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Mr. O'BRIEN. That is being done now?
Mr. LOOMIS. Yes.

Mr. O'BRIEN. And do you not think there is room for further improvement? And I am thinking specifically of hiring the younger man with the stronger back.

Mr. LOOMIS. I think they are certainly trying to work that out. Mr. O'BRIEN. Thank you very much. The CHAIRMAN. Mr. Loser ? Mr. LOSER. It is quite a problem, of course, if there is a vacancy for a mechanic in Kalamazoo who has been laid off in Los Angeles. Mr. LOOMIS. That is right. Mr. LOSER. That is the problem, rather than seniority, is it not?

Mr. Loomis. Well, that is a problem, but where seniority comes into it is that even if he were willing to move to Kalamazoo as in your example, the one thing that would make him reluctant to move was the fear that he was the youngest man on the roster and he would be the first man to be bumped, and he might rather stay at home, take his unemployment insurance for a period in the hope of being called back to the point where he had previously been employed. Because he retains his rights to be called back.

Mr. LOSER. Now, this rule of seniority-does it apply over the entire system? Or just certain divisions ?

Mr. LOOMIS. Well, there is seniority over an entire system, but broken up into districts; that is, it may be an operating division, or it may be a particular point of location.

Mr. LOSER. In other words, a mechanic on a particular division of the Pennsylvania Railroad will have seniority on that division, but on some other section or division he would not have seniority?

Mr. LOOMIS. Generally speaking, in the shop crafts, they have point seniority, which means a particular point, city or town or location. And they do not have division seniority.

The operating crafts generally do have division seniority. Mr. LOSER. Your answer to my question, I take it, would be “yes," from what you say?

Mr. LOOMIS. He does not have division seniority as a general rule. He would be confined, say, to Altoona, if that is where he held his seniority. He would not have seniority over the division of which Altoona was a part.

Mr. LOSER. Yes.

Mr. LOOMIS. But in the operating crafts, it generally is an operating division, or a superintendent's district. He can take any run on that district or division.

Mr. FLYNT. Will you yield to me right there?
Mr. LOSER. Yes, sir.

Mr. FLYNT. On this question, my question was directed to the answer to this primary question which underlies the whole phase of seniority as discussed by you today: that many phases of the present seniority rules are, as Mr. O'Brien just said, fully justified ?

Mr. LOOMIS. Oh, I think that is true.

Mr. FLYNT. And regardless of whether each phase of it is fully justified or fully unjustified, they are there because of what the Brotherhoods want rather than what management wants?

Mr. LOOMIS. That is right.
Mr. Flynt. And they are based upon the various contracts ?

Mr. LOOMIS. Yes.
Mr. FLYNT. I have no further questions.

The CHAIRMAN. Mr. Loomis, let me again thank you on behalf of the committee for your presentation here this morning.

The House is in session. The rollcall is just underway. That means that our presence is desired over on the floor of the House.

Personally, I am very glad to have you here with us and I am sure I can speak for the other members of the committee in saying that we welcome you this morning.

Mr. Loomis, this is not the first time that you have appeared before this committee on matters pending before us on behalf of the industry that you represent. I think it is a very helpful and hopeful sign as well to see you people in the industry becoming actively engaged and interested in these problems before you, as with all the others affecting the industry, including the employees, and as it affects the general public, the American people. So, from that standpoint, I am very glad to see you as a representative of industry, and others, who are presidents and vice presidents, members of the brotherhood organizations, and so forth, come before us expressing your views on these important problems, which I know will have great bearing on the industry itself and, therefore, the American people.

The committee will adjourn until 10 o'clock in the morning, at which time we will expect to have with us Mr. Leonard J. Calhoun and Mr. J. Elmer Monroe.

(Whereupon, at 12:15 p. m., the hearing was adjourned until 10 a. m., Wednesday, March 27, 1957.)

RAILROAD RETIREMENT AND RAILROAD UNEMPLOY

MENT INSURANCE LEGISLATION

WEDNESDAY, MARCH 27, 1957

HOUSE OF REPRESENTATIVES,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The committee met at 10 a. m., pursuant to adjournment, in room 1334, New House Office Building, Hon. Oren Harris (chairman) presiding.

The CHAIRMAN. The committee will come to order.

As the committee resumes its hearing this morning, our first witness will be Mr. Leonard J. Calhoun, consultant for the Association of American Railroads.

Mr. Calhoun, we are glad to welcome you to this committee and to have your presentation on H. R. 4353 and other bills relating to the amendments of the Railroad Retirement Act, Railroad Retirement Tax Act, and Railroad Unemployment Insurance Act. STATEMENT OF LEONARD J. CALHOUN, APPEARING ON BEHALF OF THE ASSOCIATION OF AMERICAN RAILROADS, WASHINGTON, D. C.

Mr. CALHOUN. Mr. Chairman, I am appearing on behalf of the Association of American Railroads with respect to amendments to the railroad unemployment-insurance law proposed by the Railway Labor Executives Association which are found, I believe, in H. R. 4353 and H. R. 4354, and amendments proposed by the Association of American Railroads which are found in H. R. 6016 and H. R. 6040.

By way of technical background, I might state that, from 1935 until 1943 when I went into the Navy, I was Assistant General Counsel of the Social Security Board and its successor, the Federal Security Agency.

In 1946 I headed the special social-security technical staff of the Ways and Means Committee, which was established to make a comprehensive study and report on unemployment insurance, old-age and survivors insurance, and public assistance.

Basic changes based on that 1946 study, such as virtually universal social-security coverage and immediate full benefits rather than gradually increasing benefit levels, have been adopted, and steps have been taken in meeting the problems of individuals with coverage under social security and railroad retirement, as this committee, of course, is full aware. 90453—57——28

427

Basic changes based on that 1946 study, such as virtually universal railroad unemployment system. In 1938 it was stated by the spokesman for the Railway Labor Executives Association at hearings on legislation establishing the system that,

The maximum for higher paid workers is the same as that in 36 of the States. The amount allowed for workers in the average pay class is substantially the same * * *

But today the practical minimum railroad unemployment benefit that is paid the person with wages of $1.70 per hour, the present practical railroad minimum wage, is far above State system payments. Under the half-pay provision of the existing law, this minimum benefit is higher than the maximum benefits of 31 States, and the labor executives' bill proposes that it be further increased by $6.80 per week.

There have been recurrent increases both in the railroad unemployment and sickness daily benefit levels and in the total benefits payable to a beneficiary. Under the 1938 law the maximum total of benefits a person with $1,300 in base year wages could receive was $240. Today it is $1,105 for unemployment and $1,105 for sickness. The Railway Labor Executives' bill, H. R. 4353, would increase this to $1,300 for each.

In addition, under their bill, certain long-service employees would be paid benefits up to the sum of $2,652 per year for several years. Sickness and maternity benefits have been added since 1938, financed wholly at the employer's expense. These two benefits under the Railway Labor Executives bill, would likewise be sharply increased.

For many months, the Association of American Railroads has been studying the three benefit programs under the Railroad Unemployment Act. Based on its study, it now proposes several amendments to that act. The amendments, reflected in the Association's bill, are designed to remove several inequities from existing law, safeguard the system's funds by limiting its beneficiaries to persons genuinely attached to the railroad labor market, base benefits on paycheck loss rather than on gross pay before taxes, and eliminate maternity benefits.

The Association has requested me as its spokesman to discuss these amendments and the amendments proposed by the Railway Labor Executives Association. I shall discuss these amendments proposed by each association in terms of their practical results as applied to broad situations, and their conformity to the conception that an unemployment system's purpose. This conception is that unemployment insurance is to provide a floor of protection to persons normally engaged in employment covered by it, when they are involuntarily unemployed through no fault of their own and that this protection should consist of benefits related to their normal earnings, to compensate them for a part of their wage loss, for limited periods and in limited amounts.

I might say, Mr. Chairman, that this principle that is followed even by such associations as the ultraliberal International Labor Organization which meets periodically in Geneva, in laying down what they refer to as international conventions.

The CHAIRMAN. Could I ask you a question for clarification? Mr. CALHOUN. Yes, sir.

The CHAIRMAN. In connection with your statement on the first paragraph on the preceding page, you say:

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