suasive program, if not compulsory. People under that program were routed into this job or that job. They were told they had to stay there for the duration of the war, instead of going to the job they would have preferred to go to.

It became a policing agency, not a service for employers or employees.

True, it did a fine job of serving the big war industries.

Mr. DORN. But you do not recommend it for peacetime economy. Mr. COMPTON. Certainly not. It went too far even in the wartime economy; in my personal opinion.

Mr. RICH. If we had not had the wartime economy, we would not have been able to produce in the way we did, because the only way you could keep the plants producing the way they did was to freeze men on the jobs.

Mr. COMPTON. I would not go along 100 percent in that. I think there was too much, let us say, persuasion in that program.

Mr. RICH. When you are at war, everybody cannot do as they please.

Mr. COMPTON. That is certainly correct.

Mr. JUDD. But that is not the issue.

Mr. COMPTON. That is not the issue, Mr. Judd. My philosophy is simply that a free man working freely on his own choice will produce a lot more than a man who is told to go to a certain place, but as Mr. Hoffman said, that is beside the point here.

Then

The fact of the matter is it was a war agency after the war. when the War Manpower Commission closed up, the Employment Service was transferred to the Department of Labor.

I sat at a meeting of the Management-Labor Committee of the War Manpower Commission at the time it closed up, and Mr. McNutt, the chairman of that Commission, told the committee at that time that he had recommended and urged that the Employment Service be returned to the Federal Security Agency and felt it belonged there; but that his advice had not been followed, and that it was going over to the Department of Labor.

It was transferred to the Department of Labor at that time. The agency was first in the Department of Labor; then in the Social Security Board; then in the War Manpower Commission; then in the Department of Labor; and can you blame them for not wanting to be transferred back again to another agency? I cannot. Yet I have the feeling that the interests of people seeking jobs and employers seeking men will be assisted by the complete integration of this employment security program in one place.

That I think generally is the position of employers.

Mr. JUDD. You do not have the fear that has been expressed here by some witnesses that if they are under the Federal Security Agency, the unemployment compensation aspects of the program will subordinate and make quite secondary the employment services?

Mr. COMPTON. Our people do not have that viewpoint generally. Mr. JUDD. I thought you would not, because the more people getting unemployment compensation, the more the drain on your resources. Mr. COMPTON. Certainly. I do not think there can be any question but that our employers want people to fill the jobs and not to be drawing benefits.

However, the point is that the employment service is not going to be under the Federal Security Agency or the Department of Labor. It is going to be under the State Unemployment Compensation departments, and it is not the employers who are going to be under one of these Federal agencies. It is the State official.

Our people feel they can rely on their State officials to do the best job of routing people to jobs. If they do not, they are close, and they can tell them what they think of them very easily.

They can complain to the State capital or to the local city office. Mr. JUDD. Are there any questions of Mr. Compton?

If not, thank you very much, Mr. Compton.

Mr. JUDD. The next witness will be Mr. Garrett.

STATEMENT OF H. F. GARRETT, EXECUTIVE DIRECTOR, UNEMPLOYMENT COMPENSATION DIVISION OF THE STATE OF IDAHO

Mr. GARRETT. I am the executive director of the Unemployment Compensation Division of the State of Idaho. I filed a statement with the committee this morning.

Mr. JUDD. That is right, and your statement will be inserted in the record at this point.

(The statement is as follows:)

STATEMENT OF H. F. GARRETT BEFORE THE HOUSE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS

Mr. Chairman, I appreciate the opportunity of appearing before this committee with respect to the President's Reorganization Plan No. 2 of 1947.

I am at the present time the executive director of the unemployment compensation division of the Industrial Accident Board of the State of Idaho and have been employed by that department in various supervisory capacities dealing with unemployment compensation and employment service problems for more than 9 years. At the present time full integration of unemployment compensation and employment service has not been achieved in Idaho due to the confused condition existing at the national level and the efforts that have been made by Federal officials to preserve a separate functioning employment service in the State. This has resulted in economic waste in that both services are now maintaining complete and separate statistical, information, and business management departments under the system of separate budgeting. Less than 2 weeks ago two Federal employees made a trip into the State from the Denver regional office, a distance of approximately 900 miles, to review the two budgets. The audit of expenditures is likewise handled by two separate Federal agencies, with little or no coordination between the two. Consolidation would not only eliminate such wasteful duplication by Federal employees but would remove the obstacle now standing in the way of consolidation of at least the service departments of the two organizations. It would also encourage more efficient administration through elimination of interdepartmental friction.

Of greater importance is the matter of handling work registrations and placements. The application of suitable work tests by an employment service dominated by a Federal agency gives insufficient consideration to local conditions, frequently bringing both services into disrepute. While it is true that many applicants for work are not benefit claimants, the same suitable work tests should be applied, and those tests should be applied under the influence of local financial responsibility.

Idaho was one of the few States having little or no war industry, with the result that many workers migrated to war centers. Upon return to the State after the end of the war many of them registered for work claiming special skills acquired while working in war plants. Since no jobs were available for those skills, serious placement problems arose. The best interests of both the worker and the general public will be served through the establishment

of a combined integrated service rendering the most adequate and economical services to the unemployed worker whether he be a veteran, an industrial worker, or a farm laborer.

To adequately serve the needs of these individuals the service must have the respect and support of employers in the local community. This may be achieved by consolidation at both the National and State levels in a neutral agency.

Mr. GARRETT. I would like to elaborate on the statement that I filed.

First, let me say that I agree with the general statements by Mr. Rector this morning with reference to the organiaztion of the Employment Service and the administration problems it involves.

So I will confine my remarks more to specific problems arising within my State.

We are one of the States that have not as yet achieved integration on the State level simply because we have had too much interference from Federal officials of the Employment Service in their attempt to maintain a separate, distinct identity for the Employment Service. This has resulted in both confusion and a considerable amount of unnecessary expense. It has also interfered with the service rendered to the public.

Within the last 2 weeks a representative from the Bureau of Employment Security and a representative from the United States Employment Service came in to the State to review budgets. The two representatives were required because we have two separate budgets.

It is a distance of 900 miles from the regional office in Denver to Boise. One man could have done the job better if we could have had one over-all budget. The divided budgets will also require separate audits.

We have been unsuccessful in establishing combined statistical business management, personnel, informational and training departments because of the influence and advice of the representatives from the USES. While such waste is important and should be corrected, of greater importance is the fact that an employment service operating on that basis is inclined to follow standards issued at the Federal level applying to a national pattern, which frequently do not conform to local problems or conditions with the result that frequently individuals who are claiming benefits may draw them when there are jobs available in the area to which they should be referred.

Such a situation occurred last fall. I received a number of complaints from an agricultural area that the farmers were unable to get help, in harvesting their crops. There were people recently returned from war industries on the Pacific coast who had before the war performed this work, but were now reported to be unavailable and at the same time claiming benefits.

Upon investigation I found that many of them were registered in such occupations as parachute riggers, control tower operators, welders, naturally no jobs were available in these occupational classifications so many of them should have been referred to jobs in other classifications.

We need one over-all Federal agency to eliminate the conflicts at the Federal level, to help us avoid those interferences in our local administration.

We have received some complaints from veterans that they were not referred to jobs that they knew were available. Upon investigation of some of those cases, we found the local office manager contending "They have readjustment allowances available to them. Let them draw them, and let somebody else have the job."

This has served to detract from the standing of the employment service in local communities thereby lessening it's value to both workers and employers.

I have talked to many of the employers in my State, and they say that they are not receiving service from the Employment Service, and that they would patronize it more freely if it were operated as a part of one over-all agency handling both placement and insurance activities.

I think we do need to build up confidence in the Employment Service if it is to perform the function for which it was created.

Mr. JUDD. In your testimony here, you speak of efforts that have been made by Federal officials to preserve a separate functioning employment service in the State. You referred to it somewhat vaguely in your remarks now.

Would you care to recite to the committee what efforts were made by the Federal officials to prevent you from getting a real integration and consolidation in your own State?

Mr. GARRETT. Yes, sir. The regional director of the United States Employment Service visited the State sometime in October of last year before the service was returned to the State and obtained an appointment with the Governor. He asked the Governor not to combine the employment service with unemployment compensation but to keep a separate functioning department.

Mr. JUDD. He went right over your heads to the man responsible for your State organizational set-up.

Mr. GARRETT. Yes.

Mr. JUDD. Do you know offhand how many States still have not effected an integration of the two services on the State level? Perhaps Mr. Rector could answer that question. Just Idaho?

Mr. RECTOR. There is Idaho. I think Kentucky is the most extreme. Kentucky has a separate legislative set-up. They have two separate departments responsible to the government.

Mr. JUDD. Go ahead, Mr. Garrett.

Mr. GARRETT. I have heard there are six, although I am not positive that number is correct.

Mr. JUDD. Does your Governor himself agree with the position you have presented? Do the majority of the officials in your State agree that they ought to move in the direction of more rather than less integration?

Mr. GARRETT. I would like to make this explanation: Since then we have changed Governors. The present Governor agrees they should be integrated. He authorized me to come before this committee and make that statement.

Mr. JUDD. Do you have any questions, Mr. Latham?

Mr. LATHAM. No questions.

Mr. JUDD. Mr. Dawson?
Mr. DAWSON. No questions.

Mr. JUDD. Mr. Dorn?

Mr. DORN. You said there were a lot of veterans coming back. You said there were registrations as parachute riggers and so forth when the farm labor was needed. I imagine that is largely due to the fact that farm wages were probably less than what they expected or were accustomed to, is that not true?

Mr. GARRETT. It is true it was less than they were getting in the war plants, but they were the prevailing wages for that type of work and much higher than farm wages prior to the war.

Mr. DORN. Is it true a large part of them would rather draw unemployment insurance than work on the farm?

Mr. GARRETT. There were a few of that kind, but not the majority; no, sir.

Mr. DORN. It was a minority.

Mr. GARRETT. Yes.

Mr. DORN. Thank you.

Mr. JUDD. The basic reason why they did not want to go back to the farm was not because they preferred factory work to farm work, but because the factory work paid more money than the farm work. Mr. GARRETT. Yes.

Mr. JUDD. Mr. Hardy?

Mr. HARDY. I understood you to say that these people that were applying for jobs were in a category where you had no vacancies, and at the same time they had a background of agricultural experience prior to their more recent experience on which they were looking for jobs.

Did the question of suitable employment involve the necessity of your having to pay them unemployment compensation rather than referring them to a job that paid less?

Mr. GARRETT. Yes; that is possible because the employment service makes the original determination of suitability. With the separation of responsibility existing the way it does, an individual coming in to apply for work and after registering for work may be told by the employment-service interviewer about existing jobs, but make no official referral following a policy of referring only to jobs utilizing the individual's highest skill. The individual who has been employed in a war plant, drawing more wages and working in a more specialized field, would not in many cases be given a referral to a farm job on the basis that it is not suitable.

Following such determination of suitability they have taken claims for benefits without reporting the failure to apply for a farm job. Mr. HARDY. Well, now, is that due to policies in Washington, or is that a standard determined within the State?

Mr. GARRETT. It is due to the Washington influence coming down through the existing type of organization. That is the thing you may expect when you have two Federal agencies in a related field, one of which has no financial responsibility with respect to a claim. I think this is an important point: With the United States Employment Service being administered on the national level in the Department of Labor through the allocation of funds to the States for the operation of their employment services, the representatives of that department are in a position to exert pressure for maintenance of a separate, distinct employment service organization. They need not have consideration for the financial responsibility of those admin