Evening star., 1940-02-15
D. {. Employers See
Important Issue in
JobIess Tax Ratinq
MeGehee Bill DeIoyed
To Work Out Employment
StubiIizer Incentive
By DON s. WARREN.

BY DON s. WARREN.
The forthcoming decision by Con-
gress on the adoption or rejection OF
an employer experience rating" In
the District unemployment compen-
sation system is regarded as factor
of exceptional Importance to District
employers who pay the jobless in
surance bills.
Just what is an employer ex-
perience rating, how would it work,
and what are its implications, If in
cluded or abandoned? These ques-
tions are being asked. and in some
quarters regarded as of equal i'm
portance with the pay roll tax rate
and the proposed extension OF
benefits.
In keeping with the original Fed
eral program, the District law and
those of some So States provide for
adoption of an employer experience
rating plan and so far such plans
have been placed in effect in four
Statess Wisconsin. Indiana, Ne
braska and South Dakota.
What is rating system? Briefly
stated, it may be described as one
permitting, within certain limits, a
reduction on the pay roll levies on
classes of employers whose record
indicates steady employment, thus
preventing the inequity which results
from carrying his own share of the
cost of unemployment insurance,
plus the share of others whose busi-
ness contributes to unemployment.
The picture as to conditions in
Washington is clearly outlined in a
tabulation released today by the
Washington Board of Trade, based
on reports of the District Unemploy-
ment Compensation Board showing
unemployment insurance experiences
by various classes OF Washington
employing groups. 1t reveals that
some groups who pay relatively little
into the insurance fund draw heavily
against it, while those who pay a
relatively large tax draw little in the
form of benefits.
Case illustrated.
For instance, one group of en-
ployers, who contributed 7.3 per cent
of the total pay roll tax collections
over one full year caused drain of
27.4 per cent of the total benefits
paid out. And, more significantly
the workers in this group took out
1899 per cent of the amount of pay
roll tax monies the employers in this
group had contributed in pay roll
taxes.
On the other hand, another group
Of employers paid 3l3 per cent of
total tax collections and caused only
304 per cent of the total of benefit
payments. This group caused the use
Of but 25.8 per cent OF its own tax
contributions as benefit outlays.
The relation of group tax contri-
buttons to group benefits paid ranged
from to 1889 per cent.
The present District act carries a
definite provision for PRONUNCIATION
of an employer experience rating
system beginning next January. l.
Its provisions appear to be manda-
tory on the D. U. c. Board, although
as yet there has been no ofiicial
legal ruling on the point. It's pro-
visions, dating back to the pioneer"
days of unemployment compensa-
tlon, 1885, are not satisfactory to
some employers, since it appears to
require an increase in the tax rate
on some employers with poor en-
ployment records in order to provide
q tax reduction to others having
better records of stabilizing pay rolls.
Provided for in l94l,
per cent Of total pay rolls, this
with the calendar year 194l, the
board shall classify employers on the
basis of their unemployment hazards
and fix rates of contribution by such
classes. The rates are not to be less
than IL per cent nor more than 4
per cent. 1t also provides that total
tax collections shall not be less than
per cent Of total payrolls, this
being the present fiat rate, which the
McGehee bill proposes to cut to 81
per cent.
There is anything but unanimity
OF opinion at present On the question
OF an employer experience rating
system. In fact, the long range i'm
portance, nationally and locally, of
the current issue raised over the Dis
trict act on this point has been
emphasized by division of views.
Washington business interests, as
represented by spokesmen for 20
organizations, have urged adoption
OF a definite new rating plan as a
part of the McGehee bill. They now
are at work on a proposed formula.
This was one of the reasons why they
sought brief delay in House action,
which was granted. They acted when
they found the present draft of
the bill merely requires that the
D. U. c. Board shall study operation
OF the act with view to determin-
ing the advisability" OF establishing
rating system, stipulating only that
recommendations must be submitted
by January /. This has been inter-
preted IN some quarters as move to
lay the subject on the shelf.
Opposed by Labor.
There are indications that some
key Government officials are back
Ing away" from the experience rat
ing system as basic policy, and
outspoken opposition has been reg
istered by both the American Feder-
alton Of Labor and by the Congress
OF Industrial Organizations in con-
vention resolutions dealing with the
national program. The American
Legion, on the other hand, has
urged continuation and perfection
of the rating system idea through
out the country, arguing that diff
culties encountered in early trials