is found in this bill. This seems to me conclusive evidence that the bill is intended to supplement income, rather than to compensate for unemployment.

It is difficult to see any justification for the liberality of these provisions, or why they should be denominated unemployment insurance. Why should Tom Brown, who happens to obtain railway employment for 2 or 3 months and earns $150 therein, be entitled to additional money payments to the extent of $140, when his neighbor, Joe Smith, who works for a similar period and earns a similar amount in a steel mill, be entitled to only $25 in benefit payments? If the latter is unemployment compensation, how could the former be called the same? Suppose now that Tom and Joe are farmers, each engaged in tending their farms except for short excursions into outside work. Tom would still get his $140 of benefits for $150 of railroad work, but Joe would not even get his $25. Here we do not even find unemployment, yet under the bill benefit payments would be made just the same.

Mr. MARTIN. You mean he would not get the $25 under the State laws?

Mr. PARMELEE. He would not, Mr. Congressman, because he is barred on account of his self-employment, a bar which does not exist in this bill.

In this comparison of the aggregate amount of benefits payable under the bill with those payable in the States, I have used the example of what I have termed the "typical State law." In order to keep the record straight with regard to this most important feature, I would point out that the 1:6 ratio of benefits to earnings which I have used is the most liberal in effect in 48 out of the 49 jurisdictions, and insofar as cost to the individual employer is concerned, even in the forty-ninth State, or Ohio, as I will show you.

Thirty-four States use the 1:6 ratio of benefits to earnings. In addition, the District of Columbia permits 1 week of benefits to 3 weeks of work, which converted to an earnings basis, is the equivalent of the 1:6 ratio; three States use a 16 percent ratio of benefits to earnings which is slightly more restrictive than the 1:6 ratio; nine States either use a 1:8 ratio of benefits to earnings or the equivalent thereof, namely, 1 week of benefits to 4 weeks of employment; while California uses a sliding benefit scale which is the equivalent of a ratio starting just short of 1:7 and going down to something less than 1:10. Finally, even though the Ohio law permits benefits to be paid without relating them to earnings, that law does specify that an individual employer reserve account, under the merit rating provisions, shall not be charged for benefit payments to an individual to a greater extent than one-sixth of the earnings received by the individual from such individual employer.

Thus, insofar as the individual employer is concerned, not one of the 49 jurisdictions permits the payment of benefits in excess of 1:6, or 16.7 percent, of an individual's earnings in his base period. Notwithstanding this fact, the pending bill would permit individuals to receive in benefits up to 93.3 percent of their earnings in the base period. In actual practice, insofar as the great majority of applicants for benefits are concerned, it appears certain that the ratio would be well in excess of 33 percent, or more than double the most liberal State ratio.

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I come now to the question of benefits for partial unemployment, called partial benefits. This relates to the fourth principle which Í

have enumerated.

I

Partial unemployment occurs when a worker's hours or days of work, and consequent earnings, are reduced below the average schedule under which he had previously been employed. For example, when a normal full-time worker is placed on a reduced working schedule he becomes partially unemployed. The typical State law provides payment of partial benefits, to alleviate partial loss of earnings.

From the proponents' presentation, it might be assumed that payment of partial benefits is only a secondary feature of the benefit formula of the present bill. Actually, the contrary is the case. Partial benefits under the bill can be more aptly designated as normaltime benefits, because a reduced scale of employment is in no way necessary to establish eligibility for these benefits. In fact, an individual's employment may be doubled, or trebled, 1 year over another, and he still would be entitled to the regular receipt of partial benefits. Although several States have not yet made provision for the payment of benefits for partial unemployment, payment of such benefits is an integral part of the system of unemployment compensation in this country. But the purpose of partial benefits is to prevent the placing of a premium on unemployment, and this purpose is accomplished by limiting the amount of partial benefits plus wages to either the amount of the benefit rate for total unemployment, or an amount only slightly greater. Thus the man who is partially unemployed is placed, in the matter of money income, in a position of substantial parity with the man who is totally unemployed.

Mr. MARTIN. Are you speaking now of the bill?

Mr. PARMELEE. I am speaking now of the State laws, Mr. Congressman. I am going to compare the provisions of the bill with those provisions in just a moment.

Under this bill, however, even though the maximum benefits payable for the total unemployment only amount to $48 in a 30-day month, an employee may receive partial benefits when his wages amount to $100 or more. Furthermore, as I have pointed out, the fact that he is working his normal schedule in no way restricts his right to receive partial benefits, so long as his schedule is less than 16 days per month, even though automatic operation of the benefit formulas of the State laws effectively prevents the worker from receiving partial benefits while he is employed on his normal schedule. Thus the bill not only permits the payment of partial benefits to an individual even when his current earnings are in excess of his benefit rate for total unemployment, but also disregards State precedent by paying him benefits when he is not even partially unemployed in the usual sense of that

term.

The bill, section 2 (a), provides for the payment of benefits for days of unemployment in excess of seven in any half month of 15 consecutive days, the only condition being that earnings of $150 or over have been obtained in the base year. We shall see that this is a generous

order.

Under any State system, the amount of partial benefits payable depends upon the relation of an individual's normal earnings to his benefit rate. If the benefit rate is 50 percent of a fair average of his

normal earnings, his unemployment must be substantial before he is entitled to partial benefits. If his benefit rate is in no way tied to his average earnings, as in this bill, his average employment may increase and yet he will still be entitled to such benefits.

The benefit rates in the States are set at 50 percent of the weekly wage, with a maximum of $15 a week in all States but Michigan, where it is $16, and in Wyoming, where it is $18.

For practical purposes, we may consider the two principl methods of determination of weekly wages, one being on the basis of total earnings in the base period, and the other on the basis of earnings in the quarter of highest earnings.

Under the bill, average earnings are entirely disregarded in determining the benefit rate, and deviation from that average or from total earnings is also entirely disregarded in the payment of benefits.

As an indication of the extent to which partial benefits would be payable under the bill, compared with State laws, I have prepared a statistical table which I now hand to you and which I ask to have appear at this place in the record.

Mr. CROSSER. It may be incorporated in the record. (The statement referred to is as follows:)

Comparison of the payments of partial benefits under H. R. 10127 and the State Laws

1 Under the bill's benefit scale, the daily benefit rate would be $2.50 which, multiplied by the maximum days (80) puts the benefit limit in 1 year at $200.

NOTE.-Columns 2 and 3 show the days employed, and wages respectively, by months, yearly totals. the monthly averages, and the monthly averages in the quarter of highest earnings for the 2 years. Column 4 shows the partial benefits which would be payable in the benefit year under the bill's formula. Columns 5 and 6 show, respectively, the partial benefits which would be payable under the straight monthly average and highest quarterly formula, the amounts being the difference between wages and the total benefit rate plus one-sixth of wages. The total benefit rate under column 5 is 50 percent of the monthly average under 3 or $31.34; under column 6 it is 50 percent of the monthly average in the highest quarter under 3, or $36.00.

Mr. PARMELEE. This statement, Mr. Chairman, which is entitled "Comparison of the payments of partial benefits under H. R. 10127, and the State laws," is based on a hypothetical example of the working experience of an irregularly employed train or engine service employee, on the assumption that his working experience is duplicated in the earnings of both base and benefit years. The practical effect would

be the same, however, even if his working experience varied as between months or in total amount. The wage rate is assumed to be $8 a day, or about straight time average for train and engine employees.

Columns 2 and 3 of the table show the days employed and wages, respectively, by months, the annual total, the monthly average, and the monthly average in the quarter of highest earnings for the 2 years. Column 4 shows the partial benefits which would be payable in the benefit year under the bill's formula. Columns 5 and 6 show respectively, the partial benefits which would be payable under the straight monthly average and the highest quarterly formula, respectively, the latter being the counterpart of the typical State law, under which the payment is the difference between wages and the benefit rate for total unemployment plus one-sixth of wages earned. The daily benefit rate, under column 4, is $2.50, as shown by the benefit scale set out in section 2 (a) of the bill.

The monthly benefit rate shown for total unemployment in columns 5 and 6 is that provided by the State laws; under column 5 it is 50 percent of the average monthly earnings, or $31.34; under column 6 it is 50 percent of the highest quarterly earnings, or $36. That is, those are the payments that would be made for total unemployment under State laws.

I call your attention to the totals at the bottom of columns 4, 5, and 6. For the same employment, with earnings duplicated from the base to the benefit year, this railway worker, if covered under the bill, would have received his maximum benefits, or $200, before the year was out. Under the straight average method of determining the benefit rate, such as used in the States of Wisconsin and Ohio, he would receive no benefits at all. Under the highest quarterly formula, which is that employed by the typical State, he would receive a total of only $14.67.

I have called this, Mr. Chairman, a duplicate statement of base and benefit years, but I am not sure that I have made it clear what that means.

This means that the railway worker that I have spoken of, who worked the number of days in each month of a given year as shown in column 2, and earned the wages shown in column 3, would, in the next succeeding year, working the same number of days and earning the same amount each month as in the base year, receive at the same time unemployment benefits of $200, and while he was receiving his unemployment benefits of $200 he would in that benefit year be creating an eligibility that being a base year as well as a benefit year for a similar payment the following year; so that this scale of wages and benefits could be continued year after year, and he would receive in each year these amounts in wages and these amounts in benefits.

Now, under the State laws, as indicated in columns 5 and 6, under one group of States he would receive nothing in the second year; under the other general group he would receive $14.67 in the second year, and the payments would then cease thereafter.

Mr. MARTIN. Mr. Parmelee, I would like to ask you a question there. In the year in which the railway employee would get the $200 in benefits, what would his wages be?

Mr. PARMELEE. His wages would be, as shown in column 3, $752. He first receives in his base year $752 spread among the months as indicated in this table.

Mr. MARTIN. I understand that.

Mr. PARMELEE. The following year, which is both a base year and a benefit year, he still would earn his $752, and at the same time receive $200 in partial unemployment benefits; and he could continue year after year in exactly that same pattern, receiving each year $752 in wages and $200 of benefits-a situation which is, as I have pointed out, absolutely impossible under the State laws.

Mr. WOLVERTON. What do you calculate would be his full benefits for a year?

Mr. PARMELEE. His full wage? That would be a difficult question to answer, Mr. Wolverton, but I think what you have in mind is how much would he have to earn in order to be ineligible for unemployment benefits.

Mr. WOLVERTON. That is right.

Mr. PARMELEE. You will recall the formula that he receives 1 day of unemployment benefits for each day exceeding 7 in any 15 consecutive calendar days.

Mr. WOLVERTON. Yes; but I have not made myself plain.

Mr. PARMELEE. Therefore, if he has as much as 8 days of employment in any 15, or as much as 16 days of employment in any month of 30 days, he becomes ineligible for unemployment benefits of any kind. Mr. WOLVERTON. What I was seeking was information as to what would be the yearly wage for a man who had no unemployment. What would be the average received by a man who would receive $8 a day for each day that he worked? In other words, how many working days would he average?

Mr. PARMELEE. He would have to get 16 working days a month, which at $8 a day would be $128 a month.

Mr. WOLVERTON. No; that is not what I want. I am assuming that he works 30 days, or 20 days, or whatever it is; that he works straight through; the usual engineer, for instance.

Mr. PARMELEE. You are asking about the actual practice on the railroads?

Mr. WOLVERTON. Yes.

Mr. PARMELEE. I beg your pardon. I thought you were referring to the impact of this bill on employment.

Mr. WOLVERTON. No. In other words, your table shows that a man who worked the number of days that you have set forth here would receive wages of $752, and under this bill he would receive unemployment compensation of $200, or a total of $952 in that particular year. What would he have earned if there had been no unemployment?

Mr. PARMELEE. That is a hard question to answer, because there are a great many different kinds of schedules on which train- and engine-service men work, on the different railroads.

Mr. WOLVERTON. I realize that. That is the reason I asked if you could give an average.

He

Mr. MARTIN. Will you permit me there? This is an $8 man. has worked at least three times 94 days, so that his wages, for his time of employment, will come to at least three times, or something more than three times, $752.

Mr. PARMELEE. Not if he is the extra-board man that we have been speaking of. He simply picks up as many days of work in a month as may be available for him.