SOCIAL SECURITY

New Zealand Herald, Volume LXXIII, Issue 22344, 15 February 1936, Page 18

SOCIAL SECURITY

AMERICA'S NEW SCHEME UNEMPLOYMENT INSURANCE BENEFITS TWO YEARS HENCE [from our own correspondent] NEW YORK, Jan. 16 The unemployment legislation passed by Congress at President Roosevelt's instance last year is now in force. Benefits will be paid two years hence. Every person who employs eight or more people must pay a tax of 1 per cent of the total amount paid in wages this year. In 1937 this tax will be increased to 2 per cent, and in 1938 and subsequent years it will be 3 per cent.

An employer might bo granted a lower rate 'of tax if his employment record and his reserve funds justify it. In other words, he can bo rewarded for keeping his employees in work. Ho is not permitted to deduct any part of the tax from the employee's wage or to allow an employee to contributo. If any State has an unemployment insurance schcmo the tax will bo paid to the Federal Government. If the State law meets the requirements of the Federal law, the employer will receive a rebate of 90 per cent. He must pay the full Federal tax on employees insurable under the Federal law that are not provided for in the State law. Administration Fund Funds cotlected by the States under their own insurance laws will be sent to Washington, and will bo credited to each stato, to be paid back to them for unemployment compensation. Moneys paid into the fund by one Stnto will not bo used for another State. There are 10 States, including New York, which have unemployment insurance laws, and the.United States Government hopes all the remaining States will pass laws to insure employees. The new Federal law, known as the Social Security Act, provides for a Federal appropriation of 4,000,000 dollars for the next year and 49,000,000 dollars annually ' thereafter. This will be allocated to the States in proportion to the number of persons employed who are eligible for insurance nnd will bo used for administrative purposes. It is not a gift, because tho 10 per cent tax on State contributions will be more than enough to reimburse the Federal Government for its expenditure. In 1933 there were 14,611,000 -insurable workers in the United States nnd if the 3 per cent unemployment insurance tax nad been in effect the total payment would have been 528,000,000 dollars. In 1929, a year of high employment, it would, have totalled 1,000,000,000 dollars. Intention ol the Law Those not eligible for unemployment insurance are farm labourers, domestic servants, family workers, crews of vessels, Government employees and employees of various institutions, such as hospitals and universities, which are not operated for profit. But there is nothing to prevent the States insuring these employees if they so wish. For instance, the State of New York insures domestic servants. And also in New York State, a person with four or more employees must insure them. The intention of the Federal law is to bring pressure on tho States to pass unemployment insurance Acts without delay, to protect the funds thus collected, and to ensure a fair and honest administration. The closest parallel to this type of legislation is the workmen's compensation, which was fought out, State by State, over a period of 20 years. The State of New York has been a leader in industrial legislation for many years, and is also a leader in the new field. It is now at work registering 250,000 employers, who have 2,500,000 employees eligible for insurance.