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note, which today in 1959 is $4,653, will rise by January 1979 to $10,533, which, in my opinion, is a very good insurance policy.
But social security does not provide any such provision for its workers.
The railroad retirement system has many other advantages, to illustrate:
An age annuitant may also receive, if entitled thereto, benefits under the social security program, without any reduction in his railroad retirement check. There are around 60,000 such individuals presently doing so, and that number is increasing constantly. In point of fact, a recent study revealed that 72 percent of the 1,628,000 employees for whom railroad service was reported in 1956 had accumulated some social security credits; 405,000 of these, or 25 percent, had dual coverage in that year alone and of that number 82,000 received credit for 12 months of railroad service, which is indicative of the amount of secondary job-holding among regularly employed railroad workers.
Also, while the relatively small minority of railroad employees in the total population of industrial workers has the privilege of a separate retirement and survivor program, its members also enjoy certain rights under the social security minimum guarantee provision of the Railroad Retirement Act.
Because of the 1958 amendments to the Social Security Act, some 30,000 retired railroad employees, 90,000 wives and 160,000 widows, children, and aged parents received increases of about 7 percent, generally, in their annuities under the Railroad Retirement Act, effective in January 1959.
As a matter of fact, these increases for spouses are even higher, ranging from 10 percent now to 17 percent a year hence. S. 226 proposes to add another 10 percent to that increase.
S. 226 proposes to increase the taxes on railroad workers from $21.88 per month to: $27 in 1959–61, $29 in 1962–64, $32 in 1965, $34 in 1966– 68, $36 in 1969, and thereafter, with no assurance, as experience has shown, that there will be no further increases in the interim. I would venture the opinion that when the tax assessment against employees was raised, January 1, 1952, it was not then thought that further increases would be necessary, at least, in such a short space of time.
The industry's share of the proposed additional taxes for retirement purposes would be $57 million per year in 1959–61, $87 million per year in 1962–64, increasing steadily to around $185 million in 1969.
These proposals to saddle additional taxes upon currently active employees (who have been carrying the burden of the cost of benefits to those who retired without contributing commensurately to the system) upon future entrants and upon an industry that is struggling to recapture its losses and keep as many employees as possible on the payroll is, in my opinion, ill-timed and ill-advised.
It may interest the committee to know that a study made covering annuitants on the rolls as of December 31, 1955, who retired at age 65 and over and who had some railroad service after 1936, contributed $240 million in employee-tax contributions and had then already received benefits totaling $1,470 million—a ratio of $6 to $1; further
more, when the value of future benefits were included, their ratio of benefits to contributions was almost 12 to 1.
The 1951 amendments to the Railroad Retirement Act increased annuities by 15 percent and provided, for the first time, annuities to wives of railroad employees; the 1954 amendments permitted annuitants to receive full benefits even when simultaneously entitled to social security benefits; the 1955 amendments increased the wife's maximum from $40 to $54.30, because of changes in the Social Security Act and that maximum was further increased through the social security amendments of 1958; the 1956 amendments to the Railroad Retirement Act increased benefits, generally, 10 percent. These amendments have increased benefit payments since 1951 by $278 million.
The total revenue has increased from 1951 to 1958, but you will note that revenue freight-car loadings on class I railroads, which is the only product outside of passenger service the industry has to sell, dropped from $401/2 million in 1951 to $30 million in 1958, or $10 million.
In lieu of the proposals in S. 226, I earnestly recommend that a moratorium be declared against any further increases in benefits under the Railroad Retirement Act, at least, until such time as the help given the industry and its own efforts to improve its position and stabilize railroad employment can be properly evaluated by both management and currently active employees. · I am, as firmly, opposed to those proposals in S. 226 to further enlarge or extend the already overgenerous benefits under the Railroad Unemployment Insurance Act, adding $40 million in 1959 and by 1962, $43 million per year to the present tax assessment against the industry.
The average daily benefit rate for unemployment, paced by the growth in rates of pay, plus amendments in 1952 and 1954, rose from $3.55 in fiscal 1951-52 to $7.80 last year and is currently in excess of $8. This bill proposes to further increase these benefit rates from 8 to 25 percent with a general advance of 20 percent.
It also proposes, significantly, to retroactively extend benefits to employees who exhausted their rights although the opportunity to do so was rejected when the program for all other workers was adopted in the last session of the Congress.
The cost of this particular proposal is estimated between $15 million and $18 million. Under the present law railroad employees can, and do, draw. unemployment benefits in more than one year.
Actually, 164,000 of the 229,000 railroad employees who drew unemployment benefits between July and December 1958 were also beneficiaries in the fiscal year ending June 30, 1958.
A recent study by Board technicians revealed that of the 1,445,000 unemployment insurance beneficiaries in the 18-year period ending June 30, 1957, over 354,000 drew benefits in 2 years; 170,000 in 3 years, 90,000 in 4 years, and 30,000 in as many as 8 or more years.
The Railroad Unemployment Insurance Act needs reappraisal and not liberalization for certainly there can be no fairness nor equity in the requirements that compelled the industry, over the past decade, to pay out in unemployment benefits: $90,466,000 to employees who are discharged or suspended for just causes, or who voluntarily quit their jobs; $15,656,000 to employees participating in strikes against the industry and to other employees affected by such work stoppages, when the Federal-State systems, covering the vast majority of the Nation's industrial workers consider voluntary separations, discharges for misconduct, and labor disputes as major reasons for the disqualification of claimants for unemployment insurance benefits.
In the last fiscal year, 10,200 railroad employees who were discharged or suspended for just causes drew $6 million in unemployment benefits under the Railroad Unemployment Insurance Act. Let's look at some of the reasons for these discharges and suspensions and the amount of benefits paid to such employees: 863 drew $556,400 for being intoxicated on or when reporting for duty; 930 drew $422,630 for violations of operating rules; 316 drew $145,600 for responsibility for accidents; 1,028 drew $677,300 for being absent without leave, failure to protect assignments, etc. ; 808 drew $511,095 for misconduct, insubordination, negligence; 371 drew $245,895 for dishonesty and police records—and at this moment, Mr. Chairman, I would like to call to the attention of the committee the case of a railroad employee convicted of stealing from the railroad or stealing property entrusted to the railroad.
He was sentenced to jail, say, for 6 months or so, and upon his release, after failing in his efforts to obtain work, collected unemployment benefits under the Railroad Unemployment Insurance Act, in an unfinished benefit year, during which he qualified on past year earnings.
This is a case in point. An employee caught pilfering in December 1955 is arrested, convicted, and sentenced to 6 months in jail. He earned well over $1,105 in the calendar year 1955. He is released from jail in June 1956. He shows evidence of seeking employment, and in July 1956 he begins claiming and collecting unemployment insurance benefits under the Railroad Unemployment Insurance Act, although he has been discharged for stealing from the railroad of property entrusted to his care, was convicted, went to jail, and could hardly be expected to be rehired by the railroad or any other railroad or industry in that vicinity.
Six hundred and twelve drew $417,560 for nonpayment of union dues.
And, Mr. Chairman, may I also mention here that this table is supplemental to the table that appears on page 562 of the 1957 hearings.
. That covered the previous year, this is current. I was accorded the privilege, just recently
Senator MORSE. I think, Mr. Healy, I will have the previous table inserted at this point as part of your testimony, the 1957 table, so we can compare the two years for the record. · Mr. HEALY. Thank you very much, Mr. Chairman.
(The table referred to follows:)
Number of unemployment insurance claims since discharge or suspension
Average benefits per
Total, all railroads.....
sion given by claimants from 63 selected
Total for 63 major railroads....
613 304 309 972 492 504 442 532 584 516 545 472 421 333
Mr. HEALY. I was accorded the privilege recently of reading a communication addressed to a Member of this Congress from an employee who was discharged by a railroad in which, among other things, that employee stated that “the brotherhood officials have refused to help me.”
Nevertheless, under the law, the Railroad Retirement Board was required to pay that discharged employee over $2,000 in unemployment insurance benefits. And, incidentally, he collected for 52 straight weeks.
Thirteen thousand one hundred railroad employees who voluntarily quit during the last fiscal year collected $8,196,000 in unemployment benefits, although the only valid reason I know for voluntarily quitting a job is to accept a better one, and even then the Railroad Unemployment Insurance Act is unduly liberal, to illustrate.
A veteran employee with over 30 years of service voluntarily quit on July 31, 1956, to enter the real estate field. The alluring promises did not materialize, so that employee on January 11, 1957, applied for benefits under the Railroad Unemployment Insurance Act and collected $1,105. Since the employee worked in the first half of 1956, additional benefits were claimed and paid under the Railroad Unemployment Insurance Act beginning July 1, 1957.
Are any of these persons truly entitled to extended and retroactive benefits or to any benefits whatever ? . And so far as I can determine no other industry is required by law to subsidize its employees for hampering or halting its production or services.
In the 11 years ending June 30, 1958, over 800,000 railroad employees drew sickness benefits aggregating $402 million and 30,000 drew maternity benefits totaling $31 million under the Railroad Unemployment Insurance Act.
Only four States provide sickness benefits and in two of those the cost is borne entirely by employees, yet the railroad industry is, through taxation, required to shoulder the entire burden for its employees throughout the Nation.
Only one State provides maternity benefits and, in my last appearance before this committee, I cited a classic example of the generosity of the Railroad Unemployment Insurance Act in an actual case.
Let me give to you, please, another example:
A female employee resigning from railroad service, after having been employed for 8 months—September 1955 to May 1956—received maternity benefits under the Railroad Unemployment Insurance Act in connection with the births of two children-one born 10 months after her resignation and the other a year later. Benefits in each case amounted to $975.
Here is how that was, and could be done:
She resigned in May 1956. The first child was born in March 1957 and the second in March 1958. Her first maternity period began in the benefit year beginning July 1, 1956, for which the base period was the calendar year 1955. The second maternity period began in the benefit year starting July 1, 1957, for which the calendar year 1956 was the base year.
While employed her daily rate of compensation was $15. Her total earnings for the 8 months of actual employment was approximately $2,500 on the basis of which she collected an additional $1,950 in maternity benefits.
The Railroad Retirement and Social Security Acts provide immediate annuities to retiring workers entitled thereto, but it is permissible, under the Railroad Unemployment Insurance Act, for a railroad worker to defer the effective date of his retirement, and in the interim draw unemployment or sickness benefit. These practices are costing the railroad industry around $12 million per year. About 40,000 deferred retirements were awarded in the last 3 years.
Furthermore, benefit rights are never reduced or canceled in cases of fraud under the Railroad Unemployment Insurance Act as they frequently are under the Federal-State system.
Mr. Chairman, I would like to have your permission, please, to substitute for the next paragraph in my original statement a broader summary of the results of our policing for possible employment on days on which people claimed they were idle.
Senator MORSE. The substitution will be received. Mr. HEALY. This is a report prepared for me at my request by the Bureau of Unemployment and Sickness Insurance.
In the period July 1, 1956, to September 30, 1958, 16,742 checks were made. In those 16,000 cases, the field representatives of the Railroad Retirement Board found 4,022 cases recoverable through claims of unemployed benefits on the days the claimants were actually working, or received other remuneration.
The Bureau of Unemployment and Sickness Insurance has computed the recoverable payment at $524,000, and we have actually re