car sealer, and bill clerk at origin. The same personnel, plus a cashier is required at destination. Remember that please when you visualize that we are loading 3 million less LCL cars today than we did 10 years ago, and practically 5 million less than 15 years ago. While this downward trend of the railroad transportation system, the Nation's No. 1 reliance in peril or need, may not continue, and I do not concede in any way that the future of the railroad industry is dismal, I am all together against saddling the industry with additional obligations and heavier burdens. My objections to the proposed unjustified liberalizations apply both to the railroad retirement system and to the railroad unemployment-insurance system. From the year 1947 to the year 1956, for example, the average daily unemployment benefit rate rose by some 102 percent. Aside from these things our research staff, sincerely and entirely capable people, have shown the net cost of the railroad unemployment-insurance system, including the proposals in this bill but excluding, for comparative purposes, administrative cost and interest earnings, to be 4.07 percent of creditable payroll. The average contribution rate, they tell me, under various State laws in 1955 was but 1.18 percent. There is already a concerted effort throughout the land on the part of railroad management, railroad labor and the Railroad Retirement Board to relieve the unemployment situation through preferential recall of furloughees, placement of claimants in nonrailroad as well as railroad work, through occupational changes, screening of new entrants and in various other ways. The serious problems peculiar to the industry and of equal concern to its employees which have arisen in the last decade suggest that a complete reappraisal of the act would be timely and more appropriate. The cost of the proposals in these bills when added to the burdens otherwise imposed, such as augmented wages, health, welfare, and other benefits, would increase the railroads' operating expenses by as much as one and one-half billion dollars since 1954. And all this at a time when railroad management is exerting every effort and straining to combat unregulated and uncontrolled competition to recapture traffic losses, to maintain and improve the railroads' ability to serve the Nation in any need, to encourage investment in the industry, despite an average return over the past 10 years of only 3.74 percent and to safeguard to the maximum possible extent the welfare and security of the employees. Gentlemen, I sincerely urge that no favorable action be taken on these bills. The CHAIRMAN. Does anyone have questions of Mr. Healy? The CHAIRMAN. Mr. Mack. Mr. MACK. Mr. Healy, I notice that you wound up your statement by stating that you favored no action on any of these bills. Mr. HEALY. On those two bills, specifically H. R. 4353 and 4354. Mr. MACK. May I conclude from that that you are in favor of some of the legislation that has been introduced? Mr. HEALY. No, sir, as my colleague, Mr. Harper told you this morning, and Mr. Habermeyer both, we are unanimously opposed to all other bills. Mr. MACK. You are opposed to all bills? Mr. HEALY. Yes, sir, we are a unit on all other bills. Mr. MACK. I was wondering if you had any views as to what should be done about that $169 million deficiency? Mr. HEALY. The President's statement, also the assurances of the Senate committee when S. 3616 was enacted last year, very clearly were concerned with the solvency of the fund. Neither contemplated any further increases or liberalizations in present benefits. Mr. MACK. What are your suggestions for making that solvent? Mr. HEALY. My suggestion would be that we take care of what has already been done, limit action to the wiping out of that deficiency of $169 million and stop there. Mr. MACK. In other words, you are in favor of increasing the contribution. Mr. HEALY. I do not see that any of us have any alternative. Mr. MACK. I have no further questions at this time. The CHAIRMAN. Does anyone else have any questions? Younger? Mr. Mr. YOUNGER. That deficit of $169 million, does that include the amount you owe social security? Mr. HEALY. It is figured in our actuarial study. Mr. YOUNGER. That includes the amount that you owe the social security? Mr. HEALY. Yes, sir. The CHAIRMAN. Mr. Moss. Mr. Moss. Do I understand, Mr. Healy, that it is your contention the present retirement payments are completely adequate? Mr. HEALY. Yes, sir. May I say a few words there? Mr. Moss. Yes, certainly. Mr. HEALY. This whole railroad retirement system and unemployment insurance system has a common root with the railroads. You cannot keep on increasing benefits and increasing taxes when your operating expenses and the percentage of business you handle are decreasing constantly. Mr. Moss. I think that is so elemental as to not require repeating. Mr. HEALY. That is right. Mr. Moss. That is quite an obvious fact. Mr. HEALY. That is right. Mr. Moss. But you are dealing here with men who are part of an overall society and you are competing. The railroads have to compete for manpower with other large employers. Do you feel that the railroad retirement system is keeping pace with the retirement systems available in other major American industries where you not only have the industry retirement but you have the benefits of social security or old age and survivor insurance available? Mr. HEALY. There are two answers to that. In the first place as I have tried to point out, and I think as the Chairman's statement, which you gentlemen have, shows the railroad retirement system is far superior to social security. That is No. 1. Mr. Moss. We will concede that. Mr. HEALY. No. 2, the railroad retirement system is federally administered, thereby making it Government-supervised, if you please. I don't know to what extent the industrial pensions are safeguarded. They are certainly not, in my opinion, as much as ours. I think we have adequate protection under the Federal laws. Mr. Moss. My question did not go to the degree of protection afforded the trust fund but rather to the competitive character of the benefits in a total package accruing to a retiree of the railroad system as compared to the total benefits accruing to a retiree of some of the other major industrial employers of this Nation. Mr. HEALY. Without exactly getting into detail, I would say that the railroad retired workers are in better condition today than any other workers. Mr. Moss. Now let me understand you correctly. It is your impression that the benefits available under the railroad retirement system are superior to those under other major employers when we take the total package including the industry retirement system plus social security? Mr. HEALY. That is right. That is my impression. Mr. Moss. Now is that just snap judgment or is it the result of an informed opinion after a study of the benefits available under other systems? Mr. HEALY. There was no particular study on my part. I have seen some comparative figures which so indicate, but I have had contacts and conversations with people under both systems who constantly say our retirement system is superior to others. Mr. Moss. I still want to emphasize that the final criteria would be the combined retirement available, well, we will say, under the private plan of some major utility, plus the social-security rights the employee has. Yours is a single package for retirement purposes. Mr. HEALY. To this extent, you mean it covers retirement, disability, survivors? Mr. Moss. No, I mean when the railroad employee retires after a lifetime of service in the railroad industry, that he has one retirement check while the employee of a major utility would probably have two, that of the company's system plus that of the Federal old age and survivors' insurance. Mr. HEALY. Now, I do not know. I would not want to answer that except to this extent. When I say supplemental, that is over and above what they get from social security and some figures I have seen do not indicate they would get a total more than $184.30 a month. Mr. Moss. There would be no point in pursuing this further unless you have some specific information. It would be my judgment that you are in error. Mr. HEALY. Well, I do not think so, but of course that is our prerogatives. Mr. Moss. That is right. Mr. HEALY. I believe I will still stick to mine. Mr. Moss. If you have figures I would appreciate them. Mr. Moss. That is all I have. (The following letter was later received from Mr. Healy :) UNITED STATES OF AMERICA, Hon. JOHN E. Moss, Interstate and Foreign Commerce Committee, House of Representatives, Washington, D. C. DEAR MR. Moss: In my appearance before the committee during hearings on H. R. 4353, and pursuant to your request, I promised to obtain, if possible, a comparison of benefits under supplemental private pension plans with those under the railroad retirement system. It has been a slow and difficult task which accounts for my failure to respond earlier. In fact, none of the private plans is strictly comparable with the railroad retirement system, as they differ so markedly in eligibility requirements, types of benefits, formulas, etc. So far as we could determine on a comparable basis, retirement benefits for an employee, at age 65 with 30 years of service and level monthly earnings of $350 are: Bituminous coal operators: $208.50 ($100 and social security). Railroad retirement system: $205.20 (and sometimes social security). General Motors Corp.: $175 ($67.50 and social security). Goodyear Tire & Rubber Co.: $162.50 ($54 and social security). Except as to the railroad retirement system, all of the foregoing amounts include $108.50 benefits under the Social Security Act. On the other hand, beneficiaries under the railroad retirement system may, in addition, receive benefits under private plans and social security. The railroad system has many other advantages. 1. It is evident that the private plans are products of collective bargaining agreements and included in a package along with wage increases etc., as is true of certain health and welfare benefits in the case of railroad employees. I be lieve it appropriate to here mention that, under the Railroad Unemployment Insurance Act, in addition to unemployment benefits, railroad employees, contributing nothing to such fund, are provided with sickness, accident and maternity benefits. 2. The private plans are subject to various conditions and individual changes or terminations. The railroad retirement system can be modified only by congressional action. 3. The railroad retirement system provides for occupational disability at age 60 with 10 years of service or at any age with 20 years of service. Neither the private plans nor social security have provisions for occupational disability. 4. The railroad retirement system provides for total and permanent disability at any age after 10 years of service. The bituminous coal operators' plan has no provisions whatever. The others require 15 years of service. Social security is not available below age 55. 5. The railroad retirement system is an industrywide plan, while company plans apply to individual companies only. A railroad employee never loses his annuity rights under the railroad retirement system. He can transfer from one railroad to another, or depart from and return to railroad employment, and each period of service will be duly credited to his account. Under company plans, employees transferring to other employment typically forfeit their supplemental pension benefits when severing connections with the companies. 6. The railroad retirement system, United States Steel and bituminous coal plans are the only ones listed above which do not require compulsory retirement. I will appreciate your incorporation of this letter as a part of the record in the hearings on H. R. 4353 and related bills. Am sending copies direct, as noted, to Chairman Harris and to Mr. Elton J. Layton. With all good wishes, I remain, Sincerely, T. M. HEALY. The CHAIRMAN. Mr. Avery. Mr. AVERY. Thank you, Mr. Chairman. Referring back just a minute, Mr. Healy, I would like to say I am very much personally interested in this information you are going to supply Mr. Moss. I have been trying to get some kind of comparative figures all day between the railroad retirement system and a retirement system of another similar major industry in the United States. I think one guide to probably the retirement program of any industry would be the success in recruiting help. Do you have any problems in recruiting help at all? Mr. HEALY. Well, in the railroad business today, as in others, our particular problem is technicians. Electricians, machinists, and other specially skilled workers are in short supply. We have a pretty good reservoir of others. Mr. AVERY. Refering to section 3 on page 3 of your statement where you say essentially this, that serious problems which have arisen in the last decade might suggest a complete reappraisal of the act. Just what did you have in mind? Mr. HEALY. I have several particular areas in mind. For example, while we are considering the possibility of amending the act, I cannot conceive that the original intention, certainly not in fairness and equity, was for a man to voluntarily quit and then draw unemployment insurance to the maximum possible extent. To illustrate, in fiscal 1954-55 and 1955-56 we had a total of 23,000 men who drew $11 million in unemployment insurance benefits. Those were voluntary quits. I don't think if a man is discharged for just cause he should be entitled to unemployment insurance. Yet in the same 2 years we paid 15,000 persons roughly $7 million for that. I don't think suspensions for just cause are intended under the act. Now I am talking about the conduct of the man himself. Mr. AVERY. Not laid off; he just quits? Mr. HEALY. We paid 4,000 of those, over $2 million in the last 2 years. I will probably get shot for this, but I will preface it by saying my wife and I had 10 children. I can't see where maternity, an act of love, if you please, has anything to do with the operation of a railroad or involuntary sickness. Now those are the things I had in mind, yes, sir. Mr. AVERY. Do I understand you to say that the expense of the confinement case is paid out of the Mr. HEALY. No, sir; but they draw unemployment pay via maternity and sickness insurance. That cost us about $4 million last year. Mr. AVERY. If a man just walks off the job, so to speak, he is entitled to full unemployment compensation? Mr. HEALY. That is right, for 130 days. Mr. AVERY. Does that terminate any other benefits he might have? Mr. HEALY. You mean on the railroad? Mr. AVERY. No, I don't mean seniority benefits, I mean any benefits he might have for retirement later on. Mr. HEALY. If he has 10 years of service, we will have to pay him. retirement regardless, because he has earned that. But if he has less than 10 years and he does not return to railroads we put him in social security. |