Special Message to the Congress on Unemployment Compensation.

To the Congress of the United States:

The Congress and the Executive Branch of the Government have already moved to prepare the country for the difficult economic adjustments which the Nation will face during the transition from war to peace.

1. The Congress has created the Office of War Mobilization and Reconversion to coordinate the reconversion activities of all Federal agencies, and that Office has established basic reconversion policies.

2. Specific laws have been enacted by the Congress setting forth the policies and providing the administrative machinery for contract termination, plant clearance, financial aid to business, and the disposition of surplus property.

3. Our military and civilian agencies have prepared themselves to expedite industrial reconversion and reemployment.

4. As part of an over-all program for returning veterans the GI Bill of Rights provides "readjustment allowances," weekly cash benefits to veterans until they are able to obtain jobs.

5. Congress has permitted business to carry back postwar losses against excess profits tax payments during the reconversion period.

6. Congress has established support prices for agricultural products so that farmers will be protected against a postwar collapse of income.

There remains, however, a major gap in our reconversion program: the lack of adequate benefits for workers temporarily unemployed during the transition from war to peace. I urge the Congress to close this gap.

I am confident that, with appropriate measures, we can avoid large scale and lengthy unemployment during the transition period. However, some temporary unemployment is unavoidable, particularly when total demobilization becomes possible. Even if reconversion proceeds rapidly, no amount of planning can make jobs immediately available for all displaced personnel. We must provide maximum security to those who have given so fully of themselves on the fighting and production fronts. The transition from war to peace is part and parcel of the war and we cannot shirk our obligation to those temporarily unemployed through no fault of their own.

To produce what is needed for the Pacific war, we must appeal to the workers to accept and remain in jobs which they ultimately must lose when munitions production ceases. The Government has thus incurred a moral obligation to these workers and to those who have stuck faithfully to their posts in the past.

To fulfill this obligation, we must rely principally upon our existing system of unemployment insurance. However, the existing State laws embrace three major defects:

1. Only about 30 million of our 43 million non-agricultural workers are protected by unemployment insurance. The absence of protection for Federal Government employees--in Navy Yards, arsenals and Government offices--is particularly inequitable, since these workers are subject to risks of unemployment similar to the risks of those who work for private employers. Lack of protection for employees in small establishments and for maritime workers also constitutes a serious shortcoming in the present programs.

2. The weekly benefit payments provided under many of the State laws are inadequate to maintain purchasing power and to provide a reasonable measure of economic security for the workers. Most States fix a maximum rate of $15 to $18 a week. This is clearly inadequate to protect unemployed workers against ruthless cuts in living standards, particularly if they have families.

3. The length of time for which benefits are paid is too short. In nearly one-third of the States, no worker can receive more than 16 weeks of benefits in any year, and many workers do not qualify even for this length of time.

Therefore, I recommend specifically that Congress take emergency action to widen the coverage of unemployment compensation and to increase the amount and duration of benefits--at least for the duration of the present emergency period of reconversion. Basically this can be accomplished only by amending the Social Security Act so as to induce State laws to provide more adequately for anyone who is unemployed.

To be sure, the States have large sums in the Unemployment Trust Fund. But since changes of State laws cannot be effected overnight, I propose that the Congress, during this emergency period, extend the coverage of unemployment compensation to include Federal employees, maritime workers, and other workers not now insured. Moreover, I see no feasible way to make benefits payable to such workers, unless they are financed entirely by the Federal Government during the present emergency. The benefits should appropriately be administered by the States.

I also recommend that Congress provide, through supplementary Federal emergency benefit payments, minimum standards for weekly rate and duration of unemployment benefits. Every eligible worker should be entitled to 26 weeks of benefits in any one year, if his unemployment continues that long. The maximum payment, at least for the worker who has dependents, should be raised from present levels to not less than $25 per week. In this connection, Congress will no doubt wish to reexamine the readjustment allowance provisions of the GI Bill of Rights. All payments should be made through the existing unemployment compensation machinery of the several States, just as payments to veterans are now made.

These provisions are essential for the orderly reconversion of our wartime economy to peacetime production. They are badly needed for the duration of the reconversion emergency.

Decent unemployment benefits would serve as a bulwark against postwar deflation. By assuring workers of a definite income for a definite period of time, Congress will help materially to prevent a sharp decline in consumer expenditures which might otherwise result in a downward spiral of consumption and production. Adequate unemployment insurance is an indispensable form of prosperity insurance.

Congress will soon deal with the broader question of extending, expanding and improving our Social Security program, of which unemployment insurance is a part. Although such improvement is fundamental, congressional deliberations on the broad issues will take time. On the specific issue of unemployment benefits, we may not have time available. We are already entering the first phase of reconversion; we must be prepared immediately for the far larger problems of manpower displacement which will come with the end of the war in the Pacific.

I earnestly hope, therefore, that the appropriate Committees of Congress will undertake immediate consideration of the emergency problem.

HARRY S. TRUMAN