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"VIC. Since our last meeting, there have been several developments in one of our top choices-Massachusetts-that you gentlemen will want to consider. "CHAIRMAN. Time is running out on us. We will have to reach a final decision at our next meeting.

"VIC. I realize that, but I must call to your attention several factors that will have a bearing on this decision. First, the State is in a financial crisis,

and it's quite probable that a new tax will be levied.

"CHAIRMAN. Doesn't this kind of problem exist in all three of the industrial Northeastern States we are looking at?

"VIC. Yes, but our survey shows that Massachusetts is already one of the highest tax States in the Nation.

"CHAIRMAN. Taxes are an important consideration here. Let's watch carefully to see what form the new tax takes.

"VIC. There are also two proposed labor laws that I think we should consider. If they are passed-and the chances are excellent that they will beMassachusetts will be the first State in the Union to have such laws.

"CHAIRMAN. Your analysis shows this State has a number of laws and regulations that tend to hold back business growth; doesn't it?

"VIC. That's correct, and one of these new bills, sponsored by the Teamsters Union, will just about take away any legal protection for us, our future employees, and our new plant, in the event of a labor dispute.

"CHAIRMAN. That's not too good.

"VIC. The other, according to our legal staff, will virtually outlaw injunetions during a strike so that we can't have access to our plant-even to keep the boilerroom from exploding.

"CHAIRMAN. That's bad. There's going to be a lot of the stockholders' money tied up in this new plant.

"VIC. On the other hand, Massachusetts has a fairly good record as far as frequency and length of labor disputes is concerned.

"CHAIRMAN. Still, it's risky. If it's agreeable to everyone, let's go on to the next proposed location. Possibly by the time of our next meeting, these tax and labor problems in Massachusetts will be settled. If not.” Sound exaggerated? Maybe. Improbable? Don't be too sure.

Every day, decisions like these are being made in business offices across the Nation. And businessmen today have to consider all the facts and possibilities. The truth is, Massachusetts is in the same position as any business. We have at least 48 competitors. If what we have to sell isn't as good as some other State, we lose out. This means we don't get the jobs, wages, and other economie benefits which Massachuetts must look to for its progress and prosperity.

The men who are making these choices the decision makers, don't owe anything to Massachuetts. The scene above gives you some idea of what does impress them.

Take the two pending labor bills that were mentioned.1 Why should a business want to come here with laws like those, when it can go somewhere else? anywhere else?

Don't get us wrong. We don't think these two bills alone will drive out of the State any business that's already here. These two straws probably won't break the camel's back.

But, multiplied by many other kinds of factors, they are making Massacusetts a bleak place in the eyes of the decision makers.

Consider this: During the next 8 years, new plants are predicted to be mushrooming in communities throughout the Nation at a rate 47 percent ahead of today's pace. Massachusetts must share generously in this expansion. It needs the jobs that will be created. The State has no natural resources and is generally in a poor geographical location. Yet on top of these natural disadvantages, it continues to impose man-made handicaps. No wonder business looks elsewhere.

We're just discussing one aspect of the problem here. For example, we haven't even touched upon what these two proposed bills will do to your rights as an employee or a citizen.

It all comes down to a matter of attitudes. A spiraling State debt, accelerating tax rates, expensive State programs, laws that tend to keep industry out-all these are reflections of attitudes.

If you were a decision maker sitting outside the State and looking in, how would you decide?

1 Peaceful persuasion (H-1160, S-187), anti-injunction (H-116, S-189, S-191).

Mr. CAREY. To meet the convenience of the committee I could come back at any time you call me.

The CHAIRMAN. The committee then will adjourn until 1:30. (Whereupon, at 12:15 p.m., Wednesday, April 15, 1959, the committee recessed to reconvene at 1:30 p.m. the same day.)

AFTERNOON SESSION

The CHAIRMAN. The committee will please be in order.

STATEMENT OF JAMES B. CAREY, SECRETARY-TREASURER, AMERICAN FEDERATION OF LABOR-CONGRESS OF INDUSTRIAL ORGANIZATIONS, INDUSTRIAL UNION DEPARTMENT; ACCOMPANIED BY LEONARD LESSER, DIRECTOR OF SOCIAL SECURITY, AFL-CIOResumed

The CHAIRMAN. Mr. Curtis has some questions, Mr. Carey.

Mr. CURTIS. Mr. Chairman, I might say first, Mr. Carey, on behalf of my colleagues there is going to be a vote on the floor of the House in probably the next 10 or 15 minutes and I know most of them stayed over there for that purpose. I am hopeful that we can temporarily recess to answer that rollcall because that is pending and I will have to leave, too.

The second thing I wanted to make clear for the record is that it has been a little difficult, of course, to go over these 38 pages of testimony, and this is not said in any way of adverse criticism because it is not meant that way, but just for the sake of the record. Of course, you were reading, as you stated, portions of it as you went through, and I did my best to try to follow it. But it does leave those of us in the committee who wanted to interrogate Mr. Reuther in this instance on the whole statement in a position where we will be unable to. I will go over this full 38 pages to see what questions I might, in addition, want to ask that I did not ask.

Mr. LESSER. Mr. Curtis, may I say one thing?

I want to say to the committee that we called Western Union yesterday afternoon and gave them 60 copies of Mr. Reuther's statement yesterday afternoon to bring up to the committee. We came in here this morning, and the Western Union fellow was just walking in with the testimony.

Mr. CURTIS. Incidentally, I might say on that with Mr. Meany's statement we did get that ahead of time and it gave us an opportunity to go over it. That is why I said I was not saying this in any way in the sense of criticism but simply to explain why maybe I will want to submit some questions to be answered for the record beyond this.

Now, the next point I want to make very clear. If this were just a question of voting for or against, depending on who is sponsoring and who is opposed to it, that would be one thing. There are many opponents of this bill whom I do not associate myself with. I find that the criticism that you directed against some of the opponents that appeared before this committee in my judgment is sound. They are the same people who at the State level appear before State legislatures to argue against the States moving ahead in these areas. I

think your critcism directed against that procedure is justified. I share it. It is not my opinion nor is it my approach to permit a whipsawing by people whose object is not to perfect this system, of going before the State legislatures and saying one thing and then coming before the Ways and Means Committee and saying another.

My concern is this: That I think overall this State-Federal system of unemployment insurance has worked well. I think there are a lot of areas where it needs corrections. But the fundamental structure of it appears to me to be good. That is why I am concerned when we talk about any fundamental changes, and going further, I want to be sure just where we are going.

Now, one of the basic points and the thing that disturbed me, Mr. Carey, and I think the basis of the recommendations of the President has been that unemployment insurance should be 50 percent of the wages of the people who are on the unemployed rolls. I think that probably is a good objective.

The thing, though, that we do not have and no one has been able to give it to us is what is the average wage of those who are presently unemployed. That is the figure we do not know. We keep talking about the fact that the State programs have not been keeping up in relation to 50 percent of wages, but that is of the overall wage of the labor force. There has been some evidence indicating that the present unemployed, and I think it probably would be true in any period of unemployment, tend to be the less skilled workers, and as a general rule as an average we probably will have a wage scale that is somewhat below the average wage scale. If we could only determine whether or not the average wage of those who are presently unemployed is being paid at less than 50 percent on their unemployment compensation, that would be an important factor. I am not sure it is. Now, let me get one point I think you made. Even if it were true, as I get your argument, the States still would not be able under their laws to go up as high as 50 percent of those who are unemployed who are in the above-average wage bracket. Is that one of the points? Mr. CAREY. It is a limitation now imposed by the State laws. Mr. CURTIS. Limitation; yes.

Mr. CAREY. That does not permit the carrying out of one of the original objectives of the law enacted in 1935, which was to establish and maintain a benefit relationship of 50 percent of earnings.

Perhaps I should have stated it earlier, Mr. Curtis, that I was elected a national union official in 1933. This is not my first appearance before the Ways and Means Committee on unemployment compensation. In fact, in 1954, as the secretary-treasurer of the CIO, I made an appearance and presented the case for the CIO on this subject. So the absence of Walter Reuther should in no way impair your asking questions of me in connection with his statement. In fact, I think perhaps that I had as much to do with the long-range preparation of the labor movement's policy on unemployment compensation as did Walter Reuther.

Mr. CURTIS. The only reason I commented, Mr. Carey, it was in no sense from that angle, is simply because Mr. Reuther has been such an outspoken spokesman and is widely quoted in the press on these kinds of things, and knowing that he is the leader of your organization, one of your top leaders, of course, that I wanted to get his point of view. I think his philosophy is going to bear on the future of this

thing. Not that I am not equally interested in your philosophy, sir, and that I recognize that it is an organization speaking.

The reason I say that is this: From interrogating Mr. Meany I gathered the impression, although I never could get him to actually say that he would prefer to have a Federal system and that the only reason he was not asking for a Federal system was it was not politically practical at this time; but, if he had his way, he would just as soon see a Federal system. I wanted to ask Mr. Reuther that and ask you that. That has been asked you to some degree by Mr. Byrnes. I think it make a difference whether this is only part of a long-range program on the part of the leaders of the CIO-AFL to gradually make this a Federal system or is it limited to trying to perfect this. Then to see how that works and if that balance turns out to be good we leave it alone. But if the balance-suppose this became law, suppose the balance showed up not to be so good, whether we would then go back to more of a balance at the State level. I regard this as a balanced system and the argument being not to eliminate the States. I do not think you are asking that in this bill nor in your testimony, but you think the balance should be shifted somewhat to the Federal level.

I am willing to listen to those arguments and see what they are. But if that is only part of a long-range plan which is to get all at the Federal level, then I think we need to examine that angle. That is where the philosophy of the individual becomes important.

Mr. CAREY. Mr. Curtis, I will say to you, speaking for George Meany, Walter Reuther, and other labor leaders on this subject, ask any of them about the Federal-State question and you will get substantially the same answer. They want decent standards to be established. They believe that the standard that was established in the original law should not be diminished and that is the standard of 50 percent of earnings. We feel that is the least that we can do for the Nation's unemployed workers.

As to the duration, as well as the weekly benefit, I might say that virtually all economists and virtually all studies that have ever been made on this law, whether sponsored by the Rockefeller Brothers or by other groups, all are pretty thoroughly in agreement on these questions. The exception is a small minority of employers who will talk one way on the same subject at one place and talk entirely different elsewhere.

Mr. CURTIS. No. Let me interrupt for 1 minute just to point this out because we are in agreement on the objectives, at least you and I are, as far as trying to get decent standards established for this program, because I think this has been a wonderful program. The argument is not over objectives. It is how we can best attain those objectives for a long-range proposition, weighing other values that have to be weighed as I see it in the program. That is a problem. Do we best get those for the long range by switching the balance more to the Federal level or do we try to attain it through continued trying to put on pressure at the State level?

And there is the point of differences at least between you and me, for example. My mind is not closed to your arguments although I must confess I have a tendency to resist them because I see other values. that might be sacrificed, and I think you would recognize those values,

too, if we went more to the Federal level. It is those things I want to dig into to see where we really do disagree or whether if information were presented to me I might change my mind, or if I could present information to you you might even change your mind. So it is not on objectives that we are in disagreement. It is how we attain them and whether we attain them better through a complete Federal system, or through a balanced system of some sort; and if it is a balanced system, where the balance is to be. Now we presently have a balanced system. The arguments you are presenting are that the balance should be shifted a little more toward the Federal level.

Mr. CAREY. I think, Mr. Curtis, you can understand that if I was for a completely Federal system I would have no hesitation in telling you.

Mr. CURTIS. I believe you would, sir.

Mr. CAREY. That would go for Mr. Meany and would go for Mr. Reuther.

Mr. CURTIS. I must say this

Mr. CAREY. I go so far, Mr. Curtis, to say that anyone who wants to maintain a Federal-State system ought to make sure that the Federal-State system at least meets the standards that were established when the arrangement was originally set up.

Mr. CURTIS. Or let us say this, or is meeting, trying to meet them. Now, right now we do not really know from the evidence we have how well they have been met in the past because the reference point to date has been not 50 percent of the wages of those who are unemployed, but 50 percent of the average wage. That is why it is so important for us to know, if we can know, who are the unemployed and what is the average wage of the unemployed. I think from evidence we do have the bulk of the unemployed are unskilled, semiskilled laborers, who are in the lower wage bracket, and it might very easily be that we are a lot closer to 50 percent of their wage than we realize, even though we may not be as high as 50 percent of those in the labor market. That is, for example, the kind of evidence I seek.

Mr. CAREY. I think your point should be cleared up and Mr. Lesser has the material to do just that.

Mr. CURTIS. All right.

Mr. LESSER. Mr. Curtis, first the President's recommendation, at least after the first year's recommendation, was not in terms of giving a benefit of at least 50 percent to the great majority of the unemployed people. He was talking about the great majority of the workers covered by unemployment compensation.

Now at any one period you may have different beneficiaries unemployed. All workers, except for those excluded, are covered by unemployment insurance. Today all low-paid workers may be unemployed; tomorrow the higher paid workers may be unemployed. All of these workers, though, look to the law for protection when they are unemployed. Every one of them is subject to the risk of unemployment.

Mr. CURTIS. I think we are in agreement on that. And I can see one aspect, if I may just finish this sentence and point, one aspect of this that I am interested in. If the States are prohibiting those people who will have above average, above the State average wages so

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