Evening star., 1938-11-29

employers have come to realize that
unemployment compensation Is not
only q social obligation, but also .
matter of their own economic SELF
interest.
Business recognizes that It Is at
least as important to conserve man
power as it is to conserve machines
and equipment. The physical plant
Of any business has to be cared for
and kept in good repair even when
not in active use; and well-run con-
Germs put aside definite sum each
year for just this purpose. 1t pays;
it's good business sense. The same
thing is true of protecting the people
who man the machines; 1t pays
it's good business sense. And that's
what industry is now doing through
unemployment compensation.
Out-of- Work Benefits.
During the first 10 months of this
year about $40 million dollars in out
of-work benefits went into the pock-
cts of wage earners who had been
laid of or lost their jobs. All Of this
money, except in the few States
where employees also contribute, was
contributed by employers. l just
said that it goes into the pockets Of
unemployed workers-but 1t doesn't
stay there very long. When, after
three or four weeks Of unemploy-
ment with no money coming in, Joe
Worker gets his first benefit check,
he or his wife takes that check right
out and cashes it; and the money
is spent pretty quickly for food, rent,
clothing and other family essentials.
We've heard lot about vicious
circles. Here's one that works the
other way: Unemployment compen-
sation funds enable the unemployed
man to keep on buying the things
he and his family need to maintain
themselves. These same funds also
enable local trade to continue pretty
much on business as usual" basis
in spite of curtailed employment in
the community. And from the local
communities these same funds
finally flow on in life-giving
stream into the business OF the city,
the State and the Nation.
That's what has happened with
the $40 million dollars which, as
just said, has gone into the pockets
or unemployed workers during the
last 10 months and from there into
business and industry of all kinds.
To describe this process in more gen.
eral and slightly more technical
language-job insurance benefits
help to maintain the buying power
of the workers, buying power upon
which industry itself depends. BY
bolstering up workers purchasing
power and through 1t business activ-
ity, job insurance also helps to pre-
vent further unemployment. 1t acts
as brake during the early stages of
a business depression, helping to
check the downward spiral of unem-
ployment followed by falling of of
sales, followed in turn by further
business retrenchment and still more
lay-offs.
Although benefits have thus far
been paid in only 20 States, and in
many of these for only a few
months, their stabilizing effect on
business and employment has al
ready been demonstrated. 1t has
been especially noticeable in small,
one-industry communities where
lack of work in the past has meant
that large part of the wage-earn-
ing population was deprived Of in
come. In such communities the pay
ment of benefits to unemployed
workers has prevented serious losses
to retail business and the service in
dustries and, as result, has tended
to maintain employment levels in
those occupations.
More States Join List.
On December l, just a few days
from now, this new kind OF protec-
ton during unemployment makes
another advance, when benefits be-
come payable in two more States
New Mexico and Oklahoma. In jan
uary 10 additional jurisdictions will
begin to pay benefits: Alaska. Ar
kansas, Colorado, Delaware. Florida,
Georgia. Hawaii, Kansas, Kentucky.
Missouri Nebraska, Nevada, New
Jersey, North Dakota, Ohio, South
Dakota, Washington and Wyoming.
These 20 States have, during the
past two years, accumulated in the
unemployment trust fund of the
United States Treasury reserves to-
falling more than $3.50 100000. All
this money will be available for the
payment of benefits to working peo-
pie who are insured under these
State unemployment compensation
laws and become eligible for COM
pensation.
AS money is withdrawn from
States unemployment compensation
reserve for the payment of benefits.
contributions to the fund continue
to come in; so that what each State
has is a steady two-way flow Of
money, into and out of it's fund.
During periods when there is consid-
cradle unemployment, the amounts
withdrawn by a State for benefit
payments will in some cases be
larger than current deposits Dur
ing periods of little unemployment
the flow will be reversed and funds
will accumulate against another pc
riod of unemployment. But the aim
is always - as is also the practice
in private insurance companies-to
keep a sufficient reserve on hand so
that the system will remain solvent
even when an emergency causes an
unusually heavy drain. This is one
of the reasons that each State is re-
quired under the Social Security Act
to build up its fund for period of
two years before benefits may be
paid.
The experience of the 20 States
paying benefits has proved
this to be a wise and necessary pre-
caution. Twenty-Five of these States
first began to pay benefits last jan
uary when employment had been
falling off for some time. The
backlog of several months unem-
ployment was thus Immediately