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American Retail Coal Association.
Alabama Council of Retail Merchants, Inc.
Retail Merchants Association of Tennessee.
STATEMENT OF HARRY O. MATHEWS ON BEHALF OF THE NATIONAL INDUSTRIAL
TRAFFIC LEAGUE My name is Harry 0. Mathews. I am chairman of the legislative committee of the National Industrial Traffic League of Washington, D.C. I appear on behalf of the league in opposition to S. 226 and similar proposals to alter the railroad retirement and unemployment insurance systems.
The National Industrial Traffic League is a national organization of those directly and individually engaged in the shipment and receipt of commodities; its membership also includes chambers of commerce, boards of trade, and similar commercial organizations whose members likewise have a substantial and continuing interest in traffic and transportation matters. The league represents and expresses the interest of those who actually ship and receive freight, the payers of transportation charges; it has no carrier membership. Membership is drawn from all parts of the United States and includes practically every line of industrial and commercial activity.
The league membership is gravely concerned with the proposals for increased benefits as set forth in S. 226 and similar bills, which are overgenerous and yet do nothing to correct glaring inequities in the present system. At the annual meeting of the entire membership in November 1958, the league instructed my committee to state the league's position, these bills being substantially the same as S. 1313 in its final form in the 85th Congress.
League members use all forms of transportation and the work of the league is dedicated to sound principles of transportation practice and regulation. As users of railroad services, league members are most directly concerned with the quality of service and the prices charged. It is common knowledge that general increases in freight rates are sought of and granted by the Interstate Commerce Commission following any general wage increase or other spiraling costs. In the postwar period such increases have had serious adverse effects and without any improvement in the quality of service.
Your committee is well aware of the serious financial plight of the railroads generally, whose traffic has failed to keep pace with the growth of the country, and who have trouble obtaining capital to make necessary improvements. The enactment of the Transportation Act of 1958 was a measure to alleviate the situation. A continuing concern for the deteriorating financial position was manifested in Senate Resolution 303 (85th Cong.) which expired on January 31, 1959, and which has been introduced in the 86th Congress as Senate Resolution 29.
This league is in no sense hostile to the real interests of railway employees, or others, but the league believes it would be folly to single out the 1 million employees in that sick industry to require payment to them of benefits that exceed by ever-increasing amounts the benefits provided under social security for the public generally.
Even with the recent 7 percent increase in social security benefits, the comparable benefits under existing railroad legislation are much higher. The proposed bills would further widen the spread by granting a 10 percent increase in railroad retirement benefits and generally 20 percent in unemployment.
It is clear from the statements of others that railroad unemployment insurance contains many provisions that are not fair either to the industry or to its employees. Wisdom demands an unbiased study. Amendments are needed to prevent the continuing requirement of paying out millions in cases of employee misconduct. We are informed that the present system, which uses the calendar year for a base year and the fiscal year for a benefit year, results in such extreme cases as a woman employed for 8 months who thereafter received $1.950 in maternity benefits for two children born a year apart.
The league is informed that the railroads have made a proposal embodied in S. 987, which would increase railroad retirement benefits about 5 percent and which also contains sound amendments to the present unemployment and sickness benefits system. Considering the present condition of the railroads, the inflationary effect of increased employee benefits, and the fact that present benefits are much higher than those already provided in the increased social security system, the league urges that this is no time to make any increases. Yet if your committee believes that some increase must be recommended, then we most earnestly urge that the proposal in S. 987 represents a wise maximum. In any event, we respectfuly urge that no change in the law should be made without equitable amendments as proposed in S. 987.
RAILWAY LABOR EXECUTIVES' ASSOCIATION,
Washington, D.C., February 24, 1959. Hon. WAYNE MORSE, Chairman, Subcommittee on Railroad Retirement, United States Senate,
Washington, D.C. DEAR SENATOR MORSE: With respect to the testimony of Mr. Leonard Calhoun before your subcommittee dealing with the Railroad Unemployment Insurance Act, I desire the testimony that I had previously given your subcommittee be made part of the record.
In hearings held before your subcommittee in the 85th Congress on S. 1313, Mr. Eli Oliver testified for the employees at page 411 in the transcript. My testimony can be found at pages 416 through 430 nf the same transcript. The above-mentioned testimony has reference to the charges of Mr. Calhoun and I hope it will be noted by your subcommittee.
In addition to the testimony given before your subcommittee, I prepared for the House Committee on Interstate and Foreign Commerce a memorandum dealing with Mr. Calhoun's charges which appears at pages 461 through 474 of the House Interstate Commerce Committee's hearings on H.R. 4353 in March of 1957. I would appreciate it if you will make this memorandum a part of your record and call it to the attention of the subcommittee. Sincerely yours,
LESTER P. SCHOENE, Counsel.
SUPPLEMENTAL STATEMENT ON H.R. 4353 AND H.R. 4354 BY LESTER P. SCHOENE, ON BEHALF OF RAILROAD LABOR EXECUTIVES' ASSOCIATION AND BROTHERHOOD OF LOCOMOTIVE ENGINEERS
In my original testimony I fully discussed the bills H.R. 4353 and H.R. 4354 and it is not my purpose to elaborate upon that testimony. However, the Association of American Railroads has seized upon the pendency of the proposals contained in these bills to put forth proposed devastating amendments to the Railroad Unemployment Insurance Act. These proposals were not before the committee at the time I testified but were covered by the subsequent testimony of witnesses on behalf of the Association of American Railroads and have been embodied in H.R. 6016 and H.R. 6040. This memorandum will be directed primarily to those proposals. The financial and economic testimony submitted by the Association of American Railroads will be commented upon in a supplemental statement by Mr. E. L. Oliver.
A general preliminary observation is pertinent. It is elementary that the proponents of a measure have the burden of proof of establishing the desirability of its enactment. That burden with respect to a proposed radical overhauling of the Railroad Unemployment Insurance Act cannot be met except by a demonstration from experience that the actual operation of the system has been so unsatisfactory that radical revision is required. The basic essentials of this system have been in existence for nearly 20 years and amendments have been made from time to time in response to demonstrated needs. Ample experience is available upon which to base proposed changes. Theoretical and conjectural objections do not suffice. Examination of the hearings before a subcommittee of this committee on H.R. 10127, 75th Congress, 3d session, on May 26, 27. 31. June 1, 2, and 3, 1938, reveals that railroad witnesses at that time posed virtually identical objections to the bill that became the original Railroad Unemployment Insurance Act. In the absence of experience only theory and conjecture was possible. But a renewal of these objections as a basis for drastic revision at this time should certainly be based upon a demonstration that the system is defective in actual operation. No such demonstration has been made. Abstract argument and theory are again the sole support of the railroad proposals.
The railroads propose that an individual benefit year and an individual base year for each employee be substituted for the present calendar base year and fiscal benefit year and that each individual's base year terminate and his benefit year begin when he becomes unemployed. The alleged advantage of this change is to eliminate the 6-month lag between the end of the base year and the beginning of the benefit year. It is said that this lag may result in an individual who becomes unemployed during this lag period being ineligible for immediate benefits and on the other hand drawing benefits up to 18 months after the end of the base year. No demonstration is made that in actual operation this condition results in substantial hardships or inequities.
The railroad unemployment insurance system is closely integrated with the railroad retirement system for administrative purposes. From the wage and service reports that the Board is required to maintain under the Railroad Retirement Act the Board can promptly ascertain from its own records virtually all the information required to adjudicate unemployment insurance claims. Before the benefit year begins the Board receives all the base year information, processes it, and has in the hands of each individual employee as well as readily available upon its own records the information from which eligibity for and the amount of benefits can be determined. Experience has shown that by this system the Board is able to pay the benefits for the first period of unemployment within a few days after the end of the first registration period. This is very important. When people become unemployed their need for benefit payments is immediate and any substantial delay in adjudication would to a substantial degree vitiate the purposes of the system.
Under the railroads' proposal the Board would have on its own records not one item of the necessary information at the time unemployment occurs. Even the base year and the benefit year of the individual employees are not ascertainable until unemployment occurs. The Board would then further have to ascertain in each individual case what was the last daily basic rate paid within the base year minus withholding taxes and railroad retirement taxes, whether 87 times the daily basic rate was earned within the base year, whether such earnings were earned in less than 6 months in the base year, whether those 6 months included 2 months in the last half of the base year, whether the employee quit his employment without good cause, whether the employee was discharged for good cause and whether the employee is or upon application would be entitled to either a disability annuity or an age annuity under either the Railroad Retirement Act or the Social Security Act. One can only guess at the length of time that would be required to obtain all this information in each individual case, but it is obvious that unconscionable delays in making initial payments would result and that administrative expense would be enormously increased. The reason for the present 6-month lag between the end of the base year and the beginning of the benefit year is purely a matter of administrative requirements. Inherently there is no other reason why a fixed benefit year could not begin immediately upon the conclusion of a fixed base year. We have inquired from time to time as to the feasibility of reducing this time interval and beginning the benefit year, say, on February 1 or March 1. We are informed, however, that this period is required for the Board to receive and process the necessary base year data and that it is not feasible to make any substantial reduction in the interval.
The railroads also pronose to make drastic restrictions in the conditions for qualifications, as they did in 1938. Originally the base year earnings necessary to qualify were only $150. The amount of qualifying earnings required has been increased from time to time as wage rates and thus earnings opportunities have increased. We now propose to increase it to $500 which is more than three times the original qualification requirement.
The railroads, however, propose to set up a series of hurdles designed to exclude employees from qualifying. Not only would the amount of requisite base vear earnings be drastically increased (i.e., to 87 times the basic daily rate, which in the case of a $15 rate, barely above the present minimum, would be over $1.300) but more importantly, earnings would be required in each of 6 months. 2 of which would have to be in the last half of the base year. In support of this proposition the railroads point out that substantial numbers of unemployment insurance beneficiaries work in less than 6 months during the base vear. It is then asserted that no proof whatever that this condition is not indicative of unemployment exceeding 6 months but of shifting to nonrailroad jobs. The assertion is not only unproven but is contrary to the facts. A substantial amount of railroad work, particularly in the northern regions, is seasonal and is performed in areas where other work is not readily available in the off season. Many of the employees engaged in this seasonal work are firmly attached to the industry, return to it year after year, but when the season is short may work less than 6 months. These are the classes of employees to whom unemployment insurance benefits are the most vital. A general indication of the effect of this seasonality may be gained from page 139 of the Retirement Board's Annual Report for 1956. The table there shows the number of unemployment insurance beneficiaries by months from July 1955 through June 1956, broken down by major categories of employment. It appears that in the group including the maintenance-of-way employees other than craftsmen the number of beneficiaries was rather constantly around 9,000 during July and August and September. It rose sharply to 11,500 in October and continued to rise until it reached a peak in January when a gradual decline began; but the number was still nearly 16,000 in April and it was not until May that the number fell below that of the previous July. It is thus apparent that throughout this 7-month period substantial numbers were seasonally unemployed; they had not shifted to other jobs and did not have an opportunity to work in each of 6 months.
With respect to unemployment due to sickness the railroads propose to impose all the conditions of eligibility that would apply to unemployment due to lack of work, most notably a showing that the individual would be available for railroad work if he were not sick. This is patently merely a device to make qualification for benefits more difficult. When an individual is sick he is obviously not available for work of any kind and whether he would be available if he were not sick is irrelevant. The individual must have had the necessary work during his base period, an unemployment tax was paid with respect to his wages for the purpose of protecting him against unemployment and sickness during the ensuing benefit year. He cannot equitably be disqualified if he experiences sickness during that period.
The railroads propose to eliminate maternity benefits entirely and in fact would go so far as to deny all benefits for unemployment due to sickness in the case of pregnant women unless it is shown that the cause of sickness is unrelated to pregnancy. This is indeed an inhuman and reactionary proposal. This committee and the Congress as a whole fully considered the desirability of maternity benefits when they were first included in the act. The railroads opposed their inclusion for the same reasons that they now urge their elimination. Congress disagreed with them and they have shown no new reason for reconsideration of that conclusion. When Congress decided to make provision for unemployment due to sickness special consideration was given to maternity benefits primarily for one very important reason: It is desirable from the standpoint of the health of the expectant mother and of the expectant child that the expectant mother cease active employment some time earlier than the time at which her condition renders her physically unable to work and that she remains out of active employment for a reasonable period following childbirth even though she might physically be capable of returning to work at the risk of permanent impairment of her health; it was recognized, however, that married women employees whose economic condition was such as to cause them to be holding regular jobs in the industry would be economically forced to run these risks of impaired health unless some provision were made to give them partial protection against the wage loss that would occur if they avoided these risks. These conditions have not changed. The railroads have not shown either that the risk of health impairment by working immediately before and immediately after childbirth has declined nor have they shown that it is less desirable to protect the health of these people than it was when the provision was originally enacted.
In the field of disqualifications the railroads' proposal seeks again to impose harsh and unjustified restrictions upon the payment of benefits.
They point out, as they did in 1938, that the Railroad Act differs from unemployment compensation acts generally in that it disqualifies employees who are unemployed because of a strike in which they are participating only if the strike was commenced in violation of the Railway Labor Act or of the laws of the labor organization to which they belong. This difference has existed since 1938. It was consciously adopted in recognition of the fact that the procedures of the Railway Labor Act themselves subject railroad employees to much greater restrictions than are applicable to other industrial employees. It was believed