STATEMENT OF HON. W. J. BRYAN DORN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA

Mr. DORN. Mr. Chairman, gentlemen of the subcommittee, I am not going into any detail because you are much more familiar with the technicalities than I ever would be.

My bill, H. R. 3974, provides for the same features as many of the others. Retirement at the age of 60 with 30 years' service and any age with 35 years service and also provides in the second section of the bill that the monthly compensation be based on any 5 years prior to 1937 instead of 1924-31.

I would like to emphasize here today the fact that the railroad people with whom I have come in contact back home, without a single exception that I can recall, are for legislation of this type.

I live at Greenwood, S. C., which has five different railroads. It is a considerable railroad center. So I am familiar with the thinking of railroad people.

From what I have been able to learn they are very much disappointed with the way the Retirement Act is working at the present time, particularly in view of the fact that they are paying twelve and a half percent, or, at least six and a quarter percent, and the management six and a quarter, which makes a total of twelve and a half, the largest percentage in any industry in any kind of retirement fund in the country today.

I might say to the committee that last fall in Columbia, S. C., the State delegation did hold an open delegation meeting. We had about 31 witnesses from practically every segment of the economy and we did have representatives of the railroads to come before the committee in open session and advocate some legislation of this nature.

I recall particularly one individual who said that he would have to work 48 years before he could retire under the present law.

If I remember correctly, he has already put in about 40 years and he will have to work 8 more before he can retire.

During those 48 years he estimates he will have paid into this fund much more than he could ever possibly draw even if he lived to be 85 or 90 years old.

That is all I have to say, Mr. Chairman and gentlemen of the committee.

I just wanted to come here to lend my endorsement to some legislation. I have the utmost confidence in this committee as far as working something out is concerned. I realize, of course, your major problem is protecting the fund, the money that is now in the fund.

I would not dare to try to suggest to you what should be done because I think you are much more familiar with this fund than I. We all realize that it is a problem.

That is all I have to say, Mr. Chairman.

Mr. MACK. Thank you very much, Mr. Dorn.

Does anyone have any questions?

Mr. MOULDER. I have no questions, but I wish to compliment the gentleman. He has done splendid work in the support of the railroad retirement program and he should be complimented on the bill which he has introduced.

Mr. BEAMER. This morning while we are passing out compliments, I wish to especially compliment the gentleman from South Carolina. Seriously, he has overestimated the ability of this committee when he says he has complete confidence in it. That is the reason we are calling members and witnesses before the committee, because we realize it is a problem.

Mr. DORN. It is one of the most perplexing problems before this committee. There is not a member of this committee or subcommittee that does not want to solve this problem.

Mr. BEAMER. We appreciate your appearance.

Mr. DORN. Thank you, sir.

Mr. MACK. Mr. Harris, do you have any questions?

The CHAIRMAN. I believe not, except I want to extend a cordial welcome to our colleague from South Carolina.

Mr. DORN. Thank you, Mr. Chairman.

Mr. MACK. The next witness is our colleague and a member of the Committee on Interstate and Foreign Commerce, Hon. Torbert H. Macdonald. Mr. Macdonald, we will be glad to hear you at this time. STATEMENT OF HON. TORBERT H. MACDONALD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. MACDONALD. Mr. Chairman and members of the subcommittee, I am Torbert H. Macdonald, Representative from the Eighth Congressional District of Massachusetts.

Before I go into the main body of my testimony, I want to thank you, Mr. Chairman, and members of this committee for granting me this privilege of making a brief statement relative to my bill H. R. 5672.

My bill, if enacted into law, would amend three Federal laws which play an important part in the lives of active and retired railway workers and their families. To be specific my bill would revise the benefit formulas in the Railroad Retirement Act so as to provide an increase in annuities to supplement the admittedly insufficient raises we were forced to accept last session. It would also amend the Railroad Retirement Tax Act so as to put the retirement system once more on a sound financial footing. Finally, the measure would liberalize the Railroad Unemployment Insurance Act so as to provide the unemployed or sick railroad worker more realistic benefits as to their amount and as to their duration.

Mr. Chairman, the cost of living is a frightening thing to the retired railroad worker. Since 1936 the cost of living has risen 98 percent while the retired railroad workers' benefits have increased only by 82 percent. My bill which increases almost all annuities, pensions, and insurance lump sums by 10 percent will help close this gap which can only mean hardship to the retired worker and his family. Already a considerable portion of the 10-percent annuity increase provided last session has been swallowed up by increasing price levels.

I am happy to say that the annuitants on the railroad retirement rolls who did not receive an increase in benefits last year will not be forgotten under the provisions of H. R. 5672. A 10-percent increase would be provided for all of the 168,000 individuals who did not qualify under the 1956 amendments because their benefits were com

puted under the so-called social-security formula. Ninety-four thousand of these people are widows. Their need for immediate relief is highlighted by the fact that the average amount paid to a widow in current pay status in December 1956 was only $52.55. My bill also raises the maximum on the spouse's annuity from $54.30 to $59.73, and thus provides increases for the 64,000 wives and dependent husbands who were denied benefit increases on the basis of the maximum in effect last year.

H. R. 5672 increases maximum creditable compensation under the retirement act from $350 to $400 a month so that annuities in the future will keep pace with our expanding economy.

My bill also provides certain other liberalizations in the railroad retirement system. It would give women railroad workers and the wives of retired workers the same option to retire at age 62 which was extended to women under the 1956 Social Security Amendments. At age 62 their annuity would be reduced to 80 percent of the amount they would have been entitled to at age 65. Moreover, the "all or nothing" income limitation for disability annuitants, which causes them to lose benefits for any month in which they earn $100 or more, would be liberalized so that they could earn $1,200 a year before any benefit loss would be incurred. Likewise, the 7-day monthly work test for survivor beneficiaries who are out of the country would be modified so that they would come under the $1,200 test which is applicable to survivors in the United States.

In providing greater benefits for railroad people we are ever mindful that we have a basic obligation not to jeopardize the financial stability of their retirement system. The increase in the tax rate of 114 percent and in the tax base of $50 a month will finance the benefits provided by the bill and also almost completely eliminate the deficiencies which have plagued the retirement fund in recent years. Those who raise objections that this increase puts an extreme tax burden on railroad employers should realize that the combination of social security and private pension costs to employers in many other industries are much higher than the costs to employers in the railroad industry. They should further remember that employers in these industries usually bear proportionately more of the pension cost because there are many more private plans and they are financed primarily by the employer.

My bill also offers more realistic protection to workers who are out of work or who are temporarily unable to work because of illness or injury.

Daily benefit rates for both unemployment and sickness which now range from $3.50 to $8.50 a day would be increased to $4.50 to $10.20 a day. This means that the full weekly rate of unemployment and sickness benefits will range from $22.50 to $51. The bill would also increase the minimum daily rate guaranty from 50 percent to 60 percent of the worker's daily compensation on his last job in a base

year.

Moreover, H. R. 5672 would provide additional unemployment benefit periods related to years of service. These periods would be in addition to the normal period for which the worker currently receives benefits. Thus, an unemployed man with 20 or more years of service might receive benefits 412 years longer than his entitlement under existing law.

All these improvements in unemployment and sickness benefits would be financed by a higher schedule which increases or decreases the tax on the employer in accordance with the amount of money in the unemployment insurance fund. The present tax rate runs from 0.5 to 3 percent while the new rate would range from 2 to 4 percent. Mr. Chairman, my bill has had long and careful consideration by representatives of the standard railway labor orzanizations. It is the result of a lot of hard work. It makes much-needed improvements in the railroad retirement and unemployment insurance systems, but it does so within the context of sound principles of financing. Early passage of this bill would be of great value in helping the active and retired railway workers and their families in my own district and State, as well as throughout the country. It is my hope that this committee will act promptly on this measure so that it can be reported to and acted upon by the House at an early date. Thank you.

Mr. MACK. Thank you, Mr. Macdonald.

Mr. MACDONALD. Thank you, Mr. Chairman.

Mr. MACK. The next witness is our colleague from Minnesota, Hon. John A. Blatnik.

STATEMENT OF HON. JOHN A. BLATNIK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. BLATNIK. Mr. Chairman, I appreciate the opportunity to appear before this committee in connection with my bill, H. R. 5456, because I believe it will make the most important improvements in the Railroad Retirement and Unemployment Insurance Acts since the major amendments of 1951.

I do not need to remind this committee that such legislation is long overdue. As you pointed out on the floor of the House in January, Mr. Chairman, the 1956 amendments were

admittedly insufficient, but we passed the legislation as an emergency relief measure with the understanding that this matter would be considered again during the 85th Congress.

My bill is identical with the Harris and Wolverton bills. It will increase practically all retirement and survivor annuities by another 10 percent. The bill recognizes the extreme hardship facing retired railroad workers who are trying to maintain themselves on income which is clearly inadequate. We must be especially conscious of the effect of continual increases in living costs on these people. We know that the rise of one-half of 1 percent in the cost of living in the last 3 months brought wage increases to 1.4 million workers whose union contracts contain escalator clauses. Surely it is time that we recognize, as well, that people living on retirement incomes are entitled to corresponding increases.

I am especially happy over the fact that this bill extends the 10 percent increase to some 168,000 people who were not included in the 1956 amendments because their benefits were computed under the so-called social-security formula. Of this group, 94,000 were widows whose average payment in December 1956 totaled only $52.55 per month. It is hard for me to imagine how women who are left alone in the world by the death of their husbands can man

age to exist on such a pittance. Similarly, this bill will increase the maximum on the spouse's annuity from $54.30 to $59.73, so that some 64,000 wives and dependent husbands will receive more adequate payments.

Certain other inequities which call for revision have also been recognized in this bill. Women railroad workers and the wives of retired workers will be entitled to the same option to apply for reduced benefits at age 62 as do women under the new social security amendments. It revises the earnings limitation on disability annuitants so that they can earn up to $1,200 a year in employment outside the railroad industry without losing their monthly disability benefit. And it calls for payment of an insurance lump sum even though there are survivors entitled to annuities. Under existing law, such lump-sum payments can be made only if there are no survivors immediately eligible for benefits.

I believe the bill is sound because it also recognizes the rights of younger railroad employees by increasing benefits for those who are unemployed or out of work because of illness or injury. Present rates, which are based on a schedule paying from $3.50 to $8.50 a day, would be increased to range from $4.50 to $10.20 a day. The bill would also increase the minimum rate guaranty from 50 percent to 60 percent of the worker's daily compensation on his last job in a base year. Moreover, the unemployed railroad worker who has had 5 years or more of railroad service, and who did not voluntarily leave work without good cause, can receive benefits for a longer period. These extended periods would vary in length, depending upon the number of years of service, so that an unemployed man with 20 or more years of service would receive benefits for as much as 42 years longer than he can under existing law.

While I am happy to sponsor this bill because it represents a good step forward in the right direction, I cannot help but feel that there still is much more to be done for the present railroad retirement workers and their families. I recognize the necessity of taking into account the future equities of the present work force and the problems of the industry, but it is about time we start thinking about the retired worker also. Many proposals have been put forward to really bring the railroad retirement system up to date, but in each case we are told "it costs too much." It never ceases to amaze me that in this Nation of ours, with its tremendous wealth and productive capacity, with its $412 billion gross national product, when it comes to taking care of the Nation's older folks we are always told "it costs too much." We have billions to spend on just about every other conceivable matter but never enough for the old folks.

We must start thinking in terms of people, not budgets and tables. We've solved big problems before. We can solve this one, too, if we put our minds to it.

We must seriously consider the adoption of such bills as H. R. 3974 which permit full retirement at age 60 after 30 years of service or after 35 years of service regardless of age. Annuities should be based on 5 years of highest earnings before or after January 1, 1937, instead of the completely outmoded present test period of 1924-31.

The last employer" clause should be eliminated as provided in H. R. 4523. Retired railroad employee should have the privilege