Mr. CRUIKSHANK. Yes; within the States. The CHAIRMAN. As I understand it, you picked that particular platform or plank out of the Republican platform. Do you subscribe to all of the Republican platform? Mr. CRUIKSHANK. No; I do not, but I trust that some members of the committee do. Mr. SNYDER. Mr. Cruikshank, I can see where your organization would be properly interested in the national aspect of keeping unemployment compensation on a national basis. I do recall Secretary Schwellenbach, when he testified here 2 days ago, related how well the present system was working. This administrative fund is under the Federal Security Agency at the present time. The thing that is in my mind as to that-that you probably heard me ask Mr. Johnson, who preceded you on the stand, that in view of the fact that Congress now has under way a study for the consolidation of Government activities, whether this is the proper time to take this matter up piecemeal or whether we should wait until we get the over-all picture? I should like to have your thoughts and reactions to that. Mr. CRUIKSHANK. It seems to me that the plan which is before us is appropriate to the implementation of the Reorganization Act of 1945. I agree entirely with the President's statement that he is bringing labor functions together. I think that the chairman put his finger right on the heart of the question, and I hope very much that it will be the issue on which you gentlemen make your determination. The point I refer to is: Is this a labor function, or is it not? Our contention is that it is a labor function. It relates to the operation of the labor market. It relates to the security of the workers. It relates to the steadiness and the maintenance of employment. The administration feature of the law seems to me to be entirely appropriate to come within the terms of the President's Reorganization Act. Mr. MANASCO. If it is not a labor function, what would be a labor function? Mr. CRUIKSHANK. I cannot conceive of anything that is more a labor function than this. I would like to refer to the organic act which Mr. Webb read into the record this morning, but the organic act signed by President Taft states that among the permanent responsibilities of the Department of Labor is to encourage the opportunities for employment on the part of wage earners. This labor market function is the governmental agency that has been set up to assist employers who are seeking competent workers and employees and wage earners who are seeking jobs to come together. The major function of the bringing together would take place in the localities. Our whole national labor function is a network of local labor markets. It needs coordination and centralization just as every other function needs some coordination and central effort to direct it. The Wagner-Peyser Act set up an agency to accomplish that. It originally set up that agency in the Department of Labor. There was none previously. Mr. MANASCO. That was by act of Congress? Mr. CRUIKSHANK. That is right. Mr. MANASCo. That was not an act of the President? Mr. CRUIKSHANK. Yes; precisely so. Mr. MANASCO. I want to observe that most of your points now have been opponents of the New Deal-are now getting on the tail of the New Deal. The CHAIRMAN. It seems to me that putting that into the Labor Department would get us into the same position or a position similar to that that Mr. Petrillo, head of the musicians' union, has gotten into. He testified before the Labor Committee; and he testified that his union has 200,000 members, which is only 30 percent of the musicians. If I remember his statement correctly, actually only 30 percent earn their livelihood as musicians. The other 70 percent does something else for a living. What he wants us to do is to permit him to levy enough to take care of the other 70 percent when they are unemployed. Mr. CRUIKSHANK. I am afraid that there was some misunderstanding; if I recall his testimony correctly--and I have seen all of it The CHAIRMAN. That is along the line of his stand-by employees, paying somebody who does not do anything. Mr. CRUIKSHANK. We are not in favor of that. The CHAIRMAN. You will admit that the unions in Detroit-I don't recall the name-for a time were insisting on unemployment compensation when they went on strike. Our State law forbade those payments. I do not blame them for asking for it, but I could not be disposed to give it to them. Mr. CRUIKSHANK. The position of our organization is such that we do not ask the Department of Labor, or any other agency, to support our strikes out of unemployment-compensation payments. There does come a time, after a labor dispute has gone over for a sufficient period of time, that the workers are not unemployed because of the labor dispute. We think that when that time comes that people should get unemployment compensation while they are unable to find other employment. The CHAIRMAN. In Washington, when the GSI strike was on, the employers hired other individuals. Even if they complied with all of the requirements of the Taft-Hartley Act, the employer would keep the new employees. Do you not see that these other people are then out of employment? Would they be entitled to unemployment insurance? They lost their jobs in the first instance, and they could not agree with the employer on terms. Mr. CRUIKSHANK. If they went to the Employment Service, and if after they had been on strike for some time and registered at the Employment Service as being available in the labor market for a job, they should have been paid unemployment compensation until they got a job, or unless they turned down a suitable job that was offered to them by the Employment Service. The CHAIRMAN. There is the fear of some employers, as expressed here, and as some members of the committee have done, as to the Labor Department's definition of "suitable employment.' Assuming that we have a depression coming along soon, and if there were 2,000,000 or 3,000,000 people out of jobs, are those people to have unemployment insurance? For how long? You can see that there would not be any money left in the fund soon. Mr. CRUIKSHANK. The fund should carry them over as much as possible. That is one of the byproducts of the use of the fund-that it is, to a certain extent, to uphold their purchasing power while they are unemployed, and they will still be paying their rent and buying food in the meantime. Thus, the depression, when it started on the downward spiral, might otherwise be stopped. The fund does not only insure the well-being and security of the individual worker but to a very large extent it insures the continuous smooth operation of our whole economy. The CHAIRMAN. I can see the situation where a mechanic is drawing $2.50 an hour being unable in a depression to get a job in his particular line of work. If he were offered a job at 50 cents an hour, what is your idea about that? Is he to take that job? That is not a suitable job. Mr. CRUIKSHANK. He should not take it until it has been thoroughly ascertained that there are no jobs available to him at his former skill. If he did so it would be a waste of his skill and effort in which both he and the community have an investment if he is forced to take a job which somebody else would probably get, anyway. Let me put this in: With respect to the matter of suitable employment and unemployment compensation, they are all matters of State law. The State laws make the definitions of "suitable employment.' The adoption of the present reorganization plan would not make one whit of difference in what the applicable definition of "suitable employment" was to any worker in the United States. The CHAIRMAN. I cannot agree with you, because the Secretary of Labor and the Federal Government have always exercised more or less influence over the States. Mr. CRUIKSHANK. They cannot rewrite State laws. The CHAIRMAN. I do not know about that. They sometimes do in order to get Federal funds. We find in our farm organizations, schools, and pretty near everywhere that situation. If you conform to the Federal regulations, it is sometimes possible to derive benefits that you do not otherwise get. That Mr. MANASCo. Under the law of 1603, of the Internal Revenue Code, paragraph (a), subparagraph (5), covers that situation. is left entirely in the hands of the States? Mr. CRUIKSHANK. That is right. Mr. BUSBEY. May I read one sentence of the Wagner-Peyser Act? It relates to the delegating of power to the Secretary of Labor: * * * to prescribe what the State should consider suitable work and work not suitable. * * * The Secretary of Labor has the power to prescribe what is suitable and what is not suitable work, and the States must comply with that in their laws in order to come under that definition. Mr. CRUIKSHANK. There is no authority for him to prescribe that in overriding the provisions of the unemployment compensation benefits. Mr. MANASCO. As a matter of fact, the employees who are not administering benefits at the Federal level through the United States Employment Service were transferred from the War Manpower Commission to the Labor Department, and the same individuals, if this plan is defeated, will be transferred to the Federal Security Agency. The Secretary of Labor does not make the rules and regulations. The rules are made by his underlings. The same people who have charge of it now will have charge of it when the transfer is effected. Is that not a matter of practical effect? Mr. CRUIKSHANK. I suspect that is largely true. Some minor changes of personnel will be made. Mr. MANASCo. If they are afraid of these people now they will still be afraid of the same group because they will be the ones transferred to the Federal Security Agency? Mr. CRUIKSHANK. That is right. The CHAIRMAN. You do not mean the Secretary of Labor, Mr. Schwellenbach, is going to transfer his first assistant to the Federal Security Agency, do you? Mr. MANASCO. The people who really administer the act are the division heads. Mr. CRUIKSHANK. The President's plan sets up a condition of employment that reports directly to the Secretary of Labor. He would not report to Mr. Gibson or Mr. Comentz, but he would report to Mr. Schwellenbach under the President's plan, which we hope will be approved. Mr. MANASCo. We would have the chance of getting a new man? Mr. HARDY. Let me change the trend of thinking for one second: Mr. Cruikshank, it is very clear that your feeling is that the impressions of some of our witnesses was that they would not get fair treatment by the Department of Labor, and that is unsound. Mr. CRUIKSHANK. Yes; I think that is unsupported by the fact that employers today are generally using the employment service in an ever-increasing number. Mr. HARDY. Mr. Manasco and some others have raised the question as to the desirability of having these functions placed in a Federal Security Agency on account of alleged socialistic inclinations on the part of some officials in the Federal Security Agency. Do you have any feeling of danger that might be involved in concentration of these functions in the Federal Security Agency? Mr. CRUIKSHANK. No, sir. To us, the two main arguments for this are: One, it is a proper labor function which belongs in the Department of Labor. It is closely geared to the other activities of other divisions and bureaus within the Department. Therefore, it represents an economy of operation in having them all in the same department. In other words, it raises the question in my mind as to what is the Department of Labor for, and why have one, if it does not tell this to the area which concerns the operations of the labor market? It is not against the Federal Security Agency except that as applied to the administrative argument. argument. We have always to come back to the ideological argument to which your question was directed and the Federal Security Agency is the agency within the Government which has an entirely different approach to problems. It has within its office the Public Health Service which gives remedial care and underwrites a certain basic health service to the people. It has the public assistance program under it, which is purely a relief program and not an insurance problem, and does not relate to the operation of the labor market. Mr. MANASCO. Social welfare. Mr. CRUIKSHANK. Social welfare, and not labor, as such. Mr. HARDY. That being the case, is it proper to conclude that your feeling is that they might place greater emphasis on the payment of unemployment compensation than in securing jobs? Mr. CRUIKSHANK. They might. Not so much from desire, but perhaps from the lack of having adequate machinery, such as that readily available within the Department of Labor to help them carry out a labor-market function. That is conceivable where the United States Employment Service and the Unemployment Compensation Service could be put almost anywhere. Mr. MANASCO. At that point I would like to say this Mr. CRUIKSHANK. It is just about as appropriate to put it in the War Department as it is in the Federal Security Administration. Mr. MANASCo. As related to the matter of WPA, that was an agency where an administrative officer of that agency did not encourage people to seek employment in private industry; is that not true? Mr. CRUIKSHANK. I think that in many instances that was true. Mr. MANASCO. That is a matter of common knowledge. It is just natural for people to want to build up their own empires. Mr. HARDY. On the other hand, pursuing your thought of a moment ago, would not the Department of Commerce be just as proper an agency to handle the employment service as the Department of Labor. That is, except for the activity of the Labor Department, such as the Bureau of Labor Statistics? Mr. CRUIKSHANK. I am not so familiar with the Organic Act of the Department of Commerce. The Department of Commerce does interest itself in some things that definitely affect human welfare. For example, the Bureau of the Census. The Department of Commerce already takes under the Bureau of the Census a running census of unemployment. There are some remotely related activities in the Department of Commerce. It is not set up to handle labor functions, as such, and functions impinging on employee and employer relationships. Mr. HARDY. The thing that I am trying to get at is this: I mentioned a while ago that actually the Department of Labor cannot do anything to create jobs. That is done by industry. Mr. CRUIKSHANK. Industry itself does not create jobs. Mr. CRUIKSHANK. The customers, the people who buy goods, create jobs. The industry is a middle man for jobs. I do not mean to be facetious, but I do not follow the trend of your question. Mr. HARDY. The trend of the question is simply this: From the standpoint of building a source of employment, of finding jobs, would not the Department of Commerce actually be in a better position to do that if we directed their attention to it, more than the Department of Labor? Mr. CRUIKSHANK. No; I do not think it would. As you are well aware, in any enterprise there are various functions and activities. Any employer, for one thing, is a taxpayer. He deals with the Treasury Department as a taxpayer: If he imports goods he deals with the customs office in the capacity of an importer. If he employs persons at given conditions, either within the State or the Federal bureau he will deal with them with respect to their wages and conditions of employment. He deals with labor agencies, either on a State or National basis in the capacity of an employer where his activity impinges on the employer-employee relationship. Because employers hire people it does not mean that all of their activities as hirers should |