Evening star., 1935-01-17
FIVE.POINT PROTECTION
PROGRAM IS PRESENTED
4O,OOO-Word Statement by Cabinet
Group Gives Results of Survey
of Hazards to Decent Living.

chinery for participation in the ad-
ministration of unemployment COM
pensation.
Employers Restrictions.
The tax should be imposed upon
all employers who have employed four
or more employees for reasonable
period of time (any 13 weeks of the
taxable year, for example), and should
be measured by percentage of the
employers pay roll. BY 1888 the rate
of tax should be 3 per cent of the
pay roll, but in the first two years,
if economic recovery has not pro-
gressed satisfactorily, we recommend
lower rate, and suggest that the
index of industrial production of the
Federal Reserve Board may well be
used to determine whether the rate
in the first and second years shall
be l per cent, per cent or per
cent. We are opposed to exclusions
of any specified industries from the
Federal act, but favor the establish
ment of a separate nationally admin
iStered system of unemployment COM
pensation for railroad employees and
maritime workers.
Against the tax imposed in the Fed
eral law a credit, up to 80 per cent
of the tax, should be allowed for the
money the employer has paid to the
proper State authority as contribu-
tionS for unemployment compensa-
ton purposes pursuant to State law.
These credits, however. should be per-
mitted only if the State is co-operat-
ing with the Federal Government in
the administration of unemployment
compensation, expending the money
raised solely for benefits, and is de-
posting all contributions as collected
in an unemployment trust fund in
the United States Treasury.
Individual Reserves Credited.
If State. to encourage stabiliza-
ton of employment. permits particu-
Lar industries or companies to have
individual reserve or guaranteed en-
ployment accounts (such accounts to
be kept by the State authority, but
with deposit of the funds in the
United States Treasury or allows
lower rates of contributions to en-
ployers not having such individual
accounts on the basis of their favora-
BILE experience, an additional credit
beyond the amount contributed in
particular year may be granted in the
Federal act.
We recommend. however, that such
credit be allowed in all cases only
on the condition that the employer
has discharged in full his obligations
under the State law and continues
to pay at least l per cent into the
pooled State fund.
Further, such an employer with
an individual reserve account, before
becoming entitled to any additional
credit, must have and maintain a
reserve equal to at least IS per cent
OF his pay roll. and an employer
with guaranteed employment &C
count reserve of 7l2 per cent of his
pay roll, while no additional credit
for any reduction in rates payable to
pooled State fund may be allowed
until after the State law has been
In operation for five years.
Administration Aid Sought.
To encourage efficient administra-
ton, without which unemployment
insurance will fail to accomplish its
purpose, we believe that the Federal
Government should aid the States
by granting them sufficient money
Tor proper administration, under con-
0ltlnnC dpcjpnad To irc
and probity.
Among these conditions we deem
selection of personnel on a merit
basis vital to success. We also recon-
mend that as a condition, both of
grantS-in-aid for administration and
OF the allowance of any tax credits
Tor payments made under any State
unemployment compensation act, the
State must have accepted the pro-
visions of the Wagner-Peyser act
public Employment Service) and
provide for the payment of unem-
ployment compensation through the
public employment Offices established
under such act. A grant-in-aid for
administration would not create any
new burden on the Federal Govern
ment. as it would be paid for by the
amount OF the pay roll tax over and
above the credits allowed for con-
tributions to State funds.
AS an essential part of the Federal
law, it should be made a require
ment for any tax credits that all
moneys collected for unemployment
compensation purposes under State
laws Gncluding those credited to in
dlVldual industry or company ac-
counts) be deposited as collected in
the Treasury of the United States in
a trust account to the credit of the
State, to be invested and liuuidated
as the Secretary of the Treasury NAV
from time to time direct. With
drawals from the fund are to be made
only for unemployment compensation
purposes, under regulations to be pre-
scribed by the Secretary of the
Treasury.
Plan Frankly Experimental.
The plan of unemployment COM
pensatlon we suggest is frankly ex-
perlmental. We anticipate that it
may require numerous changes with
experience, and, we believe, is so set
up that these changes can be made
through subsequent legislation as
deemed necessary. If we are to wait
until every one interested in the SUBJ
]ect Is in agreement as to what is a
perfect measure before enacting un-
employment compensation legislation,
there will be a long and unwarranted
postponement of action.
We submit that the Federal part OF
the program should be enacted into
law by the Congress at the earliest
date possible. This is urgently neces-
sary if the State Legislatures are to
act in time to permit the legislation
to go into effect January 1, 1886. In
the coming year A of the 48 States
will hold regular sessions of their
Legislatures. Most of these will con-
vene in January and will be in session
three months or less Unemployment
compensation in this country will
suffer another year of delay unless
there is prompt action by the Con.
gress.