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Table 16.Paid civilian employment in the executive branch of the Federal Govern

ment, by State, Dec. 31, 1953, and weekly benefit amount for total unemployment plus maximum potential benefits in a benefit year, for claimants with specified high-quarter and base-period wages, by State, June 1, 1954–Continued

BASIC BENEFIT PLUS DEPENDENTS' ALLOWANCES

(Maximum allowances for family of husband, dependent wife, and 3 children]

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1 Jurisdictions having unemployment compensation laws.
2 Metropllitan area, which includes nearby Maryland and Virginia.
• Excludes District of Columbia metropolitan area.
Source: Civil Service Commission and State unemployment insurance laws.

The CHAIRMAN. We will meet tomorrow morning at 10 o'clock.

(Thereupon, the hearing recessed at 11:50 a. m., on Tuesday, June 8, 1954, to reconvene at 10 a. m., Wednesday, June 9, 1954.)

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UNEMPLOYMENT INSURANCE

WEDNESDAY, JUNE 9, 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 of the committee) presiding.

The CHAIRMAN. The committee will come to order.

Will Mr. Larson and his associates come forward please? Mr. Larson, we are glad to see you here and we will let you proceed. I just wanted to say to those who are present that we are a little behind schedule and we do not want to foreclose anybody, but if you can be brief, it will be very helpful. You may proceed.

STATEMENT OF HON. ARTHUR LARSON, UNDER SECRETARY OF

LABOR, ACCOMPANIED BY MERRILL G. MURRAY, ASSISTANT TO THE DIRECTOR, BUREAU OF EMPLOYMENT SECURITY; PHILIP BOOTH, CHIEF, DIVISION OF PROGRAM POLICY AND LEGISLATION, UNEMPLOYMENT INSURANCE SERVICE, BUREAU OF EMPLOYMENT SECURITY, AND GEORGE F. ROHRLICH, CHIEF, DIVISION OF ACTUARIAL AND FINANCIAL SERVICES, BUREAU OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR-Resumed

Mr. LARSON. Mr. Chairman, shall I go ahead with the Federal civilian worker bill, which is the one remaining bill here, that is, H. R. 6537 and H. R. 6539, which are identical bills and which, as you know, extend unemployment insurance to Federal civilian workers.

The CHAIRMAN. That is right.

Mr. LARSON. In his budget message the President stated on January 21, 1954:

I strongly recommend extension of the unemployment compensation system to give Federal employees the same benefits as are now provided to most workers in private employment.

He followed that up in his Economic Report of January 28 by recommending

That Congress include in the insurance system Federal civilian employees under conditions set by the States in which they last worked and that it provide for Federal reimbursement to the States of the amount of the costs.

I think we might start out by observing that Federal civilian workers need unemployment insurance protection just as much as anybody else. I mention that because sometimes people have the idea that Federal civilian workers do not do much but take papers

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out of the incoming box and put them in the outgoing box, and they think all civil servants somehow differ from private employees in their need for this kind of legislation. Actually, their risk of unemployment is almost as severe as that of private workers.

You can see that from some of the charts and tables, if you like. There is table No. 13. It shows the ups and downs of Federal civilian employment. For example, just after the Korean conflict, Federal employment fell off by nearly 247,000 between June 1952 and December 1953.

There are about a half million separations from Federal employment every year and between 17 percent and 50 percent of these are what are delicately known as involuntary separations. About a quarter of Federal employees are what are sometimes now called blue-collar workers or wage-board workers, that is, people who do manual and similar work in arsenals, in Navy Yards, and in other Government facilities.

For them, of course, the risk of unemployment is even greater than that of the typical civil servant. The separation rate averages 2.9 percent per month compared with 2.2 percent for all Federal employees.

We made a little study the other day. I think probably this is the only one of its kind that ever has been made. Last year after quite a lot of Labor Department employees were involuntarily separated, a few months later we went around and checked up to see what had happened to them, and I think we have a pretty good little case study on what happens to the unemployed Federal worker. This is a pretty small sample, of course, not entirely typical, but I think it is very interesting

Three to four months later, after this group of 435 Labor Department employees had been involuntarily separated, 3 out of 10 were still out of work and were looking for work, and more than 3 out of 10 had been out of a job for 3 months or more, and most of those who found jobs had to take a pay cut and about half of them had taken temporary jobs.

You see, it is a very serious problem with the Federal civilian employee. The whole philosophy behind this particular proposal, gentlemen, is that the Federal Government, after all, should not do a poorer job in respect to its own employees than it asks private employers to do for their employees.

Mr. Mason. May I interrupt there?
The CHAIRMAN. Mr. Mason will inquire.

Mr. Mason. If Uncle Sam forces other employers to take care of their employees on unemployment insurance, then Uncle Sam should at least set the example.

Mr. LARSON. That is right.
Mr. Mason. That is the basic philosophy behind this bill.
Mr. LARSON. That is correct.
Mr. FORAND. Mr. Chairman, may I make a statement?
The CHAIRMAN. Yes.

Mr. FORAND. Mr. Larson, in support of what you have said, I am sure you have taken into consideration the fact that during a period of emergency, particularly, the Federal Government takes on a lot of additional workers and among those are many of the so-called bluecollar workers.

I had an experience following World War II with the torpedo station at Newport, R. I., where the normal employment figures, which ran around 1,000, was built up to 13,000. Many of those that were employed there at that time were men who were eligible for military service, but the Government insisted that they were of greater value to the country by remaining in those jobs than going into the service.

They were also offered jobs in private employment where they could have made more money, but they were men with civil-service backgrounds and insisted on remaining where they were and trying to do their duty. The result was that,

when the cutback came, these people were thrown out of jobs. They had no unemployment compensation to rely on and many of them could not withdraw the money they had paid into the retirement fund.

The result was that we had a repetition of what happened after World War I—I do not know whether you are familiar with this or not, but a few people seem to be—that one of the great philanthropists of this country dug into his own pocket to the tune of some $250,000 to pay the way back home for many Federal employees that were thrown out of jobs and did not have money to pay their way back home. I will not name him now, but I can tell you in confidence who he is. I do not want to embarrass the individual.

I think it is the duty, not of any individual to take care of cases of that sort, but of Uncle Sam who ought to do it through this system of unemployment compensation.

Mr. LARSON. Thank you.
Mr. FORAND. That is all, Mr. Chairman.

Mr. LARSON. I think it is interesting that you mention this question of using up your retirement pay. You may wonder what these Federal civilian workers do when they find themselves out in the street without any income. Of course, some of them have a little accrued annual leave and may get along on the average for a few days on that.

We studied that and found that if you took the average of the accrued annual leave that people worked up the last couple of years it would be about 8 days in 1 year and about 10 days the following year. It is not any real protection against unemployment at all.

Mr. Curtis of Missouri. Mr. Chairman, could I ask a question? Mr. CHAIRMAN. Mr. Curtis, of Missouri, will inquire.

Mr. Curtis of Missouri. How does unemployment insurance work in regard to terminal pay that is paid to salaried employees in private enterprise? Is such a man considered not unemployed until the terminal pay has expired?

Mr. LARSON. Usually that is the case. It is usually treated as deferred wages,

It varies somewhat, but the usual thing is that the courts of the States, who have the last word on this question, usually treat it that way.

Mr. Curtis of Missouri. In this particular bill how would you treat terminal pay or accrued wages?

Mr. LARSON. In this bill accrued leave would be counted as deferred wages. It is expressly so designated in the bill, so you would have to use up your accrued leave before you could qualify for unemployment compensation. Mr. CURTIS of Missouri. Thank

you. Mr. LARSON. That would not be true of your retirement fund that you had built up. Of course, in both of those situations what we should

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remember is this: That people should not have to build up accrued leave as a defense against unemployment. That is not its purpose.

Mr. CURTis of Missouri. I might say to the gentleman there that I have felt for some time that accrued leave should never be used in lieu of what in industry is terminal pay and that what the Federal Government should do is to have some terminal pay for its employees. Accrued leave has been used in an improper way, instead of having it for the purpose of getting people refreshed.

Mr. LARSON. Exactly. The whole idea of leave is to get people to take a rest so they will be more efficient when they come back and not build up a financial fund. Certainly it is even more true of retirement pay. You certainly should not expect people to draw out what they have been saving up against their old-age retirement and using it for this temporary unemployment period. Otherwise, you are losing the whole point of the retirement system.

Mr. COOPER. Mr. Chairman.
The CHAIRMAN. Mr. Cooper will inquire.
Mr. COOPER. May I inquire briefly for information?

How is it you propose to finance unemployment insurance for Federal employees?

Mr. Larson. The financing system is very simple. The States, of course, will handle the administration and pay out the benefits pretty much as it the people involved were ordinary private employees. Then they will report to the Federal Government how much it has cost them and the Federal Government will reimburse the States.

Mr. COOPER. Does the financing so far as Federal employees are concerned contemplate that the Federal Government shall get the benefit of the experience rating?

Mr. LARSON. I do not think so, no. Well, in a sense it does because it would be sort of built in. It costs the Government exactly what its experience is to finance this system. If it has a good experience, of course it will cost it that much less.

Mr. COOPER. As I understand your reply, the States will administer it and will pay the benefits to the unemployed Federal employees in those States.

Mr. LARSON. That is right.

Mr. COOPER. And then whatever it costs the State to pay those benefits the State bills the Federal Government for it and the Federal Government will pay it.

Mr. LARSON. That is correct.
Mr. FORAND. May I put in a question there?
The CHAIRMAN. Mr. Forand will inquire.

Mr. FORAND. Mr. Secretary, I believe that you will agree with me that the two bills, the Mason and Forand bills, on which you are talking now are the identical bills that were reported unanimously by our subcommittee some years ago and also reported unanimously by the full committee, but which we were prevented from bringing to the floor by the Rules Committee until Speaker Rayburn permitted one to be called up under suspension of the rules, where a two-thirds vote was necessary. We failed to get the two-thirds vote, but we got a majority in the House on it, indicating that when people understand this bill they are for it.

Mr. LARSON. It was not very far short of two-thirds, as I recall.
Mr. FORAND. That is right.

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