North America’s Divide - The Political Geography of Inequality - page 126

the states, and not the federal government, that retain full political control of
unemployment insurance.
The remainder of this section builds on materials produced by direct partic-
ipants in the process: E. Witte's 13 The Development of the Social Security Act
(1962), Arthur Altmeyer's 14 The Formative Years of Social Security (1968),
and Paul H. Douglas' 15 Social Security in the United States, An Analysis and
Appraisal of the Federal Social Security Act (1936).
In analyzing this material, I first focus on the discussions within Committee
on Economic Security (CES). Specifically, I present the different alternatives as
to the institutional design of unemployment insurance and discuss the reasons
underlying the final choice. Second, I analyze the political influences on the
redrafting of the Social Security Act titles devoted to unemployment insurance
during its legislative process. This includes inputs from both the House of Rep-
resentatives and the Senate as well as the Conference Committee to reconcile
disagreements between cameras. Finally, I present a succinct summary of the
final outcome.
Douglas ( 1936 : 28-69) and Witte ( 1962 : 111-143) concur that there were
basically three alternative institutional designs on the table of the Committee
on Economic Security. These were: 1) a national system in which the federal
government would collect contributions fromworkers and employers andmake
transfers directly to the unemployed; 2) what Witte calls a “subsidy plan,” a
system in which “in essence, [ . . . ] the amount of revenues collected through
the federal tax from employers in each state [would] be returned to that state
to be used for unemployment compensation purposes, subject to the state's
compliance with standards to be prescribed by the federal government” (Witte
1962 : 115); and finally, 3) a tax offset system along the lines of the Wagner-
Lewis Bill (1934), which proposed a payroll tax upon employers equal to 5%
of what they pay in wages. If a state passed a law and met the federal standards,
“then the contributions paid by employers under such an act would be credited
as an offset against the federal tax” (Douglas 1936 : 23). Otherwise, states
are free to choose any system or institutional design for their provision of
unemployment insurance. While the project did not pass through Congress in
1934, the provisions of the Social Security Act follow in the footsteps of the
Wagner-Lewis Bill.

13 Executive Director of the Committee on Economic Security (1934-1935). This topic is based
on a diary kept by the author during the entire process.

14

Second Assistance Secretary of the Department of Labor and Head of the Technical Board of
the Committee on Economic Security.

15

Professor of Economics at the University of Chicago. He served throughout the years as exter-
nal assessor as well as discussion leader in the National Conference on Economic Security,
a convention held in Washington (1934) where initial discussions on the different types of
institutional designs to be implemented were held. Thereafter, he served as close collaborator
of Bryce Stewart, Head of the Committee's Area of Study on Unemployment Insurance and
former Director of the Employment Service (1919) in Canada.