WHAT PEACE CAN MEAN TO AMERICAN FARMERS 15 



credits against this basic rate up to a maximum of 2.7 percent for 

 tax payments made to the State funds. 6 



The provisions of the present laws governing benefit payments are 

 far from uniform. In general, however, eligible workers may receive 

 unemployment compensation, in most States, after they have been 

 involuntarily unemployed for 2 to 3 weeks, at a rate which approxi- 

 mates one-half of their weekly earnings when they last worked in 

 insured employment. Such benefits are rarely paid for longer than 

 16 weeks, unless the worker has an unusually good record of past con- 

 tinuous work. To qualify for unemployment compensation a worker 

 must register for further work at an Employment Service office. 

 Whenever the Employment Service can direct the unemployed worker 

 to a job available to him which involves the general type of work for 

 which he is qualified, his eligibility for unemployment compensation 

 ceases. 



This type of unemployment insurance is of most importance in 

 maintaining the incomes of workers who are thrown out of employ- 

 ment for short periods when the economy is operating at relatively 

 high levels of employment, It can be highly instrumental in pre- 

 venting minor recessions in production from becoming major depres- 

 sions. Moreover, through the influence of benefit payments in keep- 

 ing up consumption, it has the effect of slowing up a downturn in 

 business activity, thus affording an opportunity for other corrective 

 action to be taken. 



Obviously, the unemployment insurance program could make an 

 even greater contribution to the maintenance of full employment if 

 the present system were modified : (1) To cover more workers, (2) to 

 start benefit payments earlier after involuntary loss of work, (3) to 

 provide larger payments, and (4) to continue, if necessary, benefit 

 payments for a longer period. 



Old- Age and Survivors' Insurance 



Approximately 48 million workers were covered by the old-age and 

 survivors' insurance program at some time during the calendar year 

 1943. In general, the program is financed by taxes on both employer 

 and employee covering the first $3,000 of wages received in a year by 

 an -individual from any one employer for employment to which the 

 program applies. 7 These pay-roll taxes, which at present are 1 per- 

 cent of taxable wages paid by employees and an equal. amount paid 

 by employers, are placed in the old-age and survivors' insurance trust 

 fund, from which benefit payments are made. 8 Such payments are 

 generally kept at a level well below prevailing wages. They may be 

 made not only to the insured worker who retires or is otherwise unem- 



6 Many of the State laws provide for lower rates of taxation on firms that have past 

 records of relatively little unemployment. Consequently, the effective rate of employer pay- 

 ment into the State funds, for the country as a whole, averaged 2.0 percent in 1943 instead 

 of the 2.7 percent set as a standard. 



7 Ohviously, the total earnings of covered workers are not taxed. In 1943, the total 

 taxahle wages amounted to approximately 62.4 billion dollars, which was about 6.5 billion 

 dollars less than the total wages of covered employees. The total wages of these employees 

 represented approximately 6S percent of the total expenditure for wages and salaries in the 

 United Statos. 



s The Social Security Act of 1935 fixed the tax rates at 1 percent of taxable wages for 

 both employers and employees for the calendar years 1937, 1938, and 1939, and provided 

 that these rates should rise to 1% percent on January 1, 1940, to 2 percent on January 1, 

 1943, to 2% percent on January 1, 1946, and to 3 percent on January 1, 1949. But this 

 original schedule of rates has since been modified by several acts of' Congress, with the 

 result that the original 1 percent rates have never been raised, and are now extended 

 through 1945. 



