fast as they are being dropped from the public welfare. The Louisville Council of Churches is spearheading that.

Mr. MACHROWICZ. It has turned to the Council of Churches. Do you suggest that is the proper way to handle it?

Mr. WATKINS. I don't suggest that is the proper way. I say that is the way it is being handled in Kentucky and the situation you brought up is being handled in Kentucky by Kentuckians.

Mr. MACHROWICZ. She states here further that the main reason for the general assistance applications in Louisville increasing the way they are is because of illness and unemployment. Illness was the major reason until 1957. Since that time unemployment applications have been increased and exceeded illness. There was about $100 million paid to unemployed workers of needy families or individuals by the department of economic security in the 1958 calendar year, an increase of $19.2 million over the year before.

Is that about correct?

Mr. WATKINS. Would you repeat the figures, sir?

Mr. MACHROWICZ. The Statistical Journal of Economic Security of Kentucky states that nearly $100 million was paid to unemployed workers and needy families or individuals by the department of economic security during the 1958 calendar year, an increase over 1957 of $19.2 million.

Mr. WATKINS. I don't challenge those figures. They are correct. Mr. MACHROWICZ. Evidently the situation is quite serious there and in need of something.

Mr. WATKINS. You asked if the situation was being taken care of and you have just read the testimony from Kentucky that demonstrates clearly that it is.

Mr. MACHROWICZ. And also the people are being removed from the relief roll not because they are not entitled to relief because the money has run out.

Mr. WATKINS. Are you talking about the relief? Do you want us to discuss relief or unemployment compensation?

Mr. MACHROWICZ. I think the relief question is brought in by you. not by me. You suggested that when unemployment compensation runs out they should look to relief. And when relief runs out, then what?

Mr. WATKINS. In Louisville, which is the situation you mentioned, the Louisville Council of Churches is acting as coordinating agency for numerous private organizations that are handling the job.

Mr. MACHROWICZ. To what extent are they taking care of them, do you know?

Mr. WATKINS. To what extent are they taking care of it? I don't know of any needy families in Louisville that have not been taken care of that have demonstrated their need to that group.

Mr. MACHROWICZ. At any rate that is your philosophy how this unemployment situation should be taken care of?

Mr. WATKINS. My philosophy is unemployment insurance should be insurance, or if you don't intend to make it really an insurance program call it relief and then let's quit all the questioning, let the Federal Government take it over.

Mr. MACHROWICZ. That is all.
Mr. MASON. Mr. Chairman?

39678-59-12

The CHAIRMAN. Mr. Mason will inquire.

Mr. MASON. Mr. Watkins, you say that the industries of Kentucky are paying up to 2 percent or more and are way near the top of the States?

Mr. WATKINS. They are paying up to 4 percent, average is about a little in excess of 2 percent.

Mr. MASON. Then do you think if other States would up their tax rates above the 2.7 percent that the Federal setup as Illinois has done, as Kentucky has done, as several other States have done, maybe Pennsylvania and these other States that are in trouble might get out of trouble themselves? Is that your philosophy?

Mr. WATKINS. That would be definitely a partial answer to it. Another answer would be to do a little better job of screening applicants for benefits rather than pay them to everybody who applies.

Mr. MASON. Well, I think maybe some States could learn from Kentucky and Arkansas, perhaps, and Illinois, too.

That is all, Mr. Chairman.

The CHAIRMAN. Questions? Mr. Watts will inquire, Mr. Watkins. Let me say for the record that we are indeed gratified that we have Mr. Watts as a new member of, figuratively speaking, at least, a new member of some few months on the Ways and Means Committee. Mr. WATKINS. We are, too, delighted.

The CHAIRMAN. We know you in Kentucky are.

Mr. WATTS. Mr. Chairman, as one Kentuckian to another I would like to welcome this group that appears before this committee and certainly Mr. Watkins has presented a very fine statement that clearly outlines the position of the organization that he represents.

I might say that the Associated Industries is one of the finer organizations of Kentucky and I have also read over the other list of people that he represents here today and it is about the heart of the industry of Kentucky that you are representing here on this occasion. Your statement is clear, concise, and I am too proud of the progress that we in Kentucky have made in attempting to solve a difficult problem.

As you have stated, nobody gets exactly what they want out of the Kentucky Legislature. I served in that august body once, and even though I was majority floor leader I didn't get all I wanted out of it. Everything that comes out of it is pretty much of a compromise and I think we are way ahead of some States in that respect in this type of legislation.

And I welcome you here.

Mr. WATKINS. Thank you, sir.

The CHAIRMAN. Any further questions of Mr. Watkins?

If not, Mr. Watkins, again we thank you, sir, for coming to the committee

Mr. WATKINS. It has been a pleasure.

The CHAIRMAN. And giving us the benefit of your views.

(The following letter was received by the committee:)

Congressman JOHN C. WATTS,

KENTUCKY FARM BUREAU FEDERATION,

Louisville, Ky., April 3, 1959.

Member, House Ways and Means Committee,
Washington, D.C.

DEAR CONGRESSMAN WATTS: For the past several years we have enjoyed a very pleasant working relationship with many of the business and industry organi

zations in Kentucky, such as chamber of commerce, Associated Industries of Kentucky, and similar organizations. We have attended conferences and workshops with these groups in working for a better business and industrial climate and improving the economic conditions of our State in every way possible.

We have read and are acquainted with the testimony prepared by the staff of the Associated Industries of Kentucky pertaining to H.R. 3547, the Unemployment Compensation Act, and are in accord with this testimony. Your careful consideration of this matter will be greatly appreciated.

Very truly yours,

JOHN W. KOON, Executive Secretary.

The CHAIRMAN. The next group will appear jointly: Mr. Hannah, Mr. Scrantarelli, and Mr. Bullard.

Are you Mr. Hannah?

Mr. HANNAH. Yes, sir.

The CHAIRMAN. Will you please identify yourself for the record and the other gentlemen who are at the witness table with you?

Mr. SCRANTARELLI. Mr. Chairman, I am A. L. Scrantarelli, supervisor of contributions for the department.

The CHAIRMAN. Let's see. Are the three of you appearing together?

Mr. BULLARD. I am Fred Bullard. Yes, sir.

The CHAIRMAN. All right, Mr. Bullard.

Mr. BULLARD. Representing the Kentucky Chamber of Commerce. The CHAIRMAN. All right. And, Mr. Hannah, will you identify yourself for the record, please, sir?

Mr. HANNAH. I am Ò. B. Hannah, Mr. Chairman, and director of unemployment insurance for the State of Kentucky.

The CHAIRMAN. You are recognized, sir.

Mr. WATTS. Mr. Chairman.

The CHAIRMAN. Mr. Watts.

Mr. WATTS. Before we start, may I be permitted to extend the same warm greetings to this group of Kentuckians?

The CHAIRMAN. You are to make the statement, Mr. Bullard?
Mr. BULLARD. Sir?

The CHAIRMAN. You are to make the statement for the group? Mr. BULLARD. Mr. Hannah will make a statement, and I will also make a statement.

The CHAIRMAN. All right, Mr. Hannah, you are recognized.

STATEMENTS OF 0. B. HANNAH, DIRECTOR OF UNEMPLOYMENT INSURANCE, DEPARTMENT OF ECONOMIC SECURITY OF KENTUCKY, AND FRED B. BULLARD, OF THE KENTUCKY CHAMBER OF COMMERCE AND EXECUTIVE SECRETARY OF THE KENTUCKY COAL ASSOCIATION, ACCOMPANIED BY A. L. SCRANTARELLI, SUPERVISOR OF CONTRIBUTIONS, DEPARTMENT OF ECONOMIC SECURITY, KENTUCKY

Mr. HANNAH. Mr. Chairman and gentlemen of the committee, my name is O. B. Hannah, and I am director of the division of unemployment insurance, Department of Economic Security of the Commonwealth of Kentucky. I am appearing before you as a representative of Commissioner V. E. Barnes, whose department administers the employment security program in Kentucky.

Since the beginning of the employment security program the administrators in Kentucky have consistently opposed Federal legislation

dealing with benefit standards, and I am appearing before you today to do likewise. We believe that in the matter of unemployment insurance, because of the varying economic conditions from State to State, the amount and duration of benefits is a subject which should be left to the discretion of the individual State legislatures. It is our belief that the present Federal-State program has worked out very successfully in the past and should be retained. The basic soundness of the present Federal-State program and the progress made under the various State laws, including substantial benefit improvements, we believe justifies the continuance of our present system.

As you know, for many years there have been those who favor a complete uniform national system, even to the point of fixing all details of State laws. These advocates of federalization having failed in this objective, the States are now faced with the proposition of Federal benefit standards which would in effect leave no room for judgment or discretion insofar as the States are concerned.

While Kentucky's economy can no longer be classified as predominantly agricultural, on the other hand we are still not as industrialized as some of the other States. Benefit standards which might aptly apply in a highly industrialized State could well defeat the purposes of unemployment insurance in Kentucky and other States similarly situated.

Over the years our legislature has attempted to keep our unemployment insurance program in step with the times. Our maximum weekly benefit rate has been increased from an original $15 a week to a present $34 a week and our maximum duration from an original 15 weeks to a present 26 weeks. In most cases, including the most recent amendments, the changes to our unemployment insurance law have been the result of agreed bills endorsed by representatives of both management and labor. As a result Kentucky's trust fund is still sound in spite of the fact that over the last 5 years the rate of unemployment in our State has been nearly double the national average, whereas some State's funds are now completely insolvent, and standards such as proposed would only make them more so.

As a result of our recent high rate of unemployment and the corresponding increase in benefit payments, our employers' average contribution rates are now, and have been for the last few years, considerably higher than the national average. Kentucky's employers have apparently been willing to assume this responsibility in view of our depressed economic conditions, and we feel that they will continue to do so without complaint so long as they feel they have some incentive by way of tax reduction to look forward to in the future. In view of our experience in Kentucky, we who administer the program believe that it has made sounder progress in the past and will continue to do so in the future without any additional Federal controls and we urge your rejection of any Federal benefit standards.

I appreciate this opportunity of appearing before you and being permitted to express the views of the department and the administrator of the employment security program in Kentucky.

The CHAIRMAN. Mr. Bullard, you are recognized, sir.

Mr. BULLARD. Mr. Chairman and members of the committee, my name is Fred B. Bullard, and I reside at Hazard, Ky. I appear be

fore the committee in behalf of the Kentucky Chamber of Commerce and the Kentucky Coal Association. I am a director of the State chamber and a member of its business climate committee. I am executive secretary of the Kentucky Coal Association, and chairman of the Kentucky Unemployment Insurance State Advisory Council. The Kentucky Chamber of Commerce is composed of 3,000 members from practically every county of the State and represents a variety of business and professional men, retailers, wholesalers, distributors, manufacturers, utilities, coal mining, distillers, and other segments of the Kentucky business community. At the present time, the organization's primary effort is to increase industrial payrolls in order that our State may progress economically. We feel that the basic answer to unemployment in Kentucky is the creation of new jobs resulting from the investment of private capital, rather than temporary assistance from the Federal Government.

Furthermore, it is our contention that private capital will be invested in those areas in the United States where an atmosphere attractive to doing business has been created. To assist in the creation of such an atmosphere in Kentucky is the purpose of our business climate committee.

The Kentucky Coal Association embraces the coal-producing districts of eastern Kentucky and its members account for a substantial majority of the coal produced in that area. The organization's primary areas of activity are public relations and legislation.

The Kentucky Unemployment Insurance State Advisory Council is appointed by the commisisoner of the department of economic security as provided in section 341.170, Kentucky Revised Statutes,

to

aid the commissioner in formulating policies and discussing problems related to the administration of this chapter and in assuring impartiality and freedom from political influence in the solution of such problems.

Its members include employer and employee representatives, who serve without compensation. The council is assisted by department staff members also appointed by the commissioner.

It is our belief that the regulatory conditions and standards for the administration of many Government-controlled programs, such as unemployment compensation, should be developed by State government in a manner consistent with the economic and other conditions peculiar to that State. For this reason and others to be enumerated later, the Kentucky Chamber of Commerce is strongly opposed to the adoption of Federal standards for the States to follow in administering their unemployment compensation programs as proposed in H. R.

3547.

In support of our position that such standards should be tailored to fit conditions within the State, I wish to review the experience of the Commonwealth of Kentucky in its attempt to develop an unemployment compensation program in keeping with the basic intent of such program in such manner as to be equitable to both business, which pays the bill and the unemployed individual, who is the recipient of the benefits. While no one will contend that we have reached a solution completely satisfactory to all parties concerned, we have in the past 2 years made real progress, and we anticipate continued progress in the future.