Insofar as cost of administration is concerned, the proposed transfer would appear to require additional expense as new regional offices under the Federal Security Agency would have to continue to administer the various other sectors of the social security program. Reorganization Plan No. 2 would result, I believe, in an important division of responsibility for the administration of the whole social security program which, from the standpoint of efficiency and cost, should be intimately integrated. I hope, therefore, that you will agree with me that the present satisfactory siuation, previously approved by Congress, should be continued, which will require the defeat of this particular proposal. With kindest regards. WILLIAM PRESTON LANE, JR., Governor. The Honorable WILLIAM L. DAWSON, WASHINGTON, D. C., August 3, 1949. Chairman, House Expenditures Committee, New House Office Building, Washington, D. C.: Tuesday in my testimony before your committee I referred to some 61 pages of rules and regulations issued by the Bureau of Employment Security to the State agencies. A member of your committee challenged my figure, stating that it should be 10 or 11 pages. I find that I was in error. In addition to the 61-page document there is another of about 300 pages upon fiscal and budgetary management relations. Another of about 100 pages involving the Wagner-Peyser plan, which States must sign. There is another Employment Service manual at least 3 inches thick printed on both sides of the page, and there are innumerable fiscal letters. Obviously, this yolume of control material provides abundant opportunity for Washington to orient reemployment and unemployment procedures in many ways. Will you please include this message in the record? EMERSON P. SCHMIDT, Chamber of Commerce of the United States. PALO ALTO, CALIF. The Honorable CHET HOLIFIELD, Chairman, Subcommittee on Executive and Legislative Reorganization, House Office Building, Washington, D. C. I have several long-established commitments in the West which prevent my appearance before the committee on the dates mentioned in your telegram. No doubt the committee will incorporate in its hearings the majority report upon the Labor Department made by the Commission on Organization of the Executive Branch of the Government. The Commission pointed out that the Labor Department has been steadily denuded of functions at one time established within it. It pointed out that good organization to prevent waste, overlap, and conflict require grouping of agencies as to their major purpose. It pointed out that the Department of Labor was originally created by the Congress for the exact purpose of bringing these agencies together. They are now diffused over many parts of the Government. The Commission pointed out that the overhead of the Department, in staff and expense is equal to several other major departments of the Government, some of whom administer funds 100 times as great and have employees 100 times larger with the same overhead. With such overhead staff, the Department could better administer the various labor agencies than by diffusion over the Government. On pages 9 and 10 of that report, we enumerated the agencies which we believe should be placed in, or restored to, the Labor Department. We stated that these functions were more nearly related to the problems of labor than they were to those with which they were associated in other agencies. The President's Reorganization Plan No. 2 does not transfer all of the agencies we recommended, but so far as the plan goes, I can endorse it. I would like to suggest to the committee that it might call Mr. James Rowe, Jr., a member of the Commission who is a resident of Washington and who is familiar with the studies of the Commission. HERBERT HOOVER. Hon. WILLIAM L. DAWSON, FEDERAL SECURITY AGENCY, Washington 25, D. C., August 3, 1949. Chairman, Committee on Expenditures in the Executive Departments, House of Representatives. DEAR MR. CHAIRMAN: I should appreciate the inclusion in the record of hearings before your committee of an expression of my wholehearted endorsement of Reorganization Plan No. 2 of 1949. The labor functions of the Government should be closely coordinated. The United States Employment Service is concerned primarily with the placement of workers in jobs, and clearly is a major labor function of Government. Accordingly, it should be a part of the Department of Labor. Experience has shown that the Bureau should remain intact, since its two main functions are so closely interlocked in purpose and effect. Each reacts on the other, and they cannot be separated without damage to both. As for the Veterans' Placement Service Board, I believe there is no need for me to elaborate upon the reasons already advanced before your committee in support of the transfer of its functions to the Department of Labor. I am în complete accord with the President's proposal. Sincerely, OSCAR R. EWING, Administrator. COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC., Hon. WILLIAM L. DAWSON, Chairman, Committee on Expenditures in the Executive Departments, House Office Building, Washington, D. C. MY DEAR CONGRESSMAN DAWSON: We shall greatly appreciate your placing in the record the following expression of opinion by this association with respect to the proposal in the President's Reorganization Plan No. 2 on which the House Committee on Expenditures in the Executive Departments is now holding hearings, that the United States Employment Service and the Bureau of Employment Security be transferred to the Department of Labor. Such a move, as you know, would be contrary to the uniform policy of Congress since 1947 when it returned to the Federal Security Agency those employment-service activities which had been operated by the Department of Labor as a temporary war measure. The Commerce and Industry Association of New York, Inc., represents approximately 4,000 business firms in the New York metropolitan area. Its membership is a cross section of business life in this area, both as to diversity in industries and size of firms. At least three-fourths of our member firms employ less than 25 people. The implications of the proposal under the President's Reorganization Plan No. 2 have been studied carefully by the association's committee on social security, a group of employers in New York who devote the greater part of their time to the field of social security. NEED FOR IMPARTIAL ADMINISTRATION Since public interest is paramount, these two services should not be administered by any agency which has as a statutory responsibility the advancement of the interests of either the employee or the employer. It is the statutory responsibility of the Department of Labor "to foster, promote, and develop the welfare" of the employee. NO INDICATION OF ECONOMIES An essential part of any reorganization plan is that it effect a saving. Merely transferring these two functions from one agency to another can result in no economy. The Department of Labor can take no action to effect savings which cannot be accomplished equally in the Federal Security Agency. On the contrary, previous experience has indicated that operation under the Department of Labor results in higher cost. ATTEMPT TO FEDERALIZE THESE PROGRAMS Support of the proposal comes chiefly from the Department of Labor and the national labor unions, whose interests have as their objective the complete federalization of both the Employment Service and the unemployment compensation program. The national labor organizations' support of this proposed transfer to the Department of Labor is based on their obvious conclusion that the Department will adopt policies and procedures which ultimately will bring about practical federalization to the greatest extent possible. The business community is opposed to federalization of either activity, and Congress consistently has defeated attempts to accomplish such an objective. EFFECTS OF FEDERALIZATION It is interesting to note that when the Employment Service was under Federal control, employers lacked confidence in its operation and were most insistent that the service be returned to the States. If these two services were transferred to the Department of Labor, employers again would have the feeling, well founded or not, that partisan administration of these programs would result. In consequence, there would not be as much use made of the Employment Service, thus reducing its effectiveness. For these reasons the Commerce and Industry Association of New York strongly believes that the Committee on Expenditures in the Executive Departments should reject the proposal in Reorganization Plan No. 2 to transfer the United States Employment Service and the Bureau of Employment Security to the Department of Labor. We believe the proposed transfer of these Federal responsibilities would be detrimental to the public interest with no indication, on the basis of past experience, that it would result in economies. This proposal should be defeated if only in the interest of economy, on which presumably the teorganization plan is predicated. Yours sincerely, THOMAS JEFFERSON MILEY, HOUSE OF REPRESENTATIVES, COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, Washington, D. C., July 29, 1949. Hon. NEIL J. LINEHAN, Room 411, Old House Office Building, Washington, D. C. DEAR CONGRESSMAN LINEHAN: I have received your note advising that other committee assignments will prevent your appearance before the Committee on Expenditures during the hearings on the Reorganization Plan No. 2 of 1949. It will be a pleasure to assure you that any statement you forward will be incorporated into the record. Hoping this answers your inquiry, I am, THOMAS A. KENNEDY, General Counsel. Hon. WILLIAM L. DAWSON, HOUSE OF REPRESENTATIVES, Washington, D. C., August 5, 1949. Chairman, Committee on Erpenditures in the Executive Departments, DEAR CHAIRMAN DAWSON: I should like to take this opportunity to endorse President Truman's Reorganization Plan No. 2. This plan proposes to transfer the Bureau of Employment Security from the Federal Security Agency to the United States Department of Labor. Since the functions which are to be transferred are more closely interrelated with the mission of the United States Department of Labor, I believe that it is the proper depository for these facilities. The Federal Security Agency has its major activities centered in other fields, and the Bureau of Employment Security sho.id not be continued within that agency. When the proposed transfer is effectuated, I feel confident that, under the capable administration of Secretary Maurice J. Tobin, the Labor Department will being its long-delayed and much-needed advance into more worth-while areas. From these efforts there will redound benefits to employer-employee relations and the general public. Sincerely yours, NEIL J. LINEHAN, Member of Congress, Third District, Illinois. AMERICAN MERCHANT MARINE INSTITUTE, INC., House Resolution 301-Disapproval of Reorganization Plan No. 2 of 1949Transfer of Bureau of Employment Security from Federal Security Agency to Department of Labor. Hon. WILLIAM L. DAWSON, Chairman, House Committee on Expenditures in the Executive Departments, DEAR CONGRESSMAN DAWSON: The American Merchant Marine Institute, Inc., is a trade association composed of 66 United States steamship companies which own and/or operate approximately 8,000,000 gross tons of American-flag shipring, consisting of dry-cargo, tank, and collier vessels, in the domestic and foreign trades of the United States, representing nearly three-fourths of the oceangoing tonnage of the United States and employing about three-fourths of the United States seagoing personnel. We understand that your committee is now holding hearings on House Resolution 301, which would provide for disapproval of President's Reorganization Plan No. 2. This plan would transfer the Bureau of Employment Security from the Federal Security Agency to the Department of Labor and vest in the Secretary of Labor the functions of the Federal Security Administrator with respect to employment services and unemployment compensation; i. e., unemployment insurance. The plan would also transfer to the Secretary of Labor the functions of the Veterans' Placement Service Board and its Chairman and abolish that Board. The institute opposes Reorganization Plan No. 2, and therefore desires to go on record as favoring the adoption by the House of House Resolution 301. We respectfully request that this letter be made a part of the record of the hearings. While it is true that the Hoover Commission on Organization of the Executive Branch of the Government did recommend the transfer of the Bureau of Employment Security to the Labor Department, the task force employed by the Hoover Commission to study the functions involved did not recommend this transfer, but took a neutral position. Our principal objections to the proposed transfer of the Bureau of Employment Security from the Federal Security Agency to the Department of Labor are as follows: The institute strongly believes that the administration of social security and of each of its constituent parts should be under the supervision and direction of public officials who are appointed and whose sworn duty is to represent the general interest of the public rather than the special or partisan interest of any particular group. The United States Department of Labor has been admittedly established to advance and promote the interests of the wage earners. There is a serious question as to whether or not it can act impartially in the administration of a program when it is under congressional statutory direction to advance the particular and special interests of labor. It is a recognized fact that the conduct of the Department of Labor over many years has resulted in a strong feeling on the part of business interests that it is biased and prejudiced in favor of labor. As this is the general feeling of business interests, the transfer of the Bureau of Employment Security to the Department of Labor would seriously jeopardize the effectiveness of the public employment service as an instrument for obtaining jobs for unemployed workers. This is: the necessary result if employers lack confidence in the public employment service system or feel that it is being operated under policies which have been promulgated in view of the special objectives of labor demands. Congress itself has recognized that this is a factor to be considered in refusing to approve comparable proposals made in 1948 by President Truman to transfer the Bureau of Employment Security to the Department of Labor and by its refusal to approve the Presidential Reorganization Plan of 1947 which would have placed the Federal responsibilities in connection with the public employment system in the Department of Labor. Other evidences of this recognition by Congress of this special interest purpose of the Department of Labor were reflected by the removal of the Mediation Service from the Department of Labor and establishing it as an independent agency, as well as by the refusal of the Congress to subject the Administrator of the Fair Labor Standards Act to the supervision of the Secretary of Labor, as proposed in a prior reorganization plan. It is therefore evident that the concern of employers as to the impartiality of the administration of the unemployment compensation program, insofar as the responsibilities of the Federal Government are concerned, is a real one and not just a prejudice or opinion. It is a recognized fact that over a period of several years and to date the Assistant Secretaries of Labor have been appointed directly from the ranks of the Nation's two major labor organizations. No Secretary of Labor has been appointed for the past many years to office without the wholehearted endorsement of one or both of these labor organizations. Without debating the desirability or propriety of this practice, it should be recognized that such individuals are necessarily amenable and responsive to the policies and programs advocated and advanced by the major labor organizations. Even if such officials endeavor to act impartially, there would be criticism of any decisions which they might make. Such criticisms would in turn materially affect the ability of the public employment service to properly perform its functions. The institute is firmly of the opinion that the testimony of the advocates of plan No. 2 lacks substantive merit. For many years, there has been, where called for, cooperation between the Bureau of Employment Security-while controlled by the Federal Security Agency-and the Bureau of Labor Statistics, the Women's Bureau, the Bureau of Apprenticeship, and the Bureau of Labor Standards. The really only necessary relationship with the work of any of these bureaus or with the work of the Wage and Hour Bureau is largely limited to the exchange of the statistical information with the Bureau of Labor Statistics. It is respectfully submitted that no "close relationship" can be shown between the Bureau of Employment Security and any of the bureaus or divisions of the Department of Labor, nor is there any need for such relationship, except for the exchange of statistical information. The Veterans' Placement Service Board is now operated as an integral part of the existing Bureau of Employment Security, with full recognition of the substantive rights of veterans, and the necessary close operating relationship is presently existing. On the other hand, the working relationships between the unemployment compensation and the assistance programs is a much more real one. Their policies and practices must be established and maintained so that the benefits provided under the respectve programs will not overlap or pyramid. No witness appearing in support of plan No. 2 has actually been able to describe, by example or case, any "operating relationship" between the Bureau of Employment Security and the bureaus and divisions of the Department of Labor. It has been a matter of broad generalization. The objective of reorganization plans is to attain efficiency and economy in Government. A strong case of efficiency must be made to justify increased expenditures. This cannot and has not been done by any proponent of plan No. 2. In fact, the approval of this plan would substantially increase the cost of Government. The record proves this for when the United States Employment Service was a part of the Department of Labor that Department established regional offices throughout the United States for the purpose of administering the functions of the Service. When these functions were coordinated and consolidated in the Federal Security Agency, the regional offices of that agency served for the purpose of administering such functions, and regional or field offices of the Labor Department were abandoned. Approval of the plan would result in the reestablishment of such offices without any corresponding decrease in the regional and field offices of the Federal Security Agency. Thus, from this standpoint alone, under plan No. 2 there would be an increase in expenditures of tax moneys. The Labor Department would also be subject to undue pressures to adopt rules and regulations pertaining to the operation of the public employment offices which might not be in the best interests of the public. |