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TABLE I.-Total amount of expenditures for relief, number of cases which received relief, and amount of relief per case, District of Columbia, August 1932 to January 1935-Continued

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Table II gives the distribution of the length of time the relief cases studied were unemployed.

TABLE II. -Distribution of length of unemployment of 6,331 cases on relief in the District of Columbia, July 31, 1933

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During prosperous times and in the early stages of a depression a much higher percentage of those unemployed would receive unemployment insurance throughout their period of unemployment. In the census of unemployment taken in connection with the United States Census of 1930 only 10.1 percent of those unemployed in the District have been out of employment for a period longer than 26 weeks.

THE ADVANTAGES OF UNEMPLOYMENT INSURANCE OVER UNEMPLOYMENT RELIEF

A considerable change in public opinion has occurred in regard to unemployment insurance during the last few years. In the prosperous years of the 1920's unemployment insurance in Great Britain was criticized as being a "dole." During the last 5 years, as millions of people in this country have been forced on relief through unemploy

ment, it has come to be recognized that the United States actually has a dole system and that Great Britain has through unemployment insurance been able to provide for its unemployed in a much superior

manner.

Unemployment insurance is not only superior in providing more adequate financial support to the unemployed but also it performs the important service of maintaining the self-respect and morale of the unemployed worker. It removes to a large measure the fear of insecurity always haunting the worker, even when he has a job, and preserves his self-respect through providing him with a definite cash benefit on a contractual basis, to which he is entitled by right. The humiliation and loss of self-respect which have accompanied the resort to relief on the part of millions of our unemployed workers cannot be measured. Added to this is the danger that hundreds of thousands of our citizens, once they have had to resort to relief, may gradually become adjusted to living on relief money without work. This country faces an enormous task in rehabilitating not only the skills but the mental attitudes of large numbers of those now on relief.

It is, of course, true that during a prolonged depression large numbers of the unemployed will exhaust their rights to unemployment compensation and further measures will be necessary to care for them, such as the provision of public work. Unemployment insurance, however, can serve a valuable function as a first line of defense, providing an income for those temporarily out of work, preserving purchasing power and serving as a cushion for those who lose their jobs entirely until they can either find other work or other measures can be taken to provide for them.

The functions of unemployment compensation were aptly put forth in the statement adopted by the National Retail Dry Goods Association, which was presented at the hearings by Mark Lansburgh, one of its directors:

The purposes of unemployment reserves are to alleviate the shock of unemployment, to increase continuity of employment, and to aid in the stabilizing of consumption.

Unemployment reserves can be built up which will take care of unemployment resulting from seasonal and other variations in the use of the products of an industry, from technical improvements in the methods of production, and from the initial effects of cyclical unemployment. Such reserves can be made to apply to the large majority of industrial and commercial workers.1

HISTORICAL DEVELOPMENT OF UNEMPLOYMENT INSURANCE

Schemes of out-of-work benefits were instituted by European trade unions as early as 1850. Beginning in 1890 municipalities initiated unemployment-insurance plans. The most successful of these was the plan of the city of Ghent, Belgium, which instituted payment of subsidies in 1901 as an addition to the benefit paid the worker by the union. The Ghent system spread rapidly throughout Europe. The method of subsidies to trade unions, municipalities and provincial unemployment benefit plans at present is followed in 10 of the smaller European countries, as shown in table III.

1 Hearings, pp. 85-86.

TABLE III.-Countries in which voluntary insurance laws have been enacted and number of workers covered in each

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The first compulsory unemployment insurance law was passed in Great Britain in 1911. At first limited to a few industries, it was extended to practically all workers in 1920. Italy passed a law in 1919, Austria in 1920, and Germany in 1927. At present there are eight countries in Europe, and Queensland in Australia, with compulsory laws covering about 38,000,000 workers, as shown in table IV.

TABLE IV.-Countries in which compulsory insurance laws have been enacted and number of workers covered in each

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The British system of unemployment insurance was instituted in 1911. At first it covered only six industries which had a high rate of unemployment. During the war the system was extended to the munitions industry, and in 1920 it was extended to practically the entire industrial population.

Up to 1920 the fund was in a prosperous condition and had accumulated 20 million pounds. When the system was extended in 1920 no time was allowed for the accumulation of reserves on the new workers covered, so that the surplus was quickly exhausted, and as the depression of 1921 deepened, the fund went into debt.

The fund showed a profit in 1924 and in 1927, but when the world depression reached England in 1930 it rapidly accumulated a debt which finally reached 100 million pounds. The main reason for this debt was that for years people were carried on the unemploymentinsurance fund long after they had exhausted their rights to benefits, as Great Britain refused to recognize that the depression was more

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than temporary. She was finally compelled in 1933 to recognize that the unemployment-insurance fund could not be expected to carry those who had exhausted their rights to the fund. Commencing in 1933, the benefits paid to those who had exhausted their rights to unemployment insurance were financed entirely by the Government. Thereafter the unemployment-insurance fund showed a profit. the present time amortizing the fund is its old debt. In 1934 this new arrangement was made permanent through a new law which organized a system of unemployment assistance for those who have exhausted their rights to unemployment insurance. Regular unemployment-insurance benefits are paid for a maximum of 26 weeks. Long-service employees may receive additional benefits up to 26 weeks more. Thereafter they must go on the unemployment-assistance fund and pass a needs test in order to qualify for benefits. The unemployment-insurance system is, therefore, on a sound basis, and British students of the system believe that the unemployment-insurance system has not only alleviated a great deal of distress but also has served to maintain purchasing power so that Great Britain did not experience and feel the depression as much as this country did.

GERMANY

After almost 10 years of experience with unemployment relief following the war, Germany enacted an unemployment-insurance system in 1927 covering approximately 18 million workers. Almost immediately thereafter unemployment began to increase so that the fund rapidly fell into debt. Benefits had to be restricted in 1932. The benefit rates were reduced and benefits were shortened to a duration of 20 weeks, with a needs test after 6 weeks of benefits. Since then the benefit rates have been slightly raised and the system extended to several new classes of workers. Recent reports that the German system was abolished early this year by Chancellor Hitler are false. Although restricted in its protection of the German workers unemployment insurance still plays an important part in providing security for the German workers. In fact, at the present time the unemployment-insurance fund is not only paying its own way but is furnishing a large measure of financial support to unemployment relief.

GROWING DEMAND FOR UNEMPLOYMENT COMPENSATION IN THE

UNITED STATES

The first unemployment-insurance bill to be submitted in the United States was introduced in Massachusetts in 1916. Bills were proposed in six States during the depression of 1920-22. A bill was introduced every session of the Wisconsin Legislature from 1921 until 1932, when Wisconsin passed the first unemployment-compensation law in the United States. During 1929 a number of bills were introduced in different States, while in 1931 bills were introduced in no less than 33 States. In 1933, bills were introduced in 22 States, and 7 of them passed one house of the legislature. During 1935 bills have been introduced in 25 States, of which 2 States, Utah and Washington, have so far enacted laws. An indication of the interest in this legislation and the extended consideration that has been given

it is shown by the fact that unemployment compensation has been or is being considered by commissions in 16 States, enumerated in table V.

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In the Democratic platform of 1932 there was a plank favoring the enactment of State unemployment-compensation laws. As a fulfillment of that party pledge, the President appointed the Committee on Economic Security, whose report, in modified form, is before the Congress in what is known as the "social security bill." The District of Columbia unemployment compensation bill will bring into effect the provisions of the social security bill in regard to unemployment compensation for the District of Columbia. It should also serve as a model to the States, to guide them in the enactment of sound unemployment-compensation legislation.

STATEMENT OF THE PLAN

Under the proposed bill an unemployment-compensation system will be established covering all employees of private establishments in the District which employ four or more persons for at least 13 weeks in the year. Federal employees are exempted and also employees of the District of Columbia who are employed on an annual-salary basis, including officers and teachers. Workers employed in the District on a per diem basis will be included.

The funds for unemployment compensation will be raised through contributions of employers and of the District. Employers will be required to contribute an amount equal to 3 percent of their pay roll, and the District will contribute an amount equal to 1 percent of the contribution of the employers. Contributions will commence January 1, 1936. Benefits for total unemployment will be paid at the rate of 40 percent of former wages plus 10 percent for a dependent spouse and 5 percent for each other dependent, except that not more than 65 percent of the wage, or $15 per week, will be paid. If an employee becomes partially unemployed and fails to earn at least $2 more than the benefits he would receive if wholly unemployed, he will be paid the difference in partial benefits. For example, if a married man with no dependents other than his wife has been earning $20 per week, he would be entitled to 50 percent of his wages in benefits, or $10 a week, if wholly unemployed. If partially unemployed, his earnings must fall below $12 per week before he can draw

In addition, a conference of Governors on unemployment and other interstate industrial problems was called by Governor Roosevelt in 1931. Massachusetts, Connecticut, New York, Ohio, Rhode Island, and Pennsylvania sent representatives, as well as New Jersey, which has not had a State commission. A commission has held public hearings in the District of Columbia. An interstate conference of Southern States was held in Nashville, Tenn., which considered the problem.

A municipal commission existed in Baltimore, Md., during 1932-33.
The commission in Rhode Island is expected to report by Apr. 2, 1935.

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