Evening star., 1939-04-21
Job|ess Aid Board
Studying Problem Of
Merit.Rating Clause
Marshall Sees Difficulties
In Determining Employer
Stotus in Present Act
(Last OF q Series.)
By JOHN H. CASSADY, Jr.

While directing its immediate at
tention chiefly to efforts now being
made in Congress to bring about
modification of the unemployment
tax liability on District employers
the District Unemployment Com
pensation Board also is giving much
thought to the question of estab-
fishing a workable merit-rating pro-
vision in the local law.
At present. the local unemploy-
ment compensation act does pro-
vide formula to be applied after
January /, 1941. by which the tax
rate on employers might be re-
duced as low as is per cent ~
raised as high as per cent. de-
pending on the employment record
of employers for the year previous
However, under provision of
the McGehee bill now pending in
Congress. the District Unemploy-
ment Compensation Board would
be authorized to study the opera
ton OF the act with a view to de-
termining the advisability of es-
tablishing rating system which
would equitably rate the unemploy-
ment risk and would en-
courage the stabiliZation of en-
ployment." The board would D.
required to submit its report and
recommendation to Congress not
later than January l. 1941.
Marshall Sees Difficulties.
The McGehee measure, sponsored
by Representative McGehee. Demo-
crat OF Mississippi. chairman of
the Judiciary Subcommittee of the
House District Committee, would
give the local Compensation Boaro
authority to reduce the tax rate as
long as balance of approximately
$l0000,000 is maintained by the
board to meet claims.
John A. Marshall, director of the
local Compensation Board. believes
the determination of merit rating
in the District, under the method
provided in the present law. would
be fraught with difficulties. and that
it would be so complicated. in fact,
as to be almost unavoidable.
Under the present merit pro-
vision, employers would be classi-
fled according to employment haz-
ard and higher or lower rates
would then be established by the
District board according to this
classification. Thus. employers
would be classified according to
benefit experience, and rates pre-
sumed to be relevant to the unem-
ployment hazard of each class, vary
ing from is per cent to 4 per cent,
would apply.
Mr.. Marshall said he believes
that one of the main objectives Of
any merit-rating system should be
to provide an incentive for en-
ployers to stabilize employment, but
he feels that there would be i'm
portant limitations on the effective
ness OF the present merit clause as
an incentive to sterilization.
The board plans to study the vari-
Gus methods proposed and to watch
the outcome of merit-rating tests in
other localities before making its
recommendation for a better system
to Congress. The board also believes
further experience in paying bene-
fits will be of vital Importance in
Formulating a merit-rating pro-
vision.
Mr.. Marshall said one of the
methods being studied is an "ex-
perience rating" plan proposed by
a committee of employers of New
York State-a plan which retains
the encouragement of employment
stabilization, but which simplifies
record-keeping and reduces admin
iStrative costs.
Considered Equitable System.
This proposed system is consid-
cred by many, including several
State administrative Units, as equit-
able and simple to administer. I.
thus overcomes the objections to
the "merit-rating" provisions in
cluded in the present unemploy-
ment compensation laws, but re-
tains the basic principle of en-
couraging employers to stabilize en-
ployment, and provides for variable
contribution rates yielding sufh-
cient funds to reimburse the un-
employment compensation fund for
benefits paid.
According to proponents of the
plan, maximum and minimum con-
tribution rates would be generally
established-the maximum rates
50 that undue burdens will not be
placed on employers who are un-
successful or unable to stabilize,
minimum rates % that even EN-
DloverS calrre1tfv having v1erfAcf