The CHAIRMAN. All right, Mr. Krawczyk, we will be very glad to hear you.

STATEMENT OF B. A. KRAWCZYK, ATTORNEY AT LAW; SUPERVISOR, COMPENSATION DEPARTMENT, ALLIS-CHALMERS MANUFACTURING CO., MILWAUKEE, WIS.

Mr. KRAWCZYK. Mr. Chairman and members of the committee, my name is B. A. Krawczyk. I am an attorney and supervisor of the compensation department of the Allis-Chalmers Manufacturing Co. in Milwaukee, charged with the responsibility of full compliance with the Social Security Act and the 44 State unemployment-compensation laws to which the company is currently subject. I have been engaged in this work for about 12 years.

As to my other activities I am, first, a member of the statutory Wisconsin Unemployment Compensation Advisory Committee, which consists of an equal number of labor and business representatives. Second, Chairman of the Security Committee of the Wisconsin Manufacturers' Association. Third, member of the social security committees of both the Wisconsin State Chamber of Commerce and the Milwaukee Association of Commerce.

I am likewise engaged in similar committee work in other States. My appearance here this morning has been authorized by, first, the Wisconsin Manufacturers' Association, which consists of approximately 1,100 members, representing manufacturing firms employing around 83 percent of all employees of manufacturing enterprises in Wisconsin. About 360 of these members represent firms employing less than 50 employees.

Second, the Wisconsin State Chamber of Commerce, which consists of some 2,000 members, the majority of whom are small business representing many types of businesses as well as local chambers of commerce and various trade associations.

Third, Milwaukee Association of Commerce, representing 3,000 members, about 80 percent of whom are small employers and professional men.

I appreciate that the committee has held hearings for the last 2 days and has heard the viewpoints of many of the employers as to why Reorganization Plan No. 2 should be defeated. I, therefore, out of consideration of your time and in order to avoid being overly repetitious, have summarized my statement to cover our main objections to this plan.

We in the State of Wisconsin, as you know, were the first to enact an unemployment-compensation law. It was established on the theory that the primary purpose of unemployment compensation is the stabilization of employment, and the secondary purpose, the payment of benefits, a penalty, so to speak, upon the employer for failure to provide steadier jobs. Wisconsin has always been the champion of experience rating ever since the inception of its law and intends to so continue.

Provisions for reduced employer contributions under experience rating in State laws are specific and well defined; the Federal law, setting up the standards in this connection, are general and subject to interpretation by the Federal Administrative Agency charged with

the responsibility of carrying out this function. Interpretation by a Department serving only one group, generally known to have collaborated with the labor leaders as an opponent of experience rating, could seriously impair, if not nullify, these State experience-rating provisions, resulting in a loss of the incentive to stabilize employment which was the original intention of the framers of the first unemployment-compensation law in this country.

As to some of my other summarized remarks, set forth in my written statement, instead of reading them, I will merely comment upon them. Paragraph No. 2 merely states that this being a program for the general public, it should be administered by a neutral agency and in this I concur.

No. 3, employers must be attracted to the employment service, or the entire program fails. That has been testified to before, and Í agree with it.

Paragraph 4, this paragraph deals with the fear of the employers at having this program administered on the Federal level by the Labor Department and the ultimate elimination of experience rating, also testified to by others appearing before me.

No. 5 deals with the first elimination of experience rating, then a liberalization of disqualification provisions and ultimately federalization of the law.

Paragraph 6 deals with the purse-strings control by the Department of Labor. If a State agency refused to comply with prolabor rules or regulations, the Department of Labor could either withhold or limit allocations for administrative funds, thus seriously impairing efficient State administration.

I want to say a little something about the Hoover Commission report and how our people back in Wisconsin feel about it.

Employers in Wisconsin were very hopeful that the Hoover Commission would be successful in eliminating the hodge-podge of Federal bureaucracy and thereby effect substantial economies in the Federal Government. They have endorsed it. The President to date, however, has not lead us to believe that all the recommendations of the Hoover Commission will be put into operation. Instead, he apparently has decided to take the frosting from the cake, so to speak, and leave the cake uneaten. As far as this particular reorganization plan is concerned, we know by previous testimony that the extensive study made by the task force, the Brookings Institution, failed to present any recommendation as to where the unemployment compensation and the employment service should be housed on the Federal level. Yet, for some unknown reason, the Hoover Commission made the recommendation that it should be housed in the Labor Department. The President immediately introduced this plan to house it there, and yet he failed to transfer other departments which both the task force and the Hoover Commission had received strong arguments in favor of transferring them to the Labor Department. Even among the President's friends and Department heads we find rejections of certain proposals set out by the Hoover Commission thus far. We feel that if the Federal Administrators can pick and choose as to what they want transferred and not transferred we the employers should have the same privilege.

The Secretary of Labor testified on Monday morning that the transfer of these two services should not require the establishment of additional regional offices. I believe, however, that this must have been the result of misinformation given, to the Secretary, because I am sure that he would not say so if he knew the facts. It is true that the Labor Department has a staff of field representatives in the various cities throughout the country which aid in the administration of the Wage and Hour Act, the apprenticeship program, and the Women's Bureau. Prior to July 1, 1948, when the Employment Service was still under the control of the Labor Department, the Labor Department had established 12 regional offices throughout the country to administer the Employment Service program only. After July 1, 1948, when Congress did not appropriate any moneys for the Labor Department to continue these regional offices, the Labor Department physically closed down all 12 regional offices. Shortly thereafter the Federal Security Agency, which must maintain regional offices to administer the 14 other Federal-State grant-in-aid programs, continued its regional offices and also absorbed the Employment Office functions in the same regional offices. Stortly after, the Federal Security Agency reduced the number of regional offices from 12 to 10, which is still the case.

My point is that the Federal Security Agency must maintain regional offices for the purpose of administering its 14 Federal-State grant-in-aid programs, and the Labor Department, if this transfer is made, will have to establish duplicate regional offices to carry out its functions, under the President's Reorganization Plan No. 2.

My only reason for dwelling on this last item of my remarks is to show that while the Labor Department has a staff of field representatives in various cities throughout the country, these are not regional offices as we understand them. Regional offices are offices established by the Federal Agency to act as a liaison between the Federal and State agencies. For example, a State agency must channel all its communications to the Federal Agency through the regional offices and vice versa.

I have before me a map, indicating the different regional offices of the present Federal Security Agency. I would like to show this map to the chairman and other members of the committee, with the request that the map be placed into the record.

The CHAIRMAN. The map may be placed in the record. You may proceed. (The map referred to follows:)

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Mr. KRAWCZYK. It consequently appears that the President's Reorganization Plan No. 2 as proposed makes no showing of economy. But it indicates more expense in setting up duplicate regional offices which are already set up to handle not only this program, but also the other 11 programs under the Federal Security Agency.

The thought also occurred to me during the past 2 days that if you are transferring the Employment Service and the Unemployment Compensation Service on the basis that it deals with employees and their problems, then why not transfer the old-age and survivors insurance benefits and the other Federal-State grant-in-aid programs to the Department of Labor. All of these other programs also affect employees, their survivors and their problems. I likewise have particular reference to the programs which will shortly be reported out by the House Ways and Means Committee covering social security. Then, too, I think probably the committee ought to give some thought to the over-all operational cost administrativewise of the entire program, if this transfer is to be made.

In conclusion, I would like to say that I sincerely hope that this committee and the Congress of the United States will see fit to defeat Reorganization Plan No. 2, as they have defeated similar measures in other years.

The CHAIRMAN. Your view is that instead of economizing, they will increase expenses?

Mr. KRAWCZYK. That is my point entirely, sir.

The CHAIRMAN. Do you think they would have to set up regional offices in order to administer the program properly?

Mr. KRAWCZYK. I am sorry, I didn't get your question. Must regional offices be set up to administer the program?

The CHAIRMAN. Yes.

Mr. KARWCZYK. Because of the very many problems involved, I don't see how they can get away without it. They have to have it. The CHAIRMAN. You feel there would be a duplication?

Mr. KRAWCZYK. I positively feel so.

The CHAIRMAN. Senator Hoey?

Senator HOEY. No questions.

The CHAIRMAN. Senator Smith?

Senator SMITH. No questions.

The CHAIRMAN. Thank you very much, sir.

Mr. KRAWCZYK. Thank you.

(Mr. Krawczyk's prepared statement follows:)

STATEMENT SUBMITTED BY B. A. KRAWCZYK REGARDING THE PRESIDENT'S REORGANIZATION PLAN No. 2, SUBMITTED BY THE PRESIDENT TO THE COMMITTEE ON JUNE 20, 1949

IDENTIFICATION

My name is B. A. Krawczyk, attorney and supervisor of the compensation department of Allis-Chalmers Manufacturing Co., Milwaukee, Wisc.; charged with the responsibility of full company compliance with the Social Security Act and the 44 State unemployment compensation laws to which the company is currently subject. I have been engaged in this work for about 12 years.

OTHER ACTIVITIES

I am:

1. A member of the Statutory Wisconsin Unemployment Compensation Advisory Committee, which consists of an equal number of labor and business representatives.