Evening star., 1935-03-10
Endangering the Laboratory.

Endangering the Laboratory.
Wisconsin, a pioneer State in So
cial experiments, is the only State in
the Union with any experience in
unemployment insurance legislation.
That experience has been brief, the
results undetermined. The Wisconsin
law became effective only last Sum-
mer. 1t is interesting to compare
some of its provisions with those OF
the model bill proposed for the Dis
trict by Representative Ellenbogen
and now pending before the House
District Committee.
One great difference between the
Wisconsin plan and the plan proposed
for the District is in the method Of
setting up unemployment reserves. In
Wisconsin, as in the Ellenbogen bill,
the employe makes no direct contrl-
button. But in Wisconsin the en-
ployer pays a two per cent pay roll
tax until the fund thus accumulated
reaches the sum of $55 per worker;
thereafter the tax drops to one per
cent until the fund reaches SIS per
worker, when all contributions cease,
unless and until the reserve falls below
SIS per worker. The fund as a whole
is administered by State commits
sion, although the contributions from
each employer are segregated under
the employers name. The worker
receives benefits only from the fund
accumulated by his own employer.
When the fund is exhausted he re-
ceives no benefits.
Under the terms of the Ellenbogen
bill every employer will pay three
per cent tax and the fund thus ac-
cumulated goes into a pool from
which all benefits will be drawn and
administered by a Federal agency in
which the contributors are not repre-
sented. There is no limit set on the
life of such a tax. 1t would pre-
sumably continue indefinitely. Where
as the two per cent tax in Wisconsin
encourages the employer quickly to
accumulate his reserve and to stabil-
ize his own pay roll to escape addi-
tional taxation, no such incentive is
provided In the Ellenbogen bill. The
selfish employer would find it to his
advantage to cut his pay roll as one
method of cutting his pay roll tax.
This pay roll tax, of course, will
represent no small item in the cost of
doing business, with consequent re-
Election in prices, if not in wages. 1t
has been estimated that three per
cent pay roll tax on manufacturing
industries in the United States during
the year of greatest prosperity, 1929,
would have been equivalent to an III
per cent tax on net profits, as COM
pared with a 1875 per cent income tax
on corporation income. The Ohio
Manufacturers Association estimated
that for the year 1882, a two per cent
tax on manufacturers pay rolls in
that State would represent ten per
cent increase in the cost of manufac-
ture. AS the cost of labor varies in
different lines of business. the tax will
also vary. It has been estimated in
the Senate hearings on the social Sc
curity legislation that three per cent
pay roll tax in some lines of business
will be equivalent to a thirty-five per
cent tax on net incomes. In some bus
inesses the tax can be passed along to
the consumer; in others the tax will
doubtless be absorbed by employees
through reductions in wages.
While the Ellenbogen bill has been
drawn as a standard or model law
for the States, there Is no indication
that the States intend to meet such
standards. The amount Of un-
employment benefits will doubtless
vary. In Wisconsin, first to enact
such a law, the insurance benefits
are below those proposed in the
Ellenbogen bill. It has been sug-
gested that inasmuch as the national
legislation sets up no real standards
for unemployment insurance, forty
eight plans will be found in the forty
eight States. Nor is there definite
Indication that the national legisla-
ton will succeed in its high purpose
of persuading the States to enact their
own laws. Unemployment problems
vary with conditions in the States.
Certainly the tendency in the States
will be to set the local pay roll tax
If any is levied-at figure that, with
credit allowed on the Federal tax,
will not bring the total tax above three
per cent. The Ellenbogen bill would
bring the total tax above the three
per cent local tax, allowing for the
ninety per cent credit on Federal
tax. In addition, a separate contri-
button from local revenues amounting
to one per cent of the private pay
rolls will be added.
If it were merely a matter of blazing
q trail by means of legislation for the
District that the States would be
anxious to follow, the theory Of estab-
fishing the highest standards for the
District would be to some extent JUS
tined. But there Is no indication. as
yet, that the States intend to follow