Excerpts from a White House Statement Summarizing the Report from the President's Committee on Economic Security.

EMPLOYMENT ASSURANCE

Since most people must live by work, the first objective in a program of economic security must be maximum employment. As the major contribution of the Federal Government in providing a safeguard against unemployment we suggest employment assurance-the stimulation of private employment and the provision of public employment for those able-bodied workers whom industry cannot employ at a given time. Public work programs are most necessary in periods of severe depression, but may be needed in normal times as well to help meet the problems of stranded communities and over-manned or declining industries. To avoid the evils of hastily planned emergency work, public employment should be planned in advance and coordinated with the construction and developmental policies of the Government and with the State and local public works projects.

We regard work as preferable to other forms of relief where possible. . . . Public funds should be devoted to providing work, rather than to introduce a relief element into what should be strictly an insurance system. . . .

The resources of all public bodies, Federal, State and local, must be coordinated if the policy of employment assurance is to be effectively realized. It would be advantageous to include in the program many types of public employment other than those which are considered necessary for the regular operations of government. . . .

This entire program points immediately and inevitably toward practical advance planning on a broad scale to make the potential resources of a region available for the general welfare of the people involved, and toward detailed development of individual projects. To this end we endorse the recommendation of the National Resources Board for the establishment of a permanent National Planning Board.

UNEMPLOYMENT COMPENSATION

Unemployment compensation, as we conceive it, is a front line of defense, especially valuable for those who are ordinarily steadily employed, but beneficial also in maintaining purchasing power in depression time. While it will not directly benefit those now unemployed until they are reabsorbed in industry, it should be instituted at the earliest possible date to increase the security of all who are employed.

We believe that the States should administer unemployment compensation, assisted by the Federal Government. We recommend as essential the imposition of a uniform payroll tax against which credits shall be allowed to industries (which have contributed to unemployment insurance funds) in States that shall have passed compulsory unemployment compensation laws. Through such a uniform payroll tax it will be possible to remove the unfair competitive advantage that employers operating in States which have failed to adopt a compensation system enjoy over employers operating in States which give such protection to their wage earners.

We believe also that it is essential that the Federal Government assume responsibility for safeguarding, investing, and liquidating all reserve funds, in order that these reserves may be utilized to promote economic stability and to avoid dangers inherent in their uncontrolled investment and liquidation. We believe, further, that the Federal Act should require high administrative standards, but should leave wide latitude to the States in other respects, as we deem varied experience necessary within particular provisions in unemployment compensation laws in order to conclude what types are most practicable in this country. . . .

Extended cash benefits seem to us far less desirable than work benefits and we recommend that an employee, after he has exhausted his contractual rights, be certified to the authorities in charge of the Federal work program as entitled to a work benefit. Such certification shall entitle the unemployed insured worker, who has exhausted his cash benefits, to employment on any available public employment project.

The States should make all contributions compulsory and may require them from employers alone, or from employers and employees, with or without contribution by the State Government. The States should have freedom in determining their own waiting periods, benefit rates, maximum benefit periods, etc. We suggest caution lest they insert in their laws benefit provisions in excess of collections. . . .

To encourage efficient administration, without which unemployment insurance will fail to accomplish its purpose, we believe that the Federal Government should aid the States by granting them sufficient money for proper administration, under conditions designed to insure competence and probity. Among these conditions we deem selection of personnel on a merit basis vital to success. . . .

The plan of unemployment compensation we suggest is frankly experimental. We anticipate that it may require numerous changes with experience, and, we believe, it is so set up that these changes can be made through subsequent legislation as deemed necessary. If we are to wait until everyone interested in the subject is in agreement as to what is a perfect measure before enacting unemployment compensation legislation, there will be a long and unwarranted postponement of action ....

OLD-AGE SECURITY

To meet the problem of security for the aged we suggest as complementary measures, non-contributory old-age pensions, compulsory contributory annuities and voluntary contributory annuities, all to be applicable on retirement at age 65 or over.

Only non-contributory old-age pensions will meet the situation of those who are now old and have no means of support. Laws for the payment of old-age pensions on a needs basis are in force in more than half of all States and should be enacted everywhere. Because most of the dependent aged are now on relief lists and derive their support principally from the Federal Government and many of the States cannot assume the financial burden of pensions unaided, we recommend that the Federal Government pay one-half the cost of old-age pensions but not more than $15 per month for any individual.

Since the Federal Government, under the plan we recommend, is to assume one-half the cost of old-age pensions, we deem it proper that it should require State legislation and administration which will insure to all of the needy aged pensions adequate for their support. We recommend that aid be granted only to those States which enact laws that are statewide or territory wide in scope, and, if administered by political subdivisions, are mandatory upon them. Such laws may limit the granting of pensions to citizens of the United States and residents of the State or Territory, but may not require a longer period of residence than five years, within the last ten years preceding the application for a pension. Property and income limitations may, likewise, be prescribed but no aged person otherwise eligible may be denied a pension whose property does not exceed $5,000 in value or whose income is not larger than is necessary for a reasonable subsistence compatible with decency and health. The pension to be allowed must be an amount sufficient, with the other income of the pensioner, for such a reasonable subsistence. . . .

CONTRIBUTORY ANNUITIES (COMPULSORY SYSTEM)

The satisfactory way of providing for the old age of those now young is a contributory system of old-age annuities. These will enable younger workers, with matching contributions from their employers, to build up a more adequate old-age protection than it is possible to achieve with pensions based upon a means test. To launch such a system we deem it necessary that workers who are now middle aged or older and who, therefore, cannot in the few remaining years of their industrial life accumulate a substantial reserve be, nevertheless, paid reasonably adequate annuities upon retirement. A portion of these particular annuities will come out of Government funds, but, because receipts from contributions will in the early years greatly exceed annuity payments, it will not be necessary as a financial problem to have Government contribution until after the system has been in operation for thirty years. The combined contributory rate we recommend is 1 percent of payroll to be divided equally between employers and employees, which is to be increased by i percent each five years, until the maximum of 5 percent is reached in twenty years. . . .

The compulsory contributions are to be collected through a tax on payrolls and wages, to be divided equally between the employers and employees. . . .

Both the tax on the employers and the employees is to be collected through the employers, who shall be entitled to deduct the amount paid in the employees' behalf from wages due them. . . .

We suggest that the Federal Government make no contribution from general tax revenues to the fund during the years in which income exceeds payment from the funds, but that it guarantee to make contributions, when the level of payment exceeds income from contributions and interest, sufficient to maintain the reserve at the level of the last year in which income exceeded payments. . . .

No benefits are to be paid until after the system has been in operation for five years, nor to any person who has not made at least 200 weekly contributions, nor before the member has reached the age of 65 and retired from gainful employment. . . .

VOLUNTARY OLD-AGE ANNUITIES

The voluntary system of old-age annuities we suggest as a supplement to the compulsory plan which contemplates that the Government should sell to individuals, on a cost basis, deferred life annuities similar to those issued by commercial insurance companies; that is, in consideration of premiums paid at specified ages, the Government would guarantee the purchasers a definite amount of income starting at 65 for example, and continuing throughout the lifetime of the annuitant. The primary purpose of the plan is to offer persons not included within the compulsory system a systematic and safe method of providing for their old age. It could also be used by insured persons as a means of supplementing the old-age income provided under the compulsory plan. . . .

The plan should be designed primarily for the same income groups as those covered by the compulsory system. Hence, provision should be made for the acceptance of relatively small premiums (as little as one dollar per month) and the maximum annuity payable to any individual should be limited to the actuarial equivalent of fifty dollars per month.

There should be a study of the feasibility of Government contributions toward the annuities of people, now middle aged or older, with income of $2,500 per year or less, who come under this voluntary plan—contributions comparable to the unearned part of the annuities which will be paid by the Government to people of middle age or older who are brought under the compulsory system. . . .

SECURITY FOR CHILDREN

A large group of the children at present maintained by relief will not be aided by employment or unemployment compensation. There are the fatherless and other "young" families without a breadwinner. To meet the problems of the children in these families, no less than forty-five States have enacted children's aid laws, generally called Mothers' Pension Laws. However, due to the present financial difficulty in which many States find themselves, far more of such children are on the relief lists than are in receipt of children's aid benefits. We are strongly of the opinion that these families should be differentiated from the permanent dependents and unemployables, and we believe that the children's aid plan is the method which will best care for their needs. We recommend Federal grants-in-aid on the basis of one-half the State and local expenditures for this purpose (one-third the entire cost).

Such Federal grants-in-aid are a new departure, but it is imperative to give them if the mothers' care method of rearing fatherless families is to become nationally operative. The amount of money required is less than the amount now given to families of this character by the Federal Government by the less desirable route of emergency relief. An initial appropriation of approximately $25,000,000 per year is believed to be sufficient. . . . Federal grants should be made conditional on passage and enforcement of mandatory State laws and on the submission of approved plans assuring minimum standards in investigation, amounts of grants and administration. . . .

We recommend also that the Federal Government give assistance to States in providing local services for the protection and care of homeless, neglected and delinquent children and for child and maternal health services, especially in rural areas. . . .

RISKS ARISING OUT OF ILL HEALTH

As a first measure for meeting the very serious problem of sickness in families with low income we recommend a nationwide preventive public health program. It should be largely financed by State and local governments and administered by State and local health departments, the Federal Government to contribute financial and technical aid. The program contemplates (1) grants-in-aid to be allocated through State departments of health to local areas unable to finance public health programs from State and local resources, (2) direct aid to States in the development of State health services and the training of personnel for State and local health work, and (3) additional personnel in the United States Public Health Service to investigate health problems of interstate or national concern. . . .

ADMINISTRATION

The creation of a Social Insurance Board within the Department of Labor, to be appointed by the President and with terms to insure continuity of administration, is recommended to administer the Federal Unemployment Compensation Act, and the system of Federal contributory old-age annuities.

The Secretary of the Treasury is recommended to have full responsibility for the safeguarding and investment of all social insurance funds. The Federal Emergency Relief Administration is recommended as the most appropriate existing agency for the administration of non-contributing old-age pensions and grants-in-aid for dependent children. If this agency should be abolished, the President should designate the distribution of its work.

It is recommended that all activities of the Federal Government dealing with the administration of laws based on those recommendations be coordinated and systematized.