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progress and we believe that, in the hands of State and Federal administrators who really care about social security, they are possible of ready solution. We have been advised that our program will meet the opposition of vested interests in a few States, but we believe this opposition is short-sighted and will prove temporary also, because every State law, presumably in anticipation of such a bill as this, includes provisions for cooperation between the State administrator and the agency administering any Federal unemployment insurance law.

I leave the further expansion of our argument to our written submissions, to my colleague Judge Hay and our several witnesses. On behalf of the railroad workers of this country, I want to thank the Committee for this opportunity to present their case. We firmly believe and vigorously contend that the enactment of this legislation will be in the best interests, not only of the railroads and their employees, but also of the State unemployment compensation agencies, the whole Social Security program, and sound public policy.

Mr. CROSSER. Thank you, Mr. Cashen.
Mr. CASHEN. Thank you.
Mr. CROSSER. The next witness will be Mr. Hay.



Mr. Hay. Mr. Chairman and members of the committee, my name is Charles M. Hay. I live in the city of St. Louis. I am counsel for the Committee of Railway Labor Executives' Association, of which Mr. Cashen is chairman, which supervised the preparation of this bill, and requested its introduction into the Congress.


The purpose of this bill, in a sentence, is this: It is to do with respect to unemployed compensation what the Railroad Retirement Act does with respect to old-age annuities for the railroad industry; that is to say, it is designed to create a separate system applicable only to that industry just as the Railroad Retirement Act creates a separate system of old-age benefits.


We submit that this bill is in keeping with the logic of railroad legislation history for more than half a century; certainly since the enactment of the Interstate Commerce Act in 1887.

The "range laws” demonstrated beyond per adventure, the futility of State efforts to regulate railroad rates. There arose a demand for recognition of the railroad industry as what it was, distinctly a national industry, to be dealt with effectively not only with respect to rates, but in other features, by bodies empowered to act for the national authority.

Since the enactment of the Interstate Commerce Act in 1887, numerous laws have been enacted applicable only to the railroad industry, recognizing that industry as a distinct national entity.


I mention but a few of them which will occur to you: The Adamson law; the Hours of Service Act; the Safety Appliance Acts; the Transportation Act of 1920; the Emergency Transportation Act; the Retirement Act, which I mentioned; and the Railway Labor Act.

These acts, I say, recognize the distinct individual national entity of the railroad industry.

Not only have acts been passed applicable only to that industry, but acts designed to cover industry generally, as for instance, the N. R. A., and the National Labor Relations Act, and the Social Security Act, with respect to old-age benefits, have exempted the railroad industry.

The attempt, therefore, to cover the railroad industry into the unemployment compensation systems of the various States runs counter to the logic of railroad legislation history for over a half a century.

It is, if not unprecedented, certainly violative of the whole course of history since the date I mentioned.


When the State and Federal authorities approached the consideration of the subject of unemployment insurance or unemployment compensation, they manifestly had in mind that the railroad industry should be treated with respect to that subject the same as it has been treated with respect to the other subjects to which I have referred.

I submit in support of that statement these facts: Wisconsin was the first State to enact an unemployment-compensation law. That State exempts the railroad industry, except as their railroads individually might elect to come under the operation of that system. After the passage of the Social Security Act, when the States approached the enactment of their unemployment compensation laws, more than 40 of them carried in their bills a specific provision written manifestly in contemplation of the enactment of a separate measure to cover the railroad industry, as has been enacted in the Railroad Retirement Act. The provisions to which I refer are such as this:

Service with respect to which unemployment compensation is payable under an unemployment-compensation system established by an act of Congress.

That is in more than 40 of the State acts; 48 States express a willingness to enter into cooperative arrangements with an agency administering a Federal unemployment-compensation law. The typical provision reads as follows:

The Commissioner is hereby authorized and directed to enter into agreements with the proper agencies under such act of Congress

to provide reciprocal treatment to individuals who have, after acquiring potential rights to benefits under this Act, acquired rights to unemployment compensation under such Act of Congress or who have, after acquiring potential rights to unemployment compensation under such Act of Congress, acquired rights to unemployment compensation under this Act.

EASTMAN'S STATEMENT In 1934 the then Coordinator, Mr. Eastman, made a report upon the general subject of unemployment compensation and other matters. That authority is so eminent that I ask the privilege of quoting what he had to say about the subject

which we present to this committee at this time. This is what Mr. Eastman said:

The first principle calls for the establishment of a national transportation unemployment-insurance system rather than a host of separate State systems,



Labor relations in the transportation

industry particularly on the railroads are not conducted on a localized basis. Wages, hours, and working conditions are established through agreements which cut across State lines and upon occasion are national in scope. It would be unreasonable to suppose that the unemployment-insurance laws of all of the States would be uniform. On the contrary there would inevitably be wide variation in these laws. These differences would in time tend to disturb existing wages and working conditions, and so would adversely affect the labor relations especially on the railroads. Moreover in the transportation industry there is a greater amount of transfer of employees across State lines than in any other industry. Such transfers are a normal phases of employment in the industry and would make very difficult the successful operation of an unemployment-insurance law on a State basis. To remove transportation from the jurisdiction of the States would not only facilitate the administration of unemployment insurance for the transportation industry but it would also simplify some of the administrative problems of the States. The regulation of all aspects of interstate transportation and

the agencies which conduct such transportation is primarily the function of the Federal Government.

The further principle which deserves consideration is that unemployment insurance and old-age insurance for the transportation industry ought to be administered by the same body. First of all, a total contribution for these purposes would thus be collected in one payment from each employer in the industry rather than by two payments made to different agencies. Second, the same set of records would be made to serve the same purpose. If the benefits to be paid are to have relation to any contributions paid by employees themselves, these records would be the main basis for the allowance or disallowance of claims.

That was the statement of Mr. Eastman.

In presenting this bill, therefore, we are but presenting a proposition consistent with the course and logic of railroad legislation history for a half a century and answering the anticipations and contemplations of the students of unemployment insurance approaching the subject both from the State and the Federal angle.


Subsequent events show that the Coordinator and the other authorities were right in anticipating that there would be complications and difficulties in administering State unemployment-insurance laws particularly insofar as they had to do with railroad employees. They show that there were prophets par excellence.

In fact, if they had limited their prophecy to complications and difficulties attending the general administration of the State laws they would have been good prophets, if not prophets par excellence.

The task of administering the social-security systems, when made as simple as possible, is rather difficult if not a stupendous one.

This has been rather distressingly stated by men who have been in the midst of the administration of these laws. For instance, Mr. Clarence Jackson, executive director, Unemployment Compensation Board of Indiana, Mr. Herman A. Gray, chairman of the New York Unemployment Insurance State Advisory Council, Mr. Glenn A. Bowers, until recently executive director, Division of Placement and Unemployment Insurance of New York, and the Unemployment Compensation Commission of Montana, all have made statements to the effect that the administration of the unemploymentinsurance system of the States with which they have knowledge is threatened with disaster because of the complexities and difficulties attending those administrations.

The burden of their statements is that the laws must be "fundamentally revised." They unite in criticizing the collection of taxes by both Federal and State Governments, the duplication of administrative agencies and functions and complexities of the present laws. They manifestly are in an attitude to welcome any proposition that will tend to simplify and make less difficult the administration of the State laws. They, I am sure, are in a position to look upon one who approaches with a plan that would tend to simplify that in any respect as a friend rather than an enemy of the State unemployment-insurance system; and may I say that anything I shall say in the course of my

Ι remarks with respect to State unemployment-insurance laws is said as a friend, as one anxious to see those systems perfected, and hence anxious to see them relieved of as great burden of administration as possible.

RAILROAD INDUSTRY ADDS COMPLICATIONS That the attempt to administer those laws in their application to employees in a national industry such as the railroad industry adds to the difficulties these men are struggling with at the present time no one will deny. He who runs may read that fact.


Let us look at certain facts which will convince anyone that the very nature of railroad employment would tend to complicate the difficulties. Let us look first at the laws themselves: The laws have varying definitions of what constitutes unemployment; varying definitions of what constitute employment within a certain State; varying definitions as to "waiting periods”; varying prescriptions by the amount of benefits is determined, and so on. One State will consider a worker as within that State upon the application of one certain principle and another State will consider the same worker as working in that State because of the application of other principles to his employment.

Cases are on record in which it has been shown that by the application of the principles of two different States a certain worker was working in both States and by the application of principles of another he may be found to be disqualified from benefits in either State.

When it is contemplated, therefore, to make these varying laws applicable to workers who work not only in one State, but as in the case of many of them, in many States, "multi-State" workers, as we may call them, and when we apply them also to men who move from one State to another as is necessary in railroad operations the difficulties are made clear and indeed most distressing.


These systems not only burden the administration of the law from the standpoint of the States, but they burden it from the standpoint of the railroads. The railroads are required to report to the various States. Railroads run, of course, in many States. Some of them in as high as from 15 to 16 States. They must report because of having employees in other States; some of them, in as high as 25 States. These reports are not uniform in their nature.

The expense, therefore, attached to this item which must be borne by the railroads, is most considerable.

Mr. Cashen referred to the fact that by the enactment of this measure the railroads would be saved from $3,000,000 to $5,000,000.

They would be relieved of reporting to States, and under this bill report to one agency, the agency to which they already report under the Railroad Retirement Act.


The system is not only burdensome to the State administrators, and burdensome to the railroads, but burdensome to the railroad workers as well.

As Mr. Cashen has said, we are not coming here simply to try to relieve the railroads of their burdens, although we can assure the gentlemen who represent the railroads that any measure of relief that we can bring them we do so most cheerfully, because we know that their problems are somewhat distressing at the present time. We lay emphasis upon the fact also that great inequities are visited upon railroad workers by the existing systems.

I call attention to these outstanding facts: Under the existing State laws railroad workers get different amounts in different States. In two States they get nothing-Wisconsin and Alabama-unless some individual railroad desires to elect to come under the State law. The amounts prescribed in other States vary. Some of them are more liberal than others. In six States they pay contributions from 32 to 12 percent of their wages; in the other States no contributions. These facts alone present a condition calculated to lead to discontent and unrest among railroad workers. They work under national agreements; they presumably should be given throughout the industry the same fair and equitable treatment. We therefore submit that these systems which visit upon them inequalities and inequities of the existing systems are not good for the workers. It is not good for the relations between the workers and the railroads themselves.


History attests that in periods of prosperity and adversity railroad workers have been loyal. They have been loyal servants of the railroads and loyal servants of their country. They have been loyal as they have seen their numbers increase and loyal when they have seen their ranks depleted and their brothers join the bread lines.

Therefore, when railroad workers come before any congressional committee and ask for the enactment of a mesaure, not adding to the burdens of the railroads; not burdening the public; but doing only equity and justice to them, they are entitled to fair treatment.


In lieu of the existing complicated, expensive, inequitable, unworkable plan, we present this bill which we submit, set alongside the plans under which railroad men are working today, is simple, economical, equitable, and easily workable.


In the first place we provide that the coverage of this act shall be identical with the coverage of the Railroad Retirement Act; that is to say, it applies, speaking briefly and in summary, only to men who in


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