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investigation of facts because of the complaints of officials of the Brotherhood of Railway and Steamship Clerks that I was employed in other activities. The activities referred to was my appointment as chairman of the employees committee for low-cost retirement benefits. All this is not too related to the testimony I am about to present, but the reason I have taken your valuable time to explain the situation, is to enable you to understand why I am in this fight. I intend to remain in it until the question of whether or not I am still an employee of the Pennsylvania Railroad is settled by a court of law.

I might hesitate there, Mr. Chairman, and to save that question, later state that I realize that you learned gentlemen have gone into the very serious study on improvement of the railroad employees lot, improvement in their pension benefits, and if you have emerged with 6766, as the utmost in benefits that you could give at this time, I am fully and wholeheartedly in favor of it and I know that the rail employees that I represent would feel the same way. But, however, I know you might wonder where we get all the money to do these things. In Mr. O'Hara's bill, 6397, it might be questioned that it is actuarially unsound. As to myself I do not profess to be an actuary. I have not had the opportunity for that type of study. . I sincerely wish I had. But, in making a study of the Railroad Retirement Act as it is today and where there is a possibility for you gentlemen to again closet yourselves and find out where we might be able to find the money to give them retirement at 60 years of age, plus their pensions being based on the five highest years of earnings-now I realize I may be proven eventually wrong, but that is for you gentlemen to decide. I know that the study will be given, if I may introduce the following testimony.

My appearance before you is strictly on behalf of the "rank and file" rail employees the Committee for Low Cost Retirement Benefits represents. While I cannot give, by the customary method, the number we represent, I nevertheless can submit hundreds upon hundreds of letters proving the bitter resentment of rail employees toward the present Railroad Retirement Act. From these letters, received from rail employees both union and nonunion and covering almost every conceivable occupation, you will gather that upward of 500,000 rail employees are dissatisfied with their present pension plan.

During the course of these hearings, testimony will be presented by Mr. Thomas Stack, president of the National Railroad Pension Forum, Inc., and other directors of the National Pension Forum. After meeting and having discussed the testimony they will present, I want to go on record as stating that my committee, its enlisted members, and myself, are fully in support of the program for the improvements that they seek. I will confine my testimony to that portion of the Crosser Act showing the extent of the liberal coverage that has resulted in the highest actuarial costs being placed upon the sincere employees who have selected railroad work as their life's occupation.

At this time, I would like to stress the point to you gentlemen that the major portion of my remaining testimony is actual fact, not hearsay, and will consist mainly of direct quotes from the 1946 Annual Report of the Railroad Retirement Board. I am not prepared to provide each of you with a copy of the report. However, they are

available to you through the United States Government Printing Office. To continue, I quote from page 52 of the previously mentioned report:

By the end of 1944, a total of 6,067,000 individuals had acquired some compensation credits after 1936. Almost four-fifths of the total, comprised employees who had performed no service before 1937. In general, these employees are young workers in the junior and less skilled occupations. They include large numbers of casual workers with no real attachment to the industry. Recent experience indicates, for example, that more than one-half of the new entrants withdraw from service in the year of entry. Track, shop, and station and platform laborers predominate among such withdrawals.

To break the quote for a moment, I would like to make an important observation at this point. In actual pension taxes collected, relative to future coverage benefits, it will be good to remember that the major portion of the afore-mentioned groups are in the low-wage category. I stress this so that you may understand how the present costs are related to the future liabilities of the Retirement Board. The direct quote continues:

Employees with no prior service are concentrated in the short-service groups, three-fifths having performed service in only 1 year, one-fifth in 2 years, and one-tenth in 3 years.

Suffice for that quote, but to prove that the old-timers and the new employees who decide to remain with the industry will eventually bear the cost of carrying these deadheads, I would like to make another quote from the bottom of page 53, which is from the same report:

Among employees entering the industry after 1936, the annual withdrawal rate was eight to nine times the rate for employees with prior service.

Up to this point it may not appear definitely clear that the railroad worker, who has chosen railroading as his life's occupation, is paying a high tax to support these short-term employees, who, in the majority of cases, left the railroad industry of their own free will. To further substantiate the thought I am attempting to convey, I will once again resort to a direct quote from the 1946 Annual Report of the Railroad Retirement Board. On page 77 you will find this direct passage:

The present value of the liabilities

Meaning of course, if all six-million-and-some-odd were to eventually collect the amounts credited to them—

on the valuation date for employees and annuities is given as $7,709,400,000, exclusive of the new liabilities created under the act, as amended July 31, 1946. To cover this liability there were funds in hand of $474,700,000, leaving a balance of $7,234,700,000 to be covered by future annuitants.

Now, gentlemen, as final evidence of conclusive proof that the present exhorbitant rate of taxation is based upon the Retirement Board's income from the railroad employee presently connected in railroad occupation, I make a final quote from paragraph 3, page 77:

In fixing the required rate of contribution the assumption has been made that each year contributions are required, first, to meet the normal accruing cost and second, to meet the interest accruing on the part of the unfunded liabilities not covered by future normal contributions.

In attempting to summarize the foregoing, I would like to offer two suggestions for the elimination of the carry-overs, or as previously stated, the deadheads, from the Railroad Retirement Act

without anyone being the loser. My first suggestion would be the elimination of any future benefits to former employees of the railroad industry, their heirs or dependents, who have performed less than 5 years of continued or interrupted service. Turn over to the Social Security Administration a sum equal to the amount paid in by these ex-employees and their employers. This amount is not to be in excess of the amount of taxes that would have been deducted by the Social Security Administration had these ex-employees been employed in any industry other than the railroad industry. They could then receive proper credit for their period of employment commensurate with the credit benefits in effect by the Social Security Administration. If this were done, it is not unreasonable to assume that competent actuaries would find that the remainder of funds, proportionate, with the number of employees, would be greatly in excess of the amount necessary to carry out the liabilities accrued to the accounts of the remainder of employees still listed as having credits under the Railroad Retirement Act. I repeat, while I am not an actuary, and a great many of you present will lay no claim to solving the intricate research involved in such work, I think you will admit that it is far from inconceivable to believe that an increase in benefit amounts should be given rail employees and could be given rail employees and entirely possible to reduce the amount of their personal taxation for such future pension at the same time.

My second suggestion for improvement deals with, in the opinion of my constituents and myself, a very intelligent piece of recently enacted legislation by this very Congress. I refer to Public Law 426, Eightieth Congress, chapter 84, second session, H. R. 4127, approved February 28, 1948. In H. R. 4127, created to amend the Civil Service Retirement Act of May 29, 1930, you have established a pay as you go plan for the civil service employees that is far superior, less costly, gives greater personal and dependent benefits, and reduces the retirement age, in comparison to the coverage extended in the present Railroad Retirement Act. It is acknowledged, without criticism, that social insurance from first beginning was a guinea-pig intended for the best interests of the American worker. That legislative errors would be made was, in general, accepted. It does seem odd though, that the railroad industry as a whole, has consistently been made the guinea-pig in relation to the cost of social insurance. With the passage of H. R. 4127, honesty of intention cannot be questioned. Here was a progressive step forward in the future protection of the American worker. Not for a moment could the thought be harbored that the civil service employee was being given consideration that would be denied any other type of American worker in other than Government employ. Such being the case, I ask each of you, and any opponents who may be present, why, in the interests of the railroad employee and the railroad industry in general, legislation cannot be brought about that would give the rail worker a pension plan along the same fair lines as that enacted for the civil service employee by the passing of H. R. 4127.

In conclusion, the committee I represent, its members and particularly myself, want to thank you for the time allowed us. I do not have to elaborate on the number of bills that have been proposed in connection with Railroad Retirement. Some of these bills can be directly attributed to the activities of the Employees Committee for

Low Cost Retirement Benefits, and the National Railroad Pension Forum, Inc. These activities have even resulted in a vast change of opinion being made by the railroad labor executives. As little as a year ago their brotherhood members were being told that they had the best pension plan in the country. Today the story is entirely different. The Honorable Mr. Crosser has proposed two bills, namely, H. R. 5875 and H. R. 5993. These bills were introduced with the thought of taking the play away from the two employee sponsored groups previously mentioned, who were financed by union and nonunion employees to fight the sham that had been forced upon them by enactment of H. R. 1362 on July 31, 1946. My interest in appearing was not intended to protect the credit my group, or any other group, deserves in righting the wrong which resulted in the passing of H. R. 1362. I say this: let those who appear here in the interest of receiving the credit, have it, but in all fairness, gentlemen, listen to the pleas of over 500,000 rail employees, who are a part of the lawabiding citizens who, by strength of number, selected you to protect their American way of life. Protect it for them by giving them a better pension plan.

Thank you, gentlemen.

The CHAIRMAN. We thank you, Mr. Haas, for the statement that you have presented to the committee. Rest assured that all of these matters are the subject of consideration by the committee. The bill which we hope will be passed by this session of the Congress is at least a step forward and we hope that you will recognize it as such. Mr. HAAS. That is true, Mr. Chairman.

The CHAIRMAN. With reference to the statement that you made as to benefits, that is taken care of in this bill, as you know.

Mr. HAAS. That is right.

The CHAIRMAN. So that I assume that it will have your support, that is, the point to which it goes.

Mr. HAAS. As I said, Mr. Chairman, the committee has gone into and brought up 6766 as their direct analysis of what benefits we really can receive with the funds that are there, why, I am wholeheartedly in support of it.

The CHAIRMAN. Thank you.

That is all.

It had been originally intended that these hearings would take 2 days, but it would seem as if we have covered it sufficiently. There were some witnesses who probably might expect to appear tomorrow, but they will, so far as I am able to see, speak for the same group. Is that true? I refer to Mr. W. E. Young of Dallas, Tex., Mr. F. A. Ross, Minneapolis, Minn., Mr. Walt Sands, Chicago, Ill., Mr. George K. Wenig, Chicago, Ill., Mr. Clarence B. Carter, New Haven, Conn.

I assume they will speak for the pension forum; is that correct? Mr. STACK. With the exception of Mr. Carter. He is not connected with us in any way, Mr. Chairman.

The CHAIRMAN. He is designated as secretary of the Railroad Pension Conference. And these gentlemen did not receive their notification until yesterday.

Mr. STACK. I flew down last night myself.

The CHAIRMAN. There will be no advantage taken of them. If they wish to file their statements as a part of the hearings, that will be permitted.

Mr. HAAS. Thank you.

The CHAIRMAN. Then that will conclude the hearings, gentlemen. There is a statement that I have just received from Congressman John C. Kunkel, of the Eighteenth District of Pennsylvania which will be made a part of the record.

(The statement referred to is as follows:)

STATEMENT OF HON. JOHN C. KUNKEL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. Chairman, ever since the start of the present Congress I have been urging action to grant sorely needed relief to retired railroaders and to liberalize the present Railroad Retirement Act in every way consistent with maintaining the retirement fund in a thoroughly sound financial condition. I realize that the hundreds of thousands of railroaders still in service, and those already on retirement, must be assured that the retirement fund will be thoroughly able to pay their claims when they are ready to retire and during their period of retirement. At the same time, the balance sheet of the fund clearly indicates that increases can be granted.

I had hoped that these increases would be more liberal than provided for in H. R. 6766. However, this bill is the result of an agreement between the railway labor organizations and the management of the railroad companies. Consequently, there should be no opposition to its enactment because both interested parties have agreed to its terms and because the payments will be made out of the existing fund created by taxes levied on the R. R. employees and the R. Rs. Therefore, action on this during the present Congress can be expected. I presume that the agreement reached accords with the findings of the actuaries as to what can be done. With the drive now on for adjournment on June 19, any bill involving controversy would probably be lost in the final shuffle. That is a risk we must not take. This 20 percent increase is desperately needed by the retired railroaders. Consequently, I urge with all my power the quickest possible action by your committee in order to assure final enactment by the present Congress of this important bill. If any further adjustments can be made, they can be considered during the Eighty-first Congress. Meanwhile, we must make sure that the railroad men receive this benefit to which they are entitled as of today from the present fund. I intend to do all in my power, in every way, to

hasten passage.

The CHAIRMAN. I also have a statement from Congressman Francis J. Love, First District, West Virginia, which will also be made a part of the record.

(The statement referred to is as follows:)

STATEMENT OF HON. FRANCIS J. LOVE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA

Mr. Chairman and gentlemen of the Committee on Interstate and Foreign Commerce, I should like to take this opportunity to speak to you in behalf of our retired railroad workers. I am appealing to the committee to report suitable legislation to the floor of the House of Representatives providing for a cost-ofliving increase in retirement annuities.

Today the average monthly annuity for these retired employees is approximately $70. Due to the increased cost of living, $70 now buys what $40 bought when the annuities were granted.

Seventy dollars per month is certainly inadequate to purchase the necessities of life today. This amount should be substantially increased, in my opinion. It is apparent that necessary increases could be granted without additional assessments and without impairment of the retirement fund.

Gentlemen, we may expect the Congress to adjourn within the next few weeks. I respectfully urge the committee to forthwith report legislation for adequate increases in railroad retirement annuities so that the same may be enacted into law and provide a decent livelihood for our retired railroaders.

The CHAIRMAN. The committee will go into executive session. (Thereupon, at 1:35 p. m., the hearings were concluded and the committee proceeded to the consideration of other business, after which it adjourned.)

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