Geoscience Reference
In-Depth Information
TABLE 5.4. The Legislative Process of the American Social Security Act
USA: Legislative Evolution of the Provisions for Unemployment Insurance in the Social Security Act (1935), Titles III and IX.
House of Representatives
Senate
Original Bill
(Ways and Means Committee)
(Finance Committee)
Conference Committee
Revenues (Federal
Payroll Taxes)
The rate of the federal
payroll tax is related to
previous years level of
production 1 . The normal
level is thought to be 3%.
The rate is to be established following
an annual scal, 1935: 1%; 1936: 2%;
1937: 3%, It ceases to be related to
previous years' levels of production.
Remains.
Remains.
Institutional Design
Freedom to adopt any type
of unemployment insurance
system. 2
The options a limited on grounds of
accounting efficiency. States are no
longer permitted to adopt systems of
industry or plant reserves 3 .Plant
reserves were also said to be too
inegalitarian.
La Follette amendment
passes. Previous freedom is
restored.
The Senate position prevails,
states are fully free to choose
their system of
unemployment insurance.
Coverage
Wide Coverage, no specific
exclusions beyond public
agencies.
Only those firms with less
than 4 workers are exempted
from the federal payroll tax.
Specific occupations (mainly
agricultural workers, including
croppers and tenants) are excluded.
Remains.
The threshold of exemption
is set back to 4 workers.
Compromise: The threshold
for a firm to be exempted
from the federal payroll tax
is 8 workers.
Administration
Compromise: Benefits will
be paid in any form
“approved by the Social
Security Board”, A
minimum control is
established.
1 If the index of production of the Federal Reserve Board was by September 1935 less than 84%ifits1923-1925 average, the payroll rate would be 1%. If the Index was between
84 and 95% the rate would be 2%. If the Index was above 95%ofthe1923-1925 average, the rate would be 3%.
2 In the case of the states willing to go for an industry or plant systems, it was provided that they should contribute 1% of their payroll to a pooled state fund in order to generate
a reserve for other industries.
3 Note that under these conditions the existing Wisconsin system would be doomed to change or disappear.
Sources: Data collected from Douglas ( 1936 ); Witte ( 1962 ); and Altmeyer ( 1968 ).
Federal Standards of
Personnel are required to all
States systems.
Benefits are to be paid only
by the Public Employment
offices of the States.
Abolishment of Federal Standards of
Personnel.
Remains.
Remains.
The requirement of paying
only via Public Employment
offices is eliminated.
 
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