UNEMPLOYMENT INSURANCE

THURSDAY, JUNE 10, 1954

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in the hearing room of the Committee on Ways and Means, New House Office Building, Hon. Daniel A. Reed (chairman) presiding.

The CHAIRMAN. The committee will come to order.

The Committee on Ways and Means will resume consideration of the unemployment insurance bills, H. R. 8857, H. R. 6537, H. R. 6539, H. R. 7054, and H. R. 8585. At this point and without objection on the part of the committee we will permit the Honorable Mrs. John B. Sullivan, Democrat of Missouri, to file a statement, and also permit the Honorable Thomas M. Pelly, Republican of Washington, to file a

statement.

(The statements referred to follow:)

STATEMENT OF HON. LEONOR K. (MRS. JOHN B.) SULLIVAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI

Mr. Chairman and members of the committee, while the official notice from the committee does not list the Forand bill, H. R. 9430, of which I am a cosponsor, among those bills presently being considered in these hearings, I would like to plead with the committee to take it up and discuss it and act upon it. I think the subject matter of that bill is one of the most urgent matters facing the Congress today.

I don't know how many members of the committee saw the latest report from the Department of Labor on employment conditions of the Nation's major production and employment centers. It was a rather frightening report.

Sixteen major areas in the country were shifted from group III (moderate labor surplus) to group IV (substantial or very substantial labor surplus). I'd like to mention those labor areas. Leading the list alphabetically is the AlbanySchenectady-Troy, N. Y., area. Others include: Aurora, Ill., Buffalo, N. Y., Erie, Pa., Evansville, Ind., Fall River, Mass., Ft Wayne, Ind., Jackson, Miss., Joliet, Ill., Knoxville, Tenn., Peoria, Ill., Philadelphia, Pa., Pittsburgh, Pa., Reading, Pa., St. Louis, Mo., Utica-Rome, N. Y.

These 16 new surplus labor areas-areas of substantial labor surplus-are among 51 major areas of the country with anywhere from 6 to 12 percent or more unemployment. Every member of this committee, I believe, is aware from his own observation of the extent of unemployment in his State. Most of you, I think, have surplus labor areas in or close to your districts. Not a single major labor market area in the country has today a labor shortage.

This situation has been getting progressively worse since last fall.

Although we have been reassured that business is going to pick up eventually, or soon, or sometime, the fact is that there has been no sudden upswing that any of us have been able to find in our own districts. In Missouri, for instance, unemployment has more than doubled since October and is about two and a half times what it was a year ago. And apparently it is still going up. More than half of the State's unemployment is concentrated in St. Louis at least that part of the unemployment covered by unemployment compensation. Between April and May of this year, the total rose by more than 10 percent in St. Louis.

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afraid many more people will be on the unemployment rolls in the coming months-perhaps not for as long a period as many workers currently on the unemployment compensation rolls have been out of jobs, but long enough, I fear, to experience the shock of going from a good paying job to an income of 20 or 25 or 30 dollars a week on unemployment compensation. In my own State of Missouri the maximum benefit is $25 a week.

Now, gentlemen, if the purpose of unemployment compensation is to help sustain purchasing power in periods of temporary layoff or recession-periods such as the one we are now going through—I would appreciate if someone would let our unemployed know how they are to live on $25 a week. The cost of living in St. Louis, as in most cities in the country, is 15 or 16 percent higher than it was 4 years ago. You all know what has happened to the price of coffee-The Consumer's Price Index, which is usually on the conservative side, listed it for April at an average of $1.131⁄2 a pound; actually canned coffee is running around $1.35. Frankfurters were 56 cents a pound, veal cutlets $1.10, pork chops 88 cents, milk averaged 221⁄2 cents a quart, peanut butter 49 cents a pound, eggs 551⁄2 cents a dozen. These were average in our cities in April. Rents as we know have been going up everywhere, transportation costs go up steadily. The few things that come down in price seasonally are counterbalanced by those that go up steadily. When butter went down because of lower support prices, the average price to the consumer was still 70 cents a pound, according to the CPI.

All I am trying to get across to you gentlemen in listing these figures is the fact that the cost of living is at or very near record levels. People out of jobs must still pay the rent or the mortgage. When it comes to food, it is worthwhile, I think, to keep in mind that very few of our grocery stores in this country operate a credit business. That went out of style and became economically burdensome for the small neighborhood store in the face of severe price competition by the chains. You can't go into the grocery store-unless it might be one you have been patronizing for a number of years and is independently owned and is ownermanaged, where the owner knows you-and buy a lot of groceries and charge it. The family out of work doesn't eat if it is out of cash.

So in this situation with millions of unemployed, an unemployment compensation system which works effectively has got to provide a temporary income sufficient to enable them to meet the barest minimum necessities; $25 a week will not do that.

Under the Forand bill, H. R. 9430, the maximum compensation benefits in a State like Missouri will be about $40 a week, basing it on the same formula President Eisenhower and Secretary of Labor Mitchell have recommended be adopted by the States. None of the States has acted to put these higher standards into effect. Many of them are unable to act this year. The Forand bill would make it possible to put these higher standards into effect immediately and then give the States a full year in which to amend their own laws and raise their standards to the recommended levels.

In addition to increasing the benefits, the Forand bill also extends their duration. In Missouri, we have something like 48,000 or more unemployed subject to the unemployment compensation program. Of course, there are additional thousands unemployed not covered by the present law. In Missouri nearly 4,000 workers went off the unemployment rolls in April after exhausting their benefits. In March it was 3,000 that is 7,000 in 2 months' time. That is happening all over the country-something like 157,000 claimants had exhausted their benefits in April and another 150,000 did so in March.

That is why our bill urges au extension of the period of coverage to 39 weeks instead of the present variable periods in the different States. When we urge longer coverage, it is not because we are resigned to having people going 39 weeks without finding suitable employment. I am distressed that it takes so long. No doubt there are a few on the rolls taking an easy way out, collecting unemployment compensation and avoiding work.

But I know that is not true of the overwhelming majority of people who are jobless today and forced by necessity to try to live on unemployment compensation. They are the ones I am concerned about. They are the people the Forand bill is intended to help. I urge you to take it up and approve it and report it out for House action.

STATEMENT OF HON. THOMAS M. PELLY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Mr. PELLY. Mr. Chairman, and members of the committee, I greatly appreciate the opportunity given me to testify in supprot of unemployment compensation for Federal employees. This subject has generated intense interest in my legislative district and has drawn almost unanimous support not only from Federal employee organizations but also from outside labor groups. In particular, unemployment compensation is a most important matter to the approximately 14,000 employees of the Puget Sound Naval Shipyard at Bremerton.

I am sure that the legislation you are considering has the support of President Eisenhower. In January of this year the President told the Congress that he strongly recommended extension of the unemployment compensation system to give Federal employees the same benefits now provided to most workers in private employment. In his economic report to Congress the President reiterated his approval when he said: "A worker laid off by a Government agency gets no insurance benefits despite the fact that in many types of Federal jobs he is just as liable to be laid off as if he were in private employment." Later Mr. Philip Young, Chairman of the Civil Service Commission, announced his support of this legislation.

I believe this to be fair and reasonable legislation; and I believe it is long overdue. The Federal Government should not place itself in the class of a privileged employer. On the contrary, it should be required to meet the same obligations as face a private employer.

It should be obvious, I think, that unemployment compensation will add much to the stability of any community which has a high ratio of Federal employment. It will tend to avert the economic destitution which faces so many unfortunates who have nothing to tide them over between jobs.

Let us look at the standard arguments against this legislation. They fall into two classes: (1) that a Federal employee has annual-leave accumulations to fall back on in times of economic stress, and (2) that he can draw on his retirement funds. Let us examine these arguments a little more closely.

Annual-leave accumulation has been reduced to a maximum carryover of 26 days. Obviously this cannot be maintained by all employees, nor should it be used as a substitute for unemployment insurance. To do so is to abuse the longstanding Government vacation and leave policy. At any rate, the proposed legislation does not provide unemployment compensation for any period which will be covered by accrued annual leave.

Regarding retirement funds, these are acquired for the future and should not be drawn uron during working years. We have two groups here: (1) the career employee who is covered by civil-service retirement, and (2) the temporary or indefinite employee who is covered under the social-security system. In either case, the employee pays a tax to a retirement fund. Just as social security contributions cannot be considered drawable by the temporary employee, neither should civil-service funds be considered drawable by the career employee.

In brief, gentlemen, the Federal employee is asking that he be covered by unemployment compensation in the same manner that employees are covered in private employment in the State where he filed the claim.

The proposal is fair, it is just, it is reasonable. It is supported by the administration. I strongly urge committee action on the bills now before it so that the matter may come before the House and Senate before this session of Congress adjourns.

The CHAIRMAN. The first witness will be Mr. Thomas Kennedy, vice president, United Mine Workers of America. Mr. Kennedy, we are very glad to have you here. Will you give your full name and the capacity in which you appear for the benefit of the record.

STATEMENT OF THOMAS KENNEDY, VICE PRESIDENT, UNITED MINE WORKERS OF AMERICA

Mr. KENNEDY. Thank you. Thomas Kennedy, vice president, United Mine Workers of America. I live in Hazelton, Pa., and represent the United Mine Workers of America with respect to this legislation.

Like all legislative bills the title expresses the fundamental idea of the bill itself. This title provides as follows:

A bill to assist in alleviating the effects of unemployment resulting from Federal tariff or trade policy by establishing a temporary program of supplementary grants for States which provide for liberalization of their unemployment-compensation payments to persons unemployed because of Federal tariff or trade policy.

We favor this Baker bill as a minimum requirement under present circumstances. However, in previous statements which I have made on this question, I explained that I believe the payment of unemployment compensation should not be restricted to 26 weeks, as it is in most States, but should be paid for all of the time persons are unemployed.

Speaking for the bill, as it affects the coal industry, I would say to this committee that our reciprocal trade agreements and international trade relations enter into this picture to a great extent. For instance, the residual oil that is dumped indiscriminately along our eastern seaboard and results in ruinous competition for solid fuels.

From the National Coal Association I submit herewith the figures on residual oil for 1953 as well as for 1954 up to May 22:

NOTE.-The factor used in translating these figures is 160 gallons equal of B. t. u. of solid fuels.

32,688,000 17,032, 000

49, 720,000

13, 510,000 6,325,000

19,835, 000

In Pennsylvania alone, as affecting the anthracite and bituminous coal industries, there are approximately 100,000 men employed. Between 75,000 and 100,000 are unemployed in that State. Practically all other coal-producing States such as West Virginia, Kentucky, Tennessee, Ohio, Illinois, Indiana, and so forth, are just as vitally affected by unemployment in the coal industry; and while all of this unemployment is not due to the unfair competition of residual oil, it does have a very material effect on the causes of unemployment. Another element that affects unemployment is our decline in export coal. Recently the Coal and Steel Community of Europe, functioning on the basis of the Schuman plan, received a loan from the United States of $100 million. In reality this is actually a subsidy for those countries affiliated with the Coal and Steel Community and is to be used to take care of employees in marginal mines and for housing and other purposes.

Recently I cabled Mr. William Lawther, secretary of the Miners. International Federation in London, as follows:

Newspaper reports indicate representatives Schuman plan for coal and steel in Europe are in this country to secure large loan to develop and carry on said plan. Coal industry in United States only working 2 days per week. Numerous mines shut down. Would like very much to know where Schuman-plan countries are buying their coal. Belgium recently bought coal from Russia. Are these other countries purchasing Polish coal or from what source? This information together with any of your suggestions by cable would be appreciated.

All of the Steel and Coal Community countries are affiliated with the Miners International Federation.

I received from Mr. Lawther the following reply:

Your telegram received. Following information compiled from ECE and coal and steel communities' official statistics figures in thousand metric tons January 1954: Imports into community countries from countries within community, 2,261; United States, 496; United Kingdom, 389; others not specified, 276, of which 159 from Poland, later divided up as follows: Germany, 33; France, 44; Italy, 82. Percentage difference import figures for years 1952 and 1953: 39.1-0/0 decrease from countries outside communities; 21.7-0/0 increase trade between community countries; 60.1-0/0 decrease imports from United States; 41.5-0/0 increase imports from United Kingdom, 16.3-0/0; decrease imports from other unspecified countries.

This wire from Mr. Lawther indicates that our exports to the community countries decreased 41 percent while the imports from other countries, including Poland, were substantially increased. I wonder if we are sending or loaning money to these countries for the purpose of accelerating our losses in the export of coal to these countries. It seems so to me.

In order to throw a little further light on international trade relations, which adversely affect the coal industry in the United States, I incorporate here in the record copy of a letter I recently sent to Mr. Paul G. Hoffman, chairman of the board of the Studebaker Corp., together with copy of Mr. Hoffman's reply, which is self-explanatory.

I have just read your article entitled "Suicide by Tariff" in the February 23 issue of Look magazine. The first paragraph of your article is as follows:

"As we sat in my hotel room in Berlin, a German economist said: 'You Americans baffle me. You praise free enterprise. You know how much the American consumer gains when manufacturers really compete at making better products for lower prices. Yet, you put up tariff walls against import goods that Americans need and want. The result is that Americans are obliged to buy domestic goods when they could get the same things better and cheaper from overseas. your idea of competition stop at the border?'"'

And then you say, "I could not deny his logic."

Does

If you had considered all of the facts, I think you could have easily denied the above. I was in Western Germany recently and found that American coal can be placed in Hamburg in successful competition with the Ruhr Valley coal, but it is impossible to do so because the Federal Government of Western Germany refuses to grant an import license for such imports.

I might pause here, Mr. Chairman, to say that one of my associate coal operator delegates took this matter up with the State Department representatives in Western Germany and they told him to forget about it. He could not get an import license.

A recent AP story from Luxembourg stated that Belgium had initialed a trade agreement with Russia involving purchase of 60,000 tons of Russian anthracite. In this connection it may be pertinent to ask, Is Belgium using American dollars to cover this trade agreement? Why cannot Welsh anthracite be purchased from Great Britain or anthracite bought from the United States as cheap as it could be bought from Russia? It also may be fair to ask if subsidies are part of the international grade relations program, or apply to any European nation, such as Russia and other countries, where nationalization of industries is in effect? Moreover, the various countries participating in the Marshall plan have and are still buying Polish coal-which is really Russian coal. Have they used American dollars to purchase this coal?

I might say for the benefit of the record at this point that Radio Tokyo recently made an announcement that Russia was completing