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group or class of citizens. In our opinion, the fullest powers and authority should be granted to the State agencies administering the program in order that their operations and policies shall not be hampered, handicapped, and hamstrung by any Federal agency through the setting up of standards created by it alone and not by the Congress; by the control of State agency policies and operations through budgetary controls which are capricious and discriminating, and by the issuance of directives, rules, and regulations far beyond the intent of the Congress.
It must be remembered that a successful administration of the program can be had only with the operation of an efficient employment service. This is in order that new employment may be found for the unemployed. Job orders come only from employers. Employers will not furnish ful lcooperation if the control of the program is placed in an agency in which they do not have trust and confidence in being as fair to one group as another. Nor do the workers want the control in an agency in which they do not repose the fullest confidence in being as fair to one group as another. This confidence may not be had if the control is placed in an agency which might be considered or accused of being the instrument of favoritism toward or for any special group.
The unemployment compensation program was delegated originally to the States to operate, and we feel that that is where it belongs. It is part of a Nationwide complete program of social security which should not be distorted nor separated from the whole.
Much of a State administrator's time and effort is now being consumed in matters relating to financing. We are forced to file our budget estimates for needs of the agency, both for personal service and nonpersonal service, with the Bureau of Employment Security, Federal Security Administration, for funds for the unemployment compensation program, with the Department of Labor for the employment service program and the farm placement program, and with the Veterans' Administration for the program of payment to veterans of readjustment allowance and self-employment benefits. We are prevented from free interchange of personnel in local offices from one program to the other because of these budget problems. If an interchange is temporarily effected the proper budget must be charged, and many times there is a shortage of funds in the budget which should be charged. The only logical and successful fiscal program would be to permit the States to operate under a single budget, since operation at State levels must be considered by State administrators as a unified, integrated single program. It is my understanding that it has been indicated by Mr. Robert c. Goodwin, Director of the United States Employment Service, Department of Labor, that, if the unemployment compensation and employment service programs are permanently assigned to the Department of Labor, he will continue the present fiscal program of separate budgets.
If the President's reorganization plan No. 1 of 1948 is defeated both services will revert to the Federal Security Administration 6 months after World War II is officially declared ended by the President of the United States, and it is my hope and the declared hope of Governor Gates that before these agencies are permanently placed in any Federal Bureau the Congress may enact such legislation as may be required to permit of the States collecting their own operating expenses and operating their own agencies, with full freedom to disburse funds in a manner designed to effect the greatest economy, while rendering better service to both industry and labor. Full credit under the Federal Unemployment Tax Act should be granted to all employers in States certified by a designated Federal agency as having met and complied with standards set up by Federal statute by the Congress.
It is my feeling, and that of Governor Gates, that this matter is entitled to careful consideration by the Congress, and that no action should be taken permanently transferring the program to a Federal agency when such transfer in itself might jeopardize and invite a total collapse of the entire program.
The CHAIRMAN. The Honorable John W. Byrnes of Wisconsin has appeared and presented his statement, which will be inserted in the record at this point.
(The statement is as follows:)
STATEMENT SUBMITTED BY Hon. John W. BYRNES, WISCONSIN Mr. Chairman and members of the committee, I appear before your distinguished group in opposition to the President's Reorganization Plan No. 1 for 1948, which would permanently transfer the United States Employment Service and the Bureau of Employment Security to the Department of Labor.
You are hearing testimony from experts in the field of employment and unemployment compensation. It is not my intention to infringe upon their testimony in those fields in which they are better qualified to testify than am I. I would like to speak briefly about the broad implications of the President's proposal.
I need not amplify my position on a trend which has taken place in the past 15 years in our Government-a trend which has been characterized by an everincreasing assumption of power and control by the Federal Go nment over functions and responsibilities formerly within the jurisdiction of State and local governments. You have all observed that trend, and I have, on many occasions, pointed out to Congress the inherent danger of this centralization of power in the National Government. Suffice to say at this time, the assumption of State powers by the Federal Government leads to a loss of State responsibility and where there is no responsibility, there is no strength. I do not believe we can afford to risk the withering away of our State and local governments—the bases for our Federal system of government. They provide a constant check-rein on the centralization of power in the hands of a few men with all of its consequent evils.
As it is in so much legislation which is offered to us today from the executive department, that is the danger in the President's proposal to transfer these two services to the Department of Labor.
On the face of it, and the point is stressed by the supporters of the plan, this is a simple proposal to transfer two agencies from one Federal agency to another in the interests of better administration, efficiency, and economy.
We can dispose of all of those arguments for transferring these functions to the Department of Labor by quoting directly from the President himself. In his state of the Union message, he said, “The Government's programs for health, education, and security (I have underlined “security”) are of such great importance to our democracy that we should now establish an executive department for their administration." By its very name, the Bureau of Employment Security surely would belong in such a department, and as the President says in his message of January 19, on the Reorganization plan, the functions of this agency "have proved to be intimately related to those of the United States Employment Service.” Surely, gentlemen, if such a new executive department were established, the Federal Security Agency would be the foundation for its organization, and surely, the security implicit in these two programs would logically, and by every reason for better administration, efficiency and economy, be administered: by the new department. In all truth, the President has proved to be the most able testifier against the soundness of this move, if he bases it upon better administration, efficiency, and economy.
I think we must look for other reasons for the President's insistence that these functions be transferred to the Department of Labor at this time. Here, by example, is a possible reason.
Let us assume, gentlemen, that we were extremely desirous of concentrating great economic and political power in the hands of the Federal Government. Let us further assume that we had agreed that one of the necessary steps that we must take would be to federalize the Employment Service and to administer the unemployment compensation program from Washington. Let us finally assume that our plans met with almost unanimous objection: (as is the case) from the 48 State governments. What would be one way to accomplish our objective?
Here is one way we might work it, particularly if our direct efforts to retain the temporary federalization of the Employment Service on a permanent basis had previously failed.
Arrange for the transfer, in the interests of efficiency, economy, and better administration, of these functions from a neutral agency of the Government to department which historically has been the spokesman in Government for one group of citizens-organized labor.
By placing administration of unemployment compensation in a Department which traditionally has as its Assistant Secretaries representatives from two of the largest unions, we could, and would, effectively hamstring the effective State administration of these laws. Consider some of the responsibilities of this bureau, as outlined in the Congressional Directory:
"To obtain the funds necessary for administration, the State laws must meet certain requirements set forth in the act)
* The responsibility (of the bureau) entails ascertaining that State laws include provisions that benefits be paid through public employment offices *; that a worker's rights to benefits, when he refuses a job which fails to meet certain labor standards, be safeguarded”; and so forth.
This purse-string control means life and death power over the State programs Failure to meet standards laid down by an agency frankly representing one segment of our population-organized labor—would mean the withdrawal, or refusal, of administrative funds.
Loss of administrative funds, or the impairment of adequate reserves by partisan regulations, would kill these State-administered programs. The way would then be open for the imposition of complete and absolute Federal control of a function which formerly belonged to our States.
Hand in hand with the loss of the unemployment compensation program would go the loss of the unemployment services to the Federal Government, for nearly everyone admits that the administration of these two programs must go together.
Thus, by approving this innocuous sounding transfer, we open the way for the federalization of another segment of our economic life, and the further centralization of power in the hands of a few men.
Because, by the President's own admission, this transfer would not lead to more efficiency and economy, and because of the grave dangers inherent in it, I strongly urge this committee to report out a resolution disapproving of Reorganization Plan No. 1.
Mr. MANASCO. I move that the Chair be authorized to insert anything in the record he deems proper, if anyone wishes to have statements or letters inserted in the record.
The CHAIRMAN. Then, we will adjourn.
Do not forget that we will meet Monday morning at 10 o'clock in the committee room, to pass upon the report on House Concurrent Resolution 131.
(Whereupon, at 12:33 p. m., an adjournment was taken to meet at the call of the chairman.)
(Testimony before the subcommittee of the Committee on Education and Labor, Investigation of GSI strike, January 20, 1948, Hon. Clare E. Hoffman, chairman of the subcommittee, presiding). STATEMENT OF THE HONORABLE LEWIS B. SCHWELLENBACH,
SECRETARY OF LABOR
We have had the question come up in previous years.
I simply wrote a letter to General Fleming, after receiving a letter from General Grant saying that they expected an interruption in the service, and so forth, and as a result of a strike which they expected next week, which was 2 or 3 weeks ago.
I take the position that there is one place in town where you simply cannot have picket lines, and that is around the Labor Department. In this instance, we received some communications from the A. F. of L. union, the local union here, which indicated that they were interested in organizing the GSI employees, and I just cannot take the position about one labor union as against another labor union.
Mr. HOFFMAN. Is there a jurisdictional dispute there?
Mr. SCHWELLENBACH. I have had demands made there on me, I think three times, to open the cafeteria and they would organize the workers in the cafeteria in general.
Mr. HOFFMAN. The union whose members were operating there was a CIO union?
Mr. SCHWELLENBACH. Yes.
You understand that I get along remarkably well, considering the fact that there are two organizations, but I just cannot get myself into the middle of any particular dispute when there are jurisdictional arguments.
Mr. HOFFMAN. If there was a dispute there—let me see-the CIO refused to
Mr. SCHWELLENBACH. I do not so construe the act.
Mr. HOFFMAN. Do you construe the act to be such that they do not need to sign, that they may have all the rights given under the Taft-Hartley Act if they do not sign those affidavits?
Mr. SchwELLENBACH. I construe the act to mean this:
In order to make use of the NLRB machinery, they have to file with us a financial statement and a rather long questionnaire.
They file it with the NLRB and an affidavit to the effect that these officers, whoever they may be, are not Communists. That means that they are completely barred from making use of the NLRB.
There are just hundreds, I would say thousands, of unions in this country that never have used the NLRB. They have gone ahead and bargained.
I might say one thing that disturbs me about this business is that we tried, and got authority under the Taft-Hartley Act-I will call your attention to the fact that I have not said a word about the Taft-Hartley Act-and I said I would not say it unless we could see whether or not it would work.
I did not think it was fair. We got the registration. We always figured there were about 60,000 unions in the country. It is rather difficult to get lists, but we got out and sent out 200,000 of these forms. You have to divide that by three, because we send three to each one.
Approximately three or four thousand of them were to lawyers who represented industries and people of that kind.
Actually, we contacted 57,000 unions. As of last week we had had only 10,003 comply. That means that 50,000 out of the 60,000 unions have not complied. I assume if they do not file with us, they do not go over and file a non-Communist affidavit with NLRB. That would be just a futile gesture on their part.
These other unions are bargaining all the time.
Mr. SCHWELLENBACH. If they can bargain and get along. I do not believe it is necessary for them to conform to these requirements of the Taft-Hartley Act in order to sit down with their employer and bargain.
It worries me to think that we have 50,000 unions in the country which have not yet complied, assuming our figure of 60,000 is correct. That is one out of
Mr. HOFFMAN. I do not see why that should worry you. If they get along bargaining and get along with their employer all right without using NLRB, I say God speed them on their way. It is a short cut.
Mr. SCHWELLENBACH. The position is established here that they are disqualified from bargaining.
Then it is going to mean that 50,000 unions
Mr. HOFFMAN. The only penalty in the Taft-Hartley Act—if I am wrong I hope my colleagues here or you will correct me—the only penalty attached to that is that you cannot use the act in your bargaining.
I understood you to say there were many unions bargaining with their employers without NLRB. If that is so, it is fine, is it not?
If they do not need the services, that is good.
Mr. SCHWELLENBACH. I dislike the interpretation which I think is wrong that they have to file in order to be able to sit down and bargain.
Mr. HOFFMAN. With the NLRB.
Mr. HOFFMAN. But you concede, as I understand it, or rather, you state that they can bargain if they desire without the NLRB?
Mr. SCHWELLENBACH. Yes. I take the position that it is just a fact, so far as this part of it is concerned, that just the unions that do not qualify under the NLRB are in the same position as all the unions prior to 1935 when the Wagner Act was passed.
Mr. HOFFMAN. They must be getting along all right, because the mere signing of an affidavit is not much of a job. If they are getting along without it, without the NLRB, is that not all right?
Or do you want them all to come in
Mr. SCHWELLENBACH. No, I do not. That is what disturbs me. establish the idea that they cannot bargain, I do not imagine some of these unions in work, the amalgamated, which have not had strikes for years and years, I do not imagine they have ever used the NLRB. They have just created a relationship.
Mr. HOFFMAN. Get along fine.
Mr. HOFFMAN. There is another thing about the Taft-Hartley Act, if I have it right. That is, it is an effort to guarantee or to protect a man's right to work. That is in the act, too; is it not?
Mr. SCHWELLENBACH. That is not in the part that we have under discussion
Mr. HOFFMAN. It is another provision of the act.
Mr. HOFFMAN. Here are people, and according to the statement of Mr. Ayers, here are would-be employees who want to work in the Labor cafeteria, but you close it.
If you were engaged in a private business, that would be a lock-out; would it not?
Mr. SCHELLENBACH. No.