Mr. Rodino, will you please come forward to the witness table? We appreciate having you with the committee this morning, Mr. Rodino, and you are recognized. STATEMENT OF REPRESENTATIVE PETER W. RODINO, JR., OF NEW JERSEY Mr. RODINO. Mr. Chairman, during the past 2 years of recession the Congress has twice acted, on an emergency basis, to provide stopgap loans so that States heavily hit by unemployment could continue to pay limited benefits to certain workers who have exhausted their benefit rights. In the previous dips in the economy which have occurred since World War II there have been similar flurries of activity with equally insubstantial results. I believe, therefore, we must recognize that this type of temporary stop-gap emergency action only in times of extreme crisis is a refusal to face up to the basic problems that confront us. Instead of waiting until the basement is flooded before we patch up a leak we should build a firm foundation now. We must at this time, I am convinced, establish the kind of long-range standards for State programs which will not only meet the individual problems of our unemployed whenever and wherever they occur, but will also serve as a built-in stabilizer to avert disastrous dips in the economy. The need for Federal standards as to benefit amount and benefit duration are well known to the members of this committee. Some State legislatures, beguiled by "scare" assertions that employer unemployment tax rates play a decisive part in industry plant location decisions, have entered into a competition to see who can have the most ineffectual unemployment compensation plans. From 1938 to the present, tax rates as a percentage of total payroll have declined from 2.7 percent to 0.9 percent, or one-third of the amount originally intended. Translated as a cost of doing business they have been reduced from 4 cents per employee hour to 13 cents during this period. At the same time, maximum benefits, as they are related to average weekly wages, have declined in every State since 1939-from a maximum of 65 percent for the typical State to 44 percent today. And as to benefit duration, the temporary legislation we passed last year stands as convincing testimony of need for Federal standards. The Federal standards bill that I have introduced, H.R. 3583, which is the same as that introduced by your distinguished colleagues, Congressmen Karsten and Machrowicz, would restore the basic role of unemployment insurance by requiring that the weekly benefit be at least half the individual's regular wages, subject to a statewide maximum of two-thirds of the State's average weekly wage; that the benefits be paid to eligible workers for 39 weeks; and that reinsurance grants would be made to States whose unemployment funds have been particularly hard hit by the recession. Moreover, the bill would allow States to choose between the present experience rating system or a uniform tax rate for employers. Since 1954 the present administration has been cajoling the States to modernize their laws as to benefit amount and duration. The results, needless to say, have been negligible. Under questioning before this committee, spokesmen for the administration had trouble, as you know, in pointing to any States which had met the modest Eisenhower standards. Secretary of Labor Mitchell's own Advisory Council on Unemployment Security has recently urged the enactment of Federal standards as has President Eisenhower's former economic adviser, Arthur Burns. At times this year, it has looked as if Secretary Mitchell was about to come out for Federal standards in some form but it appears that other advisers have reached the ear of the President. Our own Governor, Robert J. Meyner, of New Jersey, put the case for Federal standards positively when he said in his statement before the Finance Committee last spring: A single State, of course, is relatively powerless to prevent recessions or to restore economic health to the Nation's business. *** In unemployment compensation, the difficulties of the States have been twofold. First, the incidence of unemployment has been quite unevenly distributed among the States. * * * Second, some States, for the most part, less industrialized ones, have kept their levels and duration of unemployment benefits relatively low. The combination of these two factors has permitted such low-incidence, lowstandard States to maintain comparatively low unemployment taxes and, thus, to compete unfairly in interstate trade and location of industry. Because of these conditions, it is possible to find two firms with the same experience, and yet the one located in a less industrialized State paying but one-half or one-third the State unemployment taxes paid by the one located in a highly industrial State. The tax advantages of low-benefit standards can be illustrated by an example. Virginia for years has had one of the lowest State unemployment-tax rateslast year 0.5 percent of payrolls compared with a national average of 1.3 percent, and 1.6 for New Jersey. It also has had the lowest duration of benefits of any State; namely, 8 to 18 weeks. For we must, I believe, face up to the fact that, even in the best of times, unemployment will strike many families in our country precisely because a dynamic economy, and a defense economy, requires retooling from time to time; because of improvement of plant and equipment; and because of the mobility of industry. Even the Department of Labor, in the person of its Under Secretary, the Honorable James T. O'Connell, has recognized this point. For he testified before you at the start of these hearings that— pockets of unemployment will remain in some areas as a result of technological change and changes in our industrial geography: some industries are employing fewer people and others are moving. Moreover, he emphasized that unemployment insurance is now one of the most important weapons we have for fighting recessions, and imperfect as it is, it meets the human needs of many families who may suffer from the results of economic dislocations for which they, as individuals, have no responsibility. I urge this committee to weigh these considerations carefully in their hearts and to act boldly and substantively in modernizing our unemployment insurance plan to meet tomorrow's needs as well as today's. The CHAIRMAN. Mr. Rodino, we thank you, sir, for coming to the committee and discussing these problems with us. You have made a very fine statement. We appreciate it. Mr. RODINO. Thank you, Mr. Chairman. The CHAIRMAN. Any questions? Thank you, sir. We will hear from our colleague from New York, Hon. Seymour Halpern. Mr. Halpern, will you please come forward to the witness table? We appreciate having you with the committee this morning, Mr. Halpern, and you are recognized. STATEMENT OF REPRESENTATIVE SEYMOUR HALPERN, OF NEW YORK Mr. HALPERN. Mr. Chairman, I greatly appreciate the courtesy of this committee in allowing me to present my views on H.R. 3567, the bill which I introduced, along with many of our colleagues, to revise, extend, and improve the unemployment insurance program. I thank the committee for this opportunity to discuss the merits of this bill. Many Members of the House have discussed the provisions of the proposed legislation ably and thoroughly. I do not wish to take the time of the committee to reiterate the strong arguments made by its proponents, arguments with which I fully concur. The inadequacy of restricted benefit rates in numerous State programs and limited duration periods was made glaringly apparent during the recession. In my own State of New York the situation is not as crucial as in some other States, but the mere fact that some States do have systems that can be said to be reasonably adequate does not in any way lessen the problem created by those which remain laggard and indifferent. In a nationally integrated economy, distress occasioned by unrelieved unemployment wherever it exists will result in repercussions throughout the Nation in the form of lessened economic activity. And then, when industries in New York, in addition to financing the State's own program of unemployment insurance, are called upon to pay taxes to the Federal Government to provide funds to be loaned to States with insufficient reserves, the inequities of the situation demand the adoption of more compatible standards in each State. Corrective measures in this regard are provided by H.R. 3567. I wish to address my remarks today particularly to the reasons why such a program would be of positive benefit to my own State and district, in addition to eliminating certain inequities already referred to. My own district in Queens County is regarded as part of the Greater New York labor market area. As of March 1959, this area was classified as a "D" area, that is, one with a substantial labor surplus. Six other areas in the State were similarly categorized. Although the rate of decline of employment in the New York City area from November 1957 to November 1958 was no greater than the national average, 1.8 as against 1.9 percent, the rate of decline in the State was considerably higher, 2.5 percent. This was reflected in the number of persons in the State and city who received unemployment insurance during 1958, and even more graphically in the number of those who applied for benefits under the temporary extended Federal program. The average monthly registered unemployment in New York State during 1958 was 380,516, and comparable figures for New York City were 209,735. Throughout the State during the year, a total of 226,000 persons, or about one-tenth of the national number, exhausted their regular benefits, and by the end of November 203,332 persons had filed claims for temporary unemployment compensation under the Federal program. Of these, 64,794 had exhausted their benefits under the temporary program by the end of November, and about 63,000 were filing temporary claims for the week ending December 26, 1958. The following chart indicates the monthly unemployment insurance claims filed in New York State in 1958, plus the monthly exhaustion of regular benefit rights: In my own district, for three offices of the State labor department, the following statistics were furnished to me for the midmonth week of March 1959, regarding the number of applicants for unemployment insurance. This chart, like the one above excludes veterans, Federal workers, and maritime seamen. In addition, however, the chart does include the numbers of applicants for the temporary insurance program: The ratio of the applicants for the temporary program to those for regular unemployment insurance is, in each instance, almost onetenth. In other words, approximately one-tenth of the applicants in my district have exhausted their regular benefits under the State's 26 weeks program and are dependent upon the additional 13-week program of the Federal Government. The total number who have exhausted both programs is unobtainable. The severity of the impact of the recession in New York is reflected in these findings: Over $4 billion were paid out in unemployment compensation throughout the Nation in 1958; more than one-half a billion dollars (or one-eighth of this total) was paid in New York. About one-tenth of those who exhausted their regular benefits throughout the Nation were in New York. In my own district, one-tenth of the applicants who are now applying for unemployment insurance are applying for the extended program. It is apparent that a benefit period of 26 weeks is insufficient for many of those who become unemployed even during a relatively light recession when the national unemployment ratio was about 8 percent. When one-tenth of those receiving unemployment insurance are ex hausting their regular benefits and are requiring assistance from the temporary Federal program, it is clear, in my opinion, that revision of our present standards is essential. That is why I earnestly urge the committee to recommend the adoption of this legislation. Had a national program of 39 weeks been in existence in 1958 over 200,000 persons would have been benefited in New York alone. I can only conjecture about what might have happened in the many States which did not accept the Federal program. The magnitude of the human need, the inequities in the present system, and the benefit to our national economy are, in my opinion, irrefutable reasons for the adoption of the proposed legislation. The CHAIRMAN. Mr. Halpern, we thank you, sir, for coming to the committee and discussing these problems with us. You have made a very fine statement. We appreciate it. Mr. HALPERN. Thank you, Mr. Chairman. The CHAIRMAN. Any questions? Thank you, sir. We will now hear from our colleague from Maryland, the Honorable Samuel N. Friedel. Mr. Friedel, will you please come forward to the witness table? We appreciate having you with the committee this morning, Mr. Friedel, and you are recognized. STATEMENT OF REPRESENTATIVE SAMUEL N. FRIEDEL, OF MARYLAND Mr. FRIEDEL. Mr. Chairman and members of the committee, it is indeed a great pleasure for me to appear before my esteemed colleagues who comprise this very important committee of the Congress and to give my wholehearted support to the bills establishing certain minimum standards of unemployment compensation, in addition to the standards that have been in the Federal law since enactment of the original Social Security Act in 1935. No doubt you gentleman were as shocked and horrified as I was when you read in the April 6, 1959, issue of U.S. News & World Report that 5 million people are on the breadlines. This figure was based upon a count in 1,300 communities, where needy families are lining up for free food from Federal warehouses. It is most unfortunate that the number of people on the breadlines today is double that of a year ago and that these lines of the hungry are growing. This is a shocking revelation to America in a time of so-called high prosperity. We know full well that our people are in dire distress and that their plight is pitiful. We, who are privileged to serve as the legislative branch of the Federal Government, are charged with the responsibility of enacting legislation to help the welfare of our country and its citizens. We have that opportunity here and now. The unemployment problem has lingered too long and clearly demonstrates the urgent and pressing need for just the basic improvements in the unemployment security system which these measures propose. In these days of the very high cost of living it does not take much to convince anyone that the present unemployment compensation |