Mr. WEBB. My contention is that we do not have enough experience in bad times yet to know whether the three-tenths of 1 percent is the correct amount or whether it should be something lower.

Mr. SNYDER. Let me ask you this: Rather than provide for the future in that way, why would it not be a sounder program that, when we have accumulated a sufficient amount for a year-or 2, or 3 years in advance, to lower this scale, and then, if we found out that it was not sufficient, the scale would go up practically to three-tenths or four-tenths of 1 percent? Why should not we use a sliding scale such as that rather than put it in the general revenue and use it for other purposes?

Mr. WEBB. That could be done.

Mr. SNYDER. Would not that be the sounder program?

Mr. WEBB. It depends on whether the 3- or 4-year period is enough. We have had very good times over the last 5 or 8 years. You might have some bad times in the next 8 or 10 years. My understanding is that the three-tenths of 1 percent is not levied for the specific purpose of this program. It is levied as a general tax.

Mr. SNYDER. I was interested in your conclusion that these agencies would be better off in the Department of Labor. That was the conclusion, as I remember.

I would like for you to tell to me the disadvantages of having the function in the Federal Security Agency, and then if you will spell out the advantages in having it in the Department of Labor?

Mr. WEBB. I would say that the disadvantages of having these two bureaus both in the Federal Security Agency would largely be a loss of the close relationship between the United States Employment Service and the Bureau of Employment Security with the other labor functions which I feel they are naturally allied to.

In other words, these programs could be operated, of course, in the Federal Security Agency. They would be part of a program with which they would not be so closely and naturally allied as they would in the Labor Department.

Mr. SNYDER. I had in mind more practical advantages. That is, a sort of intangible is what I am trying to get at. I was trying to get from you an opinion whether we would save money and whether employees could be reduced and some very tangible and practical advantages which could be gained. What you say there is an advantage, but it is more or less an intangible.

However, go ahead with your statement.

Mr. WEBB. I would say that the combination of these services in the Department of Labor would probably save on the order of $50,000. That comes about largely through the combining of the agencies.

As to whether that $50,000 would be some smaller amount if the combination were in the Federal Security Agency, I do not think that I am prepared to say. I think that the actual money saving comes about more through the combination of the services, although I would like to say that the agencies are working very closely together in their relationship with the States. They have men who team up to audit the State agencies or make other kinds of examinations that they have to make. I think that they have achieved a close working relationship for the purpose of economy. I think the

major emphasis here, as high lighted in the reorganization plan, and that was in the President's mind when he made this recommendation, has to do with the employment function and with the fact that it was something that was very close to the fundamental purpose that the Labor Department was responsible for.

Also, he felt that he would gain administrative advantages through having them under the leadership of the Secretary of Labor. Mr. SNYDER. Thank you very much, Mr. Webb.

The CHAIRMAN. Mr. Hardy?

Mr. HARDY. I was unfortunately a little late in getting here, but, as I remember, last year you were advancing a more persuasive argument for keeping the functions separate. I trust that you have satisfactorily explained that change, and explained your change of heart?

Mr. WEBB. Yes; I have.

Mr. HARDY. I trust that you made the explanation satisfactory to yourself as to that?

Mr. WEBB. I think I did.

Mr. HARDY. It is a little incongruous to me to see such a complete change.

Mr. MANCASCO. If the gentleman will yield, the result of congressional pressure might have brought it about. The Congress refused to go along with the plan last year. Mr. Webb is simply being practical. Mr. HARDY. The effect of congressional action last year was to eventually get these two functions back together in the Federal Security Agency?

Mr. WEBB. I did not so interpret it. I understood that most of the testimony was to the effect that they should be together. In considering where they should be then, the President still felt that the employment functions of the United States Employment Service were so closely and naturally allied with the other functions of the Department of Labor that if Congress wished them together he would put them together in the Department of Labor. He thought that would be a better administrative set-up from the standpoint of the executive branch.

Mr. HARDY. In the absence of Reorganization Plan No. 1 of 1948, eventually the Employment Service would have gone back to the Federal Security Agency; is that correct?

Mr. WEBB. That is correct.

Mr. HARDY. My interpretation of the intent of the last session of Congress is that this plan would eventually get back together and with the Federal Security Agency.

Mr. WEBB. I did not feel that that was necessarily the intent. I may have been mistaken. I believe that you gentlemen know what you had in mind. I am sure that the President felt that he wanted to make a strong effort to keep this Employment Service in the Department of Labor. I think that is the main reason he submitted the plan.

Mr. HARDY. That is certainly what would have happened in the natural course of events without this plan here, is it not?

Mr. WEBB. If this plan is rejected, at the termination of the emergency the United States Employment Service will automatically go back to the Federal Security Agency.

Mr. HARDY. Perhaps my interpretation of the intent of Congress as of last year is at variance with some of my colleagues here, but that definitely was my interpretation of it. I want to pursue Mr. Snyder's questioning just a little bit further.

There was some discussion concerning the amount of the total administrative expense. I believe you gave some figures on that. Was that the total administrative expense, or was that purely for the State operation?

Mr. WEBB. That is the total of the grants to the States for the Employment Service, the grants to the States for unemployment insurance, and the Federal expenses.

I have no figures on that, but if the chairman or you wish it in the record, I would be glad to submit it.

Mr. HARDY. For my immediate purpose, the question I would like to raise is as to the amount of the administrative expense at the Federal level for the Employment Service. Let us take the figures for last year, the 1947 fiscal year.

Mr. WEBB. Are you interested in the United States Employment Service now?

Mr. HARDY. I would like both the United States Employment Service figures and the unemployment compensation figures.

Mr. WEBB. Did you say 1948 or 1949?

Mr. HARDY. Take it for the last fiscal year. That is what I was getting at. I have a 1947 figure here for $146,143,000.

Mr. WEBB. Yes.

Mr. HARDY. I would like to know what part of that 1947 figure was used at the Federal level?

Mr. WEBB. $8,313,000, rounded off. That is for both programs. Mr. HARDY. That was a combination of United States Employment Service and United States Employment?

Mr. WEBB. Yes.

Mr. HARDY. Did the Bureau of the Budget scrutinize the operations of the Employment Service and the Unemployment Compensation to determine what they were doing with that much money and what functions they had added?

Mr. WEBB. Yes, sir.

Mr. HARNESS. Would the gentleman there have him include the figures for 1948?

Mr. HARDY. Yes; I would like to have that figure included.

Mr. KARSTEN. How many employees do you have on the Washington level? We are getting confused here.

Mr. HARNESS. If you do not mind, let him put those figures in, first. Mr. WEBB. The figures for 1948 I will be glad to give. I gave you the total of $136,306,000.

Mr. HARNESS. Just for the administrative expenses at the Federal level?

Mr. WEBB. Of that $136,306,000, $5,852,000 were the expenditures at the Federal level for both programs.

Mr. HARDY. At that point, Mr. Webb, do you say that is the estimate for 1948?

Mr. WEBB. Yes; I should say that is the estimate for 1948. Mr. HARNESS. That is what Congress appropriated last year? Mr. WEBB. That is right. That is not the final figure, because the year is not completed.

Mr. HARNESS. What about the figure for 1949?

Mr. WEBB. The estimate for 1949 shows a figure of $6,220,000. Mr. HARNESS. They are the same figures you put in the record this morning?

Mr. WEBB. Yes.

Mr. HARDY. The thing I was trying to get at, and perhaps we need a break-down as between the Employment Service and the Unemployment Compensation, is how many employees does each service have, and why do we need so many of them in Washington? What are they doing to justify that number? As I understand it, the Employment Service is handled entirely by the State, and what do they have to do here to have so much money?

Mr. WEBB. Congressman, I understand that the Secretary of Labor is going to return to testify. He is responsible for the administration of the United States Employment Service, and I think that probably you should ask him that question.

I will be glad to state to you that we have applied a fairly rigid standard in examining these estimates, as we have all parts of the budget, in the Bureau of the Budget. I believe that the appropriations committees will find these figures quite well justified.

Mr. HARDY. You have to spend an awful lot of money to use the time as we are doing here now, but it seems to me that an awful lot of people are performing these functions here, when you say that everything is supposed to be done in the State.

Mr. SNYDER. Will the gentleman yield?

Mr. HARNESS. Yes.

Mr. WEBB. Could I give the number of the people that I was asked for?

Mr. HARDY. Yes; will you do so?

Mr. WEBB. Exclusive of the Veterans' Employment Service, which is handled at the State level, this same set-up of the type described has 654 people at the Washington level in both programs.

Mr. HARDY. Only 654 people?

Mr. WEBB. Yes, sir.

Mr. HARDY. For that number we are paying $5,852,000?

Mr. WEBB. You have other obligations and other types of expenditures other than the personnel. The cost of those 654 people is roughly 3.4 million dollars.

Mr. HARDY. Who gets all of the rest of it?

Mr. WEBB. The figure that I have here was wrong. I would like to correet the record.

The $5,400,000 figure that you used includes the 214 million dollars for the Employment Service. You can see that the sum begins to come down when you take out the Veterans' Employment Service. Mr. HARDY. Do I understand that you have some additional people besides the 654 people used in the veterans' placement program? Mr. WEBB. That is right.

Mr. HARDY. What is the total number of people?

Mr. WEBB. For both programs, exclusive of the Veterans' Employment Service, which I thought I stated

Mr. HARDY. Let us relate that to the amount of money that is allocable to this figure given of 654 people.

Mr. WEBB. Perhaps it would help you if I put a statement in the record showing the break-down of the appropriations for both agencies.

Mr. HARDY. If you do not object, Mr. Chairman, I wish that could be done.

The CHAIRMAN. Your question related to these 654 employees and you said there would be some additional number in the Veterans' Employment. What you are trying to find out is what they were doing to earn their money and how many there were altogether?

Mr. HARDY. That is right. How much money was spent for and by these 654 people, and what they did for it, is what I want to know. Mr. SNYDER. Will the gentleman yield?

Mr. HARDY. Yes.

Mr. SNYDER. The matter was checked into by Mr. Banes, a member of a committee appointed at the Governors conference, and they came back with the report that there were over 1,200 employees in Washington who had the job of dividing the money, or apportioning this money which went to the States.

Mr. HARDY. I thank you. That is exactly what I am trying to get at. There seems to be some conflict in the figures here. I want to know what all of these people do.

The CHAIRMAN. Can you get that for us?

Mr. WEBB. I would be glad to give it to you. I would be glad to incorporate that in my statement. I would be glad to amplify that, if you wish.

Mr. HARDY. Mr. Webb, in answer to that, it is my understanding that the principal function of the people on the Washington level is to divide up the money.

Mr. WEBB. No, sir; that is not right.

The CHAIRMAN. What do they do?

Mr. WEBB. First, of all, they have the obligation to insure that there is an efficient use made of the funds allocated to the States. Mr. HARDY. Who sees that they do that?

Mr. WEBB. The Secretary of Labor.

Mr. HARDY. I do not care whose responsibility it is, but I want to find out what the trouble is.

Mr. HARNESS. He means that they "ride herd" on the men in the States to see that they are doing their job.

Mr. WEBB. That is right. Furthermore, they have to establish certain standards by which various parts of these programs are handled in the States.

In addition, they prepare things such as the occupational dictionary, which is a standard type of occupational description by which workers may be referred from one locality to another. Thus, they have an occupation title which means the same thing in various places.

Mr. HARDY. I think, Mr. Webb, if you would be good enough to give us a complete analysis of the workings of that for the record, it would be most helpful.

Mr. WEBB. I would be glad to do so. (The information is as follows:)

FUNCTIONS OF FEDERAL EMPLOYMENT SERVICE UNDER THE WAGNER-PEyser

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In the language of the Wagner-Peyser Act, the United States Employment Service in the Department of Labor was established "to promote and develop a national system of employment offices, to maintain a veterans' service to be devoted to securing employment for veterans, to maintain a farm-placement service, and also to assist in coordinating the public employment offices throughout the country and increasing their usefulness by developing and prescribing