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NUMBER OF EMPLOYERS AND WORKERS Now COVERED UNDER STATE UNEMPLOY
MENT INSURANCE LAWS WITH PROVISIONS SIMILAR IN EFFECT TO DEFINITION OF AGRICULTURAL LABOR IN SECTION 1426 (h) OF THE INTERNAL REVENUE CODE
The following materials relate to two questions which have been raised by Mr. Curtis of Missouri regarding the effect of section 2 of H. R. 8857:
(1) How many workers and employers are now covered under the State laws?
(2) Does the estimate for the total number of workers (200,000) who would be protected by the program under section 2 include the number of workers
already covered under State laws? It is estimated that from 1,100 to 1,360 employers and from 20,000 to 50,000 agricultural processing workers are now covered under State unemployment insurance laws because their definitions of agricultural labor are expressed in terms which have similar effect to that which would be obtained if their language was identical with section 1426 (h) of the Internal Revenue Code. The estimate of 200,000 workers added to the protection of the program does include the workers now covered under State laws.
While inquiries were sent by the Department of Labor to number of selected States, replies from only a few were pertinent to the questions raised by the committee.
The California agency estimates that about 1,200 employers and 22,000 workers are now covered under the definition of agricultural labor in their unemployment insurance law, of which an estimated 1,100 employers and 20,000 workers would be covered if the definition was exactly the same as that contained in section 1426 (h) of the Internal Revenue Code. At present, in California, agricultural processing services are covered, including the work of the employees in the office as well as that of the manual trades in the plant. In Florida, the definition of agricultural labor excludes the services of hauling, grading, packing, and processing of fresh citrus fruits, thereby covering about 260 employers and from 3,000 to 30,000 workers, depending upon the period of the season. The employment-security agency adds that if the Florida definition of agricultural labor was the same as that in section 1426 (h) the number dropped from coverage would be substantial, as many large packinghouse operators own thousands of acres of groves and produce more than one-half of the fruit they pack,
Three State employment-security agencies, while not reporting any coverage of agricultural processing workers under existing statutory provisions, estimated that about 24,000 workers would be covered if their definitions were the same as that of section 1426 (h) of the Internal Revenue Code. This consists of about 10,000 workers for Arizona, 12,000 for Washington, and 1,500 to 2,000 workers for Idaho.
The estimated number of about 200,000 workers who would be covered if section 1607 (1) of the Federal Unemployment Tax Act were amended to coincide with section 1426 (h) of the Internal Revenue Code was based on estimates given in the reports of the House and Senate Committees in connection with the Social Security Act amendments of 1949 and 1950. House Peport No. 1300 (81st Cong., 1st sess.) to accompany H. R. 6000, August 22, 1949, for example, in its summary of the principal provisions of the bill, stated that coverage was being extended to "agricultural processing workers off the farm and certain other types of essentially commercial or industrial borderline agricultural labor; also employees of nonprofit agricultural and horticultural organizations (about 200,000).'
Information now available would justify a downward adjustment in the 200,000worker estimate by the number of workers now covered by State laws. However, since the estimate of 200,000 was based originally on 1949 data, some upward adjustment in this figure appears reasonable to take account of the growth in population and the labor force over the past 5 years. Unfortunately, in the absence of reliable data, no basis exists for determining the size of such downward and upward adjustments. Accordingly, it seems reasonable to assume that the number of workers who would be added to the protection of the program by section 2 of H. R. 8857 is approximately 200,000.
Mr. CURTIS of Missouri. That is all.
We want to thank you, Mr. Wells, for your appearance here with us this morning. You have been very helpful to us, I am sure.
Mr. Wells. Thank you.
The CHAIRMAN. The next witness is Hon. Philip Young, Chairman of the Civil Service Commission. We are very pleased to have you with us, Mr. Young.
STATEMENT OF HON. PHILIP YOUNG, CHAIRMAN OF THE
CIVIL SERVICE COMMISSION, ACCOMPANIED BY JOHN W. MACY, JR., EXECUTIVE DIRECTOR, CIVIL SERVICE COMMISSION Mr. Young. Thank you, Mr. Chairman.
I also have with me this morning Mr. Charles Denney, a member of our program-planning staff at the Civil Service Commission.
The CHAIRMAN. You have furnished, I believe, the committee with your statement.
Mr. YOUNG. I have a short statement, Mr. Chairman, in support of the proposal for unemployment insurance for Federal employees, which is that part of the series of proposals before you in which the Civil Service Commission is particularly interested.
I appreciate this opportunity to present to your committee the Civil Service Commission's views on proposed legislation to provide unemployment insurance for Federal employees. Three pending bills, H. R. 6537, H. R. 6539, and H. R. 7054 would extend the unemployment insurance system to Government workers.
As you know, the President, in his budget message and in his economic report this year strongly recommended extension of the unemployment insurance system to give Federal employees the same benefits as are now provided for most workers in private employment. In announcing the administration's legislative program for personnel management, the President again stressed the need for providing unemployment protection for Federal workers. The Civil Service Commission is particularly interested in urging favorable action on this proposal as an essential feature of a sound personnel program for the Federal service.
Financial protection against unemployment is particularly important for Federal workers because of the typical fluctuations in Government employment levels. While the general impression is to the contrary, the possibility of unemployment actually is as great in the Federal service as it is in private enterprise.
Government functions do not continue at a uniform level without change. Some activities become obsolete and are discontinued. Other activities are self-limiting or temporary in character. Appropriations are reduced and staffs are cut accordingly. As a result, there is a constant movement of workers back and forth between Federal employment and private industry. In the absence of unemployment protection, those leaving the Federal service are placed at a serious disadvantage.
The great fluctuations in the size of the Government work force are clearly shown in the employment statistics. For example, in June 1938 there were approximately 855,000 civilian employees in the executive branch of the Government. This figure increased to a wartime peak of 3,770,000 in June 1945. After the war Federal
employment dropped until it leveled off at about 2 million by June 1950. As a result of the Korean conflict, the Federal civilian service again increased to about 2,600,000 in June 1952. It has since declined to less than 2,348,000.
These large-scale adjustments in the Government's work force give particular emphasis to the need for providing unemployment protection to Federal employees. For example, approximately 155,000 Government workers were involuntarily separated from employment in calendar year 1953. Meanwhile, turnover statistics show that thousands of workers are separated from Federal service each year on a continuing basis, aside from major shifts in employment.
Unlike workers in private industry, these separated Federal employees do not get unemployment compensation to tide them over while they are looking for another job. As a result, they are forced to depend on their retirement-fund contributions and accumulated annual leave for financial assistance during periods of unemployment.
The saving of annual leave as financial protection against unemployment is highly undesirable. Annual leave is provided for purposes of rest, recreation, visits back home, and necessary personal business. The present lack of financial protection against unemployment forces Federal employees to forego needed vacations and other time off in the interests of security. In this way, both the Government and its personnel lose the value of sound leave practice.
The withdrawal of retirement contributions likewise is undesirable since it requires employees to wipe out their earned pension rights. This means that some separated Government workers must risk their future financial security, based on their Federal service, to provide needed current income.
Even these sources of financial protection, based on a forced and undesirable use of earned benefits, cannot meet the unemployment needs of all Federal employees. There are now more than 600,000 indefinite and temporary Federal workers. Turnover is particularly heavy in this group of employees who are most vulnerable in reductions in force because of their tenure and relatively short length of service. They are covered under old-age and survivors insurance and therefore have no retirement contributions to withdraw, and generally can save little or no leave to help tide them over unemployment.
I feel that the Federal Government should provide unemployment protection for its employees which is comparable to that available to most of our country's work force. As it stands, we deny Federal workers a condition of employment security which the Government requires private employers to provide. This is not only inequitable to employees, but from a personnel-management viewpoint impairs the ability of the Federal service to attract and retain competent personnel.
To correct this situation, the President has recommended that Federal civilian employees be covered by the existing unemploymentinsurance system under conditions set by the States in which they last worked, and that the Government reimburse the States for the added costs. The Labor Department has been given the principal executive branch responsibility for working with the Congress in developing legislation to carry out this recommendation. Therefore, I will not attempt to discuss the pending bills in complete technical
detail, but will give you the Civil Service Commission's views on the broad aspects of the proposals.
H. R. 6537 and H. R. 6539 are identical bills which would cover Federal employees under the existing unemployment-insurance system as recommended by the President. These bills would extend unemployment-insurance protection to Federal workers under the terms and conditions of the laws of the States in which they last worked, as determined by agreements between the Secretary of Labor and the States. Federal employees would thus be eligible for the same unemployment benefits as other workers and like them would be expected to be available for work in private industry as well as in Government.
The Department of Labor and the Bureau of the Budget recommend several amendments to this legislation: (1) To make Federal rather than State agencies responsible for deciding questions concerning the definition of Federal employment and wages, and issues concerning the nature of separations; (2) To exclude categories of Federal employees such as student nurses, emergency workers serving in case of fire or flood, employees receiving less than $12 a year, et cetera, which are not appropriate for coverage under the system; and (3) To make certain technical changes. The Civil Service Commission endorses these amendments.
H. R. 7054 also would extend unemployment-insurance protection to Federal workers. However, unlike the other bills, it would give all Federal employees the benefits provided under the District of Columbia law, instead of benefits under the law of the State in which the employee last worked, as recommended by the President. All States except four provide greater unemployment benefits than the District of Columbia, and 90 percent of all Federal employees work outside the District. Therefore, H. R. 7054 would not be as desirable, from the administration's point of view, as it would not provide most Federal employees with benefits comparable to those of other workers generally.
In summary, H. R. 6537 and H. R. 6539 would carry out the President's basic recommendation on unemployment-insurance protection for Federal employees. With the recommended amendments, the administration and the Civil Service Commission strongly urge enactment of this legislation as an essential feature of a sound and effective personnel program for the Federal service.. The CHAIRMAN. Thank you, Mr. Young. Are there any questions? Mr. COOPER. Mr. Chairman? The CHAIRMAN. Mr. Cooper.
Mr. COOPER. Mr. Young, I would like to inquire briefly for information, just from a practical standpoint, and invite your attention to your statement that
To correct this situation, the President has recommended that Federal civilian employees be covered by the existing unemployment-insurance system under conditions set by the States in which they last worked and that the Federal Government reimburse the States for the added cost.
Just from a practical standpoint, how would you deal with people employed here in Washington? You speak here of those under the existing unemployment-insurance system under conditions set by the States in which they last worked.
Of course, we have thousands of people working here in Washingtons and their last work was here. They have not worked in the State, in many instances at all, they have been working here all the time.
From a practical standpoint, how would you propose to handle that situation?
Mr. YOUNG. From a practical standpoint, Mr. Chairman, we regard the District as another State. We include the District as a State, Alaska as a State, and Hawaii as a State. The same situation applies.
Mr. COOPER. Those people who have been employed by the Federal Government here in the District of Columbia would be treated under the District of Columbia employment-insurance program?
Mr. Young. That is correct. And that is one reason why I felt it necessary to point out that the District benefits are relatively low compared with other States.
Mr. COOPER. What are you suggesting in that respect—that the District of Columbia benefits be increased?
Mr. Young. I believe there is a bill pending now which takes up that matter and suggests or proposes an increase in the District benefits; which I think would be highly desirable from the point of view of our Federal personnel program.
Mr. COOPER. I thank you.
Mr. CURTIS of Missouri. I am favorable to the extension of unemployment insurance to Federal employees, I might state.
I have one question: Is there any legislation pending or any thought being given to giving separation pay to our Federal employees?
Mr. Young. By separation pay I assume you mean severance pay, terminal pay in addition to a lump-sum leave payment?
Mr. CURTIS of Missouri. Yes. Many private employers give a certain salary. That, it seems to me, would be the first step in solving the problem. I agree that unemployment insurance is certainly indicated, and we certainly need it. But also it would be saving that particular fund if you provided for some sort of severance pay for a Federal employee. I am just wondering if that is part of your program, too.
Mr. Young. The Administration has no provision in the program for severance pay. Of course, it does not take the place of unemployment insurance or of a lump-sum payment of annual leave.
Mr. CURTIS of Missouri. May I say this, Mr. Young: It does not take its place entirely but it does take its place for the short time that the severance pay is in effect. They do not go on the unemployment rolls. That is the point. And it certainly is a helpful thing to have a man have severance pay and not have to go through the procedure of getting his unemployment insurance; and it does save the unemployment insurance fund and it is a healthier thing too.
I certainly think along the same thought, that the Federal Government as an employer should be a little ahead of our private employers. And yet they are behind in this field, too.
Mr. Young. I think you have to look at two things. Of course, any extra dollars in the pocket of the man who is separated is going to help tide him over, and there will be less demand presumably on relief or unemployment insurance.
Mr. CURTIS of Missouri. That is right.