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highly industrialized States without merit rating. No such result appears in the available evidence.

We do not claim that the following statistics prove conclusively that merit rating in Wisconsin has been completely ineffective in stimulating stabilization. We simply contend that they do not contain any evidence of any such effect. The chart shows graphically the month-to-month fluctuations in the number of employees in manufacturing from 1932 through 1937, in Wisconsin, New York, Pennsylvania, Massachusetts, and Illinois. New York, Pennsylvania, and Massachusetts make no provision for merit rating. The Illinois law provides for merit rating but was not passed until 5 years after the Wisconsin law. (The sharp fluctuation in Massachusetts in 1934 reflects the textile strike which did not significantly affect the other States.) Table 1 gives the figures on which the chart is based.

Table 2 gives an index of the number of employees in manufacturing in Wisconsin, by months, from 1925 through 1936. This expresses the number of employees each month as a percentage of the average number employed in 1925-27. It does not show any noticeable stabilization since either 1932, when the Wisconsin law was first passed; or since 1934, when contributions first began to be collected. Table 3 gives for Wisconsin and other selected States for 21⁄2 years, since June 1935, the maximum percentage increase or decrease in the number of employees in any month as compared to the preceding month. It will be noted that the range of fluctuation in Wisconsin, to say the least, is not less than that of other States.

(The chart above referred to is on file with the committee.)

TABLE 1.—Percentage changes in number of employees in manufacturing, by months,

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TABLE 1.-Percentage changes in number of employees in manufacturing, by months, 1932-37-Continued

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TABLE 2.-Index numbers of total number of employees in manufacturing in Wisconsin by months, 1925 to 1936 (1925-27 equals 100)

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Source: Wisconsin Industrial Commission, Wisconsin Labor Market, December 1936, volume 16, p. 2.

TABLE 3.-High and low percentage changes from month to month of the number of employees on the pay rolls of manufacturing firms, by States, June 1935, to January 1938

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MEMORANDUM OFFERED BY RAILWAY LABOR EXECUTIVES ASSOCIATION-RAILROAD UNEMPLOYMENT INSURANCE BILL (S. 3772; H. R. 10127)-ESTIMATED SAVINGS TO RAILROADS AS COMPARED WITH CONTINUANCE UNDER STATE UNEMPLOYMENT COMPENSATION LAWS

The passage of this bill will result in an almost immediate saving to the railroads of (1) about $1,200,000 per year in decreased contributions and (2) perhaps as much as $3,000,000 per year in reduced costs of reporting.

1. Decreased contributions. The combined State contribution and Federal title IX tax rates equal slightly more than 3 percent of total wages. The rate proposed in this bill is 3 percent of only the amount of cash wages not in excess of $300 per month to any employee. The amount in excess of $300 per month to any employee was 1.84 percent of the total pay roll in 1935. Railroad pay rolls now are approximately $2,000,000,000 per year. Under this bill they would therefore pay contributions only on $1,963,200,000-a saving of 3 percent on $36,800,000 or $1,104,000, not including the saving of contributions on an unknown amount of tips and payments in kind.

2. Decreased cost of reporting.-Railroads are now required to file returns and reports under (1) the Carriers' Taxing and Railroad Retirement Acts, (2) under title IX of the Social Security Act, and (3) under the unemployment compensation law of each State, sometimes as many as 15 to 25, in which they have any employees. There are slight but expensive variations in their returns and reports because the laws use various wage bases to measure contributions or taxes: Cash wages only, cash wages plus payments in kind, cash wages plus payments in kind and tips; total wages, total wages exclusive of amounts in excess of $300 per month, or $2,500 or $3,000 per year to any employee. Some types of employees and their wages may be covered under some laws but not under others.

Little is known about the actual expenses of such reporting but employers have complained bitterly about them and two large national employers have kept careful accounts which show that they amount to from 8 to 10 percent of taxes and contributions.

Since the reports now filed under the Railroad Retirement Act will provide all the wage records necessary for unemployment insurance, and since the coverage of this bill, both as to employees and wages, is identical with that of the Carriers' Taxing and Railroad Retirement Acts, the effect of the passage of this bill will be to free the railroads from all the present costs of title IX and State unemployment compensation reporting. Assuming that these costs are 10 percent of $60,000,000 in contributions and taxes, this saving would be $6,000,000. To be conservative, it was estimated above at $3,000,000.

3. Merit-rating under State laws.-The only possible cost of this bill to the railroads is the loss of possible reductions, generally after 1941 or 1942, in contribution rates under the "merit-rating" provisions of some State laws. But the almost immediate savings that this bill would produce should outweigh these uncertain future savings. Merit-rating will undoubtedly break down in many States. any case, some railroads may not qualify for reduced rates. Further, meritrating, if effective, may so impair the solvency of State funds that there will be damage of a general increase in the standard contribution rate.

In

Hon. B. J. GEHRMANN,
Member of Congress,

Washington, D. C.

MAY 10, 1938.

DEAR MR. GEHRMANN: Thank you for your letter of April 27 expressing approval of the unemployment insurance bill for railway workers which I have introduced and which is now before the Committee on Interstate and Foreign Commerce. I shall be glad to have you appear in person in support of the legislation if when the time comes you find it possible. In any event, you may be sure that I shall be pleased to make your letter a part of the record.

Very sincerely yours,

Congressman ROBERT CROSSER,

New House Office Building, City.

HOUSE OF REPRESENTATIVES,
Washington, D. C., April 27, 1938.

DEAR COLLEAGUE: I know that you have been the sponsor of all railroad legislation ever since I have been a Member of Congress. You are now sponsoring a bill which would provide for national unemployment insurance for railroad workers. I am very much in favor of this type of legislation, because I realize, as no doubt you do, that railroad workers engaged in interstate commerce cannot effectively be benefited under existing State or Federal laws.

If I cannot appear before the Committee on Interstate and Foreign Commerce, I wish you would place this letter in the record as favoring this legislation. As stated before, I have a great many railroad employees in my district and they have always been my most loyal supporters. I know that when they sponsor or favor legislation they are conservative, fair, and know what they are doing. Therefore, I beg of you as the person that the railroad employees have always depended on to see to it that I am recorded in favor of this legislation when hearings are held. I am sending a copy of this letter to Senator Wheeler, who, like yourself, has always looked after the interest of railroad employees.

Thanking you and assuring you of my loyal support in any legislation in behalf of railroad employees that you may sponsor and with many thanks for having me recorded in favor of this, I remain,

Very truly yours,

B. J. GEHRMANN.

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