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To appreciate just what these arrangements mean to railroads, it must be borne in mind that the gathering together of the wage data is the major problem. From long experience in the mass production of statistical information railroads realized the necessity for developing a routine for this work and they have been quick to utilize the most modern accounting machines and methods adapted to the individual road's volume and organization. At the present time some 70 percent of railroad employment is with companies using tabulating-machine equipment which is capable of producing rapidly and accurately statements in various forms from a single punched card.

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Separate pay rolls are prepared for employees in each State, and in other respects the work is systemized. I do not want to create the impression that this work is not burdensome. As a matter of fact, is burdensome. The point I want to make is that the task is well on the way to completion once the earnings have been assembled and made ready for the report to the Railroad Retirement Board. In a recent test check some 24 of our principal railroads were asked what savings in their costs could be made if the wage reports to either the State unemployment compensation agencies or to the Railroad Retirement Board, but not both, were eliminated. This check developed that the savings which would result from the elimination of either one of these reports would be of no consequence.

I have here a copy of one sheet of a combination Railroad Retirement Board and State unemployment compensation agency form. This particular report is prepared, with required carbon copies, in one printing from the punch cards used for assembling the data. A similar form may be prepared with other equipment or even by hand. The earnings by months for the quarter are shown in the first three columns. I call your attention to the fact that earnings in excess of $300 in 1 month are reported in some instances. This is in conformity with an arrangement developed with representatives of the Railroad Retirement Board whereby they undertake to eliminate the excess in setting up the ledger record of creditable earnings to be used in computation of benefits. In the next column, the individual's name is shown. Then comes the occupation according to the classification prescribed by the Interstate Commerce Commission. In the next column appears the Social Security account number. The next column shows the total earnings which are obtained automatically from the machine addition of the first three columns. It will be noted that no entries have been made in the columns headed "full-time weekly wage," or "date in" or "date out" as the State for which this report was prepared has adopted the recommendations of the interim committee and waived the requirement. At the extreme right of the form appears a code number indicating for the employer's convenience the department in which the individual is employed.

When the form is completed, the first three columns are detached from one copy, which is then filed with the State agency. That portion appearing after the social security account number is detached from another copy to produce the report required by the Retirement Board.

Thus it is clear that the savings to railroads in furnishing wage data under the proposed system will be minor. It is equally clear that the proposed system will necessitate new and additional records and reports which will more than offset this minor possibility. For

example, under the State acts benefits are based upon total unemployment in a fixed week or partial unemployment during such week. But this bill bases benefits on days of unemployment within a period of any 15 consecutive days. Such period bears no relation to a calendar week, month, or year, or to a pay period. It may begin on any day of any year for each employee, and for the same employee it may vary from day to day.

This deviation from the basis uniformly incorporated in the State systems means that railroads will have to superimpose upon their present positive timekeeping records a new and additional negative timekeeping record. By positive timekeeping I mean the records now prepared to show the hours or days worked or mileage run or other unit of work from which the pay rolls are made. By negative timekeeping I mean the preparation of a record to show the days not worked.

The CHAIRMAN. When you prepare the positive, would that not also show the negative?

Mr. ETTENGER. But that is not all the negative record must show. On pages 10 and 11 of the bill appear conditions under which an employee is qualified to receive benefits, and on pages 11, 12, 13, 14, 15, and 16, disqualifying conditions are set out. Therefore, the negative record must show why the employee did not work. In other words, each absence will have to be investigated to determine whether or not it was of such nature as to disqualify the absentee from rights to benefits. And this record must be kept not only for regularly scheduled work days but also for Sundays and holidays when no work is scheduled, because any day may be a day of unemployment.

It is well known that there are intermittently in railroad service casual employees who feel little responsibility with respect to their employment relationship. They may be absent from work for one or more days or even permanently, and yet the employing officer may have absolutely no means of determining the reasons for the absence or the termination of service. Undoubtedly this negative timekeeping requirement would impose a substantial burden upon railroads as employers.

The question may be asked as to why the railroads must prepare and maintain this negative timekeeping record. I have noted that in section 12 (i), beginning on page 42, which provides that the Board shall prescribe a procedure for registration of unemployed employees, there is an unusual provision that

The Board may, when such registration is made personally by an employee, accept such registration as initial proof of unemployment sufficient to certify for payment of a claim for benefits.

In spite of this provision, I feel certain that the Board would not pay out millions of dollars in benefits without verifying the validity of the claim. Nor do I believe that the Congress would authorize the payments of huge sums unless such payments were subjected to the ordinary safeguards of good business practice.

The CHAIRMAN. That is a rather violent assumption, is it not? Mr. ETTENGER. Well, in my personal experience, every department of the Government that I deal with requires very much proof before they will certify a claim. That is usual before the Accounting Office. Certainly my experience has been that departments of the Government require complete protection, and it appears particularly import

tant in this case because of the discretionary power given the Board in section 2 (e) to waive recovery of erroneous payments from the payee and the provision of section 5 (g) that the determinations of the Board with respect to any claim for benefits or refund shall be binding upon all persons, including the Comptroller General and any other administrator or accounting officer, employee, or agent of the United States, and shall not be subject to review in any manner other than that set forth in subsection (f) of this section-which relates to appeals to the courts from decisions of the Board. The verification of a claim for benefits could be properly made from the employer's records only. Ample authority is given the Board to require this vertification in section 12 (e), and ample precedent for such requirement is found in the Board's administration of the Railroad Retirement Act, under which railroads are required to verify a claimant's service and compensation record.

I have no way of measuring the other accounting records and reports that may be required. The Board has unlimited authority to require railroads to furnish any information which it deems necessary for the administration of the system. The methods of administration are not spelled out, but are left to the Board for determination and prescription by rules and regulations. The things to be done vary from fixing the time when benefits shall be paid to the encouragement and assistance in the adoption of practical methods of vocational training, retraining, and vocational guidance.

The proponents of the bill have not elaborated on their statements that 3, 4, or even 5 millions of dollars will be saved, beyond saying that it will be found in simplified accounting procedure. I have discussed those matters which can be measured, that is, the wage report and the negative timekeeping record. Other accounting reports will, as to form and content, be anything that the Board may prescribe, but the duties and responsibilities of the Board will be no less than existing laws impose upon State agencies.

It follows that the other requirements of the Board will be no less than those of the State agencies. Therefore, I reach the conclusion that the proposed system offers not only no escape from the present high level of social securing accounting costs, but will almost certainly increase those costs.

The CHAIRMAN. If you had to make a report to one body instead of separate reports to five or six States, you would save that much. Mr. ETTENGER. We would save five pieces of paper.

The CHAIRMAN. The five different States might require five different kinds of reports.

Mr. ETTENGER. We have a uniform requirement in 27 States today. With the aid of this conference which I described, we are hoping to make it uniform throughout the United States. The Social Security Board says that you have got to consider the convenience of the employer. This is one of the items.

Senator MINTON. Do you think it is easier to coordinate 47 or 48 States in this activity than to deal with one body?

Mr. ETTENGER. So far as making this report is concerned, it might be easier, but no railroad makes 48 or 49 reports, when you include the District of Columbia.

Senator MINTON. You make more than one?

Mr. ETTENGER. Yes; we make 2, 5, 8, and 10.

Senator MINTON. Do you think it is more desirable to make 2, 5, 8, or 10 reports than it is to make 1?

Mr. ETTENGER. Senator, we won't save enough out of this to offset the costs of the new records, particularly this negative timekeeping. Senator MINTON. Do you think it is more desirable to make 5 or 8 or 10 reports than to make 1?

Mr. ETTENGER. No; it is easier to make one.

Senator MINTON. Would it not be less expensive?

Mr. ETTENGER. So far as this particular report is concerned, but the other reports would cost us more than we would save here. I am refuting the claim that the railroads can save $3,000,000 or $4,000,000. It seems foolish that the railroads would not jump at an opportunity of that kind. They would, of course.

The CHAIRMAN. It does not seem to me that the argument for saving money is the important feature of the program or of the bill. Mr. ETTENGER. It was one of the claims of the proponents.

What are the prospects of the State agencies realizing any substantial savings in their expenses if railroad employment is lifted from out of the State system? Again, the answer must be that substantial savings are not in the picture. According to estimates furnished by the Social Security Board, some 21,000,000 workers are covered by the unemployment compensation acts of the several States. As of the date of that estimate-July 1, 1937-the number of individuals receiving pay from railroads was approximately 1,260,000. Now, the establishment of the proposed system does not mean that all of the 1,260,000 individuals would be removed from the coverage of the State systems forthwith. On the contrary, any that found some employment in other industries would be under dual systems; that is, both the State system and the railroad system. How many individuals would fall in this category I am not in a position to say, but I am of the opinion that the number will be substantial over a period of years.

The CHAIRMAN. You say you do not know what the national board will require, and consequently you cannot estimate the amount, but you have simplified it with reference to some of the States. Do you assume that you will have any less difficulty in straightening it out with one board than you would have with 48 States?

Mr. ETTENGER. We will eventually be working with 48 different representatives of the same board. They must get down to localities to handle this; they cannot handle it from Washington.

The CHAIRMAN. But you will have one board that will be uniform? Mr. ETTENGER. Yes.

The CHAIRMAN. You are going to assume that the board will have some sense?

Mr. ETTENGER. It has some sense. That was proved when we worked with them on the Retirement Act.

The CHAIRMAN. You may proceed with your statement.

Mr. ETTENGER. Also, any individual is entitled to use the State employment office if in need of employment or reemployment. But even if the dual coverage did not prevail, it is self-evident that the lifting of even 6 percent of the aggregate of the covered individuals will not permit of a reduction in the State agency's personnel or office space or equipment. It is equally evident that there could be no reduction in the employment service, which is one of the most import

ant phases of unemployment insurance and at the same time is probably the most expensive.

But what will be the effect on the Railroad Retirement Board's expenses? If we disregard research, vocational training, and so forth, as provided for in this bill, and stick to fundamentals, we still get an entirely different picture from that of the State agencies. First, there is an entirely new function added, that of collecting the contributions from employers. The record made in the hearings before the House Committee on Interstate and Foreign Commerce with respect to H. R. 10127, which is identical with S. 3772, includes a comment from the Treasury Department on question of policy involved in delegating the responsbility for collection from employers to the Railroad Retirement Board. The Treasury Department has expressed opposition to this proposal, among other matters. However, under the bill the collection methods, time, and so forth, are to be prescribed by the Board, and regardless of how it is done it will entail additional expense to the Board but without any corresponding savings to the States or Treasury Department. Accounting work will be increased substantially. A claims bureau will have to be organized. Field representatives will be needed. Employment offices must be established which will duplicate and be competitive with existing State agencies. Certainly, if the best possible service is to be available these employment offices must be operated primarily in the interest of the railroad employees and staffed by personnel skilled in social work. All of these expenses will be incurred, without a corresponding decrease in the present expenses of the agencies administering the State unemployment-compensation laws, including the Social Security Board. The CHAIRMAN. Are you through with your statement?

Mr. ETTENGER. I would like to make just this one last point. The railroads won't save anything, but the Railroad Retirement Board will have much more expense if they undertake to administer this law. The State agencies save nothing and it will save us nothing. That is all I have to say.

Mr. FLETCHER. That concludes the witnesses for the railroads. I wanted to say a word or two, but I am willing to forego that if Mr. Latimer testifies.

The CHAIRMAN. All right. You have as much time as you want. STATEMENT OF MURRAY W. LATIMER, CHAIRMAN, RAILROAD RETIREMENT BOARD

Mr. LATIMER. My name is Murray W. Latimer. I am Chairman of the Railroad Retirement Board.

I should like to say a few words first, Mr. Chairman, about the cost of the benefits themselves under the proposed legislation. Any estimate as to the cost of unemployment insurance is bound to be pieced together from data from a variety of sources. Since unemployment is a variable risk, fluctuating from year to year, falling off in years of prosperity and rising in years of depression, and since we assume from the start that every year will not be a depression year, an estimate, in order to be reasonable, ought to cover a period of years, including both years of prosperity and years of depression.

The most comprehensive study which has yet been made in this country of unemployment in the railroad or any other industry is

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