Mr. LARSON. I think the interesting feature of this bill is the way in which the job is farmed to the States and I think it should reassure anyone that thinks that we are at all disposed to extend Federal power unnecessarily to observe that the administration is leaning over backward in this instance to give as much of this job to the States as can possibly be done.

There is another bill here which takes another approach. You could, as in H. R. 7054, take the position that these are all Federal employees and why does not the Federal Government just set up one single unified system, but in line with the present philosophy and practice of letting the States do just as much as possible in this field, the administration proposal takes the form of turning the whole administrative job over to the States. As near as possible we keep up this pattern of Federal civilian employees being treated pretty much like the employees of private employers within the different States.

The same rules will apply to them as to anybody else.

For example, if they are out of work they have to make the same efforts to find work. They have to register for work in the same way, have to be available for work, and so on within or outside the Government service, just as much as anybody else.

The CHAIRMAN. May I ask a question?

Mr. LARSON. Yes.

The CHAIRMAN. In endeavoring to place an unemployed person in another job is it necessary that such job be comparable to that previously held?

Mr. LARSON. Comparable would probably be a little too strong. It is a very complicated judgment on whether the job is sufficiently similar to the training, background and all the rest of this employee so that he in all the circumstances ought to take it rather than his benefits.

The CHAIRMAN. I was thinking of the case where a person could not possibly find a job that was comparable to it. For example, there were jobs in the war that are abolished now and I am just wondering how that rule applies.

Mr. LARSON. It is a very flexible rule. The usual phrase is that he has to accept reasonably suitable work. What is reasonably suitable will depend on a lot of things-on the state of the labor market, on how long he has been out of a job, and so forth.

At the one extreme, you do not want to take a skilled worker and the minute he is out of work, say, "You have to go to some kind of unskilled menial work to support your family," because when you do that you destroy one of the best features of unemployment insurance, which is to keep the skilled worker skilled and available when another job of that kind turns up.

On the other hand, you cannot have a man saying, "Well, now, I have been getting $50 a week. I will not take $49.50, and this job is just a little bit out of my line." And accept unemployment benefits instead.

The CHAIRMAN. You have had some of those cases?

Mr. LARSON. Yes. That is a constant problem of administration, to form that judgment and the States do very well on that, on taking all the circumstances into account and deciding when the time has come for a man to accept a job that may be somewhat different from

the one that he had before, and that would apply to Federal civilian workers as well.

The CHAIRMAN. Thank you very much.

Mr. LARSON. You might be interested in what this will probably cost the government in terms of dollars. It will be about $37 million according to the best estimate for the benefit costs and the administration as well.

Mr. CURTIS of Missouri. Annually?

Mr. LARSON. Annually, yes.

The CHAIRMAN. That is with respect to H. R. 8857?

Mr. LARSON. Yes.

Mr. COOPER. Is that an average over a given number of years? Mr. LARSON. That is based on the best guess we can make about fiscal 1955.

Mr. SIMPSON. It would be interesting to know how you guessed that.

Mr. LARSON. Maybe I should have said estimated.

I think that is about all I have to say on the subject of Federal civilian workers and their unemployment-insurance problems.

(The following data was submitted for the record by Mr. Larson.) ESTIMATED COST OF UNEMPLOYMENT INSURANCE BENEFITS PAYABLE TO FEDERAL CIVILIAN EMPLOYEES UNDER H. R. 6539 for a Normal YEAR OF OPERATIONS A. Number of potential claimants

Separations due to reduction in force and termination have ranged from a high of 388,000 in fiscal year 1947 to a low of 101,000 in fiscal year 1952. In fiscal year 1953, the number was 128,000; for the first half of fiscal year 1954 it was 90,135. (See table 1.)

Over the past 4 years, the first half of the fiscal year (July to December) separations due to reduction in force and termination constituted from 50 to 65 percent of those occurring throughout the year. Assuming that for fiscal year 1954, the ratio of first half to total is 60 percent, the total for fiscal year 1954 was estimated at 150,200.

For fiscal year 1955 and the next year, the total number was assumed to be approximately 145,000 in view of the sharp reduction in Federal employment which had occurred in the years immediately preceding.

B. Number of initial claims filed

In the absence of specific statistics, it is assumed that no more than 5 percent of those separated for the above reasons will either accept other positions or withdraw from the labor force immediately upon separation, or will fail to file a claim for whatever reason. Hence 95 percent or approximately 138,000 were assumed to file.

C. Number of claimants drawing benefits

Assuming an average of 2 weeks of accumulated leave and 1 week's waiting period, 3 weeks will go by between termination of work and the beginning of the first compensable week of unemployment. During this period some of those unemployed will obtain other employment at an estimated rate of 5 percent per week. This estimate was derived by adapting the experience of other workers insured under the State programs. Hence those qualifying for benefits will represent 85 percent of those filing and will number 117,300.

D. Duration of benefits

It was assumed that the experience of unemployed Federal civilian workers in regard to duration of benefits would not differ substantially from that of persons thrown out of private employment.

Thus, the average duration of benefits drawn over the past years by unemployed workers insured under State unemployment insurance programs was recomputed to reflect current, more liberal provisions of most State laws. (See table 2.)

The resulting average duration figure ranges from a high of 13.2 weeks in fiscal year 1950 to a low of 10.2 weeks in fiscal year 1953. In the first 10 months of fiscal year 1954, actual average duration was 10.3 weeks.

Owing to somewhat higher current unemployment, this slight rise was assumed to continue and, consequently, the average duration for the next year or two was assumed to be around 11 weeks.

E. Amount of benefits

Nearly all unemployed Federal workers will be eligible in each State for the maximum weekly benefit amount provided by the law of that State. Multiplying the number of Federal workers employed in each State by the maximum amount of benefits payable in that State and then dividing by the total number of Federal workers, we obtained a rounded average of $27.50.

Multiplying this average weekly benefit amount by the number of beneficiaries (C above) and by the average number of weeks of benefits drawn (D above) yields a total estimated cost of around $35,500,000.

TABLE 1.-Number of reductions in force and terminations during first half and during entire fiscal year, 1947-54

TABLE 2.-Average actual duration of benefits under State unemployment insurance programs adjusted for present State benefit formulas, fiscal years 1947-54

Source: U. S. Department of Labor, Bureau of Employment Security, Division of Actuarial and Financial Services, June 18, 1954.

The CHAIRMAN. You have another bill to which you have not referred.

Mr. LARSON. I think now finally I ought to say a word about H. R. 8585, although we have submitted a written statement on it. The CHAIRMAN. That is Mr. Baker's bill.

Mr. LARSON. That is the Baker bill on supplementary payments for unemployment due to tariff or trade policy. This is a bill which would provide supplementary payments under the State unemployment-insurance laws for workers whose unemployment is due to trade or tariff policy. The way it would work is this: It would require a finding by the Tariff Commission and a certification to the President that unemployment in a particular industry has resulted from trade or tariff policy, and then it would authorize reimbursement to the States which paid supplementary unemploymentinsurance benefits to workers in these industries in a weekly amount which has a top limit of two-thirds of the individual's weekly wage and a top duration of 39 weeks in the year.

This top duration as you can see, is a little bit different from the usual standard, which is apt to be not over 26 weeks in the year. I think Mr. Baker is to be commended on this very thoughtful effort to deal with what is a real and very awkward problem that we

are all very much concerned about. It has had quite a lot of study. The Randall Commission went into it in considerable detail, and it certainly deserves all the thought and study, and public attention and public discussion that it can possibly get.

I only wish that we could come up with the perfect answer to this problem of unemployment that has some relation to tariff and trade policy, but, as you can see from our written statement, the position is that we do not think that this is quite the answer. There are so many difficulties involved and there is the question of principle, particularly on special treatment for one group of industries, or one group of employees with a standard of payment which is higher or may be higher than that for other employees.

Mr. MASON. Mr. Chairman.

The CHAIRMAN. Mr. Mason will inquire.

Mr. MASON. You will acknowledge that there must be some solution found for these unemployed whose unemployment has been brought about by the importations, which is a Government-regulated situation? You would agree that there must be some solution? Personally, I think the great advantage of the Baker bill will be to spotlight these unemployment groups in various parts of the Nation, unemployment that has been brought about by importations, and will at least force us to find some kind of a solution for our tariff problem and our unemployment problem which are very closely interrelated. Mr. LARSON. Yes. I think he has done us a great service by highlighting this question and showing this very, very difficult problem. Mr. MASON. If the bill should be passed and become a law and operate for a year, perhaps the Nation would then finally be aware of these problems that are created by tariff arrangements.

Mr. BAKER. Mr. Chairman.

The CHAIRMAN. Mr. Baker will inquire.

Mr. BAKER. I will not explore the subject extensively because there will be 2 or 3 witnesses. Do you not recognize, Mr. Larson, a difference in unemployed workers due to a broad national condition, such as the present temporary recession, and unemployed workers with unemployment due largely to a policy which has all the earmarks of being a permanent policy?

In other words, here are 2 million unemployed throughout the Nation and, let us use another figure, 200,000 unemployed due to tariff or trade policy.

The 2 million, if the spiral of business turns up, can expect in a few days or a few weeks to go back to work normally, but here are coal miners and other workers; until their industry changes they must have a longer time to rehabilitate or hunt another job.

Mr. LARSON. I see the distinction you are drawing there. I think one of the difficulties there would be to isolate and segregate how much the tariff policy has contributed to a particular industry like coal mining, for example, and how much general conditions have contributed to it. That would be one problem.

I think one of the things that worries us the most is that you would have an extremely difficult administrative problem.

Mr. BAKER. Let us pursue that just a minute. There is nothing mandatory about this bill. You agree with me on that? Mr. LARSON. That is correct.

Mr. BAKER. You must first,have a finding by the Tariff Commission that the unemployed in a given industry or segments thereof result from Federal trade or tariff policy. Unless you go over that barrier nothing is invoked in the bill. Then if you do have that finding, say coal or whatnot, it is then entirely up to the State whether they as to those particular unemployed individuals will give them a longer period of duration and increase the amount. Is not the latter part entirely in line with the President's economic report?

Mr. LARSON. I think the principal difficulty is that it is a little out of line with the administration's overall idea that the Federal Government should not be participating in this program to the extent of subsidizing portions of it and financing the benefits of certain classes of workers.

Mr. BAKER. Of course, it comes out of the fund that caused it because nothing would come out of the fund unless you have a finding that it should.

Mr. LARSON. I think another of the fears is that if you once do this for one group of workers who are unemployed for this specific type of cause, there might be others. In fact, as you know, we have had this same technique or this same principle proposed for conversion and reconversion before and after war periods and there might very well be others.

We are a little worried about where it all might lead to once we started Federal participation to this extent.

Mr. BAKER. I do not see the difficulty of administration. This will just be Federal money sent to the State after this finding. The State would handle it just the same as any other money, but it would be paid to these particular unfortunate unemployed people.

What is the difficulty of administration there?

Mr. LARSON. I was not thinking of the mechanics of paying out the money. I was thinking of the administrative determination: which industries would be subject to this treatment, and which employees in which industries, and so on.

Mr. BAKER. However, that is entirely up to the Tariff Commission. Mr. LARSON. Yes. It would be a very, very difficult determination to make and of course it would have to be followed up, as you say, by the States, by appropriate legislation and administration within the States.

Mr. BAKER. That is all, Mr. Chairman.

(The following tabulation was submitted for the record by Department of Labor:)