Now a few comments on the provision abolishing the Veterans' Placement Service Board. The United States Employment Service is required by the act which created it and by the Servicemen's Readjustment Act of 1944 to maintain a Veterans' Employment Service. This service is operated through the regular State employment offices with veterans' placement representatives from the Bureau of Employment Security exercising special supervision over the work. This plan does not abolish or alter the operation of the Veterans' Employment Service. What it does is to fix responsibility for the service in the head of the department by which the service will be administered: namely, the Secretary of Labor. The function of the Veterans' Placement Service Board has been to determine the policies of the Veterans' Employment Service, which by law is administered by the United States Employment Service within the Bureau of Employment Security. The Chairman of the Board has the additional function of appointing the Chief of the Veterans' Employment Service. The Board consists of the Administrator of Veterans' Affairs as Chairman, the Director of the Selective Service System, and the head of the department or agency in charge of the United States Employment Service, currently the Federal Security Administrator. At the time the Board was created, responsibility for assisting veterans to obtain employment was divided by law between the United States Employment Service and the Selective Service System. Since then, however, these functions of the Selective Service System have been transferred to the Department of Labor and are being carried on by the Bureau of Veterans' Reemployment Rights. The abolition of the Board will concentrate responsibility for the policies of the Veterans' Employment Service in the officer responsible for supervising its administration. This will eliminate what the Commission on Organization of the Executive Branch of the Government referred to as an "anomalous administrative arrangement" needing correction. More important, it will make for better service to veterans by fixing responsibility and assuring proper working relations between the Veterans' Employment Service and the General Employment Service. This plan will constitute a major step in the reconstruction of the Department of Labor, which in recent years has been stripped of so many of its functions as to endanger its status as an executive department. When it was created the Department was made responsible for the administration of substantially all the labor programs of the Government. Unfortunately, these functions have since been scattered about the executive branch. This plan starts the process of rebuilding the Department and restoring a sound organization of Federal labor programs. That concludes my testimony, Mr. Chairman. The CHAIRMAN. This plan emphasizes what we have been discussing awhile ago with reference to plan No. 1, because this plan actually transfers out of the Social Security Administration, or out of the Department of Welfare if it becomes established, and into the Department of Labor, certain agencies and functions now being performed by the Federal Security Administration. Is that correct? Mr. PACE. That is correct; yes, sir. The CHAIRMAN. This plan follows plan No. 1; but where plan No. 1 transfers all of the functions into the new department, this plan transfers some of the functions and agencies out of that new department into the Department of Labor. Mr. PACE. That is correct, sir. The CHAIRMAN. One other thing that may be significant and that I think we should make some observation about is this transferring of the USES to the Department of Labor. That has been before the Congress some two or three different times, as I recall, at least, and the Congress has always rejected the idea. Is that correct? Mr. PACE. That is correct; yes. The CHAIRMAN. And yet this plan reemphasizes it; and, unless a resolution of disapproval is passed by one House of Congress by the prescribed majority, this plan will go into effect, notwithstanding the previous actions of the Congress in disapproving it. Mr. PACE. That is correct; yes, sir. The CHAIRMAN. Any questions, Senator Long? Senator LONG. My recollection is that in my State, unless I am badly mistaken, the United States Employment Service is administered by our State department of labor, as far as the grants are concerned. Mr. PACE. I think that is correct, sir. Senator LONG. That seems to be the logical way to do it. There has been some complaint made by employers that a man could quit and be drawing unemployment compensation, when actually there was a job available to him, and that that would discourage people from wanting to go out and work, especially the kind that would be likely to be indolent anyway. At least this would have the advantage that the agency seeking to place a man would have the opportunity of knowing what the other agency was doing, rather than to have to work through two separate departments. Mr. PACE. That is a major advantage of the plan: that it provides an intelligent coordination of functions in an area where the responsibility should normally lie for placing people. In other words, the real question is: Is this something that is set up primarily as an insurance feature against unemployment, or is it something that is based on the primary desire to place people in jobs that may be available? Senator LONG. I had a complaint from an employer awhile back that he had a man working for him in a good job who had been working there for several years, and that the man quit his job in order to accept unemployment compensation for awhile. Now, of course, that would be against the regulations, for a man to just voluntarily quit and go on unemployment compensation. By putting these functions in one department and in the same agency, you make it easier to catch the people who are actually not entitled to that type of compensation. Is that right? Mr. PACE. That is correct, I think; and I will ask my staff to check me if I am incorrect. I think that it is provided that those who seek unemployment compensation must first make application before the USES; and consequently the coordination of those two in the Labor Department would eliminate generally the possibility that any such thing as you describe might occur. Senator LONG. And, furthermore, if a man is unemployed, as I understand it, he is not entitled to unemployment compensation if he refuses to accept decent employment. Is that not the effect of the regulation as it stands today? Mr. PACE. That is correct. Senator LONG. And once again, by having the two functions administered by the same agency, one would know whether a man had refused to accept reasonable placement or not. Mr. PACE. That is correct. Senator LONG. Thank you very much. The CHAIRMAN. Senator Ives. Senator Ives. Any observation I have I would rather reserve until we had the representatives of the Department of Labor before us, because I do not believe Mr. Pace would want to answer the questions which I am likely to raise. I do want to point out, however, Mr. Pace, that from the standpoint of organization obviously these two agencies-the USES and Unemployment Compensation-should be under one single head. I mean, I do not believe anybody can challenge that very effectively. Mr. PACE. That is correct. Senator Ives. But there seems to be a question as to the advisability of putting them in the Department of Labor. I am not taking part in this controversy. I simply want to point it out. Management, as you may recall, is not inclined to favor placing them in the Department of Labor, because apparently they fear-and again I am not taking sides that they would not get the consideration in the Department of Labor that they would get under some other agency of Government or under some other department of Government. I am going into that, Mr. Chairman, when the representatives of the Labor Department are before us, because I am going to ask them some very leading questions as to purpose and intent. Mr. PACE. I would only like to comment, Senator, that our view of the Labor Department is that it is a public department; that while it is charged with certain responsibilities, it, like every other department, must accept all of the controlling areas of law and regulation of the Government. I also want to bring out one other point that I think is interesting purely from an administrative point of view, and that is that, for instance, in the State of New York these programs are administered by the Department of Labor. Senator IVES. Oh, yes. I am well aware of that. I worked very closely with them, as a matter of fact, in the State of New York. Mr. PACE. And the fact is that over a period of time in a number of States it has been administered by the various departments of Labor. Senator Ives. Please do not gather from the statement I just made that I am necessarily opposed to their being in the Department of Labor, but there are a few questions I may want to ask. The CHAIRMAN. Senator Smith? Senator SMITH. No questions. The CHAIRMAN. Senator Schoeppel? Senator SCHOEPPEL. Mr. Pace, I am a firm believer in tying in these Federal agency functions, where they apply to a State, as closely as possible with the State groups. Do you see anything in this plan that would not permit of a greater degree of cooperation than heretofore has been the case in a lot of these States in regard to the Federal Government? Mr. PACE. I do not, sir. In my judgment, it would be at least as close. The State has under the law, as you know, the primary responsibility, with the Federal Government operating primarily in the research, suggestion, and stimulus field. I would anticipate that there would be at least as close a relationship, and probably a slightly closer relationship, for the reasons that I previously stated in my testimony. I agree with you wholeheartedly that there should be the closest possible relationship in that area with emphasis on State functions. Senator SCHOEPPEL. The very thing that I was referring to a moment ago was a question which concerned the long range. Heretofore there have been some practices that have developed that have been a little distasteful and certainly have not made for the best administrative practices. It seemed to me that coordinating and grouping, as has been recommended here, should give, in line with your testimony, a greater degree of cooperative effort in checks and balances. Mr. PACE. That is exactly correct. Yes, sir. The CHAIRMAN. Any other questions? Thank you very much, Mr. Pace. We appreciate your appearance here. Mr. PACE. I certainly enjoyed appearing before your committee, Senator McClellan. The CHAIRMAN. Mr. Ewing, if you will now let us have the benefit of your views on plan No. 2, we shall be glad to hear from you. STATEMENT OF OSCAR R. EWING, FEDERAL SECURITY Mr. EWING. Mr. Chairman and members of the committee, Reorganization Plan No. 2 would transfer the Bureau of Employment Security from the Federal Security Agency to the Department of Labor. The Bureau of Employment Security administers the employment service and employment compensation functions now vested in the Federal Security Agency. I gave my wholehearted support to this plan. There can be no question, in my judgment, that the progressive denuding of the Department of Labor has been a serious mistake. Sound governmental organization requires that the labor functions of the Government be closely coordinated and the work properly directed. The United States Employment Service is primarily concerned with the placement of workers in employment, and clearly falls within the designation of "labor functions." That Service, accordingly, properly belongs in the Department of Labor. The unemployment-compensation functions should be administered by the same agency that administers the Federal Employment Service. We have had ample experience both with united and with separate administration of the Federal Employment Service and unemployment-compensation functions. I do not think anyone familiar with that experience can deny the overwhelming advantages of united administration. For this reason, I am convinced that the unemployment-compensation functions of the Federal Security Agency should be transferred to the Department of Labor along with the Employment Service functions. The CHAIRMAN. This is all now being transferred by plan No. 1 to this new Department. Mr. EWING. Yes, sir. The CHAIRMAN. And this plan No. 2, as I stated a while ago, immediately transfers it out into the Department of Labor. Mr. EWING. Well, just as a technical difference from what you said, Senator McClellan, I think that all plan No. 1 does is to change the name of the Federal Security Agency. It does not transfer anything in or out. The CHAIRMAN. It gives it departmental status, and under that plan it is not transferred anywhere. Now this plan, the second plan submitted, transfers it out into the Department of Labor. Senator Ives? Senator Ives. I believe at the present time you are administering, are you not, unemployment compensation? Mr. EWING. Yes, sir. Senator Ives. Could you tell us briefly, Mr. Ewing, the procedure you follow in the regulations which you have established pertaining to that particular function of your Agency? I have in mind there especially the question of merit or experience rating in unemployment insurance. I believe you handle that through regulations. Is that correct? Mr. EWING. I will have to get some help on that question. Could I call on Mr. Willcox, who is general counsel of the Federal Security Agency? The CHAIRMAN. Come around, Mr. Willcox. Mr. ALANSON W. WILLCOX (general counsel, Federal Security Agency). I didn't quite understand the question, Senator. I am sorry. Senator Ives. The question I raised was as to the procedure you follow in the functioning of the Agency in reference to unemployment insurance in the matter of merit or experience rating. Mr. WILLCOX. Those problems come up. Senator Ives. They come up; yes. But in the first place you determine the regulations or make the regulations that cover them, do you not? You have blanket authority, do you, to make those recommendations? Mr. WILLCOX. It is a matter of interpreting the rather complex provisions of the Federal statute that are involved. Senator Ives. I know they are complex, but they give you pretty broad authority; do they not? Mr. WILLCOX. No, sir. Let me make this clear. There are problems of interpretation that have at times been very difficult, but there is no discretion in the sense that any officer of the Agency has a choice. He has simply to interpret the Federal laws to the best of his ability. That has proved a very difficult process in some situations. Senator Ives. As I recall, the statute authorizes the establishment of merit or experience ratings on unemployment insurance. Mr. WILLCOX. Yes, sir. Senator IVES. That is not mandatory; is it? Senator Ives. It is not mandatory on your part. You do not have to; do you? Mr. WILLCOX. We have no control of that. They are established by State law. |