Evening star., 1938-02-23
MERIT PLAN ASKED
IN JOB INSURANCE
D. c. Act Will Be Unfair to
Some Firms, Star Con.
troIIer Says.

Predicting that under the q. c. Un-
employment Compensation Act en-
ployers here would be assessed in
many instances unfairly" under the
employment hazard" provision for .
classification Of rates. in l94l, w. R.
Little. controller of The Evening Star
Newspaper Co.. last night proposed
that local business interests should
ask for an amendment to the act to
provide automatic merit rating for
unemployment compensation insur-
ance." He spoke before the D. G.
Chapter Of the Controllers Institute
Of America at the Carlton Hotel.
Eleven States. he explained, 10 far
have failed to incorporate In their law
a provision for merit rating Included
in this. he said, are the States Of Mary
land and Virginia and the District Of
Columbia.
THE majority of State laws do pro-
vide merit rating" he said. but In
most instances it Is not Automatic
and therefore falls short Of meeting
the objections raised As to inequitable
tax rates, and failure to stimulate
among employers generally a we'll
defined purpose to stabilize employ
ment within their particular industry
Hazard" Classification.
Under the D. c. law. beginning in
1941." Mr.. Little explained, "em-
ployers are to be classified according
to employment hazard and higher or
lower rates will then be established by
the D. c. board according to this clas-
sihcation, in lieu Of the 3 per cent rate
now in effect. This means that en-
ployers will be classified according to
benefit experience, and rates presumed
to be relevant to the unemployment
hazard Of each class, varying from IA
per cent to 4 per cent will apply. This
law also provides that in no event will
an employers rate be reduced until
he has had three years Of benefit ex-
perience. and that total contributions
payable by all employers must not be
less than 3 per cent Of the estimated
taxable wages. This latter is obviously
to provide sufficient funds to maintain
the scheme on sound actuarial basis,
but business concerns having an un-
stable employment record may con-
ceivably benefit at the expense Of the
employer with a good record who Is
in the same classification
Since one of the primary reasons
for unemployment insurance Is to en-
courage stabilization Of employment,
it is Of vital importance that business
interests work for the adoption Of Q
method Of administration that is fair
and equitable to those employers who
have succeeded in their objective
That they should be taxed because of
peculiar conditions existing In certain
industries, or because Of the failure
OF other employers to cooperate in
the plan. Is not sound reason"
Toward Stabilixatisn.
Mr.. Little explained how the "au-
tomato merit rating" system could
be worked. He predicted that en-
ployers who had failed to stabilize
their employment because Of an in
dependent or individual policy cal
culated to delay II not defeat the
accomplishment Of one OF the pur-
poses Of this act" would be inclined
under operation Of the proposed au-
tomato merit rating system. to con
slider stabili1ation more seriously and
thus fall In line with the general
program to reduce unemployment to
q minimum"
Under the present system in the
law. Mr.. Little said. it is apparent
that the determination of merit rat
ings In the District Of Columbia will
be fraueht with dificulties, that high
er tax rates will be Assessed in many
instances unfairly. and that no rem.
edy Is at hand''-except the proposed
automatic system recommended.
Explaining briefly what Is meant by
the automatic system. the speaker
said the State administration must
maintain individual ledger accounts
for each employer, unemployment in
surance taxes when paid, being cred
1ted to this account. and BENEFITS paid
to former employees being charged
thereto.
This posting Is made periodically,
he said. and would indicate as well
the total taxable pay roll Of each
employer for the period covered by
the tax. The records would be main
tanned in cumulative form. The pur-
pose. Of course, Is to balance actual
benefits paid former employees against
the taxes paid by each employer The
net credit excess Of taxes over bene-
f1ts paid would apply in ratio to
total pay rolls for the period required
by the State law; thus. when the
proper ratio is reached, the employer
Is Immediately notified by the State
administration to discontinue pay
ments of unemployment insurance
taxes until further notice, or to pay
only the minimum rate provided In
most laws"
Mr.. Little is q member Of the So
cial Security Committee Of the Amer
ican Newspaper Publishers Asso-
citation.