provisions because that would place a tremendous additional burden of administration on all of the States to know just what the District of Columbia law is. Therefore we think it would slow down administration and be a disadvantage to the Federal employees who are working outside the District. Now I want to take up unemployment insurance and tariff policy. We question the wisdom of establishing a precedent of the Federal Government subsidizing unemployment which might be attributable to some change in a national policy. Practically every Federal policy change has an effect, direct or indirect, upon some business and employment. I need only mention change in taxes; changes in defense requirements; or changes in requirements for FHA mortgage insuranceall of which affect business and employment in some way. The national chamber does not believe H. R. 8585, which proposes Federal supplementary unemployment compensation grants for any State which has unemployment in a given industry or segment of the industry resulting from Federal tariff or trade policy, to be a sound or wise solution to the problem. The provisions of this bill for weekly benefit amounts of approximately two-thirds average weekly wages and benefit duration in excess of duration in any present State law can be interpreted as a method of forcing increased benefit amounts and duration upon the State. The bill mentions average weekly wages but does not say whether these wages are before or after Federal withholding tax and OASI tax. If an individual were assured two-thirds of gross weekly pay tax free for 39 weeks, it could make a considerable difference with respect to his incentive to seek new employment. Unemployment is caused by many things. It is extremely difficult to determine the extent of unemployment due to a change in tariff rates or trade policy. Therefore, on the basis of arbitrary decisions, Federal grants would be made available to the States for unemployment compensatic 1 purposes under H. R. 8585. These grants would be conditions upon considerable liberalization of present State unemployment compensation laws with respect to benefit amount and duration. The national chamber believes that this would be usurping a considerable part of the State legislatures' prerogatives in determining the provisions and conditions of the individual State unemployment compensation laws. Most certainly the availability of nonrepayable Federal grants for unemployment due to special causes would seriously weaken the entire unemployment structure, both on the part of the individual employers and State administrative agencies. Flexibility of tariff rates should be an integral part of United States foreign economic policy. Present legislation provides adequate authority to negotiate and adminster effectively agreements for the selective adjustment of tariffs. It very properly provides safeguards for interested parties to be heard in support of, or in opposition to, contemplated and publicly announced changes in trade and tariff policy. Such legislation should continue to provide an escape clause permitting modification or withdrawal of concessions in order to deal with unforseen circumstances seriously injurious to domestic producers. Effects of changes in tariff or trade policies upon industry and employment should be dealt with through these methods. The providing of Federal grants for supplementary unemployment compensation payments to persons unemployed because of tariff changes is not an effective way of dealing with the problem. Other interested parties may suffer as much from such tariff changes as those enployees in a directly affected industry. I can merely cite the operators of stores and other businesses in a community that is affected by such a change. All of these cannot be provided special treatment. The national chamber believes that the provisions of H. R. 8585 would establish a dangerous precedent in providing Federal grants for unemployment compensation and would not have any appreciable effect upon the problem with which they are supposed to cope. In summary, the chamber of commerce believes that: (a) H. R. 8857 is undesirable because under its provisions the Federal Government forces States to extend their unemployment compensation coverage. (b) H. R. 6537 and H. R. 6539 are sound provisions for giving Federal civilian employees the same protection and benefits as their neighbors enjoy, without serious additional administrative burdens. (c) H. R. 7054 is a dangerous trend toward federalization. (d) H. R. 8585 is an unworkable attempt to single out special groups for unusual supplemental benefits above the levels already provided by State laws. The CHAIRMAN. We thank you very much, sir, for your testimony and the information which you have given. Mr. FORAND. Mr. Chairman, I have one question. The CHAIRMAN. Mr. Forand? Mr. FORAND. Mr. Cliffe, you cite in your statement that from time to time there has been agitation for Federal standards. I assume from that and I want you to correct me if I am wrong—that the chamber is taking a position in direct opposition to the recommendations of President Eisenhower relative to the standards for benefits' duration as well as weekly compensation benefits. Am I correct in that interpretation? Mr. CLIFFE. I think you are not correct, sir, for this reason. The President recommended that States take action to liberalize benefits. His recommendation was for State action. Mr. FORAND. He recommended a standard of 26 weeks. Mr. CLIFFE. He mentioned figures but it was entirely for State action. Mr. FORAND. And no State has taken action on the recommendation; is that correct? Mr. CLIFFE. I am not certain as to the action of all States. Mr. FORAND. I believe Michigan is the only one that has taken a very minor step. Therefore, I am of the opinion that it is the duty of the Congress to step in and do a job. Mr. CLIFFE. The fact of the matter is that many State legislatures have not been in session during the period since the President's message was delivered, and obviously it takes a little time for this sort of thing to work through a State legislature. However, over the period that the Federal law has been on the books, which is closely approaching 20 years now, States have made many changes in their laws. I have a chart which might be interesting to you. We see here the maximum benefits that might be received by employees in the lower line under the laws of the various States, as they were originally adopted. They range from a maximum of $180, in some States, to a maximum of $300 in other States. At the present time, those maximums have been raised tremendously, as you can see by the spread between the two lines. You will see that now the maximum in the State which provides the smallest maximum is $300, as much as the largest maximum provided originally. And the maximum provided in States that have 43 percent of the employees, the great bulk of the employees, now ranges between $780 and $900. Mr. MASON. Mr. Chairman, I think that diagram should be in the record. At least I want a copy of it because I think that is a very valuable chart showing what the States have done themselves without compulsion. The CHAIRMAN. Without objection, it will be made a part of the record. (Chart referred to is as follows:) STATE UNEMPLOYMENT COMPENSATION, MAXIMUM POTENTIAL BENEFITS The chart shows the great liberalization that has taken place in the maximum benefits that can be drawn in a benefit year by any one employee. The green line shows that as the State laws stood in 1937, 17 percent of covered employees were in States that paid maximums of less than $200; the majority of covered employees (59 percent) were in States that had a maximum of $240 ($15 for 16 weeks). The highest anywhere was $300. The red line shows that in 1953, only 5 percent of the employees were in States with maximums as low as $300 to $400, while 43 percent of the employees were in States paying from $780 to $910. The increases have come from combinations of higher weekly rates and longer durations. In general, State legislatures now provide maximum benefits about three times the 1937 maximums while cost of living has less than doubled. (Then, 60 percent of the 1947-49 base, now about $114.) The detailed figures from which the chart was prepared are: December 1937: 17 percent of covered workers_ 7 percent of covered workers.. 59 percent of covered workers.. 5 percent of covered workers.. 12 percent of covered workers__ November 1953: 5 percent of covered workers_. In States with maximum benefits $180 to $195 $210 to $225 $240 $252 to $270 $300 $320 to $400 $400 to $500 $500 to $600 $600 to $728 $780 to $910 These figures do not include the dependents' allowances which some States now grant. Source: Bureau of Employment Security, U. S. Department of Labor. summarized and arranged for chart by Frank B. Cliffe, H. J. Heinz Co. Data CHAMBER OF COMMERCE OF THE UNITED STATES, Hon. DANIEL A. REED, Chairman, House Ways and Means Committee, DEAR MR. REED: Toward the close of the hearings this morning, Mr. Forand asked me about the attitude of the chamber in relation to the President's recommendations for liberalizing and extending the coverage for unemployment benefits. Because I knew the committee was pressed for time, I merely clarified Mr. Forand's reference to the President's Economic Report message. I pointed out that the President had urged State action and not Federal legislation to force State action. I assume Mr. Forand's question was a prelude to asking for my comments on the bill, H. R. 9430. If he had asked for those comments, I would have replied substantially as follows: H. R. 9430 is a summary of the provisions of legislation that has been introduced piecemeal (but repeatedly rejected in committee or by the Congress) over the last several years, designed to extend Federal control over the State unemployment compensation legislation. The bill is subject to all of the criticisms that have been levied against previous attempts at controlling from Washington, matters which the Social Security Act recognizes as the responsibility of the separate States. Furthermore, it introduces administrative complications by providing for payments by the various States which would, each week, supplement the payments that have been provided by the respective State legislatures and correspondingly it calls for Federal reimbursement of such excess payments. Many of the statements which are made in the introduction to the bill and which have been made in support of it, are questionable. Thus, the increase in |