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Unemployment compensation taxes should not be levied on employers in fields where there is no unemployment

Regardless of the unemployment taxes which might be levied against barber and beauty-shop employers, it is a fact that neither barbers nor beauticians will validly benefit. There is a job for any barber or beautician who desires to be employed, and this fact is true in all sections of the United States. Surely barber and beauty shop employers should not be expected to contribute to unemploymentcompensation payments when people in our fields of endeavor do not comprise a portion of the numbers of unemployed.

Imposition of unemployment compensation taxes without opportunity for participation in benefits is unfair and unjust

Compelling employers of barbers and beauticians to pay unemployment compensation taxes with prior knowledge that it will not result in compensation for a reasonable number of unemployed in the barber and beauty-culture callings is an unfair and unjust situation.

Employers of barbers and beauticians will be forced to pay considerable amounts in taxes, even if only 1 or 2 persons are employed. It is not proper taxation to ask our barber and beauty-shop employers to contribute when their employees will not become beneficiaries.

Levying an unfair unemployment compensation tax on employers of barbers and beauticians adds to expense burdens, as well as bookkeeping and record-keeping burdens.

It may be assumed that if barbers and beauticians who employ fewer than 8 persons, and as few as 1 or 2 persons, will soon come under the provisions of the Unemployment Compensation Act, then we can also assume that the original rate of tax imposed will be at least 2.70 percent of the first $3,000 of earnings of each employee. Therefore, the tax assessed on an employer of but 1 person will amount to $81 annually, of 2 persons the tax will be $162 annually, of 3 persons the tax will spiral up to $243 annually, etc.

For several years it may be assumed that these rates of taxation will remain constant, and, when the rate of taxation is reduced, the amounts paid each year by the small-shop operator will still be considerable.

If it could be established that there is unemployment in the barber and beautyculture fields which would also establish that barbers and beauticians will be benefited, then some justification for imposing the tax on barber and beauty shop employers is apparent. Actually, the factual situation is one of taxation without compensation, and is totally unfair.

It is quite well understood among barbers and beauticians that sustaining 1 or 2 employees in the average barber or beauty shop is not now a profitable procedure for the shop owner. Most shop owners, having only one employee, consider that the employee is maintained in the shop more for the accommodation of patrons than for the purpose of securing a profit.

It would take but little added cost to the employer, over what his operating costs are now, for him to realize that it is not profitable for him to employ anyone. There is a point at which the operation of a multiple-chair shop with several employees ceases to be a profitable venture, and more and more barber and beauty shop operators are being persuaded that they can best conduct their businesses as one-man or one-woman institutions.

2. Moreover, a small-business man or woman detests bookkeeping and recordkeeping and all the other little wrinkles that aggravate small-business people today. The imposition of an unemployment tax on small barber and beauty shop owners, which will result if H. R. 8857 is enacted in its present form, may well be the straw that breaks the camel's back and which could reasonably cause a large number of discharges of employees by small-shop owners who would rather "go it alone" than to be confronted with additional obligations in recordkeeping and taxpaying. Our plea for exemption from the provisions of the Unemployment Compensation Act The Associated Master Barbers and Beauticians of America, speaking for the barbers and beauticians of America, respectfully petitions the Ways and Means Committee to ir corporate into H. R. 8857 an amendment which will exempt employers in the barbering and beauty culture fields from the Federal unemployment compensation law.

The CHAIRMAN. Please give your name and the capacity in which you appear. You may proceed.

STATEMENT OF JAMES A. CAMPBELL, PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

Mr. CAMPBELL. My name is James A. Campbell. I am president of the American Federation of Government Employees. Our organization is made up of Government employees who are employed in the various departments of the Government all over the United States and in Alaska, Hawaii, and Panama.

With your permission I will read this statement and comment on it. The American Federation of Government Employees most emphatically favors the principle of providing unemployment compensation for employees in the Federal Civil Service and in the employ of the Government of the District of Columbia. The organization is vitally interested, therefore, in the bills under consideration by this committee which would establish this principle for Government workers.

The Federation supports the objective of these bills because they would benefit all of our members if at any time they became unemployed. The Federation is also anxious to have this objective of unemployment compensation become a reality because the organization is an affiliate of the American Federation of Labor. As part of the American labor movement, we share labor's concern that adequate and effective provision be made for those workers whose misfortune it is to be separated from their employment. As a member also of the Government Employees' Council, representing A. F. of L. unions having members in the Federal service, the AFGE joins with those organizations in supporting unemployment insurance for Government employees.

At this point I wish to express my thanks to the chairman and members of the House Ways and Means Committee for making it possible for me to present the views of the organization I have the honor to represent.

Too much emphasis, Mr. Chairman, cannot be placed on the need for providing the benefits of unemployment insurance to employees of the Federal and District Governments. This type of protection is long overdue. Each year which passes with no action on a legislative measure designed to provide this insurance for Government employees only intensifies the need for it. For lack of, many more thousands of employees will have been separated from their jobs and made to assume the economis and social losses of unemployment.

We believe the citizen who works for his Government is entitled to the same consideration in regard to these benefits as the citizen who is employed in private industry. If one is entitled to the protection, the other is equally so entitled. The hazards of Government employment are the same as employment in private industry. Government employees lose their jobs because of changes in conditions, and they have to meet the same problem of reemployment." In many cases they have an additional handicap because of their service in the Government which is sometimes highly specialized so that there is no counterpart of that kind of work in private industry. So the problem of finding employment is even greater than that of the employee who works in private industry.

For that reason we ask that you support these bills:

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H. R. 6537 introduced by Congressman Forand; H. R. 6539 by Congressman Mason, and H. R. 7054.

Employees of the Government of the District of Columbia are included in my reference to the desirable objective of the bills before this committee. These measures should most certainly include District employees. Three of the bills relate to Federal employees and none as now written includes them. These bills are H. R. 6537, introduced by Congressman Forand; H. R. 6539, by Congressman Mason; and H. R. 7054, by Congressman Dingell. District of Columbia Government employees have a semi-Federal status, inasmuch as the operation of the municipal government and the compensation and working conditions of its employees are all subject to and in fact originate in legislative enactment of the Congress.

It is suggested also that these bills be amended to provide specific coverage of employees of the Panama Canal Company so that there will be no question as to their inclusion.

We have had in this country for more than 15 years an unemployment-insurance program for the benefit of workers in private industry. It has provided a very necessary, though moderate, protection against the hazard of prolonged unemployment. This protection has been confined to workers in private industry, but it is nonetheless needed by employees in the Government service.

Many persons seems to have the impression that Federal employment is quite stable. They believe that there is, therefore, less likelihood of the loss of one's job than there is in private industry. That view is not correct. Civil-service employees need comparable protection, for they share in great measure the irregularity and uncertainty which are characteristic of many areas in private employment.

The American Federation of Government Employees favors the general tenor of all these bills, inasmuch as they would establish the principle of unemployment insurance for civil-service employees. We want this type of insurance to mitigate the hardships that follow unemployment, and we want it without further delay. We would, of course, prefer more liberal provisions as to the amount of compensation which Federal employees may receive. It is realized, however, that we must lay the groundwork for this extension of the Federal-State system to Government workers.

As the bills are now written, they provide that Federal employees will receive the same amount under the same conditions required of workers in private industry in the various States in which they would become unemployed. It would be more desirable if Federal and District employees were given uniform benefits. The payments will be made from Federal funds, and they will not be subject to the factors which dictate the varying amounts in the different States. It would also be desirable if there were minimum and uniform standards for eligibility to receive unemployment compensation. I do not intend this statement to be in any way construed as opposition to any of these bills. I merely wish to point out important respects in which they may be improved.

If existing unemployment-insurance laws are applied, the individual benefits which would be paid to Government employees would vary from a potential maximum of $20 a week for 16 weeks in Florida to $35 a week for 26 weeks in Alaska and $33 a week for 26%1⁄2 weeks in

Wisconsin. Two States pay $30 a week for 24 weeks-New Mexico and Virginia. Mississippi pays $30 a week for 16 weeks.

Fourteen States have a weekly rate of $30 payable for 26 weeks. They are California, Connecticut, Maryland, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Washington, and Wyoming. Weekly rates in the other 29 States are between $20 and $30.

Wage or employment qualifications vary to the extent that few States have similar conditions. This will complicate the administrative problem from the standpoint of the Federal Government.

I would like to direct the attention of the committee to the extent of the unemployment problem as it exists in the Federal Government today. It requires no demonstration to understand that the economic and social implications of unemployment are no less severe for the Federal or District government employee than it is for workers in private industry. Those Government employees who have families share the same responsibilities and face the same disheartening effects of loss of a job.

When unemployment strikes, it deals the same blow to the morale of the Government employee as it does to his coworker in industry. It may have the same shattering effect on his family life. If the period of unemployment persists, it will exert the same destructive effect on the physical as well as on the mental well-being of the Federal employee and his family.

Insecurity of job tenure is the lot of many American workers, and the civil-service employee is no stranger to the disheartening expectation of becoming jobless. During the last 5 years turnover in the Federal civil service has been of considerable proportions. In the calendar year 1953 total separations amounted to 559,176, or about 25 percent of total employment. In the year 1951 separations were even greater-658,276. This is a high turnover rate, for, regardless of the reason, it means that employees are leaving jobs, many of which must be filled by further recruiting.

The majority of separations consists of outright quitting, which in 1951 amounted to 400,000 and has been more than 300,000 in 1952 and 1953. I mention the quits in passing because it bears on the basic conditions of dissatisfaction with one's job. Lack of unemployment insurance may well be one of the causes of such dissatisfaction.

The two causes of involuntary separation from the civil service are reduction in force and termination of temporary or expected appointments. Involuntary separations for these reasons totaled 155,000 in 1953, or nearly 28 percent of all separations in that year. The figures for the different categories and years to which I have referred are tabulated below:

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In nongovernmental employment, turnover rates vary from industry to industry. Direct comparison may not be properly made between turnover in manufacturing and Federal employment as a whole. However, there are some relatively stable manufacturing industries, such as chemicals and petroleum refining, which have no higher separation rates than the Federal Government. If only manual. workers of the Government are considered, turnover is higher than in many industries.

Whether Federal turnover is high or low, the comparison in itself has little if any bearing on the need for providing unemployment insurance. The situation it does point up is that industrial workers have been provided with this benefit for more than 15 years, while Federal workers have been left to fend for themselves.

Federal employees have had to rely on payments for their accumulated annual leave or on withdrawal of the money deducted from their salary for retirement purposes. This latter payment has been withdrawn from many employees, since they have been made eligible to coverage by old-age and survivors insurance benefits. More than one-third of all Federal employees are serving without permanent tenure; in other words, in an indefinite, temporary, or expected status. At least 25 percent of all Federal employees are covered by socialsecurity retirement benefits rather than by the civil-service retirement provisions. This means that when employees in that group are separated from their Federal jobs they receive no refund of their retirement deductions. This is not stated as an objection to socialsecurity coverage but merely to point to the fact that one lump-sum payment hitherto viewed as cushioning their loss of civil-service employment is no longer available.

Employees having 20 or more years of service likewise would have no refund forthcoming, since the law does not permit it after that period. They will, of course, have established eligibility to retirement benefits, but that is still no subsititute for unemployment insurance.

Contrary to the belief of many persons outside the Government service that it is providing a career to the great majority of employees, the number having relatively short service has become increasingly large. This proportion is not fully accounted for by reason of the appreciable growth of the Federal civil service in World War II and the maintenance of employment at a higher level because of an enlarged Defense Establishment. The number who quit their jobs during the 5-year period 1949 through 1953 totaled 1,428,000. It must be remembered that this number left voluntarily and that layoffs and other involuntary means of separation were in addition to the number who quit of their own volition.

Those who quit would not ordinarily be eligible to unemployment benefits. I refer to them primarily to substantiate my statement that the Federal service is becoming more and more a group of employees having relatively short service and that the cushioning payments to employees upon separation are lessening or being eliminated.

Social-security coverage has eliminated the return of retirement deductions for many employees, but the increasingly larger proportion having relatively short service has partly reduced the other paymentthat for accumulated annual leave which heretofore has provided

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