ILLINOIS STATE FEDERATION OF LABOR AND Hon. RUSSELL B. LONG, U.S. Senator, Chairman of the Senate Finance Committee, Washington, D.C. DEAR SENATOR LONG: Much information and misinformation has been presented by various groups in Illinois relative to Federal Standards for Unemployment Compensation. We understand that some statements have indicated that Organized Labor in Illinois is satisfied with the status quo. On behalf of the 1,000,000 AFL-CIO Members in Illinois, we wish to emphasize that is not true. As spokesman on legislative matters for the AFL-CIO membership, we have sought to broaden the coverage, raise the benefits and revise the eligibility provisions. While the weekly benefits have increased, we are sorry to report that coverage is lessened due to provisions which narrow the eligibility. The average weekly wage in Illinois (not including Building Tradesmen, which is $160.00 plus) is approximately $114.00. The Illinois average weekly benefit of Unemployment Compensation Insurance was $41.33 during June, 1966. Because employment and unemployment are affected by policies and economics nationally rather than statewide, we have supported and requested that good Federal Standards be applicable to every state. We have been whipsawed far too long over what other states do or do not do. We understand our colleagues in these states have the same problems when the endeavor is made to upgrade U.C. We think the goals of the original H.R. 8282 and S. 1991 should be revived by the U.S. Senate. We would hope that your Finance Committee will recommend to the full Senate a measure which will end hypocrisy in U.C., and one which will buttress the economy of each community when unemployment occurs. Our Nation will be the real beneficiary of a realistic U.C. program. The unemployed spend the weekly benefit immediately. The direct impact on the business community is very effective. Privately, business interests tell us of the wonderful impact of even the present U.C. Publicly, the spokesmen for employers decry U.C., and some even would like to eliminate U.C. We have consistently supported the position of the National AFL-CIO on U.C. We would appreciate the inclusion of these comments into your Committee Records. We purposely were very brief. If you need our personal testimony, please feel free to let us know when you would wish us to appear. May your Committee report out a proposal of worthwhile standards, and the best of wishes to all. Sincerely yours, ROBERT G. GIBSON, Secretary-Treasurer. STANLEY L. JOHNSON, Executive Vice-President. MICHIGAN STATE A.F.L.-C.I.O., Detroit, Mich., July 22, 1966. Hon. RUSSELL B. LONG, Chairman, Committee on Finance, U.S. Senate, Washington, D.C. DEAR SENATOR LONG: Your committee has before it the matter of federal standards for unemployment compensation. We strongly favor the principles of the McCarthy bill S. 1991. There are three basic reasons we favor improved federal standards for unemployment compensation. The first is the need of our members and other workers to adequate compensation when they are laid off from work. We are sure your committee has before it many examples of workers and their families who are in dire need of income who find either that unemployment compensation benefits are inadequate, that they are denied coverage for some technical reason, or that they are not entitled to any further compensation because they have exhausted their benefits under the existing state law while they are still unemployed. The second reason is that during times of widespread unemployment, the economy needs the substantial aid that can be created by filling the gap of supplying purchasing power to workers through dispensation of unemployment compensation benefits. If these benefits on a national basis are adequate in amount and duration, a state and even a national crisis may be averted. The third reason we need federal standards is to prevent the cut-throat competition among states to see which one can "attract industry" by having the most inadequate compensation system. The labor movement in Michigan as in other states has pressed hard for substantial improvements in unemployment compensation. Time and again in hearings before legislative committees we have convinced legislators of the needs for improved compensation only to be asked the question: "If we improve Michigan's compensation above that of other states, won't it put Michigan industry at a competitive disadvantage and drive industry from the state?" It is our experience that even though the cost factor of improved unemployment compensation is very small-often less than a penny an hour-the subtle and persistent effect of the charge of "competitive disadvantage" inhibits the development of needed legislation. For example, corporations which pay the federal government over 50% of their profits in a federal corporation tax never threaten to move form one state to another for that reason because the federal corporation profits tax is uniform on all states. The same principle applies to unemployment compensation. Once there is a firmly established federal minimum standard which is fairly adequate, industry will realize that unemployment costs will be practically identical regardless of which state they operate in. The result of such uniformity can then be to further encourage industry, labor. and government to reduce unemployment compensation costs in the only sound way which is to solve the basic problem of providing full employment and job opportunities on a national basis instead of arguing about "competitive (tax) disadvantages" in the various states. We sincerely believe that to the extent your committee and the senate establish non-competitive, sound standards for unemployment compensation on a national basis, you will be acting in a humanitarian manner, and at the same time will focus the attention of our society on the need to reduce unemployment compensation costs by attacking the root problem of providing full employment. I would like to request that my statement be printed in the records of the Committee's hearings. Very sincerely yours, AUGUST SCHOLLE, President. Hon. RUSSELL LONG, ST. LOUIS LABOR COUNCIL AFL-CIO, Chairman, Committee on Finance, U.S. Senate, Senate Office Building, Washington, D.C. DEAR SENATOR LONG: In behalf of the members of the AFL-CIO in the St. Louis area we desire to express some thoughts on improvements in the unemployment compensation program which is now before your committee. We endorse Senate Bill 1991 as introduced by Senator McCarthy of Michigan with other Senators. We believe there is a need for broader coverage for workers who are not now covered, such as employees in non-profit institutions, hospitals, foundations, universities, etc., and workers with regular employee relationship. We believe that improvement is needed in weekly benefits paid as in our area we find that in the service trades and textile industries most of the wage earners draw less than the maximum benefits because of the wage scales that prevail in some industries. Upon investigation we have found that many people in this category are being subsidized by food stamps in the City of St. Louis and surplus commodities in St. Louis County. It is our opinion that raising the benefits to at least two-thirds of the State's average weekly wage would be of great benefit to these people. Many are unskilled workers who are unable to find employment for long periods of time and feel that a Federal fund extending the benefits beginning with the 27th week would be beneficial to these workers and to the economy of our area. At the present time workers in this category are not eligible for any relief under the State Statutes. The only remedy that would be available to them would be food stamps if they have money to purchase them and those who live in the St. Louis County would still get surplus commodities if they could travel to the disbursing depot either by car or taxi cab because there is a lack of public transportation. We believe that there should be uniform disqualification penalties, as in our State the penalty for a person discharged for misconduct is disqualification for benefits for the entire year. We sincerely hope that your committee will give serious consideration to the above subject matter by incorporating provisions of Senate Bill 1991 into your report. It would be appreciated if this communication is inserted into the record. Respectfully yours, JOSEPH P. CLARK, President. MINNESOTA RETAIL FEDERATION, INC., AN OPEN LETTER TO MEMBERS OF THE SENATE FINANCE COMMITTEE S. 1991, H.R. 15119—UNEMPLOYMENT COMPENSATION The Minnesota Retail Federation, Inc. is a trade association of Minnesota retail merchants, most of them small stores in hundreds of communities. Several large merchandising firms are also members. The Federation has consistently opposed federalization of unemployment compensation. It has consistently hoped that power and authority would remain in state legislatures in this and countless other fields. It has been astonished at the constant federal grab for power. It fears that state powers, authority and prerogatives are about to be drowned in the Potomac. Minnesota has a new and progressive unemployment compensation law. It helps the unfortunate employee during his unemployment period. It denies some compensation to the undeserving wrongdoer. It rewards the employer who maintains a good employment record. It levies a high tax on employers, a levy sufficient to build and maintain a solvent fund. By and large it is a good law. We feel that the House showed courage in rejecting many of the shockingly bad features of H.R. 8282 and that H.R. 15119 went a long way toward preservation of the rights of the states to legislate in this field. (Thousands of small employers were stunned by House action forcing coverage down to employers of one employee. They hope you will restore the four-or-more provisions.) During the campaigns in 1966, in 1968 and beyond we expect to hear candidates at the local, state and national levels espouse the virtues of small business and the need for its protection. We are prepared to test these avowals for elements of sincerity or hogwash. Your refusal to steal unemployment legislation from the states will be evidence of sincerity; your approval of S. 1991 or other legislation like it will be evidence of insincerity. The small businessman may have seemed unimportant in the past. He knows he does not have the strident voices of the George Meanys and Jimmy Hoffas. But he's wiser now. He's learning to use his voice and his vote. He wants a moratorium on federal seizure of power over him and his state. If you insist on injecting the federal government further into the unemployment compensation field, we plead with you to approve H.R. 15119 (without the one-or-more provision) or legislation like it and to bury S. 1991 and others like it. Respectfully, THOMAS H. HODGSON, STATEMENT OF RUSSELL R. MUELLER, MANAGING DIRECTOR, ON BEHALF OF NATIONAL RETAIL HARDWARE ASSOCIATION The National Retail Hardware Association has a membership of more than 20,000 hardware dealers located in communities throughout the United States. These hardware retailers maintain independently owned and operated establishments. More than one-half of these stores are located in towns with less than 10,000 population. We are particularly concerned about the proposal to cover an employer who employs one or more persons. A number of states at the present time exempt employers with less than four employees. This has been done in many states where in smaller communities, particularly in rural areas, local conditions make the need for the protection unnecessary. It is unfair and imposes a burden on small and tiny business establishments to require this tax and the accompanying record-keeping requirements. In Minnesota, for example, special exemptions are provided for businesses with less than four employees located in towns with less than 10,000 population. More than sixty percent of the small independent hardware stores in Minnesota are so located. The Legislature of that State has considered this matter at every session for several years and has each time discovered there was no need for such coverage in these areas. Furthermore, the Legislature of Minnesota found that it would impose an unfair burden on real small employers where history demonstrated that layoffs were almost non-existent. The National Retail Hardware Association urges the retention of the "four or more" test for coverage, leaving to the states the right to lower the coverage to one or more if and when needed. STATEMENT OF MARK E. RICHARDSON, EXECUTIVE VICE PRESIDENT, 1. SUMMARY OF COMMENTS AND RECOMMENDATIONS The New York Chamber of Commerce opposes the enactment of H.R. 8282 for the following reasons: a. The ultimate nationalization of the entire unemployment compensation system is signaled by the forcing of benefit standards on the States. b. Benefit levels have been kept abreast of the needs of the jobless by the States within limitations imposed by local economic conditions. c. The theory of cost equalization is incompatible with experience rating which must be preserved in the interests of economy and stable employment. d. The drastic increase in payroll tax costs, when added to those already scheduled under recent OASDI amendments, will retard job growth. e. There is a serious question as to the constitutionality of Section 209 (c). f. The powers assumed by the Federal Government with respect to eligibility for benefits will be both punitive and dictatorial. The New York Chamber of Commerce recommends and supports the continuance of: a. The present Federal-State division of authority over the program. b. State determination of benefits and benefit financing. c. Benefits averaging 50 percent wage replacement, as currently holds true in all but two States. d. Individual employer experience rating. 2. PRINCIPLE OF UNIFORM BENEFIT REQUIREMENTS UNDER SECTION 209 (C) OF TITLE II While the New York Chamber of Commerce endorses the principle of benefit adequacy in unemployment compensation and the elimination of abuses as to eligibility for benefits, ends which purportedly are the explanation for H.R. 8282, it must, nevertheless, express strong disapproval of the means to be employed; that is, the forcing of Federal standards upon the States. From its earliest history as a depression measure the unemployment compensation system has been conducted on a cooperative basis, with the principle of maximum State discretion as to benefit payments and benefit financing regarded in a very special light. The Chamber believes this principle must be held inviolate if the present program is to remain State-oriented as the framers intended. Once accepted, even in a limited sense, Federal Standards will lead inevitably to complete centralization of authority over all aspects of the system in Washington. There fore, the Chamber must oppose H.R. 8282 at the cost of rejecting several features that, standing alone, would be most attractive to our membership. The economic and social diversity between States is so-marked as to make a completely Federalized system unworkable. Indeed, it was because of this diversity that the framers rejected arguments to centralize authority, as was done in the OASDI program enacted concurrently with unemployment compensation. Basic to this entire controversy is the issue of State competency to conduct unemployment compensation programs in keeping with the needs of the jobless, within limitations imposed by the local economy and employer ability to pay the costs. The States have met their obligations; certainly no one has made a case to show otherwise. Yet from the very beginning forces have been at work to undermine the State-oriented principle in favor of centralized authority-this would seem to be the motivation for H.R. 8282, not a desire to "modernize" the system. This Chamber does not accept the unsupported notion that local government is unequal to the task. Until someone can develop facts and figures documenting State dereliction there is no justification for further Federalization of the program. To be sure the proposals to bar claims of employees on strike and pensioners and the elimination of the "double dip" are very tempting to employers many of whom have long been working for the adoption of similar prohibitions in their respective States. We firmly believe, however, that these questions should be left to the State legislatures to determine; if they have merit, as we feel they have, then State action will be forthcoming at an opportune time. Much though we oppose abuses of the benefit structure we abhor even more the double-edged sword of Federal standards. The requirements which would be imposed by Section 209 (c) mark a radical change in Federal control. The Internal Revenue Code of 1954 currently makes provision for approval of State Unemployment Compensation Laws by the Secretary of Labor, pursuant to Section 3304 (a). The requirements there set forth are principally aimed at insuring the payment of unemployment compensation benefits in accordance with required procedures, such as the payment of benefits through public employment offices and the payment by State of monies received in State funds to the Federal Unemployment Trust Fund, etc. The effect of Section 209 (c) of H.R. 8282 would be to compel the States to adopt Unemployment Compensation Laws, which satisfy Federal standards as to the amount of benefits to be paid, the duration for their payment and the qualifying unemployment period for unemployment benefits. In effect, the new statute would legislate for various States the Unemployment Compensation benefits to be paid by States and make no allowances for differences in local employment and economic conditions. If Congress were to specifically require each State to adopt a State Unemployment Compensation law, which contained the provisions set forth in Section 209 (c) of H.R. 8282, such legislation would raise the question as to whether it would contravene the constitutional rights of the State under the Tenth Amendment of the Federal Constitution. In this respect there is a serious question as to whether the proposed law would be constitutional because in effect it seems to accomplish indirectly that which cannot be done directly. 3. BENEFIT STANDARDS SOUGHT TO BE IMPOSED BY SECTION 209 ARE ARBITRARY Experts have for some time been propounding 50 percent of net wages payable for 26 weeks as a reliable index of benefit adequacy, and we would agree with these figures. But only two States today pay benefits that average less than 50 percent of gross wages and only three have less than 26 weeks duration. In brief, the States have already accomplished two of the major objectives sought by those closest to the program. Present State limits on maximum benefits enable a great majority of claimants to collect at least 50 percent of their take-home pay. A study released last month by Unemployment Benefit Advisors Inc. reveals facts that deserve the careful attention of Congress. On the basis of evidence submitted by six key States it appears that the relationship between present maximum benefit amounts and take-home pay of claimants, a much more significant figure than the pay of covered workers relied upon by the Labor Department, stands well over 60 percent in many cases and over 70 percent in some instances. In New York in 1964, almost 64 percent of beneficiaries were receiving at least 50 percent of wages. It can also be shown that benefits have grown faster than average wages over recent years; during the period 1953-63 wages increased 33.5 percent while benefits rose 43.4 percent. Considering the importance of the State systems surely Congress will demand better evidence of shortcomings before embarking on a course that involves their ultimate destruction. |