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the rail workers at large, who felt they were being exploited by interests that could never qualify to represent them on this important topic.
Under this atmosphere, the National Railroad Pension Forum, Inc. was born, to be of service to rail employees. Committees of Congress and Members in both bodies are familiar with our activities ever since.
We have many committees within our group, the most important of which is a platform committee. This comprises five members of our executive staff, four of which are today active rail workers. Not alone do they function in this capacity but their association with fellow workers keeps them informed as to their needs. They viewed thousands of letters from members relative to different changes in our act and came up with a platform program that received the unanimous support of our executive staff at our meeting last November and again with some minor amendments at our December meeting, and with this program before us we do not hesitate to support H.R. 3289 which is really the voice of the rail worker. Congressman Bryan Dorn, the sponsor of this bill is well acquainted with the desires of the rail workers as he has four railroads merging on his hometown and has many good rail friends who depend on his efforts.
I think it appropriate at this time to explain in detail the contents of this bill. It provides retirement at age 60 with 30 years of service or 35 years of service regardless of age. In the hearings before this committee on August 4, 1958, Mr. Fox of the AFL-CIO cited a case of a rail employee who started as a shop apprentice when he was 17 years old. He had completed 35 years of service, lost his job when his shop was closed under the late financial crisis on the rails. He was not o'd enough to demand his annuity and hence had to depend on returning to work, which was a remote vision at that time (you will find this story on p. 89 of the hearings referred to). This is just one of the many cases we have where a similar fate befell the employee. Female employees on the rails today, can retire with 30 years rail service when they attain the age of 60 years. There should be no discrimination between sex. Both should be on a similar basis.
Almost 2 years ago we had the general manager's office of the N.Y.C. Railroad at Cincinnati moved to Indianapolis, Ind. Those that could not or did not want to leave were out of work. Some, however, did protect their jobs and commute on weekends back to Cincinnati while they actually stay in hotels at Indianapolis, Ind. and maintain their families and homes at Cincinnati, Ohio. This treatment is cruel for an employee up in years with many having 40 years service. Again we will have a similar occurrence at Wilmington, N.C., when the A.C.L. Railroad will move their general office to Jacksonville, Fla. Those who are young enough can leave the service, whereas the oldtimers must protect their jobs and report at the new location. If the age of retirement was reduced to 60 with 30 years of service it would relieve such occasions as mentioned and those are only two of many similar occasions where many jobs were abolished and employees were forced to report for work many miles away. So this legislation is a case of necessity and should be enacted in this Congress.
H.R. 3289 carries another important provision, the elimination of the test period 1924–31 for service prior to January 1, 1937. This entire period is prehistoric, and the earnings of that time have no relation whatever with our present high economy. Our request is reasonable to suggest using the 5 highest years in lieu of this period, similar to the pension system of your civil service employees. The use of this low earning period is a contributing factor to why we hare today some 280,000 rails and their beneficiaries getting no more than social security henefits, despite the fact that our workers at all times paid at least three times more in taxes to protect their system than did their counterparts pay under social security. It might be well to recall that up to December 31, 1958, some 80,000 rails and their survivors under the guarantee provision of the Railroad Retirement Act were getting their benefits paid in full by social security, whereas effective January 1, 1959, with the small 7 percent increase in social security benefits, some 280,000 rails and their survivors were reverted to social security for their benefits. This involved 30,000 retired rails, 90,000 spouses, and 160,000 widows, parents, and children. This clearly shows the inadequacy of our present act which needs immediate revision.
Before passing to another provision, I would like to refer you to the Railroad Retirement Board monthly review for December 1958, page 14, which shows that for the fiscal year 42,000 were awarded annuity and that some 9,800 of this number were qualified for disability annuity. This is almost one-fourth of the gross retirements and of course, all of those asking for annuity were under the retirement age which at present is 65 years. However, the Board did not show a very important figure, the number of applications they had received that were disqualified because they could not meet the qualifications. We know that one has to be almost a stretcher case to qualify for disability benefits under our act. The article further shows that half of those who qualified for disability were between the ages of 60 and 64 years old. This is another reason why the present retirement limitation should be lowered
In this bill there is a proposal to increase the tax base to apply on a taxable salary of $400 per month, which would bring our act in conformity with the social security basis which was extended January 1, 1959, to apply on $4,800 per annum or $400 per month. This feature alone should help the finance obligation defined in the bill.
In section 4 of this bill it provides a 10 percent increase across the board for those now retired and beneficiaries of the act, such as spouses and widows who are now drawing benefits. You need little comment from me on this feature. All of you know the present plight of our retired workers, who sustain many hardships to maintain themselves in this high economy. Please remember that a retired man is unemployed with additional expenses covering high medical care, a requisite that aged people are confronted with
I will comment now on some of the good provisions carried in some of the bills under consideration. H.R. 218 embodies what all rail employees desire. It carries the fundamentals of H.R. 3289 but freezes the tax rate at $350 per month. It has always been stated in the past that certain well-meaning bills were out of order because they did not provide finances necessary to fulfill the obligations of the bill.
H.R. 219 sponsored by your colleague Representative Poff, is a bill that merits special consideration. It covers the so-called last employer clause. A large group of our people are affected by the present provision on this feature in our act. I might add that this provision was written into our 1934 act for the express purpose of preventing any rail worker from holding two jobs. We had come out of a serious depression and we wanted to create more jobs for more workers but the situation today has changed in this respect and under the present law our Retirement Board is exploiting this provision. Let me cite a specific case which should give you a good picture. I have the file on this case along, and authority to show it to anyone.
Mr. A worked for a railroad, retired at age 70 years and qualified for an annuity which he received until he died last year. He was for many years a secretary of a Masonic lodge. It was not a salaried job and his work may be considered a “labor of love.” As time went on his fraternal group voted him a gratuity; sometimes it was $300 per year, sometimes it was $400 per year. Mr. A signed the regulation document required by the Board that he had quit his last employer and also the railroad. When he died his wife got survivor benefits of $56.20 per month. The Board, however, found out that her late husband held the job of secretary at his lodge and did receive some compensation. They investigated, stopped the widow's check, wrote her that her late husband was not entitled to benefits because he did not quit his last employer other than a railroad when he received his annuity. They asked this woman to refund them $3,500 in payments made to her late husband in error, and gave her the alternative of refunding this money or taking a reduced widow's benefits of $13.54 each month. Here was a man who worked almost 50 years for a railroad and always felt that his family would be protected and a situation such as mentioned arrived. Surely his connection with a fraternal group should not be considered an offense that would warrant such cruel treatment. This is one of many hundred cases we have on this provision. It is our view that it is immaterial to disqualify a retired rail worker from working on some side line, and the only disbarment that should be written into the act is that he did not work again for a railroad while drawing benefits under railroad retirement. If this bill is enacted into law it will materially reduce the operating expenses of the Railroad Retirement Board, and give our retired people a chance to supplement their earnings after retirement. This is a Railroad Retirement Act and should not go into the field of other enterprises.
We had another specific case involving one woman who worked for one of our western carriers. She had part-time work as a public stenographer in one of our hotels on Thursday evenings and on Saturdays. When her rail pension was awarded she found it insufficient to maintain her living cost and being a woman of advanced years she had no alternative but to ask this hotel for a job, which
she received. Later, with the integration between railroad retirement and social security, the Retirement Board found out that she worked for this same hotel while in the employ of the railroads, stopped her pension check and demanded a refund of over $5,000. The result of the handling of this case resolved itself into a heart attack for this lady which confined her to inactivity for several months. I would place considerable emphasis on this situation and ask that this House bill be enacted into law.
H.R. 765 by your able colleague and member of this committee Representative Friedel is another fine bill inasmuch as it proposes to extend the earnings of survivors to $1,800 per annum; the present limitation is that survivors cannot earn more than $100 per month, and it is very hard now on this class to limit themselves to $100 each month and on account of this provision they may lose benefits when their earnings exceed this figure.
H.R. 1055 by your able colleague and member of this committee Representative Roberts represents a minority group, covered by non-service-connected disability awarded under the veterans organization, where single employees are restricted to income in excess of $1,400 per annum and married workers cannot exceed an income of $2,700. Many rails now have supplemental pensions, in which they contribute a percentage of their earnings in excess of $350 per month. When they retire they receive a supplemental pension and this added to their veteran's pension check reaches $1,400 for single employees and $2,700 for married employees and some employees in the single bracket do not request veterans' pensions on account of this provision. But all of those rail employees paid taxes under railroad retirement and hence should receive benefits under that act. So the Railroad Retirement Board in conference with the veterans group came to agreement on this class of employees, that a small amount of the residual lump sum, or taxes paid in by such employee would be returned each month to the employee and would not be considered income in connection with the nonservice disability under the veteran's organization, but when the residual lump sum was used up, which comprises the taxes such employee paid into railroad retirement, his benefits under that act ceased and the Railroad Retire ment Board had discharged their obligation in full. We can give our full support to this measure.
I will refer now to H.R. 977, sponsored by the second ranking man on this committee, Representative John Bell Williams and cosponsored by many members of Congress. This bill proposes to eliminate the so-called dual restriction with reference to rail spouses. This is a case where wives of rail workers try to help the family budget, secure employment under industry covered by the social security and when they reach the retirement age find that they can qualify for social security benefits only to find that their spouse benefits under railroad retirement is denied, as under the present law they are only entitled to the higher of the two and in most cases this provision voids entirely their spouse benefits under railroad retirement. We feel that they should be entitled to both benefits under our system.
The law was changed some time ago permitting workers to work and qualify under social security and receive both benefits. It was later extended to apply to widows but the spouse dual restriction still remains, and I might qualify this remark by advising that it is the only dual restriction now carried in our act and should be removed.
Before commenting on H.R. 1012, I would like to leave this thought with you. The Railroad Retirement Board is a Government agency whose activities are controlled by Congress. Operation expenses of this Board have increased each year, despite the fact that 1958 saw a new low in railroad employment. I would refer you to the monthly Review of the Railroad Retirement Board for December 1958, volume 19, No. 12, page 14, in which the Board expenses of operation for the fiscal year for railroad retirement and unemployment insurance amounted to $17.4 million. What it will reach in the 1959 fiscal year is anybody's guess. In 1958 a new safety department was established at the Board with substantial salaries and unlimited expense account to dwell on a measure of safety that is well covered today by other agencies. The duties of this newly created department are to review Federal and State laws, analyze available data on accidents, identify areas of special safety problems, visit scenes of accidents. They will call and interview railroads and labor groups, the Interstate and State Commerce Commissions, State utilities, public service, and industrial commission boards, the Association of American Railroads, the American Short Line Association, the Bureau of Labor Statistics, the National Safety
Council, insurance companies, and other institutions interested in public safety. If this new department is allowed to thrive it will materially affect the operation costs of the Railroad Retirement Board. The actuaries of the Retirement Board and the labor press have in the past created fear in even Members of Congress that our fund was operating at a deficit, but this question received no consideration when a new department of this mention was established. Our employees are critical of this move, as they know full well that our Retirement Board was established to disburse benefits under the act, and should not invade a field now well covered and foreign to their original concepts to create a bureaucracy at the Board at the expense of the rail industry and its employees. This is a very radical departure from the principles on which they were founded.
I will now comment briefly on H.R. 1012 sponsored by our esteemed friend, your chairman, Representative Harris. This bill is a substitute for H.R. 4353 which was under considerable discussion in the last Congress. I vigorously opposed putting an unemployment measure in a retirement bill. This feature in the last session of Congress received the ire of the railroads on account of costs and should in my opinion come under a special bill sponsorship and does not come in the category of a retirement measure on account of the opposition from many sides. I am not reflecting on the merits of an unemployment feature but I do not think it should be made a part of a retirement measure, and of course we know that it carries a 10 percent increase for those now retired. But this is only for the purpose of getting their support on the other measures carried in the bill, as the old saying goes, “A dying man will grasp any straw.”
This bill starts out by indicating the age of retirement will be considered at 60 with 30 years of service and qualifies this by adding restriction for reduction, similar as is carried today in the act. The rail workers as a whole know nothing about the bill and outside of the increase in benefits very little publicity or explanation has been forthcoming in the labor press. .
We favor page 2 of the bill which allows spouses to retire at a reduced base on attaining the age of 62 years, as many wives today are younger than their rail husbands. This feature will correct a flaw that exists in the act.
We likewise support page 5, section 5 of the bill as we have many members working for American railroads, paying in taxes under our Retirement Act and yet when they die their widows are restricted to 7 working days and not their earnings as accorded the wives of rail workers in the United States of America. I have contacted many in this class who have meager jobs as baby sitting, student nurses, etc., but regardless of the compensation received all they can work under the present law is 7 days; even 1 hour each day counts. We believe they should be placed on the same basis as their counterpart in the United States of America. Hence, we wholeheartedly support this feature. I would ask that a letter I received from F. K. Higginbottom, Queen's Councilor in the Dominion of Canada, that appeared on page 286 of the March 1957 hearings before this committee, be made a part of the official record of this hearing as it very clearly shows the need for the change in this provision.
Of course, we are 100 percent behind the move to increase all rail pensions and annuities 10 percent across the board and I might state that this provision is very urgent at this time as the condition of our retired rails is very tragic to compete with the high economy of today.
While we will be glad to support increases in the tax base to $400 per month base salary to bring railroad retirement in conformity with social security which on January 1, 1959, raised their base to $4,800 per annum or $400 per month. But our employees want realistic benefits, as defined in my remarks and not fringe benefits which this bill provides.
We are opposed to the rate increase to a gross of 1312 percent of taxable payroll effective January 1, 1959, and to reach a gross of 1442 percent by January 1, 1962, coupled with added increases under the social security. I find no employee in favor of such additional taxation.
While employment on the railroads has been somewhat curtailed during 1958, the Railroad Retirement Board has actually increased their help and offices and now have created a department of safety overlapping many agencies, specialists in this field, we have $3.8 billion cushion in the railroad retirement reserve and I think you should have a good look into this feature before making any commitments for increase in the tax rate.
While we are not directly involved with the unemployment insurance, the cost of which is paid entirely by the carriers, I might point out to the committee that under the unemployment feature contained in H.R. 1012, an unemployed rails
would receive $205 for each 28 days of unemployment, whereas the maximum benefits under Railroad Retirement is a maximum of $185 each month, and less than 1 percent get this figure on account of the low test period prior to 1937 to which we ask due consideration be given. There is no difference today between a retired rail and those unemployed. They have to pay the same amount for their provisions. In fact, the retired man has added expenses covering: medical care on account of advanced years, which obligation is not manifest to the workers.
I certainly appreciate the courtesy of appearing before this committee. I do not know how long I can weather this task, as I was 68 years old last November and each year is a milestone in my life and I can assure you gentle men, that there is no pleasure in climbing the ladder of time. But a winner never: quits and a quitter never wins. I thank you.
Senator MORSE. We will recess, then, until February 18.
(Whereupon, at 12:05 p.m., the subcommittee recessed, to reconvene: on Wednesday, February 18, 1959.)