Evening star., 1940-02-22
Job|ess Tax Rating
Gives Pay Stability,
Economist Holds
Prof. E. P. Schmidt,
Here to See Legion
Officiuls, Cites Benefits


ton insurance systems, as means
Of promoting the broad objective
Of employment stabilization, was
advocated today by Prof. Emerson
p. Schmidt of the University Of
Minnesota, who came here to con-
ter with American Legion onicials.
Prof. Schmidt is serving as con-
sulting economist in the American
Legion Employment Sterilization
Service. which is seeking nationally
to foster programs for making en-
ployment for the worker a more
regular and assured prospect. He
holds that the possibility of achiev-
ing a somewhat reduced pay roll
tax rate, by stabilizing employment.
spurs employers to find means OF
avoiding worker lay-ofIs.
His views were sought on the
employer rating system, since this
Is one Of the major elements under
consideration here in connection
with proposed amendments to the
Districts Unemployment Compen-
sation Insurance Act.
Perfected System Sought.
Members Of the washington
Board of Trade, the Merchants and
Manufacturers Association and
other District business groups are
urging adoption of a perfected rat
ing system in the District measure,
to replace the old provision now
destined to go into force next jan
uary unless the plan is stricken
from the law.
An employer rating plan, it has
been explained, is a system under
which those employers who achieve
stability in their pay rolls are given.
As a reward, some reduction IN
their pay roll tax as an incentive
TO continue to strive for job regu-
larity. Four States now have such
plans tn operation and the laws OF
IS other States provide for use OF
the plans within the next several
years.
IF such a plan is not invoked,
what incentive remains for the en-
bloyer to make any effort to main
tain a steady pay roll?" Prof.
Schmidt asks. "Why would not the
employer drop worker just as soon
as he figures it possible, so as to save
the amount of the workers wages
and to save on the amount Of his
annual pay roll tax? If all employers
Are required to pay exactly the same
tax, year after year, why should they
make serious efforts to maintain
Steady pay rolls?" -#
Sees Real Achievement.
On the other hand, Prof Schmidt
finds that in Wisconsin, the only
State where the employer experience
rating plan has been given a trial
Of any length, so far. long list of
employers, striving to earn a tax
rate differential, have made real
achievements in maintaining steady
pay rolls. He cites many cases to
prove the point.
In this connection, Prof. Schmidt
explained that the American Legion
Is developing national program en-
couragink employment stabilizAtion.
The service has been organized under
the National Employment Committee
of the Legion. Statements of actual
experiences of manufacturing and
mercantile establishments of many
kinds, in regularizing employment,
are being mailed out to other en-
ployers.
"Once the top management of
business or an industrial plant is
committed to a labor stabilization
policy" he declares, lit is surprising
how many ideas will flow from the
personnel Of the organization to
preserve regular pay rolls"
He was asked whether adoption of
an employer experience rating sys-
tenn had a tendency to reward the
successful operator and to hurt the
"little" fellow.
Sees Opportunity.
"No," was his answer. Take the
case Of. the little shopkeeper, who
employs but few clerks and other
help. He may keep his pay roll
steady and earn the lowest possible
rate, just the same as the biggest
employer in town.
ployers whose operations have been
somewhat seasonal have had to use
real thought to achieve pay roll
stability, and some of them have
adopted diversified production pro-
grams in order to do so This pro-
gram can prove of value to the
producer as well as to his workers"
~ 1f
rating systems, Prof. Schmidt said:
According to the Wisconsin In
dustrial Commission, out of $500 en-
ployers, 81 per cent have never had
any benefit payment Withdrawals
(for former employes) up to June
80, 1899. Approximately 63 per cent
OF the employers had benefit with
drawals of less than 10 per cent of
the tax contributions made. In 1899,
out Of 1900 employers, 80 per cent
were given reduced rates in spite of
the fact that 1898 was a somewhat
poor year for business and en-
ployment.
Contrary to many assertions, ex-
perience rating may be used to pro-
tAAO AAOAO aNCA0ot( bCAACAACo AOA GA1C
unemployed. If seasonal, casual and
chronological unemployment can be
met largely by experience rating so
that much short time unemployment
Is eliminated, this will reserve the
unemployment funds for long time
or cyclical unemployment. Then,
instead of providing for 13 to 16
weeks of benefit payments as most
State laws now do, it should be
possible to provide for several times
as many weeks.
raids" Conducted.
''In those States where experience
rating has not yet been incorporated
in the law, little special effort
at stabilization was found. In
deed, in some of these there was
found something of design to raid
the unemployment compensation
fund. That is, the employer felt that