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Report No. 2995 81st Congress ) HOUSE OF REPRESENTATIVES 2d Session j EXTENDING THE ACT OF JUNE 6, 1933 (48 STAT. 113), AS AMENDED, TO PUERTO RICO AND THE VIRGIN ISLANDS August 25, 1950.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. Kelley of Pennsylvania, from the Committee on Education and Labor, submitted tlie following REPORT [To accompany S. 3546] The Committee on Education and Labor, to whom was referred the bill (S. 3546) to extend the act of June 6, 1933 (48 Stat. 113), as amended, to Puerto Rico and the Virgin Islands, and for other pur¬ poses, having considered the same, report favorably thereon without amendment and recommend that the bill do pass. GENERAL STATEMENT The United States Employment Service was created as a bureau in the Department of Labor under the provisions of the Wagner- Peyser Act, approved June 6, 1933, for the purpose of promoting the establishment and maintenance of a Nation-wide system of public employment offices. This act inaugurated the Federal-State co¬ operative program under which local public employment offices are operated by the several States in accordance with and subject to rules, regulations, and standards of efficiency promulgated by the Secretary of Labor. Each State is required to match dollar-for-dollar funds granted to it under the Wagner-Peyser Act for administering its public employ¬ ment service. Under the provisions of the act the Secretary of Labor is required to apportion funds to the States on the basis of population. After 17 years of operation under this act, State and Federal officials and the Congress have recognized the need for revising these financing provisions. The act applies to all of the 48 States, Hawaii, and Alaska but does not extend to Puerto Rico and the Virgin Islands. Economic condi¬ tions in those islands make it imperative that the provisions of the 2 EXTENDING THE ACT OF JUNE 6, 193 3 (48 STAT. 113) Wagner-Peyser Act be extended to those areas so as to provide for the establishment and maintenance there of public employment oluces similar to those maintained in the 48 States, Hawaii, and Alaska. Financing of the Nation-wide system of public employment offices The necessity for the revision of the Wagner-Peyser Act to provide a sound and permanent basis for financing the Federal-State co¬ operative system of pfeblic employment offices has manifested itself over the 17 years of operation. The Wagner-Peyser Act presently provides for the financing of a State public employment system on a dollar-for-dollar matching basis. The financing of these systems, however, has developed under two separate acts of Congress: (1) the Wagner-Peyser Act which provides for Federal grants-in-aid appor¬ tioned to the States on a population basis and dollar-for-dollar matching by the 'States for amounts so granted; and (2) title III of the Social Security Act which provides for 100-percent grants to the States by the Federal Government for the purpose of financing the costs of administering State unemployment-compensation laws. The requirement in the Social Security Act that unemployment-compensa¬ tion benefits be paid through public employment offices required a substantial increase in the number of State employment offices. Because, after 1938, a major proportion of the persons using the facilities of the public employment offices were claimants for unem¬ ployment compensation benefits between 85 and 90 percent of their administrative costs were financed by grants , made under title III of the Social Security Act. There is no requirement for the States to match funds granted under that act. Thus, prior to 1942 between 90 and 95 percent of the cost of maintaining the State public employment office systems was financed by the Federal Government under two different statutes. During Federal operation of the public employment service from January 1942 until November 1946 the entire cost of administering the public em¬ ployment offices was, of course, borne by the Federal Government. It is thus apparent that although the Wagner-Peyser Act provides that the States must match the Federal grants made to them under that act, because of this dual system of financing, the States have never borne more than 5 or 10 percent of the total cost of administering the public employment offices. By virtue of specific waivers contained in the annual appropriation acts, since the return of the public employment offices to the States in November 1946, the States have not been required to comply with the matching provisions of the Wagner-Peyser Act nor has the Secretary of Labor been required to apportion funds among the several States on the basis of population. These appropriation acts have provided for 100 percent Federal financing and for apportion¬ ment of the funds on the basis of the Secretary’s determination of the amounts necessary for the proper and efficient administration of the public employment offices of the respective States. Public Law 646, Eightieth Congress, enacted June 16, 1948, which consolidated the unemployment insurance and employment service programs in the Bureau of Employment Security, and subsequent appropriation acts have provided a single appropriation for both of these programs. The integration of these appropriations and the interchange of funds by the States between these programs, which is EXTENDING THE ACT OF JUNE 6, 193 3 (48 STAT. 113) 3 1 now permissible, make it no longer possible for tbe States to match funds appropriated under the Wagner-Peyser Act for employment service activities'. Because of the consolidation of the employment service and unem¬ ployment compensation programs in the Bureau of Employment Security and the provision of a single appropriation for both programs, the Congress, in the annual appropriation acts, has required that a State, to be eligible for grants for administering its public employ¬ ment service, in addition to meeting the requirements of the Wagner- Peyser Act as amended, have an unemployment compensation act approved by the Secretary of Labor under the Federal Unemployment Tax Act and that it be found in compliance with section 303 of the Social Security Act as amended. The bill recommended by your committee would amend the Wagner- Peyser Act to eliminate the present requirements for matching grants made under that act. It would further provide for the granting of funds on the basis of the determination by the Secretary of Labor of the amounts necessary for the proper and efficient administration of the public employment offices of the respective States without regard to the present obsolete formula of apportioning funds on a population basis. No additional financial burden would be placed on the Federal Government under the provisions of this bill. In the first place, it would merely enact into permanent legislation the system of financing the public employment offices which has been in effect since 1946 under the provisions of the annual appropriation acts. Secondly, the Federal Unemployment Tax Act has produced revenues which have been more than sufficient to meet the costs of administering both the unemployment insurance and employment service programs. The bill also would eliminate provisions in the Wagner-Peyser Act which have not been used in the 17 years since its enactment. Under these provisions funds apportioned to any State for any fiscal year remain available for payment to that State and for expenditure by it during the next succeeding fiscal year. So much of these funds which are unexpended by a State at the end of the period during which they are available for expenditure must be reapportioned among the States within 60 days thereafter. Extension of the Nation-wide system of public employment offices to Puerto Rico and the Virgin Islands At present the Wagner-Peyser Act does not authorize the use of any funds appropriated thereunder to maintain and establish a system of public employment offices in Puerto Rico and the Virgin Islands. By virtue of the provisions of title IV of the Servicemen’s Readjust¬ ment Act, the United States Employment Service maintains an employ¬ ment service in Puerto Rico for veterans only. In addition, there is a public employment service with limited facilities operated by the Puerto Rican Government. The committee is informed that there are no public employment office facilities in the Virgin Islands. Although there has been some increase in industry and tourist trade in Puerto Rico and the Virgin Islands within the past decade there has been no significant amelioration of the serious unemployment problems with which Puerto Rico and the Virgin Islands have been confronted. It is estimated that in Puerto Rico there are about 1 4 EXTENDING THE ACT OF JUNE 6, 1933 (48 STAT. 113) 80,000 unemployed and a much larger number underemployed and that in the Virgin Islands there is a similar ratio of unemployment and underemployment. These conditions have resulted in a flood of workers migrating from the islands to the mainland without proper guidance and without any assurances of employment. The need for full functioning public employment services in Puerto Pico and the Virgin Islands as parts of the Nation-wide system has become more and more apparent. The extension to those areas of the facilities and techniques of that system would unquestionably result in more expeditious and better placement of workers in jobs and thus contribute to the alleviation of their employment problem. The labor market information and other data available to these public employment offices have been important factors in influencing indus¬ tries desiring to establish additional facilities to locate such facilities in areas of serious unemployment. The facilities of such a public employment service could be of assistance to employers by obtaining a better selection of workers to fill vacancies and by reducing turn¬ over. The aimless migration of Puerto Ricans to the mainland induced by the serious unemployment in that island has created many social and economic problems in certain sections of this country. The facilities of a full functioning employment service could play an important part in stemming this fruitless migration. In increasing numbers agricultural employers in this country are utilizing Puerto Rican workers for temporary employment in this country. Through the clearance system now operated between the States filling of orders for temporary agricultural workers from Puerto Rico could be accomplished on a more orderly basis, reducing to a minimum the surplus migration of workers in search of employment opportunities which do not exist. If, as is contemplated by legislation which has been introduced in the Congress, title III of the Social Security Act and the Federal Unemployment Tax Act are amended to extend the unemployment insurance program to Puerto Rico and the Virgin Islands, it will be necessary in advance of such extension to have adequate public employment services in operation in those areas, since those acts require unemployment compensation to be paid through public employment offices. It is through such offices that the determination is made whether unemployment insurance claimants are available for work and unemployment benefits are reduced to a minimum by finding emnloyment for claimants. The bill recommended by your committee would amend the Wagner- Peyser Act to extend its benefits to Puerto Rico and the Virgin Islands in the same manner and to the same extent as it is now applicable to the several States, and the Territories of Alaska and Hawaii. ANALYSIS OF THE BILL This bill would amend the Wagner-Peyser Act (act of June 6, 1933, 48 Stat. 113), as amended. Section 1 of the bill would amend section 3 (b) of the Wagner- Peyser Act so as to extend that act to Puerto Rico and the Virgin Islands. EXTENDING THE ACT OF JUNE 6, 193 3 (48 STAT. 113) 5 Section 2 would amend section 5 (a) of the Wagner-Peyser Act by eliminating the apportionment formula and the requirement presently contained in that section for States to match funds granted to them under the act. Section 5 (a) as amended by this would provide the basic authority for the appropriation of funds to carry out the pur¬ poses of this act. Section 2 also would amend section 5 (b) to require that in order to be eligible for grants a State must have an unem¬ ployment compensation law approved by the Secretary under the Federal Unemployment Tax Act, and to be in compliance with sec¬ tion 303 of the Social Security Act and the Wagner-Peyser Act. Section 2 would also remove from section 5 (b) of the act certain provisions which relate to the reapportionment of unexpended funds. Section 3 repeals sections 6 and 7 of the Wagner-Peyser Act. This is a perfecting amendment required by the proposed amendment to section 5 of the Wagner-Peyser Act contained in section 2 of this bill. CHANGES IN EXISTING LAWS In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as introduced, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, existing law in which no change is proposed is shown in roman): AN ACT To provide for the establishment of a national employment system and for cooperation with the States hi the promotion of such system, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That in order to promote the establishment and maintenance of a national system of public employment offices there is hereby created in the Department of Labor a bureau to be known as the United States Employment Service. Sec. 2. The Secretary of Labor is authorized, without regard to the civil service laws, to appoint "and, without regard to the Classification Act of 1923, as amended, to fix the compensation of one or more assistant directors and such other officers, employees, and assistants, and to make such expenditures (includ¬ ing expenditures for personal services and rent at the seat of government and elsewhere and for lawbooks, books of reference, and periodicals) as may be nec¬ essary to carry out the provisions of this Act. In case of appointments for service in the veterans’ employment service provided for in section 3 of this Act, the Secretary shall appoint only veterans of wars of the United States. Sec. 3. (a) I t shall be the province and duty of the bureau to promote and develop a national system of employment offices for men, women, and juniors who are legally qualified to engage in gainful occupations, to maintain a veterans’ service to be devoted to securing employment for veterans, to maintain a farm placement service, to maintain a public employment service for the District of Columbia and, in the manner hereinafter provided, to assist in establishing and maintaining systems of public employment offices in the several States and the political subdivisions thereof in which there shall be located a veterans’ employ¬ ment service. The bureau shall also assist in coordinating the public employment offices throughout the country and in increasing their usefulness by developing and prescribing minimum standards of efficiency, assisting them in meeting problems peculiar to their localities, promoting uniformity in their administrative and statistical procedure, furnishing and publishing information as to opportuni¬ ties for employment and other information of value in the operation of the system, and maintaining a system for clearing labor between the several States. (b) Whenever in this Act the word “State” or “States” is used it shall be understood to include [the Territories of Hawaii and AalskaJ Hawaii, Alaska, Puerto Rico and the Virgin Islands. Sec. 4. In order to obtain the benefits of appropriations apportioned under section 5, a State shall, through its legislature accept the provisions of this Act and designate or authorze the creation of a State agency vested with all powers necessary to cooperate with the United States Employment Service under this Act. 6 EXTENDING THE ACT OF JUNE 6; 193 3 (48 ST AT. 113) [Sec. 5. (a) For the purpose of carrying out the provisions of this Act there is hereby authorized to be appropriated (1) the sum of $1,500,000 for the fiscal year ending June 30, 1934, (2) $4,000,000 for each fiscal year thereafter up to and including the fiscal year ending June 30, 1938, (3) and thereafter such sums annually as the Congress may deem necessary. The annual appropriation under this Act shall designate the amount to be apportioned by the Secretary of Labor among the several States in the proportion which their population bears to the total population of the States of the United States according to the next preceding United States census, to be available for the purpose of establishing and maintain¬ ing systems of public employment offices in the several States and the political subdivisions thereof in accordance with the provisions of this Act: Provided, however, That in apportioning the said amount among the several States, the Secretary of Labor shall apportion not less than $10,000 to each State. No payment shall be made in any year out of the amount of such appropriations apportioned to any State until an equal sum has been appropriated or otherwise made available for that year by the State, or by any agency thereof, including appropriations made by local subdivisions, for the purpose of maintaining public employment offices as a part of a State-controlled system of public employment offices; except that the amounts so appropriated by the States shall not be less than 25 per centum of the apportionment according to population made by the director for such State for the current year, and in no event less than $5,000. The balance of the amounts appropriated under this Act shall be available for all the purposes of this Act other than for apportionment among the several States as herein provided. [(b) The amounts apportioned to any State for any fiscal year shall be avail¬ able for payment to and expenditure by such State, for the purposes of this Act, until the close of the next succeeding fiscal 3rear; except that amounts apportioned to any State for any fiscal year preceding the fiscal year during which is com¬ menced the first regular session of the legislature of such State held after the enactment of this Act shall remain available for payment to and expenditure by such State until the close of the fiscal year next succeeding that in which such session is commenced. Subject to the foregoing limitations, any amount so apportioned unexpended at the end of the period during which it is available for expenditure under this Act shall, within sixty days thereafter, be reapportioned for the current fiscal year among all the States in the same manner and on the same basis, and certified to the Secretary of the Treasury and treasurers of the States in the same manner, as if it were being apportioned under this Act for the first time.3 Sec. 5. (a) There is authorized to he appropriated, out of any money in the Treasury not otherwise appropriated, such amounts from time to time as the Congress may deem necessary to carry out the purposes of this Act. (b) The Secretary shall from time to time certify to the Secretary of the Treasury for payment to each State which (i), except in the case of Puerto Rico and the Virgin Islands, has an unemployment compensation law approved by the Secretary under the Federal Unemployment Tax Act and is found to be in compliance with section 303 of the Social Security Act, as amended, and (ii) is found to be in compliance with the Act of June 6, 1933 (48 Stat. 113), as amended, such amounts as the Secre¬ tary determines to be necessary for the proper and efficient administration of its public employment offices. [Sec. 6. Within sixty days after any appropriation has been made under authority of this Act the Secretary of Labor shall make the apportionment thereof as provided in section 5 and shali certify to the Secretary of the Treasury and to the treasurers of the several States the amount apportioned to each State for the fiscal year for which the appropriation has been made. [Sec. 7. Within sixty days after any appropriation has been made under the authority of this Act, and as often thereafter while such appropriation remains available as he deems advisable, the Secretary of Labor shall ascertain as to each of the several States (1) whether the State has, through its legislature or its Governor, as the case may be, accepted the provisions of this Act and designated or authorized the creation of an agency to cooperate with the United States Employment Service in the administration of this Act in compliance with the pro¬ visions" of section 4 of this Act; and (2) the amounts, if any, which have been appropriated or otherwise made available by such State and by any agency thereof, including appropriations made by local subdivisions, in compliance with the pro¬ visions of section 5 of this Act. If the Secretary finds that a State has complied with the requirements of such sections, and if plans have been submitted and approved in compliance with the provisions of section 8 of this Act, the Secretary shall determine the amount of the payments, if any, to which the State is entitled EXTENDING THE ACT OF JUNE 6, 1933 (48 STAT. 113) 7 under the provisions of section 5, and certify such amount to the Secretary of the Treasury. Such certificate shall be sufficient authority to the Secretary of the Treasury to make payments to the State in accordance therewith. J Sec. 8. Any State desiring to receive the benefits of this Act shall, by the agency designated to cooperate with the United States Employment Service, submit to the Secretary of Labor detailed plans for carrying out the provisions of this Act within such State. In those States v/here a State board, department, or agency exists which is charged with the administration of State laws for vocational rehabilitation of physically handicapped persons, such plans shall include provi¬ sion for cooperation between such board, department, or agency and the agency designated to cooperate with the United. States Employment Service under this Act. If such plans are in conformity with the provisions of this Act and reason¬ ably appropriate and adequate to carry out its purposes, they shall be approved by the Secretary of Labor and due notice of such approval shall be given to the State agency. Sec. 9. Each State agency cooperating with the United States Employment Service under this Act shall make such reports concerning its operations and expenditures as shall be prescribed by the Secretary of Labor. It shall be the duty of the Secretary to ascertain whether the system of public employment offices maintained in each State is conducted in accordance with the rules and regulations and the standards of efficiency prescribed by the Secretary in accord¬ ance with the provisions of this Act. The Secretary may revoke any existing certificates or withhold any further certificate provided for in section 7, whenever he shall determine, as to any State, that the cooperating State agency has not properly expended the money paid to it or the moneys herein required to be appropriated by such State, in accordance with plans approved under this Act. Before any such certificate shall be revoked or withheld from any State, the Secretary shall give notice in writing to the State agency stating specifically wherein the State has failed to comply with such plans. Sec. 11. (a) The Secretary shall establish a Federal Advisory Council com¬ posed of men and women representing employers and employees in equal numbers and the public for the purpose of formulating policies and discussing problems relating to employment and insuring impartiality, neutrality, and freedom from political influence in the solution of such problems. Members of such council shall be selected from time to time in such manner as the Secretary shall prescribe and shall serve without compensation, but when attending meetings of the council they shall be allowed necessary traveling and subsistence expenses, or per diem allowance in lieu thereof, within the limitations prescribed by law for civilian employees in the executive branch of the Government. The council shall have access to all files and records of the United States Employment Service. The Secretary shall also require the organization of similar State advisory councils composed of men and women representing employers and employees in equal numbers and the public. (b) In carrying out the provisions of this Act the Secretary is authorized and directed to provide for the giving of notice of strikes or lockouts to applicants before they are referred to employment. Sec. 12. The Secretary of Labor, is hereby authorized to make such rules and regulations as may be necessary to carry out the provisions of this Act. Sec. 13. The Postmaster General is hereby authorized and directed to extend to the United States Employment Service and to the system of employment offices operated by it in conformity with the provisions of this Act, and to all State employment systems which receive funds appropriated under authority of this Act, the privilege of free transmission of official mail matter. Act of June 29, 1949, ch. 275, title II, sec. 201, 63 Stat. 284: In carrying out the provisions of this Act, the provisions ©f section 303 (a) (1) of the Social Security Act, as amended, relating to the establishment and main¬ tenance of personnel standards on a merit basis, shall apply. o