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in some cases, but not in others. Because the gap may be anywhere from within í day to 6 months, depending on when the individual becomes unemployed and exhausts his benefits with respect to the benefit year he is drawing on. It would in many instances bridge the gap and in others it would not. The association is opposed to all extended benefits provisions, though, because they are wrong in principle, and we ask they be stricken from the bill.

Mr. Chairman, the matter of benefits to strikers has been discussed back and forth a great deal. My statement devotes two or three pages to it. I will just read two or three sentences.

The fact is that the claimant should not be paid benefits under basic principles. This is in addition to the general argument, which I think has a great deal of appeal to it, that the employer should not be financing strike benefits.

But in addition to that, there is this essential difference between persons busy striking and unemployment due to lack of work. The person on strike is not unemployed due to lack of work, he is unemployed due to a definite decision that he and his fellow workers have made, and has a right to make, not to work. Furthermore, he is not looking for a job. What he is trying to do is better his wages, hours, and working conditions on the job he already has.

When you apply the general principles to this unemployment and ask, is this a person involuntarily unemployed, is this a person looking for work, whose registration for work means that if you offer him a job he is going to take it, you know that his unemployment is outside the act's purpose. The job normally available while the strike is going on at the railroad is a job that you cannot refer him to under other provisions of the Railroad Retirement Act. Struck work is not suitable work, and properly not suitable work, under the Railroad Retirement Act. So the striker does not have an insurable risk, he does not meet the qualifications that are normal, that a person should meet, to have an insurable risk. He is not looking for a job. The job that you would normally refer him to is specifically prohibited by the very law itself. It is struck work.

The railroads' position, based on the foregoing considerations, is that there is not justification for the portion of section 4(a-2)iii of existing law which permits payment of strike benefits.

I would say this, too, in concluding my brief comments, that up to now quite a body of laws and regulations attach to labor disputes under Taft-Hartley and under State laws, as well as under the Railway Labor Act. These are all designed to protect the public interest as well as to provide fair rules for labor disputes.

To this end they impose various restrictions both on labor and management. But this fact affords no basis at all for a provision under any system making employers pay strike benefits to strikers, regardless of whether or not the strike violates the law or a union constitution, rules or practices. This does not affect the fact that the person is not looking for a job, it does not affect the fact that he is not involuntarily unemployed, it does not affect the fact that the very work he would normally be referred to is outlawed work because of the strike under the very terms of the law.

Now as to voluntary quits and job refusals.

The philosophy of the provisions of voluntary quits and job refusals is not that they are imposing a penalty. I do not think that

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any student of the system says that the intent is to impose a penalty. An essential part of the free enterprise system is that people decide for themselves when and where they will work and when they will quit work. But if Government attempt to guarantee an individual against the fiscal consequences of his decision not to work, how long could we endure before this whole basic right is in jeopardy?

The "quit” provisions and “refusal of suitable work” provisions in the law are intended to avoid Government's guaranteeing individuals against the consequence of their decisions not to work. They are intended to preserve and not infringe the basic right to work or not to work, just as the strike provisions are not intended to penalize the right to strike, and the qualifying definitions of unemployment are not intended to penalize persons who work in denying them unemployment benefits while they are working.

If a person leaves his job to take another job and shows the bona fides of his intention by working a few weeks on the new job, the voluntary-quit provisions of present law, or under our proposal which I will shortly mention, would no longer apply to him. If he subsequently becomes involuntarily unemployed, this is not caused by his original quitting so he would be properly entitled to benefits.

It is our position that any person who voluntarily quits should be permitted to draw benefits only if and after he takes another job and works at least 4 weeks. The Railroad Association accordingly recommends and provides in section 305 4(a-2) (i) excluding from a day of employment the first 30 days after a voluntary quit be amended to exclude any of the days beginning with the day with respect to which the Board finds that he left work voluntarily without good cause connected with his work, and ending with the fourth calendar week with respect to each of which the Board finds that he shall have earned pay of not less than $25.

I would like to mention the fact that the bill that you so kindly introduced for us uses the term “compensation" instead of "pay.” Compensation would tie the requirement to getting back to a railroad job. We think that that would be a very desirable and defensible restriction. But if you decide, after going through all of the different situations, that it was more compatible with the general idea of free enterprise not to require that he come back and take a job with the railroads, but that he should be paid benefits even if he leaves the railroad industry, if he takes a bona fide new job and then gets unemployed. That would be a very great improvement over existing law.

That would be much more liberal than “voluntary quit” condition of the supplemental unemployment benefits. When you walk out from your work you get no benefits. It would be, we think, quite defensible for the railroads and the railroad employees to insist they have that kind of closed circuit for the railroad system. Because this system has been a sitting duck for paying benefits that other systems ought to pay. The system badly needs an amendment that will change the present situation where on the 29th day a person is not paid benefits because he is voluntarily out of work, and then along comes the 31st day, and all is forgotten and forgiven, and it is assumed that the unemployment is involuntary. We do not think that is a realistic provision. We think that the individual should go through some demon

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stration that can be tested-actually getting a job and working at it, before one can say he is involuntarily unemployed. He ought to get paid only when he can say: "I had a job and I am now involuntarily unemployed because it folded up.”

That provision is particularly important in situations where persons quit because they are withdrawing from the labor market to attend school, to farm, to look after their home, or for some other reason. The railroad industry should not be called upon to pay these persons benefits. Theoretically under the availability requirements they could not qualify for benefits.

I know that you will get a very honest administration by the Railroad Retirement Board. They can advise you of the extent that they can actually administer availability tests to a considerable portion of these claimants. You can perhaps administer an availability test where you have an employment center like Chicago or some other big city. But I am sure that they will give you a very frank answer as to the difficult problem of applying availability tests under other circumstances.

Now I am moving over the situation where a person voluntarily quits suitable work.

We think that he and the person who refuses a proffered job properly could be treated exactly the same. There is no distinction in principle. Then there are discharges for misconduct-Mr. Chairman, I think it is highly important to recognize that this disqualification is not intended to penalize anyone, that it would apply exactly the same rule to a person discharged for misconduct that is applied to anyone else who is unemployed through his own act. That is to say, these persons have now lost their job through their voluntary misconduct. After they have gotten another job they may lose it involuntarily, but until then we do not think they properly can be protected by the system. When a company is forced to suspend a person, and when suspended he can get unemployment benefits, it is never quite sure whether suspending him is doing him a favor or penalizing him. It is not the function of unemployment insurance to tide over people whose misconduct has taken them out of the labor market for the time being.

Now, there has been some argument that this proposal might upset union-management grievance procedures. Union-management grievance procedures apply to a great many things. I am sure that there are situations where an employer attempts to get an employee to do work described in section 4(c) which the Board has to interpret and enforce. To quote from this section: acceptance of the work would require him to engage in activities in violation of law or which, by reason of it being in violation of reasonable requirements of the constitution, bylaws, or similar regulations of a bona fide labor organization of which he is a member, would subject him to expulsion from such labor organization.

The Board interprets provisions like that, and they are perfectly competent to administer a misconduct provision. Both involve an area of employer-employee relations and grievance procedures.

Every State law has this provision, and every State unemployment agency administers it. It may be that it has happened some time, though I have never heard it, where labor organizations say that the provision should be stricken out of the State system laws. I am sure

that in connection with your hearings on Federal standards, which under pending bills would not disturb this provision, you probably will have no serious question about the State properly and validly administering misconduct disqualifications. So we feel in that connection we have every right to request your committee to seriously consider conforming the Railroad Act with the acts of all of the other States by the inclusion of strike and misconduct disqualifications.

Mr. Chairman, I will, if I may, take just about 5 minutes more in discussing sickness benefits and then I will read a couple of concluding paragraphs from my statement. Your patience has been wonderful.

The association proposes that railroad employees pay half the cost of sickness benefits and that maternity benefits be discontinued.

I might point out that when American unemployment insurance systems were established, it was generally thought that these would be financed by employers and employees, and several States originally did so. However, States by and large taxed only the employer. Three of the States that had employee contributions used those to establish sick benefits. And in Rhode Island employees paid the entire cost of sick benefits. That is the only State system in the United States that pays maternity benefits at all.

All of these State sickness systems, either in whole or substantial part, are financed with employee participation. The railroad system is the only American system financed wholly by employers. If there were employee participation in the railroad system, I cannot but believe that employee opinion would be adverse to any chiseling on the system. Sickness systems are very difficult to police. But if employees generally knew that their contributions would go up because of people chiseling, I do not think there would be any popularity in chiseling or chiselers.

Also, it is not impossible that employees as well as the railroads would support the next proposal that I shall mention, that is, of terminating the maternity benefits-if employee contributions were levied to finance these benefits. Three State sickness programs, all but the fourth one, Rhode Island, rule out pregnancy entirely.

I will skip over the other statements as to their systems.

There is no significance in railroad employment which should single out the small percent of its employees who are of child-bearing age and sex, as requiring special maternity benefits.

Railroad employees in general work under contracts where a person holding a job receives the same pay regardless of sex, and nronerly so. And I understand that the present minimum rate is $1.97 per hour. These facts alone would seem to demonstrate that neither equity or social need requires continuance of maternity benefits.

I would also say with respect to the social need for such benefits, that with all of the various proposals and the various considerable liberalization that has been going on among the State systems, I have not heard of any proposal being seriously considered for adding sickness benefits to other States, and certainly none for adding maternity benefits.

Mr. Chairman, in conclusion, I should like to express my appreciation to your committee for its patience in listening to this extended statement dealing with these several important matters. At the same time, I should apologize for giving some of these matters the sketchy treatment necessitated by time limitations. I believe that a large part

of what I have said in dealing with the complexities of the Railroad Unemployment Act boils down to this:

1. That the general unemployment insurance concept of paying a person who becomes unemployed a substitute by way of benefits, of the wages he has just lost, requires the scrapping of the calendar base year-lage period and benefit year of existing law—there should be no present significance for benefit purposes in what an individual earned or did not earn in 1957—

2. That the general concept of replacing an equitable portion of a person's pay loss requires gearing his benefit check to his normal paycheck rather than to his gross wages before tax withholding; and his benefit amount to his take-home daily pay rate rather than to his total of gross wages in his base year;

3. That the general concept of protecting railroad pay loss of genuine railroad employees requires a basic revision of the base period test of qualified employees, and also a revision of definitions dealing with his current unemployment situation-for example the definition of "day of sickness," must be revised. It should be made clear when the claimant is and when he is not, suffering an involuntary pay loss which should be compensated;

4. That in fixing benefits the public interest and the employees' interest require that benefits of no claimant shall be at such levels as compared with his paycheck, as to impair his work incentive, and finally;

5. That, like permanent disability is now, temporary disability arising from sickness should be financed, jointly by the railroad employers and employees.

Mr. Chairman, I would like to further thank you for your kindness in introducing the railroad bill by request of the association. It should furnish your committee an exact blueprint of its position and the proposals that we urge your committee to adopt.

Senator MORSE. Mr. Calhoun, I want to thank you very much for your testimony.

I request as chairman of this subcommittee that both the staff and Mr. Schreiber cover each one of the problems that you raised in this testimony on this matter of insurance benefits because it is due you and it is due the public that each one specifically be covered in executive session by this committee. I make the statement so that the representatives of the brotherhoods will know that we would be very glad to receive from them any memorandums that they want to file on the points that you so ably raised in this testimony this afternoon.

We will proceed at 10 o'clock tomorrow morning when we will hear Mr. Whitman.

We will stand in recess.

(Whereupon, at 4:55 p.m., the subcommittee recessed to reconvene at 10 a.m. Thursday, Feb. 19, 1959.)

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