truckdrivers? How about the grocery clerks and garage mechanics and local contractors who depended on the mill payroll for a living? How about the ticket taker at the movies and the television repairmen? All of these will be out of work because the mill is down. Are they entitled to special consideration?

And again, assuming we've solved all the above problems, how do we determine the specific number of additional dollars and weeks a jobless worker unemployed because of tariff policy should get? And assuming, as we must, that we would soon have to give special consideration to other groups, if this bill became law, how would we differentiate between them? Does tariff policy unemployment bring greater rewards than, say, unemployment resulting from Federal tax or from military policy or from State industrial promotion policy or from acts of God? If so, how much more?

One final point. If any such system went into effect, it would clearly be to the advantage of everyone but the taxpayer to push for preferential treatment of the maximum number of unemployed. For the added costs would come out of the Federal Treasury. As a matter of competition in many areas, the Tariff Commission, the President, the Secretary of Labor, State governors, and everyone else in a discretionary position could look for vast and many-faceted pressure for special consideration. And the Congress could look for a rash of bills providing for special consideration for unemployment resulting from dozens of causes other than tariff policy.

In conclusion, then, I repeat that H. R. 8585 appears to be impractical, illogical, inequitable, and impossible to administer. For these reasons and because it could easily lead to uniform Federal benefit standards, it would certainly be opposed by the great majority of State employment security administrators.

Mr. BROWN. I would like to point out very briefly what the historic position of the Interstate Conference of Employment Security Agencies has been in regard to Federal legislation in the field.

When this committee set up the social-security law, they established a balance between State prerogatives and Federal prerogatives. They set up two bailiwicks in which one could act and in which the other could act. Balance from the State point of view, means vesting in the States the maximum feasible latitude to adapt the law to local conditions and to experiment.

The conference over the years has felt that the original balance established by the Congress, and by this committee, was an equitable one. Its appearances before the Congress, its attitude on Federal legislation, has been conditioned by the feeling that the original balance was right. We have been here to fight bills which we felt would throw too much weight on one side or the other, and in particular which would result in the Federal Government treading in the State field. We have been here too, to espouse legislation which we felt would redress the balance, or perfect the balance.

That is why, in the past, we have come before this committee and the Congress. That is the basic philosophy behind what we have been doing.

We have never tried to eliminate the Federal role in this partnership proposition. You have not heard us here before you attempting to overturn some of the original prerogatives given the Federal Government at the outset by the Congress.

Now, I am talking primarily on the one or more, and on whether this issue constitutes an invasion of State prerogatives.

So far as the conference is concerned, on the expanded coverage issue provisions, the individual administrators, I think, almost to a man, over the years, from the start have felt that expanded coverage in general was a good thing. I won't go into the arguments. They have been expounded here many times.

What is sauce for the goose is sauce for the gander. The argument that other groups would still remain uncovered, is not a particularly

valid one.
ating both, simply because you can correct only one.

Because there are two wrongs there is no point in perpetu

In any case, the conference has investigated and the administrators have favored expanded coverage, sometimes generally, sometimes specifically, in terms of one or more.

The last official consideration in annual session the conference gave, expanding coverage as an isolated issue was in 1945, at which time they determined that although they personally felt expanded coverage was a good idea, had sponsored it locally, and so on, that it was a State prerogative.

Now, in 1951 the Mills bill was before this committee. The conference sponsored the Mills bill, and in 1952 adopted a supporting resolution at its annual convention. The Mills bill included a provision for coverage of one or more. I want to say the sponsorship of the Mills bill was sponsorship of a package. That bill represented a compromise between various points of view which came closest to meeting everybody's needs. Therefore, the conference at that time sponsored the bill, and the one-or-more provision was part of that bill. You will, of course, remember that when the Mills bill became the Mason-Mills bill, the one-or-more provision was out of it, and the Reed bill now in the Senate Finance Committee, does not have the

one or more.

There was no vote in 1952 or '53 among the States on the specific issue of coverage of one or more. However, the Reed bill was endorsed by resolution at the 1953 meeting without a one-or-more provision as noted above.

As to the current proposal, the President has come forward, the Labor Department, the administration, with a bill calling for one or more at any time. What do the States feel about it?

Well, I repeat, once again, as individuals they favor it. There is every indication that all of them favor it.

Should we support this bill? There is division among the States on it. We have not had a specific vote on this bill.

The States, in general, I think, the administrators, are divided into two categories, and both as I say, favor the principle. One says if you go in there, no matter how valid the distinction you may be able to draw between this legislation and other types which we have fought over the years, what we do will be misinterpreted as opening the door, as setting the stage for additional attempts to invade the State. field.

The other side says if we favor this thing, if we feel that it is right both in principle and in equity, let us go ahead and tell the Congress so, but make that distinction clear and make our endorsement contingent upon the acceptance by the Congress of the distinction which we make in this case.

Now let me touch briefly on what that distinction is. I believe personally that the distinction is valid, but I also fall with that group of administrators which think it is liable to be misinterpreted. Nevertheless, I will tell you what it is, and it is your judgment as to whether it is a right position, or not.

From the outset, the bailiwick, which was the Federal bailiwick, has been in part determined and conditioned upon the Federal taxing power. The Federal taxing power in the field of coverage is omnipresent, is controlling. The Federal Government taxes employees

and thereby compels State action. Your "8 for 20 weeks" was an exercise of that power. Therefore, our initial position is that the Federal Government in this case is working in an area where it has a right to work, where the original setup of the social security law intended that it should work. Therefore, there is no invasion, no new standard, no invasion of the State bailiwick, nothing here which deprives the States of the right to experiment, to adapt, in the areas in which they have always had those rights.

So that is No. 1. This is an appropriate field in which the Federal Government could act.

In addition, this is distinguished by a couple of other things. No. 1, as has been pointed out, when 8 for 20 weeks was first put in the books, there was a clearcut statement that the reason it was not another figure was the question of what was administratively feasible. That was the only condition. Experience has shown that administratively it is feasible to cover one or more.

Therefore, you have an original intent expressed and experiment, and the original intent can now be carried out as a result of the successful experiment.

Third, I know of nowhere else in the State laws, with one exception, where the States have, of their own volition, gone out of the way to write permissive legislation in anticipation of Federal action. Now, we can argue here as to whether or not the States did that affirmatively, whether they welcomed Federal action, whether they did it simply in the face of the inevitable. I don't care too much about their motivation. The fact is that in this field, and in this field almost alone, so far as I know, the States have, 38 of them, on their records, the great majority, have in their books something that permits this to go into effect. Now, I don't think the Congress generally passes bills which do not give the States a chance to go back to their legislatures and get the thing straightened out without a special session. So the 38 States need not have placed this business in their laws simply to avoid the expense of a special session.

In any case, there is certainly, let us say, openmindedness at best on this thing. So that there we have the distinction.

And I have spoken about the attitude of the conference. Now I say to you that if the committee does not feel that that distinction is a valid one, if it does not feel that this bill can be distinguished from attempts to put in uniform benefit standards, duration standards, to eliminate the experience rating, all of the other things against which the States have fought over the years, then I cannot come before you and say the conference sponsors this bill. There would be a division within the interstate conference.

That is the basic point I want to make.

We believe in the agricultural provision, because we believe that also falls into the taxing power realm. We also believe the number

involved are insignificant. In the case of the merit rating for new employers, we feel that if you want to give us that privilege, fine, but that is a third field in which the Federal Government has some right to be controlling. I won't go into the details; it is a somewhat involved argument.

Mr. CURTIS of Missouri. Mr. Chairman, might I ask?
The CHAIRMAN. Mr. Curtis of Missouri.

Mr. CURTIS of Missouri. I would like to ask the witness a number of questions. Do we have a quorum call now? What will the committee proceed with?

The CHAIRMAN. This is our last witness. We could, of course, ask that he come back in the morning.

Mr. BROWN. I should be glad to come back.

Mr. CURTIS of Missouri. Perhaps I can ask the questions and have him finish also.

Mr. BROWN. I would like to add 1 more thing on 1 or 2 points.
The CHAIRMAN. Mr. Curtis?

Mr. CURTIS of Missouri. No. 1, you say that your conference approves the agricultural extension. Yet you heard a witness point out the very fact that you have a distinction in your packing of fruits in the two Štates, of citrus fruits of Florida and apples in Washington. Yet by making a general Federal law you no longer permit the State legislatures really to trim the law to fit their particular needs.

If your conference is anxious to maintain this balance, do you not think that is an illustration of how that balance can be thrown out? Mr. BROWN. I would say in that regard, as I have said in regard to one or more, if that is your considered opinion, if you don't buy, in effect, this distinction that I am making, that the Federal taxing power was intended from the outset to be exercised in terms of who is covered, both as to industry and as to numbers, and that the Federal Government is actually within its rights in that field; if you do not believe that that is a valid distinction, then we do not want to approve that aspect of the bill.

Mr. CURTIS of Missouri. In other words, the States can, as you well know, extend the coverage beyond what is provided in the Federal law. And this is a typical example. I did not know the example existed until the previous gentleman testified, but it illustrates it exactly. Packing citrus fruit in Florida and California is a different thing from packing noncitrus fruit up in the States of Oregon and Washington. Yet the Federal Government, if we extended it to these twilight zones, would be interfering with the local prerogatives.

Another question I have, in which I am very much interested, was the question I asked the Assistant Secretary of Labor, whether there is any deterrent in the Federal law as now written which would discourage the States from adopting a minimum below 8. I cannot see any. Obviously there is not too much of 1, because 17 States have gone to 1, and other States have gone below 8.

Mr. BROWN. No, there is no deterrent, other than a possible competitive 1 as between States on 1 side of another if 1 taxes and the other does not. But if that is your question, then I have not made the distinction which I had hoped to make, and if you feel that in espousing this bill we are opening the doors for futher Federal moves into areas where they are not entitled to move, then the conference does not want to approve or support this law.

Mr. CURTIS of Missouri. My position is this: It seems to me that when you get into the employment relationship, there is the arbitrary figure to be picked, some say it should be 4, some 6, some 1, you are dealing with a different kind of employer employee relationship. varies. There is 1 situation of the employer employing 1 person, and a very close relationship.

It

It seemed to me that part of the philosophy for making this breaking point originally was to allow the local communities, the States in this instance, to determine for themselves in this twilight zone again from one up to eight. That may not have been the philosophy, but it has obviously worked out, because some States use one, some four, and some six. And, of course, many of them have eight.

The final question I had is this: Of course, by adopting this extension you are going to have additional moneys going into the Federal Treasury, 0.3 percent tax on the wages of 3.5 million employees. Presently the 17 States that knock it down to 1, or the other States below 8, do not have to pay on that additional tax.

All these States, like Florida, on the citrus fruit packers, they do not have to pay this 0.3. And actually there is an incentive right now for the States to go ahead with some additional coverage and not have to pay additional moneys into the Federal Treasury. And as we well know, we do not need more money in the Federal Treasury on this. We are already getting too much from this 0.3 percent.

I wonder if your conference has considered that angle, that you will be taking more money out of the State communities by this procedure? Mr. BROWN. We have the Reed bill, as you know, which I think takes care of the annual excess. But it is going to cost more money to administer the smaller employers, of course.

Mr. CURTIS of Missouri. But the States that have done this are getting that additional service without any cost. It seems to me that is a very nice encouragement to have other States extend to new fields. I like that incentive philosophy.

Mr. BROWN. I cannot see there is any incentive there. It is a question of putting a State tax on some employers who otherwise would not be taxed, and whether or not they get an added threetenths of 1 percent it seems to me is relatively insignificant.

Mr. CURTIS of Missouri. It is relatively insignificant, except the Assistant Secretary of Labor pointed out that this was a discriminatory tax. He used the word "discrimination."

I say quite the contrary to the extent of what it is. The 17 States that have gone down to 1, in that bracket from 8 to 1, they are getting free service, at least as far as that 0.3 percent tax is concerned.

Mr. BROWN. I can't see that either point is valid in this connection. I don't think either one has weight on either side. I don't go with his point of view, and, as I say, I don't see what the incentive is from your point of view.

Mr. CURTIS of Missouri. Thank you, sir; and thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Brown, for your appearance and the information you have given to the committee.

The committee stands adjourned until 10 o'clock tomorrow morning. (Whereupon, at 12:30 p. m., the hearing was recessed to reconvene at 10 a. m., Thursday, June 10, 1954.)