL WORKERS UNION, Akron, Ohio, July 21, 1966. Hon. RUSSELL B. LONG, Chairman, Committee on Finance, Washington, D.C. DEAR SENATOR LONG: The chemical industries rapid implementation of automated production and other similar "labor savings" devices has created several serious adjustments and other work problems for many of our workers and their families. In recent years, we have been confronted with many thousands of cases of unemployment caused primarily by plant closings due to a variety of special circumstances. You are aware, I am certain, of the increasing industry trend toward closing organized plants in order to take advantage of lower taxes and cheaper labor to be found in other states. In most every case of resulting unemployment, the chief complaint from those who are affected by the shut down was one of inadequate compensation during the time they were actively pursuing other work. Our Union firmly believes the McCarthy Bill (S 1991) will do much to alleviate many of the difficulties experienced by the family bread winner who has lost his job through no fault of his own. Further, the bill will do much to restore the original principles of job insurance protection by emphasizing the need for uniform federal standards, both for the duration of their weekly benefits, plus a minimum of 26 weeks of federal unemployment compensation benefits. We are wholeheartedly in accord with both items and we also support the bill's attempt to broaden coverage to some five million more persons through the proposed small increase in the tax rate to pay for necessary implementation. I am most concerned that our position on the bill be recorded and ask that you have this letter printed in the record of the committee hearings. Sincerely yours, WALTER L. MITCHELL, President. STATEMENT OF CLIFFORD W. SHRADER, PRESIDENT, SOUTH DAKOTA STATE FEDERATION OF LABOR, AFL-CIO My name is Clifford W. Shrader and I am the President and Legislative Representative of the South Dakota State Federation of Labor AFL-CIO with offices located at 101 So. Fairfax Avenue, Sioux Falls, South Dakota. In addition, I am an employee representative of the Advisory Committee of the South Dakota Employment Security Department. The following statement is in support of unemployment compensation reform legislation patterned after the McCarthy bill, S. 1991, and it is respectfully requested that the statement be printed in the record of the Committee hearings. During he six years I have held my present position, and during the years I have been an officer of the South Dakota AFL-CIO, I have witnessed a gradual but steady deterioration of the unemployment insurance program in South Dakota as a result of an almost continuous attack against the program on the part of certain employer groups and individuals who proudly proclaim to be ultraconservative by nature and strongly opposed to any form of social legislation. Were it not for our efforts and the efforts of our friends, the unemployment insurance program in South Dakota would be even more inadequate than it is at the present time. To illustrate my assertion that the unemployment compensation program has been under severe attack in South Dakota, permit me to cite just a few cases which have occurred during my six years as a legislative representative for South Dakota organized labor: 1. Legislation was passed by the South Dakota Legislature designed to reduce the benefit amount of claimants with prior annual earnings of $6,000 or more. This was later held to be in non-compliance by Secretary of Labor Willard Wirtz. 2. The following session of the Legislature passed a bill designed to drastically reduce the benefits of some claimants and completely disquaify others by requiring that the claimants show proof of earnings in the corresponding calen dar quarter of the prior year. We were able to defeat this measure on a referendum vote. 3. A bill to reduce the benefits of eligible claimants who left the state in search for employment was rejected by the Legislature, but only because they were fearful of a non-compliance ruling. 4. Although it had the support of the administration, a bill to require female workers who became pregnant to show proof of earnings equal to four times their weekly benefit before becoming eligible for unemployment compensation was rejected by the Legislature by a narrow margin. 5. Bills were passed by the Legislature drastically extending the disqualification periods of claimants who were deemed to have quit without just cause, discharged for just cause, etc., some disqualifications extending for the entire benefit year. 6. A Statement of Policy was issued to South Dakota employers on November 8, 1965 to the effect that retirees would no longer be considered as being on the labor market and consequently would not be considered eligible for unemployment benefits. This statement of policy was issued by the S. D. Employment Security Department and was withdrawn after we filed a strong protest to same. To further complicate our efforts to maintain a reasonably adequate unemployment insurance program in South Dakota, we have from time to time requested and received the assistance of the Employment Security Department in properly drafting legislative bills, only to have a high ranking official of the department make it a point to inform the legislators in advance of our proposals and recommend to those legislators that our proposed legislation be rejected or drastically reduced. Therefore, we not only must contend with the opposition of the employer groups and individuals mentioned earlier, but also the opposition of the administration and the Employment Security Department. The fact that it has almost become an impossibility to achieve improvements in the South Dakota unemployment insurance program is reflected by the $36 maximum weekly benefit provided and the maximum of 24 weeks of benefits in a benefit year. Only seven (7) states provide a lower maximum weekly benefit amount than South Dakota, and I believe only one other state restricts the maximum duration of weekly benefits to 24 weeks in benefit year with no provision for extensions. Time after time instances have been brought to our attention where claimants have been required to file for appeal hearings in cases where there seemed to be no justification for the claim to be held up, and in some cases where the local employment office found it difficult to understand the reason for the claims to be questioned. We have come to the conclusion that the delay in processing these claims which appear to be as clear-cut as claims can be with regard to eligibility and compliance constitute a deliberate attempt on the part of someone to make it as difficult as possible for a claimant to qualify for benefits they are entitled to. In a final analysis, and facing the situation squarely and honestly in South Dakota, neither the administration of South Dakota or the administrator of the South Dakota Unemployment Insurance Law are interested in the law being a good law. Their interest has been, and will continue to be, the lowest possible tax rates for the employers and the lowest possible benefits for the unemployed. and it is they and their kind that have promoted the passage of HR 15119 as a poor substitute for HR 8282 after their own indifference to adequate unemployment insurance laws has made it obvious that standards must be established and maintained by federal legislation. I am confident that I speak for the 17,000 union members in South Dakota and all of the working people in the state when I solicit your support of adequate unemployment compensation reform legislation designed to reinstate and maintain standards that are in keeping with the original concept of unemployment insurance. PACIFIC AMERICAN STEAMSHIP ASSOCIATION, Re H.R. 15119 unemployment compensation. Hon. RUSSELL B. LONG, Chairman, Committee on Finance, Washington, D.C. DEAR MR. CHAIRMAN: As spokesman for the West Coast maritime industry, I am asked to convey to the Senate Finance Committee our endorsement of the House-passed version of the Administration's bill to modernize the Federal unemployment statutes. We are not convinced that the Federal Government's responsibility in this field should be increased; however, if this must be, H.R. 15119 brings it about with a minimum of dislocation of historic Federal/State relationships. Very truly yours, RALPH B. DEWEY, President. STATEMENT OF WILFRED H. HALL, EXECUTIVE VICE PRESIDENT OF THE NATIONAL OIL JOBBERS COUNOIL My name is Wilfred H. Hall. I am submitting for the record the following statement on behalf of the National Oil Jobbers Council. My position is that of Executive Vice President of the National Oil Jobbers Council, with offices at 1701 K Street, N.W., Washington, D.C. The National Oil Jobbers Council wishes to go on record as supporting the modifications in Federal Unemployment Compensation Programs approved by the House in its H.R. 15119 with certain alterations. We offer this statement as constructive suggestions which will help keep our Nation strong and flexible. The National Oil Jobbers Council represents the Nations approximate 12,000 independent oil distributors through amalgamation of 34 state or regional organizations. A list of these associations is appended. Surveys show that over half of these small businessmen sell under 1 million gallons of gasoline or fuel oil per annum. This would indicate gross sales of under $200,000 a year, mostly at wholesale. Operating results surveys, attached) illustrate that the cost of product runs about 81%, leaving a gross before expenses of less than $38,000, from which labor, truck expense, rent, etc, must be taken. Profits for this group run 3-6% before taxes, or $6,000 to $12,000 annually, from which new equipment and growth capital must be provided. These 6,000 oil firms are typical of thousands of small businessmen in other lines of endeavor whose interest the Congress should carefully consider. Both large and small jobbers have a direct interest in 141,000 service station outlets through which they sell petroleum products. We feel that the newer House version (H.R. 15119) alleviates most objections that the larger wholesalers had to the earlier H.R. 8282 (and S. 1991). For simplicity, we should like to express ourselves in two areas. First, why we feel the Senate should consider modifications made in the House, and secondly, we should like to suggest modifications which might be made to further improve the Bill. 1. Features which we feel should be considered favorably a. Retention of experience rating system. This feature encourages continuing employment of an individual, and serves as a small reward to firms who gear their businesses to full year employment. Though the oil business is seasonal by nature, jobbers have thus far successfully provided full time employment in most cases. We feel that they should be encouraged to do so by a continuation of the experience rating which lowers contribution by those employers who make the effort and keep individuals from the necessity of becoming unemployed. b. Retention of the disqualification of benefits to those persons who quit work without good case, are fired for misconduct or who refuse to take suitable work offered.-Employees who receive benefits from the Federal (or State) Government as a result of their dishonesty, misconduct or false pride encourage these qualities in others. A law designed to reward these actions has the potential of undermining morality itself. Expansion of theft and dishonesty and an inordinate increased cost resulting from fraudulent claims for unemployment benefits are bound to result from allowances of this proposal. The present system of disqualifying persons from benefits who fall into these categories is just and proper, we feel. c. Payment of claims should be limited to recession periods.-Presently, unemployment is at its lowest level in years. Job retraining, relocation, and opportunities for service and education are available to nearly all who wish to avail themselves of opportunity. It would appear ill-advised to design a system to compensate those who appear to be without motive or desire to improve themselves and/or seek employment. If Federal benefits are to be extended, the payments into the fund in periods of high and full employment can cushion the affects of any future recession, thereby helping citizens and businesses unable to cope with any deep and wide recessional period. d. Payments and hence benefits should not be doubled because of the effects on businesses.-Doubling of the total wage, while increasing the rate of payment in order to provide 26 weeks of U.C. benefits would place undue burden on small businessmen. While some argue that this would force more rural states to provide benefits not now given, the effect in all states would be to place a heavy burden on small businessmen who typically are not effected greatly by swings in the economy, nor move their business from one region to another. Also, an oil jobber with a handful of employees keeps his employees year-round, does not ordinarily vacillate his work force with auto production swings, etc. Hence, the smaller businessman will in effect be paying significantly into a purse which will be drawn upon principally by large manufacturers. The small businessman should not be imposed upon with significantly higher payments principally because his employees will take relatively fewer dollars from the fund. 2. Desirable alterations in present proposals Under existing law, the Congress in its wisdom, excluded firms with fewer than four employees from Federal unemployment reporting and contributions. We feel that this was and is desirable. Present legislative proposals before the Congress would erase this exclusion so that an employer hiring one or more persons would fall under the act. This extension of coverage is undesirable for several reasons but before examining these reasons, however, let us define who would become newly covered by this change. Dry cleaners, service stations, retail specialty stores, fuel oil dealers, barbers, tree surgeons, sporting goods stores, drug stores, pet shops, tailor shops, and similar retail establishments are in the service sector. The "U.S. Retail Census of Trade" of 1958 listed nearly 1.8 million businesses in these areas. They hired 7.9 million employees, or an average of 4.3 employees per business establishment. Obviously, many of the 1.8 million fall below the 4.3 employee per business average. In some industries the variation in number of employees being predominantly under 4 is clear. For example, this same census indicated 211,473 service station establishments employing 519,812 people or on the average of 2.5 persons per establishment. Thus, the majority of service station establishments are typical of thousands of similar service groups to be brought under the present proposals. In dealing with these truly small businesses, it should be understood that record keeping is a problem. Usually a wife or the owner himself may devote a portion of his or her time to this activity. When the owner takes his time for bookkeeping, he is in a real sense, non-productive so far as his business income is concerned. Typically, an accountant comes in annually to draw a statement since the business often runs on a month-to-month cash basis. When we burden this small, often family operated business entity with a new form to fill out, this is frequently not a simple matter for this firm to reckon with. Often those in the newly-established small enterprise elect to take low wages, no overtime and few, if any, side benefits just to get the business going. Thus, they build capital, credit, and confidence. If we insist that they pay themselves overtime, and contribute to unemplayment compensation plans not designed for them, etc., we may materially reduce their ability to survive in the formative years of their business. Providing exclusion to the business with under 4 employees merely allows it to grow to a size where it will have more than 4 employees, at which time it will be included under the system. It should be pointed out that the small business must compete somehow for employees. Also, that a worker for this small enterprise has complete freedom to work where he will. Thus, unless some special reason, such as growth or experience is present, an employee would not work for the small establishment without fringe benefits as eontrasted, to say, General Motors. If we over-burden this small business |