Montana labor news., 1937-06-10
Constitutionality of State Unemploy-
ment Compensation Laws

The significance of the decision of the SUI
preme Court of the United States unfolding
the validity of the Alabama Unemployment
Compensation Act is the emphatic affirma-
ton of the broad right of a state to use the
taxing power to promote the general welfare,
and that such use in the interest of the I'M
employed does not infringe the clauses of the
Fourteenth Amendment to the Federal Con-
s~titution which prohibit a state from depriv-
ing any person of life, liberty or property
without due process of law" and from deny
ing to any person the equal protection OF
the laws
The Alabama statute sets up a comprehen-
sive plan for providing unemployment bene-
fits for workers. The law is limited to en-
ployers who employ eight or more persons
for twenty or more weeks in the year, except
those engaged in certain specified employ
ments. 1t imposes on employers the obliga-
ton to pay a certain percentage of their total
monthly payrolls into the State Unemploy-
ment Compensation Fund, administered by
the state. Employees are assessed one per
cent of their wages for the same fund.
The constitutionality OF the Alabama law
was challenged by the Southern Coal & Coke
Company and the Gulf States Paper Corpora
ton, both concerns being Delaware corpora
lions. They claimed that the tax on payrolls
was taking their property without due proc
ess of law and that the exemption of certain
employers and employees violated the clause
guaranteeing equal protection of the laws.
Justice Stone, who delivered the majority
opinion of the Court, smashed the equal pro-
lection claim with the sweeping declaration
that the exemptions constituted "the type of
distinction which the law is often called upon
to make and which has been held constitu-
tional in many decisions of the Supreme
Court.
Taking up the due process of law claim,
Justice Stone said:
"ThiS Court has long and consistently rec
ognized that the public purposes Of a state,
for lphich it raises funds by taxation, embrace
expenditures for its general aDelfare."
The question for the Court to consider,
therefore, was whether the enactment of the
Alabama Unemployment Insurance Law was
for the general welfare.
Pointing out that support of the poor has
long been recognized as a public purpose"
Justice Stone continued:
eve need not labor the point that eIpendi-
lures for the relief Of the unemployed, con-
ditioned on unemployment alone, lOithOut
proof Of indulgence Of recipients Of the bene-
fits, is a permissible use Of state funds.
'For the past sac gears the nation, un-
happily, has been placed IN a position to
learn at first hand the nature and eTtent Of
the problem Of unemployment, and to appre-
ciate its profound influence upon the public
l~OeIfare.
detailed accounts Of the problem and its
social and economic consequences, to be found
in public reports Of the expenditures Of re-
lief funds, and IN the studies OF many obServ-
erS, afford a basis for the Legislative judg-
ment.
1T Sufices to sag that unemployment has
become a permanent incident Of our indus
trial system; that it 0arieS, IN eTtent and IN
tenSity, with fluctuations IN the 0olumae Of
seasonal businesses and aUith the business
cycle. 1t is dependent, aoith special unpre-
dictable manifestations, upon technical
changes and Advances IN methods OF manu-
~tacture, upon changing demands for manu-
factured products dictated by changes IN
fashion or the creation Of desirable substi-