in the language beginning on line 21 which says that if a family had an income which was less than what would permit the payment of rentals for standard housing in the area, they would be able to get a supplement covering the difference between 20 percent of their income and the rental costs. This is a similar concept to the proposal in the Housing Act this year for rent supplements. Senator MUSKIE. Let me ask this question: Is the intent to enlarge the scope for rent supplements in that provision? Mr. BECKMAN. Yes, it would enlarge housing assistance in the sense that these people who are displaced families or elderly or handicapped individuals would be eligible for these rental adjustment payments. It is broader than the administration's original proposal for covering persons displaced by Federal programs. I think the point here is that we have to look to the provisions of this year's Housing Act to see whether it is comparable to the provision in S. 1681. If so, this probably could be deleted. If, however, that provision remains narrower or is dropped in the administration's proposal, then this would be relevant. Senator MUSKIE. All right. I think the only way to resolve this is to wait until the Housing Act takes final form, and we can then make the comparisons." Mr. BECKMAN. Yes. Senator MUSKIE. On page 11 of the bill, lines 22 and 23, it says that "the Federal agency providing such assistance shall contribute the first $25,000 of the cost of providing a relocation payment to any displaced person." Is that intended to mean up to and including the first $25,000? Senator MUSKIE. Thank you very much, Mr. Colman. I am sure that we will be in touch with you again before this bill takes final form. Thank you for your helpful testimony. Our next witness is Mr. Curtis Aller, Director, Office of Manpower, Automation, and Training, Department of Labor. Do we have the departmental report? Mr. ALLER. I do not think so. We just have the statement which you have copies of. Senator MUSKIE. Very well. Proceed. STATEMENT OF DR. CURTIS ALLER, DIRECTOR, OFFICE OF MANPOWER, AUTOMATION, AND TRAINING, DEPARTMENT OF LABOR; ACCOMPANIED BY MISS MARGARET DAHM, SPECIAL ASSISTANT TO THE ADMINISTRATOR, BUREAU OF EMPLOYMENT SECURITY; AND MISS EDITH N. COOK, ASSOCIATE SOLICITOR FOR LEGISLATION, DEPARTMENT OF LABOR Dr. ALLER. My name is Curtis Aller. On my left is Miss Edith Cook, Associate Solicitor for Legislation and on my right is Miss Mar 7 Housing and Urban Development Act of 1965 (Public Law 89-117) approved Aug. 10, 1965, regarding tenants qualification for rent subsidies: Title I, sec. 101 (c): "As used in this section, the term 'qualified tenant' means any individual or family who has, pursuant to criteria and procedures established by the Administrator, been determined— (1) to have an income below the maximum amount which can be established in the area, pursuant to the limitations prescribed in sections 2(2) and 15(7)(b)(ii) of the United States Housing Act of 1937, for occupancy in public housing dwellings; and * garet Dahm, Special Assistant to the Administrator of the Bureau of Employment Security. They will be available if there are questions. As noted, Mr. Chairman, we have a very short statement, and I can simply file it for the record or read it. Senator MUSKIE. Why don't you read it. Dr. ALLER. Very well. Mr. Chairman and members of the subcommittee, the Department of Labor is concerned that any assistance extended to persons displaced by Government acquisitions of property include provision for workers who may lose their jobs because of the displacement of businesses by such Federal action. S. 1201 contains provisions for training and training allowances under the Manpower Development and Training Act and unemployment compensation for displaced employees, where it is not now available to them. The administration now has pending before the Congress general legislation to extend unemployment insurance coverage beginning in 1967-to all employees of small employers and employees of nonprofit organizations, as well as to many farmworkers. Pending enactment of this general legislation, employees of businesses displaced by Federal acquisition of property should be assured such coverage. With respect to the provisions in S. 1201 relating to training assistance and allowances for displaced persons, these are no longer necessary since the recently enacted amendments of the Manpower Development and Training Act now make this possible. Senator MUSKIE. Now, with respect to the first point that you make in your statement, although it is quite brief, it covers quite a bit of territory. You say that the Department is concerned with any assistance extended to persons displaced and that it should include provision for workers who may lose their jobs because of the displacement of businesses by such Federal action. Do you have any information and statistics indicating to what extent this happens under Federal programs or in federally assisted programs? To what extent are workers actually displaced? This is a phase of the problem that I think not too many people are focused on, and it might be very useful to have that in the record. Dr. ALLER. I will ask Miss Dahm to respond to that. Miss DAHM. The study of the Select Subcommittee on Real Property Acquisition published by the Committee on Public Works on December 22, 1964, did have some figures on that. With respect to the sample that they checked, I think it was one-fifth of the businesses that had no employees, and the average number of employees for all of the displaced businesses was 3.2-I cannot find that section right now but it is in here-it was 3.2 employees. For service industries it was a little over one employee and for manufacturing establishments displaced it was about nine employees. Senator MUSKIE. So that we are talking about very small businesses? Miss DAHM. That is correct. Senator MUSKIE. I think it would be helpful, if you can easily do it, if you would pinpoint the relevant sections of the report of the select committee, so that we might include them in the record of this hearing. Dr. ALLER. I certainly will. (The information follows:) REAL PROPERTY ACQUISITION IN FEDERAL PROGRAMS Recommendation 16.-Unemployment compensation for employees of displaced business concerns having less than four employees (title III, sec. 303) It is recommended that the Social Security Act be amended (1) to include in the unemployment system employees of business concerns displaced by public programs conducted by the Federal Government or with the assistance of Federal funds, who are not now eligible for compensation because their employer has fewer than four employees, under conditions set by the States in which they were last employed, except as to the size of the employer, and (2) to provide for Federal reimbursement of the costs to the States. Comment.-Studies of business displacement by Federal and federally assisted programs disclose that a large number of these businesses are very small in terms of number of employees. One study of some 300 businesses displaced during the period 1954 through 1959 found that nearly one-fifth were owner operated with no employees, 80 percent employed fewer than 10 workers, and the median for all of the displaced establishments was 3.2 employees. The range was from a low of 1.4 employees for service establishments to 9.2 for manufacturing, wholesale, and construction units. All studies agree that the small, neighborhood-type service businesses suffer the greatest rate of liquidation. The study above found that one-third of the nonsurvivors had no employees and more than three out of four had less than three workers. In these types of business, the jobs are generally of a semiskilled or unskilled nature. With opportunities for such jobs constantly diminishing, employees of displaced small businesses have difficulty in finding new employment. Adding to their dislocation problems is the fact that in more than one-half the States, unemployment compensation is not available to employees of firms having three or fewer employees. This recommendation would extend unemployment compensation to these persons, in order to assist them over the period needed to find new employment, and would provide that the Federal Government would reimburse the States for the full cost of such unemployment benefits. This program would be similar to the existing program of Federal underwriting of the full cost of providing unemployment compensation for unemployed Government workers and veterans. FURTHER MATERIAL ON UNEMPLOYMENT AND UNEMPLOYMENT INSURANCE FROM THE DEPARTMENT OF LABOR In connection with Dr. Aller's testimony of June 30 on S. 1681 and S. 1201, the Department of Labor indicated that it would furnish, for the record, additional information on the reason for the unemployment benefit provision in S. 1201—that is, information on unemployment among workers in displaced businesses, and their possible status under unemployment insurance. The Department has made no surveys of its own in this area. Except for information on the provisions of State laws, we are relying on the work of the Select Subcommittee on Real Property Acquisition, as contained in the December 22, 1964, report entitled "Study of Compensation and Assistance for Persons Affected by Real Property Acquisition in Federal and Federally Assisted Programs." The relevant data follow: 1. Business and nonprofit organizations to be displaced will number approximately 17,860 per year (p. 15). 2. Farm operating units to be displaced or caused to incur expenses in moving or realining personal property will number approximately 3,660 per year. About 2,290 will be displaced by direct Federal programs. The 1,370 affected by federally assisted programs are almost entirely those affected by highway takings which do not fully displace the farm (p. 16). 3. In the past, about 10,900 businesses have been displaced per year (p. 26). These displacements were largely in urban areas (p. 27). Of all displaced businesses, approximately 31 percent (3,387 of the 10,900) discontinued operations (p. 30). Based on a study in the District of Columbia, proprietorships, mostly small, were harder hit by displacement than were corporations (p. 31). "The inescapable conclusion is that the small businesses, usually proprietorships, are least able to withstand displacement. If they reestablish, they are the ones that most often experience loss of earnings in their new location. Also, proprietorships are the most likely to be required to discontinue, and their owners are the most likely to experience loss in earnings during and after displacement. However, corporations and partnerships also may be required to terminate operations and experience decreases in earnings" (p. 31). 4. "Most of the businesses that have serious difficulty are the very small proprietorships that have fewer than four employees. Frequently the employees are elderly, or have little training to qualify them for other employment. The majority are ineligible for unemployment compensation" (p. 108). 5. One study of 300 displaced businesses found that nearly one-fifth had no employees; 80 percent had fewer than 10, and the median number was 3.2 employees. The range was from 1.4 employees for service establishments to 9.2 employees for manufacturing, wholesale, and construction units. Of the businesses that did not relocate, one-third had no employees, three-fourths had fewer than 3 workers (p. 140). 6. Of the 52 "States" (including the District of Columbia and Puerto Rico), there are 20 which cover only employers with 4 or more workers in 20 weeks, and 8 which generally require at least 4 workers, but cover some with employment in less than 20 weeks, using various combinations or alternatives of length of employment or size of payroll. Four States cover employers with 3 or more workers, and 20 cover some employers of 1 worker. 7. It is estimated that possibly 6,000 workers a year may be unemployed because of displacement from a business not covered by unemployment insurance; most of these are excluded because of their small size, but a few may have been employed by nonprofit organizations or farms. Senator MUSKIE. Can you recall whether or not by displacement you mean people who actually lost their jobs? Is that simply the figure for employees on the payrolls of the businesses which were displaced without any indication as to whether or not they actually lost their employment because of the displacement? Miss DAIM. It is the number displaced. There is evidence, though, that a sizable proportion of those businesses ceased to exist. Senator MUSKIE. Now, for those people, and the numbers are very small, are those people necessarily now covered by unemployment compensation? In many States do they not have a limit on the businesses that are covered, depending upon the number of employees-four, eight or some other figure? Now, to what extent are the displaced employees in covered industries or in covered businesses? Miss DAHM. Well, about one-half of the States cover businesses with four workers in 20 weeks. The rest cover smaller numbers, from three in 13 weeks down to seven that cover employers who have one worker at any time. Those that cover one worker at any time would cover these displaced businesses, but in those that have coverage of four, the average of these businesses would not be covered. Senator MUSKIE. So that in order to give any unemployment compensation coverage for a person displaced it would be necessary to change the employment security law of the States involved or to enact Federal legislation? Miss DAHM. Or to enact Federal legislation, as in S. 1201. Senator MUSKIE. The Federal legislation proposed would cover all of these people, no matter how few employees they had; is that right? Miss DAHM. That is right. Dr. ALLER. The omnibus administration proposal now before the Senate Finance and House Ways and Means Committees would give such coverage also. Miss DAHM. To the same extent as S. 1201 for small employers. Senator MUSKIE. This committee would not ordinarily have jurisdiction over amendments to the employment security law, would it? Dr. ALLER. You are correct, if I am properly informed. responding only to the provisions in S. 1201. We are Senator MUSKIE. S. 1201 has been referred to this committee, yet this committee has no jurisdiction over that portion of S. 1201; is that correct? That is a question for us to determine, of course. Dr. ALLER. I think that is something for you to determine. Dr. ALLER. I will ask Miss Cook to speak. Miss Cook. Senator Sparkman's bill, S. 1201, does not extend unemployment insurance coverage by amending the Federal unemployment insurance law, the Federal Unemployment Tax Act. Instead, it includes a general provision which says that the Federal Government would pick up coverage of these limited numbers of people and give them unemployment insurance until such time as they are covered by the regular unemployment insurance laws. Senator MUSKIE. So that S. 1201 simply provides for the payment out of the General Treasury of the equivalent of the unemployment compensation benefits to these people? Miss Cook. That is right. The benefits would be governed by all of the State laws that cover benefits, amounts, length of duration, and the like. Senator MUSKIE. Does S. 1201 provide full Federal coverage of this? At the present time the States provide the taxes, presumably. Miss Cook. For employees of small business employers, anybody who employs at least one employee. It would not cover employees of nonprofit organizations or farmworkers. Senator MUSKIE. My question was whether or not the cost of this provision in S. 1201 would be borne by the Federal Government only. Miss Cook. Yes, it would. Senator MUSKIE. Out of the General Treasury? Miss Cook. That is correct. Senator MUSKIE. One other question: I take it that your comments relative to the Manpower Development and Training Act support those made by Mr. Colman of the Advisory Commission just a few moments ago? Dr. ALLER. That is correct. Senator MUSKIE. Thank you very much. Will we be getting a departmental report on the bill? Miss Cook. If you would like it, we will submit one. going to use the statement. We were Senator MUSKIE. This does not indicate whether you support the enactment of either of these bills in any form and that is why I asked. Miss Cook. We were deferring on the other provisions of the bill to other interested Government agencies since the Department of Labor is not involved in the acquisition of real estate. We were, therefore, only speaking on that part dealing with unemployment insurance. Senator MUSKIE. I do not think that we will need a report, then. Thank you. Our next witness is Mr. Lewis A. Sigler, Assistant Legislative Counsel, Department of the Interior. At this point in the record, there will be inserted the report of the Department of the Interior on |