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That is what I would expect, Mr. Martin, rather than any pinchpenny method of trying to squeeze a dollar or two out of an employee.

Mr. Martin. Permit me to say, Doctor, that far from having any prejudice against railroad companies, it is quite the other way. I have always regarded them as the best class of employers in the country. I worked for them myself for 8 or 10 years as a young man, and I have always felt since then that if I ever had to go back to work with my hands for a living, I would like to go back to work for a railroad company. I know that the employees get many benefits that do not attach to any other form of employment. So I have not the slightest prejudice in the world against them. I have a very kindly feeling toward them; I can assure you of that.

Mr. WithRow. Doctor, did I understand you to say that 25 percent of the railroad employees were casual employees?

Mr. PARMELEE. No; I did not make myself clear, I am afraid. I should have said, if I did not say, that 25 percent of the men who became unemployed during the year 1937 had only worked 1 or 2 months, about 25 percent had worked only 3 to 5 months, while the remaining 50 or 52 percent had worked from 6 to 12 months, of those who had become unemployed during the year.

Mr. WITHROW. And that group would fall entirely into your first table, that is, the benefit scale—the first group, the group from $150 to $199?

Mr. PARMELEE. Which group are you speaking of?

Mr. Withrow. I am speaking of the yearly base. Their income would be $150 to $199.

Mr. PARMELEE. The assumption I made in my statistics was that the 6 to 12 months men would all be of the $150 class; that they would have earned $150 or more in those 6 or more months.

Mr. WithRow. There would be quite a group that would come in that first class?

Mr. PARMELEE. Then I made the further assumption that the second group—that is, the 3 to 5 months men—would all be in the $150 class. There would undoubtedly be some individuals there who would not earn $150, but I assumed that they would be offset by men who might be in the 1- or 2-month group, whom I did not include at all, but who might have earned $150 or more.

Mr. WITHROW. I mean in that first group, those that earn from $150 to $199 a year and would qualify in that one group for benefitsthose that would get 93 percent of that, that they had earned. Could you give us any idea as to how many would be in that group?

Mr. PARMELEE. No; I do not have any exact figures. It would not be 25 percent.

Mr. WITHROW. No, no.
Mr. PARMELEE. It would be less than this 25 percent, doubtless.

Mr. WITHROW. It would be a terrible indictment of the railroad establishment if that were so, would it not?

Mr. PARMELEE. Yes, if justified.

Mr. WITHROW. But you have used that argument time and time again of this large group that would get 93 percent of what they had earned. Now, what would the railroadsı policy be if this were enacted into law, as you see it, in regard to employment?

Mr. PARMELEE. Well, certainly there is no incentive in this bill to any employer to stabilize his employment. There may be other things that would induce him to stabilize his employment, but there is nothing in the bill to induce him to do so.

Mr. WITHROW. Do you think you can justify the railroad employees receiving as low as $150 a year—a substantial group of them?

Mr. PARMELEE. If you are going to put that in a general way and say for a year—that is, indicating a year's employment of course there is only one answer to that question. But you will recall that many of these men who earn from $150 up are of this type of men that we have been speaking of, and that I have emphasized so many times—the irregular worker who only expects to work a certain number of weeks or months on the railroad, mostly on maintenance work, and who has other things to do for the balance of the year. You have to take his whole picture, in and out of the railroad industry, before you can make any generalization.

Mr. WITHROW. I cannot believe that you are going to have a substantial group in that bracket, and if you have, I think it is a terrible indictment of the railroad management; because, to me, you have not justified this seasonal work on the railroad as applied to any other industry. As a

As a matter of fact, the arguments that you are using right now are comparable to the arguments that were used in Wisconsin, by the employers, against the employees' compensation, and likewise the unemployment insurance that we have in Wisconsin at the present time—the very same arguments. You have not given us any definite figures as to how many men are contained within those brackets, but you have argued that the regular employee would receive substantially the same were he out of employment as he would receive now under the State requirements.

Mr. PARMELEE. As a matter of fact, he would get less under this bill than he would get today under a number of the more liberal State acts; and he would get exactly the same as he would under what I have called the typical State act. In one State he can get as high as $399.

Mr. CROSSER. Are there any other questions? (There were no questions.) Mr. PARMELEE. I thank you, Mr. Chairman, for your consideration.

Mr. CROSSER. The committee will adjourn until tomorrow at 10 o'clock.

(Thereupon the subcommittee adjourned until tomorrow, Friday, June 3, 1938, at 10 a. m.)



FRIDAY, JUNE 3, 1938



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

Mr. MARTIN. The committee will please be in order. Our first witness is Mr. R. L. Ettenger, Jr.



Mr. ETTENGER. Mr. Chairman and gentlemen, my name is R. L. Ettenger, Jr. I am assistant to the vice president who has charge of the finance, accounting, taxation, and valuation department of the Association of American Railways.

I have been in the accounting department of railroads since 1914 and am familiar with all forms of railroad accounting, including pay roll, timekeeping work. Since the first of the unemployment compensation acts, I have followed actively the methods of accounting prescribed by the States in the endeavor to get them on a uniform and simplified basis.

The proponents of H. R. 10127, a bill to establish an unemployment insurance system for railroad employees, have stressed, among other things, their claim that substantial savings will accrue to both railroads and State governments through administration of the proposed . system by the Railroad Retirement Board, the agency which is now administering the Railroad Retirement Acts of 1935 and 1937. The proponents say that railroads would be relieved of the multiplicity of reports now required by State unemployment compensation agencies and that this relief would save them from 3 to 5 millions of dollars per year.

All employers have been concerned about the voluminous records and statement required by the several State unemployment compensation acts and the Federal retirement acts, particularly railroads, which were already seriously burdened by the reporting requirements of regulatory authorities. Therefore, savings in these nonproductive fields are constantly being sough and the proposed bill has been examined carefully to determine what it may reasonably be expected to produce. The conclusions reached by this examination are that there would be no savings in either accounting or administrative expense if the proposed bill is enacted into law. On the contrary, it appears likely that such costs will be greater under the proposed separate system than under the present Federal-State system.

I would like to explain briefly the reasons for our conclusions.

Ever since the passage of the Social Security Act railroads have actively cooperated with the administrative authorities in the development of a procedure as uniform and as simple as practicable, having in mind the purposes of the acts. Committees of railroad personnel were organized in each State to represent the railroads before the State agencies. The chairman of the State accounting committees were constituted a general or coordinating committee to promote uniformity. Many conferences have been had with the technicians of the Social Security Board and with the State agencies to work out the problems caused by this new venture.

The State agencies have a national association known as the Interstate Conference of Unemployment Compensation Agencies. Railroad representatives have appeared before this conference, always with the same thought—that is, to promote uniformity and simplicity in the administrative procedure. At the last meeting of the conference in October 1937, a special interim committee was appointed to confer with the railroad committee on matters of mutual interest. A joint 3-day session was held in December 1937, at which time the interim committee agreed with many of the suggestions offered by the railroads and recommended that all State agencies adopt them so far as practicable. This realization of a mutuality of interest between the administrative agencies and employers has developed a generally cooperative attitude. At the joint meetings an understanding of the problems of each interest is obtained through informal discussions across the table. For example, the basic requirement for administering any unemployment compensation system is a statement of the earnings of covered employees.

The statement is the most voluminous and consequently the most burdensome report required of employers. In addition to showing each employee's earnings, employers, in some cases, were required to compute an arbitrary full-time weekly wage and 'indicate dates of entry into or separation from service occurring during the covered period. In recognition of the fact that railroads are required to report earnings of individual employees to the Railroad Retirement Board for the purpose of the Railroad Retirement Act of 1937, and further, that they have at all times complete records of employment, the interim committee recommended that States requiring current quarterly earnings data adopt for railroads a list from of report which may be coordinated with that required by the Railroad Retirement Board insofar as the State consistently could do so, having in mind its accounting set-up; that full-time weekly wages should be based on earnings in the highest quarter where the State law follows substantially the provisions of the draft bill; that date of entry into service be not required; and that date of separation from service be required only when necessary to compute the employer's merit rating status.

I might say that there are two forms of reporting generally used. One is a list simply showing one name under another; as many as 30 to 50 names to a sheet. Another is a separate slip for each employee which shows identical data.

And when I mention the draft bill, I mean the bill prepared by the Social Security Board and the one sent out to the States as a guide to them in their legislation.

The recommendations made by this interim committee are being actively progressed with the State agencies and have been adopted in many cases. The Social Security Board has taken the position that the convenience of the employer in the preparation of reports should be given every consideration by the State agencies. With this background we have reason to hope that the simplified procedure will become the general rule within a reasonable period.

To appreciate just what these arrangements mean to railroads, it must be borne in mind that the gathering together of the wage data is the major problem. From long experience in the mass production of statistical information railroads realized the necessity for developing a routine for this work and they have been quick to utilize the most modern accounting machines and methods adapted to the individual road's volume and organization. At the present time some 70 percent of railroad employment is with companies using tabulating machine equipment which is capable of producing rapidly and accurately statements in various forms from a single punched card. Separate pay rolls are prepared for employees in each State, and in other respects the work is systemized. I do not want to create the impression that this work is not burdensome. As a matter of fact, it is burden


The point I want to make is that the task is well on the way to completion once the earnings have been assembled and made ready for the report to the Railroad Retirement Board. In a recent test check some 24 of our principal railroads were asked what savings in their costs could be made if the wage reports to either the State unemployment-compensation agencies or to the Railroad Retirement Board, but not both, were eliminated. This check developed that the savings which would result from the elimination of either one of these reports would be of no consequence.

I would like to show you one of these reports. I think it would help you to understand just a little bit better what I am going to say next.

I have here a copy of one sheet of a combination Railroad Retirement Board and State unemployment-compensation-agency form. This particular report is prepared, with required carbon copies, in one printing from the punch cards used for assembling the data. A similar form may be prepared with other equipment or even by hand. The earnings by months for the quarter are shown in the first three columns. I call your attention to the fact that earnings in excess of $300 in 1 month are reported in some instances. This is in conformity with an arrangement developed with representatives of the Railroad Řetirement Board whereby they undertake to eliminate the excess in setting up the ledger record of creditable earnings to be used in computation of benefits, as under the Railroad Retirement Act, wages in excess of $300 in any one month are not counted.

In the next column, the individual's name is shown. Then comes the occupation according to the classification prescribed by the Interstate Commerce Commission. In the next column appears the Social Security account number. That is divided into three fields, but it is all one number. The next column shows the total earnings which are

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