not passing the slightest judgment on the lawmakers, but we do feel that a very thorough investigation of this subject and a running down of what these factors amount to in a country the size of this, with its conflicting interests and its rapid changes in economy, which lead to rapid developments of substitutes, is highly important. I assure you, sir, that this is not a Fabian policy; it is not stalling. Rather, by placing emphasis on the beginning and end of our statement, I should like to point out that it is and is intended to be con structive. Mr. LEWIS. Mr. Evans, somebody or some institution will have sometime to make the decision as to the time of application of this act. Chambers of commerce might differ about it, although they would speak, of course, with great persuasiveness. Can you think of any authority likely to make the decision with more responsibility than the Chief Executive? Mr. EVANS. I should not go into that question, sir. I think we have had experience, for instance, in Wisconsin. We have had experience in New York. The suggestion is that you get a commitment to the principle and have it go into effect if and when pay rolls come up to a certain level. But I have been told while this was under discussion, by friends of the measure as it stands, that such a measure might be politically inexpedient because it might pass over into another party. The existence of such a sword of Damocles hanging over industry would be unfortunate. Mr. LEWIS. That would leave that decision to nobody, nowhere. Mr. EVANS. What creates these reserves except production and the functioning of private industry? Mr. GADSDEN. Mr. Chairman, may I call your attention to the fact that our report, in order to meet that objection, has recommended that a thorough study be made by a commission which, among other things, would report when, in its judgment, the industry of this country is in a position to stand this additional imposition? May I also add my own personal viewpoint, that any plan of this kind, to be successful, in my judgment, should be a contributory plan? I do not believe that you can get American industry to accept this burden alone. Mr. COCHRAN. Will the gentleman yield there? Mr. GADSDEN. Certainly. Mr. COCHRAN. Contribution in how many ways? That is, the employee and the Government-would you make the Government a contributor? Mr. GADSDEN. The Government is necessary only in the case of default or deficit in the fund. I think there should be some fair basis and proportion, which I have not studied. The employee should be required also to contribute, not only to his support when he is out of a job but to the support of his associate when he is out of a job. It is a social obligation. Mr. LEWIS. I am frank to say that if I were a member of my own State legislature of Maryland again when this subject came up, your point of view would have a very, very earnest advocate, but it is our view that under this bill that kind of action may be taken by the legislature; that we have protected it in that situation. Mr. GADSDEN. May I follow that, then? How would you figure the contribution of the employer? If part of that fund were not paid by the employees, then the employer would have to contribute that much greater amount than he would in some other State. Mr. LEWIS. Are you thinking about the 5-percent tax? Mr. LEWIS. But there are variants in the application and the benefits are restricted, I think, to 10 weeks. Then the employee is off the list, without regard to the human situation. He must have been in the employ a certain prescribed time before he can file his claim. There are variants in which any contribution likely from the employee would be well taken up, so that I think the objection is a provisional one. Mr. EVANS. Mr. Chairman, if I may add a word? Mr. LEWIS. Yes. Mr. EVANS. Perhaps I have not sufficiently stressed this, but I have lived with this problem day and night over long periods. I am very earnestly concerned about it. It has been my lot at times also to have something to do with the rapid development of organizations to handle large problems, and I have seen at close range the operation of the Federal State employment office in Philadelphia, which is one of the three in the country, and has very fortunately come into existence to handle the overload that the C.W.A. has put on it. But I think I can suggest how utterly inadequate that best of all public employment offices in the country is to handle the machinery of such a program as this in 1 or 2 years. That is only one aspect and here are about three pages of the problems, which are very practical problems, which must be solved, if we are to solve the question. It is not Fabian. It is asking for the appointment of a real Federal Commission, which we do not have very often, with all the characteristics and qualities which they have in the British commissions. Mr. LEWIS. More than that, Mr. Evans, a commission giving complete devotion to the task, giving the subject all of their time, it is all but impossible for the Members of Congress to give their subjects adequate attention. Mr. EVANS. I think I understand that. I think that there we are not in the slighest disagreement, sir. Mr. LEWIS. We thank you, gentlemen. We will meet and resume tomorrow morning in this room at 10 o'clock. (Thereupon, at 12:40 p.m., the subcommittee adjourned to 10 a.m., Wednesday, Mar. 28, 1934.) UNEMPLOYMENT INSURANCE WEDNESDAY, MARCH 28, 1934 HOUSE OF REPRESENTATIVES, Washington, D.C. The subcommittee met at 8 p.m., Hon. David J. Lewis (chairman) presiding. Mr. LEWIS. Mr. Green, you may proceed. Will you please give your name and your relation to this subject in a general way? STATEMENT OF HON. WILLIAM GREEN, PRESIDENT AMERICAN FEDERATION OF LABOR, WASHINGTON, D.C. Mr. GREEN. I am Mr. William Green, president of the American Federation of Labor. I appear here tonight as a representative of the American Federation of Labor in support of this bill, H.R. 7659. I think that in the beginning I might, with profit, emphasize the primary purpose of the bill, as I understand it. I think it is found in section 2. That section reads as follows: (a) There shall be levied, assessed, and collected annually from every employer subject to this Act, for the taxable year commencing July 1, 1935, and for each taxable year thereafter, an excise tax measured by an amount equal to 5 per centum of the employer's pay roll as defined in section 1 of this Act: Provided, That said tax shall be paid after the close of each taxable year and may be paid in quarterly installments, under suitable regulations promulgated by the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury. (b) Any employer who has paid the contributions required of him under a State law duly certified under section 3 of this Act may credit against the tax thus due the total of the two following amounts: (1) The amount of contributions which he has actually paid during the taxable year under such State law; and (2) The amount by which these paid contributions were less than his largest required contributions under such law in any previous taxable year. Now, I construe that to mean that the real purpose embodied in the bill, its chief objective is to promote the enactment of unemployment insurance legislation in the different States. It is designed to accelerate and promote the enactment of unemployment insurance legislation, either providing for the creation of unemployment reserves, as provided for in the Wisconsin act, or for the purpose of creating an unemployment State insurance fund. We feel that that is highly commendable, and that if this proposed bill is enacted into law it will serve as a distinct contribution toward the enactment of State unemployment insurance legislation. The years since 1929 have driven home to the public conscience the horrors of unemployment in economic terms and in terms of human deterioration. Unemployment is something practically outside the 52846-34- -17 253 control of the individual wage earner. Economic and technical forces may change industry over night and wipe out the demand for skills that workers have acquired by decades of work. Depression such as we are still going through sweeps aside our normal business arrangements as the uncontrolled forces of nature sweep aside the works of men. For such cataclysms we cannot make adequate plans, but for unemployment that occurs in normal years we have a definite obligation to provide reserves to meet the needs of those for whom work is not available. More than three fourths of our population are dependent upon jobs for a living and are in distress within a very short time if the job is lost. This latter group does not have large enough incomes to lay up reserves for the emergencies of life, such as major illnesses, accidents, business failures, unemployment, old age. Society has to help individuals through the problems developing out of these emergencies. In giving relief we followed for a long time the haphazard policy of leaving the needy to find some individual able and willing to help them, but as we come to understand that the emergencies were usually completely beyond the control of the individuals, as we faced the issues and their implications, we realize that society must assume its obligation and put into effect a public policy for insurance against suffering due to such emergencies. Wage earners believe reserves for wages for the unemployed should be provided as part of our public policy. For three fourths of our people in the United States, unemployment is a constant anxiety. Nearly all the industries in which they work are so seasonal in character that even in our most prosperous years millions must expect anywhere from 1 to 6 months' unemployment, or even more. Records from our trade unions show that in 1928 13 percent of our entire membership were out of work for at least 6 months (that was in 1928), and in 1929, 11 percent lost 6 months' income. The immensity of this problem of seasonal unemployment appears when we consider the actual number affected. According to a careful estimate of unemployment each month in 1929, prepared by the Cleveland Trust Co., we find that even in our most prosperous year over 1,000,000 workers lost 6 months' work and over 2,000,000 lost 3 months. These men and women, or the most part, are living so near the margin of subsistence that there is never enough to lay by in savings. Unemployment for even a few months can mean only one thinghunger and want. The average wage in all industries, of which we have records, was $28 per week in 1929. This is by no means a saving wage for a family, and millions, of course, earn far less than this. They have to live from hand to mouth and when unemployment comes children are undernourished, family upkeep is neglected, and debts accumulate. Records for a few industries show this seasonal unemployment in a striking way. In building for instance, where we have trade union records covering the most prosperous recent years-1928 and 1929unemployment never fell below 16 percent of the membership, and at least 25 percent were out of work for 6 months or more. In 1930, a year when unemployment was no greater than it often is n minor business recessions, 25 percent of the clothing workers were |