H. R. 4523 would repeal the so-called last employer clause of the act. As the members of this subcommittee know, many railroad workers, faced with today's high cost of living and sometimes unique mortgage, hospital, medical and other domestic financial burdens, are compelled to do something in their off-duty hours to supplement their railroad wages. Sometimes at a very nominal monthly or annual salary, they serve as executive secretaries or treasurers of church, civic, fraternal or social organizations. Under sections 2 (a) and 2 (b) of the Railroad Retirement Act, as now written, when such railroad workers become eligible for retirement under the act, they are refused their retirement benefits unless first they resign from their side job. Recently several specific cases of this nature have come to my attention. One concerns a man who had worked on one of our southern railroads for over 40 years and who, as an ordained Baptist minister, filled the pulpit in two local churches each Sunday, for which he received a small salary which hardly covered his personal expense. When he applied for railroad retirement benefits, he was told that before he would be eligible, he would have to resign as minister to these two churches. Another railroad worker had been serving as treasurer of a small local credit unit before he retired from the railroad. Unaware of the effects of the last employer clause, he continued working for the credit union after he retired. When the Railroad Retirement Board learned this, his pension was stopped and he was told that he would have to resign this little job before his pension could be restored. In still another case, a retired woman railroad worker was asked to refund the retirement benefits she had already been paid when the Railroad Retirement Board learned the she had been working as a part time stenographer while she was still working for the railroad. As I understand it, the original purpose of the last employer clause was to deny benefits to those railroad workers who left the railroad industry before retirement age after only a few years' or a few months' service and engaged in other employment which was covered by a different retirement plan. However, the legal effect of the language of this clause was to deny benefits even to those employees who were still working for the railroad when they reached retirement age simply because they had another "employer." Personally, I do not believe that the authors of the last employer clause foresaw or intended any such effect.

I am told that the argument against this bill is that it would increase the operating cost of the program. Assuming for the sake of discussion that this is a fact, still it seems to me that the argument has no equitable validity because it is based upon the unfair premise that the railroad retirement fund should be unjustly enriched at the expense of the railroad worker who has for perhaps 30 or more years paid into the fund with the reasonable expectation that he would upon retirement be entitled to the benefits which he had purchased. What justice can there be in the contention that he should be required in his declining years to forfeit these benefits simply because he was compelled by financial necessity to supplement his railroad wages in some small off-duty side job? What he gets for what he pays is little enough

anyway.

Further demonstrating the unfairness of the last-employer clause, the railroad worker who is fortunate enough to own a few shares of

corporate stock (and, believe me, they are not many) may receive several hundred dollars in annual dividends; yet he has no "employer other than the railroad" and accordingly is not affected by the lastemployer clause. The same is true of other railroad workers who are, in their off-duty hours, "self-employed" and earning income in addition to their railroad wages. While this worker is not affected by the last-employer clause and thus draws his full retirement benefits, the man working right beside him on the trains, in the yards, in the shops, or in the office may be subject to the penalities of the clause simply because his outside income is derived from an "employer" such as a church or civic organization.

I earnestly trust that the members of this subcommittee will appreciate the inequity and hardship which this section of the "Railroad Retirement Act has worked upon so many of our railroad workers and will recommend favorable action on this legislation.

Mr. Chairman, that concludes my statement on H. R. 4523.
Mr. MACK. You may proceed with your other statement.

Mr. POFF. Mr. Chairman, this is the fifth time I have appeared before a subcommittee of the House Committee on Interstate and Foreign Commerce in support of legislation similar to my bill H. R. 880, which I reintroduced this year on January 3, 1957. Accordingly, whatever I may say today must necessarily be somewhat repetitious. Nevertheless, what I have to say I feel bears repeated repetition.

Stated in its most elemental form, the purpose of H. R. 880 is (1) to reduce the Railroad Retirement age to 60 after 30 years' service and to any age after 35 years' service; and (2) to discard the antique test period, 1924-31, and install in its place the 5 best years' rule.

The modern trend in all pension plans is toward a reduced retirement age. This trend grows out of both humane and economic considerations. On the humane side, it is becoming increasingly apparent in this day of highly specialized skills that a man who loses his job after the age of 45 has little opportunity of finding employment in a different field of endeavor; after the age of 60, the difficulty is practically an impossibility. Moreover, there is a growing recognition of the humanity of providing a man who has worked faithfully at a single job for a third of a century with the reward of a few leisure years at the capstone of his mortal existence. He should receive this reward while he is still physically able to enjoy the things he has been denied during the productive years of his life.

On the economic side, economic experts have come to realize that, in this age when the machine is replacing the man and the population is increasing by leaps and bounds, this Nation may soon reach the point when the number of workers available will be much greater than the number of jobs available. To help meet this threat, the economic experts suggest that pension benefits should be attractive enough and the permissive retirement age low enough to induce the individual worker to retire at an earlier age, thereby reducing the total national work force and creating job opportunities for the young married man who is just assuming the family obligations of his work life.

Under this enlightened economic theory, private insurance companies have been lowering the benefit age in their commercial annuity contracts. Many industrial pension plans, financed jointly by the employer and employee without governmental intervention, have lowered

the retirement age. Last year the Congress lowered the social-security benefit age for women to 62. Even under the Railroad Retirement Act, where the Congress seems reluctant and slow to recognize and keep pace with modern economic trends, the benefit age for widows and working women with 30 years' service has been reduced to 60. Yet, as if the Congress were blind to changes in other pension plans and deaf to the entreaties of the railroad workers who own the retirement fund, we have year after year failed and refused to lower the permissive retirement age for the male railroad worker. In view of the greater life expectancy of the 60-year-old woman, I do not see how Congress can continue to justify this retirement-age discrimination against the male worker, especially since the man usually is the breadwinner of the family. It is no justification to say that the present law permits the male worker to retire at 60 under a reduced pension. Under the present law, the man who retires at 60 loses onethird of his monthly annuity.

Turning now to the other provision of my bill, the 1924-31 test period (which under present law would apply to every worker who retires before 1937) was established in the original act. At that time, even though the test period included the depression years of 1929 and 1930, the average wage for the entire period was higher than for any other period prior to 1937. Today, we have approximately 65 million workers in America, and I think it is safe to say that not one of them is earning the same wage he or his father earned in the years 1924-31. This test period was established in the original act according to the economic conditions, the cost of living, and the value of the dollar, as they existed at that time. None of these factors are the same today, and it is time we realize that fact and act accordingly. It is true that the passage of this bill would increase the cost of operation of the railroad retirement system. However, admitting that I am not an economic expert, I have never been able to understand the actuaries' argument that the 1212 percent railroad retirement contribution will not finance railroad-retirement benefits when the total social-security tax is only 42 percent. The actuaries say that the present tax base and tax rate will not finance the provisions of H. R. 880. Why I cannot accept that at face value is illustrated by the following example: Let's assume that a 20-year-old man went to work for a railroad in 1937. If he works continuously until he reaches the present retirement age of 65 for the full taxable base wage, he and his employer will have paid into the retirement fund a total of $23,625. If both this worker and his wife should live and receive $250 a month in retirement benefits, they would be 73 years old before they recaptured the full amount that had been paid into the fund. (You will notice that this computation does not take into consideration the compound interest which this money would have earned had it been deposited in a savings account during the 45 years this man was working.) Compare this example with the example of the retired social-security worker who often recaptures during the first 6 months of retirement more benefits than all of the taxes he paid into the social-security fund.

As if the railroad-retirement taxes were not already too high, there is now pending before this committee another bill, H. R. 4353, which would (1) increase the taxable base wage from $350 a month to $400 a month and (2) increase the tax rate from 614 to 72 percent for a total of 15 percent on the employee and employer combined. For a worker earning $400 a month, this would mean a tax increase of $8.13 a month or $97.50 a year, and a similar increase for his employer, making a total increase of $195 a year. In the example cited above, this would mean a total increase in payments to the fund of $8,775.

Mr. Chairman, I certainly want the railroad-retirement fund to be self-supporting, and I would not consciously do anything to jeopardize its solvency. However, I do not believe that another tax increase is necessary to make it self-supporting. Neither do I believe its solvency would be jeopardized by lowering the retirement age and installing the 5 best years' rule. I hope this committee will give sympathetic consideration to my bill.

Mr. MACK. We thank you for your two statements, Mr. Poff.
Mr. POFF. Thank you, Mr. Chairman.

Mr. MACK. We will now hear from Hon. LeRoy H. Anderson, of Montana.

STATEMENT OF HON. LEROY H. ANDERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MONTANA

Mr. ANDERSON. On behalf of the many railroad men in my district, I desire to urge favorable consideration of the Harris bill, H. R. 4353, to amend the Railroad Retirement Act.

This act has meant a great deal to the railroad people of this country, providing, as it does, security in the years after they have left active railroad service.

The railroad people in my district are urging legislation to increase the benefits under the act, as well as to liberalize other provisions in favor of the spouses and widows of retired railroad men. I believe the Harris bill accomplishes these objectives without in any way impairing the financial soundness of the railroad-retirement system.

With the cost of living increasing day by day, it is only just that the Congress give serious consideration to increasing the incomes of the thousands of retired workers who are not receiving annuities.

The Harris bill increases railroad-retirement benefits by 10 percent, reduces from 65 to 62 the age at which women employees may receive benefits, and permits the spouses of retired railroad workers to receive benefits at 62 under certain conditions.

I am wholeheartedly in favor of this bill and urge that it be favorably reported by this committee.

Mr. MACK. We thank you for your testimony, Mr. Anderson.
Mr. ANDERSON. Thank you, Mr. Chairman.

Mr. MACK. The next witness is our colleague from Virginia, Hon. W. Pat Jennings.

STATEMENT OF HON. W. PAT JENNINGS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

Mr. JENNINGS. Mr. Chairman, may I express my appreciation for the courtesy you have extended to me in providing the opportunity for expressing my support of H. R. 4353.

In thinking over the comments I wished to make on the proposals outlined in H. R. 4353, I decided to read some of the previous years' hearings on railroad retirement legislation, and I found the same situation exists today as in previous years: a definite and clear-cut need exists for a liberalized program. I believe it can be effected by this bill.

I found, also, in my reading that the committee quite often receives considerable duplicate testimony from the many persons interested in seeing the Railroad Retirement Act improved. Therefore, I intend to make this statement very brief.

H. R. 4353, generally, would increase annuities, pensions and lump sums by 10 percent and other provisions of the act would be improved; would amend the Railroad Retirement Tax Act, to provide funds for these benefits, by changing the tax base from the present maximum of $350 per month to $400 and increase the tax rates on employers and employees from the present 614 percent to 72 percent; and increase benefits under the Railroad Unemployment Insurance Act. I know that you are familiar with the details of this proposed legislation, so I will not go into it further.

I favor the provisions of H. R. 4353 and respectfully urge that it be favorably reported by this committee.

Last year, in expressing my support of a bill to increase benefits under the Railroad Retirement Act, I stated that such support was hinged on the question of whether the retirement program would remain actuarially sound if the bill were enacted into law. The same holds true this year; we must safeguard the soundness of the program. It is my understanding, after a study of the provisions of H. R. 4353 and several analyses of these provisions, that the proposed tax increases would not only provide more liberal benefits but would also place the program on a much sounder financial basis. We are, therefore, on safe ground in approving H. R. 4353 or a similar bill.

Mr. Chairman, there is a demonstrated need for the legislation in question. It is adequately illustrated in the rising cost of living; in the letters Members of Congress receive each day asking for these improvements in the retirement and insurance programs; and in the support that has been presented to this committee.

Without taking more of your time and repeating testimony that I'm sure has been presented in adequate measure, I reiterate my support of this legislation and ask that you give every consideration to reporting it to the House as the next step in making these needed changes a reality.

Mr. MACK. We appreciate your appearance and the information you have given the committee, Mr. Jennings.

Mr. JENNINGS. Thank you, Mr. Chairman.

Mr. MACK. We will now hear our colleague from Wyoming, Hon. Keith Thomson.