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to accept suitable work or to comply with instructions from the Board to apply for such work or to report to an employment office would be revised so that the disqualification would continue until such time as the employee obtained railroad employment in 4 calendar weeks with respect to each of which the employee had earnings of not less than $25.
The provision under which an employee now receives unemployment benefits for unemployment due to his participation in a "legal strike" (one not commenced in violation of the Railway Labor Act or the established rules and practices of a bona fide labor organization) would be revised so that he could no longer receive such benefits.
Two new disqualification provisions would be added. The first would provide that an employee found to have been discharge or suspended for misconduct connected with his work be disqualified for unemployment benefits until such time as he obtains thereafter railroad or other covered employment in at least 4 calendar weeks with earnings of $25 in each; and the second would eliminate as a day of unemployment any day which the Board finds is in a maternity period of an employee.
6. The same disqualification provision for sickness benefits respecting Sundays and holidays would be including as that which is now contained in the act respecting disqualification for such days for unemployment benefits. An employee would be disqualified for sickness benefits for any day with respect to which he would be disqualified for unemployment benefits for voluntarily leaving work, refusal to accept work, a discharge or suspension for misconduct, and for absence because of a strike. An employee could receive sickness benefits for no day which is in a maternity period unless the Board finds that sackness on such day is unrelated to the normal consequence of pregnancy or childbirth. An employee would be disqualified for sickness benefits for any day which occurred more than 90 days after the last day with respect to which he earned compensation in the railroad industry, except that there would be excluded from such 90 days any day in which the Board finds that the employee was unemployed due to a stoppage of work as a result of a strike, and any day in such 90 days in a registration period which begins, or in continuous registration periods the first of which begins, before the expiration of such 90 days. For this purpose, a registration period would be deemed continuous with the preceding registration period if established within 10 days after the last day of such preceding period.
To the definition of a “day of sickness” the phrase "but would otherwise be available for work” would be added. The consequence of this addition would be that an employee could not receive sickness benefits unless it could be found that with respect to such day he would have worked or been available for work but for his sickness.
7. From the definition of a “day of sickness" there would be excluded a day "which is included in a maternity period.” The consequence of this, together with the disqualification provision described in paragraph 6 respecting a day in a maternity period in which sickness is related to the normal consequences of pregnancy or childbirth, would be to eliminate all maternity benefits. In furtherance of the elimination of maternity benefits certain sections of the Railroad Unemployment Insurance Act would be amended by deleting the provisions therein relative to maternity, maternity periods, or maternity benefits.
8. Any employer, at his option, would be permitted to pay before the end of the quarter ending September 30 of any year contributions with respect to the first month, the first and second month, or the first and second and any part of the third month of such quarter. The result of this provision would be to allow employers to pay their accrued unemployment contributions before September 30 of any year.
9. The amendments would be effective with respect to all benefits paid in benefit years beginning after June 30, 1957, except the maternity benefits for a maternity period established before, and extending beyond, June 30, 1957, would be paid pursuant to the law as in effect before the amendments. The calendar year 1956 would be the base year for the benefit year beginning July 1, 1957, in the case of any individual who would otherwise not be a qualified employee with respect to such year. Otherwise, except as specifically provided elsewhere in the bill, the effective date of the proposed amendments would be the date of enactment of the bill.
EFFECT OF ENACTMENT OF H. R. 6016 AND IDENTICAL BILLS ON BENEFICIARIES AND
FINANCING OF RAILROAD UNEMPLOYMENT INSURANCE SYSTEM
The bills contain modifications of the present Railroad Unemployment Insurance Act of such a character that it is not possible to develop from the Board's records of beneficiaries and benefit payments any adequate report on its effect on beneficiaries and on the financing of the railroad unemployment insurance system. To make such a report would require extensive tabulations and investigations of employment histories and last rates of pay which would require a long time.
The difficulty in estimating the effect of the bills arises to a large extent from the fact that it would change the system from one with a uniform benefit year starting July 1, and a base year ending 6 months earlier, to one with individual benefit years and individual base years immediately preceding the beginning of the benefit year. To determine eligibility under the bills, the most important information needed is the employment record in the 6 months preceding the beginning of the employee's unemployment or sickness. This information has not been obtained under the present act because it is not needed. In addition, the bills would make changes in the existing disqualification provisions and add a number of disqualifications not now in the law. There is no sound basis for determining the effect of these.
Analysis of data on operations under the present law, however, makes possible some general approximations on the effect of the bills even though the total effect cannot be determined. It must be emphasized that the figures given are very rough estimates. They show the effect certain provisions in the bills would have had on benefits in 1955–56 when the number of beneficiaries and amount of benefits under the Railroad Unemployment Insurance Act were as follows:
The effect some provisions of the bills, considered separately, would have had on benefit payments is given below. However, the figures cannot be added to gether to get a total effect because a considerable number of beneficiaries would be disqualified by more than one provision of the bills.
The number of beneficiaries and the amount of benefits paid would have been substantially smaller if the bills had been in effect in 1955–56. Some of the ways in which this would have happened are as follows:
1. The change in reguirements to be a qualified employee would have prevented payment to many employees. A very rough estimate indicates that around 25,000 of the unemployment beneficiaries and 8,000 of the sickness beneficiaries would not have had the necessary service or earnings to be qualified. The amount of benefits that would not have been payable would have been between $10 million and $15 million. Those not qualified would have included employees with long periods of unemployment or sickness who received payments for a second benefit year in 1955–56, many of whom had more than 5 years of railroad service. On the other hand, the change to individual benefit years would have made it possible to pay benefits amounting to some $6 million to about 15,000 employees with recent railroad employment who for some reason did not work enough in the base year to be currently qualified under the present law.
2. The disqualification due to eligibility for or receipts of full retirement, disability, or pension benefits under either the Railroad Retirement Act or the Social Security Act would have prevented payment of over $12 million to 27,000 sickness beneficiaries and 4,000 unemployment beneficiaries, asuming they could all meet the qualifying requirement for unemployment compensation.
3. The 3.900 maternity beneficiaries could have received benefits in the maternity period only if disabled by some illness not related to pregnancy. This might have reduced the amount of benefits by about $3,500,000.
4. Other disqualifications would have affected many of the beneficiaries whose reason for leaving railroad employment was:
The extent to which these benefits would have been reduced cannot be determined.
5. Still other disqualifying provisions, such as the longer disqualification for failure to accept suitable work, the extension of unemployment disqualifications to prevent payment of sickness benefits in the period of disqualification, and the sickness benefit disqualification for any illness starting more than 90 days after the employee's last railroad work, would have reduced benefits further by an amount which cannot be readily estimated.
6. Benefit rates for those who could meet the qualifying requirements would in some cases have been lower and in some higher than under the present law. As compared with the present law, the benefit rate would generally have been smaller for those with few dependents and larger for those with many dependents, excluding, of course, those eligible for the maximum rate under both sets of provisions. A single man, for example, would get generally 50 to 60 cents less per day from 60 percent of the net pay after withholding taxes as specified in the bills than from 50 percent of the gross as in the present act; for a man with a number of dependents, the reverse would be true. Also, beneficiaries whose benefit rate was determined from the schedule in the present law were generally paid at a rate higher than 50 percent of the gross daily rate of pay. The bills would have removed this schedule, and this would often have resulted in lower benefit rates. In 1955–56, 60 percent of the sickness benefit rates, and 42 percent of the unemployment benefit rates were determined from the schedule.
7. Increasing the unemployment and sickness waiting period from 7 days to 9 days, exclusive of other provisions, would have reduced the amount of benefits about $3,200,000.
As stated above, the estimates of the effects of the various provisions of the bills cannot be added together because they overlap and the duplication between them is unknown. It appears that the net effect might have been to reduce the number of beneficiaries under the program, including both unemployment and sickness, by about 30,000, and the amount of benefits by $20 million to $25 million. The 1955–56 benefit year, however, was not a typical one; unemployment was at a low level with fewer beneficiaries than in any of the preceding 10 years. Thus for the future, it appears likely that the bills, if enacted, would reduce the amount of unemployment and sickness benefits paid to railroad employees by at least $25 million and perhaps more than $35 million. This would be equal to a difference in the long-run contribution rate of some one-half to three-fourths percent of payroll.
STATEMENT OF MR. HABERMEYER
This bill is silent with respect to the Railroad Retirement and Railroad Retirement Taxing Acts and it does nothing to take care of the existing deficiency in the retirement program. As expressed in my statement on S. 1313, Congress should first provide the additional revenue necessary to place the retirement system on a sound financial basis. This is a commitment which the President of the United States requested and received from this Committee of Congress as well as from the standard railway labor organizations last year when he signed the 10 percent increase in the benefit bill (S. 3616).
I was pleased to hear, in the testimony given to your committee on other amendments to our programs, that both the labor and management witnesses were agreed that the systems should be placed on a sound financial basis and were willing to support an amendment to accomplish this result.
The present bill would affect only the provisions of the Railroad Unemployment Insurance Act and the changes would result in a reduction generally in the amount of benefits paid. Therefore, the system would have the necessary financing to support the program and would pose no problems in this respect. Since I did not take a position with respect to the liberalizations proposed in S. 1313 and chose to remain neutral, I feel that I must likewise remain neutral and leave to your committee the policy questions involved in this bill. There is little that I can add now to the carefully considered and detailed presentation of the arguments for and against the bill made by the representatives of management and labor, respectively. I do not believe, however, that the differences between management and labor are necessarily so great that they could not be resolved in large measure by agreement, and I would suggest that an attempt be made in this direction.
STATEMENT OF MR. HARPER
I seriously oppose the enactment of H. R. 6016 and identical bills because, in my judgment, their purpose and effect are to weaken drastically the protection now and long afforded railroad workers against unemployment and sickness. The bills are backward looking in concept in that they would either eliminate in toto, or substantially reduce, long-established benefits which have long since come to be regarded as being reasonable and justifiable. The bills, if enacted, would be unmistakably against the best interests of railroad employees and public policy because :
I. The number of employees eligible for benefits is greatly reduced by changes in the existing qualifying provisions and by the addition of a number of rigid disqualifications not now in the law.
The bills provide for individual base years and individual benefit years for each individual employee, and the uniform use of the calendar year preceding the benefit year, as at present, is eliminated. This change alone results in the disqualitication of thousands of employees. The amount of qualifying earnings within the base year is raised from $400, as at present, to levels ranging from about $1,200 minimum to about $1,500 maximum, which, of course, disqualifies many. The requirement of earnings from railroad employment in 6 different months of the base year, 2 of which must be in the last half of the year, of an amount equal to what he would have earned in 87 days disqualifies other thousands of railroad workers for unemployment and sickness benefits.
The bills 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 bills preclude any continuance of benefits in a succeeding benefit year after their exhaustion in a benefit year, as presently provided.
Employees are, in effect, permanently disqualified who voluntarily quit employment, including those who quit under duress or provocation.
The payment of maternity benefits as such is completely eliminated.
The bills provide that an employee who is disqualified for unemployment benefits for any reason is by reason of that fact also disqualified for sickness. benefits.
Any employee who is, or upon application would be, entitled to full retirement, disability or pension benefits under either the Railroad Retirement Act or the Social Security Act is disqualified for either unemployment or sickness benefits. This provision would disqualify all railroad workers 65 or more years of age; women employees 60 or more years of age with at least 30 years of railroad service; and all persons who could qualify for disability benefits under either act. It is charitable to say that this provision is the “unkindest cut of all."
II. The amount of benefits payable both for unemployment and sickness is substantially reduced by the bills.
Under the present law benefits are computed on the basis of aggregate earnings in the base gear, or upon the basis of the last daily basic rate of pay, whichever produces the greater benefit rate. The bills at hand provide that the last daily basic rate in the base year shall be the sole basis for the computation of benefits. In 1955–56, 60 percent of the sickness benefit rates and 42 percent of the unemployment benefit rates were computed upon the basis of aggregate earnings in the base year. They were so computed because it produced a higher benefit rate as provided in the present law. These figures illustrate the extent to which benefit rates would be reduced.
The bills provide for the computation of benefit rates upon the basis of takehome pay, that is, benefits based upon the last daily basic rate less the railroad retirement tax and withholding tax applicable to such last daily basic rate. Congress in its wisdom has by provision of law waived the payment of railroad retirement and withholding taxes on railroad unemployment and sickness benefits. These bills would recapture both such taxes for the benefit of the railroad unemployment insurance trust fund, which only indirectly recaptures for the railroads themselves the taxes which the Government has waived.
III. Administration of these bills is made difficult to a degree approaching impossibility. The design and plan so carefully thought out and developed for easily ascertained and quickly paid benefits would be revised for the worse. Presently, the base year and the benefit year are fixed and uniform periods, known and easily understood by the employees, the railroads and the Board. Facts essential to the making of determinations as to eligibility for benefits and no less essential in the computation of benefits are now readily available to the Board. That would not be true if the bills under discussion were enacted.
Ascertainment and establishment of those facts in every individual case can only begin after the receipt of applications for benefits. Thereafter, in every case inquiry must be made of all the employers the newly unemployed person has had in the previous 12 months to ascertain or verify the claim as to the determining wage rate, the reasons for losing the employment, the amount of withholding tax, the total amount of employment and pay the claimant has obtained in the previous 12 months, and a specification of the months in which the claimant has worked. Additionally, for purposes of determining eligibility for full retirement, disability or pension benefits, facts as to total railroad service, age, sex, and physical condition together with all other information needed to adjudicate a claim for an annuity or monthly benefit under the Railroad Retirement Act or the Social Security Act must be established.
Since all of these time consuming inquiries and determinations must and can only be made after an employee has made his initial application, payment of benefits must and will be unreasonably delayed. In my personal judgment the very mechanics of adjudicating claims under the provisions of these bills will require from 6 to 8 weeks, and some of the more difficult cases will require 6 months or more.
STATEMENT OF MR. HEALY I am in complete accord with all of the proposals contained in H. R. 6016 and strongly recommend its unanimous approval.
In my relatively brief tenure in office I have clearly, and repeatedly, insisted that all just claims under the Railroad Unemployment Insurance Act, and only such, were to be paid promptly and in full. But I have found that this principle requires amendments, such as proposed by H. R. 6016, to conform the letter of the law to its spirit and its purpose of providing a measure of interim assistance to railroad employees suffering an involuntary wage loss. 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
1. An employee who voluntarily quit, or refused suitable work, should be rewarded,” up to a maximum of 130 days benefits, after a mere disqualification of 30 days, from a fund to which he contributed nothing; or that
2. An employee discharged or suspended for misconduct related to his work, or failure to fulfill his obligations, should be entitled to draw benefits, without any disqualification-again from a fund to which he contributed nothing; or that
3. An employee coming under maternity provisions should, in effect, receive special benefits, since maternity involves neither hazard of railroad employment or involuntary illness, and, again, without contributing a single penny to the fund; or that