Page images
PDF
EPUB

The CHAIRMAN. Do you wish to read it or do you wish to have it incorporated in the record and comment upon it?

Mr. DONNELLY. The statement is very brief, Mr. Chairman, and I presume that it would be better for me to read it. The CHAIRMAN. All right, sir.

STATEMENT OF JAMES L. DONNELLY, EXECUTIVE VICE PRESIDENT, ILLINOIS MANUFACTURERS' ASSOCIATION, CHICAGO, ILL.

Mr. DONNELLY. The Illinois Manufacturers' Association, which I represent, embraces over 4,000 member firms. The membership includes industries of all sizes-large, small and middle sized-engaged in a wide variety of production. The great majority of our members are small. Over 70 percent employ less than 200 persons. The impartial and efficient administration of the public employment facilities and the unemployment compensation fund is, of course, a matter of real concern to all Illinois manufacturers. In 1948 over $61,000,000 was collected from Illinois employers for the payment of unemployment compensation benefits. On June 30, 1949, the unemployment compensation reserve in our State, which has been built up exclusively through a tax on employers, was $503,541. Unemployment compensation benefits are now being paid out in our State at the rate of $12,000,000 per month.

The policies of the governmental agency engaged in the administration of the unemployment-compensation program will largely determine whether such program is to be used to stabilize employment and reduce unemployment in accordance with the objectives of Congress when the Social Security Act was adopted, or whether the program is to be used as a medium to encourage and promote various doctrines and philosophies which are inconsistent with that objective.

The Illinois Manufacturers' Association is opposed to the proposed transfer of the Employment Service and the Unemployment Compensation Service to the Department of Labor. Opposition to this transfer is predicated on the conviction, first, that the Department of Labor is not an impartial and unbiased agency; and, second, that the Employment Service and the Unemployment Compensation Service can be administered more efficiently, more impartially, and more economically under the Federal Security Agency than would be true under the Department of Labor.

*

*

It is a matter of common knowledge that the United States Department of Labor is not an impartial and neutral agency. Although the purpose of that Department, as stated in the congressional act creating it, was "to foster, to promote, and develop the welfare of wage earners of the United States *," the Department has become essentially a vehicle for the promotion of the views of the leaders of one organized minority, i. e., organized labor. Since the Department was established Secretaries have either been selected from the ranks of organized labor or from persons who have been approved by labor. On some, if not all, occasions, one of the Assistant Secretaries has been chosen from the ranks of the American Federation of Labor, one from the Congress of Industrial Organizations, and a third from an independent labor group.

94651-49-14

I believe that most employers, at least in Illinois, regard the Department of Labor as an agency which is engaged essentially in promoting the interests of one particular group-the promotion of the interests and viewpoint of the leaders of one element of our economy, namely, organized labor. They certainly do not regard the Department of Labor as an unbiased agency.

The issue involved in this proposed transfer is essentially the unbiased and economical administration of the unemployment-compensation program. The unemployment-compensation funds are raised exclusively by a tax on employers. The employers are depended upon to list job openings with the Public Employment Service in order to facilitate the reemployment of those being paid compensation benefits. Accordingly, the efficient operation of this whole program necessitates confidence by employers in the governmental agency which is administering the program.

Changes in State unemployment-compensation laws, under existing conditions, of course, are made by the various State legislatures. However, it is significant that over the years since the unemploymentcompensation program has been in effect the major proposed changes in these State laws have been advocated by spokesmen for organized labor groups. Generally, the changes so proposed have been designed to unduly increase the benefits and the scope of the State laws and make drastic changes in eligibility requirements. The proposals of organized labor, if adopted by the State legislatures, would in fact have made a dole out of the unemployment-compensation program.

Although, as indicated above, these changes have necessarily been advocated in the various State legislatures, they have been made in accordance with a National program which has had the general approval of the national leaders of organized labor groups. Conferences are held from time to time in Washington under the auspices of the Department of Labor to which the Labor Department invites not only the labor commissioners of each State, but also the heads of A. F. of L. and the CIO of each State. The policies agreed upon at these conferences reflect the viewpoint of organized labor. In the event, therefore, the Department of Labor should have the responsibility of administering the Unemployment Compensation and the Employment Services, it is reasonable to assume that the policies of organized labor would eventually, if not immediately, govern the administration of this whole program by the Department of Labor. Therefore, the conclusion is inescapable that if the proposed transfer is accomplished, the Federal Government, through the agency of the Department of Labor, and in collaboration with the leaders of organized labor, will engage in a program which will have the following objectives:

1. To completely federalize the unemployment compensation program.

2. To turn the unemployment compensation program into a dole system.

3. To pay unemployment compensation benefits to strikers. 4. To unreasonably liberalize the scope of the act as well as the payment of benefits under the unemployment compensation program. 5. To encourage idleness and malingering by unreasonably liberalizing the eligibility requirements.

6. To dissipate the reserve funds which have been accumulated solely through a tax on employers.

7. To destroy merit rating.

8. To increase the tax burden upon all concerned.

The Illinois Manufacturers' Association believes that the administration of the Unemployment Compensation program should be lodged exclusively with the various States. However, as long as the Federal Government continues to participate in the administration of that program, we favor retention of that responsibility in the Federal Security Agency. That agency is presumed to be dedicated to the welfare of the public in general and not to be responsible to any particular segment of our economy.

President Roosevelt, when he directed the transfer of the Employment Services from the Department of Labor to the Social Security Agency in 1939, made the following significant statement:

I find it necessary and desirable to group in a Federal Security Agency those agencies of the Government, the major purposes of which are to promote social and economic security.

***

The Commissioner of Social Security also stated:

When the United States Employment Service was transferred to the War Manpower Commission in 1942, it was a far stronger, sounder, and better service than it had been when the Board received it (from the Department of Labor) in 1939.

We are convinced that the transfer of the Employment and the Unemployment Compensation Services to the Department of Labor will not only mean less efficient and less satisfactory administration of those facilities, but would also mean a material increase in the cost of those operations.

We accordingly, respectfully urge the rejection by Congress of the proposed transfer of the Bureau of Employment Security to the Department of Labor.

I thank you.

The CHAIRMAN. Senator McCarthy, do you have any questions? Senator MCCARTHY. I would normally have some questions, Mr. Chairman, but there is very little time left and we have so many other witnesses, I think I will forego the opportunity.

The CHAIRMAN. Senator Ives?

Senator Ives. I would like just to clear up the same thing. I understand, Mr. Donnelly, you yourself indicate that you believe these two particular functions should be in one agency of Government.

Mr. DONNELLY. That is correct, sir.

Senator IVES. Never mind which agency it is for the sake of that particular point.

In the next place, on page 3 you indicate eight particular things which you are fearful might be espoused by the Department of Labor in connection with unemployment compensation. I would like to point out, as you yourself indicated here, but I would like to emphasize it, in each of these eight cases legislation either by the Federal Government or by the States or by both would undoubtedly be required before any of these could be accomplished, and whatever influence-please do not misunderstand me, I am not trying to take the Department of Labor's side on this, but I want to be fair. Whether or not these two functions were placed in the Department of Labor would have no bearing whatever on the decision the Congress would make on these particular points. I doubt very much that the fact that these particular functions were in the Department of Labor would add any influence that the Department of Labor might have in that connection. Please bear also in mind that I am not in sympathy with some of these eight points that you are talking about, either. I simply want to point that out.

Mr. DONNELLY. Senator Ives, I am afraid I wouldn't be able to subscribe completely to what you have said insofar as the influence of the particular agency that has the responsibility for administering this program is concerned. Although it is true that Congress in an abstract sense has a right to supervise all the activities of these various governmental agencies, as a practical day-to-day matter the policies of the men who have the immediate responsibility for administering these programs are the ones that are reflected eventually in the final result, in the end result, if you want to call it that. You take, for instance, the matter of merit it rating, which is one of the items I have indicated here, I believe you will find that there have been over 60 various regulations issued by the agency which at the moment had the responsibility for that program here in Washington.

Senator Ives. Sixty-one pages of them.

Mr. DONNELLY. Sixty-one pages? I knew it was a good many. That typifies the opportunities for changes in the law that are lodged in this agency that has this responsibility in Washington.

Senator Ives. You were not here yesterday, were you?

Mr. DONNELLY. NO.

Senator Ives. That was pretty well brought out in questioning yesterday. There is a certain limit beyond which they cannot go.

Mr. DONNELLY. Of course, we feel that if you accept my premise that the Department of Labor is a vehicle for one particular group, that that department, working with the representatives of that particular minority in the various States, can carry on a very effective program which eventually we believe would result in making a dole system out of this whole set-up.

Senator Ives. In that connection I would like to clear one thing up. I grant that the Department of Labor has that particular purpose, a basic obligation and responsibility in its organization. I would like to point out that I know of no group other than employees themselves who are more concerned with unemployment compensation. After all, it is for the benefit of employees.

Mr. DONNELLY. Yes.

Senator Ives. I think you know well enought how I stand on merit rating. There is no argument about that. I am for it. But there is no group other than employees which is so concerned with unemployment compensation. Primarily, if there be a department of government, if you are going to follow that line of argument, which is to look at the administration of this system, presumably if the interests of those who are involved in it are the primary consideration, that department should be the Department of Labor, if you want to be perfectly logical about it.

Mr. DONNELLY. I think that is quite true, Senator. I agree with that. But as a practical matter that Department has not at all times reflected the viewpoint of the great mass of workers, but rather the viewpoint of those who presumed to speak for those workers. It happens that in our State I have been active in State legislative matters ever since this program has been on our statute books, which has been, I believe, 12 years or more, and in each session the spokesmen for these groups that I have referred to this organized minority-have come down to our legislature and I believe to most other State legislatures, advocating programs which are in conformity with these eight objectives I have listed.

So I think you would agree agree that the conclusion is justified that if they had an agency down here which undertook to speak their viewpoint, the likelihood of those eight objectives being obtained would like to give the members of the committee the benefit of Mr. down here which spoke not only for that organized minority but primarily for the public. In effect, that is our position on this.

Senator Ives. I see your position, but I do not quite agree with your follow-through. I guess we had better not spend any more time on that. Thank you very much.

The CHAIRMAN. Senator Smith?

Senator SMITH. No questions.

The CHAIRMAN. Senator Long?

Senator LONG. I came in during the statement, and I have no questions.

The CHAIRMAN. Thank you very much.

Mr. DONNELLY. Thank you.

1

The CHAIRMAN. The next witness is Mr. Wrabetz. Will you come forward, please?

Senator MCCARTHY. Mr. Chairman, before Mr. Wrabetz testifies, I woud like to give the members of the committee the benefit of Mr. Wrabetz' background. He is one of our most outstanding citizens of Wisconsin. He is presently chairman of the industrial commission. He has been chairman since 1933. He has served under four different Governors of varying political philosophies. He was appointed chairman of the first Labor Relations Board of Wisconsin in 1937. He is president of the International Association of Industrial Accident Board Commissioners. He has been president since 1938 and 1939. Last year he received the civic service award from one of the two outstanding universities of the country, Marquette University.

The CHAIRMAN. Mr. Wrabetz, obviously from your background, training and experience you should be able to give us some good counsel this morning. I want Senator McCarthy to know that you are not the only constituent who has been bragged about since this hearing started. I had one of my own up here a day or two ago, a doctor from my State, and his testimony was splendid, indeed.

You may proceed, Mr. Wrabetz.

STATEMENT OF VOYTA WRABETZ, CHAIRMAN, INDUSTRIAL COMMISSION, STATE OF WISCONSIN, MADISON, WIS.

Mr. WRABETZ. I thank Senator McCarthy for his considerate recep tion. I suppose that my long service as a citizen of the State in these fields might be of some value to you. I hope that what I say may be taken for what it is worth.

I am here in opposition to Reorganization Plan No. 2, which proposes to transfer the Federal supervisory functions of these services

« PreviousContinue »