The Railway Labor Executives' spokesman had only this to say against the cause. Such a disqualification was contained in the original Act in 1938 but was removed almost immdeiately thereafter. The reason for its removal was recognition of the fact that what is proper cause for discharge is usually highly controversial and is often the subject of sharp conflict between the carrier and the organizations representing employees. Furthermore, under the Railway Labor Act the National Railroad Adjustment Board is the tribunal established for the solution of such controversies. It was considered most undesirable that the Railroad Retirement Board should resolve such controversies incidently to the adjudication of unemployment insurance claims or that it should delay the payment of claims pending resolution of the controversy by the National Railroad Adjustment Board. Nothing has occurred since that time to cast any doubt upon the wisdom of Congress in removing that disqualification."

The fact is that only in a minor percentage of cases is there any contest at all on the discharge or suspension, the facts are too clear and the employee concerned knows it.

This argument ignores all the basic reasons leading to the universal adoption— except for the railroad system-of this disqualification.

It fails to point out a single case where injustice has resulted under the State systems.

Certainly discharge for cause involves no more difficulties administratively than the other disqualifications.

The Board report to the committee does not support the Railway Labor Executives' contention.

EXTENDED UNEMPLOYMENT INSURANCE BENEFITS

THE ISSUE

Apparently in recognition that the present maximum of some 26 weeks of unemployment benefits is as long a duration as can be defended under common unemployment insurance principles, the Railway Labor Executives' Association bill provides what are termed "extended benefits"-which would continue benefits for periods of various lengths for employees who at some time in their lives had some railroad employment in each of 60 or more calendar months. The issue is whether the proposed extended benefits should be adopted.

BURDEN OF PROOF

The supplementary statement of Mr. Lester P. Schoene on behalf of the Railway Labor Executives' Association as to the burden of proof is:

"That burden with respect to a radical overhauling of the Railroad Unemployment Insurance Act cannot be met except by a demonstration from experience that the actual operation of the system is so unsatisfactory that radical revision is required."

GENERAL DESCRIPTION OF PROPOSAL

As stated by Mr. Schoene in his principal testimony, the Railway Labor Executives' bill proposes that persons with 60 or more months of service, “unemployed beyond the 26 weeks of normal payments should receive further benefits proportionate to their years of service *** graduated from *** approximately 18 months to 42 years *** the maximum is $13,260."

ARGUMENT FOR PROPOSAL

Mr. Schoene argued that as "productivity increases and we either handle more business with the same number of employees or handle the same business with fewer employees *** at least some part of that improved productivity should be directed to alleviating the hardship of those who are permanently displaced from the industry *** people with many years of service, with skills not readily transferable to other industries, are being laid off and there is no job for them *** In other words, these people with long service *** have a claim in excess of 26 weeks of unemployment insurance ***. I am interested in these people who get displaced from their jobs after many years of service."

He stated that the proposal in relating extended benefits to prior service was based on "The Washington job protection agreement * ** a collective bargaining agreement * * * negotiated *** in 1936. It deals with a small phase

of this problem * * * permanent displacement of employees through mergers and consolidation."

He also stated that: "Further, it is a very definite purpose of the bill to provide an incentive to all railroad employers to employ experienced railroadmen that have been permanently displaced somewhere else in preference to going out and hiring new men *** we have a very definite objective of making it expensive enough to the railroads not to employ these people so they will employ them."

Mr. E. L. Oliver, who appeared with Mr. Schoene, stated his conclusion that "unemployment figures established a very grave problem of the displaced older railway worker for which the current unemployment compensation provision is clearly inadequate."

He also stated: "The problem has been aggravated greatly by employment policies of the railroads; part of the remedy lies within the control of the carriers themselves."

STATISTICAL EXHIBITS

Mr. Oliver's arguments based on his statistical exhibits fail to demonstrate his thesis of special hardship of older workers. For example, he said: "Among unemployed workers between 40 and 45 years of age unemployment increased from 76 days average in 1948 and 1951 to 95 days average for 1956." He did not mention that, for the same period, unemployment for all unemployed workers increased from 74 to 90 days.

He further stated "in the last benefit year 137,600 railway employees drew unemployment benefits. Nearly 54,000-39 percent of them were 45 years or more of age." He did not mention that almost 50 percent of all workers who qualified for unemployment benefits were 45 years or older, and hence that unemployment among the age 45 and older group was much less than among younger employees.

SENIORITY

Under seniority rules employees have job rights which carriers are obligated to respect under collective bargaining agreements. The general effect of seniority rules is to give superior tenure to 5-year-service employees-the ones who would have extended benefit rights under the railway labor executives' proposal-over employees with less than 5 years' service. The proposal would give the additional protection to those who because of seniority need it least.

The exception to this general rule usually exists because of the labor union's insistence on the way the seniority rules shall operate as applied to specific areas covered by the union agreements. These rules account for the great mass of "hardship" situations. The alleged "hardship" cases of older workers, on analysis, will typically fall into two categories:

(1) Cases where the individual concerned is unwilling to take a job in another seniority district even though his experience might entitle him to that job-this usually because he would be classed below the youngest employee in that seniority district.

(2) cases where because of his union's seniority rules he cannot take a position which might otherwise be made available.

Thus the basic situations of long service employees which are presented as a reason for "extended benefits" for "long service" employees are not attributable to railroad management, but rather to the seniority rules insisted upon by railroad labor.

The statistical argument that overall average railroad employment has declined some 30 percent in 12 years-averaging about 21⁄2 percent per year-even if a correct analysis, does not lead to a conclusion that persons are thereby necessarily thrown out of work as the normal attrition-quits, deaths, and retirements-far exceed this percentage.

The statistical argument, presented by the brotherhood's representatives based on the number of new employees, that old employees are involuntarily being replaced by railroad hiring policies is likewise without substance when it is remembered that under the seniority rules a new employee cannot be hired for any position to which any old employee has seniority rights, unless that employee waives these rights.

Even a casual inspection of the median age of railroad employees as compared with employees in general, makes clear that the highly organized railroad industry has far less problem than outside industry with respect to displace

ment of older workers. As previously mentioned, nearly half of the qualified railroad employees are 45 or older.

"SUPPLEMENTARY BENEFITS"

A series of privately negotiated supplementary benefits were presented as precedents in the course of the argument. These fundamentally differ from a social program enacted by law.

Even so none of the several plans referred to by Mr. Oliver afford a precedent. At the most, they extend the normal 6 months' benefit period an additional 6 months-usually at a lower benefit rate, and their payment is conditional on a series of contingencies, financial limitations, etc., utterly lacking in the railroad unions' legislative proposal.

WASHINGTON AGREEMENT

As indicated above, the Railway Labor Executives' Association points to only one precedent-the negotiated Washington agreement of 1936-over 20 years ago. That agreement dealt with a radically different situation than does the pending proposal-railroad mergers.

As stated by Mr. Schonene, "recognizing the difference between that kind of displacement and the kind of displacement we are dealing with here, we could reasonably say we won't get into the extended benefits at all unless there is 5 years of service. *** There is further the fact that the two situations differ fundamentally in that in the kind of displacement we are dealing with here it is impossible to identify the particular saving, or, in fact, to determine whether there is any saving."

Thus the pending proposal for extended benefits

(1) Is without precedent;

(2) Is contrary to all recognized unemployment insurance principles; (3) Would involve tremendous costs;

(4) Has not been justified by any showing of a compelling situation peculiar to the railroad industry; and

(5) If there is any serious situation, it manifestly stems largely from collectively bargained seniority provisions, established at the instance of the unions. There is no justification for legislation imposing on railroads the burden of supporting victims of union prescribed seniority rules.

WHAT THE PROPOSAL REALLY MEANS

Table D-7 of the 1955-56 annual report of the Railroad Retirement Board shows that in 1954 there were some 1,680,000 persons in railroad work at sometime during the year. Over a hundred thousand were 65 or older. Approximately 170,000 had worked less than 12 months in their lifetimes in railroad service. Only some 307,000 of the remainder had service in less than 5 years. For the year, there were some 1,482,000 “qualified employees" who could draw benefits if unemployed. Of these over 1,200,000 appear to have had service in at least 60 calendar months. Thus some 6 out of 7 qualified railroad employees would come within the proposal for extended benefits—including some 100,000 past normal retirement age.

Thus in effect, for 6 out of 7 railroad employees, the proposal is to extend the maximum period of unemployment benefits from a present 6 months to periods of from 2 to 5 years-or longer in exceptional cases. This is indeed a radical change in concept of the purposes and limits of unemployment insur

ance.

PRECEDENTS

There are certainly no legislative precedents for this radical change. The normal maximum benefit period is 6 months. Only 1 State is as long as 30 weeks, and many are less than 6 months-26 weeks.

THE DOLE

At one time in England, as a depression measure, the unemployment benefit system was substantially extended-and lost its former dignity and became known as the dole. This was legislatively corrected so it affords a precedent against rather than for extending benefits under any public unemployment system.

The Duluth, Winnipeg & Pacific and the Railway Express Agency strikes are still in progress and the strike benefit payments as shown in column 3 are not indicative of what the total payments will be. For example, if the Railway Express Agency strike continues until Monday, May 20, strike benefit payments to Express Agency employees will total $1,150,000 rather than $475,000 as shown in column 3. In other words, each week that the Railway Express Agency strike continues, it costs the unemployment insurance fund about $300,000.

Senator MORSE. Our next witness is J. Elmer Monroe, vice president of the Association of American Railroads.

We are very glad to have you before the committee.

Senator ALLOTT. Mr. Chairman, before he begins his testimony on this particular problem, I wonder if I can ask consent, because I think it should be a part of this record, to have inserted a letter written to Senator John F. Kennedy by the Railroad Labor Executive Association on July 20, 1956, and the letter written on July 20, 1956, by the Railroad Labor Executive Association, the first one being signed by Mr. G. E. Leighty, and the second one being signed by Mr. Č. T. Anderson. I think they should be made a part of the record because it is a part of the history and is our responsibility and everybody's responsibility at this point in regard to this particular legislation. Senator MORSE. I think they should be made a part of the record. They were made a part of the record last year.

Senator ALLOTT. Yes, sir. They are both very short.

Senator MORSE. Perhaps we should make the entire report of last year a part of the record.

Senator ALLOTT. That would be satisfactory.

Senator MORSE. Let's do it that way. Let's include at this point the committee report on railroad retirement legislation of last year which included the letters that the Senator offered for the record. (The committee report follows:)

[S. Rept. No. 2747, 84th Cong., 2d sess.]

AMENDING THE RAILROAD RETIREMENT ACT OF 1937

The Committee on Labor and Public Welfare, to whom was referred S. 3616, a bill to amend the Railroad Retirement Act of 1937, to provide increases in benefits, special disability determinations for railroad employees, and for other purposes, and to amend the Railroad Unemployment Insurance Act, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass.

The amendments are as follows:

(a) Strike out all after the enacting clause and insert in lieu thereof the following:

"That (a) section 3 (a) of the Railroad Retirement Act of 1937 is amended by striking out '2.76', '2.07', and '1.38' and inserting in lieu thereof '3.04', '2.28', and '1.52', respectively.

"(b) So much of section 3 (e) of such Act as precedes 'Provided, however' is amended to read as follows: '(e) In the case of an individual having a current connection with the railroad industry, the minimum annuity payable shall, before any reduction pursuant to section 2 (a) 3, be whichever of the following is the least: (1) $4.55 multiplied by the number of his years of service; or (2) $75.90; or (3) his monthly compensation.'.

"SEC. 2. (a) Section 5 (h) of the Railroad Retirement Act of 1937 is amended by strikin out '$30', '$160', and '$14' wherever they appear and inserting in lieu thereof '$33.00', '$176', and '$15.40', respectively.

"(b) Section 5 (1) (10) of such Act is amended by striking out '40', '10', '$14', $33.33', '$25', and '$13.33', wherever they appear and inserting in lieu thereof '44', '11', '$15.40', '$36.66', '$27.50', and '$14.66', respectively.

"SEC. 3. All pensions under section 6 of the Railroad Retirement Act, all joint and survivor annuities and survivor annuities deriving from joint and survivor annuities under that Act awarded before July 1, 1956, and all annuities under the Railroad Retirement Act of 1935 are increased by 10 per centum.

"SEC 4. The amendments made by the first section of this Act any by subsection (a) of section 2 shall be effective only with respect to annuities (not including annuities to which section 3 applies) accruing for months after June 1956. The amendments made by subsection (b) of section 2 shall be effective only with respect to annuities accruing for months after June 1956 and lump-sum payments (under section 5 (f) (1) of the Railroad Retirement Act of 1937) in the case of deaths occurring after June 1956. Section 3 shall be effective only with respect to pensions due in calendar months after July 1956 and annuities accruing for months after June 1956."

(b) Amend the title so as to read:

"A bill to amend the Railroad Retirement Act of 1937 to provide increases in benefits and for other purposes."

The committee bill would increase benefits under the Railroad Retirement Act by, generally, 10 percent. The bill would not increase any annuity which is already in an amount equal to the annuitant's average monthly wage because it is obviously contrary to retirement policy for a retirement annuity to be in excess of the average amount that the retired employee earned during his working life. Further, the bill would not increase the social security minimum; that is, an annuity which has already been increased by reason of such minimum to an amount above the amount computed under the railroad retirement formula will be increased only to the extent that the increase by reason of such minimum is less than 10 percent of the annuity computed under the regular railroad retirement formula. Finally, a spouse's annuity in an amount of more than $49.40 will not be increased by the full 10 percent since the bill does not provide for increasing a spouse's annuity above the present maximum of $54.30.

ALL STANDARD RAILWAY UNIONS SUPPORT THE COMMITTEE BILL

The Railway Labor Executives' Association advised your committee that all the standard railway labor unions are in favor of the committee bill. The Railway Labor Executives' Association consists of the chief executives of the following standard railway labor organizations: American Train Dispatchers' Association; Brotherhood of Locomotive Firemen and Enginemen; Brotherhood of Maintenance of Way Employees; Brotherhood Railway Carmen of America; Brotherhood of Railroad Signalmen of America; Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees; Brotherhood of Railroad Trainmen; Brotherhood of Sleeping Car Porters; Hotel and Restaurant Employees and Bartenders International Union; International Association of Machinists; International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers; International Brotherhood of