we strongly urge your vigorous support of House Concurrent Resolution 131, rejecting Presidential Reorganization Plan No. 1 of 1948.

HAL E. HARLAN, President, Kansas State Chamber of Commerce.

Hon. JOSEPH H. BALL,

Chairman, Subcommittee on Labor and Public Welfare,

United States Senate, Washington, D. C. DEAR SENATOR BALL: I had initially intended to request your committee to permit me to appear before it to present my views in support of the President's Reorganization Plan No. 1. I found, however, that I would be unable to appear in person on the days during which the hearings will be conducted. The growers in Imperial County, Calif., are deeply concerned over the fact that the attack on the President's reorganization plan comes almost exclusively from groups who are motivated by the desire to remove the Federal Government from participation in the Employment Service program. The fears which the groups opposing this plan manifest are apparently predicated on the fact that the plan will have a grave impact on the administration of the unemployment trust fund, State unemployment compensation laws, and the State merit-rating systems.

While the farmers and growers of America who employ agricultural labor are not directly concerned with the unemployment compensation program, nevertheless it is evident that such fears of industrial employers are wholly unwarranted.

We have carefully studied the reorganization plan proposed by the President, and it is apparent that there is nothing contained in this plan that would confer any authority on any Federal agency to modify State laws by Federal regulation. Further, we find nothing in this plan which would give the Secretary of Labor any authority to prescribe the conditions for eligibility of workers from unemployment compensation or to define "suitable work." These are matters provided for solely in State statutes and are applied in accordance with State statutes.

We are even more concerned by the fact that little, if any, consideration has been given to the fact that agricultural workers and those engaged in raising and producing farm products are not directly concerned with the payment of unemployment compensation. The farmers, processors, and agricultural workers have a particular interest in the maintenance of an effective farm-placement program. Obtaining farm labor for our farmers and growers and farm jobs for our agricultural workers is a matter of extreme importance to our food-production program, both at home and abroad. Food-production goals cannot be achieved unless we have an orderly system for the recruitment, placement, and transfer of agricultural workers in accordance with changing farm labor needs.

The Congress recently enacted legislation which returned the farm placement program to the Department of Labor, effective January 1, 1948. Since that time the Department has been working hand in hand with agricultural employers to formulate plans and to initiate and get under way a program which would assure adequate labor in the field of agriculture. Employers of agricultural workers with whom I have discussed this problem have expressed considerable concern over the fact that once again there is a movement afoot to uproot the farm placement activities and transfer them to another Federal agency.

The farmers of this county have had very little dealings with the Federal Security Administration, and it is not our intention to cast any reflection upon their ability to administer the programs which they are required by law to carry out, but it seems to our growers somewhat anomalous to transfer this program to the Federal Security Administration, which is, except for its unemployment compensation program, concerned exclusively with health, education, and welfare activities. It appears to be elementary that finding employment for either agricultural or industrial workers is a labor function which properly belongs in the Department of Labor.

We cannot overemphasize the fact that the activities of the United States Employment Service are of special importance in connection with the mobilization of our farm labor force. Farm labor characteristically moves great distances in response to the needs of seasonal maturing of different crops. Without the coordination of these movements, effected through the facilities of the United States Employment Service, there will be no assurance that farm labor would move promptly to areas of surplus to areas of labor shortage.

Most of the management interests which are opposing this plan represent industrial and urban areas and have in their opposition to this plan completely disregarded the agricultural labor problems.

As your committee well knows, the cessation of hostilities has left the world with a food problem unparalleled in its magnitude by any other period in history. The farmers have been requested by our Government to expand their production acreage, and obtaining farm labor is essential to achieving this goal. We cannot afford to uproot the farm placement program and expect it to operate effectively. We urge your committee to act favorably on the President's reorganization plan and to retain the United States Employment Service in the Department of Labor on a permanent basis.

Sincerely,

B. A. HARRIGAN,

Agricultural Commissioner, Imperial County, State of California.

STATEMENT SUBMITTED BY THE ILLINOIS MANUFACTURERS' ASSOCIATION BEFORE THE SUBCOMMITTEE ON LABOR OF THE SENATE COMMITTEE ON LABOR AND PUBLIC WELFARE, WASHINGTON, D. C., FEBRUARY 28, 1948

(This statement is submitted on behalf of the Illinois Manufacturers' Association) The association embraces approximately 4,500 members. The membership includes industries of all sizes-large, small, and middle-sized-engaged in manufacturing an endless variety of products. The great bulk of our membership is among industries, each employing less than 200 employees. Over 70 percent of our members are employers of less than 200 employees. Our association represents Illinois industry and a real cross section of American industry.

May I emphasize the size of our typical member. It is obvious that his size and degree of specialization make him particularly susceptible to governmental controls and the vicissitudes of any unwise governmental policies.

The industries of Illinois are, of course, deeply concerned with the problems involved in the areas covered by the unemployment compensation law and the employment services.

Nearly one-half billion dollars of tax money, collected solely from employers of Illinois, is piled up in reserves under the Unempoyment Compensation Act of Illinois. The combined reserves of all States as of September 1, 1947, amounted to 7.2 billion dollars.

Likewise, the 0.3 percent tax which the employers of Illinois pay directly to the Federal Government, to cover the administrative expenses of the unemployment compensation program, has collected over $140,000,000. But the State has received back only $39,000,000 for administrative expenses. Consequently, an overdraft, or surplus levy, of over $100,000,000 has been required of Illinois employers. Sums so vast and so potent in our economic life are, of course, matters of deep concern to Illinois employers.

OASI while not directly involved in our immediate problem, is an inseparable part of this entire picture. OASI is a program supported by a tax on pay rolls. The employer and the employee each pays 1 percent of pay rolls up to 3,000. This sum becomes large and important in the business calculations of Illinois employers. In 1946, in Illinois, over $125,000,000 was collected from this source. On a national scale, a tax of over $1,295,000,000 was collected in 1946, with a total reserve of around $8,000,000,000.

Who administers these funds, as a trustee for the employer and the employees, who initiates and implements the thinking of the trustee, and who carries out on the home front, the work-a-day policies of the afore-mentioned Government activities, become questions of real concern for the employers of Illinois.

The President's Reorganization Plan No. 1 of 1948 would permanently transfer the unemployment compensation services and the employment services to the Department of Labor. The Illinois Manufacturers' Association wishes to be recorded as opposing the President's Reorganization Plan No. 1.

Employers generally are desirous of securing both an efficient use of those taxes, which are paid wholly or substantially by the employer, and to have the law administered by an impartial agency of Government, whether it is on the local or Federal level.

The unemployment compensation tax and the administration thereof are now in the hands of both the Social Security Agency and various State agencies. We

oppose transferring the control of unemployment compensation to the United States Department of Labor-an agency of the Government, clearly dominated by organized labor.

Unemployment compensation is a prerogative of the State; but so long as the Federal Government continues in this field, we prefer that the policies of the Federal Government be determined by a presumably neutral agency, i. e., the Federal Social Security Agency, and not by the Department of Labor. We believe, and have so stated on a number of occasions, that the administration of the unemployment compensation program is exclusively a State function and should not involve dictation by the Federal Government. However, so long as the Federal Government is involved, we recommend control of unemployment compensation remain within the Social Security Agency.

There are several reasons for this position. Foremost is the impartial character of the job the agency is asked to perform. Some Federal governmental departments have, because of their personnel, their history, or their basic purposes, assumed to serve the special interests of a particular segment of society. Any department of Government which is known to have a bias for a particular segment of our population should not be permitted to usurp the unemployment compensation program. The Department of Labor in this case, should not be permitted to take possession of, and divert our unemployment compensation insurance into a system of dole.

The unemployment compensation program is paid for entirely by the employer for the benefit of the worker who is unemployed through no fault of his own. The original intent of Congress was to give this program an unbiased administration. We believe that the destruction of experience rating increased pay-roll taxes, dissipation of the $8,000,000,000 in unemployment compensation reserves through unwarranted payments to applicants, would all follow the shifting of control of unemployment compensation administration to the United States Department of Labor.

Logic would also dictate that the old-age and survivors insurance program should follow the unemployment compensation program into the Department of Labor. If this should materialize, we would have the specter of the Department. of Labor administering two taxes, one of which is levied against the employee and both of which are levied against the employer, the combined reserves of which now total over $15,000,000,000. We believe the control of unemployment compensation should not be transferred to the Department of Labor.

It is interesting to note the logic of a previous Chief Executive when matters of reorganization prompted the transfer of either the unemployment compensation administration or the employment services. In the Reorganization Act of 1939, when the employment services were transferred from the Department of Labor to the Social Security Agency, the President said: "I find it necessary and desirable to group in a Federal Security Agency those agencies of the Government the major purposes of which are to promote social and economic security.

* * *""

The reasons for combining the employment services and the unemploymentcompensation program in the Social Security Division are more valid today than they were before the war.

THE EMPLOYMENT SERVICES

The State of Illinois has not been remiss in looking after the interests of its unemployed citizens. As early as the nineteenth century (1899) the State of Illinois maintained a State system of employment offices, as well as licensed and supervised a system of privately owned and operated employment service.

The Federal Government entered the Employment Service business in a timid way through the National Reemployment Service, which was an emergency service designed to recruit WPA personnel.

The Wagner-Peyser Act of 1933 placed the Employment Service in the United States Department of Labor. It set up a 50-50 financing program for cooperating State systems.

Through the 1939 Reorganization Act, the USES was transferred to the Social Security Board in the Federal Security Agency and administered in conjunction with the unemployment-compensation program, which was renamed the Bureau of Employment Security. Here it was administered from 1939 until transferred to the War Manpower Commission in 1942. The record indicates that its services were administered with little or no bias but, rather, in the interests of the

citizenry generally. In the words of the Commissioner of Social Security: "When the United States Employment Service was transferred to the War Manpower Commission in 1942, it was a far stronger, sounder, and better Service than it had been when the Board received it (from the Department of Labor) in 1939."

Now we have a system which, for the present, is financed by the Federal Government, administered temporarily by the Department of Labor, and operated by the various States.

The Employment Service can carry out its basic purpose only so long as jobs are supplied by employers. The Employment Service creates no productive jobs. They can, at best, ask employers to furnish jobs to unemployed workers.

Our experience in Illinois indicates that an impartial administration of the employment program is the minimum requisite for a smoothly working and effective employment service. The closest cooperation between the available job and the Employment Service must exist if the unemployed worker is to be served. Again, the basic purpose of, the history of, and our experience with the policies and operations of, the Department of Labor would indicate that the best interests of the unemployed worker would be served by divorcing the employment services from the control of the Department of Labor.

The power of the USES to withdraw Federal funds from State-operated employment services (see Wagner-Peyser Act) should not be left in the hands of biased men. Likewise control over State "merit systems" and the methods of reporting should be in the hands of unbiased men. There is little likelihood of disagreement when I say that the Department of Labor makes no particular claim nor possesses any peculiar aptitude for administering "the counseling of veterans, preferential hiring of veterans, placement services, special services to industries (job classifications, sytems, employee programs, etc.), or community services, all functions of the USES."

The President's Reorganization Plan No. 1 of 1948 should, we believe, be rejected.

STATEMENT OF ELTON KILE, OF KILEVILLE, OHIO, ON BEHALF OF NATIONAL ASSOCIATED BUSINESSMEN, INC., AND OHIO ASSOCIATED BUSINESSMEN, BEFORE THE COMMITTEE ON LABOR AND PUBLIC WELFARE, UNITED STATES SENATE

My Name is Elton Kile. I live in Kileville, Ohio, and am a businessman and farmer. I am a member of the Ohio Legislature, chairman of the Ohio Associated Businessmen, and president of the National Associated Businessmen, Inc. This association is affiliated with 35 State associations of businessmen as well as numerous local business associations and trade associations. My statement is presented on behalf of the State and National associations, who are tremendously concerned with the issue before your committee the transfer of Federal unemployment compensation and employment service functions to the United States Department of Labor.

The question before you, it seems to us, is whether the proposed transfer would result in more efficient and effective unemployment compensation and employment service programs. Unless this can be demonstrated affirmatively there is no justification for the transfer. There has been no evidence that these functions have not been adequately performed in the Federal Security Agency, nor has anyone stated that any change in the administrative personnel is required or that such change would be effected by the transfer. No one has contended that the State agencies administering the State programs desire this transfer but, on the contrary, it has been shown that the prevalent opinion is heartily against the change.

Only very few States have unemployment compensation and employment service programs administered in State labor departments, the normal pattern being an independent agency like the Federal Security Agency. It has also been shown that some of the few State labor departments and industrial commissions which operate the programs are themselves established on the basis of being neutral agencies, in contrast with the United States Department of Labor which has provisions in its organic act directing that it be operated in the interests of labor. We have been advised by our Georgia associaion that the Georgia Labor Department commissioner is against the proposed transfer inasmuch as that department is operated as a neutral agency, and he feels that the Federal Security Agency should continue administering the Federal unemployment compensation and employment service functions.

Examination into the programs themselves makes clear that the purpose of the employment service and of unemployment compensation is to serve the public interest. These are not programs to serve the special interests of any one group, whether business, agriculture, or organized labor, but are for all groups. Further, the cooperation of employers, including both farmers and businessmen, is essential if these programs are to be conducted successfully. The basic employment service function is making placements. Unless farmers and businessmen participate by listing job opportunities with the Employment Service and by using it in recruiting their employees, the Service is meaningless.

A basically important question is thus whether the proposed transfer would increase employer cooperation. This question cannot be answered by any assurances, however earnestly advanced, that the United States Department of Labor will act impartially and that it will forget its statutory purpose of furthering the special interests of labor. Only the farmers and businessmen can answer the question as to whether or not the proposed transfer would result in their making more or less use of the Employment Service. I, of course, cannot speak for all business, but I am well acquainted with the sentiment held, whether rightly or wrongly, by the great mass of employers who make up the membership of our organization.

* * *

I have just received a telegram from the Minnesota Associated Businessmen which states, in part, "The board of directors of Minnesota Associated Businessmen, Inc., representing over 700 Minnesota businesses sincerely believes that it would be contrary to the best interests of both business and labor to transfer the administration of the Federal Employment Service and Unemployment Compensation to the Department of Labor as proposed by the President's reorganization plan. Kindly present our views to the House and Senate." In a letter dated February 20, 1948, from the Missouri-Kansas Businessmen's Association, Inc., the secretary states: "Businessmen in western Missouri have a great deal of interest in this subject. Several have made unsolicited calls to my office urging that I do what I can to protest the transfer of these services to the Department of Labor. These men have urged to me that it is fundamental that the Employment Service and Unemployment Compensation should be operated and administered by an impartial, unbiased agency whole sole purpose is to serve the public. These people state that only in the last few years has the public finally developed a respect and understanding of the high purpose of the United States Employment Service and Unemployment Compensation. They believe that a transfer of these activities to any department of the Government, whether it be to the Commerce Department, Labor Department, or other, would destroy the public confidence which now exists in these activities."

I have heard also, in the past few days, from several other States where we have member associations of small-business men, and in each case the story is the same.

Our Pennsylvania secretary writes me: "A spot check of a representative cross section of Pennsylvania members puts this organization on record as vigorously opposed."

Our Montana chairman writes me: "Our businessmen are definitely against this transfer. The Department of Labor in all of its work has been prolabor and a review of the publicity given this Department during the past several years will show that it has acted solely in the interest of labor and to the detriment of businessmen and the general public."

From our North Dakota secretary comes a statement of the same kind—that the Employment Service should remain in a neutral agency if it is to serve the farmers and businessmen in the proper manner.

These letters are typical, we believe, of the general attitude of business. I do not doubt but that if the proposed reorganization plan were designed to transfer these functions to the United States Department of Commerce you would be faced with a very understandable and, I believe, proper objection from labor. Our organizations feel just as strongly that if these services are to be transferred to, and operated under policies prescribed by, the Department of Labor, which is a direct protagonist of labor, both farmers and businessmen would be profoundly disturbed and understandably reluctant to make effective use of the Employment Service.

No one has testified, to my knowledge, and I do not believe anyone will ever testify that employers have received any special consideration from the Federal Security Agency. Certainly employers have no basis of resenting this fact for they are not entitled to have any special consideration any more than is labor.