"So here, again, is raised the question of public policy. There is a norm, or middle ground, which dictates an impartial, balanced approach. Decisions must be in hands not too deeply influenced by special interests on either side. "Senator MUNDT. Is there anything in that that protects the man in his right to live in his own town and county, his home environment?

"Mr. ATKINSON. Yes, sir.

"Senator MUNDT. If he lives in Columbus, do you make him take a job in Cincinnati?

"Mr. ATKINSON. No, sir. There are many things, some of them stated in the law and some adopted by administrative methods. Being in political office, you are always most tolerant of the problem of the person who is coming to you in government, as you gentlemen know. We never required them to travel an unreasonable distance to take a job, or where their health would be impaired, or where their morals would be endangered. The standard phase is-health, welfare, morals. There were many other qualifications of that kind. Actually, the fact is that there is little or no policing of job referrals in the Employment Service of this country today. I am not talking about what the law says. In actual administration I know that in my State, and I am sure in other States, a person merely takes a job referral and maybe he doesn't show up where referred, but he returns to the employment office and says, "Yes, I went out there. It wasn't right;" and you accept his word and go on paying him benefits. The law doesn't say that, but reason and mercy and all the odds are with the benefit claimant, and it is rather natural. I think the restrictions of the law are made so that you can correct abuses rather than hew to the line coldly.

"Senator MUNDT. Your point is that if we keep the Employment Service where it is, there is apt to be a little bit more vigorous nudging to go out and go to work than if we placed it in the Department of Labor.

"Mr. ATKINSON. I sincerely believe that. You see, one Assistant Secretary of Labor is named by the CIO, and one is named by the A. F. of L., and the Secretary is never appointed unless he is approved by the great labor organizations. It is perfectly natural under his charter that he will be quite sympathetic to their viewpoints, such viewpoints as on these work-referral things. If I were on their side from a selfish standpoint I would follow the same policy that they do. I am not on their side. I think we both have to stand before the referee of the impartial public viewpoint.

"Senator MUNDT. The Security (Federal Security Agency) viewpoint is primarily in protecting the integrity of the fund to be sure that a man is not needlessly unemployed and living off a stipend.

"Mr. ATKINSON. I think it was well stated here that the Federal Security Agency has not been noted for its promanagement bias. It has been mostly friendly to the labor viewpoint, and we have to battle every inch of the way. On the other hand, it is set up as a neutral agency, and I think there is more likelihood of the neutral viewpoint finally emerging there, than there is in an agency that is charged with being solely responsive to labor.

"VELOCITY SPENDING THEORY CITED

"As to Senator Mundt's inquiry about preserving the fund, one of the most amazing statements made to me when I was first administrator was when a representative of the Federal Security office came out to Ohio and said, "This money is for velocity spending; this is to get spending power out into the hands of the people. We will never audit you on the payments made. If a man walks in and signs a slip, pay it to him. What do you care? We will never audit you. Get the money out. This is a spending-velocity law.' Believe you me, that pressure was put on me repeatedly.

"They weren't interested in conserving the fund too much, sir.

"Returning to benefit payments, I want to stress that the management viewpoint, in contrast to labor's is that after a reasonable period a man should accept referral to other work for which he is reasonably qualified and, as the law says, which would be something he could reasonably be expected to fill. He should be willing to work, and not cause his own continued unemployment.

"Is it the obligation of the unemployment-compensation system-and thus of Government-to carry a worker on benefits until his union gets him a union job? That is the heart of the whole issue.

"Out in the States we have just been through legislative sessions where a great effort was made by organized labor to strike out of unemployment-compensation laws the requirement that a benefit applicant prove that he is actively

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seeking work. This ties in with the same issue that you have heard debated here. To get rid of that requirement is one of the principal crusades of organized labor today. It is being waged both out in the States and here in Washington. "Most State laws require not only that a person must register for available Jobs, but he must do something on his own account to find a job. This provision is bitterly assailed by organized labor, which contends that all a man should be called upon to do is to register for work and then, relying upon the operation of his seniority contract or the union hiring hall or the business agent, step aside until his return to his union-provided job.

"Actually, very few jobs involving union membership qualifications ever clear through public employment offices. The unions want to control their placement. This is a perfectly understandable attitude, as far as the preservation and strengthening of union organization is concerned. But the public-policy question is whether the Government is justified in so operating the unemployment system so that the unions are thus specially served as a special interest before the bar of Government.

"I think it is interesting to note that S. 281, introduced June 2, 1949-I think you are all familiar with the bill, here is the docunrent-proposes to establish a system of Federal supplementary benefits to be administered in conjunction with State systems, and it is herein provided that no State shall be allowed to apply an actively seeking-work test if the Secretary of Labor finds that it should not be applied. To me, that is very significant. Here is the same issue, approached from the angle of having the Secretary of Labor carry out this policy of organized labor.

SECRETARY OF LABOR POWERFUL

"As a former State administrator, I can tell you that the State employment service systems are entirely dependent on-I will say entirely at the mercy of― the rules and regulations issued by the Secretary of Labor. In fact, no State has an employment-service law, in the proper sense of the word. State statutes simply say that the State administrators are to fully cooperate with the Federal official. The laws contain no policy statement or standards. The States must accept every rule and regulation governing in the minutest manner State employment service procedure.

"We are justifiably concerned that a department, so directly influenced by and responsive to labor's views, would promulgate placement policies allowing claimants to remain on the benefit rolls, rather than be referred to work openings. "One other item. It is my understanding that Secretary of Labor Tobin, before both the Senate committee and this committee, expressed the opinion that the Federal official administering unemployment compensation had little or no authority over experience-rating provisions and operations within rather precise ⚫ standards and limits set out in the Federal act. As a former State administrator, I can speak authoritatively, and with considerable feeling on this matter. The administering Federal official, whoever he may be, has State experience-rating systems at his mercy. I make the statement here that Social Security Commissioner Altmeyer made to me and others, a few days ago, to the effect that the Federal Administrator had it within his discretion to wipe out practically every experience-rating law on the books. There can be no question on this, and I am surprised that a contrary viewpoint has been so expressed by the Secretary of Labor.

EMPLOYERS URGED TO USE SERVICE

"Those of us whose job it is to act in the interests of management in these matters fully realize how important it is that employers use employment services. We encourage it wherever we can. If employers do not voluntarily come forward and place the job orders with public employment offices, obviously few benefit claimants can be referred to other jobs, and it is certainly an undesirable situation when idle people are not referred to a wide selection of available job openings.

"Thus, we are trying to sell the Employment Service to employers, but I assure you that our salesmanship efforts will be of no avail if employers understand that they are having to deal with Labor Department policies and practices. Justifiably or not, they have a deep apprehension as to the partisanship and the bias of this agency of Government, and I can surely tell you that the functioning of the Employment Service will be considerably retarded by placing it in a de

partment of Government under the suspicion of people who have jobs to offer. Proper functioning of unemployment compensation will be impossible, as a result. "Employers of this Nation want a successful joint functioning of the unemployment compensation and employment services.

"Such a program can be a stabilizing force in our economy, and thus be of great value to the whole country.

"Congress, we are sure, will not want to permit the intrusion of special-interest viewpoints, as against the common welfare.

"We ask only for the retention of administration of these two interrelated services in the hands of a neutral agency.

"That is in the interests of the common welfare."

STATEMENT OF HERMAN A. GRAY

(Member of the faculty of New York University, graduate division of public Service; formerly public representative on and chairman of New York State Advisory Council on Placement and Unemployment Insurance)

It is now generally accepted, both in principle and as a result of practical experience, that the administration of the Employment Service and of unemployment insurance should be in the same agency. They are complementary programs and both gain in economy and effectiveness through integration.

It is likewise now generally recognized that in the long view a fully rounded employment service has more to offer than unemployment insurance. The latter is at best a limited measure designed for temporary relief. Meeting the needs of the employer by fitting a worker into a job suited to his training and capacity has a value far in excess of cash benefits for a short period of time. The public has the right to expect an employment service which through effective placement based on expert knowledge of labor market conditions, through scientific vocational guidance and wise guidance will bring about maximum utilization of the country's labor force.

Consequently, it follows that in deciding where the administration should be placed the controlling consideration should be what is best for the Employment Service.

The Employment Service has much to gain by operating within the Department of Labor in close and integrated association with the activities already being carried on by the Department. This is not just because job placement is a labor function and logically belongs in the Department. It is rather that the Employment Service in order to operate effectively necessarily must have the aid of the other agencies within the Department and must utilize the products of their work. There need be no fear that placing the administration of the employmentsecurity program in the Department of Labor will introduce bias in favor of or against any group in the community. This is said on the basis of an extended personal experience with the administration of the placement service and unemployment insurance in the State of New York. From the very inception of unemployment insurance in 1935 both functions have been in the Department of Labor in the State of New York. As a representative of the public on the State's advisory council appointed by the Governor, and as chairman of that council for a period of 14 years from May 1935 to May 1949, I had direct personal contact with the administration. There has never been any suggestion that the State's department of labor has administered the program other than objectively and without bias. These years have seen marked changes in the structure of labor organizations, particularly the rise and growth of the CIO, with all of the tensions incident thereto. They have also been marked by shifts in the political control of the State government. Yet throughout these years no one has ever proposed that the administration of both unemployment insurance and the public employment service be taken out of the department of labor.

STATEMENT OF ROBERT E. HATTON, LOUISVILLE, KY., CHAIRMAN, KENTUCKY UNEMPLOYMENT INSURANCE ADVISORY COUNCIL

My name is Robert E. Hatton. I am a practicing lawyer in Louisville Ky. Today, I am addressing you, first as chairman of the Kentucky Unemployment Insurance Advisory Council, and secondly, as an individual who has long been interested in the unemployment insurance program. I have also been directed

by the Kentucky Unemployment Insurance Commission to present to you a resolution of that commission opposing the transfer of unemployment insurance and employment service to the Department of Labor.

Kentucky's advisory coluncil, like that of other States, is composed of representatives of the public, the employee, and the employer. All serve without compensation.

At a council meeting on July 18, a resolution was adopted as follows: "Whereas, the President of the United States by Executive order proposed the transfer from the Federal Security Agency to the Department of Labor of unemployment insurance and employment service; and

"Whereas this transfer will become effective unless action to the contrary is taken by the Congress of the United States, the Kentucky Unemployment Insurance Advisory Council, Commonwealth of Kentucky, composed of representatives representing the public, management, and labor, have this day opposed the transfer for the following reasons:

"1. The unemployment insurance and employment service are now being efficiently and impartially administered by the Federal Security Agency.

"2. This council is not of the opinion that the transfer would be in the interest of efficiency or economy.

"3. The Federal Security Agency is an agency dedicated to the welfare of the public in general and is not responsible to any particular segment of our public life; Be it further

"Resolved, That the chairman of the Kentucky Unemployment Insurance Advisory Council be directed to forward a copy of this resolution to the Kentucky Representatives in the Congress of the United States, to the chairman of the respective committees of the Senate and the House of Representatives of the United States, and to the Kentucky Unemployment Insurance Commission.

"The persons to whom this resolution is forwarded should be advised that the action of the Kentucky Unemployment Insurance Advisory Council was not unanimous; that the employee representatives dissented for the following

reasons:

"1. The transfer was recommended by President Harry S. Truman and Vice President Alben W. Barkley upon the recommendation of a commission commonly known as the Hoover Commission, which after much study recommended the change be made in the interest of greater efficiency and economy.

After the action of the advisory council the Kentucky Unemployment Commission considered the question. Kentucky's commission, like those of other States, consists of: the chairman, representing the public; V. E. Barnes; an employee representative, Omer Stubbs; and an employer representative, John C. C. Mayo.

Kentucky's commission is unique in at least one respect. It is, I believe, the only commission in the Nation, whose present personnel is identical with that of the original commission. Except for a 4-year period, 1944-48, these same members, V. E. Barnes, Omer Stubbs, and John C. C. Mayo have served continuously, under 4 governors, since their appointment in 1937.

For that reason, if for no other, their resolution is entitled to particular weight. The resolution is as follows:

"Whereas the President of the United States by Reorganization Plan No. II proposes the transfer of the unemployment compensation and the employment service programs from the Federal Security Agency to the Department of Labor; and

"Whereas such transfer will become effective unless such plan is rejected by the Congress of the United States; and

"Whereas the Kentucky Unemployment Insurance Commission, after having carefully considered such proposed transfer, is of the opinion that:

"1. Such programs are now being efficienctly and impartially administered by the Federal Security Agency;

"2. It would not be in the best interest of such programs, which were enacted in the interest of the general public, to be administered by a special interest agency such as the Department of Labor;

"3. Such transfer would be a long stride in the direction of the ultimate federalization of such programs and the complete elimination of the present FederalState system of administration;

"4. Such transfer would materially weaken and result in the ultimate total elimination of employer experience rating;

"5. The transfer of such programs to the Department of Labor would ultimately result in complete subordination to the interests of labor at the Federal level, of these Federal-State agencies and activities which were designed and established to serve the joint interests of the public, industry, and labor;

"6. Such transfer would not be in the interest either of efficiency or economy. Now therefore, be it

"Resolved, by the Kentucky Unemployment Insurance Commission, That the said proposed transfer of the unemployment-compensation and employment-service programs from the Federal Security Agency to the Department of Labor is thoroughly disapproved of as being contrary to an efficient and impartial administration of such services, and as being potentially destructive of the entire present programs of Federal-State cooperation in the work of such agencies and activities; and be it further

“Resolved, That the Congress of the United States be, and the same is hereby, respectfully petitioned to reject the said proposed transfer under Reorganization Plan No. 2 of the President of the United States; and be it further

"Resolved, That copies of this resolution be forwarded to the President, and to the Vice President of the United States; and that copies be forwarded to the United States Senators and Members of Congress from Kentucky, and to Hon. Earle C. Clements, Governor of this Commonwealth, and to the unemployment-insurance commissions of the several States, urging their support and assistance in bringing about the rejection of said proposed transfer. "This resolution adopted at the offices of the commission, Frankfort, Ky., this the 20th day of July 1949.

"V. E. BARNES,

"Executive director. "JOHN C. C. MAYO, "Associate director. "OMER C. STUBBS, "Associate director.

Now, having presented for your consideration the formal action of Kentucky's advisory council and Kentucky's commission, I am going to take the liberty of addressing you as an individual who is deeply interested in the unemploymentinsurance program.

I was appointed as the first executive director of Kentucky's Unemployment Compensation Commission. This office I continued to hold until my successor, V. E. Barnes, was appointed.

I served as general counsel of the commission until 1939.

From 1939 to early 1942 I maintained my close contact with the commission by serving in an advisory capacity without compensation.

In 1948, after having returned from the armed services, I was appointed a public representative on the advisory council and in 1949 was, as an employer representative, elected chairman of the council, which position I now occupy.' These personal references are given to justify my remarks here as an impartial witness.

As an individual, I oppose transfer of Unemployment Insurance and Employment Service to the Department of Labor.

In taking that position I wish to emphasize at the start that I mean to cast no reflection upon the very able, efficient, and public-spirited gentleman from Massachusetts who now graces the office of Secretary of Labor. Nor do I intend by my views to reflect upon the judgment of the members of the Hoover Commission.

Late in 1934 the committee on economic security recommended to President Roosevelt the broad outlines of the original Social Security Act, proposing to place its administration in the Department of Labor. This recommendation the President adopted in his message to Congress on January 11, 1935, in which he stated:

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