The act of 1934 thus created parallel to the unemployment in surance system a national system of assistance for those unem ployed who were without insurance rights, administered by a new national administrative agency, the Unemployment Assistance Board. Relief payable for other reasons than unemployment still remained a local function. The Act also expanded the insurance scheme to the widest insurance coverage it had ever had and re stored the 1931 cuts in rates. A steady contributor could now draw a maximum of 52 weeks continuous benefits if necessary.
Certain classes of agricultural workers and domestic servants have been able to come under the Act. As set up by the 1934 Act, the administration of the unemployment insurance scheme remained in the Ministry of Labour, with a new body, the Unemployment Insurance Statutory Committee, empowered to watch the opera tion of the scheme and act as official advisers both to the Ministry and to Parliament. It reports annually upon the finances of the Unemployment Fund and when necessary upon draft regulations to carry out the purposes of the Act, advises the Minister upon any problems referred to them, and watches to see that the income of the Fund balances expenditures. They can recommend in creases or decreases in either contributions or benefits_ The most important unemployment insurance events in the 193os were the establishment of unemployment insurance in the U.S., 1932 ff., and in Sweden in 1934, and the reorganization of the British system in 1934, already described. Futile efforts to enact unemployment insurance in Massachusetts in 1916 and in several other States in subsequent years were followed by the pas sage of the first American unemployment compensation law in Wisconsin in Jan. 1932. New York, New Hampshire, and Cali fornia followed in the spring of 1935. The national Social Security Act was passed in Aug. 1935, and three more States and the Dis trict of Columbia acted before the end of 1935. Twenty-eight States passed laws in 1936, and by July 1937, all the States and Territories had laws approved by the Social Security Board—a total of 51 laws, which covered, at the end of 1938, some 2 7,600, 00o workers.
Never before did the American States act so swiftly on an im portant type of welfare legislation. The reason was that the Fed eral Government imposed a payroll tax upon employers of 1% in 1936, 2% in 1937, and 3% each year thereafter, but with the pro viso that an employer's contributions under a State unemploy ment compensation law approved by the Social Security Board might be credited against his Federal payroll tax up to a maximum of 90% of the latter tax. This tax remission procedure was suffi
cient incentive to cause the enactment of State laws throughout the nation, 1935-37. Another effect of this process was a high de gree of uniformity in the principal characteristics of the laws—a condition far from typical of American legislation on many other subjects. The necessity of securing Federal approval of their acts in order to get the tax exemption benefits for their employers and the fact that the Social Security Board prepared a recommended draft bill for consideration by the States were responsible for this tendency toward uniformity. By the close of the fiscal year 5937 38, unemployment benefits, which were paid only in Wisconsin, July 1, 1936–Dec. 31, 1937, were being paid to eligible unemployed workers in 25 States and Territories, and by Jan. 1939 in 16 addi tional jurisdictions. The beginning of benefit payments in Illinois and Montana in July 1939, brought the entire benefits system into operation.
In spite of the fact that benefits were not yet being paid under some of the laws, a total of $624,709,916 was paid in unemploy ment benefits by June 1939. During the first half of 1939, with Illinois and Montana still absent from the benefits column, $229, 000,000 in benefits were paid. The average weekly benefit paid for full time unemployment has been from $io to $11; for partial unemployment, approximately half as much. At 1939 benefit rates, monthly benefit payments in periods of severe unemploy ment exceeded $50,000,000 per month in the United States. In 1938, there were 9,484,604 initial claims received; 45,511,335 con tinuations of claims; 38,075,791 checks issued, and 393,785,709 benefits paid.
The idea that unemployment insurance costs can stimulate em ployers to reduce unemployment has profoundly influenced the American legislation. The "Huber bill," written by Professor John R. Commons, and introduced in the Wisconsin legislature Feb. 4, 1921, provided for unemployment compensation to be handled by an employers' mutual insurance company financed en tirely by employers. It was based on the idea that "the modern business man is the only person who is in the strategic position and has the managerial ability capable of preventing unemployment." (John R. Commons, The Survey, Oct. 1, 1921, p. 8.) Many other American advocates of unemployment compensation have con tended that the costs of such compensation would tend to stimu late "unemployment prevention" just as compensation for indus trial accidents undoubtedly promoted industrial accident preven tion.