Besides the three kinds of benefits provided under the federal Social Security Act, many states have for a long time been operating social security programs of their own. The earliest type of coverage and the one most important in state programs now is workmen’s compensation.

Workmen’s compensation

Every state but Mississippi has some kind of law providing compensation payments for workers injured on the job, no matter who was to blame for the accident. Thirty-two states also compensate workmen disabled by occupational diseases—such as the lung ailment called “silicosis” which miners get from breathing dust-laden air.

All these laws recognize that a disabled worker is entitled to receive compensation while he is laid up and to have at least part of his medical expenses paid. Except for slight employee contributions in a few states, the employer alone foots the bill.

Although the principle is the same in every law, in practice the benefits paid out vary a good deal. Each state has its own system and schedule of payments, and within any state different workers may be eligible to receive payments of differing size—or none at all.

Top payments may range from 50 to 70 percent of regular wages and last as long as the man is disabled or for a specified period, usually amounting to a number of years. However, in. every state but Arizona flat dollar-and-cents limits, ranging from $12 to $30 a week, may cut off the actual payment below the percentage maximum. In case a worker is killed on the job the pension goes to his widow, though often at a reduced figure.

Not all employees are covered by these laws, either. Many state laws exempt from coverage agricultural or domestic workers, or those engaged in nonprofit or “nonhazardous” employment. Railroad workers and others in interstate and foreign commerce, federal employees in any part of the country, and private employees in the District of Columbia are covered by federal rather than state laws.

Furthermore, about half the states allow employers to stay out of the workmen’s compensation program if they prefer to risk damage suits by injured workmen or take out private insurance. The rest of the states have compulsory systems; that is, the employers must come in. Small employers, however, are exempt in a great many instances.

From the point of view of the family income, it makes little if any difference whether the breadwinner is laid up or laid off. In either case his normal earnings are interrupted. But there is a difference, interestingly, in the amount of compensation he may be entitled to receive.

A comparison of workmen’s compensation with unemployment compensation benefits shows that the former are usually more adequate. The percentage maximums and the dollar-and-cents maximums are both likely to be higher for disability than for unemployment compensation. And the period of eligibility for compensation payments is always longer for “temporary” disability than for unemployment. In fact, 26 weeks is the longest duration in any state for unemployment compensation, while most temporary disability benefits run for at least five years.

We haven’t space for more than one example, so let’s take Texas—not because it’s typical but just because it’s Texas. There the top weekly benefit is $18 for unemployment insurance and $20 for workmen’s compensation. The maximum rate is set at 50 percent of wages in unemployment and 60 percent in workmen’s compensation. Unemployment insurance extends only to employers having eight or more workers for 20 weeks, while the workmen’s compensation law applies to employers of three or more persons at any time. Compensation for temporary disability may run for 401 weeks compared to 4 to 18 weeks for unemployment. The Texas workmen’s compensation law, however, is “elective,” which means that employers do not need to take advantage of it if they do not wish to.

Rhode Island’s cash sickness insurance

Rhode Island is the only state to adopt a state-wide system of sickness insurance. By 1944 this state had protected more than four-fifths of its civilian labor force against sickness while on the job.

Under the Rhode Island plan an unemployed worker is eligible for a cash sickness benefit, after a waiting period of one week, if his unemployment is due to sickness and if he has earned at least $100 in a specified base period in any occupation covered under the state’s Unemployment Compensation Act. Employers do not make contributions to the fund, which is built up by contributions of 1 percent on wages of less than $3,000 in any calendar year.

How unemployment insurance works in the states

Top weekly payments to unemployed workers vary from $15 a week in 10 states, and $16 or $18 a week in 14 states, to $20 or more in 27 states. Only 6 states pay benefits of $24 to $28 a week, including allowances for dependents.

Many individual benefits, of course, are far below these top benefits. In 1942, a prosperous year, more than one-fourth of all checks for total unemployment were less than $10 per week. In 16 states over half the checks were for less than $10. And in 6 states from 10 to 20 percent were under $5 per week. Also, the ceiling of $15 to $20 in practically all states automatically limits all better-paid workers to less than half the wages they would get if working.

Steady employment during the war meant that workers piled up high individual wage credits, so that if they should need to, many former war workers can draw the highest legal benefits.

The Main Differences

Old-Age and Survivors Insurance

• Pays a monthly income to a worker whose income stops because of old age, or to his family if he dies.
• Covers industrial and commercial employees. Does not cover farm and domestic workers, self-employed, employees of public or nonprofit organizations, and railroad workers.
• Eligible for monthly benefits are persons 65 or older who stop regular work and who have earned wage credits over a long enough time in covered jobs. Wives may get benefits when 65. Widows of insured wage earners also may get benefits when 65, earlier if they have children under 18 in their care. In the absence of monthly payments, a single lump sum payment may be made when a worker dies. Children and dependent parents are also eligible in some cases.
• Total monthly benefits cannot be less than $10 or more than $85. Size of payments depends on worker’s earnings and the length of time he has worked on covered jobs. Benefits are paid as long as the worker continues to be eligible.

No person earning more than $15 in any one month is entitled to benefits in that month. Wives’ and children’s benefits are also suspended for any month in which the worker earns $15 of more.

Costs are shared. Employer takes 1 percent from the worker’s pay, adds an equal amount from company funds, and sends the total to the federal government.

Unemployment Insurance

• Pays a temporary weekly income to a worker who loses his job through no fault of his own and cannot quickly find another.
• Coverage is the same, in general, as for old-age and survivors insurance. In some states workers in small firms with few employees are not covered.
• Eligible for weekly payments are unemployed workers who have had enough recent work and earnings in covered jobs. The worker must have lost his job through no fault of his own, be able and willing to work, and apply for another job. Payments are made regardless of worker’s age or number of dependents, except in a few states. Partial benefits are paid in all but one state when a worker is employed less than full time and earns less than a specified amount.
• Weekly payments are about half of regular wages, but there are top and bottom limits. In most states the top is between $15 and $20 a week, and the bottom from $3 to $10. In most states workers can receive payments while unemployed for 16 weeks or more.
• Worker may not get benefits if unable to work because of sickness or injury; if he quits his job without good cause or if he refuses an offer of suitable work; if he is idle because of a labor dispute; is guilty of misconduct; or makes a false statement to obtain benefits.
• Employers pay the bill—originally 3 percent of pay rolls, though this has been reduced in most states by experience rating. Workers contribute in only four states.

The states, too, have worked out agreements among themselves so that a worker moving from one state to another does not lose the benefits he has accumulated in the state where he formerly lived.

In most states; the time during which unemployment benefits can be paid is tied to the amount of employment or earnings which the worker had in the previous year, or in the base year. The time during which benefits may be drawn is more than 16 weeks in 37 states. In 12 states, payments may be made for as long as 21 to 26 weeks if the worker had sufficient previous employment.

In some states, workers in small firms with few employees are not covered for unemployment compensation. If all states made these workers eligible—as they are for old-age and survivors insurance—2 to 3 million persons would be added to the unemployment insurance system in the states.

Only 4 states at present provide allowances for dependents. This means that in most states, benefits are the same regardless of the size of the unemployed worker’s family.

State laws and how they operate

States in the past few years have passed more liberal laws regulating unemployment insurance, especially as regards highest and lowest benefits and duration.

Although the states have in many cases increased the size of benefits and the length of time benefits are payable, they have also introduced some disqualifications. These relate mostly to workers who leave a job voluntarily or refuse to take another one.

Disqualifications

Here are some of the reasons which are sufficient cause for unemployment benefits to be canceled or reduced in many states: Applicants are not eligible for unemployment benefits in most states if they are attending school regularly.

Pregnancy and childbirth are causes for disqualification and reduction or cancellation of unemployment benefits in 17 states and territories.

In 17 states and territories, if a worker leaves the state to get married or if he leaves because his wife (or husband, if the worker is a woman) has a job in another state, he may be disqualified or his benefits may be reduced. This is true even though the worker returns to the state in a short time.

Eighteen states and territories disqualify workers who voluntarily quit their jobs for reasons not the fault of their employers or not connected with their work. Twenty-six states cancel a worker’s benefits, in whole or in part, if he voluntarily quits, is guilty of misconduct, or refuses to take suitable work.

Experience rating

Experience rating is a means of reducing the rate employers pay on contributions to unemployment insurance. Under this system, employers whose workers have drawn few benefits get their rates reduced. Most state unemployment insurance laws contain provisions for experience rating.

The idea was borrowed from state workmen’s compensation systems, where firms which had few accidents got more favorable premium rates than firms which had many accidents. Many feel that a business with steady employment should pay smaller contributions toward unemployment insurance than do others.

Those in favor of experience rating say that it stimulates careful planning and social thinking by employers and promotes regularity of jobs. Those against experience rating point out that unemployment in a plant or a community cannot be brought under control so certainly as accidents.

From EM 5: Why Do We Have a Social Security Law? (1946)