election the largely Cuban crew voted 4 to 1 for the SIU.

Settlements in aircraft manufacture were virtually completed with an agreement late in June between the Machinists and Boeing Airplane Co. covering 37,000 workers at the Seattle plant. Wage increases ranged from 16 to 20 cents an hour and were retroactive to May 22; another 3-percent increase is due in May 1959. In addition to fringe benefit improvements in the 2-year contract, the parties established wage determination and performance analysis committees.

JUNE CONVENTIONS of several unions took important actions affecting internal affairs. The Communications Workers raised officers' salaries (the president now receives $22,500), but by a narrow margin rejected a 50-cent increase in the monthly per capita tax. Two rail unions made changes in top leadership. H. C. Crotty succeeded T. C. Carroll, who retired as president of the Brotherhood of Maintenance of Way Employes; five other officers also retired; a $6 annual dues increase was voted. James A. Paddock, 42-year-old officer of the Order of Railway Conductors and Brakemen, was elected president to succeed R. O. Hughes, who retired. The Retail, Wholesale and Department Store Union raised the per capita tax on locals by 10 cents a month and changed the presidential salary from $15,000 to $20,000.

A meeting in mid-June of the National Conference on Labor Health Services brought to public discussion what the New York Times editorially described as the "differences between organized labor and organized medicine over health protection for union members and their families." The labor group, led by the United Mine Workers Welfare and Retirement Fund, which operates 10 hospitals staffed by Fund doctors in mining communities, defended prepaid medical plans and group practice by a closed panel of physicians against charges by the American Medical Association and its affiliates that free choice of physician was thus barred. It called upon the AMA to offer a "constructive alternative." The AMA has contended that the right to choose one's own doctor is "almost as much a part of our basic freedoms as the right . . . to speak and to vote as one pleases."

WITH BUT ONE DISSENTING VOTE, the Senate passed a bill designed to protect the rights of union members and to control certain labor union activities. As of mid-July, the House had not acted on the measure. Major features of the bill include reports on fiscal and certain internal operations to the Secretary of Labor, with severe penalties for evasion or falsification of reports; similar disclosure of conflict-of-interest transactions by union officers; periodic election of constitutional officers directly by secret ballot or by delegates so elected; provision for removal of officers by members under procedures to be established by the Secretary of Labor; limitations on trusteeships; a ban on union funds for promoting candidacy for union office; outlawing of shakedown picketing; voting rights to economic strikers in representation elections; non-Communist oaths by employers as well as union officers; and a directive to the National Labor Relations Board to assert authority over all cases within its jurisdiction, except where by agreement cases are ceded to States having laws consistent with Federal law. Sixteen States and other jurisdictions by July 15 had taken full advantage of Federal funds made available for extension of unemployment insurance benefits to jobless workers whose eligibility had expired; an additional five States were using State reserves for the same purpose. The Labor Department estimates that about twothirds of the unemployed who had exhausted their benefits since June 1957 were in those States.

On June 16, the U. S. Supreme Court held, 6 to 3, that "hot cargo" clauses were legal in labor contracts, but unenforceable unless the employer agreed. In a 7-to-2 decision on June 23, the Court said the draft law's reemployment provision does not supersede a contractual provision on promotions; if a union agreement allows an employer discretion in promoting workers, a returning veteran, while entitled to his old job, is not thereby entitled to a promotion he might have received, unless the employer so desires. In an 8-to-1 opinion on June 30, the Court maintained that unions do not, as a matter of legal right, enjoy the same privileges of management in communicating with employees on company property, and that they must adhere to company rules if other means of communication are available.

Benefit Levels in Workmen's Compensation

EARL F. CHEIT*

THIS YEAR MARKS the 50th anniversary of workmen's compensation legislation in the United States. Compared with the common law and employers' liability systems that it replaced,1 workmen's compensation has made an impressive record.

But when the achievements of workmen's compensation are appraised by the changes over the past 20 years in weekly wages entering into compensation benefit formulas, neither the record nor the prospect for the future is nearly so impressive. Although workmen's compensation systems have made commendable progress in some areas, some benefits have not only failed to keep pace with wages but have also slipped backwards.

Cash Benefits for Temporary Disability

Cash benefits were the most important single feature of the first workmen's compensation laws and were designed to provide an injured worker i with some income while his earnings were cut off by job-connected disability. They were usually set within fixed dollar limits, at from one-half to two-thirds of weekly earnings. The actual amounts were compromises between the desire to compensate substantially all job-connected injuries and the fear that industry might be unduly burdened. Benefits were to be adequate for the injured worker's support during disability (or for his dependents for a reasonable period after his death), but not high enough to dull work [ incentives.2

Since the compromise benefit amounts that emerged were the initial cautious gropings of a

new program, it would seem reasonable to expect that as workmen's compensation became an accepted and sturdy social insurance system, its benefit performance would improve. But this has not uniformly happened. In fact, cash benefits today sometimes restore a smaller proportion of lost weekly wages than they did under the earliest laws.

Twenty-three American workmen's compensation laws were in effect in 1914. For that year, average weekly earnings for production workers in manufacturing were $11.01.3 The average weekly dollar benefit limit of the compensation laws was $12.23. Thus, it is safe to assume that indemnity benefits paid to all covered workers reached the full percentage maximum, which for these early laws averaged 57.9.5

This was true until the 1940's. At the beginning of that decade, no law offered benefits for temporary-total disability above $25 weekly, and half of the laws stipulated maximums of less than $20 a week. But with average wages of employees estimated at $26 a week, these dollar limits were high enough to give virtually all injured workers a benefit equal to the full percentage of their lost earnings permitted by law. By 1949, however, wage increases had outstripped dollar benefit changes to the extent that this was true in only five States.7

Herein lies the paradox of benefit maximums. Absolute dollar benefit limits have forced a decline

*Associate Research Economist, Institute of Industrial Relations, University of California (Berkeley). This article is adapted from a paper presented by the author at a 1958 symposium on workmen's compensation sponsored by the Institute.

1 A summary of the common law and employers' liability approaches to occupational disability and their effects appears in John R. Commons and associates, History of Labor in the United States, 1896-1932 (New York, Macmillan Co., 1935), Vol. III, pp. 564–570 and 572-575.

For the benefit standards outlined in the 1912 Report of the Federal Employers' Liability and Workmen's Compensation Commission, see Walter F. Dodd, Administration of Workmen's Compensation (New York, Commonwealth Fund, 1936), p. 619.

'See BLS Historical Estimates of Earnings, Wages, and Hours (in Monthly Labor Review, July 1955, p. 803).

Arthur H. Reede, Adequacy of Workmen's Compensation (Cambridge, Mass., Harvard University Press, 1947), p. 148.

• Ibid.

• Average weekly wage for workers covered by unemployment insurance was $26.15 in 1939. See Supplement to Handbook of Unemployment Insurance Financial Data, 1955 (U. S. Department of Labor, Bureau of Employment Security, Unemployment Insurance Service, 1956), p. 2. No comparable national average wage for workers covered by workmen's compensation is available. The average weekly wage in all manufacturing in 1939 was $23.86. See Monthly Labor Review, Table C-2, this issue. Thus, the estimate of $26 is, if anything, a liberal one.

'Dorothy McCamman and Alfred M. Skolnik, Workmen's Compensation: Measures of Accomplishment (in Social Security Bulletin, March 1954, p. 7).

in the percentages of average weekly wages restored by indemnity benefits. For example, before California raised maximum benefits in 1957, its $40 weekly maximum meant that only those workers who earned less than $64.78 weekly could actually recover the full 61% percent of the wage loss entitled by the law. A tabulation for September 1956 shows that 3 of every 4 workers injured in California were earning more than $64.78 and consequently received less than this full percentage amount.'

Effect of Dollar Limits

The effect of dollar benefit limits in holding indemnity payments below allowed percentage limits is apparent in the accompanying table, which lists the maximum percentage and dollar weekly benefits available to workers temporarily and totally disabled in 51 American jurisdictions. The percentage limits in August 1957 ranged from a low of 50 percent of the weekly wage in Montana and Oregon to a high of 97% percent in Illinois. The rise in weekly wages since 1939 has shifted importance from these percentage limits to the weekly dollar benefit limits, which ranged from a low of $25 in Mississippi to $150 (excluding dependents' allowances) in Arizona in 1957.

Up to the stated weekly dollar benefit limits, the percentage limits alone define the degree to which an injured worker is required to coinsure his earnings loss due to occupational disability. For most States, this burden is about one-third of the weekly wage.

When an injured worker's weekly wage reaches the point where the percentage benefit allowance would yield a dollar benefit greater than the cash. benefit limit, however, he becomes a full insurer of that part of his wage loss. Column 3 of the table indicates the ratios of the dollar limits to the percentage limits, and the amounts shown represent the weekly wage above which a worker becomes the full insurer of his wage loss. Thus, workers in Iowa are coinsurers of one-third of their wage losses up to weekly earnings of $48; beyond this amount, they become full insurers.

Comparison of the average weekly wage (col. 4) with the maximum wage on which coinsurance can apply (col. 3) indicates that actual wages are higher by 10 percent or more in all but 13 jurisdictions. Thus, the workers in 38 jurisdictions

Moreover, the maximum insured wages are calculated on the assumption that benefit limits include full dependents' allowances. When insured wages are computed on basic benefits excluding those allowances in the 14 jurisdictions that offer them, they approximate average wages in only 7 States. At the other end of the scale, workers are full insurers of 40 percent or more of their wage loss in 7 States.

Few jurisdictions maintain complete records of occupational disability and workmen's compensation benefit payments. Therefore, to gage average workmen's compensation benefit performance from the maximum percentage and weekly dollar benefit limits alone requires assumptions about wage losses, duration of disability, geographical distribution and distribution to dependency groups, the effect of waiting and recapture periods, benefit amount, and duration limits.

Studies of individual State experience indicate that benefits are from 30 to 55 percent effective in restoring lost weekly wages; 10 and one national estimate, which seeks to take account of all of the variables listed, concludes that benefits are perhaps only one-third effective in restoring lost weekly wages. Even if a generous allowance is made for possible errors in these estimates, weekly compention benefits to the temporarily and totally disabled are, on the average, restoring less than onehalf of lost wages.

Cash Benefits and "Adequate Compensation"

Although nearly 95 percent of all occupational disability cases are temporary, a warranted inference about the adequacy of workmen's compensation cannot be made from the benefit estimates

Sixty-five percent of 95 percent of actual earnings.

See Weekly Wages of Injured Workers, California, September 1956 (San Francisco, California Department of Industrial Relations, Division of Labor Statistics and Research), p. 1.

10 A review of several such studies appears in Herman M. and Anne R. Somers, Workmen's Compensation (New York, John Wiley & Sons, 1954), pp. 67-81.

11 McCamman and Skolnik, op cit., pp. 8-9.

alone. Workmen's compensation is a State system; and the wide differences in cash benefits available from State to State limit the value of generalizations about average benefits. Moreover, judgments about adequacy must also take account of amendments which have extended compensation coverage to new groups of workers, expanded the period of benefit payments and upper limits Ion benefits, provided life-time benefits for permanent disability in some States, broadened medical benefits, and introduced rehabilitation services.

It is clear that adequate cash benefits are not, in I themselves, a sufficient condition for adequate workmen's compensation, but certainly they are a necessary one. And when benefits to all categories of disability are considered, few jurisdictions can meet even a relaxed standard of adequacy.

Indemnity benefits restore to the severely injured worker and to dependents in death cases an even smaller proportion of wage losses than is provided to the temporarily disabled. Studies of individual State experience reveal that for States of

13 Reede, op. cit., pp. 179-228; and Somers and Somers, op cit., pp. 78-79. 13 For a list covering all American jurisdictions for each benefit category, see State Workmen's Compensation Laws, August 1957, Bull. 161, revised (U. S. Department of Labor, Bureau of Labor Standards, 1957).

"average generosity," indemnity benefits restore, at best, 25 percent of lost wages to victims of permanent-total or severe permanent-partial disability and to survivors in death cases.12

These wage losses result from limiting percentage benefit maximums by dollar benefit maximums. In addition, many of the laws set total dollar limits as well as duration limits for benefits in cases of severe disability.13 As a result, benefits for the severely injured often run out and, ironically, in some cases are not even as high as for the temporarily injured.

Benefits for permanent-partial disabilities are seriously limited in most jurisdictions. Over half of our workmen's compensation laws provide totally and permanently disabled workers with benefits for the period of their disability, but the remainder either reduce or cut them off at about 6 to 10 years. In death cases, the situation is similar in some jurisdictions which offer benefits of $10,000 or less, or slightly over the average amount which a factory worker earns in 2 years.

While it is not possible to define precisely the average degree of protection offered by workmen's compensation cash benefits, when all of these facts about indemnity benefits are considered together,

it seems clear that workmen's compensation is restoring to the occupationally disabled an average of well under one-half, and more likely, no more than one-third, of lost wages.

Payments for Dependents

Some States have sought to make benefit levels more adequate through supplemental allowances for dependents—a principle followed in the Old Age and Survivors Insurance program and in 11 State unemployment compensation laws. Workmen's compensation laws of 14 jurisdictions 14 currently offer such benefits. Dependents' allowances operate quite simply: they entitle a claimant to payment in addition to the basic benefiteither a higher percent of wages paid as benefits or a stated dollar amount (typically a few dollars weekly for each dependent) but subject in either case to stated limits.

Effects on the System. Dependency allowances result in increased aid to some beneficiaries. But is the net effect of dependents' allowances favorable on the system as a whole or on all beneficiaries? These questions are often raised by trade unionists who fear that dependents' allowances tend to become self-defeating. Unions have often argued that a wage policy which includes dependents' allowances may tend to hold basic wage levels down. Apparently this has also been the case in workmen's compensation.

For the jurisdictions with dependents' allowances shown in the table, the top dollar benefit for temporary-total disability (including dependents' allowances), compares favorably with most other States. If Alabama, which has a maximum of $31, and Vermont with $30 (plus $2 per dependent under 21) are eliminated, none of the States offer less than $40, and most offer considerably more.

But the ranking of these 14 jurisdictions by the percent of average wages represented by maximum benefits without dependents' allowances is drastically different. Arizona still ranks first on this standard. But 6 of the States-Idaho, Illinois, Michigan, Montana, Oregon, and Washingtonare included in the 7 States with the lowest basic benefits. None of the others ranks higher than

21st among the 51 jurisdictions for which th comparison can be made.

In other words, with the exception of Arizona dependents' allowances are found in the State where basic weekly maximum benefits are amon the poorest. It may be hard to determine whic is the cause-dependents' allowances or low basi maximum benefits-but it is clear that while de pendents' allowances might help injured worker with large families, they are of little value t others. Illinois, for example, offers benefits up t a limit of 97% percent of the weekly wage in case of dependency. Its benefit range is from $30 t $45. Yet according to a study of Illinois experi ence, 3 out of every 4 injured workers in tha State will be paid the smaller amount.15 Whether or not the proportion of beneficiaries who receive no dependents' allowances is that high in all jurisdictions cannot be determined, since dependency data are not available. From other data, however, it seems clear that the number is at least one-half. For these workers, dependents' allowances appear to be an excuse for low basic benefits.

Even injured workers who are eligible for dependents' allowances may find them of very limited value. As the table indicates, amounts are small, and they actually increase available income by a far smaller percentage than is necessary for support of dependents.17

Historically, American social insurance systems have avoided flat benefits plus dependents' allowances (a practice followed in England). However, in many cases departures from the philosophy of relating the amount of benefits to wages have been made because of the problem that the lowest paid workers would receive the lowest benefits. Thus, those who are in the poorest position to withstand an earnings loss would be given

14 Alabama, Arizona, Idaho, Illinois, Massachusetts, Michigan, Montana, Nevada, North Dakota, Oregon, Utah, Vermont, Washington, and Wy. oming. In four States, Idaho, Oregon, Washington, and Wyoming, this differential benefit treatment is also based on marital status.

15 H. A. Katz and E. M. Wirpel, Workmen's Compensation, 1910-1952: Are Present Benefits Adequate? (in Labor Law Journal, Chicago, Commerce Clearing House, March 1953, p. 173).

10 Dependency data gathered by the California Department of Industrial Relations revealed that there are no minor children in 50 percent of death cases. This figure is remarkably stable over the past decade. See Depen. dents of Workers Killed in On-the-Job Accidents, annual reports, Californis Department of Industrial Relations, Division of Labor Statistics and Research.

17 See Katz and Wirpel, op. cit., pp. 175-176, for a detailed criticism of Illinois dependents' allowances on this issue.