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The purposes of the Labor Department as set forth in Public Law No. 426 of the Sixty-second Congress, signed by President William Howard Taft in 1913, were declared to be
to foster, promote and develop the welfare of the wage earners of the United States, to improve their working conditions, and to advance their opportunities for profitable employment.
As presently set up and under present appropriations the Department is not prepared to fulfill the obligations and responsibilities recognized in its organic act. The proposal you have before you in Reorganization Plan No. 1 presents you with an opportunity to take a significant step toward the correction of these deficiencies and toward the fulfillment of promises to which both parties are pledged.
There has been some opposition to this plan based on the allegation that the United States Department of Labor is a protagonist of labor's special interests. These allegations can only grow out of the false conception that the interests of labor are opposed to the interests of other groups in our economy. American labor has never accepted that view. The welfare of labor is prerequisite to the economic wellbeing of the Nation. Though there are inevitably differences of opinion between groups in our democracy, the long-run interests of labor coincide with those of industry, agriculture, and other groups in our economy.
This type of propaganda is deliberately calculated to create the impression that the Department would subordinate the national interest to that of a particular group. Let there be no mistake about the pretended fears of those who oppose this plan. Experience emphatically refutes this specious contention. Industry throughout the Nation has for years utilized the statistics and information compiled and released by the Bureau of Labor Statistics of the United States Department of Labor with complete confidence in their integrity. For years employers have worked hand in hand with the Apprentice Training Service in the Department of Labor in carrying out apprenticeship programs. The activities of the Labor Standards Division of the Department are of direct concern to employers. But of more immediate relevancy is the fact that since September 1945 when the United States Employment Service was returned to the Department of Labor more employers and workers are using public employmentoffice services and facilities than ever before in peacetime history.
Statements have also been circulated to the effect that the transfer of the unemployment-compensation functions of the Bureau of Employment Security to the Department of Labor would result in the use of the reserve funds in the unemployment trust fund to encourage and assist strikers in greater demands for higher wages and other benefits. These statements display either a callous indifference to fact or a woeful ignorance of the statutory provisions which control the Department of Labor in carrying out its responsibility. The payment or denial of benefits to workers including the standards governing their eligibility is solely a matter of State law, subject only to certain specific limitations written into the Social Security Act, which gives the Federal authority no discretion with respect to who is eligible to receive unemployment compensation benefits or the extent of such benefits.
I should like to point out that while there has been opposition to the administration of these two related activities by the United States
Department of Labor on the part of some representatives of State agencies, there are now 15 States where both the unemploymentcompensation and employment-service programs are administered by the State department of labor or comparable agency. There are six others where the administration of these programs is placed within State departments which administer these functions together with other labor functions. Oddly enough in some instances representatives of some of these very States appear in opposition to having the administration of these functions at the Federal level placed within the Department of Labor. It should also be pointed out that in no State is the administration of these programs placed within a State agency having the responsibility for public welfare, public health, education, and the other functions which at the Federal level are within the Federal Security Agency. What the President's Reorganization Plan No. 1 therefore contemplates is, in brief, to square the administration of the Employment Service and unemployment compensation with the predominate pattern of State administration. (Attached to this statement is a list of the States where the unemployment-compensation and employment-service functions are the responsibility of State labor or comparable departments.)
I should like further to point out that notwithstanding vague and general charges of partiality and bias on the part of the United States Department of Labor, not a single specific instance of any partiality has been cited.
In order to make our position clear I think it should be understood that our interest in a strong and effective executive department to protect and advance the interest of labor concerns only those labor functions which properly belong to that department.
The United States Employment Service was established in the Department under the Wagner-Payser Act enacted June 6, 1933, for the express purpose of finding jobs for men and women in industry and agriculture. That this task is basically a function which has for its purpose the protection and advancement of the workers' interest and “to advance their opportunities for profitable employment" is self-evident.
As the Secretary of Labor pointed out last year in his statement to the Bureau of the Budget, the activities of the United States Employment Service are basically labor functions interrelated with many of the Department's other activities. This relationship has long been recognized and was stressed in the report of the President's Committee on Administrative Management in 1937 as a basis for continuing the United States Employment Service in the Department of Labor.
The administration of unemployment compensation likewise is a labor function since it deals wtih the employment relationship and since its activities are of direct concern to both industry and labor. The unemployment-compensation system is an insurance system which provides partial compensation for wage losses arising from involuntary unemployment. It is not a relief program administered in relation to need and is therefore not properly a responsibility of a department or agency whose main functions relate to the administration of public welfare. It is concerned with bringing about a greater measure of employment stabilization and job continuity. Clearly, its activities are closely related to others which are being conducted within the Department of Labor.
It is important to bear in mind that the employment-service and unemployment-compensation programs are closely interrelated. They have common objectives designed to provide workers with a measure of economic security. I am sure that there is unanimity of opinion on the point that economic security can best be achieved through obtaining maximum employment and the payment of unemployment compensation should be resorted to only when jobs are not available.
The plan which the committee is considering is a step forward in progressive reorganization of governmental responsibilities. It provides for bringing into the United States Department of Labor functions which properly should be administered within that Department and makes adequate provision for the coordination of these two interrelated programs. This plan carries out both the spirit and letter of the Reorganization Act of 1945. The American Federation of Labor, therefore, earnestly urges this committee to take favorable action on this plan.
(The following was submitted for the record:)
States which have unemployment compensation and employment services in a State
department of labor or comparable department State
Department of Labor. Connecticut.
Department of Labor and Factory Inspection. Georgia.
Department of Labor. Hawaii.
Department of Labor and Industrial Relations. Illinois
Department of Labor. Kansas.
State Labor Department. Louisiana
State Department of Labor. Massachusetts.
Department of Labor and Industries. Missouri..
Department of Labor and Industrial Relations. Nebraska..
Department of Labor. New Hampshire
Bureau of Labor. New York
Industrial commissioner. Pennsylvania
Department of Labor and Industry. Utah.
Industrial Commission. Wisconsin
States which have unemployment compensation and employment services located in a department having other labor functions
Department of Industrial Relations. California
California Department of Employment. Florida
Industrial Commission. Idaho.
Industrial Accident Board. Kentucky
Department of Industrial Relations.
Workmen's Compensation Bureau
The CHAIRMAN. In addition to your statement, Mr. Cruikshank, do you wish to make some further observations?
Mr. CRUIKSHANK. Yes, Mr. Chairman, if I may.
I realize that the hour is getting late, but I do have some observations that I should like to add in addition to those contained in my statement.
The CHAIRMAN. Let me ask you this: Inasmuch as your headquarters are in Washington, we have a Mr. Donnelly from Chicago. If any of those gentlemen are present, would you consent to their proceeding? Would you be willing to let them testify in advance?
Mr. CRUIKSHANK. If there is to be an evening session I would be very glad to stay over. Unfortunately, tomorrow I have a meeting of the Social Security Advisory Council, of which I am a member, and I am supposed to be there.
The CHAIRMAN. The gentlemen who were to testify apparently are not here.
Proceed, Mr. Cruikshank, inasmuch as the one gentleman who is to testify is willing to wait.
Mr. CRUIKSHANK. I appreciate the courtesy of the gentleman who was willing to let me go on at this time.
Mr. Chairman and gentlemen of the committee, there have been a number of references throughout the day to the regulations of the Department of Labor. I should like to point out to the members of the committee that these regulations affecting the employmentsecurity and unemployment-compensation programs are a matter of record, particularly those which relate to labor disputes about which there has been some extended discussion.
As a matter of fact, these were drawn up in 1939 by the Social Security Board, the president of the Social Security Administration. They were accepted by every State having a State unemploymentcompensation law, which at that time included all of them. They were accepted by the State agencies and they have been in operation since that time. While there is some question raised about the Labor Department issuing regulations, these regulations which they are referring to are now operative, particularly those applicable to labor disputes which have been in operation since 1939. They have been accepted by the State agencies, and no witness has put his finger on any specific clause of those regulations which were not in accord.
I have had the advantage of having been here almost all of 2 days hearing testimony, and that is my observation.
Mr. Busbey. Have those regulations been amended since 1939, or have there been any additions?
Mr. CRUIKSHANK. Basically, they are the same regulations. There may have been minor procedural regulations added, particularly with respect to the labor disputes, but I believe they are the same.
I should also like to comment on one other thing: This morning a good bit of emphasis was laid on employer contributions. That happened to have been made by two gentlemen from Alabama. It was not mentioned that the State of Alabama is one of five States in which the employee also makes a contribution.
With respect to unemployment compensation, that is the employee's money as much as it is the employer's. That is entirely aside from the question that the employers, particularly in a period such as we are now in, do not absorb these taxes, but these taxes are passed on in costs so that the employer becomes simply a tax-collecting agency.
Specifically, in Alabama and four other States, the employee pays a contribution to that. They should do so in every State. It has not been adopted in all of the States.
I should also like to point out that under the Federal laws that govern these agencies, whether they are in the Federal Security Agency or within the United States Department of Labor, there is no United States agency that has any power whatsoever to determine the conditions under which unemployment benefits are paid or withheld.
Those are duties entirely within the province of the States and would remain so in
any event. A good bit of discussion has been had here based on some premise that a Federal agency-either the Department of Labor or the Federal Security Agency, depending on the disposition of this planwould have some power to determine the basis upon which benefits would be paid.
Mr. MANASCO. At that point, the only way that those benefit payments would be changed would be to have an amendment to the State law, itself?
Mr. CRUIKSHANK. That is right, sir. That is exactly right.
Of course, I am sure you are well aware, as other members of the committee are, that it would not be affected by the adoption or rejection of this plan.
The CHAIRMAN. While that is all true, nevertheless if the States do not make their laws conform to the regulations as put out by the Federal Government, then the Federal Government will not give the States the funds to administer the law.
Mr. CRUIKSHANK. That is technically correct, except that it needs to be pointed out that the regulations which the Federal Government may administer, those regulations are very severely defined by law, The regulations which the Labor Department can issue with respect to these things is a very narrow limit of discretion.
A great deal has been said, and it is quite disconcerting to me as a labor man and as a citizen to hear all that has been said about the lack of confidence in the Department of Labor.
I would like to submit, if I may, respectfully, that the question here is not whether the Department of Labor is a good Department, or not, or whether it is biased. If the Department of Labor is biased as for one group against the public interest, then we should do away with the Department of Labor. If it is not a good Department of Labor, the basic issue, Mr. Chairman, is whether this is a labor function of Government appropriate to the organic act signed by President Taft in 1913 describing the functions within the executive department to a Department of Labor.
The CHAIRMAN. The charge that the Department of Labor is biased has been made many times, of course, but that is not a critical charge. I think everyone expects the Labor Department to be biased in favor of labor. That is what it was created for, to look after the interests of labor.
The question here is whether unemployment insurance funds should be administered by that Department.
Mr. CRUIKSHANK. There are two answers to that. One is that funds would not be administered by the Department, in any event.
The CHAIRMAN. The manner in which the rules are promulgated by the Federal Government, or by the Federal end of the Government, would not be affected by this plan, one way or another?
Mr. CRUIKSHANK. That is right. It would not be affected by this plan one way or another. The rules are a matter of law.
The CHAIRMAN. As to the over-all regulations coming down to the Federal Government, those must be complied with by the State agencies or they do not get the money?
Mr. CRUIKSHANK. They are very few and relate only to administrative procedures and not to the Department of Labor or the Federal