EXHIBIT A

COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC. ADEQUACY OF BENEFITS UNDER NEW YORK UNEMPLOYMENT INSURANCE LAW The following table presents the percentage of the weekly benefit amount under the New York unemployment insurance law to (1) the average weekly gross wage, (2) the take-home pay of a single person, and (3) the take-home pay of a married man with two children. Take-home pay is the average weekly wage less withholding and social security taxes.

These percentages are from “Operations" (February 1959) published by New York Division of Employ. ment.

45

47.4 57.2

52.6

45

45.0 54.2

50. 5

TABLE 6.-18t payments by number of dependents payable and family class State unemployment compensation, 1946–58

1 Amendments to the Michigan act effective June 26, 1954, provided for separate benefit rate schedules for 6 different family classes.

Mr. CURTIS. One other question.

Would those statistics reveal the wages of those unemployed, or wouldn't you have those statistics compiled?

Mr. WILLIAMS. We would have the averages, but I don't know whether we would have the specific ones.

Mr. CURTIS. Average and classes of those who are unemployed. That is what we are trying to get.

Mr. WILLIAMS. We can do it for those who are receiving benefits, not the unemployed.

If you would like to frame your questions and give them to us in writing so we will understand exactly, we will try and get exactly what you want.

Mr. CURTIS. Maybe I can explain quickly here.

I have been trying to get some sort of idea of just who are the unemployed and who are getting the unemployed benefits; for example, as to whether they are heads of families, whether they are single people, whether they are secondary wage earners in the family; and then also to try to estimate what were the last wages of the unemployed so we can determine how well the States have been doing in relating benefits to the last wages of those who actually are the unemployed. In other words, the original formula in 1935 was set up on the basis of benefits being 50 percent of the previous wages of the unemployed, and there is some real indication that the States have not kept up with that. Yet most of the figures we have relate not to the of the unemployed, those who are actually receiving the benefits, but are related to the labor market.

wages

There is some indication that the majority of the unemployed tend to be from the unskilled and lesser skilled groups, and therefore would be in the lower than average wage bracket, so it is figured along those lines, and I would just leave the record open.

If the State of Michigan does have any statistical data that could be supplied for the benefit of the committee, I would appreciate it.

Mr. MACHROWICZ. I believe I have asked that question prior to the Governor coming on the witness stand. I believe those figures are available readily right now if you care to have them?

Mr. CURTIS. Yes.

Mr. WILLIAMS. Mr. Chairman and gentlemen, I have two tables that don't cover all of the material you have, but cover part of it.

The first is an Administrative Brief No. 122, dated April 10, 1959, on page 5, table 1. This divides it into our family classes and indicates the percentage of those receiving benefits equal to 50 percent or more of wages. It also has the numbers.

is

The first family class is the A class, in which only the one person involved, and there 23.6 percent received 50 percent or more; in the B class, 9.9 percent; in the C class, 28.3 percent; in the D class, 34.3 percent; in the E class, 54.6 percent, and in the F class, 68.6 percent.

But the last one is the group with four dependents, and of course it is a much smaller percentage of the total, so that when you get it weighted there are relatively few people who are getting as much as 50 percent.

Mr. CURTIS. However, the class with four or more dependents, because of your dependency allowance, does get more than 50 percent; is that right?

Mr. WILLIAMS. 68.6 percent of it.

Mr. CURTIS. Is that percentage of take-home pay, or is that the wages?

Mr. WILLIAMS. That is the percentage of gross wages, sir.

Mr. CURTIS. Just one point on this dependency credit.

Incidentally, I have been very much impressed with Michigan's unemployment insurance program in this relation.

In asking some questions on the possibility of emphasizing dependency allowances, over and above what they get, there have been remarks made that that would tend to discourage employers from hiring family men.

Has there been any indication in Michigan that this is so?

Mr. WILLIAMS. I don't believe there has been any indication of that. Of course, in Michigan many of the businesses are unionized, and they have seniority rules, but let me say that while I am very proud of the State of Michigan, and I am proud of some of the phases of our unemployment compensation law, it has been doctored up so that in some areas it looks pretty good.

In other words, this 68 percent for families with four or more, while there are relatively few of the unemployed or employed who fall in that category, those who want to say we have a good system point to this isolated example, and the entire average is that, instead of getting near 50 percent, as the law originally contemplated, the average is about 37 percent of wages.

In other words, the wage loss is 63 percent.

Mr. CURTIS. I would say that the discrimination that Michigan has put in the law, in my judgment, at any rate, has been doing what we would hope to be done, recognizing that the real problem, the greatest human problem, is with families with dependents, and that is why I pointed that out.

Mr. WILLIAMS. I think that we want to be awfully careful not to make the unemployment insurance system a dole.

Mr. CURTIS. I agree with that, too.

Mr. WILLIAMS. We want to remember that it is assurance and that the people should have relationship to wages rather than relationship to what their costs are.

Mr. CURTIS. I agree with that, and I might ask, do you think that Michigan's system has gone too far in that respect, or do you think your balance is OK?

Mr. WILLIAMS. I think it has gone too far, because, frankly, I feel that the forces who are not interested in unemployment compensation have built up these two or three isolated examples so that they can go around the country and say we have a specially good law, and thereby prevent us from bringing the general average up to where it should be.

I have no objection to these dependency allowances, but I think that we should get up to the standards provided here in the bill before

us.

Mr. CURTIS. Governor, it was brought out in testimony yesterday that in the Karsten-Machrowicz bill, with the way it is worded, and there is some dispute on this, and the way I read it, at any rate, we would be putting a ceiling of 50 percent on what any unemployed could receive.

If that were true, of course then Michigan would be hit two ways: One, it might raise the standards of those receiving less than 50 percent, but at the same time, because it seems to be worded that way, it would be knocking down those that are receiving more.

Mr. WILLIAMS. I certainly don't read it that way.

I understand it is a minimum standard and if any State wants to have higher than this, they certainly can.

Mr. CURTIS. I thought so originally myself, but on rereading it, I think there is a real question as to whether that might be the effect, and I would appreciate your reexamining it to see if you see that point.

One final observation to see if you agree.

You were talking on page 8 of the countercyclical impact of the tax and of these proposals.

Actually, the way it is now, it seems to me it is a pretty good countercyclical tax for this reason: that we get more tax during full employment because the base of course is much broader. There are more people employed to levy the tax, the payroll. Then during the periods of recession or unemployment, the tax base of course is contracted.

Likewise, the tax rate increases after the period of relatively high unemployment because with experience rating going into effect, after we have had the experience the rate of course increases, and so the rate decreases after a period of relatively low unemployment.

I can agree if your recession became too prolonged, this aspect of the rate would not be so countercyclical.

Mr. WILLIAMS. I take it, sir, that you approve of the principle, but feel that the existing system does have a certain countercyclical force. Mr. CURTIS. Yes, I certainly do approve of the principle. I think it is very important, and I think that is an area in which the Federal Government rightly has a concern.

You may think it should be more countercyclical, but at least what we do have, it seems to me, is all countercyclical.

Mr. WILLIAMS. Certainly, as to the size of the base of those employed, there is a countercyclical effect, but if your unemployment lasts any period of time, then your merit rating has a cyclical, rather than a countercyclical, effect.

Mr. CURTIS. Countercyclical is really limited, I will say, to about a year, or maybe a little more than a year. I agree with that.

Mr. WILLIAMS. I think that we should study whether we cannot give it an added kicker here, but I agree with you.

Mr. CURTIS. Thank you.

The CHAIRMAN. Are there any further questions of the Governor? Mr. Knox will inquire.

Mr. KNOX. Governor, may I first compliment you on the paper which you have furnished to the committee, which sets forth your views. It is on a very broad base and does not deal entirely with the problem which is confronting the committee, which is the problem of unemployment compensation insurance.

However, in the past few days we have had two Governors appear before the committee who had adverse opinions relative to the dependency allowance such as Michigan has.

You answered Mr. Curtis' question, I believe, in two different mediums.

First, you said that you did not think it should become a dole system, and I agree with you; it should not become a dole system. At the same time, you felt that possibly we had gone too far.

Would you tell me why you think we have gone too far in Michigan?

Mr. WILLIAMS. I feel that the dependency allowances themselves are all right, Congressman Knox, but I think that they have been used by those who want to prevent the general increase by saying, "Well, with these dependency allowances, we have taken care of everything"; whereas, in truth and in fact, I do not believe they have.

My objection isn't so much to the dependency allowances themselves, as to the use that they are put by those who are trying to oppose general increases.

Mr. KNOX. Of course we have another phase also, and that is the contracts that are entered into between management and the labor unions, which I believe safeguards the individual employee who has dependents; is that not true, because of the seniority in the plant?

Mr. WILLIAMS. I am not sure exactly what kind of contracts you refer to. Are you referring to the SUB contracts?

Mr. KNOX. No, I am referring to the contracts between the unions and the management of the plant.

Mr. WILLIAMS. The SUB contracts are between management and labor. What is the nature of the contract?

Mr. KNOX. It would be the contract that the union would have with the management for duration, whether it is for 1 year or 2 years, 3 years, or however it may be drafted and agreed to.

Mr. WILLIAMS. Of unemployment compensation?

Mr. Knox. No, not of unemployment compensation, but of wage scales and fringe benefits that may be provided for in the contract.