Senator Clyde M. Reed of the present Congress was chairman of that group at one time.

It will also be argued that the employment-security phase of the program is presently in the United States Department of Labor, which is correct and was accomplished by Presidential decree. However, I call your attention to the fact that since the partial separation from the Department of Labor, November 16, 1946, when operations were returned to the States, that placement of workers on jobs has increased by as much as 50 percent in my State. This is a measure or yardstick of employer acceptance attributable in part at least to the partial separation. It is interesting to note also that employers in Kansas responded to a poll conducted by the State chamber of commerce favoring State operation over Federal operation by 96 to 4.

It is my studied opinion that the President's Reorganization Plan No. 1 adds nothing to an effective placement and insurance program. It appears to be an attempt to give permanency to plans adopted as emergency measures during wartime, while the possible loss of status and effectiveness to State operations is calculated to be considerable. Economies can be effected and greater accomplishments can result from consolidation, but such consolidation should be made in a neutral and impartial agency.

That is all I have, Mr. Chairman.

The CHAIRMAN. Doctor Judd, the gentleman is testifying at the request of Governor Carlson of Kansas. He has explained the manner in which it was operated there in Kansas, joint operation-department of labor and industry. Have you any questions?

Mr. JUDD. No.

The CHAIRMAN. We thank you very much.

Are there any other witnesses here? Will you identify yourself, sir?

Mr. MARSHALL. My name is Robert E. Marshall, director of the division of employment security, Commonwealth of Massachusetts. The CHAIRMAN. And you have a statement, have you?

Mr. MARSHALL. I have no statement prepared, sir. I did not have time to prepare one before I came down here. I was tied up with my own legislature and had no written statement.

The CHAIRMAN. Do you wish to let him proceed?
Mr. LANHAM. Surely.

The CHAIRMAN. Very well, the members of the committee say ignore the rule for the moment.

Mr. MARSHALL. In Massachusetts the division of employment security is an independent agency. Technically it was put as a division within the department of labor through a constitutional limitation of 20 departments in the State, and so the legislature enacted the law and said there should be within that department a division, but not subject to the control of the department.

I am responsible solely to the Governor of Massachusetts for the administration. In Massachusetts we have one organization. The local offices SES which are commonly called the employment service, are integrated. There is one organization, one line goes down under the charge of assistant director and every individual in the local offices above the range of junior clerk are required to have knowledge of both the unemployment-compensation and the employmentservice function.

The CHAIRMAN. Now may I interrupt you there? You say "is required to have knowledge." Do you have a test?

Mr. MARSHALL. We are under civil service, a very strict civil service, and on the civil-service examinations they take the questions are propounded to them on the basis of the employment-service function and the unemployment-compensation function.

In Massachusetts we do not regard these as two programs, we regard them as one program, the employment-security program, the two functions.

Mr. LANHAM. Might I ask there which you emphasize most, the employment service or the unemployment compensation?

Mr. MARSHALL. We regard them as equally important and we do that because it is not possible to properly administer an unemployment-compensation program without having a good employment service going right along with it, and it is a very basic thing.

These men must be available for work, and there is only one quest of the man's availability for work, and that is to offer him a job. Otherwise, if you haven't the jobs to offer, you are merely asking him questions trying to ascertain a state of mind.

It is quite possible that a man today may be willing to work, and will change his mind as of tomorrow, but the true test I say again is the matter of offering a man a job, and that is why we have that thing closely integrated in that way.

Mr. LANHAM. Do you think at the Federal level that these two services should be combined?

Mr. MARSHALL. I believe that they should, and I believe that they should be combined as the Social Security Administration did in 1939 when the two functions were transferred to them.

I've distinguished from the Department of Labor, the Social Security Administration when it was transferred to them in 1939, encouraged and forced integration at the State level. The Social Security Administration has insistently believed in integration along the lines that I have stated to you that we have in Massachusetts. Mr. LANHAM. Well, that has been the attitude of the Department of Labor.

Mr. MARSHALL. The attitude of the Department of Labor prior to 1939 when they had six, and subsequent to them getting it back at the present time, has been to keep these as two separate programs, and they have not favored integration. They have consistently advocated two separate programs and two separate organizations. As to their philosophy, it was suggested here the other day by you, Mr. Chairman, that you get the rules and regulations which were promulgated by the Secretary of Labor when these services were returned to the States.

To

I respectfully suggest to the committee that you not only get the rules and regulations that were promulgated, but you also get the original draft regulations, the proposed regulations, which they sent out to all of the States, because there, in draft regulations, the proposed regulations, you will find what their real thinking was. contrast that with the Social Security Administration I respectfully suggest that you get the Social Security Board's regulations that were in existence in December of 1941 before the States loaned their employment offices to the Federal Government.

The CHAIRMAN. What year?

Mr. MARSHALL. They were in effect in December 1941. As you recall, the employment services were loaned to the Government as of January 1, 1942; and if you will examine and compare those two you will see that the Department of Labor in their regulations consistently say, "The State shall do this; the State shall do that."

You will find that they go right down into minutiae. They suggest what source of the organization it should be, they say in that-and you will find it written-that the people assigned to the employmentservice work shall not be used for the unemployment-compensation work in the local office except in an emergency. They do not define what that emergency is.

Mr. LANHAM. But you do use your employees in both services interchangeably?

Mr. MARSHALL. When the services were returned to them, Massachusetts had a great deal of difficulty with the Department of Labor. In Massachusetts we insisted that we operate it. Our law called for a separation on that basis, and I have consistently insisted that we would have only one organization in Massachusetts.

Now what I have to do, as was explained, we get part of the funds from the Department of Labor, part of our funds from the Social Security Administration, and then the balance of the funds presently for the administration of the Service Readjustment Allowance Act from the Veterans' Administration.

I have to take those three funds, put them into one fund, meet my pay rolls, and then I have to account for those funds on a time and cost basis, because there is still the basic principle that money appropriated by either Congress or the State legislatures for a specific purpose cannot be used for another purpose.

The CHAIRMAN. Do you follow that plan or that purpose, that principle?

Mr. MARSHALL. Yes, sir; and we believe very strongly in that in Massachusetts. Now to actually operate that thing is a very difficult thing because at no time a year in advance can we anticipate what the unemployment conditions are going to be in our State. We estimate them as well as we can. Now those moneys are allotted to us.

I think to perhaps clarify a question that has been raised, that money is allotted to us on a unit-cost basis, and work loads. In other words, for a given operation such as the reception, we estimate the number of receptions contacts that will be made. We know what the unit cost will be, based upon our previous experience, and that amount multiplied, but your unit cost gives you the amount that will go into your budget on that particular item. The same thing happens in unemployment compensation.

The CHAIRMAN. The question that Mr. Lanham started with was whether you placed the emphasis on securing jobs for the unemployed or on the payment of the unemployment benefits; that is to say, which comes first? Which do you make the greater effort to do? If a man is unemployed, in your mind is it more important to get him unemployment money or to find him a job? That is what you were getting

at.

Mr. LANHAM. Yes.

Mr. MARSHALL. It is very basic that the best thing to do for a man is to find him a job.

The CHAIRMAN. You give him unemployment insurance only when you cannot find a suitable job for him?

Mr. MARSHALL. That is correct.

The CHAIRMAN. That covers it. That is all we need on that subject, Mr. MARSHALL. But both are of equal importance. Step by step that is what you do. The first thing is you offer him a job on that

score.

Now the reason in Massachusetts that we have that sort of an organization—and it is a neutral organization-is because of the fact that we realize that this is not just a labor program but it is in general a program in the proper public interest.

If you may divide it into the parties, you have the employers who have a very great interest in this; you have the employees who have an interest, and you have the general public who have an interest in the program. Very often in connection with your unemployment compensation and your employment service this matter of offering a man a suitable job and his refusing to take it, ties them right together. You have the employer's interest which may be a little bit different. They may be opposed to that of the employee's interest and you must have a neutral agency to act as arbiter of that. That is the appeal process. The employers actually pay in both the money for all of these benefits as well as the money for the administration of that. The CHAIRMAN. Well, the whole basis of your argument is that as long as there are certain employers who want to get as much as they can out of the employees, and as long as there are certain employees, perhaps very few but nevertheless an appreciable number, who want to get as much as they can out of the employer, and perhaps I might add who at times want to get payments without working at all, that you must have this neutral agency.

Mr. MARSHALL. Yes, sir, and that is what we have in Massachusetts. The CHAIRMAN. That is what it all boils down to, isn't it?

Mr. MARSHALL. That is right, and then we are quite conscious of the fact in Massachusetts that the employment service of its own supplies no jobs except to supply jobs on the Government pay roll. Mr. LANHAM. I think everybody understands that. It is not necessary to make that point. The Employment Service simply tries to find jobs or to direct applicants to jobs. We understand that.

Mr. MARSHALL. Well, they are working, too, on the job orders that the employer puts in, and the employers unless they have confidence in the organization that is handling that, they will not put their job order into the office.

The CHAIRMAN. Well, of course then we get right back to the proposition that neither the employer nor the general public is going to have any confidence in an organization which is in favor of giving unemployment compensation rather than finding jobs, nor is labor going to have any confidence in an organization which insists a man should take a job which perhaps he cannot perform, rather than to give him compensation when he can't actually get any worth-while work.

Mr. MARSHALL. That is correct, and furthermore your employers. are not going to have confidence if the job orders which you have in the local office are not used to test the availability of those

The CHAIRMAN (interposing). Well, the employer is not going to have any confidence if you have a group of social workers whose basic

thought is that everybody or everyone is entitled to a living whether they work a little or much.

Mr. MARSHALL. That is correct. Now I have occasion to face that in Massachusetts. The United States Employment Service do operate, I think, it was July 1945 to the time that Congress, in spite of the wishes of the Secretary of Labor and the officials of the USES ordered the return of these employment services to the States, the situation where the employers did not have confidence, and since November 15, 1946 I have been all over the States meeting with the employer groups trying to resell them the idea of placing their job orders in these local offices. They have not had the confidence, and one of the questions that is constantly asked me in these group meetings is, "Mr. Marshall, is the Department of Labor dictating to Massachusetts how this employment service should be run? Is it going to be run in accordance with our laws and the policies that you had prior to the taking over?" And I have to assure them of that. Now, at no time. do we get more than 20 percent of the available jobs open in the States, and what we need is not less confidence, but we need more confidence so that we can get more job orders.

The CHAIRMAN. And you think those who actually give the jobs. will have less confidence if it is in the Labor Department?

Mr. MARSHALL. That is correct, sir.

The CHAIRMAN. And that opinion of yours is based upon experience over how many years?

Mr. MARSHALL. Nine years, sir, I have been with the agency, and 8 years as the Director of the Division of Employment Security.

Now, there is something beyond that plat that I would like to point out to you from the Administrator's standpoint. I am going to first give you the reasons why I think it should be in the Social Security Administration of the Federal Security Agency.

At the beginning back in 1939 along there it is true that the States fought the Social Security Administration in their attempts to dictate to the States. But that battle has been won and for nearly 4 years now practically all of the States have had no difficulty with the Social Security Administration because they found that they could not dictate to us, to the States, as to how they should run their unemployment-compensation system and their employment-service system, and we have no difficulty.

Mr. LANHAM. May I interrupt right there? There was one witness who has the same job that you have, who said the very opposite. He said that he had more dissension and trouble with the Federal Security Agency than he had with the Labor Department.

Mr. MARSHALL. I heard these statements, sir, but that is not true so much in Massachusetts, and that is not true, from my knowledge, of a number of other States. For the evidence of that you can go back to the difficulty that the State had after Congress ordered the return of the employment offices to the State. You will find, I think, there are approximately 21 States that did have difficulty. In their very plan of operations they have put in reservations that they only agreed to be bound by these rules and regulations of the Department of Labor if it was within their authority to agree with them, and if they were not inconsistent with their own State laws.