gium, 66%% of earnings. BLE 5.-Maximum Unemployment Benefit1 in Selected European Countries, 1967 urce: U.S. Social Security Administration, "Social Security Programs Throughout the d. 1967." RUSSELL B. LONG, AMALGAMATED MEAT CUTTERS & BUTCHER WORKMEN OF NORTH AMERICA, rman, Senate Committee on Finance, Senate, Washington, D.C. Chicago, Ill., February 20, 1970. CAR SENATOR LONG: The Amalgamated Meat Cutters and Butcher Workmen, 3421 and Amendment No. 489 represent efforts to improve this situation. Union also strongly favors extension of unemployment compensation a workers are subject to even greater risks of unemployment as other THOMAS J. LLOYD, President. ATEMENT OF LOUIS STULBERG, PRESIDENT AND GENERAL SECRETARY, statement is submitted on behalf of the 430,000 members of the Inter- ESS 9 N ESS structure came into being 30 years ago, it has lost much of its viability because it has failed to keep pace with evolving needs. H.R. 14705, now before your Committee, does not provide the modernization needed by our unemployment insurance system. It expands coverage of unemployment insurance protection to more people but fails to extend it to many others sorely in need of a safeguard from the ravages of unemployment. It automatically extends benefit duration in periods of recession but fails to correct the inadequate benefit duration under the laws of the several states even in normal times. It raises the taxable wage base to only $4,200 and thus still leaves a large proportion of payrolls untaxed. To make up for the inadequacy of the tax base, the bill raises the tax retained by the Federal government, thus further intensifying the inequity of the tax structure. At the same time H.R. 14705, by providing judicial review of adverse determinations of the Secretary of Labor under the provisions of Title III of the Federal Unemployment Tax Act, defeats the very purpose for which the Secretary was given his existing powers which were never abused. The most glaring deficiencies of the bill are in its omissions. It fails to provide Federal standards for improvement of the entire benefit structure. Thus, it does nothing to induce the various States to raise benefits, a necessary measure since some 40 percent of the insured unemployed receive benefits of less than one-half of their wages. There is a definite need to reform the existing unemployment insurance system. However, the matter cannot be left to state action alone. Interstate competition, if nothing else, deters needed improvements in the absence of standards promulgated in the form of appropriate Federal legislation. We hope, therefore, that your Committee in the course of its deliberations will recognize the manifold deficiencies of H.R. 14705 and will recommend the needed amendments, including guidelines binding on the individual states, that would modernize the federal-state unemployment insurance system. A start in that direction was made by the 89th Congress when the House of Representatives and the Senate deliberated on H.R. 15119. Even so, that bill in both its original version and its amended form left considerable room for needed improvements. In the following wages, we propose to examine briefly some of the basic proposals which we hope your Committee will incorporate in the bill for consideration by the Congress. COVERAGE Millions of wage and salary earners are still not covered by the unemployment insurance system. While H.R. 14705 does propose the extension of unemployment insurance protection to about 4.5 million workers, it would leave an additional 12.5 million persons outside the system. There is no justification for excluding any wage or salaried worker from unemployment insurance protection, whether they work in a small establishment, in a household, for a nonprofit organization, for a governmental agency, or in agricultural or nonagricultural pursuits. We urge your Committee to extend the law's coverage to all persons working for salaries or wages. BENEFIT STRUCTURES The existing benefit structures need to be updated in several respects by means of appropriate Federal standards to be written into your recommendations. In view of the dynamic nature of the labor market and rising wage levels, the maximum benefit rate for every state should be set at no less than two-thirds of the statewide average wage for covered employees, determinable each year by state authorities. This proposal is in line with the recommendations of the Federal Advisory Council on Employment Security, accepted by President Eisenhower as far back as 1954 and endorsed subsequently by Presidents Kennedy and Johnson. President Nixon also recognized the validity of this principle in his message to the Congress on July 8, 1969. However, by leaving the matter to enactment by individual states rather than to the Congress of the United States, he frustrated his intent. Judging by past experience, the states are not prone to act in this matter in the absence of a national standard set forth in Federal legislation. This formula would permit a periodic (annual or semi-annual) adaptation of maximum benefit amounts to changing wage standards. It would assure that only a minority of the unemployed would get benefits amounting to less than 50 percent of their lost earnings. RESS es. he Federal law should also require every state to provide benefits equal to ere is also need to provide a Federal standard for the maximum duration sure equity, it is important that each covered worker get maximum credit benefit amount or 1.2 times the high quarter earnings. The states should also be prohibited from requiring employment to be measured in terms of a number of quarters in the base period and no claimant should be required to meet more than a single test of employment or wage qualifying requirement. FINANCING OF UNEMPLOYMENT INSURANCE We recommend that the same tax base should be adopted by the Congress for unemployment insurance purposes as for Old Age, Survivors and Disability Insurance. When the original Social Security Act was first taken up by the Congress, it was proposed to levy a tax for unemployment insurance purposes on total covered payrolls. However, a $3,000 limitation was thereafter adopted, the same as for Old Age and Survivors Insurance, because the overwhelming number of covered workers did not earn much over $3,000 at that time. With the advances in wage and salary levels this ceiling became obsolete. While in the case of Old Age, Survivors and Disability Insurance it has been gradually lifted to $7,800 beginning with 1968, no change in taxable wage base has ever been made for the Federal Unemployment Insurance Tax. As a result, anomalies developed in the tax structure with some employers paying a lower proportion of their total payrolls than others. At the same time, inadequate financing, coupled with frequently unsound experience rating provisions, placed undue restraints on needed improvements in unemployment insurance legislation. In view of interstate competition, it is essential for Congress to provide at least the same tax base for unemployment isurance purposes as it has done for Old Age, Survivors and Disability Insurance. The proposed tax base in H.R. 14705 falls short even of the $6,000 recommended by President Nixon in his message and Secretary of Labor Shultz in his testimony before your Committee. The inequity is compounded by the delay proposed for the implementation of the higher tax base. A tax base identical to that used for Old Age, Survivors and Disability Insurance would provide both a sounder and more equitable form of taxation and would make it unnecessary to increase the share of the payroll tax retained by the Federal government. In considering unemployment insurance financing, it is to be hoped that your Committee will also review the existing chaotic experience rating practices under the various state laws. These unwise provisions have often weakened reserve funds and fostered perpetuation of inadequate levels of benefits and of benefit duration. Hopefully, your Committee will agree with many authorities on the subject that experience rating should be eliminated from the system or, if it be retained, should be severely limited. The range of variation between minimum and maximum permissible tax rates has to be narrowed, with no rates permitted to fall below one percent of the total payroll of the taxed employer. In any event, the schedule of tax rates should vary up or down in such manner as to insure that available reserves do not fall below an amount equal to the highest benefit payments over a continuous 18 month period in the preceding 10 years. CONCLUSION We submit to your Committee that H.R. 14705 fails to meet the current needs of the United States for a modernized unemployment insurance system. We have provided your Committee with a number of recommendations for needed reforms, including the appropriate standards that are needed for the guidance of the state legislatures. We believe they have been made more urgent because of the present economic slowdown and rising unemployment. We hope that these will meet with your Committee's approval and will find their way into the bill that will be reported out. STATEMENT CONCERNING THE EXTENSION OF UNEMPLOYMENT INSURANCE TO FARM EMPLOYEES, SUBMITTED BY J. J. MILLER, EXECUTIVE VICE PRESIDENT, ON BEHALF OF THE AGRICULTURAL PRODUCERS LABOR COMMITTEE,* LOS ANGELES, CALIF. This statement is presented on behalf of approximately 12,000 citrus and avocado growers and establishments where citrus and avocado fruit is prepared for *A report attached to this statement entitled "The California Farm Labor Force: A Profile," prepared for the Assembly Committee on Agriculture by the Advisory Committee on Farm Labor Research with the assistance of the California Department of Employment, was made a part of the official files of the Committee. rket in California and Arizona. Mr. Miller is also an officer and director of the employment Insurance Association which is composed of both industrial and m associations in California. THE PROPOSAL n presenting legislation to Congress to improve the Federal-State unemploynt insurance system, the federal administration has urged that a certain part he farm labor force be insured against the risk of unemployment. he original proposal was that agricultural workers on farms employing four hore workers in each of 20 weeks of the year be covered by the federal law. In nation this involved about 400,000 farm workers, 190,000 of whom are estied to be working in California-48% of the total involved! CALIFORNIA IS AWARE OF THE PROBLEM rior to this year there have been some 46 different bills filed with our legis- 'he California Legislature has been struggling with the problems of agricul- d the position of Governor Ronald Reagan supporting coverage for "per s Committee then, in considering the next step, must reason through the mic and social facts which to date, in spite of this tremendous interest ffort, have produced only a modest change in our farm coverage provisions. HIGHER COSTS WILL HURT FARMING s well known that the number of farm workers is declining in this country. 30 the average annual employment of hired farm workers was 3,190,000. 9 it was projected at 1,165,000. August 1969 one of the leading banks in California took occasion to point their research publication that California farmers and ranchers were onfronted with a price (profit) picture stagnant at 1940 levels while their vere moving up at a brisk 1970 pace. n production expenses in California already average about 75% of gross acome compared with a national average of 69%. State Director of Agriculture has identified the rising costs of producs follows: High wages, high taxes, considerable expense for water to e, and high freight bills in marketing. ems clear that a way must be found to increase the prices which farmers for their food and fibre. But this involves many uncertainties not the f which is the perishable nature of the product, the mood of the purchassumer and the competition which is now developing from Mexico and oreign countries. well known that Mexico has boosted its export of agricultural commodithe United States most dramatically. By way of illustration, the followment is contained in Research Service, Fruit Situation, U.S. Department culture (June 1969): “During the first 4 months of 1969, U.S. imports of rawberries totaled nearly 36 million pounds, nearly double those of the riod last year. . . . Most come from Mexico." ould be understandable that California farmers are most sensitive to oposal which would impose still another payroll tax upon them which a will always be at the maximum level prescribed ! |