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State act in knowing what the benefits are going to be, and what State is going to pay them. It is much greater in the building trades in certain crafts than in the railroads. You take an elevator and esculator construction gang. They go from State to State on almost every job they work on. Their work then is practically interstate, in between their jobs. So, as you go down through other industries, you find substantially high percentages of the employees who are affected by this crossing of State lines.

Mr. WOLVERTON. I am not prepared to dispute the statement you made, because I have no factual information upon it, but I must say it does surprise me somewhat to hear that opinion expressed. Is it possible for you to furnish the facts that enable you to make the positive statement as to the percentage to which you have referred? Mr. YOUNG. No, sir; there are no such facts or statistics on this situation. It has been my experience in the insurance business, sir, that if you will reduce the premium rate by lowering the casualty, you generally will reduce the casualties. That is true in fire, marine, workman's compensation insurance, insurance against injuries to passengers and others.

So I say, the same thing would be true in connection with unemployment insurance. It is the type of business which has, as you have with the workmen's compensation, the incentive whereby if your rates are reduced, you can reduce the cost of the premium.

Mr. MARTIN. Mr. Chairman.

Mr. CROSSER. Mr. Martin.

Mr. MARTIN. I have one more question. I have this thought in connection with the contention that the unemployment insurance fund may be depleted and finally exhausted by payments to the short time or temporary class of employees, so that it might work to the ultimate disadvantage of the older class of employees if they become unemployed and would be deprived of benefits.

Now, if that situation did come about, it would simply result in the exhaustion of the funds. It would not increase your tax rate, your unemployment insurance tax rate. It would not place any responsibility whatever on the carriers to pay out unemployment insurance that is not required by the law to be paid in. It would simply result in an exhaustion of the funds, and the necessity for further legislative action. For instance, they would have to come back to Congress and get additional tax legislation before any further additional liability could be placed upon the carriers.

The employees have assumed the responsibility of the position that this plan is self sufficient and self sustaining. If it proves not to be it looks to me like somebody will have to bring the carriers back into Congress for some amendment to the legislation, at which time it might then appear that the plan had failed and the question then could be raised as to requiring contribution on the part of the employees as well as the carriers to provide sufficient funds.

So I do not really see that there is any risk involved to the carriers in the possibility you are suggesting that the funds may become depleted and exhausted by payments to the short time temporary employees.

Mr. YOUNG. I did not say that there was great risk to the carriers. I said that there was great risk to the long-service employee. He is the man I am interested in. He is the man who is running our rail

roads. I am not interested in the man you pick up for 2 or 3 or 4 months. I am interested in the man who has had 10, 15, or 20 years' service with us and on whom we have to depend to render service. There is no particular reason why we should benefit a man with 3 or 6 months' service and disregard the man with longer service.

Mr. MARTIN. I think in view of the fact that they are here unanimously, through their organization representatives, asking for it, that the risk could be left to them.

Mr. YOUNG. Well, sir; they are our employees, and we desired to protect their welfare.

Mr. CROSSER. It is just 2 minutes until 12 o'clock. I do not know whether Dr. Parmelee cares to start now.

Mr. SOUBY. Dr. Parmelee will be quite a long witness.

Mr. CROSSER. I think perhaps it would be better to adjourn now, because it is 12 o'clock and that is the usual adjourning hour. In addition to that the food and drugs bill in which this committee is very much interested, comes up immediately after the House convenes. So the committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon at 12 o'clock, meridian, the committee adjourned to meet at 10 o'clock the following morning, Wednesday, June 1, 1938.)

UNEMPLOYMENT INSURANCE FOR RAILROAD EMPLOYEES

WEDNESDAY, JUNE 1, 1938

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE OF THE

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The subcommittee met at 10 a. m., Hon. John A. Martin, presiding. Mr. MARTIN. The committee will be in order. The first witness on our calendar this morning is Mr. Farquharson. Mr. Farquharson, we shall be glad to hear you at this time.

STATEMENT OF JAMES A. FARQUHARSON, NATIONAL LEGISLATIVE REPRESENTATIVE, BROTHERHOOD OF RAILROAD TRAINMEN, WASHINGTON, D. C.

Mr. FARQUHARSON. Mr. Chairman and members of the House Interstate and Foreign Commerce Committee, my name is James A. Farquharson and I am national legislative representative of the Brotherhood of Railroad Trainmen, with offices at 10 Independence Avenue, Washington.

I am appearing here in support of H. R. 10127, a bill to create unemployment insurance for railroad workers and to remove those workers from the unemployment provisions of the Social Security Act.

More than 2 years ago it became very apparent that it would be difficult to properly take care of railroad employees under the unemployment provisions of the Social Security Act, because of the fact. that in a great many instances these employees are required to work across State lines. Their seniority district may include branch lines or home terminals located in an adjoining State, to which they may be forced to go to protect their seniority when they are displaced on account of a reduction of force or by the exercise of seniority rights of an employee older in the service. Consequently, it would be difficult to take care of the unemployment compensation due an extra man, especially, who, for example, may live in Washington, D. C., and whose seniority district extends to Wilmington, Del., or Enola Yard at Harrisburg, Pa. Such an employee might lose his position in Washington and be forced to the extra board at Baltimore or some other job located on his seniority district and would in all probability suffer periods of unemployment wherever he went upon his seniority district because of being an extra man.

In 1936 our legislative representative in the State of Alabama sought an opinion from the attorney general of that State as to how the Alabama law would apply to men working in the State of Alabama,.

and here is a specific case: An Illinois Central trainman residing in Tennessee was assigned to a run that covered 53 miles in the State of Tennessee, 43 miles in the State of Mississippi and 123 miles in the State of Alabama. He would be taxed under the Alabama law, as the major portion of his employment was within the State of Alabama but being a resident of the State of Tennessee he could not collect benefits in the State of Alabama. Therefore, it is possible for railroad employees, especially in the transportation group, to be taxed without being able to receive the benefits for which they pay taxes and I believe that it is best that railroad employees be taken from under the unemployment insurance provisions of the Social Security Act and that the bill before you be enacted.

Thank you.

Mr. MARTIN. Thank you very much, Mr. Farquharson.

The next witness on our list is Dr. Julius H. Parmelee.

STATEMENT OF JULIUS H. PARMELEE, DIRECTOR, BUREAU OF RAILWAY ECONOMICS, ASSOCIATION OF AMERICAN RAILROADS

Mr. PARMELEE. Mr. Chairman and gentlemen of the committee, my name is Julius H. Parmelee. I am director of the Bureau of Railway Economics of the Association of American Railroads. I have been connected with the Bureau of Railway Economics for more than 25 years and since 1920 have been its director.

I appear here for the Association of American Railroads in opposition to this bill H. R. 10127.

Before entering on my statement, Mr. Chairman, I should like to refer to a question asked yesterday by a member of this committee of Vice President Charles D. Young of the Pennsylvania Railroad, who was on the stand at that time. The question related to the relative level of railroad employment at this time, particularly with reference to the corresponding levels during the year 1933.

Colonel Young's answer was that so far as the Pennsylvania Railroad is concerned, fewer employees are on the rolls of the Pennsylvania today than in 1933.

Broadening the answer to that question, I may say to the committee that the number of employees of all railroads combined is lower today than at any time in the past 20 years, during which monthly records of railway employment are available. It is lower today than in any month of the year 1933, even the month of March, the month of the bank holiday, when railway employment was at an extremely low ebb.

Mr. REECE. If I may interject, I assume that during the course of your testimony you will make answer to the question which was propounded by another member of the committee yesterday morning in regard to the statement that the enactment of this legislation would result in a net saving to the railways.

Mr. PARMELEE. That subject will be covered, Mr. Congressman, either by myself or a later witness.

Mr. MAPES. You say that there are fewer men working on the roads now than at any time in the last 20 years. Are fewer hours being worked as well?

Mr. PARMELEE. Yes, that is correct, Mr. Congressman.

Mr. MAPES. In other words, in 1933, there were more men employed than at the present time; but were they working as many hours on the average for each man, to offset the lack of employment, or were they working about the same number of hours then as they are working now?

Mr. PARMELEE. I think the average is about the same, Mr. Congressman. There was some "spread-the-work" in 1933, and there is some today. Generally speaking, the hours of men in the train and engine service have been going down per man, on account of the speeding up of freight- and passenger-train service; in other groups of railway employees, except for the "spread-the-work" principle, which is in effect in some respects today, there certainly has not been any increase in the number of hours per man.

I may say further, as a preface to my statement, Mr. Chairman, that I have given considerable study for several years to the questions of retirement of railroad employees and unemployment compensation for railway employees. As far back as 1935, at the time the Federal Coordinator was working on a plan of unemployment compensation I, among others, representing the railroad industry, was called in by members of the staff of the Federal Coordinator, and at that time consulted with that staff respecting certain features of his work.

During the first half of 1937 I was a member of the committee of railway representatives, which met with the representatives of railway labor organizations and worked out a plan of railroad retirement which was later enacted by the Congress.

Again, during the first 2 or 3 months of the year 1938, I was a member of a committee of railway representatives which met with a similar committee of representatives of railway labor, and for several weeks discussed together the possibilities of a separate system of unemployment compensation. The subject, therefore, is not entirely a

new one to me.

As Vice President Charles D. Young of the Pennsylvania Railroad indicated to you yesterday, we do not appear in an attitude of uncompromising opposition to any or all systems of unemployment compensation for railway employees. What the future may hold in this field, no one can know today. But no such fundamental change as this bill contemplates should be made, in our opinion, before the several States have had a certain degree of experience with the present system. Less than half the States have begun to pay benefits. To make a change now, before the State systems become fully operative, would be not only swapping horses while crossing a stream; it would be swapping horses before some of the horses had even entered the stream.

Aside from this consideration, however, and what is far more important, the proposal now before this committee contains many provisions that we oppose as unsound and uneconomic.

In fact, this bill, designed to establish a separate system of unemployment compensation for railway employees, is not what it purports to be. It rejects the principles of unemployment compensation that formed the basis of the Social Security Act. It rejects the principles incorporated in the recommendations of the Social Security Board to the State legislatures as guides to the preparation of the State laws, which were finally written into those laws. Its objectives, and the means by which they would be attained, are not founded on precedent.

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