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STATEMENT OF HARRY PENDERGAST, EXECUTIVE DIRECTOR,
OKLAHOMA EMPLOYMENT SECURITY COMMISSION
Mr. PENDERGAST. My name is H. E. Pendergast, executive director of the Oklahoma Employment Security Commission, located at Oklahoma City, Okla. I have long been associated with the employmentsecurity program in the State of Oklahoma, having been one of the original employees of that agency, commencing in 1936. Successive advancements placed me in the position of executive director, the principal administrative officer of the commission, in 1942. Since that time I have been responsible for activities of the agency, both in respect to the operation of the Oklahoma State Employment Service and the Oklahoma Unemployment Compensation Administration. As this record indicates, I have been very close to all of the many and varied policy and technical problems which are present in the operation of this program. I am proud to have been associated with it, and to have made some small contribution to a governmental operation which has received the general acceptance and support of the people of my State. During this long period of time I have observed and been a part of this coordinated State-Federal program wherein the Federal Government has had certain responsibilities and the State has had certain responsibilities. In my judgment the total result has been a satisfactory one. I am satisfied that this satisfactory result could not have been obtained had this been a completely federally operated program. I likewise feel that probably a better job has been done during the initial period of the placing of these programs in effect than would likely have been accomplished had the Federal Government had no responsibilities. During the relatively short period of time during which the Government has been in the unemployment insurance business I feel that this mutual arrangement has developed an outstanding example of good governmental operations.
In view of the President's message transmitting Reorganization Plan No. 1 of 1948, it appears that this Congress is called upon to legislate in respect to the consolidation of the Federal responsibility reposed in the United States Employment Service and the Bureau of Employment Security in one Federal department. I, as well as other State administrators of employment security, have long recognized the desirability and necessity for such a move. We had been hopeful that the President would not bring this issue before the Congress, and that thus, during the course of a reasonable period of time, the United States Employment Service, temporarily in the United States Department of Labor, would by operation of law be restored to the Federal Security Agency, where in my judgment it properly belongs. This mutual State-Federal program of employment security so vitally affects the State agencies having responsibility in this field, and the action of the Congress on this issue is so vital in its implications and impact upon State policies and operations that I feel called upon to give to you my views on this legislation, which are based upon long and practical experience in this field.
The standards, policies, and practices which have been developed and promulgated by the State agencies are a very important factor in the effective and efficient administration of all unemployment compensation laws. If the function of referring unemployment benefit claimants to job openings is inefficient, unnecessarily restricted, or otherwise fails, the system of unemployment insurance as we know it today will destroy itself. Effective referral practices and policies are the best solution to the problem of unemployment. While some restrictions have been placed by the Federal Government on these policies and practices developed and followed in the States, in general there has been sufficient flexibility and leeway for the States to operate their public employment offices so as to best meet local conditions and to permit a reasonably effective administration of their unemployment insurance laws.
The United States Secretary of Labor in recent testimony clearly disclosed his views concerning the proper operation of the public employment service in relation to the payment of unemployment insurance benefits. Under Reorganization Plan No. 1, the United States Secretary of Labor will have full and complete authority to issue binding standards upon State agencies in respect to the referring of benefit claimants to jobs. It is clear that if Concurrent Resolution 131 is defeated and the Secretary of Labor translates his views into rules and regulations prescribing the standards of referral of workers to jobs, that those standards will conflict with the policies and practices heretofore established in many State employment security agencies, and may in a large measure substantially impede the application of the work test as prescribed in many State unemployment compensation laws.
I wish to further make it plain that I am not criticizing the operations of the United States Employment Service, as now conducted, nor charging them with failing to provide States with consultive advice on technical matters. However, I strongly feel that the vast store of information and technical knowledge which has been accumulated by the Federal Security Agency during the past 10 years in the field of unemployment compensation and in the field of the public employment service, should not be relegated to the files of the Government. I have great fear that this will be the case, notwithstanding the provisions of Reorganization Plan No. 1, which provides for the transfer of the personnel, records and files of the Bureau of Employment Security to the Department of Labor.
While I am confident that each State administrator of employment security has from time to time had disagreements with the Federal Security Agency in respect to certain operations or policies, nevertheless I strongly feel that Concurrent Resolution No. 131 should be passed, and that both United States Employment Service and the Bureau of Employment Security should be united under the Federal Security Agency at the earliest possible date. This conclusion has not been reached hurriedly, but has been the result of 10 years' observation and experience. I might briefly recite to you the history of this program in my own State of Oklahoma.
When the Oklahoma unemployment compensation law was first passed, it placed the administration of this law, together with the administration of the Oklahoma State Employment Service, in the Oklahoma Department of Labor. After 4 years of experience under that department it was found ond determined that better operations and a better organizational arrangement could be effected. Accordingly, in 1941 the legislature established an independent agency, the Oklahoma Employment Security Commission, and placed under that commission the administration of unemployment compensation and the public employment service. This has led to a better public acceptance of our program, and materially contributed to its more efficient operation. In addition to my own experience, I would like to place before you the position which was taken at the region IX executive committee meeting of December 15 and 16, 1947, in Kansas City, Mo. This regional executive committee is composed of State employment security administrators of Missouri, Kansas, Arkansas, and Oklahoma. On that date this executive committee unanimously expressed the view that these Federal activities should be consolidated in the Federal Security Agency. As executive vice president of region IX of the executive committee of the Interstate Conference of Unemployment Security Agencies, I wish to present to you a resolution which was unanimously adopted at that meeting, and which my recent contacts with these states indicates is their view today. [Reading:)
That the conference be recorded as favoring, by a majority of its membership, the continuance of the present Federal statutory provisions concerning the location of these two agencies, for the reasons
That the two agencies historically and according to law belong together, and were consolidated by the will of Congress and the President and separated only for purposes of the war emergency; and further
That experience has demonstrated that separate allocation of funds and separate Federal administrative controls are uneconomic, cumbersome, and conflicting, and tend to make difficult as well as complicate the relations between the States and the Federal authorities, especially in the matter of allocation and expenditure of Federal grants; and for the further reason
That the purposes and objectives of the Employment Service and Unemployment Compensation functions, when handled on a separate Federal basis, create a difference in emphasis without a full realization of their coimportance in actual operation at the State level; and further
It is recognized and agreed by all that to properly serve the workers and employers it is essential that there be a fuller appreciation at the Federal level of the important task of carrying out the laws involved in both programs and for the purposes for which they were conceived and enacted.
I respectfully urge that Concurrent Resolution No. 131 be passed.
The CHAIRMAN. If you wish to add to your statement, we will be very glad to hear you.
Mr. PENDERGAST. I do not have anything to add. I would like to call the attention of the committee to the last page on which the resolution was adopted by the States of Missouri, Kansas, Oklahoma, and Arkansas in a meeting in Kansas in December. That is about the only thing I have.
Mr. RIZLEY. Opposing the reorganization plan?
The CHAIRMAN. Mr. Harvey, Mr. Riehlman, Mr. Busbey, Mr. Rizley?
Mr. RIZLEY. I might say for the benefit of the committee, Mr. Pendergast has been active in these agencies in the administration of this program from its inception in Oklahoma, and personally, of course, I have a lot of confidence in his opinion.
The CHAIRMAN. Mr. Harness?
Mr. 'HARNESS. Just one question, Mr. Pendergast. Do you and the people you represent in Oklahoma believe that it would be more economical to consolidate these two in the Federal Security Agency than to leave them in the Labor Department?
Mr. PENDERGAST. Yes, sir. One main point on that subject is the fact that there has been 10 years of experience developed in the Federal Security Administration, but it costs a lot of money and we feel to throw that experience away and put it in a new agency would not be economical.
Mr. HARNESS. In other words, you think they could administer the two programs for less money, less overhead than if you put them in the other departments? Mr. PENDERGAST. Possibly, yes. The CHAIRMAN. Mr. Lanham? Mr. LANHAM. No questions.
The CHAIRMAN. Mr. Holifield, Mr. Manasco, Mr. Judd? Thank you very much.
We have Mr. Broadway from Alabama. Have you a statement?
Mr. BROADWAY. Yes; I have, Mr. Chairman and members of the committee, and I want to avail myself of this privilege of filing it.
The CHAIRMAN. Identify yourself to the stenographer, please.
Mr. Chairman, I am Frank R. Broadway, of Montgomery, and I am speaking for the Alabama State Chamber of Commerce and the Automobile Dealers Association of Alabama. During the period from May 1939 to January 20, 1943, I served as general counsel and from January 1943 to January 1947 I served as director of the Alabama Department of Industrial Relations, an executive department of the State government in which is vested the administrative responsibility of operating the Alabama State Employment Service and the Unemployment Compensation Agency for the State of Alabama.
Alabama business is especially interested in all matters concerning the administration and operation of the employment-security program, both at the Federal and State levels. The State chamber has consistently adopted and followed the policy of advocating and supporting a sound and logical employment-security program, operated at the Federal and State levels and as an integrated and coordinated program operating through unemployment-compensation agencies and State employment services.
During the 1945 regular session of the Alabama Legislature, Alabama business supported amendments to the Alabama unemploymentcompensation law which brought about an increase in the weekly benefit amount from a minimum weekly benefit of $2 to a minimum weekly benefit of $4 and from a maximum weekly benefit of $15 to maximum weekly benefit of $20 and, at the same time, supported amendments which reduced the waiting period to be served by the unemployed worker from 3 weeks to 1 week. This is pointed out to show you that the business interests of Alabama have always advocated and supported employment-security measures so long as they did not detrimentally affect the State's social, economic, and industrial structure but instead contributed to the stability of employment and the strengthening of the social structure of the State.
In the administration of the law at the State level, the Alabama chamber in the first instance supported an unemployment-compensation commission which represented the public, labor, and business; and, upon the abolishment of the commission, it advocated and supported the administration of these programs by a neutral and impartial administrator. This, accordingly, is what Alabama business believes to be for the best interest of the employment-security program at the Federal level as well. Consequently, the business interests of the State of Alabama, as represented and spoken for by me, are using this means of expressing their opposition to the President's Reorganization Plan No. 1 of 1948.
If the employment-security program is to be at all effective and carry out the fundamental intent and purposes provided by law, it must have full public acceptance and the cooperation of all. If jobs are to be developed for unemployed workers and jobs and unemployed workers are to be brought together in a satisfactory manner, employers and business generally not only must have full and complete confidence in the fundamental purposes of employment security but must work hand in hand and in full accord with the administration of the employment-security program, rather than conduct employment facilities through their own personnel offices and ignore those made available through the governmental employment-security program.
Unless business concerns communicate with the employment service when they need workers and unless business concerns cooperate with employment service when they are called by it regarding the possibilities of placing unemployed people, the service cannot properly and satisfactorily function and consequently unemployment compensation will cease to operate in the manner, and for the purpose it was intended; unemployed workers will remain idle; unemployment trust funds will be unnecessarily dissipated; and employment security will become very much of a colossal failure.
Public acceptance and public confidence in the program are necessary prerequisites to its success. In order to secure and maintain public acceptance and public confidence, it is necessary to have the employment security program administered in a fair and impartial manner by administrative authorities who are of a neutral, unbiased, and unprejudiced disposition, both with respect to the workers and to the employers or business concerns covered by it. To more nearly perfect such an administrative arrangement at the Federal level, it is the belief of the Alabama State Chamber of Commerce that the employment-security program should be reestablished in the Federal Security Agency and maintained there so that the administrative responsibility of the program will be in the hands of administrators of neutral disposition; no special interest will be favored; and impartiality will be shown toward all.
This is definitely believed will not be the case if the Reorganization Plan No. 1 of 1948 is adopted, which will result in that program being administered by the Labor Department officials who necessarily because of their position are primarily interested in the labor phase of the program. Such cannot and will not make for general public confidence and acceptance. It stands to reason that the employment security program will not be developed and extended-will not serve all interests concerned-and will ultimately tail, thus bringing benefit and advantages to none.
Mr. BROADWAY. I might say in addition to that based, of course, on my observations and experience as general counsel for the depart