14 MISC. PUBLICATION 570, U. S. DEPT. OF AGRICULTURE 



equity financing of properties for rent should be encouraged in the 

 post-war years, as distinguished from placing all of the public em- 

 phasis on loan financing for ownership: 2 



Revision of the Social Security System 



Another means of helping private enterprise maintain full employ- 

 ment is the extension and enlargement of the insurance features of 

 the social security system. These include the joint Federal-State sys- 

 tem of unemployment insurance 8 and the Federal system of old-age 

 and survivors' insurance. 



By aiding in maintaining larger total private expenditures for 

 goods and services when unemployment and old age occur, such pro- 

 grams help support a higher level of employment than would be 

 possible without them. Certain modifications in existing law would 

 make the programs even more helpful in maintaining a high level 

 of demand when unemployment threatens, or when an abnormally 

 large number of older workers retire from work — a situation likely 

 to arise during the transition period. To indicate what modifications 

 might be appropriate, it is necessary to describe briefly the principal 

 provisions of each of these two social-insurance programs. 



Unemployment Insurance 



With the exception of the system for railroad employees, which is 

 a federally administered program, unemployment insurance is now 

 provided by a joint Federal-State program, under 51 separate laws 

 of the States, Territories, and the District of Columbia. Provisions 

 of the laws relative to the size of firm and type of industry covered, 

 the standards which workers must meet in order to qualify for unem- 

 ployment compensation, the amount and duration of benefits, and 

 similar factors, vary considerably from State to State. However, 

 the general premise on which all of the State unemployment-insurance 

 systems are built is, "that over the swing of a business cycle the con- 

 tributions paid into a State's account will approximate withdrawals 

 from the fund for benefit payments". 4 



In 1943, approximately 45 million workers were in employment 

 covered by programs at some time during the year. The programs 

 are financed by funds collected through pay-roll taxes and are depos- 

 ited by the States in a trust fund in the Federal Treasury. The basic 

 rate of pay-roll taxation is 3 percent, levied by the Federal Govern- 

 ment on specified classes of employers. 5 But employers are allowed 



2 The Housing- Committee of thp Twentieth Century Fund has recommended — 



That, following the pattern of the New York law, insurance companies be author- 

 ized by the various states to invest up to 10 percent of their assets in the debt-free 

 ownership of housing property ; that, under a system of federal insurance, guaran- 

 teeing an average net return over a ten-year period of an amount not to exceed 

 the current long-term government bond rate as applied to the total investment, the 

 permissive investment be increased to 15 percent, that similar insurance be made 

 available to federally chartered and regular trustee institutions organized for 

 investment in housing property. — American Housing, p. 333, The Twentieth 

 Century Fund, 1944. 



3 The federally-administered railroad-retirement and railroad-unemployment insurance 

 plans, and Federal, State, and municipal systems covering certain groups of public 

 employees are also social-insurance programs. 



4 8th Annual Report, Social Security Board, 1943, p. 27. 



5 In most States it is only the employers of eight or more workers who are subject to the 

 tax and hence whose employees are covered by the program. 



