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By comparison, we point to the report of a broad survey conducted by the Bankers Trust Co. of 289 retirement plans, as reported in the Journal of Commerce of March 22, 1948, representing a substantial segment of the larger and more important programs adopted in industry during the last 5 years. In brief, the survey showed— 1. Broader coverage. All employees in public utilities are covered (which can be compared to railroad service). 2. Four percent of all the concerns in survey pay the entire cost of such retirement plans. The most commonly used period of service continues to be 20 years, and vesting age of 55 seems increasingly more prevalent, as compared to the railroad retirement plan, where today an employee must be 65 years of age and have worked 30 years in the industry, to attain an average annuity of $70.53 a month (figures for March 1948), at a cost of 5% percent payroll contribution by carrier and emloyee each. The average quoted is from the latest (May 1948) issue of the ailroad Retirement Board's Monthly Review. The average railroad man feels sharply disappointed in the small retirement benefits he derives for the price he is paying, as compared to other industries. He is perfectly willing to continue paying his present charge, plus the additional 2 percent if for such payments he will obtain a half-pay annuity (based on his highest 5 years earnings), after 30 years of service (irrespective of age). Retirement after 30 years of service is urged so that benefits to an employee may be reasonably timely, and it is proposed that these benefits be based on the highest 5 years of earnings so that an employee's benefits upon retirement may be reasonable in amount as well as timely. Out of 100 railroad men— 30 years old, 33 will not live to 65 years. 40 years old, 31 will not live to 65 years. 50 vears old, 26 will not live to 65 years. (These facts are revealed by the United States Railroad Retirement Board in its Press Release No. 48–5, dated April 12, 1948.) To understand why the railroad employee is getting comparatively so little in retirement benefits, we must review the unsound foundation upon which the railroad plan was launches. When the Railroad Retirement Act was enacted in 1937, the railroads were not called upon, as they should have been, to set up a fund to meet the cost of service credit earned prior to 1937. This cost has been, instead, carried by the working railroaders, and has been included in their contribution rates. The manifest unfairness of this is well set forth by Representative Robert Crosser in a letter from him to Representative R. J. Welch, dated January 27, 1947, wherein he states: “* * * And this agreed upon act was enacted on June 24, 1937. The agreement provided that the railroads were not to attack the constitutionality of the 1937 act, in consideration of the emplovees' agreeing (1) to share the costs of the system equally with the railroads (in the earlier 1934 act the employees had to bear only one-third of the costs), (2) to a reduction in the total taxes to be levied for the maintenance of the system, (3) to the system's taking over the previous obligations of the railroads to their former pensioners, and (4) not to seek legislation which would depart from the principle of sharing equally the costs of the retirement system (during the hearings on H. R. 1362, the railroads without any justification contended that this provision meant that railroad employees would never seek amendments to the act without the railroad's eonsent.) Thus the Railroad Retirement Act weathered the storm and became the established social security system for railroad emplovees in the United States. “It became apparent shortly after the Railroad Retirement Act of 1937 was enacted that the reduction of tax was too drastic and that the soundness of the fund resulting from the reduced tax revenues would be subject to serious question. This was due, in large part, to the assumption of the costs of prior service credit— an obligation of the railroads exclusively. When the Railroad Retirement Act of 1937 was enacted the railroads did not do what other major industries as well as the Federal Government did, when they established contributory retirement systems. The railroads did not set aside a fund, and did not arrange for an extra contribution on their part, as was done by all major industries and the Federal Government as to its own employees, in order to meet the costs of crediting service rendered before the establishment of the contributory retirement system. Because of this failure on the part of the railroad industry, there have been, and are being paid from the railroad retirement account in the Treasury, which consists exclusively of the equal contributions of the railroads on the one hand,

and their employees on the other, (1) not only the annuities which are based on railroad service since January 1, 1937, the date when the contributions began, but also (2) annuities which are based on the railroads' prior obligations, that is, the accumulated (pension credit) service before 1937, and (3) another of the railroads’ obligations, that is, the pensions, up to $120 a month, of all previously retired employees who were then on the railroads' private pension (gratuity) rolls. Since the obligations in the last two categories are those of the railroads only, they should have been borne by the railroads themselves; but railroad employees have paid, and are continuing to pay, one-half of these obligations. “Nevertheless, railroad employees have not sought any legislation which would change the scheme of an equal sharing of the costs of the railroad retirement system even though it became apparent, when the Supreme Court held the Social Security Act constitutional, that the court would sustain the Railroad Retirement Act against any attack on its constitutionality. “Even though this equal sharing was unfair to the employees since thereby they assumed a share of a burden which was not theirs at all, these employees did not move for a reduction of their costs. * * *” By comparison with workers of other industries, railroad workers are paying a much higher tax for comparative benefits. The high tax upon railroad workers results in part, as has been shown, from the fact that railroad employees have been saddled with the cost of management's prior obligation. An additional 2 percent from management toward the 30-year plan would not go to correct this past inequity, but might sustain the pension rights needed and wanted by all railroaders. The average railroader is very articulate in expressing his dissatisfaction with the present meager retirement benefits he receives. He feels that he is getting too little, too late, and paying too much for what he gets, if and when. He feels that he would far rather pay more, and get something worth while within his lifetime. He wants to keep his present disability, widows and children, and sickness benefits, but he also wants retirement benefits which can be used by him in his lifetime—and not remain statistical mirages. The average age of a person entering railroad service is 28–30 years of age. A 30-year pension would lower the average retiring age to 58–60, a reasonable age at which the gallop of life may be slowed to the canter of retirement. (From the Annual Report of Railroad Board, fiscal year to June 30, 1946, p. 123.) The Railroad Retirement Board has given us the factual information which we submit as evidence that our estimates of increased taxation in S. 2055-H. R. 4695 is sound. Since S. 2055-H. R. 4695 does not provide for widows' annuity, the portion of the letter dealing with the widows' annuity, should be eliminated and the 1% percent of pay roll to pay for this benefit should be subtracted from the total of 5% percent, leaving 4 percent to pay for the benefits contained in S. 2055-H. R. 4695. The 30-year half-pay pension bills H. R. 4695-S. 2055, introduced for the Pension Conference by Representative Clason and Senator McMahon, will cost only an additional 4 percent in taxation. Based on a 50–50 basis, the carriers will pay 2 percent and employees 2 percent. Prior to the introduction of our legislation, we checked our figures with Mr. Walter Matscheck, director of research of the Railroad Retirement Board. While the Pension Conference has always maintained that its proposals were sound, Mr. Matscheck's letter quoted below fully supports our claims:

RAILROAD RETIREMENT BoARD, OFFICE of DIRECTOR of RESEARCH, Chicago, Ill., February 11, 1947. Mr. CLARENCE B. CARTER, Chairman, Program Committee, Railroad Pension Conference, New Haven, Conn. DEAR MR. CARTER: This is in answer to your letter of January 22. For convenience your new set of proposals to amend the IRailroad Retirement Act is presented herewith: “1. Retirement after 30 years of service, regardless of age. “2. Annuity to be half of salary, but not to be lower than $50 per month. “3. Widows to receive half of amount of deceased, regardless of her age, unless she remarries, plus maintaining the annuity given to children under 18 years of age as provided in the Crosser bill.” In making the necessary computations for this series of suggested amendments our acturial staff has made the following assumptions:

1. Each of the proposed revisions will only affect employees with at least 30 years of service; otherwise the set of benefits under the present Retirement Act will remain unchanged. It is necessary to introduce such a limitation because the cost of benefits relative to pay roll would be far out of reach if the second and third provisions were applied in all cases of retirement. Under such circumstances, for example, it would be possible for a limitless number of individuals to work for just 1 day in a month, withdraw from the industry permanently and then be able to draw an annuity of $50 a month when retirement age was attained. This was obviously not the intention of the suggested changes in the present act. 2. Compensation will be credited up to a maximum of $300 per month in line with present provisions. 3. The proposed annuities represent the minimum amounts which will be available monthly to individuals satisfying the eligibility requirements. Otherwise there could be instances in which a smaller monthly annuity would be paid than under the present act. The additional cost for retirement after 30 years of service regardless of age would be about 3% percent of pay roll. This represents a probable figure in the event that the retirement provision is permissive rather than compulsory. In the latter instance when employees must retire as soon as they obtain 30 years of service, the increase in cost would be closer to 7 percent of pay roll. Let us now consider the effect of the proposed change in the benefit formula. For individuals with maximum earnings of $300 per month and 30 years of service the present act would make an annuity of $120 per month available. The change in the benefit formula would increase this amount to $150, representing an increase of 25 percent. For individuals at the $200 monthly earnings level, with 30 years of service, the change would be from $90 to $100 per month or about 11 percent. There would be no modification when the monthly compensation dropped to the $150 level. In both cases the annuity would then be $75 per month. Taking these facts into consideration we figure that the change in annuity formula would add about 9% percent of pay roll to costs. Survivor benefits: Not only would there generally be an increase in the widows' annuities under the suggested proposal but also such survivor annuities would be ayable regardless of her age and would only cease upon her remarriage or death. nder the present act the widow's insurance annuity would be paid from age 65 while the widow's current insurance annuity would cease at the latest when the youngest child reaches age 18. We estimate that the additional cost for this element of your proposals would be about 1% percent of pay roll. Thus, on the assumption that employee retirement after 30 years of service, regardless of age, will be premissive rather than compulsory, the increased cost of this series of amendments over and above that for the present act could well be about 5% percent of pay roll (3% plus 4 plus 1%). It is emphasized in this connection that no changes whatsoever have been provided for with respect to all other benefits in cases where the employee has less than 30 years of service. If you have in mind liberalizations of the present provisions where the individual dies or retires with less than 30 years of service then the cost estimate made herein must be revised upward. I trust that the information given above will be satisfactory for your purposes. Very truly yours, - WALTER MATSCHECK, Director of Research.

Another important reason for the railroader's desire for earlier retirement is his constant apprehension of being removed from service in advanced years for failure to continue to meet the high physical standards set for his important occupation. Constantly exposed to the hazards of the elements, working long hours, called out to both day and night duty, living away from home, subjected to dangers to life and limb, the strains and stresses of constant repair work, he suffers a high incidence of malignant illnesses, such as heart disease, diabetes, kidney inflammation, high blood pressure, hypertension, etc. These diseases, according to the recent reports of the United States Census Bureau, accelerate in tempo from the ages of 45 to 64 and an even greater proportion from the ages of 65 upward. For most of this, the railroad man is not today eligible for disability retirement, as he may be held capable of continuing work at his own occupation, at the cost of shortening his alloted life span. The right to a reasonably early retirement after having served the carrier and the public 30 years would go far to give these workers the help they so badly need.

The retirement pension bears, too, on the increasing threat to railroad workers of mass lay-offs and unemployment. Railroad management has launched a national movement to put into effect consolidations, mergers, and abandonment of small unprofitable railroad lines. The placing in use of Diesel engines in vast numbers, has already caused the closing down of roundhouses, and repair yards. This accelerating process is causing a rising unemployment situation in the railroads. Employment on class 1 roads in January 1948 was about 65,000 below the month of July 1947 (the I. C. C. shows in its Monthly Comment on Transportation Statistics). In the case of consolidations, the I. C. C. in its Sixty-first Annual Report (1947), recommends terminal unifications and more than just the use of one company's tracks and terminal facilities by other companies. The I. C. C. has recently authorized a merger of the Wheeling & Lake Erie with the Nickel Plate Railroad. Railroad labor is partially protected under the Transportation Act of 1940 by a displacement allowance up to 4 years of severance pay with other benefits as payment of home, moving charges, etc. An earlier retirement would go far to maintain employment by retiring the older worker earlier instead of leaving the younger worker in constant fear of unemployment. It would also be more economical to the carriers insofar as it would effect a saving of severance pay. . This would make for a sensible comprehensive plan which gives earlier rest to a worker of advanced years, and a young man entering the industry could for once plan his life for steady employment, and plan to retire after having given the best 30 years of his life in some measure of certainty. It has been argued by some that retirement after 30 years of service, with no absolute age minimum might serve to flood the labor market with the competition of workers who, because of pensions, could compete unfairly to the detriment of other workers, not so subsidized. But this is without basis. There would not be any inducement for a man, untrained in a trade or skill outside of railroading to which he has given 30 years of his life, to compete at a late age with other workers of a new, different craft, when, if he can and wishes to work, he can remain on the railroad with top seniority of jobs, choice runs, and pay. Few retired railroaders would be able to work in private industry upon retirement and few would be eligible to meet the competitive requirements and age limits of Civil Service. At best they would be likely to get only odd jobs, self-employment, or such, none of them covered under the Social Security Act. We know that today, under the present Retirement Act, many pensioners are forced to seek additional employment to supplement the pittance now received. Under S. 2055–H. R. 4695, that need would be eliminated. Representative Katherine St. George, of New York, on the floor of the House called attention to the retirement situation since the constant increase in the cost of living, the rates of annuity are wholly inadequate. Under the Clason bill, H. R. 4695, which is the House equivalent of S. 2055, “providing retirement for all railroad emplovees after 30 years of service on one-half pay with payments made into the retirement fund to be made equally by the workers and the railroads, it would seem to bring the act up to date. It would also keep it there because by the simple method of retiring workers of half pay, it will prove fair and equitable. The clause making retirement possible after 30 years of service is far better than on age. This last method often works a hardship. It would seem that after 30 years of continuous service, any man or woman has earned retirement if he or she desires it.” So says Representative St. George. All in all, this would make for a sensible comprehensive plan. It gives earlier leisure to a worker. A young man entering the industry can for once plan his life for steady employment, plan his insurance; have his home paid off by the time of his retirement. This is in a democratic way a self-contained plan for security. This adds up to the American way of life.

RAILRoAD PENsion CoNFERENCE,
OFFICE of THE SECRETARY,
New Haven, Conn.

FURTHER TESTIMONY IN REGARD TO RAILROAD RETIREMENT LEGISLATION

In addition to the testimony presented in behalf of the need for enactment of 30-year retirement at one-half pay in this session of Congress as embodied in the Clason bill, H. R. 4695, I would like to make some further remarks in regard to the proposed amendment H. R. 6766.

The Railroad Pension Conference doubts the wisdom of granting the carriers a reduction in the unemployment insurance tax. Lay-offs in all crafts are now taking place in increasing amounts. Employment on class I railroads in January 1948 was about 65,000 below the month of July 1947 (the I. C. C. shows in its monthly Comment on Transportation Statistics). Further, the Railway Labor Executives Association revealed in its report Labor and Transportation in 1947 that an economic recession would affect over 400,000 railroad employees. In addition plans that are being made for consolidation of railroads would further greatly reduce the number employed by the railroads. Enough money must be available in the Railroad Unemployment Insurance fund to take care of such situations when they arise. The Railroad Pension Conference maintains that if there is a reduction in the taxation of the unemployment insurance for the carriers, it should be entered into the Yaccount of the Railroad Retirement Fund so as to provide 30-year retirement for the reasons stated elsewhere in our testimony. o The 20 percent increase in annuities and pensions as provided in H. R. 6766 is not sufficient to meet the high cost of living as based on the present formula of computing annuities. While the 20 percent increase may look good on paper to some, and considered good publicity by others, the actual increase is too small. At best it can be only considered a very small patch on the quilt, and a baby step in the right direction. We do support the return of the lump-sum benefit as provided in the Crosser bill and also in H. R. 6766. We sincerely hope the committee will give every consideration to the facts stated above and report the Clason bill H. R. 4695 out of committee and present it to Congress for passage. Respectfully submitted. CLARENCE B. CARTER.

CHARLottesville, WA., June 2, 1948. Hon. CHARLEs A. Wolverto N, Chairman, House of Representatives, Committee on Interstate and Foreign Commerce, Washington, D. C. DEAR SIR: Enclosed is a memorandum with reference to bills for amendment of the Railroad Retirement Act with respect to which I understand your committee is now holding hearings. I regret that I cannot attend the hearings and therefore request that you incorporate this communication in the minutes of the hearings. Respectfully submitted, RAINARD B. Robbins.

By way of identification: Formerly vice president, Teachers' Insurance and Annuity Association of America. Member of the social security technical staff of the Committee on Ways and Means of the House of Representatives, which prepared the 1946 report entitled “Issues in Social Security”. Author of Railroad Social Security, printed in 1945, and Federal Legislation of 1946 and 1947 Bearing on Social Benefit Plans, mimeographed, 1947, both published by American Enterprise Association.)

MEMORANDUM WITH REFERENCE to H. R. 5993 AND H. R. 6704, to LIBERALiz E BENEFITs of THE RAILROAD RETIREMENT Act, JUNE 2, 1948

These benefits should not be liberalized. Our railroads are still privately owned. The benefits provided by the Railroad Retirement Act and by the Social Security Act, alike, apply after employment ceases; their need is not related to particular employments. So long as the railroads are privately owned, the responsibility of Congress with reference to social benefits for their workers is the same as for workers in other industries; all should be met under one Social Security Act. Whenever the railroads are nationalized, the responsibility of Congress with reference to social benefits for their workers will be the same as for civil-service employees. Benefits under the Railroad Retirement Act are already more liberal than those rovided by Congress for workers in other private industry under the Social ecurity Act. This unjustified favoritism through national legislation can be cited as a precedent by any other group of industrial workers who want special consideration with respect to social benefits.

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