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Chairman DaviE. I regret to announce that Mr. Altmeyer, of the l'nited States Social Security Board, who was to have taken part in the discussion at this time could not possibly make the trip. He has, however, delegated a very able pinch-hitter, Cornelius R. P. Cochrane, technical adviser to the Bureau of Unemployment Compensation of the Social Security Board.
Mr. Cochrane after conveying to the convention Mr. Altmeyer's regrets that he was unable to be present, read his paper, as follows:]
Mr. AlTMEYER. I appreciate this opportunity of addressing a group of State labor-law administrators, since for many years prior to becoming a Federal official, I was a State labor official. If I may, I should prefer to talk to you as a State labor official rather than a Federal official. I hope that you will accept me as one of you discussing mutual problems, rather than an outsider giving gratuitous advice.
It should be possible through meetings such as this to develop ways and means of bringing about the proper integration of the administration of labor laws. With the advent of unemploymentcompensation laws the relationship of the administration of such laws to the administration of other labor laws becomes a matter of great concern. If the proper relationship is established it may lead to greater integration in the administration of labor laws in general. On the other hand, if it is not handled properly it will lead to greater disintegration. Unfortunately, the present situation as regards the integration of labor-law administration is not very cheering to those who are desirous of having effective labor-law administration.
While all of the States in the Union have some agency designated to administer one or more types of labor legislation, in several States the same agency is charged with the responsibility for administering as well other legislation which has little relationship. Moreover, in most States there is more than one agency administering labor laws, the typical division, of course, being between the administration of workmen's compensation laws and the administration of other laws. As a matter of fact, in only 11 States is a single agency administering all labor laws. Not only is there great need for consolidation of separate agencies administering various types of labor laws, but there is great need of integration of functioning within agencies that have consolidated. The very fact that there are two national organizations meeting here in Topeka not only demonstrates that there is a lack of consolidation of agencies administering labor laws, but also is proof of the fact that the two sets of administrators recognize that there is community of interest between them.
As you know, there are two main types of State agencies administering what the English term "factory acts" (that is, labor laws other than workmen's compensation)--the commission type and the socalled department of labor type. In the first type there is a body of persons, usually three, who possess executive as well as quasi judicial and quasi legislative functions. In the second type there is a single person who possesses executive functions only. In all cases where there is a commission to administer regulatory labor laws, that commission is also charged with administering the workmen's compensation act. However, in the majority of cases where there is a singleheaded labor department there is also a separate commission administering the workmen's compensation act. That it is not necessary to have a separate agency administering the workmen's compensation act when there is a single-headed department of labor is evidenced by the fact that in a number of States having a single-headed department of labor there is a commission created within such a department handling the executive functions involved in reporting, recording, and checking of undisputed cases, while another commission created within the department hears the appeals from decisions made in disputed cases.
The experience of this country indicates that either the singleheaded type of labor department or the commission type can operate successfully. It is true that as the administrative load increases, due to increased industrialization within a given State, the necessity for a commission to delegate executive functions becomes greater and greater, so that eventually a point may be reached where the executive and judicial functions should be made coordinate rather than having the executive functions subordinate to the judicial functions. In other words, it may be that under such circumstances the commission type should be superseded by the single-headed department of labor type of organization.
But whether we have the single-headed or commission type of administrative agency, there is the same necessity for integration of functions within the agency. This arises out of the fact that there must necessarily be specialization of functions within the agency. This very specialization, while it promotes greater efficiency in the carrying out of each function considered separately, gives rise to a problem of coordination and integration, so that the administration of each type of labor law may improve and reinforce the administration of every other type of labor law.
The Social Security Act, as you know, is in essence a cooperative Federal-State plan. Indeed, all of the benefit provisions of the act, with the exception of Federal old-age benefits, are administered by the States. This approach, rather than a straight national approach, was made to the problem of social security because it was recognized that the variation in conditions and public opinion throughout this vast country of ours required that a plan be developed whereby each State would have an opportunity to decide for itself the kind of law it wanted and to develop for itself the kind of administrative organization which it felt met its problems. It is also recognized that in no other way could there be maintained that close contact with individuals and groups affected by the provisions of the law which alone is a guaranty of realistic administration.
The fact that there are on this very program representatives of two States having widely varying types of unemployment-compensation laws and widely varying types of administrative organization is evidence that the Social Security Act does afford opportunity for adaptation to local conditions and public opinion. I think these two States are to be congratulated that each one has recognized the close relationship which must exist between the administration of unemployment compensation and operation of the employment service.
All of the States that have enacted unemployment-compensation laws, with one exception, have placed the administration of unemployment compensation and the operation of the public employment service with the same agency. Thus the progress that has been made in the integration of these two functions is most encouraging. However, only 5 of the 15 States that have enacted unemployment-compensation laws have placed the administration of unemploymentcompensation laws within a single agency administering all labor laws. But in two other States the agency administering workmen's compensation has also been charged with the administration of unemployment compensation.
I am frank to say that I think it has been very unfortunate that the administration of workmen's compensation has developed rather independently of the administration of other types of labor laws. The advent of unemployment compensation offers two possibilities--either further dispersion of responsibility for administering labor laws or an opportunity to bring about integration of the various agencies in a State administering labor laws.
The integration of unemployment compensation with the administration of other labor laws can be accomplished in a number of different ways. It is not necessary nor desirable that a single pattern be followed. If a State prefers the single-headed department of labor type of administration, then in addition to creating a division within the department to handle the functions involved in the collection of contributions and payment of benefits it will be necessary to provide for an appeals body to hear appeals in disputed cases. In a State with a small volume of appeals this might be a part-time body. However, if the department of labor also administers the workmen's compensation act, the same appeal body might be used to hear appeals under the workmen's compensation act as well. If this were done the volume of appeals under both acts would probably be sufficient to warrant a full-time body which, of course, is always more satisfactory. When the volume of appeals is great, this combination
would not be satisfactory. But in either event it is essential that the relationship between the appeals body and the head of the labor department be clearly defined in the law, both as regards control of personnel as well as regards procedure. I should also like to point out that if the legislature has given the department of labor the power to adopt regulatory rules or orders having the force of statutory law either in the field of safety or some other field, consideration should be given to the desirability of charging the appeals body with responsibility for approving such rules or orders as the head of the labor department may develop and recommend.
If a State prefers the commission type of administration, there should of course be created a division to handle unemployment compensation, but the commission itself would then be the appeals body. It could also exercise the administrative rule or order-making power I have just mentioned. While under the commission type of administration the difficult problem of defining the respective functions of the head of the labor department and the appeals body is avoided, another difficult problem is created; that is, to make certain that the commission delegates its executive powers to an executive officer sufficiently, so that prompt action is assured and so that the commission itself can give adequate attention to its quasi judicial and quasi legislative powers.
It is important that the friends of efficient labor-law administration in the various States assume leadership in developing the type of integrated labor-law administration that seems to fit the particular needs of each State. It is particularly important now that they use their influence to make certain that the advent of unemployment compensation is made the occasion, not only for integration of laborlaw administration in general, but also for more adequate financing of labor-law administration. Unfortunately, in many States the importance of adequate administration of labor laws has not been recognized, and in most States labor-law administration has been inadequately financed. Even the friends of progressive labor legislation have too often felt that their job was done when they secured the enactment of suitable legislation. They have failed to recognize that administration is fully as important, if not more important, than the legislation itself. If the friends of labor legislation now will recognize the importance of adequate and integrated administration, they have a fine opportunity of capitalizing the public interest in unemployment compensation to make great strides forward.
Chairman Davie. The next speaker has had quite a varied experience in unemployment compensation. I consider it a great pleasure to introduce Glenn A. Bowers, of the Department of Labor of New York State.
Mr. Bowers. I will direct my remarks briefly to the report which Mr. Raushenbush has so well presented, and being a member of the
committee on unemployment compensation, I want to give credit to Paul Raushenbush for having prepared the report. It is a fine report. I concur in the report with one or two exceptions and I should like to join Professor Bigge on the point of delaying the payment of benefits or the accumulation period for fund accumulation to less than 2 years. I believe, as he does, that if any lesser period is fixed there may be a shortage of funds at the very beginning. There are one or two other points I might make on the general problem of administration of unemployment insurance.
The New York law, of course, has problems that no other State law has. I think Dr. Lubin will verify my statistics when I say that New York has 10 percent of the population of the country, about 15 percent of the wage earners of the country, and about 17 percent of the total pay rolls of the country. Therefore it would not be fair to compare the administration in Wisconsin, for instance, with that of New York, because the nature of the problems is quite different. However, we may have reason to comment upon the fact that Mr. Altmeyer's address referred to the radical difference between the New York State law and the Wisconsin law as regards the pooled fund created by the New York law and the reserve fund of the Wisconsin law. There is a great deal of misconception of the real substance of that. I do not think there is a difference at all, provided the pooled-fund law has coupled with it a merit-system law. A pooled-fund law plus a merit-rating system can be the same in result as a reserve type of law, because you get to a credit in either case. In the instance of the company-reserve plan, you stop paying after you have accumulated a certain amount of money. In the case of the merit-rating system coupled with the pooled-fund plan you get a rebate. Both plans are the incidence of the rebate or the incidence of the cessation of payment to turn-over. If the turn-over is low, Four merit rating is high or your reserve accumulation account starts that much earlier. I think the mathematicians will all agree that they can be made the same; therefore, a great deal of this argument we have had over the past few years in which I have been particiDating, favoring, you might say, the reserve-fund law-should evapstate. I no longer fear the pooled-fund law as taking away all the Liberties of the individual or failing to distinguish between the rating experience of an individual employer, as I once did. The Supreme Court of the United States will pass in November on the New York Law. At that time I suspect that it, rather than the State and Federal agencies cooperating, will settle the question of the degree to which the States manage these unemployment-insurance laws or the Federal Social Security Board manages them. We can cooperate in our interstate conferences, but in the last analysis the Supreme Court will decide whether the sweeping powers which Mr. Raushenbush has referred to should reside in the Social Security