In the early days of the study of this program, in 1934, the feeling of the Advisory Committee on Employment to the Federal Coordinator was that every step should be taken to stabilize railroad employment; and that a very important tool in the study and development of such stabilization should be a separate railroad unemployment insurance measure and, coupled with it, a railroad placement service. This would permit the problem of statistics, the problem of handling of the actual transfer of workers from one railroad to another or their placement in any other way which would contribute to railroad stabilization, to be in a single agency, so that the controls and policy could be more satisfactorily determined. In other words, if a job is to be done in the stabilizing of railroad employment, one of the most important things we need to know is just what is the record and what are the possibilities of bringing about that stabilization. A separate placement service for the railroads, coupled with a separate unemployment-insurance plan for the railtoads would add greatly in bringing about that development. Mr. REECE. Does this bill have a placement provision in it, as well as an unemployment provision? Mr. BROWN. It provides, sir, for the establishment, to the extent necessary, of special placement facilities. In the case of any unemployment insurance measure it is desirable that there be attached to the unemployment insurance, which is the benefit-payment machinery, also the machinery of placing the worker when unemployed. It works in this way, sir, that, providing there is a benefit to be paid, then the employee has an interest in appearing as frequently as necessary with the placement officer, and, if the placement officer, in turn, is the officer that handles the payment of the benefit, he has in hand more adequate information as to the qualifications for reemployment of the persons unemployed. Mr. REECE. Does the replacement provision contemplate the replacement of employees on the respective railroads on which they hold seniority rights, or does it contemplate breaking down the seniority rights on the various railroads and pooling them into one organization? Mr. BROWN. As I understand it, there is no provision which would lead to the breaking down of seniority rights. Of course, I should prefer to have that question asked of someone who has made a more detailed study of those points. But, as a matter of policy, and as provided in the bill, there would be an arrangement for clearance between the machinery for specialized railroad placement and the machinery for placement in outside employment where that was necessary. A railroad employee would not necessarily merely await railroad reemployment but would have open to him, naturally, the full service of the country in placing him in other work. Mr. REECE. Would he be required to take work in some other industry than the railways? Mr. BROWN. That is taken care of, sir, in the provisions--I do not recall the particular section-about suitable work; that is, that there are certain tests, as to when he shall be required or may refuse to take other employment. Mr. REECE. I do not wish to divert you from your planned statement. Suppose you proceed with your prepared statement. Mr. BROWN. There are other problems, but I do not know how far you care to have me go into them. For example, there is, of course, the special problem of establishing a system of this sort at a time when State unemployment-insurance administrations are at work. I believe that the arrangements whereby certain reserves are to be transferred to the railroad unemployment-insurance account seem to be entirely reasonable. Every unemployment-insurance administration faces the problem of beginning to pay benefits at some stage of the business cycle. It is desirable, of course, that there be a period of increased business, during which a reserve of contributions be built up, so that the unemployment insurance benefits do not begin to be paid at the trough of the cycle, when they would be highest. In starting a railroad unemployment insurance administration at this time, therefore, it is desirable that funds collected under State administration be made available to the Railroad Unemployment Insurance Administration to the extent these collections were from railroads or their employees. This would mean that a measure coming into effect as of the time of this bill would have certain funds with which to begin the payment of benefits. And that is a reasonable arrangement. In other words, you cannot begin paying benefits the first day that the collections go into force. There is a necessary period of collection before the benefits can be paid. I believe, sir, those are the principal points which I care to make. I have not had an opportunity thoroughly to familiarize myself with every detail of this bill, and there are undoubtedly many other provisions which call for comment or analysis. There may also be many questions about the detail of the bill which I could not profess to answer. I have, therefore, limited this statement to the central features of the bill which seem to me to be sound and to represent a very progressive step in the development of unemployment insurance in this country. I would like to emphasize in closing that I do feel it is highly important and advantageous that there be a separate unemploymentinsurance bill for railroad workers. As a student of unemployment insurance I feel there are certain advantages, even apart from the railroads and their employees. I feel it would be advantageous in this country to have a Federal unemployment-insurance program for a single industry such as this, as a means of developing better understanding of the best means of handling unemployment insurance. I know that I have many colleagues who would agree with that, that under such a bill as this, with its particular advantages as to simplicity and possible effectiveness of administration, it would be definitely in the public interest to have such a bill on the statute books as a means not only of doing a better job for railroad workers but of helping us to do a better job for all workers throughout the country. Thank you. Mr. HAY. Mr. Chairman, may I ask a question? I would like to ask Dr. Brown, if I may, to direct his remarks to the daily benefit provision. Mr. BROWN. Yes. Mr. HAY. I would like the committee to have your views on that. Mr. BROWN. I forgot to mention that. There is in this bill the arrangement that benefits be based on days of unemployment. There is quite a bit of history behind that. In all of our States we are attempting to use weeks of unemployment and, in some States, to use weeks for partial unemployment. Partial unemployment benefits, unfortunately, are becoming serious headaches in a good many States. I feel very definitely that this arrangement of using days of unemployment is much more simple and effective. I came to that conclusion first in the study of the British unemployment insurance 2 years ago, and I found, after a discussion with not only their chief officials in London, but also many operating officials in the various exchanges, that they could operate with respect to days of unemployment in a far simpler and more effective way. Mr. REECE. Could you give us a concrete example as to just how that works, Doctor? Mr. BROWN. Well, let me state the principle first, that is, that a man knows if he is at work for a day, or if he is not at work for a day, but it is very difficult to say whether he has earned half his normal weekly wage or something of that sort, or whether he has worked half his normal weekly hours. In other words, in all of our minds we know whether we worked on Saturday or not. We know whether we worked on Wednesday or not. So that we start with a thing that is simple in the mind of the man and, therefore, simple in the mind of the employer and administrator, which is, Did this man work today? When you come to provide benefits you require first that there be a waiting period of a certain number of days-not weeks, but days. Then, following the fulfillment of the waiting period, the benefit is paid for a certain number of days of unemployment. A man can tell definitely for how many days in a half month he is totally unemployed. He can very seldom tell whether he has had a week of partial unemployment as defined in the State laws. Benefits will be paid for each day of total unemployment in excess of 7 during any period of 15 days. So that it is as simple as taking a calendar, if you are a railroad worker, you can have a little calendar and scratch off the days that you work in a period of 15 if you are on very short-term employment, and then you can take the days that you are unemployed and find out the number of days for which benefits are payable. Mr. MARTIN. May I ask how Sundays and other holidays are treated or computed? Mr. BROWN. In the over-all arrangement, those are thrown in the 15-day period, and the computations are adjusted to allow for unemployment on Sundays or other holidays. Of course, in the railroad industry so many people do work Sundays or holidays that it is possible to take the full 15 days and check it off in that way. .. I would say that, from the point of view of administration, it is highly important to have an arrangement that the man can understand, because a great deal of the feeling of insecurity which a man has is due to his ignorance, his lack of abilty to understand the very protective arrangement which has been set up for him. Mr. MARTIN. Mr. Hay the other day gave us a formula that no one but an Einstein could understand; a fourth-dimension affair. Mr. BROWN. Yes. I believe he took that out of a State act. I can cite many of those, sir. Mr. QUINN. Your theory as to the desirability of a Federal agency to handle railroad unemployment insurance is the same as it would be for any other interstate business? Mr. BROWN. I feel, sir, that there are long traditions separating out the railroads and while I do not hold any definite long-run brief in principle as to just where that delimitation comes, say in the border line of interstate busses or trucks, I do feel, as of this time, that we do have pretty definitely earmarked the railroad industry and railroad employees, so that it would probably be a very reasonable line of delimitation to make this, as it is, a railroad bill. Mr. CROSSER. Thank you, Doctor. Mr. BROWN. Thank you, Mr. Chairman and gentlemen. Mr. CASHEN. Mr. Chairman, on behalf of our committee, we desire to rest our case at this time. I see that we have about an hour and 10 minutes remaining. I should like to rest with the understanding that we may use that time later in rebuttal to statements by the opponents of the bill, if it becomes necessary. Mr. CROSSER. I think that will be satisfactory. Is Mr. Farquharson here? I believe he asked to be heard. Colonel Young, will you proceed with the opposition to this bill? STATEMENT OF C. D. YOUNG, REPRESENTING THE Mr. YOUNG. Mr. Chairman and gentlemen of the committee, I am here testifying on behalf of the Association of American Railways. My personal representation here is brought about through the fact that a year or so ago the association selected me among others to represent them in negotiations with labor, to try to bring forward to you gentlemen a retirement act. · That made it necessary for me to become posted on such matters as social security for old age. As a companion to that study, I found unemployment insurance. We touched upon this matter occasionally in our discussion of the Retirement Act and its necessities for railway employees. We were approached by the railway labor executives to discuss with them the matter of unemployment insurance, and I was selected to be a member of the subcommittee of the committee of the association. I am an employee at the present time, and vice president of the Pennsylvania Railroad, and among other items in my portfolio is insurance. I do not come here as an expert, but rather as an administrator of insurance matters. The subject of this bill is that of unemployment-insurance benefit for employees of carriers, through a Federal act, the cost of which is to be borne by the employers, versus the present 51 Territorial acts in which the carriers' employees are included with other occupational groups; and it proposes to lift all carriers' employees out of the provisions of the State acts and isolate them in a Federal act for this industry. I come to this hearing with an open mind regarding the ultimate wisdom of a Federal unemployment-insurance act for railroad employees. I am here because I am opposed to making a change at this 73643-38-9 time from the system now in effect in the States before the States have had time to make their present acts fully effective and without having had sufficient experience through the State acts-with due regard to the welfare of all other employees in each of the States-to enable one to determine what should be the ultimate plan for the best interest of the railway employees. I am against this proposed bill, gentlemen, for nine reasons: 1. The plan is not what it is purported to be-insurance against unemployment. It is, rather, unemployment insecurity for the employees longest in the railroad service. 2. It is not a measure for stabilizing employment, in fact it has a tendency to invite the men with shortest service in the railroad industry to become unemployed. 3. It offers no encouragement to the employer to minimize unemployment. 4. The fund may be inadequate to pay benefits to railroaders with the longest service if they do become unemployed. 5. It assumes one of two things: Either the State laws are too restrictive as to benefit payments or the State tax rate is higher than need be to meet the requirements. 6. The contemplated cost of administration is unnecessarily excessive. 7. It assumes that insurance is a grant at the expense of the State or the employer. 8. In many respects it does not follow the draft bill recommended by the Social Security Board to the States as a guide for their laws.. 9. This bill is inequitable, unduly benefiting short-service men at the expense of long-service railroaders under the guise of meeting the complexity created by the crossing of State lines in interstate employment which, however, affects less than one-fourth of railway employees; whereas there should be no preference by the Federal Government for one group of men within an industry. May I elaborate on the several points I have just mentioned? BENEFITS If we visualize the insurance benefits contemplated in this bill for unemployed workers of the railroad industry, it will be a disappointment. The last men to become unemployed are, according to seniority practice, the older ones in the service and when their time comes to be paid benefits the fund is likely to have become depleted to the extent that it will be insufficient because the money will have been given to the men with shorter periods of service. The form this bill takes is substantially different for men of less than 1 year's service from that of a great many of the State acts, a difference which it is not my purpose to discuss in detail since other testimony will be presented upon this subject, and I will illustrate with charts later. I do point out at this time that it goes beyond the total benefits provided in most of the State acts for men with a short period of service. Under this bill the short service employees receive benefits during the same period (5 months) as the longer service employees. May I illustrate? A messenger boy receiving $50 per month for 3 months would earn a total of $150. Under the proposed act he would be paid a total of |