be administered by the same Federal body, but we believe that body should be an impartial agency such as the Federal Social Security Agency. Furthermore, whichever agency administers these funds they must do so in cooperation with similar agencies on the State level and the State agencies are the agencies that come directly and specifically in contact with the recipients of the benefits of either the United States Employment Service or unemployment compensation activities. The Federal agency collects the funds and allocates the money back to the State agency, which, in reality, does the work. The Federal agency is relegated to the position of establishing policies, and theoretically, does not exercise any power over the State group, but in reality, having as it does control of the purse strings, it enjoys an all-embracive power over the various State groups, and could if it so desired almost completely domineer them. The United States Department of Labor, we believe, is not the proper agency to administer these funds because its policies are dominated by labor. The Secretary of Labor himself is flanked on one side by a representative of the CIO and on the other by a representative of the A. F. of L. We have no quarrel with these labor organizations and make this statement only in support of our contention that the Department of Labor would be the direct representative of the recipient of the benefits of the two agencies to the exclusion of the providers of the funds for the operations of the agencies. Accordingly, in our opinion, the Department of Labor is disqualified to render an impartial service. Further, and if possible, of even greater importance, is the underlying philosophy of the Department of Labor as is manifested occasionally in the utterances and the writings of the Secretary of that Department. We refer more specifically to a letter written by the Secretary of Labor to the Bureau of the Budget when the President's Reorganization Plan No. 2 was under consideration in 1947. We quote from that letter as follows: "Decisions on whether benefits shall be paid or withheld are made in the light of changing local labor-market conditions, local customs, and prevailing industrial-relations practices in order that such actions will facilitate the migration of workers to available, suitable job openings, and prevent the development of pockets of unemployment, or the dissipation of the local labor supply. Correlatively the program is designated to promote industrial stability by maintaining the purchasing power of the unemployed, thus supporting the domestic market for consumer goods and contributing to the maintenance of a high level of economic activity. It thus aids the local community in planning for a high level of employment. The unemployment-insurance program also promotes security of employment by giving workers a reasonable period of time to find work which will utilize their highest skill at wages comparable to their prior earnings. By so doing it reduces labor turn-over and gives employers greater assurance that the labor force they hire has had time to find the job that matches their skills and previous earnings and will be ready to remain on the job. Better distribution of the labor force among industries, occupations, and geographical areas means a better utilization of the available human and technical resources, which in turn implies more production and more purchasing power, higher real earnings for workers, and higher gains for capital" (excerpt from Schwellenbach letter, p. 162, hearings before the House Committee on Expenditures on H. Con. Res. 49 and 50). The implication that we interpret within that letter is that the Department of Labor would utilize the authority vested in them through the placing within their jurisdiction the United States Employment Service and the unemployment compensation activities to further their apparent preconceived objective of a paternalistic government. They would use these agencies to control employment by referring prospective employees only to the positions which they felt the employee was appropriately suited, or where the prospective position might be suited to the employee. In other words, they would make the decision, rather than supplying the employee with all the pertinent facts relative to the prospective jobs and permitting the employee to make his own decision as to whether or not he desired one of the jobs in question. This is fundamental, and if carried to its logical conclusion, as is usually done by Federal bureaus vested with power, this could, under conditions of great strain in unemployment, place the Federal Government in an excessively domineering position with respect to individual rights with respect to self-determination regarding employment and the earning of a livelihood. Furthermore the administration is apparently displeased with provisions of the Taft-Hartley law, which, to quote from the Washington Star of August 14, 1947, "caused the President to criticize the Congress for cutting down the activities of the Department of Labor." The implication in this proposed plan of the President is that he would rebuild the Department of Labor by disregarding the welfare of the employee and of the American public in arriving at the decision. The Department of Labor in its relationship with the various State agencies has demonstrated that when possible it will dominate a State agency, or at least this is evidently so in what is known as the Conference of State Labor Commissioners, most of which are called by the Federal Department of Labor, rather than by the State officials themselves. In our opinion, these services should increasingly be separated from the Federal Government rather than concentrated in a Federal bureaucracy. We look with considerable distress upon the further concentration of power in Washington, and do sincerely hope that the Congress in this instance, as well as in every other opportunity, will utilize its constitutional powers to reinstate the sovereign powers of the respective States of the Union, and take from the Federal Government all unnecessary authority, and thus reverse the trend that has in some instances reached dangerous proportions. ED. C. BURRIS, Executive Vice President, Texas Manufacturers Association, Houston, Tex. Mr. PHILIP R. RODGERS, CHAMBER OF COMMERCE OF PHILADELPHIA, Clerk, Senate Labor and Public Welfare Committee, Senate Office Building, Washington, D. C. DEAR MR. RODGERS: The Chamber of Commerce of Philadelphia submits the following in behalf of its 2,000 member business firms, urgently opposing Reorganization Plan No. 1, 1948. The Department of Labor is staffed and influenced at the policy-making level by individuals whose interest and viewpoint is entirely that of labor and who, in many instances, refused to recognize the fact that employers' interests also must be taken into consideration if we are to maintain a prosperous and healthy economy. Top-ranking officials under the Secretary of Labor are men who, over a long period of time, have been associated with organized labor, and it is understandable that their viewpoints are those of labor. To this we take no exception and believe to be entirely proper as long as the activities of these officials do not embrace programs such as unemployment compensation in which both industry and labor have a substantial stake. The Government of this country has been organized on the premise that there should exist an adequate system of checks and balances. To place the unemployment-compensation program under the jurisdiction and administration of the Department of Labor is as indefensible as to place it under the jurisdiction and administration of the Department of Commerce, which Department is properly primarily concerned with the industrial development of the country, just as the Department of Labor is properly primarily concerned with the interest and welfare of labor. The efficient administration of the unemployment-compensation program, which, except in a few States, is financed entirely by taxes on pay rolls paid by employers, is naturally of great concern to employers. The continued successful operation of the program can be assured only if benefits are adequate but not so excessive that they discourage employment and encourage malingering. It is natural that labor organizations are continuously interested in increasing the amount and otherwise liberalizing benefits. If the program is under the administration of the Department Labor, it is inevitable that the viewpoint of labor regarding the amount and duration of benefits, eligibility requirements and standards relating to disqualification will be liberalized beyond the point of sound administration. We recognize that in all probability the converse would be true if the program was administered by a governmental agency whose viewpoint was closely allied with that of employers. In the one instance the program probably would become insolvent and in the other instance payments might be so restricted as to defeat the objectives of the program. The only sound solution to the problem is to place the program at the Federal level under the administration of an agency neither associated closely with labor or industry. The record of the Bureau of Employment Security appears to meet this qualification. On the whole the Bureau's relationship with the State agencies has been very satisfactory. The efficient operation of a system of unemployment compensation necessitates the maintenance of a successfully operated public employment service. Facilities must be available for the referral to available job opportunities of all recipients of unemployment benefits. The Philadelphia Chamber of Commerce is keenly interested in an effective and efficient public-employment service. Such service is vital to the national economy by aiding in the maximum utilization of the labor force. It can and should be of equal benefit to labor and employers. During the war, while under the direction of the War Manpower Commission, employment-service offices performed a function of allocating labor and otherwise regulating the mobility of labor and the personnel practices of employers. Although this was a necessary function of Government during wartime, it has no place under our system of government during peacetime. Since November 16, 1946, employment-service offices have been under the jurisdiction of the States. However, the basic policies of these offices, to a large extent, are dictated by the Department of Labor and by the same individuals who were responsible for the administration of these offices under the War Manpower Commission. Although the authority to regulate under the War Manpower Commission no longer exists, the philosophy underlying the policies of the Department of Labor has not changed. This philosophy in essence is antiemployer. It assumes that employment-service offices should be the guardian and champion of the rights of labor, that they should determine what are fairlabor standards as to hours, wages, and working conditions and fair employment practices, and disregards practical problems of the employer. The position of the Philadelphia Chamber of Commerce is that the employment service should be a free public-labor exchange, a clearing house for information on available labor supply and job opportunities. Nothing more and nothing less. No employer's job order should be refused or inactivated regardless of the hours, wages, or conditions of work offered or the specifications of the job order unless specifically contrary to law, and the specifications which the employer gives should be strictly adhered to in making referrals. The policies and practices which have resulted from this philosophy have caused many employers to refuse to use the service. Only slightly more than 1 out of every 10 jobs are filled through Employment Service offices, and most of these are in unskilled occupations. To be of service to labor and employers and to effectively aid in the administration of the unemployment-compensation program in order that jobs may be offered to claimants for unemployment benefits this proportion must be considerably increased and Employment Service offices must have the confidence and acceptance of employers generally. Such acceptance does not and will not exist under the present policies of the Department of Labor, which is considered by many employers to be unfairly antagonistic to their interests. For this reason we respectfully recommend that the committee give consideration to the consolidation at the Federal level of both the employment-service program and the unemployment-compensation program under a single independent agency which will be publicly accepted as not unduly sympathetic to either the interest of labor or of employers. During the period of the war the Employment Service developed a severe case of bureaucracy. So-called specialists were created in counseling, testing for aptitudes and skills, job analysis, occupational analysis, interviewer analysis, veterans' problems, and labor research. An army of individuals who considered themselves professional in their respective fields was created. To perpetuate this top-heavy organization the Department of Labor developed what has come to be known as a six-point program which the States have been required to adopt as a condition to the receipt of Federal grants for administration. Basically this six-point program appears to be sound. However, so much emphasis has been placed on these special services that the primary objective of the Employment Service of matching men and jobs has been subordinated as evidenced by the small proportion of job openings which are filled through the service. The Employment Service of today may be likened to a hospital which devotes all its time to providing diversion and comfort for its patients but gives little attention to the treatment of their injuries or ills. To keep this organization busy a host of "contact men," which in effect are salesmen, have been employed to sell these services to employers and to the community. At public expense an employer may have jobs in his plant analyzed and classified, and specifications written for each job. After a study has been made, he may be advised to break down the duties of particular jobs and divide and specialize the work. This may involve a readjustment of wage rates. Employees may be given tests to ascertain their aptitude for certain types of work. All of these are services which would normally be performed by the employer's own staff or by professional engineers. Our experience has been that employers generally do not desire these free services at the expense of the taxpayer, because of the fact that they are not satisfactory and the recommendations made are frequently not practicable. We do not believe that such services are a proper function of government. We do not believe that salesmen should be employed to sell services rendered by a governmental agency. We do not believe that Government employees are capable of rendering such highly professional services, even if such services are considered a proper function of government. We strongly urge that employmentservice offices concentrate their activities on placement processes. We are also attaching a supplementary statement which has already been submitted to each committee member. We would appreciate it if our statements can be included in the official record of the hearings. Very truly yours, CLEMENT V. CONOLE, General Manager. The Chamber of Commerce of Philadelphia submits the following statement in behalf of its more than 2,000 member business firms, employing over 1,000,000 workers, urgently opposing Reorganization Plan No. 1, of 1948. This plan proposes to establish the United States Employment Service permanently in the United States Department of Labor, and to transfer the Bureau of Employment Security from the Federal Security Agency to the Department of Labor. The social-security program designed to benefit the public We submit that it was clearly the intent of Congress in passing the Social Security Act to establish a program for the benefit of the public, and not in the interest of any one group. This consideration makes administrative and fiscal control of this program by an agency traditionally dedicated to the interests of organized labor obviously illogical. It should be noted that from its inception the entire cost of administering unemployment compensation, a major part of the over-all program has been borne by employers alone. The public employment service requires support of business With reference to the public employment service, we submit that to be effective, such a service must enjoy the confidence and cooperation of businessmen. This relationship cannot be a product of coercion. It is most likely to obtain when ultimate administrative control is vested in an agency at least technically neutral in its attitude toward labor and management. This is the position of the Federal Security Agency-certainly it is not that of the United States Department of Labor. Does President's plan reduce administrative costs? The Reorganization Act, under which Reorganization Plan No. 1 is offered to Congress, states that "It is the expectation of Congress that transfers under this act shall accomplish an over-all reduction of at least 25 percent in the administrative costs." To date, no evidence has been adduced tending to convince us that incorporation of the United States Employment Service and the Bureau of Employment Security in the Department of Labor would in any way reduce administrative costs. On the contrary, the Employment Service, during its temporary alliance with the Labor Department, has assiduously promoted all manner of auxiliary services of an allegedly technical nature, which its representatives have tried to ram down the throats of indifferent or unwilling employers. It would appear that the maximum opportunity for administrative economy would lie in again consolidating the basically complementary functions of USES and the Bureau of Employment Security within the Federal Security Agency. In the handling of reports and records alone, social security and unemployment compensation are so interrelated that substantial savings in time, personnel, and money should accrue from this consolidation. Labor's attitude toward experience rating The potent pressure of organized labor, if this reorganization plan were to become law, would inevitably jeopardize the existence of experience-rating provisions now embodied in the unemployment-compensation laws of 45 States. These provisions mean substantial savings to employers, proportionate to their success in stabilizing employment in their businesses. The net result of this incentive may prove, in time, to be more beneficial to workers than the aggregate of compensation paid them for involuntary unemployment. Interference with State administration of unemployment compensation The Federal Social Security Act does not provide for any Federal control of State unemployment-compensation policies. We firmly believe that the determination of such policy should be, and should remain, solely within the province of State legislatures. The Secretary of Labor has made it abundantly clear in sundry statements that if the unemployment-compensation program should be placed under his jurisdiction, decisions on whether benefits are to be paid or withheld would be made in the light of the effect on wages, the labor supply, worker migration, and other similarly irrelevant factors, rather than on the basis of eligibility as presently established by the laws and regulations of the several States. This avowed intent to distort and pervert the principal function of the USES and the Bureau of Employment Security, namely, the allocation of administrative funds to the States, would be manifestly an unwarranted assumption of unauthorized power, and an altogether improper infringement of State sovereignty. Consolidate unemployment compensation and employment service within Federal Security Agency The proposed transfer of the Unemployment Compensation function to the United States Department of Labor would break down the whole concept of centering social-security functions within one agency. In order to integrate these functions most effectively, they should be administered by one agency, and an independent one, since the program is primarily designed to be of benefit to the public. Consequently, it is recommended that the United States Employment Service be transferred to the Federal Security Agency and made a coordinate division with the Unemployment Compensation Division of the Bureau of Employment Security. Obviously, a disintegration of the various related aspects of the over-all socialsecurity program would be most unfortunate. Hon. JOSEPH H. BALL, AMERICAN MINING CONGRESS, Washington 6, D. C., February 28, 1948. Chairman of Subcommittee Considering Reorganization Plan No. 1, Senate Office Building, Washington, D. C. DEAR SENATOR BALL: The American Mining Congress, representing the coal, metal, and nonmetallic mining industries, strongly endorses House Concurrent Resolution 131, to reject Reorganization Plan No. 1 of January 19, 1948. We believe it would be a serious mistake to transfer the United States Employment Service and the Bureau of Employment Security from the officially neutral Federal Security Agency to the officially partisan Department of Labor. This is not intended as a criticism of the Department of Labor, which was created by Congress for the express purpose of aiding and fostering labor's interests. The functions of these two agencies, however, are of concern not only to labor but to employers and the public generally. The Employment Service deals with the finding of jobs for those out of workand it is employers who create and furnish these jobs. The Bureau of Employment Security deals with unemployment benefits, which are paid from funds collected entirely from employers. The funds thus accumulated now total nearly 8 billion dollars. They represent an important part of the general social-security program in which the public is deeply interested. Both the USES and the Employment Security Bureau should be administered by an impartial and unbiased agency in which not only labor but employers and the public may have confidence. We agree that these two services should be coordinated under a single head. The appropriate location is the Federal Security Agency-which now handles the unemployment-compensation program, together with other phases of social security, and to which the United States Employment Service will automatically be returned under present law upon expiration of wartime powers. This will accomplish the objectives of increased efficiency and economy fully as well or better than under Reorganization Plan No. 1. 72469-48-15 |