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a month and that is what I mean by net saving—one offsetting the other.

Mr. WOLVERTON. Are you able to support your opinion with factual information which you wish to submit for this record?

Mr. Young. There is no factual data because we have not had experience enough, Mr. Wolverton, to create a statement of facts of merit rating and employee contribution. In other words, there has not been time enough to produce such a statement.

Mr. WOLVERTON. I do not wish to appear captious, but the statement you have just now made indicates that there is no factual information that is procurable. That rather astonishes me, because it seems to me that there would have to be information of that kind available or you would not be in a position to express an opinion.

Mr. Young. Yes; I can express an opinion based on long experience. Now, if

you want me to show to what extent there will be a saving due to merit rating, I cannot do so because that must be based on the future and not on the past.

The history of the workmen's compensation acts, and disability acts, have adequately proven that merit rating has reduced accidents and has reduced the cost of compensation insurance tremendously and I believe that you can do the same thing with unemployment insurance as you have done with workmen's compensation.

Mr. WOLVERTON. Why are there no facts?

Mr. Young. Because it is the future you are dealing with. You are not dealing with the past which produces facts.

Mr. WOLVERTON. There is nothing in the past then in the nature of facts that would justify the opinion?

Mr. Young. No, sir; there is not because 26 States have not as yet started to pay benefits.

The only information I know of is a sample study by Mr. Eastman of the employment insurance and you could not determine from that study the benefit of merit ratings.

Mr. WOLVERTON. Then, why do you make the point in your conclusions on page 12 of your statement:

1. It has been prepared without adequate factual information relative to unemployment in the railroad industry as compared with all other gainful employment.

Mr. Young. Because I think it has; and furthermore, you will find the proponents of this bill have no factual information on which they can tell you definitely the cost to the railway industry of the benefit provisions. They have to make an assumption.

Mr. WOLVERTON. I do not wish to appear to be antagonistic to the viewpoints you have expressed; but it seems to me it is hardly courteous to expect the committee to take your opinion that is not based on factual information and at the same time the objections upon your part that the bill as presented is not based upon factual information. It seems to me there is no difference.

Mr. Young. It cannot be based upon factual information if there are no facts on the subject. We have not had experience on the subject upon which facts could be determined.

Mr. WOLVERTON. Then, if this be true, this bill has been prepared without actual factual information, would it be possible for you to present factual information that would disprove it?

Mr. YOUNG. No, sir; because they do not exist, that is, the factual information does not exist.

Mr. WOLVERTON. Then we are in the position where we are considering legislation from a theoretical standpoint.

Mr. YOUNG. Absolutely; that is correct.

Mr. WOLVERTON. And therefore, that you are further charging here that it is premature in that it is not based on an experience which would hardly ever become effective, unless you made a start.

Mr. Young. That is right, and you have got a great start right now in the States.

Mr. WOLVERTON. It is your opinion then that the present acts with the States participating, should continue without change.

Mr. Young. No, sir; I think many of the States-
Mr. WOLVERTON (continuing). Until more States grant it?

Mr. YOUNG. I think so far as constructing a Federal law for railway workers is concerned, it would be wise to wait and see how the various State acts work out. You understand, 26 States have not even started to pay benefits yet. I think we are right in the middle of an experiment, by the States and another Federal experiment has been proposed.

Mr. WOLVERTON. I have in mind that this committee, over a period of years, has passed much legislation helpful to railroad workers that was not based upon experience when it was enacted; but which nevertheless has resulted successfully and beneficially.

It would seem to me that the railroad industry in the matter of legislation in the relationship to the men, has taken the forefront, so to speak, as a pioneer in proving a way from which probably others have benefited, or will benefit, and while I see the importance of experience, yet at the same time, I recognize the fact that we cannot have experience without making a try and with trial the experience may come that will improve the situation.

Mr. Young. Well, my answer is that we are getting experience now under the State laws.

Mr. WOLVERTON. The experience that has resulted from that was related the other day by a witness in favor of the bill, and he corroborated an experience I have recently had with a worker who has communicated with me with reference to the matter, and that is the great difficulty of getting decisions as to whether they come within the benefits of the law in a particular State or under particular conditions.

I think we must admit that a railroad employee is in a far different position than one who works in an industry which is anchored to a particular locality and, therefore, there may be difficulty arising with respect to railroad employees that would not necessarily arise with reference to an employee in a local industry.

Mr. Young. That is correct, sir; but I would like to invite your attention to the situation so far as crossing State lines in employment is concerned, in the railroad industry, that it effects less than 25 percent of the railroad workers, so you have 75 percent that are fixed in the States.

Now, that is a minority.

In many building trades the crossing of State lines percentage of total employees in certain classes is much higher than in the railroad industry. Just as you say, they are experiencing difficulty under the

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State act in knowing what the benefits are going to be, and what State is going to pay them. It is much greater in the building trades in certain crafts than in the railroads. You take an elevator and esculator construction gang. They go from State to State on almost every job they work on. Their work then is practically interstate, in between their jobs. So, as you go down through other industries, you find substantially high percentages of the employees who are affected by this crossing of State lines.

Mr. WOLVERTON. I am not prepared to dispute the statement you made, because I have no factual information upon it, but I must

say it does surprise me somewhat to hear that opinion expressed. Is it possible for you to furnish the facts that enable you to make the positive statement as to the percentage to which you have referred?

Mr. Young. No, sir; there are no such facts or statistics on this situation. It has been my experience in the insurance business, sir, that if you will reduce the premium rate

by lowering the casualty, you generally will reduce the casualties. That is true in fire, marine, workman's compensation insurance, insurance against injuries to passengers and others.

So I say, the same thing would be true in connection with unemployment insurance. It is the type of business which has, as you have with the workmen's compensation, the incentive whereby if your rates are reduced, you can reduce the cost of the premium.

Mr. MARTIN. Mr. Chairman.
Mr. CROSSER. Mr. Martin.

Mr. MARTIN. I have one more question. I have this thought in connection with the contention that the unemployment insurance fund may be depleted and finally exhausted by payments to the short time or temporary class of employees, so that it might work to the ultimate disadvantage of the older class of employees if they become unemployed and would be deprived of benefits.

Now, if that situation did come about, it would simply result in the exhaustion of the funds. It would not increase your tax rate, your unemployment insurance tax rate. It would not place any responsibility whatever on the carriers to pay out unemployment insurance that is not required by the law to be paid in. It would simply result in an exhaustion of the funds, and the necessity for further legislative action. For instance, they would have to come back to Congress and get additional tax legislation before any further additional liability could be placed upon the carriers.

The employees have assumed the responsibility of the position that this plan is self sufficient and self sustaining. If it proves not to be it looks to me like somebody will have to bring the carriers back into Congress for some amendment to the legislation, at which time it might then appear that the plan had failed and the question then could be raised as to requiring contribution on the part of the employees as well as the carriers to provide sufficient funds.

So I do not really see that there is any risk involved to the carriers in the possibility you are suggesting that the funds may become depleted and exhausted by payments to the short time temporary employees.

Mr. Young. I did not say that there was great risk to the carriers. I said that there was great risk to the long-service employee. He is the man I am interested in. He is the man who is running our railroads. I am not interested in the man you pick up for 2 or 3 or 4 months. I am interested in the man who has had 10, 15, or 20 years' service with us and on whom we have to depend to render service. There is no particular reason why we should benefit a man with 3 or 6 months' service and disregard the man with longer service.

Mr. MARTIN. I think in view of the fact that they are here unanimously, through their organization representatives, asking for it, that the risk could be left to them.

Mr. Young. Well, sir; they are our employees, and we desired to protect their welfare.

Mr. CROSSER. It is just 2 minutes until 12 o'clock. I do not know whether Dr. Parmelee cares to start now.

Mr. Souby. Dr. Parmelee will be quite a long witness.

Mr. CROSSER. I think perhaps it would be better to adjourn now, because it is 12 o'clock and that is the usual adjourning hour. In addition to that the food and drugs bill in which this committee is very much interested, comes up immediately after the House convenes.

So the committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon at 12 o'clock, meridian, the committee adjourned to meet at 10 o'clock the following morning, Wednesday, June 1, 1938.) UNEMPLOYMENT INSURANCE FOR RAILROAD EMPLOYEES

WEDNESDAY, JUNE 1, 1938
HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE OF THE
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The subcommittee met at 10 a. m., Hon. John A. Martin, presiding.

Mr. MARTIN. The committee will be in order. The first witness on our calendar this morning is Mr. Farquharson. Mr. Farquharson, we shall be glad to hear you at this time.

STATEMENT OF JAMES A. FARQUHARSON, NATIONAL LEGISLA

TIVE REPRESENTATIVE, BROTHERHOOD OF RAILROAD TRAINMEN, WASHINGTON, D. C.

Mr. FARQUHARSON. Mr. Chairman and members of the House Interstate and Foreign Commerce Committee, my name is James A. Farquharson and I am national legislative representative of the Brotherhood of Railroad Trainmen, with offices at 10 Independence Avenue, Washington.

I am appearing here in support of H. R. 10127, a bill to create unemployment insurance for railroad workers and to remove those workers from the unemployment provisions of the Social Security Act.

More than 2 years ago it became very apparent that it would be difficult to properly take care of railroad employees under the unemployment provisions of the Social Security Act, because of the fact that in a great many instances these employees are required to work across State lines. Their seniority district may include branch lines or home terminals located in an adjoining State, to which they may be forced to go to protect their seniority when they are displaced on account of a reduction of force or by the exercise of seniority rights of an employee older in the service. Consequently, it would be difficult to take care of the unemployment compensation due an extra man, especially, who, for example, may live in Washington, D. C., and whose seniority district extends to Wilmington, Del., or Enola Yard at Harrisburg, Pa. Such an employee might lose his position in Washington and be forced to the extra board at Baltimore or some other job located on his seniority district and would in all probability suffer periods of unemployment wherever he went upon his seniority district because of being an extra man.

In 1936 our legislative representative in the State of Alabama sought an opinion from the attorney general of that State as to how the Alabama law would apply to men working in the State of Alabama,

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