Mr. RECTOR. We could do a better job for the citizens in the State of Wisconsin.

Senator TUNNELL. That is what your State Government says. Mr. RECTOR. And that is what the people of our State say, at least that is what

Senator TUNNELL (interposing). Have they ever had a chance to say it?

Mr. RECTOR. Well, we haven't held any plebiscite, but the strongest force in organized labor there, the State federation and the various employer organizations. Those are interested parties, and they have said it.

Senator TUNNELL. We have had some labor organizations here

Mr. RECTOR. That are distinctly opposed to it.
Senator TUNNELL. To the State.

Mr. RECTOR. Yes.

Senator BALL. I think organized labor nationally has been, from the very beginning in favor of federalization of both the UC and ES. Mr. RECTOR. No question about it, and I hold a contrary view.

Senator BALL. All I was trying to get straight on this particular merit provision is that if you are going to put this back under the Wagner-Peyser Act rather than leave it under title III, that that provision probably should be in there, perhaps, with that proviso taking care of the fact that all the States now have merit systems meeting the requirements of the Social Security Act.

Senator TUNNELL. We don't have it in our State.

Mr. RECTOR. Every State must maintain a merit system under the surveillance of the Federal Government to qualify for the title III money. I think your comment there, Senator Ball, would clarify the situation.

Senator TUNNELL. If there is any organization in our State that provides for any examination by State authority I have never heard of it nor seen it nor seen the effect of it. It is entirely political, handled entirely by the political machine and never has had a Democrat in it so far as I know or ever heard. [Laughter.] If that is what you call civil service, all right.

Mr. RECTOR. In my estimation that might not be the conclusive test, whether you have Democrats or Republicans. I suppose there are a lot of Southern States that have rather a paucity of good Republicans

Senator TUNNELL (interposing). They can't find them. [Laughter.] Here is the point. The Southern States would have just the same reasons to object to Federal control as Northern States, and while there might not be a difference in politics there would be a difference in personnel.

Mr. RECTOR. All I am able to say is this, Senator, in reference to your question in that form, that I have known the Social Security Board for a long time and I don't believe they have been remiss in their obligations to see that your State has a merit system that measures up to its standards of an effective personnel system.

Senator TUNNELL. That gives us an idea of their standards, then. Mr. RECTOR. Going along to the bottom of page 6 and the top of page 7, in response to your inquiry, Senator Ball, and coming right

down to cases here, the language on page 6, lines 16 to 23, in conjunction with the language at the top of page 7, lines 1, 2, and 3, varies the whole approach of Federal-State cooperation as envisaged in the Wagner-Peyser Act. It varies the whole thing, fundamentally changes the whole conception of the relationship. You will note that the material on page 6 does this. It makes a deletion of the present requirement that the States and the Federal Government enter into a plan of operation. From the very beginning, before the State meets the standards of the Labor Department and undertakes operation and receives administrative grants, it must enter into a plan of operation with the Federal agency. Such a plan of operation is a pretty comprehensive thing. For instance, the last plan we entered into in the State of Wisconsin was 74 pages long. It was pretty minute, pretty detailed, it ran into the organizational charts, procedures, what was to be done under certain considerations, and it set out the interstate policy and procedures that were to be followed. However, this repeals that approach. This erases the conception of the plan. On the top of page 7 there is an addition to section 9, as you will note there, Senators.

Section 9 of the Wagner-Peyser Act reads this way in the opening

sentence:

Each State agency cooperating with the United States Employment Service under this act shall make such reports concerning its operations and expenditures as shall be prescribed by the director.

Now, we pick that up on the top of page 7,

and shall comply with such provisions as the Secretary may from time to time find necessary to carry out his obligations under this act.

Instead of following that original conception of the WagnerPeyser Act, namely, the State and the Federal Government sitting down around the table at the beginning of the year, and through the process of collective bargaining, arriving at a plan that is weighed with cogent considerations advanced by both sides of the table. Of course it is obvious that the heat is on us, the State, because if we don't enter into a plan, we don't have any Employment Service, so the ultimate bargaining power is theirs. But there is profit in that democratic procedure in arriving at what we are going to do through the period of a year, just like there is profit in a collective bargaining wage contract. Now that is scheduled to go out the window and there is substituted the conception that we subscribe in advance, that the States must comply with any and all regulations, or provisions, that the Secretary shall see fit to issue from time to time. The States will not have any administrative control, policy administration, or anything else, if this measure is enacted. If you feel that Federal control is so much better in this field, then the only answer is to take over not only the Employment Service, which this would be doing-we would be merely clerical-but to take over the unemployment compensation as well. One cannot be run under directives of the other any more than a two-seated car with one driver up front with a latitude of freedom

Senator TUNNELL (interposing). Unemployment compensation is paid by both Federal and State, isn't it?

Mr. RECTOR. The administrative costs are Federal and all the moneys for the benefit checks are State-if you have the unemployment

compensation and Employment Service, which are one chassis, they can't be operated separately-it is like having a back-seat driver and a front-seat driver, with two steering wheels. The man in the back must run his end of the car in accordance with directives from Washington; the man in the front is given pretty large discretion, that is the UC. They either both must have pretty wide discretion or they must both be under substantially the same directives. I think this is fundamentally bad and takes

Senator TUNNELL (interposing). I wish you had made this statement before Senator Murray left, because it refers to one of his bills. Mr. RECTOR. In line with that same control element, I will skip over

to page

Senator BALL (interposing). You are talking about the first two paragraphs of section 211 of this bill, primarily?

Senator TUNNELL. Pages 6 and 7.

Mr. RECTOR. That is right. I said lines 1, 2, and 3 at the top of page 7, or, in other words, the material in the first paragraph of page 7. Senator BALL. How about the second paragraph, lines 8 to 16 inclusive?

Mr. RECTOR. I have no objection to that other than this:
You will see that lines 13 to 16 state—

or there has been a substantial failure of compliance by such State agency with any provisions of this act or any rules, regulations, or standards of efficiency prescribed thereunder.

The way it used to read is that they cut off our money when we failed to comply with the "plan." Now, since they have taken away the "plan" approach and put in the rules and regulations approach, which we must follow even though we don't know what they are, in advance, then they simply change the term, "plan," to read "rules, regulations, or standards of efficiency" and so forth.

Senator TUNNELL. It states both here. It says, "of this act or any rules, regulations, or standards."

Mr. RECTOR. That is right, but in lines 10 to 13 they have deleted the following:

or the moneys herein required to be appropriated by such State, in accordance with plans approved under this act.

They used to cut off the moneys appropriated, and so on, when we failed to comply with the plan.

If you were to strike the change set out by lines 1, 2, and 3 at the top of the page then this latter paragraph falls of its own weight because it is tied in with those lines.

Now going over to page 8, section 212, we raise serious question concerning the delegation of power to the Department of Labor to formulate a referral policy under the situation that now obtains wherein you have 48 States with different conceptions of "suitability of work" in their laws. I don't mean to say 48 different ones, but there is quite a variable pattern within the 48 States insofar as definitions of "suitability" are concerned. We are saying that a good referral policy, administratively, can only be framed in accordance with the "suitable all State agency that is responsible for the administration of the UC work" provisions of your State law.

Now if you don't believe that it is proper for the States to have different conceptions, my answer is that we are not arguing that point.

Some people of course say, "Well, there should be only one over-all referral policy for the Nation." That is another issue. But I am saying that as long as we have the present State system, then the overall State agency that is responsible for the administration of the UC law, in accordance with the conceptions of "suitability" as defined in the State laws and interpreted by administrative discretion, must determine the referral policy of that State's employment service so as to make it in accord with the "suitable work” definition in the State law. Here you are delegating authority to set up a uniform referral policy throughout the Nation. That would certainly be proper and sound if you had a uniform unemployment compensation system. But lacking that—and it doesn't appear very near-then, to make this thing work

Senator TUNNELL (interposing). Does that say that? It says that he has to see that the separate

State systems of public employment offices, cooperating with the United States Employment Service under this act, maintain reasonable referral standards which will, to the maximum feasible and consistent with the purpose and provisions of this act, assure equal referral opportunities.

It doesn't say they have to be the same, does it?

Senator BALL. Read the rest of it. I think he could go in and practically write the whole referral standards under that provision.

Mr. RECTOR. This permits the Secretary of Labor to write the ticket; and from our experience with Federal officials he would write the ticket.

Senator TUNNELL. I don't see it that way at all, but I hear your view. Senator BALL. What about this provision beginning with line 22 at the bottom of page 7 and reading:

In any fiscal year the Secretary is authorized to expend in any State so much of the funds appropriated and made available under section 5 of this act as he may deem necessary to establish a State-wide system of public employment offices under the control of the Secretary if no State system of public employment service exist in such State or of, and for as long as, the State is not eligible for funds in accordance with the provisions of this act.

Mr. RECTOR. Well, I was saying that, Senator, until I showed the vast extension of power that was being delegated here, the power to make rules and regulations which we must follow, and then the necessity on the part of the States to subscribe to a referral policy; and then I was going to point out what happened if we didn't, and that is covered by the portion of S. 1510 that you just read, and section 14 at the bottom of page 9.

You were reading what we call the recapture clause. This provides that if in the estimation of the Secretary of Labor we fail to follow any of his promulgations, even though they might be directly contrary to our over-all administration of the State Unemployment Compensation law, and of other State laws concerning personnel and so on; if we fail to follow any of the Federal directives in the estimate of the Labor Department, I wouldn't say if in fact, but if it is so in their opinion, it empowers the Federal agency to step into that State and to take over the control and resume Federal operations of the Employment Service-on their estimate of our failure.

Sure we get a hearing. They have told us, say, that we have not been complying, and the best we can get out of it is a trip to Wash

ington and have a hearing, which is not reviewable by a court. Our only recourse is to come here and present our case formally, and listen to the final determination, which is not reviewable. Then they move into the State and take over.

Now I cant' imagine any more far-reaching sanction that you could extend to a Federal agency to force compliance with its conceptions. The rule might not be the way they read it at all, or as reasonable men, or as a court would construe it; it is their own construction of their own rule, and they are the sheriff, the judge, the jury, and the executioner. They possess all the power of government rolled into one, and I don't think that that is good government. It certainly would reduce the number of States, this absolutely unqualified power to make rules and regulations such as they saw fit, and force compliance therewith-I don't think there would be a State that would take it were it not for the other provision which has been very well thought

out.

Senator BALL. I understand that there is one State, I think it is Arizona, where the governor and the State legislature didn't want to establish any employment service. I don't know how they could operate unemployment compensation without it. But if the language in the first three lines at the top of page 7 were eliminated, what would you think of this paragraph?

Mr. RECTOR. I still wouldn't want it. After all, the sanction on us is that if we do not carry out our cooperative bargaining, we would be in the position of having our funds cut off

Senator BALL (interposing). Which would cut off the service.

Mr. RECTOR. It would cut off the service which would mean quite a repercussion. It would mean the assumption of a great responsibility on the part of the State agency so acted. It would have to be right.

Senator BALL. What was the experience under the act previously? Do you know of any case where funds were actually cut off and service stopped?

Mr. RECTOR. I don't know of a single case where the service stopped. Senator BALL. I remember that Senator Hayden got a line in an appropriations act under which they did operate service in Arizona. Mr. RECTOR. That was in an early appropriations act and due to some prearrangement-I am fairly conversant with how that happened they moved in before the Federal Government took over Employment Service generally, and due to a technical defect in the State law that they said did not conform to the Federal act, or rather a defect in the State law that didn't meet with the regulations of the USES, they made arrangements to take over. I am saying that the question of responsibility for proper administration in the State is so grave, and the onus that they would have to assume to stick by their guns on a question of difference with the Department of Labor assures full protection from the cut-off of funds and doesn't allow the exercise of whim on the part of the Department of Labor. They don't even need to be approximately right if they can move in and take over anyhow. They can just say, "Well, this is our decision, gentlemen, we want your employment service." But they have got to be right, as well as the State. This brings us right down to the nub of the thing