Evening star., 1936-09-26
BY BLAIR MOODY.


What Is the chief purpose Of unem-
ployment insurance-to stimulate
regularity Of employment. or to take
care of the workman after he loses
his job?
This is the principal issue facing
the States which today are contem-
plating q new compensation" law to
dove-tail with the Federal act so that
their workers may reap the benefit OF
payroll taxes paid by their employers.
It Is inextricably linked with another
issue that Is as paramount in writing
these laws as 1t is in almost any
family: What's going to be done with
the money?
For, on how the reserve fund built
by this tax is handled, may depend
whether, in the future, Auto Worker
Joe Smith or Bookkeeper Ben Brown,
who have been laboring for years
under the impression they were pro-
tected by insurance, actually get
their money when the crisis comes.
And on the same thing may depend
whether employers give hearty CO.
operation to the law, as they do in
the only State now paying benefits,
Wisconsin, or whether they are in
clined to buck it, as many are doing in
New York. The wording Of the State
act may decide whether Smith and
Brown are kept on the payroll during
. slack period, or chopped on.
Question Of Emphasis.
t. fr,,a fhof fhA no dnviro1 MIR
pose of unemployment insurance Is
to regularize employment and to
cushion" the temporarily jobless at
the same time. 1t cannot achieve
them both completely and it will
achieve them both to some extent.
The big question is: Where Is the
emphasis to be placed?
In the cradle of unemployment
insurance, England, 1t is strictly an
emergency proposition to tide the
jobless over to . new payroll. The
money collected is pooled" in one
fund and benefits are paid out of that
fund. Employers are taxed alike,
employees contribute alike and anyone
out of . job collects alike. so long as
there is money left in the big jackpot.
In other words, under the pooled"
system, adopted in this country by
New York and Utah, there Is no in
centive to keep employees on the job
through temporary business slumps,
or to schedule production to cut
violent fluctuations in the payroll.
There is no reward for the considerate
employer, nor penalty for the hard
boiled ax-wielder. Each pays exactly
the same tax.
Wisconsin's "American Plan."
Now Wisconsin, which has been
miles ahead of most other States in
progressive legislation, brought for
ward the so-called American Plan,"
or employer reserve" Its law,
passed before the Federal act, pro-
vides that the pay roll taxes flow into
one fund handled by the State, but
that the exact amount paid in by each
employer be kept as . credit to his
particular company. As soon as the
employer builds up his reserve to 10
per cent of his last annual pay roll,
he is exempted from the further pay
ment Of taxes.
The primary effect of this Is OBJ
vious. 1t makes it strictly to the sell
fish advantage of each employer to
keep his men working regularly. For.
II he lays them on, his own reserve"
will be depleted and he will have to
keep on paying the tax, or resume If
he has stopped. But If he fires no
one, in q few years he will pay no
taxes
THE philosophy back Of the Wis
consin act" says Gov. Philip F.
La Toilette, "is to provide some COM
pensation to an employe thrown out
of work. but chiefly to make it worth
while to industry to stabilize and
avoid tremendous fluctuations in
number of men employed. We try
to take care of the workman's eco
nomic health first, and take care of
him If he gets sick second.
Cites States Experience.
Back of it is Wisconsins 20-year
experience in workmans compensa-
tion. We pioneered that field and pay
the highest benefits of any State in
the country. Yet the total of work.
mems compensation paid in Wisconsin
Is less than in any comparable State.
That remarkable record Is due di-
rectly to the fact that We handle the
system to reduce accidents.
when an industry found that the
cost Of severed arm or put-out eye
showed right up In the books of the
corporation, it provided an immediate
incentive to prevent accidents. In the
same way, we believe that by making
each employer pay regularly for the
men they lay of themselves, there
will be less lay-offs.
What we did was, say: Unemploy-
rnent is no longer an individual prob
lem. When a factory puts up help
wanted sign and brings thousands OF
families into town, it's no longer
private business If il decides to shut
down and drive most of them on relief.
It costs money and Is . public con-
cern.
Unemployment insurance in Wis
consin costs the well-managed con-
Germ little. The poorly run industry
pays the bill for its own mismanage-
ment."
Problem Of Small Concern.
All of which has elected loud cheers
from most Wisconsin employers. But
how about the wage Garner working
for . small company? It may pay the
tax regularly but cannot build up .
large reserve. If 1t is forced to
shut down the workman, having lost
his job through no fault of his own.
is entitled to compensation. Yet, rs
soon as his own company's reserve Is
exhausted, he Is out of luck.
1.-The Wisconsin plan" says Glenn
A. Bowers, director of unemployment
compensation for New York, "does not
provide adequate coverage and is likely
to trend toward q pooled fund. Al
ready they are starting = kitty for
emergency purposes They don't call
1t pooling"
Neither Gov. Herbert H. Lehman
e.