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Social Security Pioneers



A Statement by
A. J. Altmeyer,
on October 14, 1943

General Nature of Plan. The first fundamental policy question is whether the allowances shall be in accordance with a uniform national pattern or in accordance with the varying patterns developed under the 51 State, Territorial, and District unemployment compensation laws. Since the payments are to be made as a result of Federal military service, it is assumed that a uniform national pattern is desired so that benefits shall be calculated in the same manner, regardless of where the ex-serviceman makes application or where he lives.

Amount, Character and Duration of Benefits. Another fundamental question is whether the amount of allowance should be a flat amount and for a fixed period of time, or whether it should be related to the amount of the serviceman's base pay or the length of his service. It is assumed that a flat allowance is desired regardless of the amount of base pay or length of service. A $12-a-week or a $15-a-week allowance for a specified number of weeks of unemployment during the 12 months immediately succeeding the period for which a "mustering-out" payment would be made might be considered reasonable for a person without dependents. It should be noted that only 3 State unemployment compensation laws pay benefits uniformly for more than 20 weeks, and most States pay for a considerably shorter period. Payment for a maximum of 26 weeks during a 12-month period or payment for all weeks of unemployment during a 12-month period might be considered. This 12-month period would be required in many cases for a serviceman to develop new benefit rights under a State unemployment compensation law.

Another fundamental question is whether the amount of the allowance should be varied in accordance with the number of dependents. While only the District of Columbia unemployment compensation law provides dependents' allowances, it is assumed that it is desirable to take account of dependents, especially since provision is made for dependents' allowances for persons while in service. However, a secondary question is whether the amounts allowed for dependents should be the same as (or be related to) the allotments and allowances now being provided or whether a separate schedule of dependents' allowances should be established. Either approach would be feasible administratively; however, if the dependents' allowances are to be related to the allotments and allowances now being received several questions would have to be decided. To mention only the more important, is it desired to pay to dependents only the allowances or both the allotments and allowances in addition to the unemployment allowance that the man himself would receive? Is it desired to pay to Class B dependents? Is it desired to consider a working wife to be a dependent? Is it desired to fix a maximum amount on dependents' allowances?

If a separate schedule of dependents' allowances is established the amount of the basic allowance may largely determine the number of dependents who may be taken into account because of the desirability of establishing a maximum allowance. For example, if the basic weekly allowance were made $12, a dependent's allowance of $6 a week for each dependent, up to a maximum of two or three dependents, might be considered reasonable. If the basic weekly allowance were made $15, a dependent's allowance of $7.50 a week for each dependent, up to a maximum of two dependents, could be considered.

All but two State unemployment compensation laws provide for compensation for partial unemployment--that is, when a person works so little in a week that he earns less than his weekly benefit amount. It is assumed that allowances should be paid to ex-servicemen for partial unemployment on a basis which would encourage them to accept part-time work. Such a formula might exempt the first $3 or $6 of weekly earnings, in making deductions for earnings from the total weekly allowance.

Another question is whether allowances should be paid on a daily or weekly basis. All but one State law provides for compensating for unemployment in units of a week, although the method of paying on a daily basis has certain advantages.

Payment During Disability. Another fundamental question is whether unemployment allowances should be paid regardless of whether the unemployment is due to lack of work or physical disability. There are six possibilities:

(a) Pay unemployment allowances regardless of whether the unemployment is due to lack of work or physical disability;

(b) Pay no unemployment allowances if the person is physically unable to work;

(c) Pay unemployment allowances if the beginning of the period of unemployment was due to lack of work, even though after the period started the person became physically disabled;

(d) Pay unemployment allowances if the beginning of the period of unemployment was due to lack of work, even though after the period started the person became physically disabled, except when the individual fails to accept suitable work offered to him through the employment office;

(e) Pay unemployment allowances if the beginning of the period of unemployment was due to lack of work, even though after the period started the person became physically disabled, so long as he would have been held to be "available for work" under the State unemployment compensation law of the State in which he is residing.

(f) Pay unemployment allowances if the beginning of the period of unemployment was due to lack of work, so long as the extent of any period of unavailability within a week is not such as to preclude a finding under Federal regulations that he was available for work "for the week." As indicated in (e), this is in accordance with the present practice of some States.

At the present time one State is paying disability benefits. Other States administer their laws in the manner indicated in (b), (e) or (f). Alternatives (c) and (d) are intermediate suggestions. In part, the decision as to whether to pay allowances during periods of disability will depend upon the decision as to the effective date of the program since administrative considerations must be weighed with respect to any inclusion of disability benefits. There can be no doubt as to the social desirability of providing the ex-servicemen and their families protection during periods of sickness and disability. With an appropriate allowance of time to get ready it would not be impossible to administer disability benefits. It would be comparatively simple if disability benefits are payable only for disability occurring within periods of unemployment. If benefits are payable for disability, regardless of whether it occurs within a period of unemployment, the administrative task is more difficult and of a different character, since it would be necessary to have Nation-wide facilities to determine the fact of disability in individual cases. On the other hand, payment of benefits for disability occurring within periods of unemployment and failure to pay benefits for disability not occurring within periods of unemployment will cause some anomalies and may be difficult to understand.

Disqualification Provisions. Another fundamental question is whether there shall be uniform provisions relative to disqualification for the receipt of benefits or whether the disqualification provisions in the various State, Territorial, and District unemployment compensation laws shall be applicable. The most important of the disqualifying conditions in these various unemployment compensation laws relate to discharge for misconduct, voluntary quitting, or unreasonable refusal to accept suitable employment. The laws vary in defining the type of discharge, quit or refusal which disqualifies and in the extent of the attendant disqualification. It is assumed that specific and uniform disqualification provisions are desired. It is also assumed that refusal or failure without good cause to attend a training course as directed shall be one of the causes for disqualification.

A related question is whether the interpretations of the disqualification provisions and other provisions of the law shall be in accordance with rules and regulations promulgated by a Federal authority or whether they shall be in accordance with rules and regulations promulgated by the various State unemployment insurance agencies. There is considerable variation between the States in their interpretation of identical language. It is assumed that the provisions should be interpreted in accordance with rules and regulations promulgated by the Federal agency.

Relation to Existing State Legislation. Final decisions as to what the allowances should be, what the disqualification conditions should be, and who should be responsible for interpretations are dependent to a considerable extent upon the relationship envisaged between the ex-servicemen's unemployment allowances and the regular unemployment insurance benefits payable under the various State, Territorial, and District unemployment compensation laws. All but three States have enacted legislation to freeze any unemployment benefit rights which persons entering the armed forces may have possessed at the time of such entrance. It is estimated that probably 50 percent of the persons entering the armed forces had benefit rights in varying degrees under some State law. Twenty of the States which provide for freezing the benefit rights of persons entering the armed forces have included a proviso to the effect that the benefits frozen shall not be payable until unemployment allowances payable under a Federal law to such persons are exhausted. Six additional States provide that the frozen benefits payable for a given week shall be reduced by the amount of the Federal benefits. There is likewise a general provision which is found in most State laws to the effect that benefits are not payable for any period for which unemployment benefits are payable under an unemployment compensation law of another State or of the United States. Therefore, it is doubtful whether a Federal statute could be drawn to supplement for each week the benefits otherwise payable under State unemployment insurance laws which would not require amendment of the majority of existing State laws in order to make certain that ex-servicemen actually could receive combined State and Federal benefits up to the desired amount.

The States could be compelled to amend their laws to pay the frozen benefits through the insertion of sanctions in the Social Security Act relative to Federal grants for the administration of State unemployment insurance laws and the approval of State unemployment insurance laws which is necessary in order that employers may qualify for the 90 percent offset against the 3 percent Federal unemployment tax. However, this would undoubtedly be resented by the States. Even if the States were compelled to pay these frozen benefits, the determination of the respective State and Federal obligation in individual cases would be complicated.

Administration. Even though the States were not required to pay the frozen benefits first or were not required to share any financial responsibility for the payment of allowances to ex-servicemen, it would still be possible to utilize the State unemployment insurance agencies for the administration of Federal unemployment allowances. However, it is assumed that in order to assure administrative flexibility and adaptation to changing circumstances it is desired to make it optional with the Federal agency as to whether the allowances will be paid directly by the specific Federal agency designated to administer the law or by other cooperating Federal or State agencies.

In any event, it seems that there should be a specific requirement that applicants for allowances shall register at an office of the United States Employment Service. That Service is now being operated by the War Manpower Commission but is being utilized by the State unemployment insurance agencies. The United States Employment Service is required by the Wagner-Peyser Act (48 Stat. 113) to "maintain a veterans' service to be devoted to securing employment for veterans." Prior to January 1, 1942, the United States Employment Service consisted of 51 separate services maintained by the various unemployment insurance agencies although almost 100 percent financed by grants from the Federal Government. On that date all of the State agencies, at the request of the President, consented to the transfer of the employment offices to the Federal Government for direct operation by the Federal Government. In consenting to this transfer practically all of the Governors and other State officials specified that they considered this transfer temporary and justified only because of the war emergency.

Regardless of whether the employment offices are returned to the States or directly operated by the Federal Government, it should be possible to administer this program simply, and in practically all cases to have local offices pay allowances without referral to either State or Federal central offices, since the schedule of allowances would be uniform and the ex-servicemen's discharge papers would contain all the information necessary to process the individual's claim.

Effective Date of Plan. Finally, there is the question of when such a program should become effective. Already thousands of individuals have been discharged from the service and it is possible that there may be some demobilization of the armed forces before complete victory over both Germany and Japan. Consequently, the effective date should be determined in relation to possible military developments and possible demobilization plans. One alternative is to begin payment of allowances upon a specified date; another upon occurrence of a specific event, such as an armistice or a substantial demobilization; another is to provide that the President shall determine the date by proclamation, taking due account of certain factors specified in the law.

Terminal Date of Plan. It is also necessary to decide for how long a period after the termination of hostilities the program will be in effect. The period for which such a program should be in effect depends in large part upon the length of time it takes to demobilize the armed forces and the economic conditions prevailing during the post-war period. It is possible, in view of the fact that our forces are distributed all over the world, that it may take some time for demobilization to be nearly complete. Provision could be made for the program to operate for a specified time after the termination of hostilities, say 3 years. If the Congress should decide later on that this was not long enough to permit individuals to take advantage of the provisions of the law because of a slower process of demobilization, the Congress would have sufficient time and opportunity to amend the law to extend the duration of the program, or if experience should so indicate, to shorten the duration of the program.

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