It is the duty of the board to determine annually whether the unemployment compensation law of each State and its administra tive procedures conform to the Federal standards. If they do, the Federal Government, out of its share of the payroll tax, grants to the State funds to cover its costs of administration. All of the contributions of the State's employers under the State law thereby become available for benefit payments. In the three-year fiscal period, 1935-38, $53,750,000 of Federal grants were made to the States for unemployment compensation administration. Their dis bursements were $52,007,808.94. (Annual Reports, Social Secu rity Board.) Both State and Federal moneys are held in trust and invested by the Treasurer of the United States. The funds are kept in fact in the Federal Reserve banks and the States get ac cess to their reserves for the payment of benefits by checking out lump sums from those banks and depositing them in a bank within the State, where individual benefits are drawn upon them.
The original Wisconsin act was in two parts, one providing for a voluntary plan and the other for a general compulsory system of compensation. If employers of 175,000 employees (later reduced to 139,000) established voluntary plans by the spring of 1934, the compulsory portion of the act would not go into effect. In spite of most strenuous efforts by the Wisconsin Manufacturers' Association, the effort to establish unemployment compensation through voluntary action by employers was a complete failure. Employers of less than 5,000 employees complied. Most employers felt that if anyone came under unemployment compensation every one should.
Twenty-five States put employers of 8 or more persons under their acts ; 11 States, employers of 4 or more ; and 8 States, em ployers of I or more. The others made employment of 3 or 5 per sons the basis for coverage. The trend is toward extending the coverage by reducing the number of employees. Ordinarily, em ployment of the given number of persons on some day in each of 20 weeks determines the employer's status. But these provisions do not apply to all classes of employers. Employment in agricul ture or domestic service; by religious, educational, scientific, and charitable institutions not operated for profit ; or in industries ex clusively under Federal control, such as interstate carriers, is ex cluded from coverage. So are casual workers and persons in cer tain salaried occupations in which an annual income is assured. In most States no one is excluded because of the amount of his wages, but a few States set up such exclusions.
The principle, characteristic of European plans, of basing an unemployed workman's rights to benefits upon the duration and earnings of a preceding period of employment, is characteristic likewise of the American laws. The specific provisions of the
different laws vary considerably in this particular. Under many laws, a worker is required to earn, during three of the last four completed calendar quarters, a total wage income equal to 16 times his weekly benefit rate. There is also a diversity of provi sions respecting waiting periods. A two- or three-weeks' waiting period is required before benefits can be drawn. In some jurisdic tions this is the only waiting period which can be required in a 13 week period; in others, in a 26-week period; in others, in a 52 week period. In some States, it can be followed by another waiting period after the 13-week period has elapsed, but there is always a provision limiting the total waiting period for a consecutive period of 52 to 65 weeks to a maximum of 4, 5 or 6 weeks, except in Con necticut where a two-week waiting period is allowed for each period of 13 weeks. The minimum was Pennsylvania's and Ohio's three weeks in a calendar year but the amendatory legislation passed in a number of States in 1939 reduced the waiting periods to two weeks and there is a definite trend in that direction.
The weekly benefits payable for total unemployment are based, as in accident compensation laws in the United States, upon a percentage of the worker's earnings rather than the flat benefit rate used in England. Fifty per cent of wages, with a maximum of $15 a week, is standard under the American laws. But, in order to simplify the computation of benefits, many States have fixed flat benefit rates for persons falling within specified wage classes. Each wage class ordinarily has a narrow range. Three States have no minimum; two-thirds of the States have a $5 minimum. The others scatter along the scale from a $6 to an $8 minimum. But in all but a few States there is a provision allowing the minimum to fall below the figure mentioned in the law if three-quarters of the person's weekly wage or some other formula gives a figure lower than the nominal minimum.
The maximum amount of benefits which may be received by a claimant during a year is not uniform in the different States. Two general methods of limiting annual benefits are used. Several States have a specific provision that not more than 12 to 16 weeks of total unemployment benefits may be drawn within a period of 52 weeks. But a large majority of the laws provide a double check; the claimant's maximum benefit rights are determined by the lesser of two figures. He may receive within a year an amount equal to one-sixth his total wage credits during eight of the last preceding nine calendar quarters, or he may receive as a maxi mum 12 to 20 weeks of total unemployment benefits—in most States from 13 to 16 weeks. Both methods, in practical operation, tend to fix maximum annual benefits between 13 and 16 weeks of full benefits.