Mr. MEANY. If that is all they would do, we would have no complaint.

As a way of life, they resist all cases; that is, some employers, not all employers of course.

Mr. CURTIS. I am talking about a system and I think it is a healthy system where you have an incentive at one side to screen to be sure you do not pay where you should not pay, if at the same time there is equal incentive on the part of another equally strong group to argue the other side of the case, and then the decision rests with an independent body, and that is the way I thought that the unemployment system worked.

Mr. MEANY. Do you not think, Mr. Curtis, that it is significant that this policing, this intense policing you refer to, only occurs where there is merit rating?

For instance, in the railroad system we do not have it at all.

Mr. CURTIS. What I am arguing is as to whether it is not a good system. Otherwise, I again ask the basic question, Mr. Meany: What would you put in its place for policing to be sure that we do not have abuses?

Mr. MEANY. Mr. Curtis, I am not perhaps as familiar with all the laws in all the States as my research people are, but I am assuming that all of these laws contain the same provisions as the New York State law, and I sat for 5 years as a member of the advisory board of the New York State unemployment insurance law, for the first 5 years of its existence, and I sat with Mr. Marion Folsom, as an employer member of that board, and Mr. John Crane, representing insurance companies, and we had a regular system to follow up all of these claims and we were on the lookout for people who were trying to take advantage.

I might say to you that I had a selfish interest in that because I wanted unemployment insurance to work and I realized that one of the things that would surely break it down would be a lack of policing, a lack of inspection, and I am assuming that all of the States have provisions in their law by which the State administration polices the law, and I don't give any credit to the employers for policing the law. I do give them credit if they have a legitimate complaint, but as a matter of routine, day-to-day business, when they set up an agency and pay an agency-they pay an agency to police these things-they are surely doing that in order to bring down their tax liability.

Mr. CURTIS. All I am saying is that I think it is a healthy system that that is going on, if at the same time there is the balance for someone presenting the other side, and you have an independent agency making the decision.

Mr. MEANY. I don't think it is a healthy system where the employer is challenging practically every case merely because he figures he can

save some money.

Mr. CURTIS. That is his incentive.

Mr. MEANY. I am not so naive to believe that the employers who do these things do it in the interest of the law.

Mr. CURTIS. Mr. Meany, I am not talking about that. I am talking about how we do police this thing, and it seems to me that is the very effective and automatic way, where real justice can be obtained, be

cause as long as you have an independent body that weighs whether the employer's position is right or the employee's position is right, and what I am going to go on to suggest, if you remove that, and as I understand your suggestion would be to simply supply the checkpoint, some administrative tribunal where no one has an incentive to try to see that there are not abuses, I do not see how that is going to work.

It seems to me that your abuses will probably destroy your system that way. In other words, if you do not have a partisan on both sides of this presenting the thing and having an incentive in presenting it before an interested tribunal, you are going to have abuse.

If the money is there that you are going to provide and the only thing is just to pay it out, the natural human reaction is to pay it out. Mr. MEANY. I have said, Mr. Curtis, that I don't think that that is the system or that that is the policy, in which the only thing is to pay it out. I assume that each State takes care of this problem under its own law. I know we did in the State of New York, and surely you are not saying that the employer has a great patriotic duty or the only place he has a patriotic duty is where he saves some money personally for himself.

Mr. CURTIS. I think that is a legitimate and good incentive as long as there is a proper balance so that he is not making the decision. He simply has an incentive to try and point out where he thinks there is an abuse and then some independent tribunal decides whether he is right or the employee is right.

Mr. MEANY. You surely don't think that it is a good system for the employer to pay someone to challenge every case, do you?

Mr. CURTIS. I do not believe that actually is the case.

Mr. MEANY. This is what we are criticizing and we certainly don't criticize the employer who comes in where he feels he has some reason to believe that an improper claim is being made.

Mr. CURTIS. I do not believe the employer is that extreme any more than I believe all the cases that some of the witnesses have given us of the abuses. I think there are a lot of abuses in the system, but I do not think they are as extreme perhaps as some people present them. At least I examined this area to get your thinking on it.

One other point on this: Do you not believe that this experience rating does have a very healthy tendency to minimize unemployment? Mr. MEANY. No. No, sir; absolutely not. I do not.

I can show you arguments made against it before the law was ever passed. Experience rating has done the very thing that we warned against at the time.

Mr. CURTIS. I would like to examine into the actual experience, but I think you and I disagree on that.

Mr. MEANY. I am quite sure we do.

Mr. CURTIS. It seems to me if an employer can minimize his tax by keeping the men on instead of laying them off and he is given incentive to preserve a good employment record, that he would do so. That gets into this other thing.

It is true, is it not, that after a period of recession where we have had unemployment, the unemployment taxes are going to be increased because of the experience ratings?

Is that not true all through the country, where we have had unemployment we are going to see automatic increases in the unemployment tax because of the experience rating?

Mr. MEANY. Mr. Curtis, do you know of any cases where the experience rating prevented layoffs? Has it prevented this recession? Has it done anything to minimize the number of unemployed?

Mr. CURTIS. I do not know, Mr. Meany. That is the fact I want to get into. I suspect so, yes.

Mr. MEANY. You run into business with experience rating. There is a certain norm you have as to a work force and the incentive is to bring that norm down to start with, to keep it down, not to hire the people so that you don't have to lay them off.

Mr. CURTIS. That is true, and which, incidentally, I think you would agree is a healthy thing?

Mr. MEANY. No, I do not.

Mr. CURTIS. Do you think a employer should hump up his employment, knowing that he would have to lay off later?

Mr. MEANY. Deliberately, no. I think there is a normal incentive to try to have a level work force. I think that is there whether you have unemployment insurance or not.

I think what happens with this experience rating is, you bring down that norm.

Mr. CURTIS. I do not know and I would like to examine into the actual effect because I appreciate the theory can sound good and then in practice not work out, but it seems to me that this theory is sound and it has worked out and is a real incentive to create a more level rate of employment. Nonetheless, at least I see the differences there. Mr. MEANY. Of course we don't argue in supporting this law that these systems should be eliminated. The States still have the option. Mr. CURTIS. However, I am trying to examine into the philosophy and theory to see where I might differ with your point of view and I see several areas where I do disagree with your approach on this. One other point: I have been very much interested in the fact that some States have dependency differential benefits if the employee has dependents, and in examining into this unemployment problem, it strikes me that that is an area where we possibly could examine into, particularly in those States that have had these systems, to see how well they have worked.

I was wondering if your organization had thought of that angle at all and had any comments on it, and this would fit in with the insurance program, being the insurance theory, because certainly an employee with dependents has more to protect and more reason to protect than an employee who is single without dependents.

I was just wondering if you had any recommendations in your organization in that area or comments as to how those State systems that have done this have done a better job or a different job than the States that have not recognized the different problems.

Mr. MEANY. We have not made any study on that. But we feel that the need requirements enter into this, that it is foreign entirely to the whole idea. This is insurance.

Mr. CURTIS. Of course, it is insurance, Mr. Meany, and insurance includes the person who has dependents, who, I can tell you, and I am sure you know, takes out more insurance when he has more to protect.

I, with a family of five children, of course, have to take out more life insurance than a single man, and do. That is why I say that this would seem to me to fit in with our theory of unemployment insurance and the emphasis on insurance, and particularly in the light of our experiences now in these recessions, where we know that the problem is much greater and more acute in those working families where they have dependents than in others. That is the reason why we are talking about improving the system.

It seems to me this is an area where at least I would like to know

more.

Mr. MEANY. We keep in touch with the situation, but frankly we have not made any special study on it. Perhaps we will find that there may be some good effects and some bad. I do not know. There are 12 States, I understand, that have these need requirements in the law.

Mr. CURTIS. Two other points and I am finished, Mr. Chairman. You have stated your theory as I understand it as being that one reason benefits are not being extended in the States is the result of, first, the argument, whether it is fiction or real, the argument of interstate competition, and, second, the fear of insolvency.

I can see that if those were extreme situations your argument would have merit, but do you not think that if modified the argument of interstate competition would produce a healthy situation in our employment problems? Is it not a good thing to encourage States to compete and also compete on this thing of having more employment and less unemployment? The rates would really go down if they have less unemployment. That is the real thing that makes the rates go down.

Mr. MEANY. Do you feel that this is a healthy thing, to have competition to drag industry from one State to another?

Mr. CURTIS. No, sir; I did not say that. I said this, that granting your theory, if it were carried too far I can recognize that that is a danger and an abuse and something unhealthy. But I am also asking whether, modified and kept within bounds, it is not healthy because it does relate to this problem of trying to encourage our employers to maintain a more level state of employment.

Mr. MEANY. What we are trying to do, Mr. Curtis, is keep it in bounds. The only way that suggests itself to us is through Federal standards.

Mr. CURTIS. I know that, but I am trying to get back on this other point.

Now, the fear of insolvency seems to me likewise, kept within bounds, is a good healthy, normal check on one State that might get extreme ideas as to what it can do in this area. I can again see that it could be abused. But I do not think that, per se, these two reasons that you gave, without developing them further and showing that they are extreme-maybe they are, but I would like to know whether they are extreme. If they are, I can agree with you. But merely the fact that we have interstate competition and the fact that there is a check on the States because of fear of insolvency, within bounds those are very healthy things I would think.

I just want to see if it disagrees even there.

Mr. MEANY. I do not think we disagree as to the question of having some competition. What we would lke to do is keep the thing within bounds.

Mr. CURTIS. And your theory is that it is out of bounds?

Mr. MEANY. And surely you feel that where there is a differentiation of seven to one between States, that is entirely too much.

Mr. CURTIS. I think, Mr. Meany, I can see the area I am going to want to get a great deal of information on, because I think maybe our differences lie essentially there.

You feel that the tax rate has gone down primarily because of the elimination of certain claimants, and you think unfairly so, rather than the fact that they have had a good unemployment rate.

We ought to be able to get the facts in that area, and that is the area in which I want facts.

Thank you, Mr. Chairman.

The CHAIRMAN. Are there any further questions?

Mr. Alger will inquire, Mr. Meany.

Mr. ALGER. Mr. Meany, I had the privilege and pleasure of readng and studying your statement last evening. I want to stick close to this statement and limit my questions to the subjects I am particularly troubled about.

On page 1 and at the top of page 5 you discuss the people who are unemployed, and the figures keep coming up of labor force compared to unemployment. Here it is 5.8 million or 7.6 percent of the labor

force.

Has the AFL-CIO made a comprehensive study at any time of the constituency of this labor force that is unemployed? Specifically, how many of them are heads of families with dependents as compared with single people or wives or seasonal workers by choice that do not have to work? Have you ever broken it down in that way? I tried with the figures I have here, and I must tell you I have some, but I am not satisfied with the figures I have.

In fairness to this entire subject, I believe this committee should have such a breakdown, and we ought to benefit from whatever you have to give us.

Mr. MEANY. Our own unions have done it; we have not done it ourselves on a national scale. However, we have a report of findings made up by a special group, by the University of Michigan. We have that report which gives some information on it.

Mr. ALGER. I am particularly interested because I see in the report that I have here-and this is available for you to study later, to give us more information on if you can-that this particular publication shows that Michigan has 37 percent of the workers that are drawing unemployment compensation at this time-and this is a typical weekdid not have dependents.

That is the exception almost to the rule of the other States. In almost all of these other States 50 percent or in some cases more than 50 percent of the unemployed had no dependents. Then before this committee, the gentlemen from Arkansas, Kentucky, Indiana, Utah and elsewhere have pointed out and additional information has been submitted to us in the record that a number of workers are of the seasonal type where there is another breadwinner in the family.