Department of Labor has had the USES in it for several years now, and that such action has not been taken as he fears, and I ask the gentleman this question directly.

Isn't it true that payment or denial of benefits to these workers is controlled by the State law and by the State officials in each State at the present time? Congress has placed that function in the States? Mr. MANAK. That is true; subject, however, to this superinfluence. It is subject always to the budgetary machinery and the administrative control of the Federal departments which supervise.

Mr. HOLIFIELD. That is true, but now as a matter of record isn't it true that the Federal Government, under the Federal law which would not be changed by this transfer in any way and that its interest in the past has been the honest use of administrative grants-in-aid to the States, No. 1, and the selection of personnel on a merit basis for the administration of it, just seeing that that was done on a State level. Isn't that true of the past record?

Mr. MANAK. I believe the record will show that the Department of Labor has been interested in seeing that benefit payments are paid in cases where the State law does not provide for payment of benefits, and they have tried to secure legislation and have tried other types of argument and persuasions which are quite strong and they have purse-string control in order to secure and put across their programs.

Mr. HOLIFIELD. Now you make the statement, then, that the Federal agency-that the Department of Labor has tried to influence the enactment of State laws which were detrimental to the employers and to the workers.

Mr. MANAK. No, sir; I did not state that.

Mr. HOLIFIELD. Do they attempt to enforce on you anything over and above that which has been passed by your own State legislatures?

Mr. MANAK. There are others here who have more recent knowledge. All I can speak about is my own experience in the Ohio agency, ending in 1943. The Department of Labor at that time did not have jurisdiction over the Employment Service.

Mr. HOLIFIELD. I think your testimony if it be pertinent, would have to be of a period of time when the Department of Labor had the USES within its jurisdiction, if your comments on that point are pertinent.

Mr. MANAK. Well, I am speaking, of course, about the top-level policy control which can be expected from a pro-organized labor program.

The CHAIRMAN. Mr. Holifield, will you not concede the Department of Labor does send its representatives around to the different legislatures, suggesting what changes should be made in the State laws, and minimizing the payments?

Mr. HOLIFIELD. Well, I have no personal knowledge, I will say to the chairman, on that. However, I think it would be perfectly justified in the administration of Federal funds in advocating certain provisions in your State laws which would safeguard the proper payment of benefits to prevent fraud and abuse or arbitrary action against employees.

The CHAIRMAN. And against employers, too.

Mr. HARNESS. Will the gentleman yield?

Mr. HOLIFIELD. Yes.

Mr. HARNESS. Do I understand you to say you think it would be legitimate for the Government agency to use the taxpayers' funds to go to a State legislature and lobby for legislation in that legislature? Mr. KARSTEN. Two of the witnesses have made similar statements. Mr. HOLIFIELD. The witnesses have made statements along that line.

Mr. HARNESS. This witness hasn't said anything to that effect. Mr. HOLIFIELD. I didn't say that. I said two of the witnesses said that. I will answer my friend direct. I say when a Government department is charged with the distribution of Federal funds in a State agency, it has a perfect right to investigate the State law, and see if that State law complies with the Federal laws, for the protection of the Federal money.

Mr. HARNESS. That is entirely different from what he said a while. ago.

Mr. BENDER. I think public sentiment pretty generally has been with the States; people have known about the way the Federal Government has handled their affairs and the way the State governments have handled their affairs, and I think public sentiment pretty generally goes along with the States.

Mr. HOLIFIELD. That is true, but in the distribution of grants-inaid from the Federal Government, my friend from Ohio realizes that there are always regulations and procedures to which the State agrees in return for the participation in the Federal funds.

The CHAIRMAN. And as I understand the position of at least some of these gentlemen it is this: That the Department of Labor, having been created for the express purpose and properly being interested in the advancement of labor, what they object to is that they are fearful that this particular fund will be turned over to them, there will be a drive on to not only increase payments but to liberalize all the laws which hinder their payment. Is that not it, in a way?

Mr. HARNESS. Mr. Chairman, I would like to ask the witnessit is a fact, isn't it, that the money that goes into this fund, is money raised in the State, and paid by the employers, isn't it?

Mr. MANAK. Yes, sir.

Mr. HARNESs. The fund that is paid out for unemployment compensation?

Mr. MANAK. That is right.

Mr. HARNESS. That is supplied by the employers of the State, not Federal funds, as such, at all; is it?

Mr. MANAK. No, sir; it is a trust only.

Mr. HARNESS. It is a trust fund held by the Government?

Mr. MANAK. That is correct.

Mr. HARNESS. Money taken from the employers in the States? Mr. MANAK. That is correct; yes, sir.

Mr. MANASCO. Do I understand that you are speaking as a representative of employers?

Mr. MANAK. Yes, sir.

Mr. MANASCO. You are speaking for all these organizations on this list here?

Mr. MANAK. Yes, sir.

Mr. MANASCo. I notice in your statement and in the statements of some of the other gentlemen that you folks are turning New Deal now. You are the strongest New Deal agency that was ever created. I am

sure that will come as a surprise to a lot of folks who thought you were turning away from the New Deal.

The CHAIRMAN. Let me interject there where do you find that he is turning to the New Deal?

Mr. MANASCO. I am just drawing that conclusion, that he thinks the Federal Security Agency does.

The CHAIRMAN. He didn't say that. He said that it was the lesser of two evils, if I get him rightly.

Do you have any questions, Mr. Rich?

Mr. RICH. It has been said repeatedly the primary function is to secure jobs. Well, really, if your concern is to get jobs for laboring men, the primary concern must be to have jobs provided.

Mr. MANAK. It is the employer who hires.

Mr. RICH. There are no jobs to be provided unless the Government provides all the rest of them. There are no other sources, so the very fact that we want jobs for men does not mean that it ipso facto should go into the Labor Department. It should go wherever the jobs are to be provided. The Labor Department does not provide jobs.

Mr. HARNESS. It should go back to the States where it belongs. The CHAIRMAN. Have you finished?

Mr. MANAK. That is all I have, sir.

The CHAIRMAN, Mr. Porter Dale.

STATEMENT OF PORTER DALE, YOUNGSTOWN, OHIO, ON BEHALF OF THE OHIO CHAMBER OF COMMERCE, COLUMBUS, OHIO

Mr. DALE. I am Porter Dale, social security tax accountant of the Youngstown Sheet & Tube Co., Youngstown, Ohio. I am appearing on behalf of the board of directors and members of the Ohio Chamber of Commerce, whose offices are at Columbus, Ohio, and on whose committee on social legislation I have served since 1939.

My duties with the Youngstown Sheet & Tube Co. and subsidiary companies, include the coordination of social security tax and reporting matters in our various plants in Ohio, Pennsylvania, Indiana, Illinois, West Virginia and Wisconsin. On these matters I work closely with all of our plant and company employment departments. All procedures and coordinating policies of the company in this field are developed in my office and cleared through to general management. I have been performing this work since the program started over ten years ago.

We are supporting Mr. Hoffman's House Concurrent Resolution 131, which disapproves Presidential Reorganization Plan No. 1 of 1948, because we feel that Federal functions in unemployment compensation and employment service ought to be in an independent Federal agency along the same general pattern of the program maintained in the State of Ohio, where the Bureau of Unemployment Compensation has the status of an independent agency. In Ŏhio it is not under the Department of Labor, it is not under the Department of Industrial Relations, nor is it under the State Department of Commerce. We think that the responsibility for referring people to jobs and the system of paying them benefits when they are not able to find jobs is of major importance to employers as well as employees. These systems include the responsibility of seeing that benefits under the program are paid only when a qualified worker cannot be employed

at a job for which he has a reasonable aptitude or skill. In other words, the Federal and State governmental agencies, the employers and the employees, have a common interest in the functions. Cooperation among these interested parties is essential.

When we examine the proposed transfer of the employment service and unemployment compensation to the administrative and rule making authority of the Department of Labor, we must consider that department, its policies and organizational set-up. It seems to us to be beyond question that the Department of Labor is staffed and strongly influenced by organized labor at the top policy making level. In view of the sharp differences of philosophy and approach between management and organized labor in the field of unemployment compensation, the Labor Department is certainly not the place to expect an independent and unbiased administration. Organized labor has always sought a federalized system. Employers have supported state and local administration. The Department of Labor, as well as organized labor, has resisted most strenuously the return of the loaned employment service to State control and, even now, would place it under national jurisdiction. Another objective of labor groups is that of establishing interpretations and rules which would seriously limit the availability of individuals for job openings by contending that a worker ought to be permitted to draw benefits rather than to take a job at anything beneath the level of his highest skill. There are many other issues in unemployment compensation on which employers and labor organizations do not stand on common ground. In the words of the Secretary of Labor with respect to the matter of "suitable work" the State laws must be so interpreted as to "avoid depressing labor standards." Furthermore, in conferences sponsored by the Department of Labor it has been recommended that

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no claimant shall be denied benefits because he refuses to take a job which is not comparable to his proven skill, ability and earning capacity nor suffer complete disqualification for more than 1 to 4 weeks for voluntary separation for any cause.

This clearly means that from the Department of Labor viewpoint, unemployment compensation benefits should be paid according to union standards and also should be paid during labor disputes after only a minimum number of weeks of disqualification has been invoked. We feel that this would seriously prejudice the unemployment compensation program by throwing open and nullifying all types of controls which the States have found to be necessary and important.

From our own actual experience in dealing with unemployment compensation problems in the local communities, we have found it to be extremely important for us to be able to prove that work has actually been offered. Under the philosophy of the Employment Service as operated on a temporary basis under the Department of Labor, it seems to be that procedures are designed to permit claimants to draw benefits rather than to take jobs which are on file in the local employment office. Concerted action on the part of many claimants would seem to show that advice and consultation is afforded them by union officers at the local level.

Another aspect of the availability problem arises from organized labor's efforts to continue to increase benefit levels beyond the point which most States have deemed proper and advisable. Here we

encounter the very practical question of making benefits so attractive that no work will be taken in prefernce to benefits. The present level of benefits in Ohio at $21 has proven sufficiently attractive to keep numerous men from accepting work which is available. This is why the referral procedures of the unemployment compensation system must be fairly and impartially administered.

Employers throughout the country, employers in my State, and my own company have a tremendous investment in the $8,000,000,000 unemployment compensation trust fund. We feel justified in our contention that this trust fund must be administered impartially. By action of this Congress in the Labor-Management Relations Act of 1947, controls were established for employer payments held in trust for medical, hospital care, unemployment benefits, pensions, life insurance, etc. The provisions of such controls require written agreement with the employer, equal representation between employers and employees in the administration of such funds, together with such neutral persons as representatives of employers and representatives of employees may agree upon. (Sec. 302 of title 3, Labor-Management Relations Act, 1947.)

We sincerely believe that if these safeguards and requirements of equal representation are deemed necessary in this law, it is equally logical and necessary that the public interest in the trust funds of the State unemployment compensation programs be likewise administered.

From every test of equity and justice it is our belief that Reorganization Plan No. 1 of 1948 should be disapproved and to this end it is our sincere hope that this committee will recommend House Concurrent Resolution 131 for passage.

The views of the Department of Labor and interests of organized labor are significantly parallel.

In support of my statement, filed with the committee, I should like to read from a pamphlet issued by and prepared by the legal department of the United Steel Workers of America, 1500 Commonwealth Building, Pittsburgh, Pa., entitled "Your Right to Unemployment Benefits in Ohio", and I quote:

In

What if you refuse a suitable job? Be careful on this. You will not receive any benefits during your present unemployment if you refuse to take a job the State agency considers suitable. If you are offered a job you feel you cannot accept, through your answer you may needlessly lose your benefit checks. order to make clear that you are willing to work, don't refuse to go for a job interview. Instead go and get the facts. Know your rights, and if you find the job is unsuitable, be sure to explain your refusal in terms that won't cause loss of benefits to you.

I will further quote from the statement of Philip Murray to the members of the United Steel Workers of America.

Mr. MANASCO. Will the gentleman yield? What is the object of the paragraph you read there?

Mr. DALE. This, sir: That in the actual administration of unemployment insurance it occurs-and in my experience it has occurred quite repeatedly-that refusals are made of job opportunities. By that I mean that in our own plant and for the company we have at times had as many as five to six or seven hundred common labor jobs that can be performed by any capable individual, physically capable, available, and going begging at the same time that men who are on our pay rolls in our employ are seeking unemployment benefits.