Federal agencies, and that there were values in assigning each to the department or agency to which it was functionally most directly related. However, I also stated that the proper location of these programs in the executive branch presented a very close question, with significant arguments on either side. I then attached primary importance, as I still do, to placement and the development of a strong and effective employment service.

In the debates within the Congress on Plan No. 2 of 1947, two points were particularly stressed: first, the desirability of assigning the Federal functions with respect to employment service and unemployment compensation to a single department or agency to secure the fullest possible coordination, and second, the importance of placing the emphasis in the administration of these programs on obtaining jobs rather than on paying unemployment benefits. Plan No. 1 of 1948 has been specifically designed to achieve these two objectives. By_locating the United States Employment Service and the Bureau of Employment Security in the Department of Labor, it assures uniform Federal policies and regulations and simplifies relations with the States on employment service and unemployment compensation. Thus, it removes the basis for the objections which the State agencies raised to the 1947 plan.

Not only does the plan afford the desired simplification in FederalState relations, but it does so within the framework of an agency which thinks primarily in terms of employment rather than of social insur

As you no doubt recall, the prewar arrangement under which the two programs were administered at the Federal level by the Social Security Board was vigorously criticized as tending to subordinate and weaken the placement program. Location within the Labor Department should assure maximum attention to placement activity.

Nor is it inappropriate to locate the administration of Federal unemployment compensation functions in the Department of Labor. As you may remember, the Committee on Economic Security, which formulated the social security program in 1935, recommended that it be administered by the Labor Department. Unemployment is a hazard of industry. The administration of unemployment compensation, therefore, may properly be assigned to the agency responsible for labor functions. In many other countries unemployment insurance is administered by labor departments, and in one-third of the States the employment service and unemployment compensation programs are under the State labor departments.

In putting the primary emphasis on employment rather than insurance payments, the proposed transfer to the Department of Labor will benefit both workers and employers-workers by helping to provide instead of unemployment compensation at a fraction of normal earnings, and employers by lessening the drain on insurance funds and the consequent charges against their experience rating accounts.

Mr. Chairman, I have handed to you a table entitled “Basic DataUnemployment Compensation Grants,” which I believe will answer some of the questions that members put to the Secretary of Labor yesterday. I will also be glad to discuss any points that may be found of interest by the committee.

In addition to the figures included in that table, I believe it may be helpful to the committee to know the record of grants and administrative expenses for both the unemployment compensation and the United States Employment Service activities for a 5-year period, which I am prepared to give you, if you wish.

(The table referred to is as follows:)

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Excise tax collections (Federal). $107.5 97.7 120.0 158.4 179.9 184.5 179.9 184.8 Contributions collected (State). 854.0 888.5 1,093.9 1,216.9 1,353.3 1,252.0 1,009.0 1, 002.0 Benefits paid.

482.5 344.3 371.3 176.9 61.0 71.2 1,091.1 833.7 Funds available for benefits at end of year..

1, 707.0 2, 284.0 2, 891.1 4,007.5 5,389.1 6,685.0 6,733.0 7,031.0 EMPLOYERS

In thou- In thou- In thou- In thou- In thou- In thou- In thou- In thou

sands sands sands sands sands sands sands sands Subject employers at end of fiscal year.

815.0 851.0 894.0 880.0 865.0 903. 0 1,139.0 1, 269.0 Quarterly contribution reports... 1,704.0 3,754.0 3,649.0 3,648.0 3,625.0 3,676.0 4,244.0 5, 205.0

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The CHAIRMAN. Mr. Wilson, do you have any questions?
Mr. Wilson. I would like to have those figures that you have.

Mr. WEBB. For the year 1945 the grants under "Unemployment compensation” were $34,000,000. The grants under the United States Employment Service were $58,000,000, and when the administrative expenses are added to those two, the total expense of both programs is $108,000,000.

For the year 1946, the grants for Unemployment Compensation were $57,000,000. For the United States Employment Service, the grants were $63,000,000, and when administrative expenses are added to those two the total program cost $131,000,000.

For 1947, the grants under "Unemployment Compensation” were $59,000,000. The grants for the United States Employment Service were $79,000,000, and when administrative expenses are added to those figures the total for both programs was $146,000,000.

The estimated figures for 1948 are as follows: Grants under “Unemployment Compensation” Amount to $65,000,000 and for the United States Employment Service, $65,000,000, and when administrative expenses are added to the total for both programs it is estimated to be $136,000,000. The estimates for the year 1949 are as follows: Grants under “Unemployment Compensation,” $73,000,000, under the “United States Employment Service,” $72,000,000,' and with the addition of administrative expenses, the estimate for both programs is $152,000,000. Those are round figures, Mr. Chairman.

Mr. Wilson. Mr. Webb, with regard to the present Reorganization Plan No. 1 for this year, 1948, what is your opinion about it?

Mr. WEBB. My view is that the continuation of the United States Employment Service in the Department of Labor emphasizes the natural relationship between bringing together the man seeking a job and the employer seeking a worker with the other facilities in the Department of Labor that will reenforce those activities and which will in turn be reinforced by the Employment Service.

With respect to the Bureau of Employment Security, I definitely feel that there is a closer relationship to the United States Employment Service activity than there is to the other insurance programs in the Federal Security Agency, and that it is a wiser grouping of Government activities to place both activities in the Department of Labor.

Mr. Busbey. Mr. Webb, did you not appear before this committee last year in support of Reorganization Plan No. 2 for 1947, claiming then that the plan which provided for putting the United States Employment Service in the Department of Labor, and putting the Unemployment Compensation Service in the Federal Security Agency was a proper grouping of the governmental functions, and it was in the interest of more economical Government operation?

I do not know how you can reconcile your present position, as you have stated it to the gentleman from Texas.

The CHAIRMAN. He did not answer that.
Mr. HARNESS. What was the answer?
Mr. WEBB. Yes, I did.

Mr. BUSBEY. How do you reconcile your present position in support of the measure which seems diametrically opposed to the position that was taken last June?

Mr. WEBB. Congressman Busbey, last year when Reorganization Plan No. 2 was before the Congress I gave testimony that the plan was designed primarily to keep those functions where they then existed, and that the record of the Employment Service in the Department of Labor had been a good one. Also, that it was naturally allied to the other programs in the Department of Labor, and that it would be a better grouping of functions to maintain them in the Department of Labor. That plan was rejected by the Congress. A great deal of testimony was adduced both in the House and in the Senate, with much testimony by members from various State organizations that those services should not be separated.

Congress decided that they did not wish to have them separated.

The decision, in my mind, comes down to where the two services should be located. I am now here to testify that in my opinion the maintenance of both services in the Department of Labor will be a better grouping of the activities than to permit both services to go over to the Federal Security Agency.

Mr. Wilson. Do you attach any importance to the fact that the Labor Department was created primarily for the purpose of fostering and developing the rights of the labor movement, or the rights of the laboring man, which puts them primarily in the position of a protagonist for labor or labor groups, whether organized or unorganized?

I say that that is their proper function. I do not see anything wrong with it. Do you not lend any weight to the fact that if that is their duty that they could not carry on the functions of these two services with impartiality as well as a neutral agency could? Do you lend any weight to that argument at all?

Mr. WEBB. Congressman, I have listed at some length to arguments as made here yesterday and today, and I must say that my own experience has been that men rise to the responsibilities that are imposed upon them. My own personal experience, when I was personnel director of the company that I worked for before the war which employed some 30,000 people, and in that period of experience which lasted 5 years I learned much. I had a great deal of experience with Mr. Morse, who is now the Under Secretary of the Department of Labor. He was the attorney for the National Labor Relations Board in the city of New York. I appeared before that Board on behalf of my company when it was charged with unfair labor practices. I found him à fair-minded man, and as fair-minded as Government officials whom I have encountered in my dealings with other matters.

I feel that the experience I have had with him since he has been with the Labor Department indicates that he is a fair and judicial-minded man. I do not feel that the very fact that the Department is called the Labor Department means that it is not a neutral agency, to use the words that other witnesses have used.

Mr. Wilson. Those. very words created a Department for the purpose of which we just spoke. That is, to develop and protect the rights of labor-organized and unorganized. I say that that is their proper function. Do you think they could carry out that idea, and at the same time be absolutely neutral with regard to paying out money to unemployed people?

Mr. WEBB. First of all, the payments of money are made by the State agencies, themselves. In 17 of the States these funds are paid out through the State departments of labor. With respect to the Employment Service, I believe that the record will show that more people are using the Employment Service every year, and that the service is increasing in vlaue. Also, it is administered, as I say, jointly with the unemployment compensation in these 17 States, and I do not feel that there would be any bias there in favor of paying more money under the unemployment compensation law than with some other agency. I do think that they would lay great emphasis on using the facilities of the Employment Service to the utmost degree to see that a man would get a job, if possible, rather than have him going on the unemployment rolls.

I do not know if I have answered you, but I have tried to give you Mr. Wilson. I think you have. I do not ascribe any ulterior motive to the Labor Department, but I think they have their proper functions. That is, they have their proper functions in their own field, and certainly that field is not paying unemployment compensation. I believe a neutral agency will be set up to carry on these functions.

You say that the 17 States pay out the funds? Of course, as a matter of fact, I thought there were more States than that paying out the funds. It is all done by general policy, subscribed to out of Washington by whatever bureau is in charge of it.

They have a certain elasticity in promulgating those rules?

my views.

Mr. WEBB. That is correct. Mr. Wilson. Under the act of Congress? Mr. WEBB. I was going to say that the law itself has more to do with prescribing the conditions under which these payments are made than the administrative regulations.

Mr. Wilson. It leaves certain administrative regulations that can be made by any department that has this fund at hand. I mean, such as has control of this organization, does it not?

Mr. WEBB. That is right. I believe that the officials charged with it, in any agency of the Government, will try to administer it in accordance with the law.

Mr. HARNESS. Will the gentleman yield?
Mr. WILSON. Yes.

Mr. HARNESS. I want to join in my colleague's expression in saying that I certainly do not attribute any ulterior motives to any employees of the Labor Department, nor do I criticize any of the individuals of the Labor Department at the moment. But, as has been pointed out, the Labor Department has been set up to carry out a certain function in behalf of labor of the Nation, has it not? It represents labor. It is the spokesman for labor of the country. That is all right, and we do not criticize it. If they are permitted to carry out this program they may likely make rules for the payment of benefits, looking at it solely from the standpoint of labor rather than from the standpoint of the public and the employer.

For example, they might make a regulation changing the system that prevails in Texas, or Indiana, as to whether a man should take a certain job when it is offered to him, making him eligible for compensation when he would not otherwise be eligible.

It seems obvious to me that any individual who leans toward a particular economic group would be influenced to work for the benefit of that group

Mr. WEBB. I have tried to answer that

Mr. HARNESS. They might unintentionally go beyond what is reasonable in making regulations to govern these States.

I do not say that the Secretary of Labor, or any of his people, would deliberately do something of that kind, but certainly the opportunity would be there. It could not be impartial administration, could it?

Mr. WEBB. May I answer that this way: The fundamental law of the Labor Department states the purpose of the Department shall be to foster, promote, and develop the welfare of the wage earners of the United States and advance their opportunities for profitable employment.

In the carrying out of that function, I do not believe it can be divorced from a system that takes into account the welfare of employers under our kind of economic system.

Mr. HARNESS. Insofar as the payment of benefits under the unemployment compensation law, would not the tendency be to favor the particular economic groups which they represented? You could not blame them for that, as that is their job. They could insist that unemployment compensation be paid, notwithstanding the fact that a job was available.

Mr. WEBB. No, sir; I do not subscribe to that. I believe that the emphasis would be on getting a man a job so he could earn the full wages of the job rather than to take a partial payment that would be less than he could earn.

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