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that you have this kind of a committee, which, if utilized, can do a tremendous good in presenting this question, and dispel some of these fears.

That is all, Mr. Chairman.

The CHAIRMAN. Senator Long, do you have any questions?

Senator LONG. Mr. Secretary, I would just like to state that I am very happy to see you here this morning, and that the Labor Department in my State has found that your Department has worked and cooperated with them most harmoniously, and they are happy to see this program come down. We certainly hope it goes into effect. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much, Mr. Secretary.

Secretary TOBIN. Thank you, Mr. Chairman, and members of the committee.

The CHAIRMAN. Is Mr. Findley present? If so, will you come around, please?

STATEMENT OF A. R. FINDLEY, VICE PRESIDENT OF WIEBOLDT STORES, INC., CHICAGO, ILL., AND CHAIRMAN OF THE SOCIAL SECURITY COMMITTEE FOR THE NATIONAL RETAIL DRY GOODS ASSOCIATION, CHICAGO, ILL.

Mr. FINDLEY. Mr. Chairman, I shall endeavor to be brief, because I know the time is short.

My name is Ray Findley, and I am vice president and treasurer of the Wieboldt Stores, Inc., who operate department stores in Chicago.

I represent the National Retail Dry Goods Association, an association of some 7,000 or 8,000 stores, also the Illinois Federation of Retail Associations, as well as the local Chicago Retail Merchants' Association, and I am appearing in opposition to the President's Reorganization Plan No. 2, of 1949.

Others will appear before you to argue the matter of whether there are or are not actual savings to be realized through the institution of this particular reorganization plan. I want to confine most of my remarks to the matter of experience rating which has been discussed here in questions and answers propounded to the Secretary of Labor. Every State in the Union, as well as all the Territories, that has this particular kind of law, unemployment compensation laws, has experience rating. It seems rather strange that there can be any question about experience rating when the legislatures of all the States have decided that experience rating is something that is desirable. Experience rating itself is in the first place reasonable and logical. I will not go into the discussion, but I believe you will agree that a highly seasonable organization or business such as a cannery or perhaps construction in some of our northern latitudes should pay either wages sufficient to carry their employees through a period of unemployment, or else they should be required to pay unemployment compensation taxes and levies sufficient to carry them through if they do not do it direct.

On the other hand, we have certain steady types of employment, such as insurance, banking, public utilities, where the employment is very steady. In those cases, it does not seem reasonable that they should have to pay for the period of time when other employees are off of the pay rolls.

But this question of reasonableness is not the only virtue to be found in experience rating. The big point in experience rating is that if it were not for experience rating there is no one responsible for a reasonable consideration of claims. That to me is the big thing. The employer, who is going to have charged up against his experience figures and have to pay if an employee is permitted to file an unfair claim and collect thereby, is vitally concerned, and he makes it his business to find out whether that employee really has a claim, and if it is not a just claim, to fight it out and to attempt to have the claim denied. If it were not for this particular fact or factor, I wonder just who would police these unemployment compensation claims? The question might well be raised, and I think it has been probably answered to some extent, as to who desires to knock out experience rating. Of course, our answer is the Department of Labor.

This annual conference of labor officials, consisting of the labor and industrial commissioners from the respective States, meets each year in December in Washington. Along with these State officials are invited the top officials of the American Federation of Labor and the CIO in each State. This conference is supervised by high officials of the Department of Labor.

In conducting this conference, presumably the Secretary is carrying out the purposes that were stated in the act which provided for the Department of Labor.

If you will permit me, I will just read those purposes here:

The purpose of the Department of Labor shall be to foster, promote and develop the welfare of the wage earners of the United States, to improve their working conditions, and to advance their opportunities for profitable employment.

That talks about one side-the wage earners themselves-it does not talk about the public, nor does it talk about the employers; and I agree with the one remark that has been made here; that the public generally is very, very much concerned in this whole problem.

If we do away with experience rating, I think we will find that the scandals that we had some years ago that developed with WPA and also with the distribution of surplus foods, are going to fade into insignificance, because there will be no one at all to object to the unfair claims. Who is going to object if some of these individuals, even as they now do, take their vacations in Florida and in southern California and other places that are desirable, and then file claims with their home States, as they do in the case of Illinois, for unemployment compensation, because they are not able to find employment in these particular cases where they would like to have their vacations? Again, who is going to object if a bricklayer moves from the place where he has found employment out to a rural area where there is no construction and proceeds to file a claim for unemployment because he is not able to get employment at that particular place in a field in which his highest skill can be employed? Or, if a coal miner leaves a coal area and goes somewhere else and he is unable to find employment in his highest skill, who is going to police that? If it were not for the experience rating, there would be nobody to police it.

At the present time, the employer is concerned because the claims, where the payments are made on that claim to the particular individual, are charged up against his experience. We have many cases

in our own stores of married women who come to us for the purpose of making money for a while to pay off the accumulated bills. They only want temporary work. In some cases, they tell us in advance that they only want temporary work, but very frequently after they acquire the amount of money they desire, they quit, go back to the primary duty of a housewife, and then proceed to file a claim for unemployment compensation. All right, we are immediately notified under the Illinois law about these claims, and we do something about it. If they worked only for the purpose of temporary employment, we bring that to the attention of the department and the department very frequently will deny the claim. It was not for those that the unemployment compensation laws were established in the first instance.

I am wondering whether or not these are the individuals that the Thirteenth Annual Conference of Labor Leaders had in mind when they concluded in their recommendations as follows:

The experience rating provisions in State laws have proven to be powerful incentives to the adding of disqualifications and restrictive eligibility provisions to the State laws and to narrow interpretation of these provisions, with the result that many persons in need of protection of unemployment insurance are deprived of their benefits.

I do not think any employer is trying to deprive any person of his benefits, who actually and properly is entitled thereto; but what we are trying to stop is the raiding of the funds that have been built up by payments from the employers.

The unemployment compensation laws have been established for the country as a whole. They were intended to benefit all classes, not only the employees themselves, but the employers; but above all else, the public was supposed to be benefited thereby. These laws do benefit the employee, they benefit the employer, they benefit us in retailing. The payments made under these laws have a tendency to level out the business cycles. To that extent they are good.

The American people generally are not accustomed to having an umpire or referee chosen from the participants in the game. The arbiter in all cases should be unbiased. This leads to confidence on both sides, and also, and very important in this particular respect, it leads to confidence on the part of the spectators. In this particular instance, I think that we can determine that the spectators are the public generally. The Department of Labor, in our opinion, is not unbiased. It is not unbiased because of the very object in mind when the Department was established. We know that the Secretary is invariably chosen after consultation with high officials of both the American Federation of Labor and the CIO. We also know that the Under Secretaries of Labor are practically designated by the American Federation of Labor and the CIO. One of the Under Secretaries, I think, invariably comes from the American Federation of Labor official staff and the other one from the official staff of the CIO.

In conclusion, I think it very significant that the highly respected task force which made the study for the Hoover Commission relating to these particular functions failed to make any recommendation to the Commission, but submitted the following language:

The nature of this issue regarding the proper location of the Federal Agency administering the employment service and unemployment compensation precludes

its settlement on a purely factual basis. A decision must be arrived at on the basis of judgment, and in the last analysis this judgment must be exercised by the duly elected representatives of the people. The Brookings Institution is not submitting any formal recommendations on the subject because detailed facts alone do not determine the issue.

Now, this objective group, after an extensive study of both the Federal Security Agency and the Labor Department, could find no advantage, either administratively or economically for the transfer to the Labor Department. They indicated this decision should be left to the duly elected representatives of the people.

The Congress of the United States has twice since May 1, 1947, rejected similar proposals, and it is my considered judgment at this time that in the interests of economy and efficiency and good administration, and also in the interests of a fair and unbiased operation of unemployment-compensation laws, that this committee and the Congress should again reject this plan.

The CHAIRMAN. Thank you, Mr. Findley. Are there any questions, Senator Long?

Senator LONG. Yes, Mr. Chairman, I would like to ask this question: I notice that you are strongly opposed to some of these administrative cases where a man is drawing unemployment compensation although the man could be on the job working, or where he may be drawing compensation and has turned down suitable employment.

Does it not seem to you that if the same agency were administering compensation claims for unemployment and the placement of unemployed people, it would be easier to keep these people who are not deserving of unemployment compensation and who actually refuse to work, off the rolls?

Mr. FINDLEY. Senator, I believe that is exactly what we have at the present time. In other words, the Unemployment Services are at the present time in the same Division that is handling the unemployment compensation claims. The reorganization plan contemplates that both of these shall be transferred to the Department of Labor. In other words, it would not be different than we now have.

Senator LONG. I may say that in my State the Department of Labor handles both, and in the Federal Government, the Department of Labor handles one and the Federal Security Agency handles the other. I think that in the interest of consistency, it would be well for the two of them to work together.

Mr. FINDLEY. Senator, a couple of years ago, I believe you will recall, the Employment Services, by act of Congress, was taken away from the Department of Labor and transferred back to the States, where in most cases they are operated by the same department that is now operating the unemployment compensation law. That is the case in Illinois. So we have them there.

A point was raised a few minutes ago, in the questioning of the Secretary, regarding whether businessmen in general would not have more confidence if the Employment Service was in the Department of Labor. I want to say I do not think they would. We question the fairness, the absolute fairness of the Department of Labor, and, of course if the employers will not use the Employment Service, it does not make any difference where it is. You can consolidate it with

the Veterans' Administration, with their employment services, with anything else that you may have in mind, but if the employers will not use it, then it cannot possibly be effective.

Senator LONG. But it occurs to me that one of the main complaints that you are making is just as much and maybe more the fault of the employers than it is the fault of the laboring people.

An employer in my State recently complained to me about the very same thing you are talking about-a man quitting his job to go to some other State for a vacation, and drawing unemployment compensation. I asked him if he reported the matter to the Department of Labor. I discovered that he had not, so I reported it, and they immediately cut the man off.

Now, it just occurs to me that the Employment Service should be sympathetic to a laboring man, but at the same time it should be tough for those who do not want to work, and I believe that the Labor Department certainly recognizes that fact. They do in my State, at any rate.

Mr. FINDLEY. Senator, if we do away with experience rating, who is going to police that? Who is going to be concerned with it?

Senator LONG. Does this plan necessarily mean that we do away with experience rating? What makes you think that by putting the reorganization plan into effect that the experience rating would be abolished?

Mr. FINDLEY. Because of the recommendations that were made in this Thirteenth Annual Conference of Labor Representatives, which was under the auspices and conducted by the Department of Labor. They recommended that very thing.

Senator LONG. But the Department of Labor is not recommending

that.

Mr. FINDLEY. The recommendation was made by the Thirteenth Annual Conference of Labor Officials, who were meeting under the auspices and invited there by the Department of Labor, and I do not think that you can possibly imagine that they were not doing anything other than reflecting the opinion of the Department of Labor; and they recommended this:

The committee recommends that the experience-rating provisions be removed from State unemployment compensation laws.

I do not know what could be any clearer, Senator.

Senator LONG. But even if the Department of Labor wanted that done, that does not mean that this Congress will do it. I may say that they also recommended that the Taft-Hartley Act be repealed, but I think that you are aware that it is still on the statute books.

Mr. FINDLEY. It certainly does not follow, but we certainly do not want the umpire to be biased at the time he is chosen.

Senator LONG. It does not seem to me that the Department of Labor is the umpire; I believe that the Congress is the umpire here. And, as far as your people are concerned, they have always had a fair hearing from Congress, and they will continue to get a fair hearing. That is all, Mr. Chairman.

The CHAIRMAN. It may be noted at this point that the Secretary of Labor would not commit himself on this question this morning.

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