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1 Unemployment Compensation Revision: Pinpointing the Issues 1 (1965)

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SPECIAL REPORT
1965 - 6
UNEMPLOYMENT COMPENSATION REVISION -- PINPOINTING THE ISSUES
A Summary of the Arguments Presented Before the House Ways and Means Committee
The previous report in this series outlined the proposals advanced by
the Administration for revising the Federal-state unemployment insurance
system, and raised certain questions as to the effects of these proposals,
without attempting to delineate the major issues involved.
The House Ways and Means Committee has now completed three weeks of hear-
ings on these proposals. The testimony presented before the committee
disclosed that these proposed revisions in the UC system are extremely
controversial and raise fundamental issues of Federal-state relation-
ships, including potential Federal domination over a program in which
the states have heretofore played a significant role.
This Special Report provides a summary of the major arguments presented
for and against the Administration's proposals. Included also are some
data and comments on the cost of the proposals.
In brief these proposals would (1) establish Federal standards of minimum
benefits and eligibility, (2) create a new program that would extend bene-
fits for unemployment from 26 to 52 weeks, (3) provide Federal grants for
states with exceptionally high benefits costs, (4) expand coverage to
employees of very small firms, farm workers, and certain other categories
of employees, and (5) increase the taxable wage base and the Federal
unemployment tax rate, as well as make a contribution from general revenues,
to finance a portion of these benefits.
The Proponents' Arguments
The principal case for the Administration proposals was presented by the
Secretary of Labor. Appearing in support of the proposals were spokesmen
for the Departments of Commerce and Treasury, several Members of Congress,
a few state officials, and representatives of a number of.labor unions,
certain specialized employee groups, and others.
The essence of proponents' arguments was that the states, competing as
they do for industry, cannot take the steps necessary for an adequate
unemployment compensation system; that present benefit levels are in-
adequate and the duration of benefits is too short; that coverage is
incomplete, and that present experience rating systems are inadequate
and result in inequities among employers and between states. Under-
lying the arguments was an apparent desire for further Federal activity
in combatting recessions and easing the problem of long-term unemployment.

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