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Congress adopted, an amendment basing benefits on the claimant's last daily pay rate in his base year. However, in situations where the annual wage schedule, which was also liberalized in 1954, will pay a higher benefit, they recommend that this basis be retained and it is still in the law.

Thus the annual wage-benefit schedule was scrapped and the daily pay-rate formula was adopted in all cases where the annual wage formula produces low benefits (cases where the claimant worked much less than the full base year). But the annual wage has been retained even in instances where its use produces indefensibly high benefits (cases where the claimant worked all or nearly all the base year).

The railroad association proposal is that the last daily pay rate should govern in all situations-as daily unemployment benefits should depend in all situations on daily pay lost by unemployment.

LIMITING BENEFITS TO GENUINE RAILROAD EMPLOYEES

Under present law eligibility for benefits is based on a flat specified amount of earnings in the claimant's base year. At present this amount is $400. The railroads have proposed that this requirement be changed to one which is more realistic.

The basic proposed change is that, instead of a flat amount, the claimant must have earned an amount equal to 87 times his daily pay rate. This, of course, means that he must have been in railroad work at least a third of the working days in his base year. Such a requirement, whether for 87 or some greater or lesser number of days, is fairer than basing eligibility on a flat amount. There is no defensible theory to qualify a $28 per day man in half the time necessary to qualify a $14 per day man.

The objection of the railway labor executives to the provision just described was very limited and unconvincing. The principle was not and could not be attacked. The basic reason for the proposal was not and could not be attacked. The argument was only that "the amount of requisite base year earnings would be drastically increased (i. e., to 87 times the basic daily rate, which in the case of a $15 rate, barely above the present minimum would be over $1,300)."

No statement was made that persons working in less than a third of the working days in a base year have shown themselves to be genuinely attached to railroad employment. No suggestion was made that some specified smaller number of days should be used. No reason was advanced to support the flat earnings requirement of existing law.

The principal attack was made on the further proposal that, to qualify, the individual should perform at least a small amount of work in each of 6 calendar months, including 2 in the last half of the base year. A person can meet this requirement who begins work toward the end of April or of May and does his last work shortly after the beginning of September or October.

The attack on this provision was basically a defense of the present practice of paying benefits to employees whose work is so casual that they do not meet even this requirement. The spokesman for the railway labor executives stated: "A substantial amount of railroad work, particularly in the northern regions, is seasonal and is performed in areas where other work is not readily available in the off season. Many of the employees engaged in this seasonal work are firmly attached to the railroad industry, return to it year after year, but when the season is short may work less than 6 months."

He assumes that unemployment and sickness benefits should properly provide subsistence for the major part of the year for persons engaged therein. He ignores the whole problem raised by seasonal employment and imples that those who engage in it may properly expect to be supported the major part of the year by unemployment insurance.

He denies the commonsense conclusion that typically persons working only 4 or 5 months in a year in railroad work do other work in the year, and states: "In support of this proposition the railroads point out that substantial numbers of unemployment insurance beneficiaries work in less than 6 months of the base year. It is then asserted with no proof whatever that this condition is not indicative of unemployment exceeding 6 months but of shifting to nonrailroad jobs."

However, he is certainly familiar with the statistics.

For example, in 1954, some 215,000 persons worked for railroads in only 2 to 5 months. But unemployment benefits were paid to only 40,000 of beneficiaries with base year wages of less than $1,300.

The issue is establishing a realistic safeguard of the drain on the system created by persons who have only brief railroad work but who draw benefits instead of seeking other work.

It is contrary to equity and public policy to continue to invite persons to sit back and draw benefits after engaging in railroad work for only a minor part of the year.

RAILROAD UNEMPLOYMENT-INSURANCE BENEFITS FOR STRIKERS

THE STRIKE-BENEFIT ISSUE

The basic issue of paying unemployment benefits is raised by the railroad industry's proposal to delete the words underlined below in section 4 (a−1) of the Railroad Unemployment Insurance Act. The section as presently written denies benefits to an employee for “(iii) *** any day with respect to which the Board finds that his unemployment was due to a stoppage of work because of a strike in the establishment, premises or enterprise at which he was last employed, and the Board finds that such strike was commenced in violation of the provisions of the Railway Labor Act or in violation of the established rules and practices of a bona fide labor organization of which he is a member."

With the omission of the italic words, this strike disqualification provision would be in line with other unemployment systems. But as presently written it is out of conformity with States as the italic matter limits the strike disqualification of "wildcat" strikes-and so all authorized strikers receive benefits. The issue is whether the railroad unemployment-insurance system, which is financed wholly by railroad taxes, should provide "strike benefits" to railroad employees striking against the railroads, or whether its benefits should be granted only to persons who are involuntarily unemployed.

Except for the railroad system, all unemployment insurance systems have a strike disqualification applicable both to "legal" and "illegal" strikes.

HISTORY OF STRIKE DISQUALIFICATION

The President's Committee on Economic Security, which President Roosevelt established in 1934 to work out the original social security proposals, had a special board which worked out appropriate unemployment compensation provisions. The then Chairman of the National Mediation Board, Dr. William N. Leiserson, testified in 1935 before the Senate Finance Committee with respect to the unemployment compensation provisions. He stated (hearings, p. 259), “I worked particularly on the unemployment compensation provisions."

At the request of the Finance Committee, he furnished copies of the two model bills developed by the staff and approved by the Committee.

These model bills each provided (pp. 601 and 623 of the hearings) that: "An employee shall not be eligible for benefits for any week in which his total or partial unemployment is directly due to a labor dispute still in active progress in the establishment in which he is or was last employed."

This provision followed the decision of the Advisory Council to the Committee on Economic Security which was composed of outstanding citizens including Grace Abbott, George Berry, and William Green.

This Committee made a detailed report on appropriate legislation. It contained the following (p. 228, hearings):

"Types of unemployment not benefited

(1) Unemployment of persons directly engaged in trade dispute for duration of dispute."

DISQUALIFICATION UNDER STATE SYSTEMS

Disqualification of strikers for benefits is provided for in the law enacted by Congress for the District of Columbia, and by the legislatures for the State unemployment insurance laws of every State. No distinction is made between "lawful" and "wildcat" strikes.

Exclusion from benefits for the entire duration of the active progress of the labor dispute is the rule in all but two States. As stated in the United States Department of Labor publication, Comparison of State Unemployment Insurance Laws (1956, p. 198)—

"Only two States provide for a definite period of disqualification * * * New York *** after the expiration of 7 weeks and the waiting period * * * Rhode Island 6 weeks * * * and a 1-week waiting period."

INTERNATIONAL RULE

The rule of disqualifying strikers from benefits is recognized not only nationally, but internationally.

The social security standards adopted by the International Labor Conference in Geneva in 1952 provides (art. 69) for suspending benefits

"(1) In the case of unemployment benefit, where the person concerned has lost his employment as a direct result of a stoppage of work due to a trade dispute ***

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This was adopted without controversy by the labor degelates and employer delegates of all the nations, including the United States, participating at the Conference.

REASON FOR THE STRIKE DISQUALIFICATION

As stated in Digest of Issues in Social Security, Part III, Chapter III, Report to the House Ways and Means Committee, Senate committee print, 80th Congress, 1st session, 1947:

"Disqualifications are intended to prevent payment of benefits to an individual whose unemployment is a result of his own voluntary act."

A. J. Altmeyer, Social Security Board Chairman, later Commissioner, in hearings in 1939, pages 2332-2333, in testifying on strike disqualifications, stated:

"Benefits are limited entirely to involuntary unemployment. I am not suggesting any liberalization in that regard. I think the proper theory of unemployment compensation is that benefits should be paid only for involuntary unemployment."

Nelson H. Cruikshank, on behalf of the A. F. of L., in 1946 hearings on social security before the Ways and Means Committee, stated at page 1402: "Mr. WASIELEWSKI. Do you believe that unemployment-compensation benefits should be paid a man out on strike?

"Mr. CRUIKSHANK. The position of the American Federation of Labor is that unemployment compensation programs should be completely neutral and our position has traditionally been that labor disputes between employers and employees are something for which the labor organizations themselves should bear the cost."

POSITION OF RAILROAD RETIREMENT BOARD

The Chairman of the Railroad Retirement Board has made no comment on the strike-benefit issue. In the report to the chairman of this committee, on the railroad industry bill by the Railroad Retirement Board, the employee representative states that the proposed deletion would—

“*** abolish the long established congressional policy, which has been in effect from the very beginning of the system, for the payment of unemployment benefits for time lost due to orderly, legitimate, and legal strikes, conducted solely to rectify or improve conditions of employment in full accord with the quite specific and carefully considered provisions of the Railway Labor Act and in full accord with the provisions of the laws and constitutions of the railway unions, long and universally recognized as respectable, well-run, and responsible organizations."

The carrier representative states in this report:

"Certainly, it was hardly the intent to subsidize persons whose unemployment is attributable to their own decisions. *** The spirit of the law should never have contemplated that * * * employees should draw unemployment benefits from a trust fund provided solely by employers while on strike against the industry * * *.

“Although *** only 300 persons received benefits of some $63,000 while on strike in 1955-56 there were 18,100 such beneficiaries in the previous year who received in excess of $8 million. In the present fiscal year there have already been 3 work stoppages involving some 1,700 railroad employees, all eligible for benefits under present law."

ARGUMENT OF RAILWAY LABOR EXECUTIVES

Mr. Schoene, on behalf of the railway labor executives, states that railroad spokesmen

"point out, as they did in 1938, that the railroad act differs from unemployment compensation acts generally in that it disqualifies employees who are unemployed because of a strike in which they are participating only if the strike was commenced in violation of the Railway Labor Act or of the laws of the labor organization to which they belong. This difference has existed since 1938. It was consciously adopted in recognition of the fact that the procedures of the Railway Labor Act themselves subject railroad employees to much greater restrictions than are applicable to other industrial employees. It was believed that the procedures of the Railway Labor Act were such as to assure that every means of amicable adjustment of disputes would have been exhausted before a strike would occur; consequently, there was no justification for denying benefits for unemployment occurring during a strike that was not in violation of the Railway Labor Act or of the laws of the organization."

THE 1938 ACT

The theory above expressed as to why railroad employees should receive unemployment benefits during strikes must have been developed since 1938. Examination of the testimony before the Senate and House committees on the bill adopted in 1938 establishing the railroad unemployment system, shows that this recent argument was not advanced at that time. The report of neither committee assigns any reason for adoption of the language which permits strike benefits to be paid.

The record shows that the basic issue contested in 1938 was whether there should be a separate unemployment system established at that time for railroad employees-not whether particular provisions in the long and complex bill should be adopted, revised, or rejected.

The hearings were held at the very end of May and the first of June in the House, and the first of June in the Senate-near the end of the session. The Senate committee chairman told the labor executive spokesman (p. 197 of hearings):

"You realize the legislative situation now. * * * There would be objection to the bill, so I will move that the Senate proceed to its consideration. It is going to be difficult to obtain Senate passage, but I will do all I can. "Mr. Hay. Well, we count on you to work that out for us.

"The CHAIRMAN. You had better count on the administration leaders to work that out I might suggest to you the proper persons to work on. I appreciate the confidence and faith."

The bill was reported out by both committees shortly after the hearings and passed exactly as drawn by the railway labor executives save only deletion of a minor provision permitting free transportation of Railroad Retirement Board employees.

INVALIDITY OF ARGUMENT FOR PAYING STRIKE BENEFITS

As shown above, legislative history negatives the argument that the provision permitting strikers to receive strike benefits from the railroad financed railroad unemployment fund "was consciously adopted in recognition of the fact that the procedures of the Railway Labor Act themselves subject railroad employees to much greater restrictions than are applicable to industrial employees." Instead the legislative history makes clear that the long and complex bill was rushed through as drawn by the railway labor executives.

More important than the question of how the provision permitting strikers to receive benefits came to be adopted is whether it should be retained. The railway labor executives argue now that there was in 1938 a vast disparity in the rights of labor under the Wagner Act and the rights of labor under the Railway Labor Act. Their representative inadvertently admitted a substantial change in relative treatment in railroad and industrial employees in stating that

*****it might well be that if the strike disqualifications in State unemployment compensation acts were reconsidered today in the light of the Taft-Hartley Act, they too might be relaxed."

The fact is that despite the several sessions of each the 48 State legislatures since the Taft-Hartley Act, with hundreds of changes made in State unemployment laws, no strike benefit restriction has been relaxed.

That the Railway Labor Act imposes no unwarranted burdens on railway labor is indicated both by its provisions, its history and the admission by Mr. Harrison in his testimony on behalf of the railway labor executives at the Senate hearings-when he stated that that act was worked out by railway labor and management and was the finest statute that the mind of man could devise.

The strike benefit issue, for the railroad system covering railroad employees and for State systems covering all other employees, is identical. Certainly no benefit payments are warranted during strikes because of the basic considerations leading to the model State law provisions, framed and approved with labor participation and the subsequent defense of those considerations by the Commissioner of Social Security, and the adoption of the same restriction by the International Labor Organization.

For, as stated by Commissioner Altmeyer with respect to liberalizing the strike provisions :

"I am not suggesting any liberalization *** the proper theory * * * is that benefits should be paid only for involuntary unemployment."

Nor have the railway labor executives advanced any reason why they do not agree with the A. F. of L. position, above quoted, that—

"unemployment compensation programs should be completely neutral and our position has traditionally been that labor disputes between employers and employees are something for which the labor organizations themselves should bear the cost."

MATERNITY BENEFITS

An issue in the proposed revision of the Railroad Unemployment Insurance Act is whether maternity benefits shall be paid hereafter.

Female employees who decide to raise a family presently receive an average of more than $900 per child under that act. The question is whether such special treatment of this special group should be part of a program paying benefits for involuntary unemployment.

This issue is to be clearly distinguished from the issue of sickness benefits. For sickness benefits are a common hazard of all employees of both sexes and all ages. This basic distinction between maternity and other sickness has been recognized in all four State systems which pay sickness benefits-three of which pay no maternity benefits and one which pays in very limited amounts. As stated in the U. S. Department of Labor publication, Comparison of State Unemployment Insurance Laws-1956 edition, page 127:

"Types of disability excluded.-All the laws exclude or limit benefits for disability due to pregnancy. New Jersey does not pay for any period of disability due to pregnancy, miscarriage, or abortion. California provides payments only for disability which lasts more than 28 days after termination of pregnancy, and New York only for disability which occurs after a woman has worked in covered employment for at least 2 consecutive weeks following the termination of pregnancy. In Rhode Island, benefits for disability resulting from pregnancy are limited to 12 consecutive calendar weeks beginning 6 weeks before the expected date of childbirth and ending not more than 6 weeks after childbirth. Additional weeks may be compensated only if there are unusual complications as a result of childbirth."

Rhode Island, the only system which pays maternity benefits, recognizes that the hazard is in no way related to employment, and finances benefits solely by employee contributions. The maximum payable a person in Rhode Island is $360, and only to one with $1,080 in base year wages. Under the railroad system, a woman with $1,080 in base-year wages can receive $1,080 in maternity benefits and $1,080 in other sickness benefits, paid for entirely by the railroads. In the Railroad Retirement Board's report on the pending proposals, the Chairman is silent on the matter of maternity benefit payments.

The labor member of the Board states:

"The bills, if enacted, would be unmistakably against the best interests of railroad employees and public policy because:

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