(The statement filed by Mr. James C. Lucas for Rowland Jones, Jr., is as follows:) STATEMENT OF ROWLAND JONES, JR., PRESIDENT OF THE AMERICAN RETAIL FEDERATION, SUBMITTED TO THE SENATE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS IN OPPOSITION TO REORGANIZATION PLAN No. 2 OF 1949 The American Retail Federation is a federation of 35 State-wide associations of retailers and 18 national retail trade associations. Its principal office is located at 1627 K Street NW., Washington 6, D. C. The membership includes: California Retailers Association Delaware Retailers' Council Florida State Retailers Association Georgia Mercantile Association Idaho Council of Retailers Retail Merchants Association of Texas Vermont Council of Retail Merchants Associated Retailers of Washington Illinois Federation of Retail Associa- West Virginia Retailers Association, tions Associated Retailers of Indiana Michigan Retailers Association Retail Merchants Association of New New York State Council of Retail Mer- North Carolina Merchants Association, Ohio State Council of Retail Merchants Retail Merchants Association of South Retail Merchants Association of Ten- Inc. American National Retail Jewelers As- Associated Retail Confectioners of the Association of Credit Apparel Stores, Institute of Distribution, Inc. Mail Order Association of America National Association of Credit Jewelers National Association of Retail Clothiers National Association of Shoe Chain National Retail Dry Goods Association National Retail Furniture Association Retail Credit Institute of America, Inc. The members of the American Retail Federation, representing upwards of 500,000 retailers, wish that the Committtee on Expenditures in the Executive Departments know that they are opposed to Reorganization Plan No. 2 of 1949. In the opinion of the federation, plan No. 2 is inimical to the best interests of retailing and to the general public, and therefore should be rejected. Retailers are mindful of the fact that on two previous occasions the Congress has spoken forthrightly in opposition to the proposed transfer of the Bureau of Employment Security from the Federal Security Agency to the United States Department of Labor. Many of our members expressed themselves to the Congress upon this issue in 1947 and again in 1948. Their reasons for opposing the transfer then are a matter of public record. Nothing has happened in the interim to change their original views. This was demonstrated by a recanvass of our membership as recently as last week. Without a single dissent, the federation's members reaffirmed their opposition in even more emphatic terms than ever. Retailers have had experience with the Department of Labor. That experience convinces them that it is a protagonist of organized labor. All the eloquent protestations of the Secretary of Labor to the contrary are unlikely to persuade employers to change their convictions upon this point. Retailers have no quarrel with the Secretary of Labor in this connection. He has a mandate clearly spelled out in the statute under which the Department of Labor was elevated to Cabinet status. You just can't convince people, however, that bias doesn't exist merely by having someone say it doesn't exist. Employers must have good grounds for the fears they have expressed about the Department of Labor on so many occasions. All of their observations cannot be mere figments of the imagination. The Department of Labor is a "special pleader," one which by tradition and by its past record cannot be depended upon to be completely objective and impartial. Employers consider that they have a substantial stake in the successful operation of the Federal-State system of unemployment insurance. They are responsible for the pay-roll taxes which flow into the State unemployment trust funds whose total now approaches $8,000,000,000. Their interest in these funds is reflected in their insistence that employer experience rating be so refined and administered as to achieve greater effectiveness in all State unemploymentinsurance laws. The Department of Labor is openly hostile to the principle of experience rating in any form and would eliminate it if it were possible for them to do so. Knowing this, it is little wonder that employers object to having the Department acquire the Bureau of Employment Security which embraces unemployment insurance and placement services. It is well understood that any department which controls these two services exercises a wide degree of latitude in the promulgation of regulations and in the exercise of its responsibility in establishing conformity of State employment insurance laws. In addition to the elimination of experience rating, officials of the Department of Labor have repeatedly expressed their support for Federal benefit standards under which benefit payments would be substantially uniform throughout the Nation. Most retail employers and in fact most other types of employers object vigorously to the establishment of Federal benefit standards because they view such Federal interference as the initial step toward the complete federalization of the system of unemployment insurance. The public too has a stake in unemployment insurance. Benefit payments help maintain purchasing power in times of stress. They help cushion the impact of unemployment upon the worker and his family over periods when he is unable to find a job. What justification is there for one partisan agency to have complete administrative control over these funds which have become imbued with a public interest? I am sure no one would seriously contend that the Bureau of Employment Security should be placed in the Department of Commerce. Yet it would be just as logical for the Department of Commerce to administer unemployment insurance and the placement service as the Department of Labor. If any economy is contemplated in the proposed transfer someone surely would have advanced this as an argument in support of the transfer. No one however, has offered economy as an argument. On the contrary every indication points toward increased costs of administering the system because it would appear necessary to set up a field organization under the Department of Labor duplicating the existing field organization in the Federal Security Agency through which the Bureau of Employment Security now operates. Retailers applaud the over-all objectives and recommendations of the Hoover Commission on Organization of the Executive Branch of the Government. They take exception, however, to Reorganization Plan No. 2. In their judgment it does not tend to promote the general welfare nor conform to the objective of greater efficiency in the Government. The American Retail Federation and its members are convinced that the Federal-State system of unemployment insurance will be more equitably administered if the Bureau of Employment Security is retained in the Federal Security Agency which is not charged by law to represent any particular segment of the population. Therefore we hope that the committee will reject Reorganization Plan No. 2 of 1949. The CHAIRMAN. I am sorry that we could not find time to hear more witnesses this morning. However, it has taken us a little longer with the Secretary than we expected. We will have to adjourn until tomorrow, as we are very busy over in the Senate and will not be able to hold a meeting this afternoon. Therefore, the committee will recess until tomorrow morning at 10 o'clock and we will try to hear first those witnesses who were scheduled to be heard today. (Whereupon, at 12 noon, the committee was recessed, to reconvene at 10 a. m., Tuesday, July 26, 1949.) REORGANIZATION PLAN NO. 2 OF 1949-TRANSFERRING THE BUREAU OF EMPLOYMENT SECURITY TUESDAY, JULY 26, 1949 UNITED STATES SENATE, Washington, D. C. The committee met at 10 a. m., pursuant to recess, in room 357, Senate Office Building, Senator John L. McClellan (chairman) presiding. Present: Senators McClellan, Long, McCarthy, Ives, and Smith. Present also: Walter L. Reynolds, chief clerk. The CHAIRMAN. The committee will come to order. We will resume hearings this morning on the President's Reorganization Plan No. 2. We have about nine witnesses scheduled to testify. We have from now until 12 o'clock. I will ask the witnesses to be as brief as they can, and if they have long prepared statements it would be well, I think, for them to file them and let them be made a part of the record, and then testify as to the high points in them. The first witness is Mr. Walter J. Mackey. Will you come up, Mackey? Do you have a prepared statement? Mr. Mr. MACKEY. I have, sír, and I have already distributed it to the clerk. The CHAIRMAN. The statement may be printed in full in the record unless you prefer to read it. Mr. MACKEY. Following your suggestion, Senator, I will not read the statement, but will possibly quote a few excerpts from it which I would like to high light. The CHAIRMAN. The only reason the committee is suggesting that is in the hope that we can accommodate all of you. Our time is crowded these days in the closing hours of this Congress. So we want to give everyone an opportunity. If we take up too much time with two or three witnesses we cannot hear the others today. You may proceed, Mr. Mackey. STATEMENT OF WALTER J. MACKEY, REPRESENTING THE OHIO MANUFACTURERS' ASSOCIATION, COLUMBUS, OHIO Mr. MACKEY. My name is Walter Mackey, and I am here today representing the Ohio Manufacturers' Association, of Columbus, Ohio, in opposition to Reorganization Plan No. 2. I might further say by way of qualification that I was appointed by the Governor of our State in 1936 as a member of the first unem ployment compensation commission and served for about 5 years on that commission and the board of review. We are opposing Reorganization Plan No. 2 today chiefly for the following reasons: When the original Social Security Act was passed by Congress, the Social Security Board was established as an independent Federal agency. The program should continue to be so administered. We are convinced that if this transfer is allowed to take place, there will be an ever-increasing effort to completely federalize our State unemployment compensation programs by those here in Washington who have tried so hard in the past, although unsuccessfully, to bring about this result. It will be remembered that so far as unemployment compensation is concerned, all of the money used to pay unemployment benefits comes from a tax upon employers exclusively. This is true in my State as well as in every other State, I believe, with the exceptions of Alabama and New Jersey. To permit the control of the administration of these laws nationally, to be exercised exclusively by the United States Department of Labor is not only unsound from an administrative point of view, in our judgment, but is a breach of faith with the States which have accepted this program on the basis that it would be a plan impartially administered here in Washington by a Federal agency dominated neither by organized labor nor by employer groups. Although there have been many things lacking, possibly, in the relationship between the present Federal Security Agency and the State administrative agencies, these difficulties we believe would be multiplied if the administration were to be lodged with the Labor Depart ment. It has been previously pointed out before this committee that the purpose of the Department of Labor is to foster, promote, and develop the welfare of the wage earners of the United States, to improve their working conditions, and to advance their opportunities for profitable employment. This is a laudable purpose for any agency which is devoted to the interest of labor exclusively. It is, no doubt, the same purpose upon which the several Nation-wide labor organizations were founded, that is, to promote the interest of labor, and while we have no quarrel with these proper objectives of labor organizations, we believe that the United States Labor Department should not have the tremendous power and authority which is potentially contained in the administration of this far-flung system of unemployment service. Take the State of Ohio as a typical example. The unemployment compensation program is made up of two principal divisions: The employment service and the unemployment compensation division. The function of one is to try to find a job for the unemployed individual and fit him to the job for which he is most capable. The function of the other is to pay benefits to those for whom jobs cannot be found. One of the important problems of the State agency is to secure the cooperation and confidence of the employers in the employment service in order to have them list their job opportunities with this agency and cooperate in the filling of these jobs. |