The railroad retirement system guarantees a return to the survivors or estates of all railroad employees of all of the money they put into the fund plus a slight amount in lieu of interest, minus benefits paid. Social security does not.

So that the maximum today of a residual payment to a survivor or the estate of a railroad worker is $4,653 and in 1979 it will be $10,533, and you cannot buy that for the price under private insurance.

The railroad retirement system has recently added many other improvements. An age annuitant may also receive, if entitled thereto, benefits under the social security program, without any reduction in his railroad retirement check.

There are around 60,000 such individuals presently doing so and that number is increasing constantly. In point of fact, recent study revealed that 72 percent of the 1,628,000 employees for whom some railroad service was reported in 1956, had accumulated some social security credits. 405,000 of these, or 25 percent, had dual coverage in that year alone and of that number 82,000 received credit for 12 months of railroad service, and that, I believe is indicative of the amount of secondary jobholding among regularly employed railroad

workers.

Also, while the relatively small minority of railroad employees in the total population of industrial workers has the privilege of a supplemental retirement and survivor program, its members also enjoy certain rights under the minimum guaranty provisions of the Social Security Act.

Because of the 1958 amendments to that act, some 30,000 retired railroad employees, 90,000 wives and 160,000 widows, children, and aged parents received increases of about 7 percent, generally, in their annuities under the Railroad Retirement Act, effective in January 1959.

As a matter of fact, these increases for spouses are even higher, ranging from 10 percent now to 17 percent a year hence. H.R. 1012 proposes to add another 10 percent to that increase.

H.R. 1012 proposes to increase the taxes on railroad workers from $21.88 per month to $27 in 1959-61, $29 in 1962-64, $32 in 1965, $34 in 1966-68, and $36 in 1969 and thereafter, with no assurance, as experience has shown, that there will no further increases in the interim.

I would venture the opinion that when the tax assessment against employees was raised on January 1, 1952, from 6 percent to 64 percent, it was not then thought that further increases in that tax assessment would be necessary, at least in such a short space of time.

The industry's share of the proposed additional taxes for retirement purposes would be:

$57 million per year in 1959-61;

$87 million per year in 1962-64,

increasing steadily to around $185,000,000 per year in 1969.

I shall refer later to the additional tax burden upon the industry which this bill proposes under the Railroad Unemployment Insurance Act.

These proposals to saddle additional taxes upon currently active employees who have been carrying the burden of the cost of benefits to those who retired without contributing commensurately to the system-upon future entrants and upon an industry that is struggling

to recapture its losses and keep as many employees as possible on the payroll is, in my opinion, ill-timed and ill-advised.

It may interest the committee to know that a study made covering annuitants on the rolls as of December 31, 1955, who retired at age 65 and over, and who had some railroad service after 1936 contributed $240 million in employee tax contributions, and had then already received benefits totaling $1,470 million, a ratio of $6 to $1.

Furthermore, when the value of future benefits were included, their ratio of benefits to contributions was almost $12 to $1. The 1951 amendments to the Railroad Retirement Act increased annuities by 15 percent and provided for the first time annuities to wives of railroad employees.

The 1954 amendments permitted annuitants to receive full benefits even when simultaneously entitled to social security benefits. The 1955 amendments increased the wife's maximum from $40 to $54.30 because of changes in the Social Security Act, and that maximum was further increased through the social security amendments of 1958 and will be $63.50 beginning in February 1960. That does not consider or contemplate the 10-percent increase proposed by the bill. These amendments since 1951 have increased benefit payments by $278 million, or 52 percent.

In the vital statistics between 1951 and today is the following incongruous situation:

Under the railroad retirement system as of June 30, 1951, there were 407,000 beneficiaries. On June 30, 1958, there were 710,000. The total benefit payments for the fiscal year ending June 30, 1951, were $317 million; last year, $721 million.

The administrative expenses for the fiscal year ending June 30, 1951, were $4,739,000; last year, $8,433,000. I might add here, too, that the tax collections per calendar year for 1951 were $709 million; last year, $536 million, or $173 million less.

What has happened to the industry upon whose welfare this whole system depends? Revenue freight carloadings in 1951 were 4012 million; last year, 30 million, a decrease of over 10 million cars.

The revenue passengers carried decreased from 483 million to 375 million, and the average number of employees from 1,276,000 in 1951 to 841,000 in 1958; and that, gentlemen, is the average of the count on all class I railroads.

In lieu of the proposals in H.R. 1012, I earnestly recommend that a moratorium be declared against any further increases in benefits under the Railroad Retirement Act, at least until such time as the help, as you, Mr. Chairman, mentioned, given the industry and its own efforts to improve its position and stabilize railroad employment can be properly evaluated by both management and currently active employees. I am as firmly opposed to those proposals in H.R. 1012 to further enlarge or extend the already overgenerous benefits under the Railroad Unemployment Insurance Act, adding $40 million in 1959 and by 1962 $43 million per year to the present tax assessment against the industry.

The average daily benefit rate for unemployment, paced by the growth in rates of pay and amendments in 1952 and 1954, rose from $3.55 in fiscal 1951-52 to $7.80 last year and is currently in excess of $8.

This bill proposes to further increase these benefit rates from 8 to 25 percent with a general advance of 20 percent.

It also proposes, significantly, to retroactively extend benefits to employees who exhausted their rights although the opportunity to do so was rejected when the program for all other workers was adopted in the last session of the Congress.

The cost of this particular proposal is estimated between $15 million and $18 million. Under present law, railroad employees can and do draw unemployment benefits in more than 1 year, as I will attempt to show.

Actually 164,000 of the 229,000 railroad employees, or practically 70 percent, who drew unemployment benefits between July and December 1958, were also beneficiaries in the fiscal year ending June 30, 1958.

A recent study by Board technicians revealed that of 1,445,000 unemployment insurance beneficiaries in the 18-year period ending June 30, 1957, over 354,000 drew benefits in 2 years, 170,000 in 3 years, 90,000 in 4 years, and 30,000 in as many as 8 or more years.

The railroad unemployment insurance act needs reappraisal, not liberalization, for certainly there can be no fairness nor equity in the requirements that compelled the railroad industry by law over the past decade to pay out in unemployment benefits $90.5 million to employees who were discharged or suspended for just causes, or who voluntarily quit their jobs, $15.6 million to employees participating in strikes against the industry and to other employees affected by such work stoppages, when the Federal-State systems, covering the majority of the Nation's industrial workers, consider voluntary separations, discharges for misconduct and labor disputes as major reasons for the disqualification of claimants for unemployment insurance benefits.

In the last fiscal year 10,200 railroad employees who were discharged or suspended for such just causes, drew $6 million in unemployment benefits under the Railroad Unemployment Insurance Act.

Let's look at some of the reasons for their discharges and suspensions and the amount of benefits paid to such employees. Eight hundred and sixty-three drew $500,000 for being intoxicated on or when reporting for duty. Nine hundred and thirty drew $422,630 for violation of operating rules. Three hundred and sixteen drew $145,000 for responsibility in accidents. One thousand and twentyeight drew $677,000 for being absent without leave, or failure to protect assignment, and so forth. Nine hundred and eight drew $511,000 for misconduct, insubordination, negligence. Three hundred and seventy-one drew $245,000 for dishonesty and police records. Six hundred and twelve drew $417,000 for nonpayment of union dues.

I was accorded the privilege just recently of reading a communication addressed to a Member of this Congress from an employee who was discharged by a railroad, and who was appealing for help in getting reinstated. This communication, among other things, contained this statement by the employee:

The brotherhood officials have refused to help me.

Now, there was a case where even the brotherhood refused to help him for some just reason, I can assure you, but, nevertheless, under t Railroad Unemployment Insurance Act we were compelled to pay the

fellow $2,000 and more in unemployment insurance benefits, and he collected for 52 straight weeks. Thirteen thousand one hundred railroad employees who voluntarily quit during the last fiscal year collected $8,196,000 in unemployment benefits, although the only valid reason I know for quitting a job is to accept a better one, and even then the Railroad unemployment Insurance Act is unduly liberal.

To illustrate, a veteran employee with over 30 years of service voluntarily quit on July 1, 1956, to enter the real estate field. The dealer's promises did not materialize so that employee on January 1, 1957, applied for and received benefits under the Railroad Unemployment Insurance Act and collected $1,105.

Since he also worked in the first half of 1956 he drew additional benefits under the Railroad Unemployment Insurance Act beginning July 1, 1957.

Now are such persons truly entitled to extended or retroactive benefits or to any benefits whatsoever under the Railroad Unemployment Insurance Act? So far as I can determine, no other industry is required by law to subsidize its employees for hampering or halting its production or services.

In the 11 years ending June 30, 1958, over 800,000 railroad employees drew sickness benefits aggregating $402 million, and 30,000 drew benefits for maternity, totaling $31 million, all under the Railroad Unemployment Insurance Act.

Only four States provide sickness benefits, and in two of those the cost is borne entirely by employees. Yet the railroad industry is, through taxation, required to shoulder the entire burden for its employees throughout the Nation.

Only one State provides maternity benefits, but let me give you a classic example of the generosity of the Railroad Unemployment Insurance Act in an actual case.

Here is a record of benefits actually received by a female employee in a western area under the Railroad Unemployment Insurance Act: From October 30, 1954, to January 6, 1955, sickness benefits for 52 days amounting to $390; from January 17 to May 12, 1955, 116 days, maternity $975; from May 20 to June 30, 1955, 30 days of sickness benefits, $225.

A new benefit year started on July 1, and from July 1 to July 14 she collected $43.98. She returned to work on July 15. She then drew vacation pay from the railroad for 2 weeks, from August 15 to August 26, 1955.

She resigned on August 26, 1955, but received sickness benefits from August 27, 1955, to February 18, 1956, 124 days $908.92. During her previous service from July 15 to August 14 she earned $447.07, which qualified her for unemployment, sickness, and maternity benefits in that amount for the year beginning July 1, 1956, so promptly on that date, she applied for and was paid sickness benefits amounting to $447, and then from October to December 2, 1956, she again drew maternity benefits of $447, or a total of $894.

Thus, for less than 1 month's actual service over a period of 26 months that employee received $3,437 in sickness and maternity benefits under the Railroad Unemployment Insurance Act.

Unless you believe that is an isolated case, here is one that just came to my attention. A female employee who resigned from rail

road service after having been employed for 8 months, September 1955 to May 1956, and those dates are important, received maternity benefits under the Railroad Unemployment Insurance Act in connection with the births of two children, one born 10 months after her resignation from the railroad service, the other born a year after that.

Benefits in each case amounted to $975. Here is how that was and can be done: She resigned in May 1956. The first child was born in March of 1957 and the second in March of 1958. Her first maternity period began in the benefit year beginning July 1, 1956, for which the base period was the calendar year 1955.

The second maternity period began in the benefit year starting July 1, 1957, for which the calendar year 1956 was the base year. While employed her daily rate of compensation was around $15. Her total earnings for the 8 months of actual employment were approximately $2,500 and on the basis of which she collected an additional $1,950 in maternity benefits.

The Railroad Retirement and Social Security Act provides immediate annuities to retiring workers entitled thereto, but it is permissible under the Railroad Retirement Act for a railroad worker to defer the effective date of his retirement and, in the interim draw unemployment or sickness benefits. These practices are costing the railroad industry around $12 million per year.

During the past 3 years around 40,000 persons were granted annuities under deferred retirements.

Here is a case: A man aged 67 began railroad service in July 1948. He ended his service in December 1957. He had a total of 114 months of railroad service, which does not qualify him for railroad retirement, but he applied for railroad unemployment insurance benefits under the Unemployment Insurance Act in January 1958.

In our policing program we found that he was available for and seeking work, so we paid him benefits. The chance of his getting a job was very remote but we had to pay him the benefits.

On March 27, 1958, social security awarded him an annuity of $95.70 (which is now $102), retroactively to 1957. Meanwhile, we paid him unemployment benefits under the Railroad Unemployment Insurance Act totaling $875.93.

When he received his social security award we recovered $551 of that amount. This claimant reported some employment between July and October 9, 1958-bear in mind July starts a new benefit yearwhen he was injured working outside of the railroad industry, so the very next day on October 10, 1958, he began claiming sickness benefits based on his 1957 earnings, and through January 16, 1959, collected $450.

Although this claimant is not entitled to an annuity under the Railroad Retirement Act, has not rendered any railroad service since December 1957, was injured in an occupation outside of the railroad industry, has received and is receiving an annuity under the Social Security Act by reason of his age, he has been able thus far to collect over $775 from the Railroad Unemployment Insurance Act and can collect at least another $450.

Furthermore, benefits are never reduced or canceled in cases of fraud under the Railroad Unemployment Insurance Act, as they fre quently are under the Federal-State system.