the total program at their own expense. To penalize them by reducing unemployment insurance benefits cannot be justified and should not be permitted. 6. Wage base. The present wage base of $3,000, introduced in 1939, is both unrealistic and inadequate. The same logic that argues for adjusting benefits for inflation and higher levels of dollar earnings suggests that the taxable wage base should be brought up to date as well. A standard of at least $3,600 is justified now. 7. National reinsurance.-Experience in 1958, when total reserves of 8 billion found some States in need of aid, suggests the necessity for a national reinsurance fund, in which all States are required to participate. CONCLUSION These seven additional standards appear essential if unemployment insurance is to measure up to what our citizens expect of it in stabilizing our economy. The recommended additional standards are entirely consistent with the basic principles introduced by Congress in 1935 and deserving our continued acceptance and support. These proposed additional standards preserve State responsibility for most administrative decisions in the areas of both policy and practice. They freely permit State-to-State variation and adaptation to distinctive employment conditions. Standards with respect to maximum benefits, for example, are stated as a proportion of earnings-not in absolute amounts. The principle of proportional relationships among tax rates, levels of reserves, and total benefit payments a helpful guide in State administration-is encouraged by these standards. Meanwhile, these additional standards should assure a more adequate defense in recession and a sound basis for great public confidence in our FederalState system of unemployment compensation. Hon. WILBUR D. MILLS, DIAGRAPH-BRADLEY INDUSTRIES, INC., Chairman, House Ways and Means Committee, Herrin, Ill., April 2, 1959. DEAR MR. MILLS: In looking over some of the Washington bulletins that reach my desk I notice considerable comment on H.R. 3547 and S. 791 and consequently have informed myself to some extent on this matter and have also asked the opinion of others. It is the consensus of opinion of the directors of this company that the States should retain control of unemployment compensation and that the establishing of Federal standards must be avoided. I do not believe there is any particular reason to waste your time on a lot of reasons for this. You will hear enough of these in Washington but that is our opinion and as an employer of 125 people in this area and as a contributor to the present unemployment compensation plan, again we state that the individual States should retain control of it. Yours very truly, JAMES W. BRIGHAM, President. SOHNGEN & BISCHOFF, Cincinnati, Ohio, April 17, 1959. Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, Honorable MILLS: This letter is being written in triplicate as an official objection to bill H.R. 3547. It is my belief that the bill proposes unwarranted Federal controls on State unemployment compensation and that it would have a very unhealthy effect on both business and employment. I would appreciate your doing all in your power to see that this legislation is not passed. Yours very truly, HOWARD A. BISCHOFF, Partner. THE JOHNSON PRESS, INC., Pontiac, Ill., February 17, 1959. Hon. LESLIE C. ARENDS, Member, House of Representatives, DEAR LES: We have just been advised of some of the provisions of H.R. 3547 and are greatly concerned about its content. This Nation was built on the principle of hard work and honest labor. Determination and, many times, courage were required of men to meet the needs of their families. Strong character was and is built from individual responsibility. Sizable unemployment compensation benefits for a long period create laziness and lack of initiative. We believe a measure such as the one proposed is damaging to the strength of our country and damaging to the moral fiber of those very persons who believe it to help them most. We believe, too, this is a matter that can best be left in the hands of the States. Conditions vary throughout the country making Federal control unwise. This appears to be another situation where the Federal Government is interjecting itself into a matter where State government can adequately perform. We understand that this measure calls for uniform taxation of employers irrespective of employment experience. This, of course, causes the employer with a stable record of employment to bear a portion of the burden of the cost of unemployment benefits of those employers who, either through mismanagement, or because of the nature of their business, do not have stable employment. We are opposed to the changes as we understand them. We ask that you oppose this bill and that you do whatever you can to seek the opposition of other Members of the House of Representatives. If you have suggestions of ways we might help in the defeat of this measure we will appreciate having them and will do what we can to carry them out. Very truly yours, Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, EUGENE R. JOHNSON, Jr. SPRINGS VALLEY HERALD, French Lick, Ind., March 28, 1959. DEAR COMMITTEE MEMBER: Please defeat H.R. 3547 or the Kennedy-Karsten measure which would make a welfare state out of our United States. Unemployment is now getting as much as they deserve and the clause which would eliminate any disqualifications, even for fraud would be ridiculous. Primarily this bill would increase the cost of unemployment by 70 to 75 percent and would, in some cases, require the employer to pay much more than the whole year's salary of an employee who quits his job or is laid off. The disqualification clause would allow employees to quit their jobs and draw more than they would if working and the employer would have no recourse. Please, Mr. Representative, just what do you want this country to come to, a welfare state or worse? Please include one of these copies in the record of the hearing. Constitutionally yours, J. E. GRUBER, Editor, Springs Valley Herald. MISHAWAKA, IND., April 14, 1959. Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, DEAR REPRESENTATIVE MILL: I understand that one of the bills that will come up for action this month is the Kennedy bill (S. 791) and the Karsten bill (H.R. 3547). This legislation would impose rigid Federal controls converting unemployment compensation in the United States to the image of European welfare-state patterns. At the moment I am concerned with the principle of this type of legislation, not the details of any Federal standards bill. The Social Security Act of 1935 placed full responsibility and discretion with the States to determine eligibility conditions, weekly benefit amounts, and the duration of weekly benefits. Congress set up this program in keeping with the tradition of leaving to the States those things which they can do most effectively. Thus, Congress recognized the widely varying living and working conditions in different areas of the country, that the States were in the best position to make the necessary adaptation of these programs to their respective conditions and situations. Therefore, I implore you to let the States run this program. I request that this letter be made a part of record of the hearings. Sincerely, R. A. HERRLY. CROWN TOOL, INC., Wabash, Ind., April 2, 1959. Re Kennedy-Karsten H.R. 3547. HOUSE WAYS AND MEANS COMMITTEE, Washington, D.C. (Attention of Hon. Wilbur D. Mills, Chairman). GENTLEMEN: Supplemental unemployment laws should definitely be left up to each individual State. We (in Indiana) have already increased unemployment compensation from $33 for 20 weeks to $36 for 26 weeks, or a total of $936. The above bill would require potential maximum benefits of at least $2,340 in a year's period. The application of the controls to the Indiana benefit formula would permit $1,500 in wages to qualify a person for $2,340 in unemployment benefits. IS THIS THE AMERICAN WAY? Surely we can see unfairness to the employee himself, for what incentive to work are we creating? As for inflation, we would burden the Indiana employer by a conservative estimate of $58 million increase over his present cost of $82,800,000. We know he will have to provide means to recover this amount. Let's get off this merry-go-round, and spend the taxpayers' money in improving our country, rather than downgrading our people by softening them up. Let's think big, and spend your efforts toward curbing inflation, and educating our people. This will do them a lot more good than trying to hurt others to pay them subsidies for what they don't earn. We hope you will use your influence in rejecting the above measure, and all of the 125 like measures which have been introduced. Thanking you for your sincerity and cooperation, we remain Very truly yours, LEO R. KASTNER, Vice President. P.S.-We are sending copies of this letter in triplicate to the House Ways and Means Committee and request they be made a part of record of the hearings. Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, House Office Building, Washington, D.C. PERFECT CIRCLE CORP., Hagerstown, Ind., April 8, 1959. DEAR MR. MILLS: We should like to express opposition to H.R. 3547, known as the Kennedy-Karsten measure, now under consideration by your committee and give you some reasons for our opposition to this bill. Passage of this measure would give the Federal Government virtually complete control over the standards in unemployment compensation. We believe, in particular, that the determination of eligibility conditions and amount and duration of benefits is a proper function of the individual States and that such determination should remain there. A social program such as unemployment insurance is terrifically complicated in its implications and effects. Functioning on a reasonable basis, it represents a constructive force in the economy. But, published statements of the AFL-CIO to the contrary, larger benefits mean higher taxation which must be borne by someone, regardless of whether it be borne directly by the employer or eventually by the consuming public. A runaway unemployment compensation program can create, by its cost impact, the very ills of unemployment it seeks to abate. The theory that unemployment benefits sustain purchasing power is sound within limits. But if always-larger benefits for nonproduction created an alwayshealthier economy, then there would be no need for anyone to do anything other than to wait for a Government agency to ladle out cash. Obviously there is a limit to the extent by which the economy can lift itself by its own bootstraps through the feeding back of income for which no productive services are performed. A Federal rule that maximum benefits in each State must equal at least twothirds of the average weekly wage of persons covered by unemployment compensation is exorbitant and inconsistent with the original concept of the program. If unemployment compensation is to be converted from a system of limited insurance against the hazards of unemployment to a program which attempts to meet fully all normal living needs, then a needs test should be injected into it. This would not be desirable, but it would permit the program, without involving prohibitive costs, to be more generous to persons in need while withholding the benefits from people not in need. The provision in the bill for a uniform duration of benefits is wholly inconsistent with any insurance principles in unemployment compensation, which historically relate both amount and duration of benefits to earnings, and is therefore undesirable. It would result in discrimination against the steady worker and favor the person in the labor market only occasionally. The serious question in the matter of both proposals of maximum benefits of at least two-thirds of average weekly wage and uniform duration of 39 weeks, is whether the incentive for a person to seek work rather than to remain on the benefit rolls would be destroyed. We think it would, particularly with respect to second and third wage earners in a family and to single persons with themselves only to support. The more comfortable we make it for people in handouts the more we destroy saving incentive and individual initiative. In our opinion this is not good for the individuals nor for America. Indiana has certain disqualification provisions in its law, as we presume is the case with most States. These disqualification provisions are necessary to prevent abuses in the program. Any proposal, by Federal law, to eliminate such provisions would weaken the program and reward the undeserving. We feel H.R. 3547 would be a move in the wrong direction and are therefore strongly opposed to it. We think your committee would perform a real service by killing this measure in committee. This letter is being mailed to you in triplicate and we kindly ask that it be made a part of the record of your hearings. Cordially yours, DON H. TEETOR, Chairman of the Board. KNIGHTSTOWN TELEPHONE CO. INC., Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, DEAR CONGRESSMAN MILLS: We understand that hearings will start April 7 before your committee on H.R. 3547, commonly known as the Kennedy-Karsten measure. This bill, as we understand its proposals would require Indiana to amend its unemployment compensation program, (1) to pay maximum unemployment benefits of $60 weekly, or more, to meet the Federal rule that the maximum benefit in each State be equal to at least two-thirds of the average weekly wage of persons covered by unemployment compensation. (2) Guarantee 39 weeks of duration insuring each person eligible for benefits to a full 39 weeks of benefits in any 1-year benefit period. (3) Eliminate any disqualifications, including fraud, which would reduce benefit rights below the full 39 weeks of benefits. Indiana now offers maximum unemployment benefits of $33 weekly for up to 20 weeks for a potential total of $660. And after July 4, 1959, the benefits will be $36 for 26 weeks for a total of $936. The 1959 Indiana Legislature also made 39678-59-73 payments under supplemental unemployment benefit plans nondeductible from State unemployment benefits otherwise payable, effective March 13, 1959. Legislation was also enacted whereby municipally owned utilities and their employees (except executives) were covered under unemployment compensation, effective April 1, 1959. Under the present Indiana law, unemployment benefits may not equal more than $1 of benefits for each $4 of wages. Were the proposed Kennedy controls applied to the Indiana benefit formula, $1,500 in wages would qualify a person for $2,340 in unemployment benefits. Thus, $1 in wages could qualify a person for about $1.56 in benefits. And we understand this would be true in cases of self-employment. The Kennedy bill would, according to conservative estimates, increase unemployment compensation costs in Indiana around 70 to 75 percent. Application of a 70 percent increase to the $82.8 million paid in Indiana in benefits in 1958 would have meant an increase in the cost of doing business that year of $58 million. This bill would specify ceilings of benefit-eligibility requirements above which the States might not go. It would invite elimination of experience rating by authorizing flat-rate tax reduction for all employers in place of individualemployer experience rating. Thus, an employer having a stable record of employment would be penalized by employers having less favorable records of stable employment. The bill would also curtail rather than increase employment by encouraging more overtime work by present employees. It would encourage idleness on the part of more people than it is intended to help. It would increase the cost and selling price of all consumer goods and services thereby adding fuel to inflation. Those who are unemployed through no part of their own and who are willing, eager and able to work should be helped. But voluntary idleness must not be encouraged or subsidized. American taxpayers, already overburdened, must not be saddled with further schemes which reflect the image of European "welfarestate" patterns, if our American free-enterprise system is to survive. This letter is being written and mailed in triplicate with the request it be made a part of the records of the hearings. Yours very truly, E. C. MULL, Manager. ALEXANDRIA, IND., April 17, 1959. Hon. WILBER D. MILLS, Chairman House Ways and Means Committee, House Office Building, Washington, D.O. DEAR MR. MILLS: May I express to you and your committee my opposition to the Kennedy-Karsten measure dealing with unemployment compensation laws and upon which your committee has been holding hearings. As I see this measure, it is nothing more than an attempt by the Federal Government to dictate to the States and additionally atempts to establish some of the European "welfare-state" patterns in his country. As I see it, it will do nothing except invite bureaucratic controls and even foster a "drone" type of individual who is perfectly willing to let someone else be his support. I should like for my opposition to this measure to be put on the record of these hearings, and I might add that I have written my Senators and Representative and asked them to oppose this measure if it appears in the Congress for vote. Very truly yours, J. P. MOMAHAN. APRIL 9, 1959. Hon. WILBUR D. MILLS, Chairman, House Ways & Means Committee, MY DEAR MR. MILLS: The Kennedy-Karsten measure, H.R. 3547, is under committee consideration in the House, and its basic philosophy is most disturbing to those who can see States rights going right down the drain. Indiana has been accused of having horse-and-buggy legislation on unemployment compensation. We make no apology for using horse sense in paying $36 a week for 26 weeks to our people who are out of work due to reasons beyond |