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Let us be realistic. If both of these agencies were administered under the authority of the United States Department of Labor, largely dominated and controlled by the national leaders of organized labor, the inevitable result will be that the State agency will have greater difficulty in convincing the employers of its impartiality and be further handicapped in securing employer cooperation with the local employment offices.

I believe that it is well known that the national organized labor groups are still exerting their influence to federalize our whole system of unemployment compensation. To now place the administration of these programs in the Labor Department, whose policies are largely determined by these groups, would be a far step in the direction of federalization.

We submit that this is contrary to the best interest of those affected by the unemployment-compensation program. To permit administration of this broad insurance program by a Federal agency dominated entirely by representatives of the beneficiaries of these funds is not sound governmental procedure.

If it were proposed to place the administration of this insurance program nationally in the Commerce Department, which would probably be just as logical, we would expect objections from the labor group.

It has also been pointed out here that these same labor groups are opposed to merit rating, which is a fundamental part of practically every State law today. This is the feature of the State laws which permits the allocation of the cost of unemployment compensation to industries in proportion to the amount of unemployment, which en-courages employers to stabilize their employment, thus preventing unemployment, and which sustains the interest of the employers in the quality of administration.

As one of those who was charged with a share of the responsibility of administering the unemployment-compensation program in Ohio, I have become convinced that, without the employers' interest in how this law is administered, no program of this kind can be operated without opening the door to abuses of many kinds.

For example, the unemployment agency must rely upon the employer to furnish wage data, as well as other information necessary to determine a claimant's eligibility for benefits such as reason for separation, number of weeks worked, and so forth. Without some employer interest in this program, difficulties would increase in obtaining this vital information.

The destruction of merit rating would also destroy this interest. A program of this kind needs the sustaining influence of the labor groups on the one hand, the employer groups on the other, and an impartial administrative agency such as the State legislature or Congress in establishing general rules and policies.

It has also been called to your attention before this committee that the so-called task force, an agency working under the Brookings Institution retained by the Hoover Commission to make a study of these departments, could find no facts justifying this proposed transfer. Instead, it stated that

-A decision must be arrived at on the basis of judgment, and in the last analysis this judgment must be exercised by the duly elected representatives of the people.

We know what that judgment has been in the past by those who are the duly elected representatives of the people, namely, Congress. There has been a consistent record of retaining these services under the jurisdiction of an impartial agency which is not subordinated either to interests of a Labor Department or to any employer-dominated agency.

It has been suggested that possibly one reason for this proposal was out of sympathy to a Labor Department whose authority and functions have been decreased during the last few years. Congress surely had some very good reasons for its action taking away certain functions from this Department. Does mere sympathy for a Labor Department which has not conducted itself so as to hold this public interest justify this reward?

While we are on the subject of task forces, the New York HeraldTribune carried an article under date of July 9, 1949, written by Mr. James E. Warren, in which was discussed a part of the task-force report which recommended the repeal of the Federal unemployment tax and part of the social-security law so that the various States would have complete control over unemployment compensation. For some reason this part of the task-force report apparently has not as yet been released, but it might be well if this program is to be reexamined in line with suggestions which were made here yesterday, that recommendations of this kind be considered. I believe this would also be in line with the recommendations of a committee headed by Senator Bricker known as the Committee on Coordination of Federal and State Taxes. As I understand, this committee is composed of 15 State governors, 10 Congressmen, and some 6 Senators, which met, and made a recommendation similar to the one suggested by the task force of the Hoover Commission.

In conclusion, if this proposed transfer is justified now, then President Roosevelt was wrong when he gave these responsibilities to an independent and impartial agency, and Congress was wrong in accepting this action at that time.

If this proposed transfer is right now, then Congress was wrong in 1947 in deciding to retain this independent status.

If this proposed transfer is right now, then again both Houses of Congress were wrong in 1948 in rejecting a similar proposed transfer. If this proposed transfer is right now, then all of those who have testified that the best interests of employees, employers, and the public can be served by continuing the administration of these services under an impartial agency, have been wrong and lacking in good judgment. We believe that no such errors have been committed in the past and that the proposal today has no more merit now than it had then. May I say before I close that Ohio industry favors the greater part of the recommendations of the Hoover Commission, but we believe that the proposed transfer of unemployment and employment services to the Labor Department is out of harmony and inconsistent with the other parts of this report which deal with practical recommendations for economy, efficiency, and elimination of duplications of Government operations.

For these reasons, Ohio industry, through the Ohio Manufacturers' Association, registers its objection to the proposed transfer of unemployment and employment services to the United States Labor Depart

ment.

I thank you.

The CHAIRMAN. Mr. Mackey, it simply amounts to this, does it not? You just do not trust the Labor Department to administer the law fairly. Is that what it amounts to?

Mr. MACKEY. I suppose it could be put in those words. I have tried to use words that were a little less blunt.

The CHAIRMAN. I think we ought to be frank about it when we are trying to develop the facts. That is the impression I get-that there is simply a feeling that the Labor Department is biased; that it wants to take over complete control and management of this service; and that business-large business, all business generally-feels that the Labor Department would not give this service the same impartial and fair administration as an independent agency or the State would give it. Mr. MACKEY. And we feel, Senator, that the record in the past would indicate just that.

The CHAIRMAN. I would like to inquire about this. You say an example of the principles of those who advocate the domination of this program by the Labor Department is found in the Thirteenth Annual Conference of Labor Officials here in Washington in 1946. Who composed that conference of labor officials?

Mr. MACKEY. I don't know whether I have the exact membership here. I will try to furnish it, if it is available.

The CHAIRMAN. Was that labor conference composed of Department of Labor officials or organized labor officials, or both?

Mr. MACKEY. It was sponsored by the United States Labor Department and the Department invites the various State and local labor officials, such as the various State directors of the departments of labor-industrial relations department, we call it in Ohio-as well as the leaders of the national labor organizations.

The CHAIRMAN. Was it held under the auspices of the Labor Department?

Mr. MACKEY. That is my understanding.

The CHAIRMAN. I notice that it was recommended by that conference that

in testing an unemployed worker's availability for work, no general requirement for "actively seeking work" outside of registration in a public-employment office be incorporated in any State law.

In other words, there is no duty-no obligation-on someone out of work to seek work. The obligation rests upon this service to provide unemployment compensation, whether he seeks work or not.

Mr. MACKEY. That is right, Your Honor.

The CHAIRMAN. Is that the effect of this recommendation?

Mr. MACKEY. That would be the effect. In Ohio it would have the very practical effect of allowing a person merely to register and not look for work further. It is a matter of record that only 10 percent of the jobs that are filled in Ohio are filled through the public-employment service. When we restrict his availability to merely filing at a public-employment office, we are really restricting his availability to 10 percent, because only 10 percent of the openings are so filled. The CHAIRMAN. That is what you are apprehensive about. Mr. MACKEY. That is right.

The CHAIRMAN. That situation will be established if this Service is put under the Department of Labor, and that is one illustration that you give.

Mr. MACKEY. That is correct. May I give you another? During the last session of our legislature our legislature saw fit to write into the law a provision known as the noncommunistic affidavit provision, requiring a claimant for benefits to sign such a certificate before he drew any money out of the State fund. It wasn't long after this was introduced and passed in the house that we received word from Washington that this did not meet the approval of the Social Security Agency and would possibly throw the Ohio law out of conformity, thereby denying the right to Ohio employers to secure their offset against the Federal excise tax. We have a Governor in Ohio who has a mind of his own, who I understand immediately got on the telephone and asked whoever in Washington had the authority to make such a decision to put it in writing and send it to him post haste. To make a long story short, and it was rather a long story, lasting about 2 days, consisting of telephone conversations, and so forth, no one saw fit to put this ruling in writing and tell the State legislature that the inclusion of the noncommunistic affidavit provision would actually throw the Ohio law out of conformity.

That is just another illustration, Your Honor, of the potential power and authority that is actually exercised regardless of what the congressional intent may have been, but what is actually exercised by this central control that is lodged here in Washington. A threat, Your Honor, to throw the Ohio law or any other law out of conformity with the Federal law is sufficient to almost destroy any amendment which is proposed or to induce the inclusion of almost any amendment in a State law.

The CHAIRMAN. Senator McCarthy? Senator Ives?

Senator IVES. I think you will agree, Mr. Mackey, that these two particular functions should be in one agency of Government.

Mr. MACKEY. Yes, sir; I do.

Senator IVES. You are not quarreling about that at all,

Mr. MACKEY. I am not.

Senator IVES. I want to get certain things clear for us.

The next thing I want to point out to you is that I do not think you can construe the action taken by the Congress in 1947 and 1948 as a mandate for anything in particular.

Mr. MACKEY. Possibly not.

Senator IVES. I point out particularly, with respect to action taken by the Congress in 1948 that a great many of us were opposed to that proposal, opposed in part at least, because we were awaiting the Hoover recommendation. We thought it inadvisable to go ahead until we had a proposal from them. a proposal from them. We now have their recommendation.

There is just one more question I would like to raise, and that is this: You seem to be fearful of the influence of the Department of Labor in the way in which this whole system of unemployment compensation will eventually be determined. You were here yesterday, were you? Mr. MACKEY. I was, sir.

Senator IVES. You heard the conversation, probably, between the distinguished Secretary and myself in which it was finally pointed out that after all the Congress itself determines this question. It does not make any particular difference whether it is the Department of Labor that you have or any other department, as far as the law itself is concerned.

I realize the intent and I realize the interpretation and all that, but I think you will recall that the law was read into the record yesterday, and based on the testimony of the representatives of the Department of Labor, it was indicated that beyond a certain point they cannot go in their interpretation or in their regulations. In the final analysis it must rest with the Congress to decide. I think that perhaps in that connection there is an undue amount of fear being expressed on the part of a great many people because, after all, it does rest with the Congress. Do not think that I am not sympathetic toward unemployment compensation and unemployment insurance and experience rating in particular. It was largely because of my own personal efforts that that whole system was instituted in the State of New York, and in doing so we got organized labor with us in the undertaking. We all worked together on it. But I do not entertain the fears for that reason due to my own experience that so many are expressing, because I do recognize that it does rest finally in the Congress. You might get the most conservative labor department known to man, and if you suddenly got a Congress in the other direction, that would make no difference, and vice versa it would be equally true.. I simply want to point that out.

Mr. MACKEY. May I comment?

Senator IVES. Surely. We are trying to clear up these things.

Mr. MACKEY. I certainly don't disagree with you, Senator, and I wouldn't charge anybody with intention to violate the law. Senator IVES. I did not mean to infer that.

Mr. MACKEY. I didn't mean that either, if there were any inferences of that kind. I do feel, however, that there is a wide field of discretion in the authority which is granted to whichever Federal agency it is lodged in here in Washington. We in the States feel this very definitely, and anyone who has had any part in the administration of one of these programs is everconscious of that influence. We would like to have whatever that influence is one which beyond any question or doubt is impartial in every way. That is all we are asking. The CHAIRMAN. Senator Smith?

Senator SMITH. I have no questions.

The CHAIRMAN. Thank you very much, Mr. Mackey.

(The prepared statement of Mr. Mackey follows:)

STATEMENT BY WALTER J. MACKEY ON BEHALF OF THE OHIO MANUFACTURERS ASSOCIATION, COLUMBUS, OHIO

Reorganization plan No. 2 of 1949, prepared by the President and submitted to the Senate and House of Representatives on June 20, 1949, pursuant to the provisions of the Reorganization Act of 1949, provides that the Bureau of Employment Security of the Federal Security Agency, including the United States Employment Service and Unemployment Compensation, shall be transferred to the Department of Labor.

It is proposed that the functions of the Federal Security Administrator with respect to employment services, unemployment compensation, and the Bureau of Employment Security, together with the Administrator's functions under the Federal Unemployment Tax Act, be transferred to the Secretary of Labor.

It is provided that if this transfer takes place, functions so transferred shall be performed by the Secretary of Labor or subject to his jurisdiction and control, by such officers, agencies, and employees of the Department of Labor as the Secretary shall designate.

As we all know, this reorganization plan No. 2 of 1949 is one of a number of reorganizational proposals which have resulted from what appears to be an

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