QUESTION OF CONFLICT Senator HILL. Are there any other questions? Off the record. (Discussion off the record.) Senator HILL. Thank you very much, Mr. Christensen. As you know, there have been some differences between your bureau and the vocational education people. Have you pretty well resolved those differences? Mr. CHRISTENSEN. I think it is proper to say that everyone concerned is satisfied that there is no question of conflict any more. Senator HILL. In other words, you think any conflict that has existed there has been now pretty well resolved? Mr. CHRISTENSEN. I do. Senator HILL. You must have had a Benjamin Franklin such as we had in the Constitutional Convention to help you out. Mr. CHRISTENSEN. We had a lot of workers who worked at it and they have cleared up any misunderstanding. Senator HILL. At one time there was quite some conflict there, I know, but you think all conflicts have been resolved? Mr. CHRISTENSEN. I feel confident, Mr. Chairman, that they have been. Senator HILL. That is very gratifying. Thank you very much, sir. Mr. CHRISTENSEN. Thank you. BUREAU OF EMPLOYMENT SECURITY STATEMENT OF ROBERT C. GOODWIN, DIRECTOR, BUREAU OF EMPLOYMENT SECURITY; ACCOMPANIED BY W. R. CURTIS, DEPUTY DIRECTOR; R. G. WAGENET, ASSISTANT DIRECTOR FOR UNEMPLOYMENT INSURANCE; WILLIAM U. NORWOOD, JR., ASSISTANT DIRECTOR FOR EMPLOYMENT SERVICE; FRANK JOHNSON, ASSISTANT DIRECTOR FOR FARM LABOR; H. DANIEL DARLING, DEPUTY ASSISTANT DIRECTOR, PROGRAM REPORTS AND ACTIVITY ANALYSIS; EDWARD L. OMOHUNDRO, CHIEF, VETERANS' EMPLOYMENT SERVICE; EUGENE LOVE, CHIEF, DIVISION OF BUDGETS AND FISCAL OPERATIONS; HERBERT A. MEYER, CHIEF, ESTIMATES AND EXPENDITURES BRANCH; JAMES E. DODSON, ADMINISTRATIVE ASSISTANT SECRETARY; AND U. S. HUDSON, DEPUTY ADMINISTRATIVE ASSISTANT SECRETARY PREPARED STATEMENT Senator HILL. All right, Mr. Goodwin, Bureau of Employment Security. We are glad to have you here, sir, and your associates. Mr. GOODWIN. What we would propose to do, Mr. Chairman, is submit for the record my statements and then I would like to make a few comments on each one of the appropriations that we have submitted, if that is satisfactory to the members of the committee. Senator HILL. That may be done. (The statement referred to follows:) STATEMENT OF ROBERT C. GOODWIN, DIRECTOR, BUREAU OF EMPLOYMENT SECURITY Mr. Chairman, with the committee's permission, I would like to make some general observations about the employment security program before discussing specifically each of our 1960 appropriation requests. I want to review briefly developments in the program during the recent period of high unemployment and what we expect for 1960. ADMINISTRATIVE IMPACT OF UNEMPLOYMENT The rise in unemployment during the recession was accompanied by very sharp increases in the number of claims for unemployment insurance between the early fall of 1957, and the spring of 1958. Initial claims in August 1957-at the beginning of the recession-totaled less than 850,000. In January 1958, initial claims reached their peak at 2.3 million-which is the highest volume in the history of the program. Insured unemployment rose from slightly more than a million per week in August 1957, to a peak of 3.3 million in mid-April of 1958. The number of different individuals dealt with in the program, when turnover among claimants is taken into account, reached a high of well over 5 million in April 1958. Before the recession-during fiscal year 1957-the highest number in any 1 month was a little over 3 million individuals. In total the volume of unemployment insurance work in the first months of calendar year 1958 had risen to nearly three times the volume of work in the late summer of 1957. It is difficult to maintain peak operating effectiveness when workloads rise so sharply. The State employment security agencies were confronted with serious operating problems when the claims workloads almost tripled in an 8-month period. It was not possible to recruit, train, and house enough new employees to carry on all phases of their work. Therefore, some functions were not performed as frequently as necessary and others were not done as well as we would have liked. Some of the local office functions which were curtailed involved a sacrifice of adequate protection against improper payments. Such functions as the testing of the eligibility of claimants, informing claimants of their rights and responsibilities under the State laws, and other functions required to protect Federal and State benefit funds must be brought to maximum operating effectiveness as rapidly as possible. I would not want this to be construed as criticism of the way in which the State agencies performed their jobs during the recession. The State agencies paid claimant's benefits more promptly than in any previous economic downturn and considering all circumstances did their job very well. However, we and the States believe that from this experience we can find out how to operate even better during such periods, and we are studying the problem for future applications. I would be remiss if I did not acknowledge the aid which we received from the Appropriations Committees and the Congress as a whole in meeting the problems of the past year. The speed with which the Congress made funds available to pay for increased administrative costs was invaluable in getting benefits paid promptly. EMPLOYMENT SECURITY AIDED RECOVERY The contribution of the Federal-State employment security program toward easing the burden of the recession has received widespread public recognition. No other program contributed as greatly in offsetting wage losses. Between August 1957 and May 1958, unemployment benefit payments offset about 30 percent of the net drop in wage income. During calendar year 1958 as a whole about $3.9 billion in Federal and State unemployment benefit payments were paid out through the employment security system. These payments were an important factor in maintaining consumer expenditures. TEMPORARY UNEMPLOYMENT COMPENSATION Early in the recession there was mounting public concern about the large number of workers who were exhausting their regular unemployment insurance benefits and were still unable to find a job. As the committee knows, the Con gress passed the Temporary Unemployment Compensation Act of 1958 to alleviate the problems of these workers. I would like at this point, Mr. Chairman, to give you a brief report of the accomplishments under this law. The original Federal plan enacted on June 4. 1958 (Public Law 85-441) for extending benefits was adopted by 17 States. In these States, all unemployed workers who exhaust their regular State or Federai unemployment benefits are covered. Eleven such States signed agreements to extend payments of TUC until June 30, 1959, under Public Law 86-7 enacted March 31, 1959. In addition, last year five States (Colorado, Connecticut, Illinois, Ohio, and Wisconsin) revised their own unemployment insurance laws to extend benefits temporarily. Since March 31, 1959, New York revised its own unemployment insurance law to extend benefits temporarily, thus withdrawing from the TUC program except for veterans, while Wisconsin discontinued payment of extended benefits under its law on March 31, 1959. Therefore under the original legislation 22 States paid TUC to all the workers covered by the State and Federal unemployment insurance programs of the employment security system for the extended period through March 31, 1959. Sixteen States agreed to extend these payments until June 30, 1959, under the extended program. In another 14 States the original Federal plan was adopted only for Korean veterans and Federal employees, but workers who exhaust their benefits under the State unemployment insurance laws receive no further benefits. Fifteen States agreed to pay extended temporary unemployment compensation benefits to Federal employees and veterans until June 30, 1959. Altogether, 36 States originally had programs for temporarily extending benefits to some or all covered workers who exhaust their regular benefits. Whereas 31 States now have programs to pay benefits through June 30, 1959, these programs apply to approximately 70 percent of all covered workers. For many eligible unemployed workers the potential maximum duration of benefits including temporary benefits is now 39 weeks-in Pennsylvania it is 45 weeks. From late June 1958, when the program started, through March 1959 an estimated 1,512,000 workers have received approximately $426 million in unemployment compensation payments under the Federal temporary unemployment compensation program. In addition, approximately 382,000 workers received $110 million in unemployment compensation payments in the five States which adopted their own program. Thus, a total of $536 million has been paid in temporary benefits to 1,894,000 workers. The average duration of temporary benefits has been 9 weeks, and the average weekly benefit amount $31. By June 30, 1959, it is estimated that about 1,900,000 workers will have received $630 million in temporary unemployment compensation payments. Of this amount, approximately $500 million will be under the Federal program. I would like now to discuss some of the problems we face in the aftermath of the recession, and what lies ahead as we see it. ECONOMY GAINS As you know, many sectors of the economy have already recovered from the 1957-58 recession and begun to establish new highs. Gross national product, for example, which measures the value of goods and services produced in the country, show that as far as overall production is concerned the economy in the fourth quarter last year was about where it had been before the recession began. In the first quarter of this year, gross national product was at an all-time high, at a seasonally adjusted rate of $465 billion. The rate for the present quarter will probably be even higher. A number of other important indicators of economic conditions have recovered from the recession and are establishing new records. Among these are industrial production, personal income, construction, retail sales, average weekly earnings of factory workers, and average factory hourly wage rates. IMPROVEMENT IN UNEMPLOYMENT LAGS However, unemployment still lags behind other indicators of well-being, despite a better than seasonal improvement between March and April. In April, total unemployment was estimated at 4.4 million on a seasonally adjusted annual rate of 5.8 percent of the work force. This is considerably above the prerecession level of 2.5 million unemployed and 3.7 percent, which was experienced in fiscal year 1957. Unemployment usually lags when the economy is recovering from a downturn, partly because employers first increase production by lengthening the hours worked by the employees still on their payroll, and partly because output per worker usually rises in this stage of the business cycle. Another important factor ending to keep unemployment relativly high is that the labor force continues to expand, even during a recession. As a result we need some 600,000 to 700,000 additional job opportunities every year to keep unemployment from increasing. EMPLOYMENT SERVICE EVALUATION AND IMPROVEMENT During the past few months, we and the State agencies have undertaken an analysis of employment service programs and operations as related to recent eco30mie fluctuations and current labor market conditions. We recognize that the irst responsibility of the employment security program is to bring together the employer who needs a worker, and the worker who wants a job. In order to analyze the placement activity and focus attention on improving the employment service we held a national meeting of State administrators and employment servce directors in Kansas City, Mo., in December. Through this meeting we atempted to draw out the best thinking of these people who operate the employment service across the country as to how services to workers and employers can be mproved. At this point we have really just set our sights on employment service improvement and agreed upon a few of the avenues toward this end. I hope to have a report of some definite progress for you at this time next year. BUDGET ASSUMPTIONS FOR 1960 In preparing the budget requests which we are discussing today we have estimated that the uptrend in economic activity will continue at a steady but moderate rate in 1960. We have also estimated that this expansion will gradually reduce the volume of insured unemployment. Specifically, we have estimated that insured unemployment will average 2.1 million per week in 1960. It is always difficult to predict precisely what the future economic developments will be. It is particularly difficult when the economy is beginning a new period of expansion, because the future speed of the recovery now underway cannot be determined. Our appropriation requests for 1960 are those which will be required in a moderately expanding economy with developing job opportunities, and gradually declining unemployment. In the event that insured unemployment declines and claims workloads are somewhat lower than have been estimated, job opportunities should be more plentiful. In such a situation, the employment service workloads in the budget would be too low. As a matter of fact, our actual experience in the last 2 or 3 months indicates that insured unemployment is already below the level we had estimated for fiscal year 1960. (February seasonally adjusted was at an annual rate of about 1.9 million insured unemployment and March at approximately 1.8 million, while placements are running well in excess of our fiscal year 1960 estimate. Seasonally adjusted the annual rate of placements in February was 6,150,000 and in March 6,650,000. SALARIES AND EXPENSES APPROPRIATION ESTIMATE "For [expense] expenses necessary for the general administration of the employment service and unemployment compensation programs, including temporary employment of persons, without regard to the civil-service laws, for the farm placement migratory labor program; [$6,219,000] $7,262,000, of which [$1,145,800] $1,252,000 shall be for carrying into effect the provisions of title IV (except section 602) of the Servicemen's Readjustment Act of 1944." Amounts available for obligation Enacted appropriation or estimate. Proposed for later transmission: For pay act costs authorized by Public Law 85-462.. For new program legislation: Federal administration of Ex-Servicemen's 85-848. Total direct appropriation or estimate.. Obligations by activity |