National Retail Farm Equipment Association. National Retail Furniture Association. National Retail Merchants Association. National Retail Tea & Coffee Merchants Association. National Shoe Retailers Association. National Sporting Goods Association. National Tire Dealers & Retreaders Association, Inc. Retail Jewelers of America, Inc. Retail Paint & Wallpaper Distributors of America, Inc. Variety Stores Association, Inc. Women's Apparel Chains Association, Inc. STATE ASSOCIATIONS Alabama Council of Retail Merchants, Inc. Illinois Retail Merchants Association. Kentucky Merchants Association, Inc. Louisiana Retailers Association. Maine Merchants Association, Inc. Maryland Council of Retail Merchants, Inc. Michigan Retailers Association. Mississippi Retail Merchants Association. Missouri Retailers Association. Nebraska Federation of Retail Associations, Inc. Retail Merchants' Association of New Jersey. Ohio State Council of Retail Merchants. Oregon State Retailers' Council. Pennsylvania Retailers' Association, Inc. Rhode Island Retail Association. Retail Merchants Association of South Dakota. Tennessee Retail Merchants Council. Council of Texas Retailer's Associations. Utah Council of Retailers. Virginia Retail Merchants Association, Inc. Associated Retailers of Washington. West Virginia Retailers Association, Inc. (Thereupon, at 4:20 p.m., the committee recessed, to reconvene at 10 a.m., Friday, April 10, 1959.) UNEMPLOYMENT COMPENSATION FRIDAY, APRIL 10, 1959 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met at 10 a.m., pursuant to recess, in the main Ways and Means Committee hearing room, New House Office Building, Hon. Wilbur D. Mills (chairman) presiding. The CHAIRMAN. The committee will please come to order. Mr. Horman, please come to the witness table. Please identify yourself for the record by giving us your name, address, and the capacity in which you appear. STATEMENT OF S. L. HORMAN, CHAIRMAN, SOCIAL SECURITY COMMITTEE OF THE COUNCIL OF STATE CHAMBERS OF COMMERCE Mr. HORMAN. Thank you. Good morning, Mr. Chairman and members of the committee, my name is S. L. Horman, vice president of the Time Insurance Co., Milwaukee, Wis. I am chairman of the Social Security Committee for the Wisconsin State Chamber of Commerce, a member of the Social Security Committee of the Council of State Chambers of Commerce, and as a member of that committee I represent the Council of State Chambers of Commerce and their member State chambers throughout the United States. We realize, gentlemen, that your hearings have been loaded with detailed testimony from both sides so we are not going to read our formal statement, but merely hit one or two high spots that perhaps we feel should be brought maybe more emphatically to your attention. Basically, we feel that this bill is an invasion of States rights and, secondly, and perhaps more important than any of the other details, is the fact that the one principle that is omitted is the principle of experience rating. And I should like to emphasize, the States that have followed this principle in the administration of their unemployment compensation setup have found it to be tremendously worthwhile. I should like to point out four fundamental and basic postulates about experience rating. The first is, it is a policing measure. It brings the employer into the picture and maintains his interests. Second, it is the most sound and practical method of adjusting fund income and outgo and in building reserves. Third, it is a fair and equitable distribution of the cost. And, fourth, it encourages regular employment and it does provide job security. In conclusion, we feel that the States have done an excellent job of administering their UC programs for what we might call normal conditions. If this bill is prepared as an expediency for what we might consider abnormal conditions, then we should like to pose this question: Why should industry be shackled with this as a permanent thing? In closing, I should like to ask the members of the committee if you honestly believe that legislators from other States can understand and appreciate and administer UC benefits in your local State better than your own local legislators. We feel definitely that any welfare or social benefits, security benefits, should be administered as much as possible on the local level. Gentlemen, thank you for this brief appearance. The CHAIRMAN. Mr. Horman, without objection, your entire statement will appear in the record. . (Statement referred to follows:) STATEMENT OF S. L. HORMAN ON BEHALF OF MEMBER STATE AND REGIONAL CHAMBERS OF THE COUNCIL OF STATE CHAMBERS OF COMMERCE ON REVISION OF THE FEDERAL UNEMPLOYMENT COMPENSATION LAW My name is S. L. Horman. I am vice president of the Time Insurance Co., of Milwaukee, Wis. I am chairman of the Social Security Committee of the Wisconsin State Chamber of Commerce. I am also a member of the Social Security Committee of the Council of State Chambers of Commerce and appear here on behalf of the member State and regional chambers of the council listed at the end of my statement. In our opinion, the basic issue now before this committee is whether the Federal Government or an individual State shall determine what the provisions of that State's unemployment compensation law will be. At the very beginning I want to emphasize that the organizations for which I speak are unalterably opposed to legislation that would impose Federal standards for eligibility, amount and duration of benefits, and consequently impose Federal control and domination over the State unemployment compensation programs. We are opposed in principle to any curtailment of a State's authority over and responsibility for its own unemployment compensation program through the mandated transfer of such authority to the Federal Government. In our opinion the responsibility of a State legislature to provide the citizens of that State reasonable protection against the hazard of temporary unemployment should not be transferred to the Federal Government. State governments should not be divested of this responsibility to their citizens; it therefore follows that they should not be stripped of the authority required to carry out this responsibility. The right of the citizens of each State to determine for themselves through their duly elected State legislators what unemployment benefit program best meets their needs was first recognized by Congress in 1935; that is, by that Congress which brought about the establishment of the State unemployment compensation systems. Succeeding Congresses also have made it clear that each State should be free to build that unemployment benefit structure which most closely fits the needs and desires of its citizens-taking into consideration the general economy of the State, the degree of industrialization, and other significant labor market factors. We earnestly hope this committee will continue to maintain the right of the States to assume this obligation. It seems to us that the proponents of Federal standards appeal to this Congress, as they have appealed to previous Congresses, because they have not been able to successfully advance either the wisdom or necessity for the policies that they recommend in the State legislatures. Having failed in the forum in which their case properly should be tried, and in which it has been tried time and time again, they now appear before this Congress in the hope that it will preempt what previous Congresses have recognized as a State function. In short, they ask that this Congres ignore the decisions reached after long and careful study by the several State legislatures. We seriously question the property of super imposing the wishes of those favoring Federal standards upon the judgment and evaluation of the citizens of a State by congressional mandate. If the objectives sought by those who support Federal standards were sound, would they have been rejected time and again by State legislative bodies. Are we to believe that all of these duly elected bodies are blind to reason, or lacking in responsibility? We respectfully ask each member of this committee to consider whether in your opinion Congress is better equipped to solve these problems in your State than your own State legislators? We do not believe that Congress should assume direct legislative responsibility for the State unemployment compensation programs, nor do we believe that Congress can be more responsive to the citizens of the individual States or more knowledgeable and understanding of their problems than their own State legislators are. Furthermore, we submit that the States have not failed in their responsibility. On the contrary, the facts indicate that they have been responsive to the desires of their citizens and on the whole have provided reasonable protection against short term unemployment. Consequently, those who would have the Congress seize from the States their rights and obligations lack substantive reason for advocating such action. The fact that the States have expanded, improved and liberalized their unemployment compensation programs is a matter of record. Every State during recent years has adjusted its unemployment compensation program in the light of changing economic conditions according to the carefully considered judgment of its executive and legislative officials. By almost any yardstick imaginable, advances are apparent in weekly benefit amounts, in benefit duration, in total maximum benefits, and in the number of workers protected under the program. Frequently, however, the extent of these advances have been played down by those who argue that the States have failed in this regard. In order to substantiate our contention that the State unemployment compensation programs have been appreciably liberalized, I should like to point out how much has been done with respect to benefit amounts alone within the past 4 years. This is apparent from the table on the following page : TABLE I-Distribution by States of basic maximum weekly benefit amount, December 1954, October 1956, and March 1959 Table I shows the maximum weekly benefit paid by the various States at three different times-in December 1954, or just 4 years ago, in October 1956, and in March 1959. I will not read the figures from the table since it is before you, but I do want to point out the fact that 4 years ago only one State paid a weekly benefit of $35 or more. Two years ago this had grown to 12 States. Currently, 25 States pay a weekly benefit of $35 or more, and some of these, as you can see, pay considerably more. During this 4-year period on 72 occasions State legislatures increased the maximum weekly benefit. And as you undoubtedly know a number of States are expected to further increase their weekly benefit during the remainder of their current legislative sessions. This record demonstrates clearly that the States have moved to change their unemployment compensation programs when circumstances within the States have made such action advisable. As is evident from the table below, benefit periods have also been generally liberalized during the past 4 years. TABLE II.-Distribution by States of maximum weeks of benefits for total unemployment, December 1954, October 1956, and March 1959 This table shows that 28 State laws have been liberalized within recent years. For example, during the last 4 years the number of States in which an unemployed individual could receive benefits for 6 months has increased from 25 to 37. Currently 83 percent of all covered workers are in States which provide a benefit duration of 6 months or longer. Again, it is worth noting that several State legislatures now in session are expected to increase further the benefit duration of their programs this year. The most striking effect of these increases in weekly benefits and in duration is the total amount of benefits which an individual can receive now in a given State as compared to the amount that he could have received in the past. Most States now provide three or four times as much in total benefits as were available when the unemployment compensation programs first became effective. In other words, while the cost of living is slightly more than twice as high as it was 20 years ago, the total benefits that can be obtained under most State laws have tripled or quadrupled during this same period. Many other illustrations could be used to show how much the States have improved their unemployment compensation programs; however, you are undoubtedly familiar with most of these as other witnesses very likely have presented them for your benefit. We believe, however, that the illustrations we have given indicate clearly that the States have carried out their responsibility to expand and improve their unemployment compensation programs so that they are reasonable in the light of conditions existing within the individual States. True, not all States provide the same benefits or the same duration, but differences are to be expected. Obviously the States feel that there are sufficient differences among themselves in economic structure and business climate to warrant differences in their unemployment compensation programs. These variations in program content were arrived at only after each State had carefully and deliberately considered the problems and circumstances which differentiate that State from others. Indeed, Congress itself anticipated that these very results would occur. The Federal-State relationship on which the unemployment compensation programs are based embodies recognition of the fact that differences in the economies of the States exist, and that the States should be free to adjust their unemployment program to the circumstances and conditions that prevail within each State. Just as the States have had the right to determine for themselves what combination of benefits, duration, eligibility, and disqualification provisions are best adapted to the needs within the State, they have had the responsibility of determining what taxing provisions are required to finance these programs. We believe that this should continue to be the case. In this connection it has been indicated that an increase in the Federal taxable wage base is deemed desirable by some. Various arguments have been advanced for such an increase. Because your time is limited I will not attempt to examine these arguments in detail. I want to indicate, however, that we do not believe there is any necessity for congressional action fixing a higher taxable wage base. The States are competent to handle their long run financing problems despite temporary difficulties which may arise and prove troublesome to individual States. One point may be worth noting, however. Where the States have acted to solve unemployment benefit financing problems themselves, they have almost always preferred an increase in the maximum tax rate in preference to an increase in the taxable wage base. |