testimony primarily to our reasons for supporting the bill for Federal standards, grants, and extended coverage, introduced by Congressman Forand and others-H. R. 9430. My supplementary statement contains much additional material.

The administration has recommended substantial improvement in the protection afforded but says, "Congress need not act let the States do it." Only three States have raised maximum benefits since President Eisenhower urged them to do so last January. Only three State legislatures are still in session. The rest will not meet again until next year.

It is your responsibility to improve unemployment benefits just as surely as it was the responsibility of Congress in 1935 to enact the social-security law which brought the Federal-State system of unemployment compensation into existence.

The average payment to the unemployed under the State laws today is less than $25 a week. This is not enough to live on, or to provide markets for farmers, for neighborhood stores, for the automobile producers or the factories that turn out electrical appliances. Only $1 out of every $5 lost in wages and salaries has been replaced by unemployment-insurance benefits.

Do not be misled by the May figures on unemployment, which show a slight drop, as they usually do in the spring. They will rise again as school and college graduates start looking for jobs, even should layoffs cease. But layoffs have not ceased. Manufacturing. employment fell by another 200,000 in May. As compared with a year ago, there was a decline of 2 million jobs in mining, manufacturing, and transportation.

No one knows how far the decline may go. But we have not seen any predictions that fewer than 3 million will be unemployed in the fourth quarter of the year. The figure may well be much higher. Many of these people will have used up their benefit rights. Many will be desperate, finding that even public-welfare payments are not provided to persons able to work even though no jobs can be found. Spokesmen for the administration may continue to say, "Let us wait and see what the States do." But about 40,000 workers a week are exhausting their benefit rights, with a total of over a half million exhaustions so far in 1954. These are in addition to the more than 2 million workers who are receiving unemployment benefits.

Are you going to say to these people, "Let's see what the States may do next winter?"

If the Members of Congress want to go home without doing anything for these unemployed people, in the face of these facts, we will do what is necessary to help place responsibility and secure remedy.

The Forand bill, H. R. 9430, is being sponsored by at least 81 Democrats and 2 Republicans. It provides a comprehensive program for aiding Americans who cannot find jobs. Its main advantages are:

1. Weekly payments to a majority of unemployed workers would be raised substantially. State maximums would have to be raised so that they would no longer cut off so large a proportion of benefit amounts. The maximum primary benefit under each State law would have to be not less than two-thirds of the State's average weekly wage. Subject to this maximum, each worker's primary benefit would be not less than 50 percent of his regular earnings. Thus, in most States maximums would have to be raised by between $10 and $20.

2. Benefits would be paid for at least 39 weeks to anyone who could not find a suitable job. It is unjust and disastrous to cut off payments when jobs are not available, savings have been exhausted, and no other source of income is available.

3. Hundreds of thousands of workers who are now unfairly denied benefits would be entitled to them. This would be accomplished by limiting the reasons for which workers may be disqualified, the type of disqualifications, and by preventing oversevere eligibility provisions.

4. Coverage would be made virtually the same as under the old-age and survivors insurance program. If any groups are left out that your committee finds can be covered, we hope you will add them to the bill.

5. Essential improvements would be made in regard to the financing of the system. One would help overcome the abuses of experience rating. Another would make reinsurance grants to States which are in financial difficulty because of heavy unemployment.

The States would be required to improve their laws by July 1, 1955, to meet the new Federal standards. In the meantime, the Federal Government would provide the money for paying benefits up to the standards set for the States.

Every dollar thus paid out would promptly swell lagging buying power and thus help maintain economic production. Such money is ⚫not lost to the Treasury. Higher incomes mean higher tax collections, too.

The idea of Federal standards which State laws must meet is not new. The present unemployment-insurance law has standards which the States must meet on such matters as prompt payment of benefits when due, the way in which States may reduce taxes, the grounds on which benefits may be denied, and the maintenance of a merit system for State employees. The States must meet these standards or pay the full Federal tax of 3 percent of payrolls.

The Reed bill itself is directed toward changing some of the Federal provisions which affect the States such as coverage and reduction of The Truman administration recommended a Federal standards bill which was introduced in the House by Congressman McCormack.

The real issue is not whether there should be Federal standards but whether the workers should receive more protection. The very same employer organizations, which ask you to leave benefit provisions to the States, lobby vigorously in the State legislatures to defeat bills we support that would improve benefits by State action.

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Our members are tired of having every suggestion they make for aiding unemployed workers defeated by the argument that some other method should be used. We have turned to collective bargaining for guaranteed annual wages as another approach to the problem. big corporations say: "This is not a fit subject for collective bargaining. The jobless are supposed to be taken care of by unemployment insurance." And they continue their efforts to weaken the State laws.

They try to give you the impression that American wage earners will not have an incentive to work if they get an average of more than $25 a week when they cannot find jobs. This is nonsense. The great majority of CIO members have definite seniority rights and a place

on seniority lists. If the company for which they have worked calls them back, they must go or forfeit their rights. They have a definite financial stake in resuming their old jobs. This is in addition to the desire of the great majority of American workers to work rather than be idle.

The incentive that is lacking in our society is the incentive for management to provide steady jobs in ever-growing numbers. We in the CIO believe employers should be furnished this incentive by guaranteed wage plans and decent unemployment-insurance benefits. We want jobs, not pay for idleness. If there is unemployment, let the cost be properly shared by employers and the Government rather than inflicting disastrous loss on innocent families.

Employers have been far more successful in cutting costs than workers have been in securing better benefits. For years the average tax rate paid by employers for unemployment insurance has been only a little more than 1 percent under the State laws. For 1953 the figure was 1.3 percent. This is less than one-half the 2.7 percent allotted as the State's share in 1935. As Prof. Richard A. Lester, of Princeton University, has said:

While employer contributions were reduced by two-thirds, average weekly benefits declined relatively from 43 percent of average weekly wages in covered employment in 1938 to 33 percent in 1953, and the proportion of workers whose benefits were depressed by benefit ceilings rose from less than one-quarter to over one-half of the compensated weeks of total unemployment. Consequently, rough calculations indicate that probably not more than 25 percent of the wage loss caused by unemployment of covered workers is compensated for by unemployment benefits under the State laws.

I have attached to my testimony a table prepared by the CIO department of education and research, entitled "Unemployment Insurance Under State Laws," prepared in January 1954. The picture has not changed much since. California raised its benefit maximum from $25 to $30 but at the cost of other undesirable changes. Michigan, as a result of a hard fight led by the CIO, now has a maximum ranging from $30 to $42, varying with the number of dependents. It also extended possible duration to 26 weeks but not for all workers. Virginia raised the maximum to $24 a week but made duration more limited.

The CHAIRMAN. Pardon me, Mr. Carey. I have asked the other witnesses, in consideration of the House meeting at 11 o'clock, to extend their remarks in the record. Of course, the bells will ring very shortly. If it was possible really to cover this and get over there and prepare for what we have to do this afternoon, I would let you go on and finish, but I hope you will cooperate and let us extend you remarks. That will give Mr. Forand or someboy who might wish to ask some questions an opportunity to question you. Is that agreeable to you, sir?

Mr. FORAND. Mr. Chairman, it is still 10 minutes before the bells ring, and even after that you know the rule is coming up and that will take an hour and you are going to have a quorum call shortly after 11 o'clock. I suggest that Mr. Carey be permitted to finish his statement, at least.

The CHAIRMAN. I am only asking him to cooperate to the same extent that I asked the other witnesses.

Mr. FORAND. We have no more witnesses, and I suggest we allow Mr. Carey to use the remaining time.

The CHAIRMAN. I know I have plenty of work to do up in my office; but, if somebody wants to take over and preside, that is all right.

Mr. CAREY. Mr. Chairman, you asked me a question. May I answer it?

The CHAIRMAN. Yes.

Mr. CAREY. You asked me if I would cooperate with the chairman in this proposition. I would like to finish my statement. I do not know the restrictions imposed upon the other witnesses; but, if you have imposed restrictions on other witnesses by limiting their testimony to not even a completion of their statement, and those other witnesses represented the working people of this country, I think I cannot agree to any of the limitations you seek to impose in dealing with what we consider is the most important question confronting the wage earners of America; namely, What is going to be done for the unemployed?

Our corporations in America have periods of the highest prosperity in terms of profitability. In General Electric Corp. they made 42 percent more profit this quarter compared with the same period of last year. Their dividends are 60 percent over the peak year of 1953, and 20,000 GE employees were laid off. We ask if serious consideration can be given in keeping with the importance of the question. I submit the statement to the committee to see if they cannot give consideration to the interest of the wage earners of the United States of America during this period of great need on their part. I am sure the committee members have matters perhaps of what they consider of greater importance and that takes their attention at this time. No, sir, I cannot agree to limiting the presentation of this most serious question.

The CHAIRMAN. Sir, I am not going to cut you off if I can get Mr. Kean to preside.

Mr. KEAN. What do you have, about two more pages, Mr. Carey? Mr. CAREY. I will try to speed it up, Mr. Kean.

The CHAIRMAN. We thank you sir for your appearance and the information you have given up to this point.

Mr. KEAN (presiding). Go ahead, Mr. Carey.

Mr. CAREY. If you will glance at the table, you will see how low weekly benefits are in many States. You will see that only 3 States pay benefits for as long as 26 weeks to all eligible workers. The last column shows how widely employer contribution rates vary from State to State. In Alaska, Massachusetts, and Rhode Island, the average in 1952 was 2.7 percent. But in many States it was 1 percent or lower.

Rhode Island and Massachusetts, which are hard-hit by the migration of industry to the South, are further handicapped by the cost of meeting the unemployment that results. In each State, employers argue that if benefits and contributions or taxes go up, then industry will not be attracted to the State or will go elsewhere. Interstate competition hampers State action and makes national action essential. Only last month we were sent a memorandum analyzing the Mis

sissippi law and arguing for more restrictive provisions. This memorandum pointed out:

Neighboring States have, instead of Mississippi's $30 maximum, the following maximum benefits: Louisiana and Georgia, $25; Alabama, Tennessee, and Arkansas, $22; and Texas, $20.

It is customary for employers, in fighting better benefits, to make similar comparisons of provisions in other States.

We would have more success in the State legislatures if they were truly representative of industrial areas. But a great many do not give equal voice to the large population now concentrated in cities. The people who need unemployment insurance are completely outvoted by representatives from rural areas who follow the wishes of the organized employers.

Unless Congress acts, therefore, benefits will continue utterly inadequate.

The improvements in financing incorporated in the Forand bill are valuable in themselves and will help bring about more humane benefits. The bill would make Federal grants available to a State like Rhode Island so that she could pay more adequate benefits without raising her tax rates still further. Such a provision would be far better than the other Reed bill, H. R. 5173, which the House passed last year, before the recession began.

A memorandum from the Interstate Conference of Employment Security Agencies, supporting that Reed bill, clearly revealed the desire of the State administrators to hold down benefits in Rhode Island. That memorandum was introduced in full in the record of the Senate Finance Committee. In dicussing the provision of the Reed bill for repayment of the loan through raising the Federal tax, the interstate conference memorandum states:

Belt tightening by both-labor and management-would be essential to simply getting out of trouble. If, in addition, a loan had to be repaid when the system was again solvent, further and protracted belt tightening would be required. As long as the loan didn't have to be repaid and more could be had without definite repayment strings, why cut benefit rates and raise contribution rates, etc. In this sense the loan without definite repayment proviso would be

worse than a grant.

Rhode Island is not the only State in which harsh provisions for repayment of loans will tend to hold down benefits. The heavier the unemployment in the months and years ahead, the greater the number of States that will find that the reserves they have accumulated will be too small for making adequate unemployment insurance payments.

The Forand bill would give Rhode Island aid without forcing her taxes higher; H. R. 5173 has the unfortunate effect of forcing up rates, putting pressure on benefits, and thus accentuating unemployment in the States.

The Forand bill has other improvements in regard to financing. Thus it would provide a $25 million contingency fund for meeting unforeseen increases in administrative costs.

Even more important, it would change the Federal standard in regard to State-tax arrangements by permitting States to provide for uniform rate reductions to all employers. The present Federal clause permits States to reduce taxes below the 2.7 percent rate only on the