no privileges or more generous treatment than Congress has provided for our employers in meeting problems of reconversion. We want State unemployment compensation directors to be as solicitous in conserving benefit rights of displaced war workers and exservice men and women as they are in protecting reduced employment tax privileges of the employers in their respective States. We believe that fair and impartial treatment of employer and worker by Federal and State Governments can be achieved by the passage of Senate bill 1510. This bill provides necessary minimum standards after July 1, 1947, to insure continued progress of the Employment Service under State control as it has under Federal administration because the Federal Government, under the terms of this bill will (1) provide funds to defray all necessary costs of administration, and (2) develop, in cooperation with the States, such policies and necessary standards of operation as to yield a reasonably uniform national system of employment service machinery. This was the intent of Congress, and it was so stated in the Wagner-Peyser Act which it passed some 13 years ago, Moreover, our national objective of speedy reconversion, full employment, and continued peace and prosperity cannot be accomplished by transferring the present unified Employment Service machinery to the caprice of 48 separate State administrations.

With every good wish, I am
Respectfully yours,

R. G. SODERSTROM, President.

Hon. JAMES E. MURRAY,

THE METHODIST FEDERATION FOR SOCIAL SERVICE,
New York, 11, N. Y., February 19, 1946.

Chairman, Senate Committee on Education and Labor,

Senate Office Building, Washington, D. C.

DEAR SENATOR MURRAY: On behalf of the Methodist Federation for Social Service, I am writing this letter to urge you as chairman of the Senate Committee on Education and Labor to use your influence to the end of postponing the return of the United States Employment Service to the States as proposed by the House.

Specifically, we ask your support for S. 1510 (which postpones such return until 1947) without amendments.

Hoping to receive favorable word from you as to your attitude on this matter and with all best wishes to you personally.

Sincerely yours,

JACK R. MCMICHAEL, Executive Secretary.

Senator TUNNELL. We will recess until further notice.

(Whereupon, at 11:20 a. m., the subcommittee adjourned.)

UNITED STATES EMPLOYMENT SERVICE

WEDNESDAY, MARCH 6, 1946

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON
EDUCATION AND LABOR,
Washington, D. C.

The subcommittee met, pursuant to call, at 2 o'clock p. m., in room 457, Senate Office Building, Senator James M. Tunnell (chairman), presiding.

Present: Senators Tunnell (chairman), and Ball.

Also present: Senator Murray (chairman of the Committee on Education and Labor).

Senator TUNNELL. All right, Mr. Rector, you are the first witness on this list.

Mr. RECTOR. I am the first on the list of the States. There are only two of us, Senator.

Senator TUNNELL. All right. Who else appears for the States? Mr. RECTOR. Mr. W. O. Hake, administrator of the State of Ten

nessee.

Mr. TUNNELL. All right, Mr. Rector. We are here as to S. 1456, I believe.

Mr. RECTOR. I was wondering on that, Senator. There are a number of measures before your committee relating to the return of the Employment Service.

Senator TUNNELL. S. 1456, S. 1510, S. 1848, and H. R. 4437.
Mr. RECTOR. Yes.

Senator TUNNELL. Will you give your name for the record?
Mr. RECTOR. As I indicated, Senator, my name is Stanley Rector.
Senator TUNNELL. What State are you from?

Mr. RECTOR. I am chief counsel for the Industrial Commission of the State of Wisconsin. I am here as chairman of the legislative committee of the 48 State Employment Security Agencies.

Senator TUNNELL. Proceed with your statement.

STATEMENT OF STANLEY RECTOR, CHIEF COUNSEL, WISCONSIN INDUSTRIAL COMMISSION, AND CHAIRMAN, LEGISLATIVE COMMITTEE, INTERSTATE CONFERENCE OF EMPLOYMENT SECURITY AGENCIES

Mr. RECTOR. Our committee has been in town now for a matter of a few days. This hearing, happily, corresponds with our regularly scheduled quarterly meeting, and we have had opportunity to meet and discuss the issues of the return of the Employment Service.

The States have had a well-pronounced position on this matter, now, for some time. I would like to emphasize that the views I now express have been outlined and considered by our full committee.

I would like, for the purposes of the record to indicate the membership of the group for which I am spokesman, if I may submit that for the record.

Senator TUNNELL. Go ahead.

Mr. RECTOR. There is Mr. Davis, of the State of Washington, administrator; Benjamin Luchini, of New Mexico, administrator; Donald Miller, labor commissioner, from the State of Nebraska; Mr. W. O. Hake, administrator, from the State of Tennessee; Mr. Broadway, from the State of Alabama. And there are two gentlemen who are members of the committee who are not here today, Mr. T. Morris Dunn, industrial commissioner, of Oregon; and Col. A. L. Fletcher, administrator, of North Carolina. That is the group for which I am spokesman, and this group is representative of the position of the 48 States.

The position of the State agencies, Senator, is that the interests of the Nation, and specifically the interests of the displaced worker and of the demobilized serviceman, can best be served by an early return of the employment service to State operation, so that it may be integrated and play the role that it was originally designed to play in the program conceived by the Congress in the Social Security Act. Of course, we conversely believe that a delay

Senator TUNNELL (interposing). We are interested in why. Mr. RECTOR. I would like to state, if I might, the over-all position, and I will certainly come to the why.

Senator TUNNELL. All right.

Mr. RECTOR. We believe that any bills designed to delay the return— and there are several here before the committee, one of them would not return it at all and some would postpone it a year and a half, we believe that those bills would not be conducive to the national interests, and we propose here to try to show why.

Senator TUNNELL. That is what I am interested in.
Mr. RECTOR. Very well, sir.

Our basic proposition as to why it should be returned is that it is absolutely essential for the effective operations of the employment security program to have the two component parts, unemployment compensation and the employment service, operated as a unified whole, as a unified program. They cannot be efficiently and properly operated under different lines of authority.

Now the purpose of the employment security program envisaged and enacted by the Congress in the Social Security Act was to provide protection for unemployed persons. That protection takes two roads, or there are two phases, if I may correct that. It is an endeavor on the part of the State, and I am using "State" now not in the sense of Federal or in political sense

Senator TUNNELL (interposing). Of Government?

Mr. RECTOR. Of Government, that is a good word for that. The first phase is the endeavor of Government to find a person a job who has been displaced from his work through no fault of his own-Senator TUNNELL (interposing). How about one who never had a job?

Mr. RECTOR. The program, I may add, did not visualize that. You couldn't very well have unemployment protection to those who were displaced without first having a record in some form or another.

Senator TUNNELL. Don't you take care of those who have never had a job?

Mr. RECTOR. Not in this program. There are other programs that may, but not in this program, Senator.

Senator TUNNELL. I just don't see the difference between a fellow who has had a job and one who has not, so far as the necessity—

Mr. RECTOR (interposing). Well, certainly he may have needs that the State may have to take into consideration, but it is not the problem of unemployment compensation and

Senator TUNNELL (interposing). I don't mean compensation. I am talking about USES.

Mr. RECTOR. That is different.

Senator TUNNELL. You say it is not the job of the USES?

Mr. RECTOR. I thought you were talking about compensation. Certainly anybody who hasn't had a job, anybody, a displaced person or anybody seeking a job, can go to this public labor market established and maintained by the Government, and utilize its service to seek work. Senator TUNNELL. That is what I thought.

Mr. RECTOR. I am sorry I misunderstood you.

Senator TUNNELL. You mean that your organization represents the compensation end of it; is that it?

Mr. RECTOR. No; I don't; and I would like to digress. I would like to give you the basic theory on which the Congress enacted or contemplated and finally enacted an employment security program for the Nation as envisaged in the Social Security Act. It was to meet the problem of the unemployed. It has two phases. One is to find a man a job through a Government agency in the public labor market. It doesn't cost him anything, and presumably the agency is expert in the function of finding him a job. The other phase of the employment security program envisaged by the Congress is to pay a man unemloyment compensation benefits based on a work record (and he would have a work record if he had been in the labor market) to assist him in living through that transition period from one job to another job. These benefits might be sufficient in and of themselves for subsistence or he might have to supplement them. But the two phases of the problem of the unemployed function together.

The responsibility vested in Government by the Social Security Act was that it is the responsibility of the Government to find a man a job or to pay him benefits for a limited period of time during which he is seeking a job and they are seeking a job for him.

Now with that basic theory in mind, Congress enacted the Social Security Act. There was sentiment, of course, for a Federal act, but it did not prevail and it was thought, and in our estimate properly so, that_decentralized administration, decentralized political control in the States could make for a more effective program.

With that Congress provided for an Unemployment Compensation Tax Act, which induced every State to enact unemployment compensation acts. And as an integral part of the unemployment compensation act of every State, in order to meet the requirements of the Federal act, they had to establish a State employment service law and sys

tem. They could only work one in conjunction with the other as a unified, over-all program.

Now with that in mind-I think that is evidenced by the laws of the States-this, here, is a typical law [indicating]. I picked up the law for the State of Kansas, and you can pick up the law of every State, except perhaps my own State which was passed before the Federal act, and you will find that the so-called unemployment compensation act of the State provides that the State, in the administration of unemployment compensation, set up a system of employment offices, which were integrated with unemployment compensation and under the administrative command of the State employment security agency, from top to bottom. There was no distinction whatsoever in the offices that performed the function of employment service and the function of benefit payment.

Here it is in the State of Kansas:

The commission shall create a State employment service in the division of unemployment compensation. The commission shall establish and maintain thereunder free public employment offices in such number and places as may be necessary for the proper administration of this unemployment compensation act.

Now I might say that the laws of the States originally followed in very close form the recommendations of the Social Security Board. It was the original recommendation of the Social Security Board that they be set up on an integrated basis for proper and efficient operation. True, there are two functions, but there is only one program, and that is employment security to take care of the unemployed worker. Now if we will visualize-I think we sometimes get lost in abstractions in visualizing unemployment compensation and employment service as being Federal bureaus here-and look at it in the light of the rules and regulations that they promulgate and different social theories and policies now in evidence. But if we will stop and look at the employment security program as it affects the people, you can see the essential necessity for absolute integration. If you go to the village, if you go to the town, if you go to that section of the city that has an employment office, the place that John Doe goes to when he becomes unemployed, you will find an office staffed by a representative number-2, 3, it may be up to 15 or it may be up to a much larger number. He goes in that office, he registers for work, and he claims unemployment compensation benefits if he has been employed. If he hasn't been employed he doesn't, of course, claim that.

In this office, with, let us say, some 10 people under one roof, with this man going from one person to another, directed back and forth from one function to the other, it cannot function efficiently and economically and effectively with two lines of command. There must be the flexibility of sending personnel that is not busy today discharging one function, across to another line-I mean not literally across a line but into another phase of the program. There is one office that man goes into to meet his need, which is to find a job or to secure benefits.

If you have two lines of command in that office, with the personnel difficulties that can evolve out of two lines of command, particularly when they are aggravated by different pay classifications, by people doing nearly the identical work who are on the Federal pay roll which