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  • 1084 ECONOMIC

SECURITY

ACT

There

is nothing

new

in

having

each working

generation

support

the

pre-

ceding generation of workers.

That

is sound

has

Onlv

aft&

for

been

a few

their

the

in

practice

of

safety

families

have

and

laid

society for uncounted generations.

aside -enough

While

to

the

to suppo&

themselves

the foregoing

fact

that

proposal

company

each eeneration

-lifetime.

working

a country,

be built

attention

with

should be called

on the

prin­

pension plans

cannot

ciple

of paying

pensioners

from

current

operating

income.

Companies

rise

and

fall

will

over relatively

always

be

short

a younger

intervals

and hence cannot

to

pay

safely

assume that

their

generation

the pension

costs of

there

prede­

cessors.

As

an example,

the railroads

are

now

facing

a continual

increase

in

number

Serious

of pensioners

inflation

and decrease in the number of active employees.

would

destroy

the value

of

a reserve

type

of pension,

but

would

not

greatly

disturb

the

above

proposal.

If

prices

are

doubled,

the

monthly

roll

pay

The

individual

pension would need to be doubled,

would

alqo double, requiring

proposal

of

involves

a few

committee’s

contributions

but the national

in the tax

(taxable)

no change

percentage.

task

a tremendous

clerical

cents per week

and accumulations

income or

of

recording

thereof.

It

would

should

seem that

be alike

the national

for

all.

Then

a larger

problem

voluntary

income for

ings media, provide

is

to

supply

a minimum

income,

accumulations,

in the established

which

sav­

those with

larger

incomes or thriftiness.

The proposal

outlined

of

above may be financed by whatever

Its immediate

funds

would

payment

have

system is simplest

and

currently acceptable to Congress.

and

the

collection

the needed

of full normal benefits

effect

on

no appreciable

current

business.

Furthermore

the Wagner-Lewis

employed

or for

working on their own behalf.

bill

makes no provision

number

for

the large

of farmers

the women

who

or others

who are

are not gainfully

STATEMENT

OF HON. WILLIAM

M. COLMER, A REPRESENTATIVE

IN

CONGRESS1FROM

THE

STATE

OF MISSISSIPPI

Mr.

C'OLMER.

Mr.

Chairman

and gentlemen

of the committee,

I

am

intensely

interested

in

the

Economic

Security

Act

now

under

con­

sideration

by

your

committee.

I

am naturally

interested

in

any-

thing

that

tends

to

the

betterment

and

the

economic

stability

and

comfort

of

the

aged.

President

Roosevelt

assured the Seventy-third

Congress

that

he would

recommend

social

legislation

of

this

type.

The

people

of

the

country

as a

whole,

both

young

and

old,

are

in-

tensely

interested

in

the problem.

I

have read

w&h

meticulous

care

and increasing

interest

the

bill

of the distinguished

gentleman

from

North

Carolma-Mr.

Doughton-the

chairman

of

this

committee,

which

proposes

to

put

into

actual

operation

legislation

seeking

eco­

nomic

security

and

comfort

for

the aged, the unemployed,

and

the

unfortunate

cripple.

The theory

of

this

piece of legislation

is beau­

tiful,

but

I

am very

much

concerned

about

its

practical

operation.

We

are all

agreed

that

some legislation

looking

to

this

end

is

desir­

able.

This

committee

has had

many

plans

submitted

to

it,

some most

fantastic

and

impractical,

some more

practical

and

logical.

But

I

desire

to discuss

briefly

one feature

of

the

legislation introduced

by your

distin

ished

chairman,

as I

feel

that

that

particular

bill

in

some form

wil

!Fbe the

one most

likely

reported

by your

committee.

The

point

that

I

want

particularly

to

call

to

your

attention

is

the provision

which

requires

that

the

States must contribute

an equal

amount

to

that

provided

by

the

Federal

Government

up

to

$15 per

month.

As

I

understand

the

bill,

the Federal

Government

will

con-

tribute

to

the

aged people

over

65 who

can qualify

thereunder

an

amount

up

to

$15 per

month,

provided

the State

or other

subdivision

of the Government

of which

that

particular

aged person

happens

to

be a resident

will

contribute

an equal

amount.

 

ECONOMIC

SECURITY

ACT

 

1085

This

means

that,

before the unfortunate

 

aged .person

who

is

in

need

of

this

pension

 

can receive

 

the benefits

thereof,

or

even

the

amount

contributed

 

by

the

Federal

Government,

 

the

State

or

other

subdivision

of

the

Government

must

cont’ribute

a

like

amount,

 

I

want

to

say

in

all

frankness

and candor

 

to this committee,

who

I

believe

are really

 

desirous

 

of reporting

 

out and enacting

into

legis­

lation

a bill

that

will

be practical

 

and

workable,

that

this

will

not

work.

It

may

work

 

in

some States,

but

there

 

are many

others

in

which

it

will

not work.

This

for

the reason

that

the States

are

un­

able financially

to

meet. the requirements.

 

I

can best illustrate

this

by t.aking

my own

State of Mississippi for example.

 

According

to the

 

census

of 1930 Mississippi

 

had 77,443 persons

who

are over 65, years of age.

By

the time

this

law

is enacted,

there

will

be very

little

variation

in

the figures.

 

If

anything,

 

there

will

be

an

increase.

*It

is estimated

that.,

of

this

number,

approximately

13,660

are

on relief.

I

have

no definite

way

of arriving

 

at what

percentage

of the ‘7’7,443would

 

apply

for

a pension,

 

but

it

is reasonable

to assume

that

a considerably

larger

portion

 

would

apply

for

the pension

than

applied

for

relief.

I

think

it

would

be fair

to assume that

somewhere

in the neighborhood

of 75 percent

 

would

apply

for

the pension.

 

If

the State

matched

the $15 provided

for

in

this

legislation,

which

is

the maximum

the Federal Government

would

provide

 

under

the

bill,

for

75 percent

of

the

 

aged over

65, Mississippi’s

 

contribution

would

amount,

in

round

figures,

to $10,500,000 per annum.

 

Mississippi

is not, a comparatively

 

wealthy

 

State.

 

Its

total

reve­

nue receipts

for

the general

 

fund

in

1934 were only

 

$14,000,000.

The

people

in

our

State

 

are already

taxed

by

the

State

to

the

point

where

taxation

has become onerous

and burdensome

 

in

its

efforts

to

carry

on

its

school

systems,

road

building,

 

and

other

necessary

expenses.

It

is quite

obvious,

therefore,

that

the State

of Mississippi

could

not

function

under

the set-up

of

this

legislation

 

and

its

dependent

aged

would

be cut

off from

 

any benefits

 

whatever.

I

am satisfied

that

the

picture

presented

above,

so far

as Mississippi

is concerned,

is true

in

many other States of small comparative

 

wealth.

 

Now,

what

I

desire

is some practical

form

of legislation.

Thirty

 

dollars

a month

is

small

enough,

but

if

the people

of

manv

of

our

States

are to

be denied

the privilege

 

of sharing

 

in the contribution

 

of

the Federal

Government

because of the financial

inability

of

the sub-

divisions

of

the

Government

to

contribute

 

as substantially

as

the

Federal

Government,

we are faced

with

 

a serious dilemma.

It

might

also

be pointed

 

out

that,

although

the

old

people

of

a

State that

cannot

match

the Federal

funds will

 

not

share

in

the

bene­

fits

of

this

bill,

the people

of

that

State

 

will

be forced

to contribute,

 

in

the

form

of

taxes

to

the

payments

to

the

aged

of

the

other

and

more

fortunate

 

States.

This

will

be taxation

 

without

benefit.

I

think

that

old-age

pensions

and

the

care

of

crippled

children

 

should

be recognized

as a national

problem.

 

Therefore,

if

this

com­

mittee

concludes

that

 

it

is impractical

 

to

make

as much

as a

$30

a

month

contribution

to

the

needy

aged

by

the

 

Federal

Government,

the provision

requiring

the equal

contribution

 

by

the

State

or other

subdivision

of

the

Government

should

 

be eliminated

 

from

the

bill.

And

t,hese needy

persons

in

 

this

aged class, who

have contributed

 

so

substantially

to

the

upbuilding

of

this

Government,

should

at

least

be permitted

to enjoy

 

whatever

amount

 

in

the form

of

a pension

is

granted

by t.he Federal

Government.

 
f
f
I
I
f I
f I

1086

ECONOMIC

SECURITY

ACT

The

CHAIRMAN.

So

far

as

the

Chair

knows,

this

concludes

the

hearings.

The

witnesses

have

been heard

and

the

hearings

will

be

closed.

The

committee

will

now

stand

in adjournment.

 

(Whereupon,

at

12: 25

p.

m.,

the

hearings

were closed.)

 

&MOIUNDUM SWMITTED &Y DR. PAUL H. DOUGLAS,DEPAETMENT ox ECONOMICS,

UNIVERSITY

WAGNER-LEWIS

OF

CHICAGO,

BILLFOB

ON

UNEMPLOYMENT

SOCIAL

S~~RITY

(S.

INS~RANOE

1130; H.

FplA~uv~ms

R.4142)

OF

THE

I

sible

am

to

in

hearty

agreement

upon

of work

State

be reluctant

in

confines lest

in

disadvantage

to

pay

to

hold

greatly

credit

and that

on much

of

the

purposes

with

the general

action

if

purposes

we

are

of

this

bill.

It

is impos­

poor

their

the

rely

exclusively

out

State

within

its

will

have

the States

or

at

the least

the

to protect

employers

The

the aged

of

upon

and those thrown

own,

for

each

employers

at

by unemployment

to

doing

levy

so it

and through

an

extra

should

with

no fault

assessment

place

these enterprises

in

other

States

tendency,

legislation

there-

to

be

If

seen this

funda­

attempt

criticize

as

as

for

I

if

a competitive

do

not

is

for

to

comparison

which

fore,

such tases

back

and

delayed.

or contributions.

for

much needed social

that

it

has

the Federal

prevented

It

is greatly

difficulty

united

the

it

of the administration proposes to have

mental

to get

some of

attacking

Government

I

must

action

details

the primary

bill

needed types of social security.

as presented,

which

it

I

do not

want

seeks to

fultlll.

insurance

general

to be understood On the contrary,

one who has been advocating

at

least

believe,

15 years,

however,

heartily

I

that

certain

vital

unemployment

approve

of

the

bill,

and old-age pensions

aim

could

of

this

program.

better

be effected

these fundamental

made

in

the

purposes

changes were

more particularly

in those sections

dealing with unemployment insurance.

I.

TEHOOMP4I#ATIVE

UNDESIEABIJXIT

OF

TEE

OFFSm

METHOD

Choosing

law,

to adopt

which

a Federal-State

is proposed

system

of obtaining

rather

than

an outright

State

action

on

pay

rolls

up

to

its

Federal

is

that

which

by

insurance

the method

favorable

a tax

of a tax-offset.

The Federal

Government

imposes

1938 must amount laws employers

to

the

State

percent

of

ance act,

ployers,

local

to 3 percent. are then permitted

credited

as

amounts.

If

therefore,

In

States which

to have

an

offset

a State

impose

pass unemployment

which

Federal

they

tax

the amounts

against

the

contribute

90

insur­

em­

to

a

moneys

defective

systems

will

was

up,

appar­

the

act

the taxing

As

a

systems

the latter

it

but

does not,

merely

which

will

passes such an unemployment

any

additional

to

make

expense

their

upon

contributions

instead

of

these

diiferent

it

is vitally

objects,

the State

This

set

permits

these enterprises

the

local

being

in

fund

relieve

unemployed

with

going to Washington,

in

This

plan

a number

(1)

The

and possibly

spent on entirely

but

my opinion

to which

is most certainly

of important

bill

lays

ingenious,

features:

down very

order

to

fear

that

State

it

few standards

be credited

if

many

on the

have to conform

ently

might

powers

result,

because

of

be declared

for

the

insurance

eligibility

residual

to in

the

the offsets.

were

such standards

ground

if

that

it

unconstitutional

which

a

was using

a purpose

act

leaves

system

for

funds

was primarily

free

to

not exclusively

almost

to

regulatory.

enact

subject

a

any

few

under

kind

simple

the

of unemployment

rules

distribution

governing

of

the

of

the

State

services

be

must

be paid

out through

as

(a)

the

minimum

be paid

provisions

or

or maximum

wages

(e)

to

length

in

for

reserves,

or State-

nonmanual

States

may

which

and

wishes,

to

benefit

for

the

requirement,

that

and that

such

vital

the personnel

the benefits

matters

period,

(b)

percentage

weekly

reserves,

salary

limit

States ..

administration,

basis

on

on a merit

and nonpolitical

the minimum

(f)

employment,

are

to

the State employment

But

no standards

maximum

of

the

length

of

benefit

(d)

period,

beneflts,

part-time

pooled

workers.

offices.

are

the

(c)

set

waiting

the minimum

of weekly

benefits,

industry

for

the average

and maximum

whether

(0)

that

plant

the

to result

funds

be used,

including

the

While

it

some variation

is

apparent

is

likely

and experimentation

under

the, method

which

will

between

proposed,

be desirable,

variety

a bewildering

varying

degrees

of provisions

give widely

of protection

to workers

in different

ECONOMIC SECURITY ACT

1087

(2)

The

bill

in

its

present

percentage

for

Rhode

other

form

between

of

does not

make

any

States.

among

provision

Thus

the

for

in

the

April

wide

1930

differences

when

the

workers

in unemployment

average

the various

unemployment

as

nonagricultural

for

Michigan

and

was

was 8.5 percent

for

the country

Island

other

a whole,

the average

Montana

in

was 13.9 percent,

11.2 percent,

10.7 percent,

South Dakota

for Illinois 10.1 percent.

only 3.9 percent.’ unemployment

lowest.

If

the

in

In

the

the Committee

25.8 percent.

average

of

17 percent.

On the

words,

with

hand, the average

four

there was almost

the

highest

times as much relative

of

as

in

that

with

the actuaries

the country

had

the

of

as

an

of

bill,

be

State

from

percentage

taken

4 years

1930 to 1933 are

Security

was

estimate

again

the

Georgia,

State

as a whole,

for

on Economic

Michigan,

the average

high

State,

State,

which

while

however,

had

34.3 percent

Here

the

twice

that

highest

of

the

therefore,

that

upon

employers

which

can

volume

unemployed

There

will

States

is

any time

Kew

at

the lowest

had

a volume

the proposed

which

it

vary

will

an average

unemployment

if

each State

that

State

they

pay

a

which

levies

will,

was relatively

It

a

lowest.

under

of

be given

where

much

is apparent,

the assessment

the amount

States

with

3 percent

will

is hoped

from

to

of benefit

high

to their

much more.

in

the

greatly

able

a low

for

period

their

sets

to State.

few

be able

of unemployment

while

only

will

weeks’ benefit

to provide

The

those with

be no justification

the benefit

longer.

of

There

48 different

of forms

the handling

the necessity

districts. There

administrat’ive

volume

is

in

is,

of

any such treatment.

short

fact,

location.

will

be

just

no justifiable

of

central

records

procedure,

records

unemployed

as innocent

as those where

them

bill

will

it

in a bewildering

has spent

system

at

reason for penalizing

(3)

The proposed

and probably

Anyone

of

who

the British

because of the accident

also result

variety

in

and administrative

of

the

will

studying

realize

large

central

a relative

concentra­

indi­

work

tion of these.records

cate that

most

States

in

least

is good evidence

units

to handle

to

this

are

too small

effectively.

(4)

The

eligibility

It

therefore

bers

of

this

protection

Yet

proposed

bill

makes

and

who

no provision

on moving

workers

terms,

more

eligibility

this

fairly

acutely

to

out

so

such few

its

standards

the

for

those

another

of

its

workers

become

who

acquire

in

one State

largely

class are,

against

bill,

unemployed.

The num­

of them

need

group.

and

will

leaves migratory

in absolute

protection.

And many

than

prescribes

way

large.

unemployment

by making

debars

far

as

perhaps

any other

within

are

a

the present

used

not

occur exclusively

class from

aid.

“offset”

features

as

it

only

a State

not the country

(5)

The

as a whole,

bill,

proposed

violates

will

concerned,

for

the

be ineffective

If

a

can

fund

State

be

will

in enforcing

any

to

States.

of these standards

be

declare

that

an

against

to

pay

the Federal

double.

In

to invoke

been guilty

be almost

unwilling

not

have

would

few

points

standards

to

can

the offset

to

provision

State

were done

authorities

against

practice,

main­

Nor

employer’s

pay-roll

practice

such

of

contributions

tax.

If

this

the Federal

a severe

any

penalty

ol?fense.

In

ineffective

in

the

bill.

be credited

would

have

completely

who

would

the employers

would

private

be almost

parties

the

uniform

be used

degree

therefore,

taining

offset features

standards

to

lay

of

completely

order

the

which

to provide

States

do

but

it

should

so far

as this

subsidy

two

plan.

part

unemployment

for

the

three-tenths

for

redistribution,

difficulty

on these

down further

control

of

the

the

can

if

now covered

in

the future.

in

by

the

Federal

it

retains,

for

their

not

could they

A greater

through

sumably

the

costs.

be exercised

tax

Government

and

then

pre­

administrative

to proper

that

it

is

the

funds

The

The

percent

10 percent

pay-roll

in

redistributes

These

sums

States

be withheld

This

under

Federal

is

602).

their

conform

be noted

of

standards of personnel.

effective

is important,

only by abandoning

to

employers

States

the

which

(sec. 406 and

in paying

most

only

Perhaps

not

the offset feature

an outright

will

have

Federal

to make

the State

Government

is concerned and resorting

(6)

In practice,

will

be to

the

first

second will

of

the

pay

expenses

employers

(7)

be

roll

to

to

sets of coutributions.

insurance

laws.

of

1

be used,

There

will

contributions

of

but

all

For

through

administrative

imposed

upon

tend

insur­

A

be some extra

to two different

is

the

fact

that

financing

the

nature

sets of officials.

the offset

law

will

of unemployment

of

the Federal

tax.

important

the present

to confine

the future

such

is

ance to a levy upon pay rolls.

* Supplement

to

the

Report

to

the

President

of

the

Committee

on

Economic

Security

I

I

I
I
I

1088

ECONOMIC

SECURITY

ACT

State

cannot,

therefore,

obtain

offsets for

its citizens

if

it

wishes

to finance

a

portion

of

the costs

from

or excess-profits

income

tax

the

on

pay

rolls

since they

upon

same degree

that

those

backwards

taxes.

would

These could

not

fall

of

persons.

the

best

not

be

offset against

a Federal

or

exclusively

standard

them

to

and

the

on the same persons

It

may well

should

benefits

be held

be

met

which

will

not either

to

identical

by some, however,

by

taxes

be shifted

upon

a portion

who

can

to

the

costs of

afford

or forward

workers

consumers.

used within

There

are

The

offset

method

towards

thiti

prevents

this

would

tax

method

by

the

of financing

pay-roll

to

levy.

willing

have

taxes

or

some of

at

the

cannot

principle

be

of

from

being

the range

also

many

insurance

shifted

of protection

who,

while

from

afforded

they

be initially

wish

this

the

to finance

the

very

done sb

offsets

forecloses

For

all

Federal

unemployment

finandnp-

least

w&d

later

like

far

as

the

basic

against

future

these

pay

as well

rolls

reasons,

a pay-roll

income

possibility

is

concerned

would

and excess Drofits

left

open.

as

long

‘But

as

to have

protection

is

retained.

‘The proposed

to

measure,

methods

while

better

therefore,

of finance.

than

no

as present

therefore,

recourse

the

these other

feature,

offset

actiton

at

all,

is

seen

to

be clumsy

and

comparatively

ineffective.

II.

NSTIOPI‘AL

SYSTEM

OF

UNEMPLOYMldNT

INSURANCE

From

that

the economic and administrative

national

would

system

any

standpoints,

there

can

be

under

little

doubt

the

an outright

of unemployment

insurance,

wbicb

Federal Government

would be superior

1.

It

would

:as a whole.

to

provitle

at once collect

other system.

a uniformity

of

the money

rules

and

and disburse

provisions

for

the benefits

the

country

2.

tion

ten

Administrative

records

could

be relatively

centralized

and a standardiza­

of

forms

effected.

The

administrative

districts,

country

each

of

could ‘be

divided

into

which

woultl

have

a

some

set

of

eight

or

central

records.

3.

not

Migratory

lose their

workers

claim

and those transferring

to benefit.

from

one State

to anotbrr

would

4.

Since

the

insurance

fund

in

benefits

would

be provided.

ployment

would not be penalized

would

be Nation-wide

The

unemployed

in

because of the accident

in

SCOW. a uniformity

%ith

high

unem­

but would

States

of residence,

share equally

5.

There

with

would

all.

he

no

standards,

since this

would

problem

follow

of

from

keeping

the fact

the

that

localities

up

to

the administration

minimum

would

be in

central

hands.

6.

Employers

\vould

make their

contributions

to

only

one

governmental

agency.

7. The

Government

could,

if

and

when

it

wished,

use other

methods

of

financing

pay rolls.

I

the

payment

,of unemployment

which

benefits

are

chiefly

and

lawyer,

in

addition

advanced

(in

but

the

it

to

the

levy

on

such

a

the

that

the

presume

that, the objections

are primarily

I

am not

calls

for

against

national

term)

the

bill

system

constitutional

system

better

should

sense of

be noted

in

which

political.

properly

a constitutional

a national

persons

of old-age

are

annuities

paid

situation

during

their

that

system

contributions

fund.

This

way

But

in which

what

of

this

annuities

of employed

and of employers way of handling

State

this

to State

in

this

that

such

this

is

into

in

a Federal

view

of

the

working

life.

the drafters

of

old-age

be

at

is the only practicable

I

many people move from

chiefly

want

to emphasize

believed

evidentls-

be constit&ional.

If

connection

is

a national

so. there

would

legislation

would

seem to

least

would

equal

reason to believe

also be constitutional.

that

a national

system of unemployment

insurance

In

ment

fact,

the

case for

would

the constitutionality

seem to

annuities

up

of

a national

stronger

steadily,

system

than

that

irrespective

of uneml)loy­

for

old-age

of Lvhether

insurance

bene­

As

such

purchasing

The

pros­

classes

for

insurance

out

to

be appreciably

will

be paid

or depression.

primarily

build

in

and

annuities.

For old-age

consequently

x5-e are in periods

fits,

however,

will

they

will

power

of prosperity

be

paid

serve

Unemployment

of

periods

steady

their

savings

lea;

depression.

consumers

severity.

of the workinv

td

a better