Senator IVES. Not as steady as appears on the surface? Senator IVES. I appreciate your contribution. Mr. SCHREIBER. One more thought, Mr. Chairman. Mr. Squire mentioned the sliding-scale basis for reducing taxes, and Mr. Kennedy pointed out a distinction between merit rating and tax reduction. I would like to suggest that the sliding scale would not be merit rating at all, for this reason: If merit rating is what it is supposed to be, namely, a reward to a particular employer for stabilizing employment, then the sliding scale proposed would give that reward also to one who does not stabilize employment. If you adopt that slidingscale method, what do you have? A reduction in tax for all railroad employers; in other words, you would give a reward to those who do, as well as those who do not, stabilize employment. Consequently, the whole concept fails when you talk about a sliding-scale method for tax reduction, because railroad A may stabilize employment, while railroad B may not, but both would be equally rewarded by the sliding scale proposed. Senator IVES. Taking the railroad system as a whole, that is different, though. There you could, could you not? Mr. SCHREIBER. You would not have merit rating. That is not merit rating in the sense it is generally used. Merit rating deals with individual employers who on their own initiative achieve stabilization of employment. But when you have a sliding-scale method for reduction in tax for all employers you reward those who do, as well as those who do not, stabilize employment. Furthermore, we have in the unemployment-insurance system not only benefits for unemployment due to lack of work, but also benefits for unemployment due to sickness. Conceding for a moment-and I do not concede it at all-but, for the sake of argument, conceding there is such a thing as control over employment or unemployment, how can a railroad employer control the sickness of an employee? Clearly, the railroads cannot control that, or determine whether and when a man should be ill with a sort throat, for example. You can see that merit rating cannot possibly apply to this type of benefit. Senator IVES. You have an actuarial point there which you can pretty well estimate when it comes to the drain on the fund due to sickness. Mr. SCHREIBER. As to the question of control by the employer of the amount of unemployment, how can a railroad employer control the amount of unemployment due to sickness, since it cannot determine when a man would or would not be sick? Senator IVES. I do not think we want to get into merit rating. I just raised the question more or less academically. I do not know anything about it from the standpoint of the railroads. I think it has considerable merit when you use the term in another way, when it comes to industry itself. But I do think, as I indicated earlier, that you first have to look after benefits, and you first have to look after those drains that will be placed on the fund of necessity. Has anyone else anything? Mr. SQUIRE. A point that Mr. Schreiber just mentioned I disagree with. His point about sickness is good, but application or merit rat ing to employment would not necessitate a separate handling. Accounting could be easily handled. Mr. SCHREIBER. The point I made is, you cannot have merit rating on sickness. Mr. SQUIRE. You could, or could not, but it would not necessarily follow that you would have to carry two accounts as to the effect of it. While it is true, as Mr. Kennedy says, much of the fluctuation in railroad employment is entirely outside of the control of the railroads, there is a little control left in track labor and shops, and, while railroads in the last 20 or 30 years have gone pretty far in stabilization of their employment, there is still something that could be done if the incentive were there. And so long as we have this unemployment payment, if it were handled on that basis, it would tend in that direc tion. It could not possibly hurt any unemployment beneficiary or applicant in any way I can see or think of. Senator IVES. Thank you. Anything further, Mr. Kennedy? Mr. Squire? Mr. Musher? Mr. Schreiber? We will adjourn for the day, and meet tomorrow at 10 o'clock. Thank you very much. gentlemen. (Thereupon, at 12 o'clock noon, the subcommittee adjourned until 10 a. m., Thursday, May 20, 1948.) RAILROAD RETIREMENT AND RAILROAD UNEMPLOYMENT INSURANCE ACTS AMENDMENTS THURSDAY, MAY 20, 1948 UNITED STATES SENATE, COMMITTEE ON LABOR AND PUBLIC WELFARE, The subcommittee met, pursuant to notice, at 10 a. m., in the hearing room of the Committee on Labor and Public Welfare, Capitol Building, Senator Irving M. Ives (chairman of the subcommittee) presiding. Present: Senators Ives and Jenner. Senator IVES. The hour of 10 o'clock having arrived, we will begin the hearing. Mr. Schoene is our first witness this morning, I believe. Mr. Schoene is counsel for the Railway Labor Executives' Association, I believe. You may proceed, Mr. Schoene. You have 1 hour. STATEMENT OF LESTER P. SCHOENE, COUNSEL, RAILWAY LABOR EXECUTIVES' ASSOCIATION Mr. SCHOENE. Mr. Chairman, my name is Lester P. Schoene. I am a member of the law firm of Schoene, Freehill & Kramer, and I appear here this morning representing the Railway Labor Executives' Association and the American Federation of Labor. I am authorized to say that the views I shall express are also the views of the American Federation of Labor. As the members of this committee no doubt know, the Railway Executives' Association is an association of the chief executives of 20 of the 22 standard railway labor organizations. The organizations represented in the association are: Brotherhood of Locomotive Firemen and Enginemen. Order of Railway Conductors of America. Switchmen's Union of North America. Order of Railroad Telegraphers. American Train Dispatchers' Association. Railway Employes' Department, A. F. of L. International Association of Machinists. International Brotherhood of Boilermakers, Iron Ship Builders, and Helpers of America. International Brotherhood of Blacksmiths, Drop Forgers, and Helpers. Sheet Metal Workers' International Association. Brotherhood Railway Carmen of America. International Brotherhood of Firemen and Oilers. Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees. Brotherhood of Maintenance-of-Way Employes. Brotherhood of Railroad Signalmen of America. National Organization Masters, Mates, and Pilots of America. International Longshoremen's Association. Hotel and Restaurant Employees and Bartenders International Union. Railroad Yardmasters of America. Now, there are two additional standard railway labor organizations, namely, the Brotherhood of Locomotive Engineers, and the Brotherhood of Railroad Trainmen. Those two organizations are not represented in the Railway Labor Executives' Association. However, in view of the fact that the position of those two organizations with respect to these bills pending before this committee is identical with the position of the Railway Labor Executives' Association, they have authorized me also to speak for them and to state that the views I shall express also represent their views. Senator IVES. I think that is a very good idea. Mr. SCHOENE. These organizations, speaking for practically all the railroad employees in the United States, are unanimously and unequivocally opposed to enactment of any of the bills under consideration except S. 2437 and S. 2438. They favor and recommend the enactment of those two bills as vigorously as they oppose the enactment of the others. I shall not deal in detail with the other bills; that is, bills other than S. 2437 and S. 2438. The Railroad Retirement Board has filed a very comprehensive brief analyzing each of those bills, and I have examined that brief and I think that Senator IVES. Did you hear the discussion here yesterday? Mr. SCHOENE. Yes; I did, and I am in accord with the views expressed by Mr. Kennedy concerning those bills. I want to make a very brief additional observation concerning the bill S. 994. That bill is in most of its important aspects is simply a proposal to substitute for the Crosser amendments that were adopted in 1946, the same provisions that those members of the House Committee on Interstate and Foreign Commerce who were opposed to the Crosser amendments brought forth as their substitute at that time. In other words, the essence of S. 994 is simply a proposal to reconsider the decision that Congress made in 1946 after full debate and full hearing. The reasons for the decision that Congress then made are just as valid today as they were when they were made, and they are fully set forth in the proceedings in Congress at that time. There is no necessity now to repeat them. Senator Ives. You do not need to go into it now, but you heard the questions I raised yesterday regarding unemployment insurance and experience rating. I am not asking you what you think about it now. All I am asking is that you give thought to it, because I do not think anything will be done along that line at this time anyway. Please devote a little thought to it in connection with the matter some time. Mr. SCHOENE. Very well, Senator. In addition I should like to point out that the bill S. 994 incorporates, among other things, the substance of the bill S. 670, which was the subject of hearing before a subcommittee of this committee on June 23 and 24, 1947. The reasons for our opposition to those provisions appear at pages 122 to 161 of the transcript of those hearings, and there is again no need of repeating. Except for the bills that we recommend, and S. 2228, all of the other bills, apart from anything else that might be said for or against them, incur liabilities in excess of any reasonable prospect of financing within the present statute. In the brief that I filed with the committee I included S. 2228 in that category also. It appeared to me that that was the case from an inspection of the bases of the bill; however, since that time I have had the benefit of studying more detailed cross calculations made by the Railroad Retirement Board, and it appears that the cost of that bill would not be far different from the cost of the bill S. 2437, which we recommend. However, Mr. Kennedy's statement and the Board's brief demonstrate in detail the highly inequitable nature of the distribution of increased benefits which that bill would provide, and we subscribe to that analysis and oppose the bill for that reason. I want to turn now to a consideration of S. 2437. The bill has two, and only two, purposes, and both of them are very simple. In the first place it would increase retirement annuities by approximately 20 percent-20.4 percent, to be exact. The increase is not an exact 20 percent for all categories of employees. The bill recognizes the fact that the increase in the cost of living has had an impact upon the lower income groups to a greater extent than it has on the higher income groups. For that reason the formula set up in the bill would provide a 25 percent increase for those annuities calculated under the formula on the basis of average monthly compensation of $50 or less. For annuitants so calculated, on average monthly compensation of between $50 and $150, the increase would range from 25 percent down to 20 percent, approaching 20 percent as the average monthly compensation approaches $150. The increase of annuities calculated on an average monthly compensation of $150 and more is exactly 20 percent. Annuities calculated under the minimum formula are also increased exactly 20 percent. The same is true of joint and survivor annuities already in effect, and survivor annuities to be awarded on the basis of joint survivor annuities already in effect. It is likewise true of pensions that were taken over from the railroad pension system when the railroad retirement system was set up. Senator IVES. The basic principle involved there, I take it, is the need quality involved on the part of the recipient? Mr. SCHOENE. That is correct, Mr. Chairman. That is given weight. Of course, at the same time we have to keep in mind that these people pay for these annuities, and people with larger average monthly compensation pay larger amounts. For that reason we have tried to balance the need factor on the one hand against the equity of paying for it on the other, and have arrived at this gradation as being a fair recognition of the need without doing any undue violence to the higher payments made by the higher paid employees. |