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Full text of "The agreed bill process in the formation of Illinois unemployment compensation legislation"

1-4 67a 



Illinois University— Institute of 
Labor and Industrial Rela- 
tions. 

„ The agreed trill process in the 
formation of Illinois , unemploy- 
ment compensation legislation. 



Return this book on or before the 
Latest Date stamped below. 

University of Illinois Library 






L161— 1141 



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in 2012 with funding from 

University of Illinois Urbana-Champaign 



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Preliminary Draft 



UNIVERSITY OF ILLINOIS 
INSTITUTE OF LABOR AND INDUSTRIAL RELATIONS 



THE AGREED BILL PROCESS IN THE FORMATION OF ILLINOIS 
UNEMPLOYMENT COMPENSATION LEGISLATION 



by 

GILBERT Y. STEINER 
Research Associate 



October, 1950 



PREFACE 

One of the principal functions of the Institute of Labor and 
Industrial Relations is to perform research in the critical problems of the 

^ labor field in order to increase society's understanding of these problems 



and its ability to deal with them more effectively and intelligently. This 
N 

study is concerned with a segment of the vital area of the role of govern- 
ment in labor affairs, notably with the manner in which labor laws are 
enacted and changed. The present volume deals with only one type of law — 
unemployment compensation. Subsequent studies will deal with other laws and 
other types of government action in this field. 

The study which is here presented has a number of unique features 
that warrant the careful attention not only of scholars but also of people 
concerned with labor legislation from the point of view of industry, laboi 
unions, and the public at large. As far as is known, it is the first 
detailed description and analysis of the so-called "agreed bill" process 
whereby the representatives of management and labor, the parties primarily 
concerned with the legislation, seek to work out through negotiation a 
pattern for legislative action. The state of Illinois has had many years cf 
experience with this rather uncommon procedure and this experience merits 
careful appraisal. Obviously, a final evaluation of the "agreed bill" 
process cannot be made until many other studies of similar and contrasting 
methods of enacting labor legislation have been concluded. 

The study would have been impossible of achievement without the 
extended cooperation of a large number of important representatives of labor 
unions, management, and the general public in the state of Illinois. These 
people gave freely of their time, knowledge, and insights. Most of the 
basic data, otherwise not available, were derived from interviews with them. 
A list of these people follows. 



ii 

The volume was prepared under the general supervision of Milton 
Berber, Coordinator or Research. Professor Murray Edelman participated in 
the original planning of the study and provided helpful advice throughout 
its development. Other members of the staff of the Institute and the 
University who contributed valuable ideas and suggestions were Professors 
Phillips L. Garman, Charles B. Hagan, and Rubin G. Conn. 



W. Ellison Chalmers 
Director 



iii 



PRINCIPAL INTERVIEWS 



Thaddeus V. Adesko 
Samuel Bernstein 

Henry Bolz 

Abraham Brussell 

Walker Butler 
Bertram J. Cahn 

Daniel D. Carmell 
James L. Donnelly- 
Louis Dumond 
Paul F. Gorby 
Kermit Johnson 
Maurice McELligott 
Joseph T. Meek 
R. G, Soderstrom 
Royal A. Stipes 
George H. Tompkins 
Bernice T. Van der Vries 



State Senator 

Commissioner of Placement and 
Unemployment Compensation 

General Manager, Decatur Associ- 
ation of Commerce 

General Counsel, Illinois State 
Industrial Union Council 

State Senator 

Chairman, Unemployment Compensa- 
tion Advisory Board 

General Counsel, Illinois State 
Federation of Labor 

Executive Vice-President, Illinois 
Manufacturers' Association 

Manager, Legislative Department 
Chicago Association of Commerce 

Chairman, Social Security Committee, 
Illinois Chamber of Commerce 

Manager, Social Security Department, 
Illinois Chamber of Commerce 

Secretary-Treasurer, Illinois State 
Industrial Union Council 

Executive Secretary, Illinois Federa- 
tion of Retail Associations 

President, Illinois State Federation 
of Labor 

President, Illinois State Chamber 
of Commerce 

Secretary, Associated Employers 
of Illinois 

State Representative 






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IV 

TABLE OF CONTENTS 

Page 
PREFACE i 

PRINCIPAL INTERVIEWS iii 

FOREWORD v 



THE NATURE OF THE INQUIRY 1 



INITIAL AGREEMENT AND ENACTMENT 12 



PASSIVE AND ACTIVE LEGISLATIVE INTEREST: 1939 AND 19hl .... 22 



POLITICS, ECONOMICS, AND AGREEMENT: 191*3, 19h$, 19U7 37 



COMPROMISE, BUT NOT AGREEMENT: 19k 9 9x 



CONCLUSIONS AND HYPOTHESES 67 















, 






FOREWORD 

The labor law of a state "differs from most law in that it is not 
merely an evolution of the customary law of a community, but is a definite 
attempt by the community to solvere. an acute social problem." A study of 
labor law thus serves as a direct method of investigating the relationship 
between government and two organized, politically powerful groups, labor 
and employers, as they attack a social problem. 

In the vast amount of material and discussion on labor legislation, 
comparatively little attention has been paid to the process by which such 
legislation has been enacted. The present study is an attempt to explore 
the proposition that the method of enactment may have considerable importance 
with respect to the content of the legislation and administrative and judicial 
policy-making. At the same time, it is designed to offer an opportunity to 
focus on the role of government in meeting a social need growing out of the 
labor-management relationship. 

Writers in the field and practitioners of labor-management rela- 
tions have from time to time suggested that labor legislation be a matter 
of agreement between the parties concerned. Recently, Eric Johnston, former 
President of the United States Chamber of Commerce, has urged the use of the 
agreed bill in formulating labor legislation. This process—- wherein 
representatives of labor and management seek to agree on the terms of 
legislation prior to formal legislative enactment— has been utilized in 
various fields of labor legislation in Illinois since 1911. The past use 
of the process in this state furnishes an opportunity to consider the conditions 
under which it is feasible to use an agreed bill, its adaptability to the needs 



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VI 

and problems of labor, of employers, of the legislature, its growth or 
deterioration and the reasons therefor. Further, there is an attempt to 
answer such auestions as (a) what level of participants and what numbers seem 
to give the best result, (b) what is the disposition of the legislature to 
enact the recommendations contained in the agreement, (c) what motives lead 
to a statutory demand for an agreed bill through an advisory board or a 
similar agency? 

Unemployment compensation legislation is a particularly good 
field in which to undertake a pilot study of these problems. The Federal 
Social Security Act of 193£ represented a governmental attempt to meet 
several kinds of social needs. The unemployment compensation titles imposei. 
a virtual obligation on the individual states to enact unemployment compensa- 
tion programs. Beyond that, however, the Federal act seemed to leave the 
states almost complete freedom in determining the specific content of the 
legislation. This freedom extends to such important matters as breadth of 
coverage, benefit formulae, conditions of eligibility, reasons for dis- 
qualification, length of waiting period, disability benefits and others, . 
Thus, major areas of policy must be decided by the states, Illinois enacted 
an Unemployment Compensation Act in 1937 * and that act has been amended on 
a number of occasions since then. 

Years before unemployment compensation became a matter of public 
policy discussion in the state of Illinois, considerable experience had 
been achieved with the use of joint conferences as a method of developing 
labor legislation. A brief recapitulation of this experience may help to 
set the stage for a consideration of the factory involved in the development 
and relative effectiveness of the agreed bill process in the unemployment 
compensation field.. 









" 



vii 



Just before the turn of the twentieth century, Illinois mining 
laws were described by the House of Representatives' Committee on Mines 
and Mining as uncertain, confusing, and frequently unintelligible. The 
Committee, moreover, stated that the work involved in revising and 
modernizing the laws was of such scope and character as to be beyond the 
range of the General Assembly because the amount of time and study required 
would be prohibitive. The Committee recommended the appointment of a 
Joint Commission on Revision of Mining Laws with full power to compile and 
revise all laws relating to mining. Although such a Commission was not then 
appointed, the State Bureau of Labor Statistics was charged with this duty., 
In the course of time, "the Bureau invited representatives of the operators 
and miners to confer with it and offer such suggestions as they might see 
fit, the purpose being to present to the General Assembly a bill having the 

approval and support of both miners and operators as well as of the Bureau 

2 

itself, thereby securing its passage without opposition*" This bill was 

subsequently approved by the legislature without a dissenting vote. 

Partially as a consequence of this success, joint agreements 

between Illinois miners and operators during the first years of the century 

stipulated that neither party should introduce bills affecting the industry 

■without previously consulting with the other. Ultimately, this was revised 
so as to provide for the statutory existence of a Mining Investigation 

Commission. At the time of the establishment of the Commission, it was 

agreed that all mining bills then pending or which might later be introduced, 

be referred to this Commission. Nearly all coal-mining legislation in 



1. The discussion which follows is based, in large measure, on the work 
of Earl R. Beckner, A History of Labor Legislation in Illinois (1929), 
particularly pp. 29h ff., and pp. U62 ff. 

2. Ibid., p. 29h. 



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viii 

Illinois since 1909 has been enacted upon recommendation by the Mining 
Investigation Commission which has been established on a tripartite basis. 

"Laws passed in this way," Beckner notes, "rarely come up to the 
highest possible theoretical standard, but they are likely to approximate as 
high standards as the industry can bear* Even more important, however, is 
the fact that when both sides are in agreement and actively support the 
bills agreed upon, both assume the obligation to abide by them and secure 
their proper enforcement, and the way is cleared for improvements when 
business conditions are favorable."-* 

Perhaps influenced by the success of the Mining Investigation 
Commission, the Industrial Board, a three member non-partisan board, began 
in 1915 to ask employers and employees to reach agreements concerning 
amendments to the Workmen's Compensation Act* From that date until the 
present, amendments to that law, with limited exceptions, have been agreed 
upon in advance and have been passed by the legislature without question. 

There is probably considerable importance in a series of experiences 

in the workmen's compensation field around 1921 and thereafter. President 

John H. Walker of the Illinois State Federation of Labor discussed the use 

of the agreed conference at the 1921 convention: 

I say to you frankly that there has never been a time since 
we started trying to get a compensation lav; enacted that if we 
hadn't got an agreement with the employers affected by it we 
would have been unable to get a single line through that they 
were opposed to.. .The ambulance chasing, crooked politicians 
that have no human feeling and human decency in the legislature 
would not give the widows and orphans as much as the employers 
were willing to give them*U 

Nonetheless, Walker also indicated to that same convention that 

he was becoming increasingly pessimistic about the prospect of securing 



3. Ibid ., p. 300. 

ii. Quoted in ibid., p. U67« 



ix 
desirrble legislation through the agreed method. He recommended that the 
State Federation revise its tactics on this particular matter and present 
its case directly to the legislature. Accordingly, in 1923* joint 
conferences were not held. Instead, labor forces drew up a measure which 
was introduced by Representative Soderstrom who later became President of 
the State Federation, This bill passed the House but the Senate committee 
to which it was referred was never called together for a hearing and the 
bill was lost. In 1927* the representatives of the State Federation again 
met with employer representatives, and an agreed bill was worked out which 
passed with almost no opposition. Thereafter, labor has depended on the 
agreed method to secure improvements in the workmen 1 s compensation law. 

The experiences in mining and workmen's compensation thus indicate 
that the use of the agreed bill technique was well known prior to the develop- 
ment of unemployment compensation legislation in the state. Indeed, by 19:1 
when unemployment compensation first became an important issue here, there 
had been more then twenty years of experience with both an explicit 
statutory demand for an agreed bill as in mining* and with informal 
arrangements leading to agreement. It is noted elsewhere in this study, 
furthermore, that there was similar experience in the Occupational Diseases 
field in 1936 when independent labor action, again sponsored by Soderstrom, 
was defeated in the legislature. 



THE NATURE OF THE INQUIRY 



1. 



For a long period of time, labor and industry leaders in both the 
state and nation opposed the enactment of compulsory unemployment compensation 
legislation. Perhaps as a consequence of depression experience, labor 
changed its stand independently. The opposition of industry to state 
legislation necessarily evaporated with passage of the Social Security Act* 
The tax-offset device established a situation wherein, if no law were passed 
in Illinois in 1937j the employers of the state would have had to pay into 
the Federal Treasury, with no hope of direct benefit to employees, a total 
of about $60,000,000 during 1938. By 1937> then, unemployment compensation 
legislation for Illinois was removed from the area of debate and put in t-hj 
area of necessary economic policy and experimentation* 

Starting, therefore, with the premise that tne underlying ouestion 
of public policy with regard to the enactment of a law has been decided in 
this field in Illinois, this investigation hypothesized that the content of 

the legislation will be conditioned by the method of enactment the agreed 

bill process. 

The reasoning which resulted in the formation of this hypothesis 
for testing in the research may be summarized as follows. Initial considera- 
tion 7*as given to possible reasons why labor and industry may agree on a 
legislative proposal. Thereafter, one of those reasons which seemed most in 
accord with known facts was selected, and related specifically to the state un- 
employment compensation picture. Thus, there would seem to be three outstand- 
ing possible reasons why labor and industry may agree on a legislative 
proposal: 



1. Because they believe it is to their mutual 
advantage. 

2. Because it may be to the political advantage of 
one party to agree in connection with one issue 
in order to have a strategic advantage on other 
issues. 

3. Because one party may consider that the legisla- 
tion is going through anyway, and that as the 
weaker party, it is wiser to influence the terms 
of the legislation by agreement than to wage a 
hopeless fight against it« 

The first of these propositions appeared to be of limited applica- 
bility on its face. Given an area like unemployment compensation where 
public policy of a positive character is inevitable, it is to the mutual 
advantage of both sides to agree only to sponsor some legislation; it is 
not to the advantage of management to agree in the abstract to a higher 
benefit rate rather than a lower rate, nor is it to the advantage of labrr 
to agree to more rather than fewer disqualifications, unless agreement is 
somehow made attractive 3 Although agreement on technical specifics, like 
reporting, may be to the mutual advantage of the parties involved, it would 
not appear that agreement on substantive specifics is of a similar character* 
Some clarification may be achieved by noting that "mutual advantage" is by 
itself too inconclusive a term to serve as an explanation for agreement on 
anything except the fact that each side would regard some kind of law as 
beneficial. The basic problem of explaining why agreement on specifics is 
mutually advantageous remained. 

Nor did the second proposition— that it may be to the political 
advantage of one side or the other to agree in connection with one issue in 

order to have a strategic advantage on other issues serve as a satisfactory 

explanation. This suggests the notion only of agreeing not to disagree, the 
notion of compromise. Again, it lacks positive aspects in that the party 



which agrees to something it opposes is unlikely to take practical political 
action to urge enactment unless the o uid pro quo is of extraordinary value. 
It will rather limit itself, for cause, to taking no political action to 
oppose enactment* 

The hypothesis that the content of legislation may be conditioned 
by the method of enactment may be rephrased in terms of the third proposition. 
It may be that Illinois industry leaders, on the basis of their perception 
of social and political trends consider long-term liberalization of the un- 
employment insurance program inevitable. Consequently, they agree to 

legislation so as to have some influence over its terms particularly so a.:: 

to insure gradual adjustment, and minimization of costs to the employer. 
Posing this hypothesis necessarily requires a companion hypothesis seeking 
to explain why labor leaders agree to legislation in view of the supposed 
inevitability of liberalization* A dual answer is suggested, both phases of 
which involve obtaining advantages in the shortest possible time. The firsv. 
and more general phase has to do with the nature of labor legislation in a 
democracy. Perhaps no other area of public policy is productive of so sharp 
a cleavage between clearly defined powerful interests. Left to its own 
devices, a legislative body will enact protective or restrictive labor 
legislation only when strong interests are mobilized on one side or the 
other. A mobilization of this type automatically produces a counter-mobilisa- 

tion. The natural disposition of the legislator one of whose principal aias 

is re-election is to look with favor on any device that permits him to avoid 

alienating any potent group whenever possible. Thus, the absence of agreement, 
from labor's point of view, may lead to the maintenance of the status quo for 
a longer period than is deemed desirable in that it is somehow more difficult 
to attack "no policy" than a specific enactment. 



The second phase of the explanation as to why labor agrees involves 
the particular nature of the Illinois Constitutions "and no bill shall 
become a law without the concurrence of a majority of the members elected 
to each house," This constitutional majority requirement further enhances 
the possibility that, without agreement, labor's goals may be delayed* The 
need for a constitutional majority means that absenteeism or failure to 
vote for any reason whatever is the equivalent of a negative vote.- If labor 
is on the offensive in this field, the requirement can work only to labor's 
detriment. Agreement, including as it does active political pressure by 
employers would tend to lessen appreciably the difficulties of the 
constitutional majority requirement. 

The possibility that agreement is basically a function of perception 
of long-run trends and short-run obstacles thereto would seem to be a more 
satisfactory tentative explanation of the agreed process than either of the 
others advanced, and, therefore, a more proper hypothesis. It succeeds whey > 
the more simplified "mutual advantage" explanation fails in explaining 
agreement on specifics. Moreover, it succeeds more generally in explaining 
why agreement is followed by positive political action rather than passive 
acquiescence. The validity or invalidity of this hypothesis will be tested 
by the research. 

2. 

Flowing from the hypothesis regarding the reason for agreed bills 
are a series of questions dealing with the substance and mechanics of agree- 
ment. Is there a plausible explanation of the fact that disability 
unemployment compensation has, thus far at least, not been a subject on 
which agreement could be reached? Are there, within the field of unemployment 
compensation itself, some questions that are not within the scope of an agreed 



bill? In this field, it is hypothesized that benefit amount and duration, 
eligibility and disqualification, and waiting periods are particularly 
flexible and are subjects of short-run disagreement rather than long-run 
opposition; these are issues that tend to be settled through the agreed bill. 
Contrariwise, assumption of costs, merit rating provisions, disability 
unemployment compensation are less flexible and matters of long-run disagree- 
ment and do not lend themselves to an agreed bill. Further, it is 
hypothesized that both sets of provisions are dynamic rather than static. 
The issues which lend themselves to the agreed procedure tend to expand or 
contract respectively as one group or the other concludes that long-run 
achievement is inevitable or that maintenance of the status quo is inevi'ir ., < 
barring rn unexpected organization of political pressures. 

In talking loosely of "labor" and "employer" agreement, it is ni o 
meant to suggest that either of these groups is in any sense a monolithic 
force. In Illinois, five major employer organizations concern themselves 
with legislative activity,^ while the state organizations of the two major 
national labor unions are similarly concerned, as are both the United and 
Progressive Mine Workers. It may be argued that the potential success of 
an agreed bill tends to be enhanced as the employer associations and labor 

associations agree among themselves on the dual questions of long-run 

2 

inevitability and short-run goals. Inter-association agreement, in turn, 

will be maximized when a single association is able to take clear leadership, 
and other members of the group will follow that leadership. In concrete 



1. The so-called "Big Five" include the Illinois Manufacturers' 
Association, Illinois State Chamber of Commerce, Illinois Federation 
of Retail Associations, Associated Employers of Illinois, and the 
Chicago Association of Commerce and Industry. 

2. For purposes of convenience, the word "association" is used to refer 
to an employer or labor organization, while the word "group" is used 
to refer to a combination of associations joined together for 
political purposes. 



terms, one burden of this investigation is to demonstrate whether the chances 
for agreement are heightened when, for example, the Illinois Manufacturers' 
Association develops an unemployment compensation program to which the other 
employer associations subscribe. On the other hand, are the chances for 
agreement lessened when the IMA and the Illinois State Chamber of Commerce 
each develop unemployment compensation programs? 

The leadership question is further complicated by the pressing 
need to find a single individual who can serve as a group spokesman in 
negotiations. Do the chances for agreement tend to increase when each group 
is represented by a spokesman with experience in negotiations and in legisla- 
tive affairs, with prestige among all the associations in the group, with 

technical competence, and with authority to come to a conclusive agreement' 
Is continuity in leadership an important element in obtaining agreement '. 
The Illinois Civil Administrative Code provides for the establishment of a 

Board of Unemployment Compensation and Free Employment Office Advisors on s 

tripartite basis— labor, employer, and public representation. It would se?j. 

important to seek confirmation of the possibility that the Advisory Board 

was deliberately established to provide statutory pressure for agreement* 

If this is indeed a valid hypothesis, has the Advisory Board device been an 

important mechanism in securing agreement? Has it produced experienced 

negotiators? Is agreement in any way relrted to the existence of the 

Advisory Board, or is the Board a non-essential convenience in presenting 

the results of agreement? 

3. 

Up to this point, the focus has been on labor and industry as 

parties to agreement. The use of an agreed bill technique, however, 

necessarily raises a number of political questions involving the legislature 

and the political party in power in the state. A legislator seeks to make 






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7 
law that conforms to the needs of the groups affected by the law, but also 
seeks to make law that is in his judgment in the general public interest. 
It is assumed, moreover, that a legislator is jealous of his prerogatives and 
holds to the idea that it is his function to declare public policy. The 
legislative dilemma becomes apparent. A sense of duty incidental to the 
attainment of formal power conflicts with a desire to avoid alienating groups 
whose antipathy may remove him from power, and whose opposition may raise 
some question as to whether he is acting in the public interest. Possible 
solutions are to function irrespective of any possible antipathy, to make a 
judgment as to the most potent group and minimize the possible antipathy of 
that group, or, most desirably, to retain public responsibility and yet avoid 
antagonisms. In terms of labor legislation, the first of these solutions 
would demand that the legislator come to an independent value judgment on 
the merits of the law and proposed amendments and vote accordingly. In 
point of practical fact, this is possible only for the legislator who has 
reached the "elder statesman" stage of eminence or for whom re-election io 
a matter of certainty or indifference. The second solution — -to make a 
judgment as to the most potent group and minimize the antipathy of that grc r; 
—tags a legislator as a spokesman for a particular interest and serves to 
lessen his prestige. Moreover, it is available only to the legislator who 
is willing to be charged with foregoing his sense of public responsibility. 
This obtains despite the fact that there need be nothing immoral in being 
swayed by pressures. 

To retain a sense of public responsibility and yet develop the 
widest possible support is plainly the most difficult and yet the most 
desirable answer from a practical point of view. Nonetheless, it can be 
achieved if the groups involved establish an identity of short-run goals 



8 

which ere not inconsistent with the short-run goals of any other formal 
group. Thus, the lcgislrtor can resolve the dilemma, rather than simply 
escape from it, by injecting himself as a party to the agreement. A meaning- 
ful test of this idea would be to determine whether the legislative path of 
an agreed bill tends to be easier when there has been legislative participa- 
tion in the agreement than when the agreement is reached without legislative 
sponsorship. 

An hypothesis concerning the role of the political party in the 
process requires only a slight modification of the tentative generalization 
on the role of the legislature. The party, as a non-cohesive body interested 
principally in the achievement of power, is motivated by the non-alienation 
concept together with a need to be able to point to specific achievement. 
An agreed bill, therefore, would seem to be of value automatically to the 
party in power for it offers an opportunity to claim specific achievement 
for antithetical groups. Moreover, the minority party may not challenge 
the results for a challenge can only result in alienating both labor and 
employers. It is suggested, then, that the governor as leader of his party 
will exert all possible influence in the direction of agreement, and will 
claim the results to be a party achievement. 

Finally, it is hypothesized that the administrator who is concerned 
with carrying out legislative policy will seek bo maximize his role in the 
formulation of that policy. Management and labor leaders, accustomed to 
close contact with the administrator, would seem likely to utilize his 
expertise in plrnning and discussing changes in the law. The sensitive 
relationship that exists between an administrator and a legislative body is 
not duplicated necessarily in the relationship between the administrator and 
the parties affected. In sum, the question is raised as to whether the 



unemployment compensation administrator seeks agreement because he considers 
that his influence over policy will be greater as a consequence of an agreed 
bill than as a consequence of enactment on a non-agreed basis. 

h. 

In seeking to develop the hypotheses and framework presented above, 
an attempt has been made to examine the prc-legislative and legislative his- 
tories of all unemployment compensation legislation in Illinois. Because 
legislative reporting in the state includes no record of debates, the formal 
record offers little more than an indicr.tion of the diversity of bills 
introduced and the vote on those measures which reached the amendment or 
passage roll call stage. Labor and industry convention proceedings have 
been utilized in an attempt to determine the formal origin of group demands 
in this field, while the expressed attitudes of other political pressures 
were gathered in an effort to establish a general environment within which 
agreement had to exist if it were to exist at all. Information gathered in 
this fashion was used to formulate questions used in interviewing labor 8.nC 
industry leaders who had participated in agreed bill conferences and 
administrative and legislative personnel interested in the process in this 
field. 

Methodological problems of research were limited almost exclusively 
to questions of interviewing. Because of the semi-public nature of the 
agreed bill process, the identification of actual participants was sometimes 
an elusive process. The labor press and organs of industry associations 
tended to emphasize the role of the Advisory Board as the formal device for 
presenting agreement while referring more vaguely to the participation of 
"labor and industry leaders." Although two names those of Victor Olander, 



10 

Secrctary-Tr<- asurer of the Illinois State Federation of Labor and 

W« J# MacPherson, Vice-President of the Public Service Company of Northern 

Illinois appeared with increasing frequency, Olr.ndcr and MacPherson had 

both died shortly before the study was undertaken. A master list of some 
fifty-five names was drawn up including all labor and industry people 
whose names had been linked to unemployment compensation policy by either 
the Illinois Manufactures' Association's "Industrial Review," "The 
Springfield Scene" published by the Illinois State Chamber of Commerce, or 
the Illinois State Federation of Labor's "Weekly News Letter." To these 
were added the names of administrative officials in the field, and the 
names of legislative sponsors of unemployment compensation legislation. In 
undertaking a "test run" of interviewees, one representative of labor, one 
representative of industry, and the Commissioner of Unemployment Compensation 
were interviewed. 

At this stage as well as at a later one, interviewees were used '. 
both informants and respondents. Test interviewees, however, were not 
subjected to as lengthy a schedule of open-end questions as were later 
interviewees principally because hypotheses were not clearly formulated 
until after the "test run." During this initial stage of interviewing, the 
point of concentration was on learning the nature and structure of the 
participating associations and the relationship between the Advisory Board 
and the agreed process. Test interviewees were used as respondents chiefly 
to aid in setting up a basic hypothesis as to the reasons for the use of so 
uncommon a political device as the agreed bill process. 

Some twenty-five additional interviews with representatives of 
industry's "Big Five," the State C. 1. 0. and the State Federation of Labor, and 
members of the legislature were undertaken. In these cases, the informant 



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function was diminished in that the participating associations and the 
mechanics of meeting were known. It was possible, therefore, to emphasize 
in the case of labor and industry people the auestions of practicality and 
suitability to needs and goals together with the question of determining 
those needs and goals. Thus, a typical area of investigation would have 
to do with the reasons for the fact that benefit amounts have been subjects 
of agreement while merit rating provisions seemingly have been beyond the 
scope of agreed bills. It should be noted that interviewees functioning 
either as respondents or informants showed no reticence in offering either 
information or opinion, and in only perhaps three or four cases were isolated 
statements made "off the record." 



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INITIAL AGIEETT^ITT AIID EXACTS iEHT 

Enactment of state or federal unemployment compensation legis- 
lation did not become a practical possibility until the effects of the 
"Great Depression 1 ' made it apparent that private action would not be an 
adequate solution to large scale unemployment. Thus, the decade of the 
30' s seems to be a realistic one in which to initiate an investigation of 
the background forces operating in this field. 

From 1931 through the special sessions of the Illinois legis- 
lature of 1936, nineteen bills were introduced dealing with unemployment 
compensation. The largest number of these, nine, was introduced in the 
1933 session following 'lisconsin's enactment of such a law, and following 
the American Federation of Labor Cincinnati convention of 1932 when the 
Federation reversed its earlier oppostition to a system of compulsory 
unemployment insurance, Si:c such bills were offered in the first special 
session of 1935 following passage of the Federal Social Security Act, 
Of the total of nineteen, four bills were advanced as far as second reading. 
but only two were called, to the order of third reading and further con- 
sideration was ordered postponed for both of these. Only once prior to 
1937 did the unemployment insurance question reach the third reading or 
record vote stage in the Illinois legislature. 

Labor forces waged their first all-out fight for an unemployment 
insurance law in the first special session of the 59th General Assembly 
meeting in 1935. The vehicle for labor action was Senate Bill 10 sponsored 



la For a review of the development of the unemployment insurance system in 
the United States, see "arry iialisoff, "The Emergence of Unemployment 
Compensation," Political Scien c e Quarterly . 1939, pp. 237-258; 391-420$ 
577-599. 



13 

by Senator John H, Lee of Chicago who had sponsored and was to continue to 
sponsor many labor measures. The provisions of S.B, 10 represented a con- 
scious attempt by labor to propose a realistic bill, a bill that did not 
incorporate the features of unemployment compensation most repugnant to 
industry. Thus, for example, the bill provided that benefits were to be 
denied persons unemployed through a strike or lockout, ^ In an attempt to 
meet industry's insistence tliat the Social Security Act was unconstitutional, 
the bill was to be dependent on the continued operation of the Federal act. 

Employer forces, however, wore not willing to accept any state 
unemployment compensation lav/, oven one dependent on the Federal law. Ho 
counter-proposal representing the views of organized employers was offered 
because of the latter T s fear that even if the Federal act were struck down 
by the Supreme Court once a state law had been enacted it would represent 
acceptance of the unemployment insurance principle — acceptance which in- 
dustry was not willing to grant unless and until final Court action com- 
pelled a reappraisal of the state situation. While S.B. 10 was pending, 
James L, Donnelly, Executive Vice-President of the Illinois iianufacturers 1 
Association, addressed the annual meeting of the national Industrial Council 
on this subject, Donnelly, who spoke for the dominant Illinois employer 
association, advanced the three-fold argument that the Social Security 
Act was unconstitutional insofar as it was designed to force states to onact 
unemployment compensation laws, that once adopted, state acts would continue 
even if the Federal act were invalidated, and that the specific content 
of initial state law was not to be considered a persuasive argument for 



2, Benefit rates were set at 50£ of the weekly wage to a maximum of .15, 

and a minimum of )5 for a maximum duration of 20 weeks in any 52 week 

period. Claimants were required to have worked 20 or 36 weeks during 

the one or two years, respectively, preceding an application for benefits, 

A three week waiting period was stipulated. Employer contributions of 

3/» were to begin in 193& together x/ith employee contributions of .5^. 

Agricultural labor and sundry other groups were exempted from the law 
which was made optional for employers of less than eight. 



u 

adoption because any such law would subsequently be amended to meet political 
expediency. 3 

There seems little doubt that organized Illinois industry was 
convinced of the unconstitutionality and general unsound premise of the 
Federal statute,^ and that it would appose a state law as long as possible. 
In this respect, Donnelly's suggestion that any state law enacted would be 
amended to meet political expediency is most illuminating because it suggests 
a fear that state law would be amended to the future disadvantage of industry. 
The Illinois i Manufacturers ' Association took a very active part in stimu- 
lating opposition to the proposed legislation. 

We distributed over 100,000 pamphlets among 
farmers, retailers, wholesalers, women's clubs and other 
groups throughout the State,,, 7e also wrote many 
thousands of individual letters to leaders of farm 
groups and leaders in other walks of life throughout 
the State. Uhat appeared to be a hopeless battle at 
the beginning soon developed into a formidable contro- 
versy, llhen the public began to understand the real 
import of the legislation and particularly the tre- 
mendous additional tax load that the bills would 
impose they protested actively and vigorously to the 
members of the Illinois General Assembly, 

Probably never before did the staff of the Illinois 
Manufacturers ' Association receive such aggressive, 
generous cooperation from its members. These measures 
were up for consideration at Springfield for several months. 
During the entire period, executives of manufacturing 
firms made the trip to Springfield almost every week in 
largo numbers. The presence of these executives in 
Springfield, their appearance before committees in oppo- 
sition to these bills, their contacts with legislators on 
the grounds, r wcrc the strongest factors in the defeat of 
these bills, ' 

T Jhen S.B, 10 came up in the Senate for third reading, it received 

only seven votes, whereas twenty-six were required for passage. On the 

basis of this experience, organized labor concludod that, at the least, 

sustaining or the Federal act was a prerequisite to adoption of any kind 



3. Industri al Review . Vol. IX, Ho. 104 (January, 1936), p, 12. 

4. See ibM.> No, 101 (May, 1935), p. 1. 

5. Ibid., No. 106 (April, 1936), p. 2. 



. 



15 

of Illinois unemployment compensation lav/, Moreover, it served as an in- 
dication of the tremendous political strength at the command of the employer 
group. 

In 1936, moreover, labor and industry wore both given reason to 
consider the futility of any attempt to achieve legislative goals over the 
opposition of the other croup. Immediately after the Illinois State Supreme 
Court declared the Occupational Diseases Act of 1911, as amended in 1923, 
unconstitutional, 6 both the employer group and the labor group introduced 
bills into the legislature. The measure sponsored by the Manufacturers ' 
Association set up in a schedule about about thirty diseases as being un- 
conditionally compensable. The bill was attacked by labor loaders who 
favored a complete coverage of all occupational diseases and condemned 
the "specific schedule 1 ' method of compensation,''' This bill was defeated. 
Labor's bill, known as the Soderstrom bill, was denounced by the IMA because 
it was argued that if it were enacted the employers would be subjected to 
responsibility for all kinds of diseases which had no logical relation to 
the work in which the employees might be engaged. The Soderstrom bill 
was shelved by the Senate Judiciary Committee, and the state was left 
without any legislation on this subject, 

Both interested parties wanted the difficulties settled. Governor 
Horner thereupon named a joint conmittcc representing the state administration, 
organized labor, and organized employers, and called upon this committee to 
endeavor to work out a solution to the problem. Seven months of intensivo 
work wore productive of agreed bills. The main issue in dispute remained 



6, Vallat v. Radium Dia l Co., 360 111. 407 (1935), 

7, John A, McClurc, "Occupational Disease Legislation in Illinois," (Lias tor's 
Essay, University of Illinois, 1937), p. 14, The discussion of the occu- 
pational disease legislation experience of 1936 draws freely from this 
essay. 

8, In the meantime, the Illinois Appellate Oourt held that a judgment filed 
under the Occupational Diseases law prior to the unconstitutional finding 
by the Supreme Court was vacated by thai, accion dcspicc prior filing ana 
findings, Barnacjd. v. C rane C q, t 284 111. App, 641. 



16 
of a schedule plan of coverage as opposed to general Coverage. After an 
agreement had been reached that the bill should bo one of general coverage, 
there was vory little actual clash* Remaining diffcrcnco3 of opinion involved 
questions of language and expressions rather than disputes over substance. 
The agreed bills were presented to the Third Special Session of the 59th 
General Assembly whore representatives of the manufacturers and of labor 
spoke in favor of the proposed legislation. The program was enacted by 
the legislature with almost no opposition. ° 

The willingness of the II IA to agrco to legislation on occupational 
diseases despite its earlier opposition to a general coverage bill may be 
related to Vice-President Donnelly's statements on the unemployment compen- 
sation program. In the latter case, Donnelly viewed with alarm any state 
legislation passed prior to final federal coercive pressure because of the 
possibility of amendment. It was the hope of the HA. that unemployment 
compensation legislation could be kept completely off the state statute 
books. In the instant case, however, the TIA argued that the "probability 
of some legislation relating to this subject matter being enacted into law 
following such (Supreme Court) decision was entirely obvious. Therefore 
it was essential that this Committee take every precaution to see that 
any legislation enacted properly safeguard the interests of all concerned, : ' '- 

The question of the desirability of state unemployment compen- 
sation legislation became an academic one on May 24, 1937 when the United 
States Supreme Court upheld the constitutionality of the Federal act,H 
Evon before this action, however, active work on pending unemployment com- 
pensation bills had been inaugurated in and out in the Illinois legislature. 
Foreseeing impending Supremo Court action, Governor Horner had suggested 



9» According to a labor observer, the coal mine operators reneged on the 
agreed bill, nonetheless, Oliver Mount who served as industry spokes- 
man in this field, continued to give his support to the bill, and held 
the operators in line. Some labor people offer this as an indication 
of the positive importance of agreement concluded between group repre- 
sentatives who havo sufficient power and prestige to hold their factions 
in line, 

10. In dustrial Revie w. Vol. IX, Ho. 106 (A^ril, 1936), p. 1. 

11. sEoward "j j g dhTHqlTo . v. Davis . 301 U.S.'543J 



17 

early in the session that the appropriate legislative committees — the 
Senate Committee on Public Welfare and the House Committee on Insurance — 
each appoint subcommittees to meet in joint session with labor, industry, 
and administration personnel all to be selected by the Governor.- 1 - 2 Although 
this group met on April 20, 27, and 30, 1937, there is no reason to believe 
that the IMA had modified its stand of opposition to state action without 
federal action. Without doubt, however, the IMA was anxious to be prepared 
with a state program in the event that the Court acted favorably. 

The committee officially reported the results of its work to 
the legislative subcommittee on liay 4, 1937 at which time the Supreme 
Court had not yet acted. Recommendations took the form of suggested changes 
in S.3. 273, an unemployment compensation bill then pending in the Public 
Welfare Committee of the Senate. The individuals comprising the conference 
agreed on striking out of S.B, 273 a provision for employee contributions 
to a UC system. Modifications were also agreed to on the question of 
pooling all funds collected as stipulated in S.B..273. The members of the 
committee proposed an arrangement whereby l/6 of all funds would go into 
a general pool, while remaining funds would be kept in individual employer 



12. The joint labor-management committee had a membership of twenty-one. 
Leading industry spokesmen were Louis Leverone who held membership in 
the IMA, the Chicago Association of Commerce and the Illinois State 
Chamber of Commerce ', Joseph C, Spiess of the Illinois Federation of 
Retail Associations and the State Chamber^ Oliver Mount, of the State 
Chamber, who load been active in past agreements in occupational dis- 
eases legislation. Labor leaders on the committee included R. G. Soder- 
strora and Victor Olander of the Illinois State Federation of Labor, 
Thurlow Lewis of the United Mine Workers, Dennis McCarthy of the Rail- 
road Brotherhoods and others. The state administration was represented 
by Peter Swanish of the State Department of Labor later named Commissioner 
of Unemployment Compensation j Samuel Bernstein of the Illinois Legis- 
lative Reference Bureau, later named rules and regulations officer for 
the Division of Unemployment Compensation and subsequently appointed 
Commissioner J Daniel D. Carmell, Assistant Attorney-General and later 
General Counsel for the Illinois State Federation of Labor, In addition, 
II. L. McCarthy, regional director of the Federal Social S;curity Board, 
and Walter F, Dodd, consultant for the State Chamber of Commerce were 
invited to participate in the work of the committee. Senator John Lee, 
who load sponsored earlier unsuccessful unem-oloymcnt compensation legis- 
lation, served as chairman of the joint legislative subcommittee. All 
told, thirty-two persons were involved officially in the work of the 
committee. 



18 

reserve accounts which might be drawn upon to keep the pooled fund solvent. 
Although labor had opposed anything but a straight pool arrangement, it 

agreed to the change "in an effort to avoid delay which might make the 

13 
passage of the bill impossible," 

The nature of industry participation in these preliminary ac- 
tivities is deserving of some attention. It appears that the i! Big Five" 
were certainly not functioning in this instance as a cohesive body. According 
to the Secretary of one association, ^ the State Chamber of Commerce was 
relatively inactive at this time as was the Illinois Federation of Retail 
Associations which grew out of the Chamber. Thus, the chief employer 
groups responsible for activity were the Associated Employers of Illinois, 
the Chicago Association of Commerce and Industry, and the Illinois Manu- 
facturers' Association. Little cohesion obtained between those three* 
It would appear that there was a much stronger feeling on the part of the 
II IA that the Federal act would fall than prevailed in the other two associ- 
ations. Industry participation in the workings of the governor's committee 
was, in reality, limited participation. The HiA was in a dominant position 
and when it finally acted positively it was able to influence the terms 
of the agreement and of the law. 

The legislative subcommittee had no sooner received the results 
of the conferences when David Clarke, general counsel of the H'A, made it 
plain that that organization was still not prepared to support a UC law. 
Clarke argued against the revised bill and repudiated the action of the 
employer representatives. J Probably because of the uncertainty as to 



13. Illinois State Federation of Labor, News Letter . Vol. XXIII, No* 8 

(May 22, 1937). 
1/+.. George II. Tompkins of the Associated Employers of Illinois in an 

interview, Chicago, March 17, 1950. 
15* Hews Letter^ Vol. XXXII, No. 6 (iky 3, 1937). 



19 

whether or not an agroemcnt obtained, hearings wore hold on May 13 on the 
revised bill which was now numbered S,D. 436. The latter had been formally 
introduced on May 12 after labor had threatened to introduce another measure 
if the results of the conferences were not formally introduced. The con- 
fusion surrounding the position of industry led to a practical arrangement 
wherein it was understood that S.B» 436 would be moved out of subcommittee 
without binding anyone or any group to any final position. The May 18 
hearing was a consequence of this arrangement. 

At that hearing, employer representatives took exception to 
a number of provisions in the revised bill and proposed weakening the 
partial pool plan. At this point, labor decided to press for elimination 
of any type of individual reserve scheme, an action that was almost cer- 
tainly motivated by industry's apparent unwillingness to agree to the com- 
promise arrangement. Labor strategy was to refrain from pressing for this 
change in the Senate, but to exert efforts to have the bill amended in the 
House, It is not unlikely, however, that sufficient industry opposition 
could have been developed to kill the bill completely had not the Supreme 
Court decision boon handed down on May 24. 

Labor and industry representatives took time to reappraise the 
situation in light of this crucial development. In the meantime, the moos are 
passed the Senate, Court action strengthened the labor position imficasurc- 
ably, for the IMA now hold that "the adoption of a state measure by the 
Illinois General Assembly seemed imperative." The Association was immediately 
ready to cooperate in making "the proposal in Illinois as practicable and as 
economical as was feasible," The IMA, however, felt no compulsion to 
accept the pooled fund idea which had now become a matter of great importance 



16, Illinois Manufacturers' Association, "Review of Legislation Affecting 
Industry Considered at 60th General Assembly" (Chicago, 1937). 



20 

to labor. The Association's ability to develop a program rather than fall 
apart completely on the issue despite the eleventh hour change in its basic 
position was of considerable importance,. An agreed bill was plainly the 
only device through which the pooled fund could be achieved. On the other 
hand, now that the H1A found it imperative to support adoption of a state 
lav, it was intorostcd in securing inclusion of a merit rating provision 
which would diminish individual employer contributions, in return for sta- 
bility of employment. It was too late, however., in view of the advanced 
stage of the legislation to hope successfully to sponsor a merit rating 
provision independently. 

Representatives of the Illinois State Federation of Labor and 
the Illinois iianufacturors' Association held a last minute conference and 
agreed on the terms of amendments to the pending bill. The employers 
agreed to "cease their fight for the individual employer reserve account 
fund, 1 ' while labor agreed to offer no opposition to an operative merit 
rating system which would distinguish between employers having a low rate 
of unemployment as against those having a high rate. Further, the employer? 
agreed to withdraw opposition to labor's demand for an increase of the 
number of benefit weoks from thirteen to sixteen. ' On the basis of the 
evidence presented, it seems almost certain that the pooled fund, merit 
rating, and the sixteen week benefit period could not have been achieved 
in tho 1937 law without a labor-management agrcod bill. 

The nature of the agreement was reported to the House of Repre- 
sentatives on June 16, Following Governor Horner's earlier suggestion, tho 
proposals were put in the hands of Representative Adamowski, Houso majority 
floor leader, Adamowski indicated at this last minute that he could not, in 



17. News Letter . Vol, mil, No. 12 (June 19, 1937). 



21 

good conscience, actively support tho agreement because ho opposed the 
pooled fund idoa.^° The agrconont thereupon wa3 sponsored by Representative 
Daley, a freshman legislator, who was successful in obtaining house approval 
with a minimum of opposition. Subsequently, the Senate concurred in the 
house amendments, and the bill was approved by the Governor on June 30, 1937, 



18. Daniel D. Carmell, interview, Chicago, llarch 16, 1950, 



22 

PASSIVE AND ACTIVE LEGISLATIVE INTEREST: 1939 and 191+1 

1. 

The workability of the agreed bill technique in 1937 in unemploy- 
ment compensation helped to add strength to supporters of the process. Some 
leaders of industry felt that the use of the agreed bill permitted employer 
influence to be maximized in 1937 despite a complicated series of events 
which had caused internal disagreement and which, but for the agreed bill, 
might have resulted in a thoroughly unsatisfactory state law. The state 
administration, anxious for an unemployment compensation law in 1937 which 
would not antagonize any major interests, had soon it develop through the 
agreed bill. The environment seemed a receptive one for formalization of 
the agreed bill process in this field. 

At the time of passage of the basic act in 1937 > the legislature 
amended the Illinois Civil Administration Code so as to provide for the 
existence of a Board of Unemployment Compensation Advisors, the nine-man 
membership of which was to be equally divided between labor, employers, 
and the public. In September, 1938, the Board was activated under the 
chairmanship of Bertram J. Cahn, a director of the Illinois Manufacturers' 
Association, and an active member of the Chicago Association of Commerce., 
Illinois State Chamber of Commerce, and Associated Employers of IllinoiF*"" 
At the time of his appointment, Cahn had had no particular interest in un- 
employment compensation. He consented to serve principally because of his 
friendship with Governor Horner. Cahn' s understanding of the functions of 
the Advisory Board was that it would be helpful to the legislature for 



1. Cahn was chairman of the Board and president of B. Kuppcnheimer k 

Company, president of the Civic Federation, Bureau of Public Efficiency, 
a member of the Illinois Minimum Wage Advisory Board, president of the 
Chicago Crime Commission, and a member of the Economic Club of Chicago. 
Industrial Review, Vol. 10, No. 117 (June, 1938). 



23 

industry, labor, and public to join together and recommend amendments to the 

2 

lav;. There is evidence that suggests, however, that industry and labor 

leaders thought of the Advisory Board as more than a potentially "helpful" 

body to the legislature. Rather, it would appear that the Advisory Board 

3 

was conceived of as an implicit statutory demand for agreed bills. 

A few months prior to the appointment of the Advisory Board, the 
industry group had established a new process in its unemployment compensa- 
tion activities. It was the general goal of industry loaders to insure 
inter-association agreement in the field, and thereby present a stronger 
front vis-a-vis labor and the legislature. The technique devised to achieve 
this general goal was the setting-up of a broad Joint Technical Committee on 
Unemployment Compensation. Membership on the Joint Technical Committee was 
available to all interested employers. Indeed, its purpose was to gather 
the most extensive possible body of technical information on the basis of 
which policy decisions could be made. The policy determining unit was a 
separate body known as the Joint Executive Committee. Membership in the 
latter was restricted to executives of the five major employer organization:, 
Ultimate decisions on policy matters in unemployment compensation were to 
be made by this group. On the industry side, at least, the locus of power 
was formally vested in the Joint Executive Committee. 



2. Interview, Chicago, February 8, 1950. 

3. It does not seem important to determine whether industry and labor 
really believed that there was such a statutory demand or whether they 
chose to accept this idea because of their satisfaction with the agreed 
process. In either case, both sides acted for a long period of time as 
if there was a statutory demand. 

In The IMA, at least, went even beyond the Advisory Board and the Joint 
Technical and Executive Committees. 1 "fhile these bodies were meeting 
separately, "the Illinois Manufacturers' Association gave attention to 
this subject through a Technical Committee representing the Illinois 
Manufacturers' Costs Association, through its Committee on Unemployment 
Compensation, through its Board of Directors, its Counsel and its staff." 
Industrial Review , Vol. 10, No. 120 (July, 1939). 






I 



» 









2U 

The broad membership of the Joint Technical Committee assumes 
particular significance when it is noted that Illinois industry leaders 
tend to pay careful attention to- the policies and experiences of other 
states in their unemployment compensation activities. Broad participa- 
tion enables Illinois industry to obtain the views of out-of-state industry 
leaders whose sphere of business activities includes Illinois and who, 
therefore, maintain an active interest in Illinois public policy. 

This much background is essential for subsequent understanding of 
the fact that the 1939 amendments to the Illinois Unemployment Compensation 
Act were agreed on with a minimum of drama and difficulty, were introduced 
and passed in the Senate in six days, were passed in the House in seven 
days, and were neither amended nor in any way opposed in either the Senate 
or House. 

Industry's chief concern at this time was the question of 
computation of the experience factor which determined individual employer 
contributions to the Unemployment Insurance Fund. Last minute insertion 
of an experience rating provision in 1937 had served to keep the door oper. 
for changes in an existing experience rating principle in the Illinois lsw. 
The complications of experience rating, however, precluded the possibilj :■;. 
of a satisfactory arrangement without considerable advance study. Ts.-i 
Joint Technical Committee, chaired by G. M. Pelton, financial analyst for 
Swift & Co. and ex-professor of Accounting at Northwestern University had 
devoted itself to this kind of a study. The Committee recommended that the 
Illinois experience rating provision be revised to incorporate a state 
experience factor. The overall effect of the new formula would be "on the 



$• Kermit Johnson, Manager, Social Security Department, Illinois State 
Chamber of Commerce, in an interview, Chicago, March 1, 19^0. 






I 



'- 















' 



2* 

whole to treat employers more favorably than other formulae." 

The employer associations made revision in the experience factor 
provision their chief point of emphasis in subsequent recommendations to 
the Advisory Board which served as the formal liaison between the legislature 
and labor and industry groups.' Labor was concerned about a possible deter- 
mination on the part of employers to escape coverage by reducing their em- 
ployees below eight. Consequently, a chief labor goal was an extension of 
coverage to employers of less than eight. In addition, labor sought to 
take advantage of the fact that other states had liberalized the waiting 
period provision, and, in addition, was urging an increase in benefits. 

Labor and industry proposals along these lines were transmitted 
to the Advisory Board which recommended the change in experience factor 
computation together with an extension of coverage to employers of six or 



6. Eveline Burns, The American Social Security System , p. 15>9. The 
experience factor provision in unemployment compensation legislation 
may take any one of five general formulae. Illinois' original pro- 
vision was for the so-called reserve-ratio plan where an employers' 
rate is tied to the difference between the taxes he has paid and 
benefits paid to his employees. This difference is expressed as a 
percentage of the employers' payroll and related to a specific sched iJ 
If an employers' payroll increases faster than his reserve, his rat-... 
will fall and his tax rate increase. The Joint Technical Committee 
apparently perceived that this would often bo the case. Accord: r. K-lj .■> 
it proposed the switch to the benefit-wage-ratio formula. Here, -t 
ratio is established between wages paid unemployed workers during 
their period of employment (benefit wages) and the employers' total 
payroll. This establishes an individual employers' experience factcr 
which is correlated with a state experience factor representing a 
ratio of all benefits paid in the state to the benefit wages charged 
to all employers. Under a schedule of rates which is provided, each 
employers' rate approximates the product of his experience factor 
multiplied by the state experience factor. See Almon Arnold, 
"Experience Rating," Yale Law Journal (December, 19h!?), P« 230. 

7. Staff interview with John '.7ald, then a labor member of the Advisory 
Board, Peoria, October 17, 191*9. 



26 

more, a reduction in the waiting period from two to three weeks, and an 
increase in naximum benefits from $1J> to $16. Victor Olander, Secretary- 
Treasurer of the Illinois State Federation of Labor and a labor member of 
the Advisory Board approved this agreement for labor, dander's dominant 
position assured labor acquiescence. However, the multiplicity of employer 
associations and the fact that the employers had not yet happened on a 
single individual to whom they would delegate the same degree of authority 
that organized labor groups had delegated to Olander made it necessary 
for the agreement to be approved by the Joint Executive Committee. In this 
case, such ratification was achieved without incident. It was "the consensus 
of opinion of all those who participated in the consideration of the new 
subject matter that the conclusions of the Board of Unemployment Compensation 
under all the circumstances were fair from the standpoint of Illinois industry 

o 

and business," In justifying its support of increased benefits, the IMA 
pointed out that "it seemed clear that if an accord was not reached and the 
matter were fought out in the Legislature that impasse would have been 
reached," No particular explanation was offered for the concessions on 
coverage and waiting period. In this connection, it may be important to 
note that by 1939, thirty states had a briefer waiting period provision 
that Illinois, while twenty- two states had scaled coverage somewhere below 
employers of eight, ° Presumably, the multi-state representation on the 
Joint Technical Committee and the consequent consideration of experiences 
of other states in these areas diminished the opposition that might otherwise 
have been engendered by these proposals, Benefit increases were of another 



8. Industrial Review , Vol, 10, No. 120 (July, 1939). 

9, Issues in Social Security , A Report to the Committee on Ways and 
Means of the House of Representatives by the Committee's Social 
Security Technical Staff established pursuant to H, Res. 20U, 79th 
Cong,, 1st Sess. (19U6) pp. U98 ff. 



27 

order, however, as only one state had established a maximum rate over $l£ 
by the 1939 legislative sessions, ^ 

S. B. 1±58 incorporating the agreed amendments to the law was 
introduced in the Senate by John Lee on May U, 1939, and advanced without 
Committee reference. This bill, which had an identical counterpart in the 
House, was the only measure proposing amendments to the Unemployment 
Compensation Act to be introduced at this session of the General Assembly. 
Neither labor nor industry found it desirable to publicize their goals to 
the extent of sponsoring bills. Exactly two weeks after its introduction, 
S.B. U5>8 emerged from the legislative gantlet completely unscathed, and six 
days later was signed by the governor. 

2. 

When the 62nd General Assembly convened in 19l*l, labor had had two 
successful experiences with agreed bills in the unemployment compensation 
field. Moreover, the general environment was such as to suggest that inde- 
pendent action would not be likely to meet with success. 

The only controversial labor bill enacted during the 1939 session 
was a measure requiring the payment of prevailing union rates of wages on 
all public works projects. Although industry did not make opposition to 
the legislation a major issue, it did oppose enactment. The IMA General 
Counsel advised that "the measure was unquestionably unconstitutional." 

On October 11, 191*0, the Illinois Supreme Court ruled the prevailing wage 

12 

lav/ unconstitutional. In December, a petition for a rehearing was denied. 

Other considerations were obtained which might well have led 
organised labor to take a dim view of its chances. The 19U0 elections 
brought the Republican Party into power in both the executive and legislative 



10. Wyoming had established an $18 rate in its initxal act of February 
25, 1937. 

11. Industrial Review , Vol. 11, No. 128 (October, 191*0). 

12. Reid v. Smith, 375 111. 11*7. 






> 



• 









'• 












. 









■ . ■. 



'• 












• 



• ■ . 






' 






• 



. 



I 



■ 






. . 



28 

branches of the state government. Organized labor's relationship with the 
Director of the State Department of Labor had been excellent during the 
tenure of Martin P. Durkin, a Horner appointee, Durkin had not been re- 
appointed by Governor Green, however, and while he continued to serve his 
appointment was in constant danger of being terminated. Finally, as 
President Soderstrom subsequently reported to the State Federation of Labor 
convention, the Republican victory in the state gave vigor to industry. 

In the opening of the legislative session in January, 
the representatives of the employers tried, and succeeded 
somewhat, in crystallizing the sentiment that wage-earners 
had enjoyed their day under President Roosevelt and his 
Democratic administrations. Now that the Republicans were 
back in power in the State of Illinois, labor would make no 
further progress in the legislative field* In fact, the 
employers were contending, labor would be lucky to hold the 
gains they had won.^3 

Sensing that the period was not one making for easy agreement, 
and perhaps sensing too that the possibility of war might lead to long- 
time maintenance of any changes enacted in 19hl 9 labor and industry both 
prepared legislation embodying extreme positions which might subsequently 
be used for bargaining purposes. The labor proposal (S.B. 2li) was offered 
by Senator Lee on January 28. It provided for extension of coverage to 
employers of one or more, for the inclusion under the act of agricultural 
labor, seamen, and employees of charitable institutions. Minimum and maximum 
benefit rates would have been increased to $10 and $21; from $7 and $16 
respectively, while duration of payments would have been increased to 20 
weeks from 16. The bill made sickness and disability benefits permissive 
by repealing the able to work requirement, repealed the waiting period, 
decreased the earnings required for eligibility from $225> to $15>0, and 
repealed the merit rating provision. 



13. Illinois State Federation of Labor, Proceedings Fifty-n i nth Annual 
Convention, Danville, Illinois, September 15, 19U1, p<> 6. 



29 

Counter-proposals by the employers were incorporated in S. B. 110 
introduced on February 19* Under this bill, application of the act would 
again have been limited to employers of eight or more, earnings for eligibility 
would have been increased from $22£ to $3^0, and employees drawing workmens 1 
compensation or occupational diseases benefits during unemployment would 
have been ineligible for benefits under the Unemployment Compensation law. 
Further, provisions dealing with availability for work as a condition of 
eligibility were tightened, while benefits would have been denied to 
employees discharged for cause or those who suffered loss of employment 
for reasons beyond the fault of the employer. 

Both of these bills were allowed to languish in committee while 
employer and labor representatives sought to work out an agreement. An 
impetus to agreement came in March when Governor Green took official notice 
of the situation and appointed a new Advisory Board. The significance of 
this lies less in the personnel appointed, as there was no general over- 
haul, than in the fact that by taking action the governor was exerting 
pressure for agreement. The new Board held its preliminary meetings in 
April . 

More significant meetings on the same subject, and the beginnings 
of a pattern of crucial importance were being developed at the same time, 
however. W. J. MacPhcrson, Vice-President of the Public Service Company of 
Northern Illinois, had succeeded G. M. Pelton as Chairman of the Joint 
Technical Committee and had become principal employer spokesman in the 
unemployment compensation field. John H. Docsburg, Counsel for R. R. 
Donnelly and Sons, was closely associated with MacPherson as Vice-Chariman. 
From this time until his death in 19h7 f MacPherson established an ever- 
increasing sphere of authority and interest in industry's position on the 



30 

unemployment compensation question. His technical competence, prestige, 
influence with the Joint Executive Committee, and increasing experience in 
negotiating agreements all combined to make him the unquestioned spokesman 
for the employers. 

An additional consideration affecting MacPherson's position in the 
industry group involved his relationship with his labor prototype, Secretary- 
Treasurer Olander of the State Federation. Olander had long been organized 
labor's chief legislative agent in the state, and unemployment compensation 
was taken on by him almost as a matter of course, .As the State Federation 
was preeminent in developing labor 1 s policy at Springfield, Olander was 
preeminent in developing the policy of the State Federation. In the course 
of time, a personal rapport developed between Olander and MrcPherson that was 
of great significance in the utilization of the agreed bill process. ^ 

By early June, 19hl f Olander and MacPherson were approaching but 
had not yet reached an agreement which might be submitted formally by the 
Advisory Board to the legislature. Accordingly, on June li, the Senate 
Judiciary Committee voted to report out favorably S« B. 2.h with the under- 
standing that certain agreed amendments would be proposed on second reading. 
A week later, however, an agreed bill was determined upon, S. B. 2U was 
tabled, and in its report dated June lli, the Advisory Board submitted its 
proposals with "our earnest recommendation that immediate consideration be 
given to the proposed amendments outlined herein." These amendments were 
incorporated in Senate Bill 691 introduced by Senator Lee on June 11. 
Advisory 3oard Chairman Cahn' s letter of transmittal indicated that "Labor 



lli. On one occasion, M?cFherson was indisposed and unable to carry on 
talks. Although industry proposed another spokesman, Olander 
insisted on awaiting MacPherson's recovery. 



31 

organizations and employer associations have expressed substantial agreement 
with the conclusions reached in the attached report." 

Major substantive matters provided for in the agreed bill included 
an increase in maximum benefits to $18, which was as high as any state had 
gone, and an extension of duration to 20 weeks* The waiting period was 
reduced to one week, while a three week penalty period was assessed for 
voluntarily leaving employment. Unemployment and workmens 1 compensation 
benefits were not to be paid simultaneously unless the latter was smaller 
than the former in which case only the difference would be paid. Coverage 
was to bo extended to employers of one or more employees. The Advisory Board 
buttressed this last recommendation with the announcement by the Division 
of Placement and Unemployment Compensation that it was "now ready to take 
on the increased administrative load involved in the coverage of employers 
of one or more workers." 

Senate Bill 691 was presumably an ideal agreed bill, '.'forked out 
by Olander and MacPherson each of whom had considerable prestige in their 
respective groups, it was approved by the Advisory Board which, in turn, 
had gubernatorial sanction. Finally, the administrative office involved 
had been consulted and had given its approval. Nonetheless, S. B. 691 
did not have the easy legislative path usually associated with an agreed 
bill. The reasons for this seem to lie in the unwillingness or inability 
of organized management and organized labor to recognize the particular 

interests involved particular interests whose influence was not a part 

of either organized labor or organized employer activity and who, consequently, 
used their influence on the only formal body in which they had representation, 
the legislature. 



. 



32 

By the time the agreement incorporated in S. B. 691 had been 
reached, three particular interest bills had been favorably reported out 
of legislative committees. One of those would have exempted all insurance 
agents on commission from the act rather than only a selected group; a 
second would have exempted salesmen of seedj the third redefined wages as 
applied to seasonal employment so as to benefit seasonal employers. None 
of these bills was incorporated in the agreed bill. 

Of even greater significance was the fact that industry, function- 
ing through the Joint Technical Committee and its representatives on the 
Advisory Board, had agreed to an extension of coverage to employers of one 
or more despite the fact that, as they were to admit much later, "while 
they have some of these small business concerns represented in their 
organizations, they do not, as a matter of fact, represent the great bulk 
of the smaller business concerns who would be affected by the proposed 
coverage." ^ There were, in 19/jl, approximately 1;0,000 employers covered 
by the Illinois act. The proposed amendment would have increased the 
number of covered employers by approximately 116,000* 

S. B. 691 was advanced to second reading without Committee reference. 
Presumably, both the parties to the agreement and the particular interest 
backers wore eager to dispense with formality and get to a test vote. Eight 
amendments were proposed from the floor: five dealt with the seasonal 
employment question, one with seed salesmen, one with insurance salesmen, 
and one would have deleted the provision for extension of coverage. The 
tangential interests who had not been parties to the agreement were 
carrying their case to the legislature. A roll-call vote of the Senate 
was taken only on the question of deleting the extension of coverage. This 



1^. Footnote to the Report to the Governor and to the Sixty-Fourth General 
Assembly by the Board of Unemployment Compensation and Free Employment 
Office Advisors (Illinois Department of Labor, 19li5), p. 12. 



. 



! 



; 



. 












! 



33 

was probably considered the most meaningful test of opposition strength to 
S» B# 691 as agreed to by labor and employer groups* 

The vote was set-up by Senator Lee's motion to lay on the table 

16 

the amendment deleting extension of coverage. Lee's motion prevailed 

by only two votes, 2£-23, thereby maintaining the extended coverage. An 
analysis of the vote gives no definite indication of a split along either 
urban- rural or party lines. The best that may be said is that Democrats 
tended to support extension (l6-5>) while Republicans tended to oppose it 
(18-9). Chicago Senators tended to support extension (11-6), This crazy- 
quilt pattern, later to be reproduced in the House, suggests only that 
legislators were forced to conclude that labor-management agreement or no, 
some phases of this question would have to be decided on the basis of the 
effect on the legislator's constituency (or at least the effect on the 
majority of the voters therein), and the effect on the legislator's experience. 

Experience and constituency dictated a different result in the 
House. Although S. B. 691 did not reach the House until a week before 
adjournment, Representative Allison's motion to suspend the rules and 
advance the bill to second reading without reference failed. This was a 
forerunner of greater difficulties to come. The House Judiciary Committee 
reported the bill out within a matter of hours, but recommended the adoption 
of two amendments: elimination of the extension of coverage provision, and 
blanket exemption for insurance agents working on commission. Management, 
embarrassed by its multiplicity of interests, was silent. On the one hand, 
the employer group tended to favor the less extended coverage and greater 
exemptions; on the other hand, neither of these matters was of direct 



16. The motion to lay on the table is a privileged motion and has the 
effect of forcing the issue as it must be decided without debate. 
Rules hh and U6 of the Illinois Senate. 



■ 






.> 



• 



• 















3U 



interest to the Joint Executive Committee^ and there was some advantage 
in leaning over backwards to show good faith as to the agreed bill. 

The labor group was in no such dilemma* Soderstrom and Olander 
vigorously urged defeat of the amendments and adoption of the bill as 
agreed upon. They made a particular point of the fact that none of the 
representatives of employers who had been part to the agreed bill opposed 
discarding the agreement. ' This implied bad faith charge may have been 
designed to capture the vote of the hesitant legislator with the suggestion 
that a vote against the amendments would be a vote for good faith while a 
vote for the weakening amendments would be tacit approval of bad faith • In 
any case, the House approved both amendments with votes to spare. 

The earlier close vote in the Senate probably suggested to 
Senator Lee that little would be gained from a conference between the 
houses. Senate conferees would hardly be in a position to suggest that 
the Senate felt strongly that the House-approved amendments should be 
deleted, whereas House conferees might well have argued that that chamber 
had shown a relatively greater strength of feeling. In addition, there 
was always the danger of a conference stalemate and consequent loss of 
the legislation. Accordingly, Senator Lee moved that the Senate concur in 
the House amendments. The motion carried without opposition, and a 
rather battered "agreed" bill was approved by the governor on June 30. 

The need for some explanations and apologies remained. Industry 
leaders plainly had to demonstrate that there was some justification for 
initial agreement in view of the fact that the legislature had shown 
itself vdlling to vitiate at least two liberalizing amendments. Was it 
not possible, it might have been asked, that the legislature would have 



17. News Letter, Vol. XXVII, No. LU (July $, 19hl)* 



, 



3$ 

rejected increased benefits if industry had not agreed thereto? On the 
labor side, the need was to focus credit for achievement on the labor 
conferees, and to indicate that the legislature was not to be congratulated. 
In its review of the legislative session, the IMA tacitly admitted 
that the original agreed bill represented the best judgment of industry- 
negotiators as to the temper of the legislature on unemployment compensation; 

The views of the labor group were very largely embodied 
in Senate Bill 2li which not only provided for substantial 
liberalization of the Act, but also for the elimination of 
the merit rating provision as well as the elimination of the 
provision prohibiting payment of benefits to strikers. The 
viewpoint of the employers in connection with this subject 
were (sic) presented to the Advisory Board primarily by a 
Joint Employers' Committee which embraced representatives 
of the principal general employer groups in Illinois. It was 
the consensus of opinion of the individuals identified with 
this activity on behalf of the employers that their acquiescence 
in the changes of the Act was warranted by the situation that 
existed in the Legislature in relation to this particular 
subject matter . 16 

Again, Doesburg who chaired the IMA. Unemployment Compensation 
Committee in addition to his work with the Joint Technical Committee, 
noted that the former group had not acquiesced all along the line. Liberaliz- 
ing amendments, it was pointed out, "were aggressively opposed by the 
Illinois Manufacturers' Association. "-^ Finally, the Industrial Review 

devoted a full page spread to a presentation of "Amendments That Are 

20 
Favorable to Employers in the Illinois Unemployment Compensation Act." 

Industry representatives were making it plain that they had fought the 

good fight, and had achieved some important victories in the agreed bill. 

Those losses which might have been avoided were a consequence of possible 

errors in judgment, but any rational industry representative would probably 



18. Illinois Manufacturers' Association, "Review of Legislation Affecting 
Industry considered at the 62nd Regular Session of the Illinois General 
Assembly" (Chicago: August 1, 19l;l)> p. 8. (Underlining supplied). 

19. Industrial Review , Vol. XIII, No. 135 (January, 19U2), p. 19. 
20* Vol. XIII, No. 133 (August, 19Ul), p. 9. 



36 

have made the same errors. Quite properly, the "Big Five" claimed no 
credit for the actions of the House, 

Sodcrstrom explained to his Convention that the "lawmakers are 
not entitled to a great deal of credit" for voting for an "agreed" bill. 
"The General Assembly compelled the representatives of labor to go out and 
get agreements with the employers, to sit into conferences with represen- 
tatives of employers and reach an agreement," Indeed, "the membership of 
the General Assembly. ..voted only for such bills as the employers agreed 
labor should have." Thus Sodcrstrom seemed to argue that the agreed bill 
was the only way for labor to achieve immediate goals. Without the agreed 
bill, labor could not have achieved even as much as it did here. The 
legislature is a formidable obstacle. "Credit for the enactment of this 
legislation is due more to the ingenuity of the representatives of labor 

who sat into these conferences than it is to the generosity of the elected 

21 

members of the General Assembly." In Soderstroir^s eyes, at least, the 

legislation would have been of a different order if its formulation had 
been dependent on the "generosity of the elected members of the General 
Assembly." 



21, Proceedings Fifty-ninth Annual Convention, pp« 7 f» 



'. 






' 






. 



37 
POLITICS. EC0i T 0;:iC.S. Ai?D AGHEEtlBNTi 1943. 1945. 1 947 

1. 

On October 1, 1941, Governor Duight Green appointed Francis P. 
ilurphy director of the Illinois Department of Labor and thereby touched off 
a controversy which helped to illuminate determinants of and attitudes 
toward the use of the "agreod" bill in labor legislation. 

The State Federation of Labor, from the time of Green's election 

in November, 1940, had urged on him tho reappointment of liartin Durkin as 

head of the Labor Department, Tho 1941 convention of the State Federation 

affirmed the advice of its officers and went on record in favor of Durkin *s 

retention. The United liinc Workers, the Progressive Mine Workers, and the 

state C.I.O. were less enthusiastic about Durkin," 1 - When, however, the Murphy 

appointment was announced, the State Federation made a vigorous protest, 

and used the columns of tho News Letter for this purpose. Green was finally 

impelled to defend his own labor record in an open statement to President 

Soderstrom of the Federation, Soderstrom's response made specific and 

pointed reference to tho use of the agreed bill in past sessions of the 

legislature: 

It is a startling fact that the passage of every major bill 
enacted by tho legislature since you became Governor was 
the result of conferences and agreements between labor and 
employers, through the Illinois State Federation of Labor 
and leading employers' associations, the most prominent of 
which was the Illinois Manufacturers' Association, It was 
a most unusual experience and was so reported to our Danville 
convention a year ago. You know that to be true, Ue did 
not then direct any particular criticism against you, be- 
cause we believed that your very apparent shortcomings were 
perhaps due to inexperience, which the passage of a little 
time might remedy. 



1. It was around this time that the State C.I.O, began to emerge as any 
kind of significant political power in Illinois, Its potency remains 
limited, however, by the entrenched position of the State Federation of 
Labor, and by the fact that C.I.O, membership is concentrated in the 
urban areas, notably Chicago, which are underrepresented in the legis- 
lature. 



38 

It was the subject of very serious discussion in our 
councils and that is the conclusion we then reached. \le 
wanted to be helpful to you, to give you every possible 
chance to make good* That lias been the traditional atti- 
tude of the Illinois State Federation of Labor towards all 
new governors throughout the entire sixty years of its 
existence. !7e have always been patient in that respect. 

The Murphy appointment gave rise to an extended controversy. As 
late as iiay, 1943, Secretary Olander of the Federation was of the opinion 
that he was being excluded from the Governor's conference on relaxation of 
the women's eight hour laws because of his steadfast opposition to Murphy.^ 
It was not until July 31, 1944, with elections a few months off, that Green 
accepted Murphy's resignation, and appointed Robert Gordon as Acting Director 
of Labor. Gordon was subsequently named Director and enjoyed a harmonious 
relationship with the State Federation although there is some question 
about the attitude of other labor groups. 

At least one other factor, somewhat more impersonal, but no less 

real, almost certainly intruded on the thinking and deliberations of those 

responsible for Illinois Unemployment Compensation policy in 1943. The 

peculiar wartime economic conditions and their effect on unemployment 

compensation trends is summarized by the Unemployment Compensation division: 

Since production and employment were high, total wage pay- 
ments were large. As the contributions of employers to the 
Unemployment Compensation Trust Fund are proportional to 
wages, they, too, were large. At the same time, the numer- 
ous employment opportunities furnished by war production 
decreased the extent of unemployment. Consequently the 
volume of unemployment compensation claims and benefit pay- 
ments was low. 

The number of persons who are covered by the Unemployment 
Compensation Act varies with the size of the working popu- 
lation and with its industrial distribution. During the 
war, the working population increased, partially as a re- 
sult of normal growth and partially due to the availability 



2. Letter from R. G. Soderstrom to Governor Dwight Green, October 7, 1942, 
reproduced in Mew s Letter . Vol, XXVTII, Ho. 29 (October 17, 1942), p. 1. 

3. News Letter . Vol. XXIX, Ho. 9 (May 29, 1943), p. 1. 



39 

of many attractive employment opportunities. As the volume 
of production was more than sufficient to absorb the people 
who are ordinarily in the labor market, some retired workers, 
housewives, and young people of school age found jobs readily 
and were induced to accept them because of the liberal wage 
incentives. It is noteworthy, moreover, that the jobs 
cheated by the demands of the war were mostly in manufacturing, 
an industry group in which coverage under the Unemployment 
Compensation Act is almost complete.^ 

At the beginning of the 1943 session, the Illinois law was less 
liberal than that of sundry other states in only two major respects. Twenty- 
three states, by this time, had extended coverage to employers of less than 
six employees although by no means had all of these statos scaled coverage 
all the way down to employers of one or more. The second area in which 
Illinois seemingly lagged involved maximum number of weeks for which benefits 
wore payable. By August, 1942, fourteen states were paying benefits for 
a maximum period longer than Illinois' sixteen weeks. A qualification in 
order here is that Illinois' maximum amount of )18 per week compared 
favorably with the maxima of all other statos save Connecticut, llichigan, 
Utah, and Hawaii. 

Judging from its legislative activity, it appears that organized 
labor was preoccupied with the benefit question at this time to the virtual 
exclusion of concern about other aspects of the unemployment compensation 
picture,^ Thus, labor's spokesman in the House, Representative Allison, 



4. Illinois State Department of Labor, Division of Placement and Unemploy- 
ment Compensation, Unemployment Compensation During "the j feg Years (Chicago? 
October, 1946), p. 4. 

5. In a sense, this appearance is somewhat misleading. In this session, 
as in many others, labor representatives propagandized for elimination 
of morit rating. The propaganda was particularly active in 1943 be- 
cause of the fact that merit rating permitted expanded wartime industries 
to have low contribution rates despite the fact that they had not made 
any particular efforts to "stabilize" their employment, and that these 
same industries would probably become major contributors to unemployment 
at the close of the war. This situation resulted from a computation of 
"experience n years on which contribution rates wore based as past years 
during which payrolls had been considerably smaller than they were 
during the war. Thus, under the law, these businesses could use the low 
rate, obtained from their records covering a relatively few employees, 



40 

introduced a bill covering only two points — an increase in the benefit amount 
to >24, and a repeal of the one week waiting period. An employer bill, spon- 
sored by Representative Stransky, concentrated on a tightening of disquali- 
fication provisions* Agreement was very slow in forthcoming* The employers 
objected less to an incroasc in benefits than to labor's refusal to go 
along on tightening disqualifications. By oarly June, prospects for agree- 
ment seemed exceedingly dim, and labor succeeded in a notion to discharge 
the Judiciary Committee from further consideration of the Allison bill. 
3y June 10, by a vote of 88-11, the House voted to place the bill on the 
calendar. It is probably true that the most optimistic labor observers did 
not expect to push the Allison bill through. However, it waa an advantage- 
ous point from which to start. 



5. (Cont.) to apply to their expanded business which was not of a permanent 
character. Labor strongly supported a special "war risk" provision, sub- 
sequently enacted, which was designed to cope with this problem. 

In reality, though, labor representatives seem to look upon the merit 
rating provision as a kind of scroon, Employer groups are necessarily 
concerned about merit rating, and consider maintenance of the system 
and improvements in it to bo victories for themselves. Labor, however, 
probably feels loss strongly about merit rating than its propaganda 
suggests. The size of the Unemployment Compensation Trust Fund has 
always been sufficiently large to cover any '"normal" amount of unem- 
ployment. If another serious depression should occur, the fund would 
undoubtedly bo inadequate and additional revenue would be required. 
Thus, labor feels that the important consideration is to insure that 
public policy be consistently positive toward UC, With a positive public 
policy, necessary revenue will be obtained through some manner or means 
irrespective of the existence of merit rating. Labor leaders suggest that 
merit rating fights are really "illusory" in that labor may use them to 
harass industry and compel concessions in other areas. The anti-merit 
rating fight becomes a kind of technique used to achieve goals, rather 
than a real goal in itself. 

This is related, of course, to the fact that Illinois docs not utilize 
employee contributions to the fund. Labor tends to be unconcerned about 
costs. Its interest in merit rating might be a more real one if it had 
some responsibility in the cost area: 

"The employee tax would help put employees on a parity with the employer... 
Under the present arrangement, many employees believe that benefit in- 
creases arc financed entirely bv the employer and they tend therefore to 
exert their influence mainly toward payment of higher benefits without 
consideration of costs." Unemployment Insurance , A Report to the Senate 
Commit top on Finance from the Advisory council on Social Socuritv (S. Doc. 
206, 80th Con;-;., 2nd Sess.), p. 28. 



a 

Within a wcok, an agreement was rcachod botwocn labor and industry 
representatives whereby benefit ratos would be increased to r )20 on April 1, 
1944 • Labor gave up its request for elimination of the waiting period. It 
was decided to incorporate the agreement in S.B. 399 then pending in the 
House which had originally involved tc clinical and procedural changes in 
the law rather than substantive amendments. The time factor seemed to 
be the chief consideration hero. The agreed amendment, once approved by 
the House, would require only Senate concurrence since that chamber had 
already passed the basic bill. This saved about a week which would other- 
wise have been lost in advancing the bill through thrco readings. This 
plan was followed, the amendment was formally offered by the Advisory Board, 
and the agreement adopted without incident. 

The facts involved in the 1943 agreement suggest a possible kind 
of explanation which it may be worthwhile to consider in an attempt more 
clearly to understand the interrelationship between this agreement and 
others which precede and follow this particular case. Labor goals, in 
1943, could have been directed toward an attempt to obtain increased benefit 
ratos not so much for short run purposes but rather to insure a high level 
of compensation at such time as the war economy slackened off. A mid-war 
increase in unemployment benefits might have had no appreciable immediate 
significance because of the high level of employment, but it could be 
used as a higher base from which to negotiate for further increases when 
unemployment again became an important problem, lioreovcr, it might have 
been assumed that industry opposition to increased boncfits would bo at a 
minimum in this period. Industry, like labor, had little cause to be con- 
cerned about benefit rates during the war because of the small number of 
claims. 



6. "livery bil3 shall be read at large on three different days, in each 
Illinois, Constitution, Article IV, Section 13. ,In -oracticc, the pas 
of a bill is rarely accomplished in only three days. 



A2 

In addition, hov/ovcr, industry anticipated (incorroctly, as it 
developed) a precipitous rise in unemployment aftor the war, and probably 
foresaw as well tho possibility that a wartime increase might be used as 
a base for greater demands, rather tl an as a point of stabilization. On 
tho other hand, tho employer group could well have reasoned that a nominal 
increase in benefits at this time would serve as an answer to demands for 
a greater increase whon unemployment rose, and when, as a consequence, 
there would bo stronger labor demand for a large increase. The area of 
speculative analysis boils down to the suggestion that, on the benefit issue, 
the war conditions '..light have influenced labor to push for a short-range 
goal so as to sot up more advantageous conditions for long-range achieve- 
ments, while these r:amc conditions might have influenced industry to 
accede to short-range labor goals so as to be able to argue that the 
planting of short-range goals did, in fact, meet tho long-range problem. 
This hypotheses is tested in subsequent discussions of post-war activity. 



43 



2. 



When the 64th General Assambly convened in 1945, pressures from 
diverse sources wore forthcoming for liberalization of tho Illinois Unem- 
ployment Compensation lav; in every respect of major importance to labor except 
benefit increases. 

Governor Green's inaugural address to the legislature was, accord- 
ing to the State Federation of Labor, "of a more positivo character than 
any he has previously made,"''' In dealing with unemployment compensation, 
the governor recommended oxtension of the benefit period to twenty-six 
weeks from the existing twenty weeks, and inclusion of "all employers 
within the act, so that all legally qualified employees will be covered." 
Governor Green, however, stated explicitly that he hoped for achievement 
of these ends "without increasing the scale of benefit amounts." 

These recommendations coincided almost exactly with recommendations 
made by the United States Chamber of Commcrco in October, 1944 • The 
Chamber had urged that (1) the individual states consider the feasibility 
of extending unemployment compensation to cmployoos of smaller employers in 
those cases where the State law now covers the occupation or industry, 
and (2) insofar as the condition of the State unemployment compensation 
funds permitted, the states gradually lengthen the time during which 
unemployment benefits arc payable (rather than increase the amount of 
benefits payable per wcck.) u 

In addition, the federal Social Security Board offered four 
specific recommendations on unemployment compensation to state legislatures 
meeting in 1945. These included extension of coverage to employers of one 



7, News Letter . Vol. XXX, Ho. 42 (January 13, 1945) 

8, United States Chamber of Commerce, Social Security in the United States . 
Chamber Policies and ?.e-oort of Committee on Social Security (October, 
1944), pp. 6-7. 






. 









• 



44 

or more, a lengthening of benefit duration to twenty-six weeks, an increase 

in maximum benefit amount to *j25 per week, and the elimination of "unduly 
restrictive" disqualification provisions," 

Strong indications that the war, in Europe at least, would be over 
before the 1947 legislative session focused labor and industry interest in 
Illinois on the 1945 session. In fact, the European war did end before the 
adjournment of this session, and the amendments to the law passed in 1945 
must be considered an attempt to satisfy the diverse pressures created by 
the anticipation of immediate post-war unemployment. If labor had aimed 
at a post-war benefit increase, however, its case was appreciably weakened 
by the existence of the price control system, and the not inconsiderable 
attention being paid to the need to head off an inflation. This may account 
for the fact that at no time was there an effort made in this session to 
press for an increase in benefits. The point of concentration, instead, 
was the proposition endorsed by Governor Green, the United States Chamber 
of Commerce, and the Social Security Hoard: extension of the duration period. 
Interestingly enough, only California and Maryland were paying benefits 
at the beginning of 1945 for a period longer than Illinois' 20 weeks. 

Although a relatively large number of bills on the unemployment 
compensation subject were introduced in this session, neither labor nor 
industry offered a systematic series of amendments. Conferences between 
Olander and iiacPherson began early in the session; apparently, they showed 
promise of success from the beginning. By mid-April, the report of the 
Advisory Board wa3 ready, and around the same time an "agreed bill" was 
introduced in the Senate as an administration measure. Principal substantive 
recommendations of the board included an increase in duration of payments 



9, Unemplo?/TTient Compensation^ in the Reconversion Period 9 Social Security 
Bulletin, (October, 1944), pp. 3-8, 



, 



45 

to a maximum of 26 weeks, an increase in minimum weekly benefits from 
}7 to .'-10, and, again, extension of coverage to include workers in estab- 
lishments which employ one or more persons. Special circumstances involving 
this last recommendation merit special attention. 

Extension of coverage had been a vital issue in 1941 when the 
recommendation of the Advisory Board, although incorporated in the agreed 
bill, had been eliminated by the legislature. On that occasion, it is 
probably accurate to say that small employers who were not by and large 
represented by the "Big Five" had urged the legislature to reject the 
proposal. The major employer organizations had been placed in something 
of an embarrassing position in that they were willing to agree to extended 
coverage, but could not openly renounce their fellow employers. At the 
same time, they were not eager to abrogate the agreement with labor. 
When the issue was opened afresh at this session, a new technique was 
utilized. Employer representatives on the advisory board footnoted that 
portion of the report dealing with extended coverage with a reservation. 
Indicating that they agreed person ally to the amendment, the employers 
nonetheless refrained from voting theron because of their inability 
accurately to gauge the sentiments of the smaller employers, A consequence 
of this v/as exclusion of the extended coverage amendment from the agreed 
bill, and its presentation to the General Assembly as a separate measure. 
The Assembly had to deal with two measures, one of which was agreed, and the 
other of which was, at best, non-disagreed. Presumably the major employer 
groups would not disagree to extended coverage, but they would not give it 
the advantage of a labor-industry agreement. 

The agreed measure of this session, thon, incorporated the 
increase in minimum benefits and extension of duration. This bill, 
supported by the administration and favored by labor and management met 
no organized opposition and passed the General Assembly easily. Extension 



46 

of coverage to snail employers was not included within this agreed bill as 
it had bean in 1941. The earlier experionce may have suggested the de- 
sirability of confining an agreed bill to those matters on which positive 
agreement had been reached. Extension of coverage was introduced by Senator 
Trager and reached the Senate Industrial Affairs Committee simultaneously ' 
with the agroed bill. Tracer's bill was considered by the committee after 
the agreed bill had passed the Senate probably so as to avoid a confusion of 
issues. The committee reported the measure out with a recommendation that 
it do not pass, in effect, killing the bill. The Committee vote showed 
eight Republicans and one Chicago Democrat comprising the majority, with 
three Democrats in the minority. 

Subsequently, the State Federation indicated that it put little 
stock in the notion that small businessmen killed extended coverage. Noting 
the adverse committee vote, the News Letter reported that the defeat came 
"following opposition by what was alleged to be a group of 'small business 
men 1 whose activities, however, were plainly under the guidance of certain 
large organizations... The bill was introduced as an administration measure 
on behalf of the Board but never had even the ";host of a chance for passage," 10 

One other incident of this session deserves emphasis. Senator 
Daley, who had sponsored the agreed bill of 1937 in the House, introduced 
S.3. 300 which would have qualified claimants who became ill or disabled 
subsequent to the time of initial registration for work. The net effect 
would have been to modify the "able to work" provision of the unemployment 
compensation law by requiring only that the claimant be able to work at the 
time a claim was filed. 

Employer and labor representatives appeared before the Senate 
Industrial Affairs Committee at a hearing on Hay 9, 1945, and both groups 



10. Vol. XXXI, No. 17 (July 21, 1945). 



47 

opposed a favorable committee recommendation, Representatives of the ti/o 
interests stated that their objection was not necessarily directed at the 
provisions of the bill, but that to do anything but oppose enactment would 
be in violation of an agreement entered into in good faith with the Unem- 
ployment Compensation Advisory Board, It was argued that an agreed bill 
was pending in the legislature, and that a further agreement obtained on 
introducing Trager'a extended coverage bill as a separate measure The 
labor and employer spokesmen stated explicitly that in view of those con- 
ditions, they would be acting in bad faith in doing anything but opposing 
this bill. 11 

3. • 
The post-war Illinois political and economic scene, like that of 
every other state, was quite different from the pre-war scene, and that 
difference was reflected in the development of unemployment compensation 
policy, "After the surrender of Japan, the employment situation changed 
radically, Many war workers wero displaced as a result of the cancellation 
of Federal war contracts. The rapid demobilisation of war veterans increased 
the number of persons seeking work. Consequently unemployment, which had 
been at a minimum, rose sharply. , , The beneficiaries were subject to a large 
turnover. Only a minority of the beneficiaries during a period of time 
were still drawing benefits at the end of the period, While some beneficiaries 
exhausted their benefit rights, the majority ceased to draw benefits, although 
they still regained benefit rights, ilany of those who discontinued their 
withdrawals had found jobs, some had left the labor market, and others were 
disqualified for refusal of jobs or for other reasons,"-^ 



11. Ibid., No, 6 (Hay 12, 1945). 

12, Employment Security in the i Year Following V-J Day , Activities of the 
Division of Placement and Unemployment Compensation, State of Illinois 
Department of Labor (Chicago: 1946), p# 1, 



48 

Large scale sustained unemployment did not emerge as a serious 
problem in the period from the end of the var to the convening of the 65th 
General Assembly in January, 1947, On the other hand, the upward spiral 
in the price index had not yet reached a generally alarming level. The 
consequences of the situation were that industry './as prepared to resist 
any attempts to extend the unemployment compensation benefit period beyond 
26 weeks, and was also prepared to resist arguments for benefit amount in- 
creases. Moreover, the industry group was viewing with alarm past and pro- 
spective payments to claimants who were voluntarily leaving the labor 
force either temporarily or permanently, and to those who refused "suitable 
work."-*--' Employers were undoubtedly dissatisfied with their inability 
under the law to contest claims that they thought undeserving* although 
there is no indication that they were generally dissatisfied with admini- 
strative rulings on those claims which were contested despite the fact 
that the Unemployment Compensation Division allowed more contested claims 
than it disallowed: 

In the year from August 1945 to July 1946, 309,000 claims 
were contested. Labor disputes accounted for more than 
one-fourth of the contests. Other reasons which v/ere in- 
vidually responsible for as much as one-fifth were the issue 
of ability to work and availability for work and the issue of 
refusal to anr>ly for or to accept suitable work. Voluntary 
leaving gave rise to a tenth of the contests, and alleged mis- 
conduct •co one-twentieth of them. Miscellaneous reasons, 
prominent among which v/as late reporting, accounted for the 
remainder of the contested claims. 

An indication of the general validity of the claims is 
that 42 percent of those contested resulted in disquali- 
fications or denials, while the remaining 58 percent v/ere 
decided in favor of the claimant. Only one issue, labor 
disputes, gave rise to more denials than affirmations of 
the claimants' rights to benefits. While 83 percent of 
the claims contested on the basis of labor disputes re- 
sulted in denial of benefits, the proportion of disquali- 
fications or denials in the case of most other issues was 



13. Interview with ?.oyal A. Stipes, President, Illinois State Chamber of 
Commerce, Champaign, February 11, 1950. 



49 

in the neighborhood of 30 percent. Even lower (15 
percent) was the proportion of disqualifications for 
refusal to apply for or accept suitable work.^4 

In addition, industry uas riding the wave of public unhappiness 
over the post-war round of strikes and the anti-labor feeling that resulted 
therefrom. The 194.6 elections, certainly, could not be construed as a 
popular mandate for the formulation of further "protective" labor legislation. 
Politically and economically, Illinois employers seemed at last to be on 
the offensive in the unemployment compensation area. The point at which this 
offensive was to be concentrated was disqualifications. Management leaders 
insisted that they did not object to the existing £20, 26 week formula. 
The opposition, rather, was directed at the payment of benefits to people 
v/ho were unemployed through their own doing, -*••* 

Labor was aware, of course, of the environment within which the 
General Assembly was to work, llore than half the states had passed, or 
were to pass in 1947, severe "restrictive" labor statutes. The work of 

the State Federation of Labor during the 65th General Assembly was concen- 

-i r 
trated upon an effort to prevent the enactment of anti-labor legislation, ivJ 

Governor Green urged restraint on the legislature: "I would 

earnestly caution the General Assembly against any hasty action that would 

retard the progress which lias been made in our State, The times call for 

dispassionate, impartial judgment upon all proposals having to do with 

labor and management," On the other hand, in the unemployment compensation 

field, restrictive action was invited, at least in a backhand fashion: 

"Unemployment compensation is a splendid program for those who are out of 

work and want to work. We ore determined that it shall not be abused by 

17 
those v/ho remain voluntarily idle," 



14. Emplo ym ent Security in the Year Following V-J Day , p. 7, 

15, Interview, Royal A, Stipes, February 11, 1950, Champaign. 

16. Mews Letter . Vol. mill, Uo. 25 (September 20, 1947). 

17, Biennial Message of Governor Dwight Dreen to a Joint Session of the 
Sixty-Fifth General Assembly, January 3, 1947, 



' 



.'. 






- 






'■'■-' • ■ 



; 



I 



• 



• 






50 

Aside from the combination of economic and political circumstances 
which seemed to make disqualifications the chief point of attack, there was 
at least one other factor which helps explain the focus on this issue in 1947. 
Royal A. Stipes of Clinmpaign was at this time chairman of the Legislative 
Committee of the Illinois State Chamber of Commerce. Stipes tool: an interest 
in legislative affairs which was more intense than that of his recent pre- 
decessors, and too'.; a particularly gre.it amount of interest in the state 
unemployment insurance program. The State Chamber, under Stipes' leadership, 
began to assume a more important role in legislative affairs than it had 
during the earlier period when the BIA served as the indisputable leader of 
the "Big Five." Among other activities, the Chamber started a thorough- 
going investigation of unemployment compensation policy. : '0ur activities," 
says the manager of the Chamber's Social Security Department, "started 
competition amongst the other employer groups." On the basis of this study, 
Stipes was determined that the disqualification question be "corrected" 
in the 1947 session. Stipes' battle cry, used both in 1947 and 1949, was 
"We've got to go after what is right, and this is right," 

The management group split apart on the disqualification question. 
Although there was no disposition anywhere to question the desirability of 
tightening disqualifications, there was serious disagreement as to timing-— 
as to whether 1947 was the right time, or whether it might be more strategic 
to wait until 1949 when industry would be more likely to have to ma Ice some 
concessions to labor. The Secretary of an employer association who is a 
veteran of thirty years as a lobbyist around Springfield argued that the 
legislature would not be inclined to enact disqualification restrictions 
without some positive grant to labor, and that since no positive grant 



18. Kermit Johnson, in an interview, liarch 1, 1950, Chicago. 



51 

scomod desirable in 1947, the subject should bo deferred until 1949. 
According to this source, "The Illinois Chamber wanted to push hard (on 
disqualifications) in 194-7, but some of us with more experience felt that 
it's one thing to want to do something and another thing to do it." 

Ultimately, the State Chamber stood alone in its determination 
to force the issue in 1947 • Partially as a consequence of the fact that 
this split on strategy weakened the employer position, management represent- 
atives adopted a position in 1947 that one of its own spokesmen describes 
as "not a sincere one," Dccausc the Chamber was so firm about going ahead, 
and because of the need to present a solid management front, the other 
principal employer groups did not oppose the Chamber's program. It was an 
open secret, however, that the employers were not united. So as to make the 
strongest possible case, the Chamber sought to "throw the book" at labor 
on the disqualification question, A leading Chamber spokesman suggests 
that "we were asking for raoro than we really wanted, and really hoped to 
obtain." 

Another \-aacon for Chamber activity at this time v/as a growing feeling 
in the Chamber that William MacPherson had been over-conciliatory as chairman 
of the industry Joint Technical Committee in his dealings with Victor dander. 
For example, one leader argues that Ha cPher son's only achievement for industry 
was in section 7g of the law which deals with discontinuance of benefit 
payments after 26 weeks irrespective of the coming of a new benofit year 
until such time as the beneficiary earns a sura equal to three times his 
benefit amount for a single week. This provision is designed to compel 
the recipient to accept employment which might not usually be considered 
"suitable work," In this respect, it serves as a kind of disqualification, 
but is not operative for six months. The Chamber was after generally 
tighter disqualification provisions which would be operative before, rather 

^ yf iul ua 



. 









i ' 



. 


















52 

than after, any bonofit paymonts« The essential elements of the Chamber 
program included disqualification of those persons who voluntarily took 
themselves out of the labor force, including women who left work for 
reasons of pregnancy, disqualification of those who voluntarily removed 
themselves to a different labor market area, and a narrower definition 
of "suitable work" than that which the Unemployment Compensation division 
had been utilizing. 

In the course of introductory conferences, labor undoubtedly 
sensed the wide difference in intensity of feeling among the employer 
participants v/ho were aiding llacPhorson. The range of opinion in the man- 
agement group moved from a characterization of management proposals as 
"a fair set of amendments", to a belief on the part of one representative 
that the employer position was not a sincere one. In terms of tactics, no 
less widespread a difference obtained, with one "Big Five" leader opposing 
any attempt at amendment of the law in 1947> while another insisted on 
absolute firmness, and a third suggested a generally conciliatory approach, 
Olandor, for l.ibor, refused to suggest a positive program. Taking advantage 
of the internal disagreement on the other side, he agreed to nothing. 

At one point, an attempt was made to convince Bertram Cahn that 
the Advisory Board ought to meet and recommend enactment of the Chamber 
program despite labor opposition. This meant an attempt to sell the program 
to the public members of the board, Cahn, however, was devoted to the use 
of the agreed process. He had made particular mention in all of his reports 
to the governor and General Assembly of the fact that the Board's recommenda- 
tions had been substantially agreed to by representatives of labor and in- 
dustry. He demurred at breaking this pattern. Calm, moreover, was an IMA 
director, and the EIA was not anxious for an open battle. Calm kept asking 
for more and more timo with the hopo that some agroement would eventually 



. 



' 



53 

bo worked out. Any substantive agroomont, of course, could bo offered 
as an amendment to pending non-controversial technical and procedural 
changes in the law. 

On Jun.j 23j a week before the end of the session, iiacPhcrson 
dijd of a hoart attack. His death tended further to restrict the already 
dim possibility of agreement because aacPhcrson-Olander negotiations had 
com^ to be the accepted pattern. The session ended on June 30, as usual. 
The unusual aspect was that the legislature enacted no substantive changes 
in the unemployment compensation law. It should be noted, howovcr, that 
the absence of legislation at this session was not a consequence of an 
inability of labor and industry to agree because of irreconcilable views. 
The evidence suggests that Olandcr refused the concessions necessary 
for an agreod bill at least partially because the oraploycrs themselves 
were not united on their demands. Whether or not there would havo been an 
agreed bill had the employers been united is, of course, an imponderable 5 
the facts arc that the employers wore not united and that there was no 
agreement. 



. 



COMPROMISE . BUT MOT AGREEMENT: 1949 

Many of the factors impeding an agreement in 194-7 on unemployment 
compensation legislation had disappeared or had been resolved by 194-9. The 
post-war recession, expected in 194-7, had still not materialized in 194-9, 
and more and more students and practitioners were abandoning their "bearish" 
attitudes. The 194-& elections had indicated popular support for state and 
national administrations committed to programs of social security extension. 
Perhaps the most significant nev^ factor was the rapidly increasing price 
level and the consequent diminution in the real value of the dollar. 

A ne\; factor of a somewhat different nature was emerging, however. 
By the end of 194£, three states had provided for the payment of benefits 
for temporary disability to workers covered by their unemployment insurance 
lai/s.l In addition, the Railroad Unemployment Insurance Law had been 
extended to cover cash sickness benefits for workers insured by that lav;. 
The tripartite Advisory Council on Social Security in its second report to 
the United States Senate Committee on Finance presented recommendations 
for a program that would afford protection to workers against the loss of 
v/ages due to permanent and total disability. In its fourth report, the 
Council took cognizance of the "major economic hazard" in the loss of 
income from temporary disability, and issued a summary statement on the 
need for providing protection against wage loss due to this type of dis- 
ability. 2 Disability unemployment compensation was becoming a question for 

1. California, Rhode Island, and New Jersey 

2. "Because time was lacking for a comprehensive study of the various 
methods that have been proposed to afford protection to workers who 
are unemployed because of temporary disability, the Council refrains 
from making any recommendations covering this area." Unemployment 
Insurance, a Report to the Senate Committee on Finance by the Advisory 
Council on Social Security, S. Doc. 206 (80th Cong., 2d Sess.), p. J+5* 



55 
serious consideration. Thus, Governor Stevenson's inaugural address care- 
fully suggested, "I trust that when the legislature is considering unemploy- 
ment compensation it v/ill also explore the related question of temporary 
disability insurance. "3 

The Stevenson message was the first direct set of recommendations 
made to the 1949 legislature on the subject of unemployment compensation. 
Aside from the sentence on disability benefits, the governor touched on 
four points, benefit increases, extension of coverage, abuse of the system, 
and contribution rates: 

The maximum benefits payable under our Unemployment Compensation 
Act were last adjusted in 1944. The purpose of this legislation 
is to enable the unemployed worker to continue to purchase the 
necessities of life. Increases in wage scales and living costs 
since 1944 have obliterated the correlation betx^een earnings 
and unemployment benefits which are now insufficient to cover 
non-post ponable necessities. 

Our statute extends the benefits of unemplo3Tnent compensation 
only to workers in establishments v/hich employ more than six 
employees. Twenty-seven states, employing more than 60% of 
all the workors covered by unemployment compensation have 
extended their coverage to establishments employing less 
than six, without, apparently, encountering serious adminis- 
trative difficulties. I urge you to consider this matter 
with other legislative adjustments in the field of unemploy- 
ment compensation. 

Here, too, there are problems for the executive as well as for 
the legislature. The importance of security to workers, the 
heavy cost to employers, the volume of claims presented — all 
combine to demand the utmost administrative care to protect 
our unemployment compensation system against abuse by officials 
as well as undeserving claimants. 

While I think weekly benefits payable to unemployed workers 
should be raised, consideration should also be given to a 
reduction of employer contribution rates taking into account 
the present size of the fund and the potential need for funds 
in the foreseeable future.^ 



3. Inaugural address of Governor Adlai Stevenson, Springfield, Illinois, 
January 10, 1949. 

4. Ibid. 



56 

Short lj r thereafter, the Chicago Tr ibune which, in past years, 

had stayed pretty much avay from the state unemployment insurance scene, 

published the first of three editorials dealing with the general subject 

of benefit eligibility. The first editorial, published on January 25, 194-9, 

established a framework: 

More than 200 peoplo are drawing unemployment relief payments 
from the state of Illinois while enjoying the resort season 
in Florida. They are presumed to be looking for i^ork there. 

These people have no right to be supported out of the unem- 
ployment insurance fund merely because they are out of work. 
They paid no premiums on the so-called insurance. It was 
contributed by their employers. Its sole purpose is to tide 
workers over from one job to another, not to support them 
indefinitely because they happen to be jobless. To qualify 
for benefits, they must be looking for work. 

So long as they are basking in Florida, verification of their 
claims that they are looking for work will be sketchy, at 
the best. There is an active labor market in Illinois. 
Employers who contribute to the unemployment fund would 
seem to have a prior claim to hire the services of the 
unemployed persons whom they are supporting. 

There can be no law to prevent a citizen of Illinois from 
seeking work outside Illinois if he wishes. There should, 
however, be no law compelling Illinois to pay him benefits 
while he is away. There may be times when it would be 
desirable to have people seeking work in other states rather 
than drawing benefits because they cannot find work here. 
These are not such times. 

There is a good deal of fraud in unemployment relief. It 
is partially legalized fraud. It consists of rulings as 
to what constitutes 'suitable work' for an unemployed 
person. Labor unions try to keep these definitions as 
narrow as possible. They would rather have a carpenter 
or bartender or race track cashier sitting idle and drawing 
relief than working as a laborer, even though he is phys- 
ically fit for the laborer's job. This is a more far 
reaching scandal than that of the Florida reliefers.? 

Three weeks later, a Tribune editorial reviewed the case of a 

bookkeeper who had been striken from the unemployment compensation rolls 

for refusing suitable work, but ended with a reaffirmation of the need to 



5. Chi cago Tribune . January 25, 194-9, p. 14-. 



57 
tighten requirements: "In viev; of the demonstration made by the Illinois 
unemplo'/ment insurance division in this case, that it kept trying to find 
suitable jobs for the bookkeeper and stopped paying her as soon as suitable 
jobs were found which she refused to take, hov/ can the division possibly 
send checks to Illinois unemployed spending the winter in Florida, Arizona 
and California, and thus unavailable for jobs which might develop here?"" 

Although it is manifestly impossible to make a quantitative evalu- 
ation of the influence of anything like newspaper opinion on either legisla- 
tive attitudes or perceptions of legislators attitudes, the Tribune "campaign" 
was a background for introductory discussions between labor and management 
representatives. As the Secretary of one employer association put it, 
"things were being stirred up by this kind of editorial and by radio 
addresses by Fulton Lev/is, Jr. on the same subject." 

The labor forces suffered a severe blow when, on February 5, 1949, 
Victor lander died after a brief illness. Olander had almost single- 
handedly guided and controlled labor activities in unemployment compensation 
legislation since the original act of 1937. His knowledge of the field, 
his prestige in the state labor movement, and his grasp of tactics and 
techniques in agreed bill negotiations were more profound than that of any 
other labor leader. His death, coupled with that of William J. MacPherson 
two years earlier, brought about a reorientation of the agreed bill process. 
Although MacPherson was replaced by John Doesburg and Paul Gorby, and 
Olander replaced by Daniel D. Car me 11, the agreed bill process did not again 
become a two man negotiating process with controlling decisions made on the 
spot by the negotiators. 

Another new element involved a possible redistribution of com- 
parative influence between the State Federation of labor and the State C.I.O. 



°* Ikid., February 19, 194-9, p. 8. 



53 
For the first time, a C.I.O. man v/as named Director of Labor when Governor 
Stevenson appointed Fran!: Annunaio to the post. This appointment, together 
with lander's death, tended to strengthen the position of the C.I.O. in 
the total picture. 

Early in April, Representative Stransky introduced H. B. 611 and 
H. B. 612 which represented attempts to enact the program supported by the 
Illinois State Chamber of Commerce. These bills revised employer contribu- 
tion schedules, and made detailed disqualification changes. The definition 
of "unemployment" would have been amended to require an individual to be 
"actively seeking employment " in order to be so classified. In the area 
of availability for work, the bills required that an individual be 
"physically and mentally able to perform v/ork of a character which he is 
qualified to perform by pact experience or training." In addition, "no 
individual shall be determined available for work unless he has been and 
is actively seeking work either at a locality at which he earned wages for 
insured work during his base period or at a locality where it may reasonably 
be ejected that such work may be available and he submits, for each benefit 
payment week, substantial evidence to such effect to the deputy," Pregnancy 
was a cause for disqualification, ipso facto, and it was to be legislatively 
determined that no woman is able to work during the three months prior to 
and one month following delivery of a child. 

An individual who quit work because of marital, filial or other 
domestic obligations or other causes not attributable to the employer was 
to be deemed ineligible until he again secured work and earned eight times 
the weekly benefit payment applicable to him at the time of separation. 
A similar penalty v^as proposed for persons discharged for misconduct. 

As to suitable work, an individual v/as to become ineligible if 
he failed "to submit substantial evidence that he is actively seeking work", 



59 
or failed without good cause either to apply for suitable work \/hen so 
directed or to accept suitable work when so directed. Ineligibility, again, 
was to extend until the claimant secured a new job and earned eight times 
his old weekly benefit. The determination of suitable work was of special 
importance. Stransky proposed that in deciding whether an individual has 
been offered suitable work, "during the first four weeks of his unemploy- 
ment, consideration shall be given to his prior training, his experience and 
prior earnings," but that after dra\/ing benefits for four Weeks a claimant 
may be required to take a job below his highest skill and earnings. 

Against H. B. 611 and K. B. 612, labor offered H. B. 319 and 
H. B. 74-6, both sponsored by Representative Allison, counsel for the 
United I line Workers in the State, H, B, 319 proposed an across the board 
increase in benefits of 50$, and the payment of benefits in case of work 
stoppage over a labor dispute after the sixth week of siich dispute, H, B. 
74-6 would have eliminated the experience rating provision from the Illinois 
Unemployment Compensation Law, In addition, although labor was not directly 
responsible for its introduction, labor looked with favor on S, B, 127, 
sponsored by Senator But lor, which provided for a system of disability 
unemployment insurance. 

President Stipes of the State Chamber of Commerce proposed to 
the emploj r er group that its program be presented directly to the legis- 
lature without intervening attempts to secure agreement with labor. As 
in 1947, Stipes was concerned about "going for what was right, "7 Stipes 
argued that even if enactment of the industry program was not possible in 
194-9 or 1951, independent action would give sure knowledge that there had 
been support for a program in which he believed. This position was not shared 
by other industry leaders. The IMA people, particularly, seemed to feel 



7. Interview, Champaign, February 11, 1950, 



60 
that it would be much more desirable to try to negotiate With labor. Stipes 
attributes this difference on proposed strategy to an IMA belief that it is 
impossible to enact an industry program without labor agreement, a point 
of view that is often expressed by labor spokesmen in defending the use of 
the agreed bill. Ultimately, Stipes agreed to go along with the IMA, and 
attempt to negotiate. 

John Does burg and Paul Gorby vere chief industry negotiators. In 
addition, industry made every attempt to have technically competent people 
present so that they uould always be prepared to give the proper kind of 
information when a technical question presented itself. Stipes says that 
he was unwilling to participate directly because of an awareness of the 
fact that he might tend to be too "stand-pat" in his attitudes and would 
perhaps walk out on a conference rather than attempt continued negotiation 
if he found that labor was adopting a position that seemed impossible to 
him. Daniel Carmell took over Victor dander's seat for labor and was 
joined by Abraham 3r us sell, general counsel of the State C.1,0. Industrial 
Union Council. Samuel Bernstein, Commissioner of Placement and Unemployment 
Compensation, participated for the state administration. 

There appears to have been a consensus at the outset that the 
major points to be settled involved benefit increases and tightening of 
disqualifications. "Wo knew" said one employer association executive 
secretary, "that in 1949 we had to agree to an increase in rates, and 
this seemed like the exact moment to demand concessions on the disquali- 
fication issue." The comparable official of another "Big Five" association 
notes that the position of labor was stronger in 194-9 than it had been in 
the past, that benefit increases vere inevitable, but that the employers 
felt so strongly about disqualifications that they didn't want to discuss 
anything else until that issue was out of the way. Similarly, labor 



61 
representatives were do tor: lined to press for a benefit increase as their 
number one objective 

Carmoll and Doesburg agreed oarly in the discussion to a tontative 
solution. This involved an increase in maximum benefits to $27 a week, 
In turn, Doesburg and Carmoll wero to write a joint public letter to 
Commissioner Bernstein urging that administrative decisions on disqualifi- 
cations be made more severe. No change in the existing disqualification 
language was to be written into the lav;, however, Carmoll brought this 
agreement back to his people who gave it their approval. When tho tontative 
agreement was presented to tho Employer Joint Executive Committee, Stipes 
led the fight against acceptance arguing that he could put no faith in a 
letter of this sort. The employer group r ejected tho agroement and held 
out for writing tighter disqualification provisions into tho lav/. Negotia- 
tions broke down, at least temporarily, over this issuo. The incident led 
to some tensions among the participants in that labor folt that industry 
was not at all clear as to whore its locus of decision maiding powor lay- 
in the negotiators or in the Joint Executive Committoe, 

Governor Stevenson, apparently concorncd about a possible slowing 
up of his legislative program, called a meeting of tho two groups in 
Springfield at tho beginning of May and sought to impress upon them the 
need for agreement. At one point, the question of a benefit incrcaso to 
Q27 a week was raised, and some industry pcoplo responded that although 
they had agreod among themselves to go as high as §21+ in return for dis- 
qualification concessions, they would probably bo willing to go to §25 
but not higher, thereby throwing out the Doosburg-Carmell agroement, Stipos, 
for example, indicated that he would attempt to influoncc the Joint Exccutivo 
Committee to go to 025 if, in turn, Stevenson would use his influence to improve 
the disqualification feature. Stipes, at least, came away with the dofinite 



62 
impression that the governor thought that tighter disqualification require- 
ments were dcsirablo, and this buttrcssod Stipes' already strong foolings 
on the subject. 

Around this same time, both sides clarified their positions. On 
May 4, Stipes announced that H. B. 611 and H, B. 612 represented the State 
Chamber's legislative program in this field. He argued that these bills 
"would not take away one cent of employees 1 benefits nor one day of the 
26 weeks for which benefits can now be paid." 

The State Chamber favors unemployment compensation as an 
insurance program maintained for protection of those people 
who are out of work through no fault of their own. 

Unemployment compensation should not be paid to people who 
quit their jobs merely because of personal wishes, who 
leave the labor market, or who refuse to help themselves 
by finding work and earning a living. 

Although the other employer associations were seemingly content 
to let Stipes issue the public statements, they were consulted all along 
the line. Stipes' and the Chamber's leadership seems to be a function of 
the fact that it was from here that a definite plan was forthcoming. The 
Chamber was apparently alone in having a definite program. This was 
important in terms of leadership, but it did not at all mean that the 
industry group had become monolithic. Indeed, it seems possible that 
employer differences on tactics was a weakening force on that side. One 
employer representative reports that he "sat" on one of his colleagues on 
two different occasions because the latter charged labor with bad faith, 
a charge that the first man termed "untenable." 

labor restated its position with the introduction of H. B. 825 
by Representative Harris. The willingness to shift from the position 
originally taken in the Allison bills was probably due to three principal 
causes. Introductory discussions had demonstrated that the earlier position 



8. Illinois State Chamber of Commerce, Current Report (June, 194-9). 



63 

was not sufficiently specific to be realistic j that the Allison bills wore 
making no progress in the House Judiciary Committee. Finally, H. B. 239, 
originally providing for administrative changes, which might have served 
as a measure to which substantive changes could be grafted, had been 
amended in the House in such a manner as to increase the executive authority 
of the Commissioner of Unemployment Compensation. The State Federation 
charged that the amendments were "absolutely meaningless", and indicated 
that it was opposed to "giving anyone except the State Director of Labor 
executive authority in the administration of such an important law as 
the Unemployment Compensation Act • "9 

Harris 1 bill incorporated the proposed amendments of the State 
Federation of Labor, ^ It extended coverage to employers of one or more, 
increased maximum benefits to 035, established an allowance of $5 for 
each dependent, eliminated the one week waiting period, reduced the penalty 
period of disqualification for voluntary quits and refusal of suitable 
work, eliminated the prohibition on benefit payments to strikers, and 
repealed the experience rating provision. 

Following the tentative introductory discussions, all of the 
pending bills were referred to a subcommittee of the House Judiciary Committee. 
The five man subcommittee included Representative Karber as chairman, and 
Representatives Ferguson, Stengel, Horsley and Arrington. The subcommittee 
held a series of hearings on May 4, 11, and 18 to which industry and labor 
spokesmen were invited, Paul Gorby testified on the 4th and the 11th, while 
Leonard Stiegel, an industry member of the Unemployment Compensation Advisory 
Board and Chairman of the State Chamber of Commerce's Social Security 
Committee, testified on the 11th and again on the 18th, "representing all 
employers' organizations. "H Daniel Carmell testified for organized labor 

9~. News, Letter . Vol. XXXV, ilo. 2 (April 9, 1949) . 

10. Ibid., l!o. 5 (April 30, 1949). 

11. Current Report (June, 1949). 



64 
at the hearing on May 11. At that time, Governor Stevenson wa3 said to 
have reaffirmed his interest in having a "satisfactory" bill enacted. The 
State Federation of Labor still felt that "there is some hope for a com- 
promise which will satisfy both [labor and employers] . "12 j n view of 
subsequent developments, the use of the word "compromise" rather than 
"agreement" is of particular interest. 

The State Chamber's Legislative and Social Security Committees 
met in joint session in Springfield on May 17 to discuss progress. At 
that time, it was decided to intensifjr the push for passage of H, B. 611 
and H. B. 612. Accordingly, a special one page supplement to the Chamber's 
legislative bulletin, Spri ngfield Scene , was issued on May 21. The supple- 
ment reproduced two editorials from The C hicago_ Journal of Co mme r ce, dated 
May 12 and May 13, in which that publication reviewed the unemployment 
compensation situation and concluded that "Every Illinois emplojrer and 
every honest Illinois employee should support H. B. 6ll", and that "House 
Bills 611 and 612 are, we believe, in the public interest. They should 
become lav;," An accompanying letter, reproduced adjacent to the editorials 
described them as "typical of much nowspapcr comment in past weeks. They 
give convincing arguments for passage of these 2 bills," State Chamber 
members wore "again" urged "to see your legislators and tell thera of the 
need for better U, C. legislation," 

It was apparently becoming manifest by this time that labor and 
industry positions wcro "simply not reconcilable despite the fact that 
sincerity abounded on both sides and that there was honest and decent 
conversation, "13 State administration leaders determined on a final attempt 
to secure agreement. Representatives of labor and employers were called into 

T2~ Hews Letter Vol. XXXV, No. 7 (May H, 1949) . 
13. Paul Gorby, interview, Chicago, March 16, 1950. 



65 
a conference at the Abraham Lincoln Hotel in Springfiold on May 25. Although 
labor was apparently willing to make concessions in the disqualification 
area, no agrcomont was reached. "The provisions of House Bills Nos, 611 and 
612 were so objectionable and provoked so much dissension that the representa- 
tives of labor decided to leavo tho conference"!^ 

Labor's final position, as expressed at this conference, included 
an increase in maximum benefits to 025 a week. On the disqualification 
issue, labor was willing to accept disqualification of women who quit work to 
marry, of pregnant women, of individuals who quit because of domestic cir- 
cumstances, of workers who remove to an area where job opportunities are 
less favorable. In addition, labor acquiesced in a requirement that availa- 
bility for work be considered in terms of whether the worker is actively 
seeking work, and in a change in base period earnings requirements from 
$225 to 0300. Finally, labor agreed to a change in the employer tax rate 
from the existing scale of \% to 3*6$ to a scale of \% to 2,7$ and offered 
to accept a six week penalty period for voluntary quits, refusal Of suita- 
able work and discharge for misconduct, ^5 The existing law provided for 
a flexible four to eight week disqualification period* 

The conference broke up on industry's insistence on an earnings 
requirement following voluntary quits, refusal of suitable work, and 
discharge for misconduct, 16 The point may be illustrated by considering 
the case of an individual who leaves work "without good cause." Under 
labor's proposal, he would be penalized by a six week disqualification 
period before he might secure unemployment compensation. Under industry's 
plan, he would be required to secure employment and earn wages equal to 
eight times his weekly benefit amount before becoming eligible for benefits. 



H. He ws Letter . Vol. XXXV, Ho, 9 ( May 20, 1949) 

15. Ibid. 

16. Ibid. 



66 
Almost certainly, the labor representatives v/ere influenced in their stand 
by the unceasing campaign that Victor Olander had v;aged for establishment 
of the principle that freedom to leave employment is as important as 
freedom from involuntary servitude,-^ 

Although representatives of the State Labor Department v/ere still 
hopeful that some satisfactory agreement might be reached, labor and 
industry were pessimistic about the chances for agreement after the May 25 
stalemate. This pessimism was apparently shared by the House Judiciary 
subcommittee which proceeded to establish "what it considered a fair 
compromise between the positions taken by the labor and industry groups, 
and drafted its own bill, which was introduced as H. B. 1105. "^ The 
subcommittee bill, in almost every respect, corresponded to the final labor 
offer of May 25. In providing for a six week penalty period for voluntary 
quits, discharge for misconduct, or refusal of suitable work, the bill did 
not meet industry's proposal that re-employment be a prerequisite for 
claiming benefits after this type of separation. 

H. B. 1105 was introduced on June 8, passed the House on June 17, 
and passed the Senate on June 24., It was not an "agreed" bill #^9 On the 
other hand, it was a bill which both interest groups agreed not to oppose. 
Labor and industry leaders both carefully terra this a "compromise" bill 
rather than an "agreed" bill. The essential distinction would seem to lie 
in the fact that an "agreed" bill will be actively supported by both parties, 
while a "compromise" bill will not be opposed by either party. The "com- 
promise" bill of 1949 represented a completely new kind of development in 
the formation of Illinois unemployment compensation legislation, 

17. A discussion of the history of this question including Olander' s position 
and activities may be found in Howard D, Hamilton, "Legislative and 
Judicial History of the Thirteenth Amendment" (Unpublished Ph.D. thesis, 
University of Illinois, 1950). 
13. Illinois Labor Bul letin. Vol. X, No. 1 (July, 1949), p. 5, 
19. Hews Letter , Vol. XXXV, No. 13 (June 25, 194-9). Springfield Scene 
(July 22, 1949) . 



67 

CONCLUSIONS AND HYPOTHESES 
1. 
Two general observations are in order prior to a summary analysis 
of the use of the agreed bill in the formation of Illinois unemployment 
compensation legislation. First, the maintenance of the status qu o is 
disadvantageous to labor in the area of so-called protective labor legis- 
lation where increased benefits and extended coverage are usually the major 
goals. Thus, labor must frequently consider it a defeat if no policy change 
is enacted by the legislature. Second, the legislative process in Illinois 
is so set up by virtue of the 1870 consitution as to discourage the enact- 
ment of legislation. The constitutional requirement that all bills must be 
passed by a majority of the ele cte d members of each house establishes a 
situation wherein, in effect, a legislator who does not vote is helping 
to defeat the proposed legislation just as surely as if he were voting in 
the negative. The constitutional majority requirement appears to be a 
strong argument in favor of the use of the agreed bill in that 77 votes in 
the House and 26 votes in the Senate are not otherwise easily obtainable. 
This point was emphasized by the State C.I.O. in its semi-public dispute 
of 1949 with State Federation leaders on the subject of a Constitutional 
Convention for the State, One C.I.O.-P.A.C. leader, in arguing publicly 
with a top State Federation figure, charged that the State Federation called 
the agreed bill a necessary expedient in view of the constitutional situation 
but, at the same time, deliberately helped to perpetuate the agreed bill by 
its opposition to the framing of a new Illinois constitution. The State 
C.I.O,, according to another official, would like to meet the situation by 
modernizing the constitution and then reappraising the use of the agreed 
bill technique. In this manner, it is argued, it will be possible to 
assess the value of the agreed bill as an independent technique* Leaders 



■->. 



68 

of the Federation, on the other hand, argue that the overall dangers to 
existing labor legislation involved in revising the Constitution are too 
great to permit experimentation, and that if the existing situation is a 
kind of pressure for the use of the agreed bill, the situation is not a 
bad one. "After all," said a Federation negotiator, "we have done well." 
Contrariwise, his C.I.O. prototype suggested that the C.I.O. goes along 
because its position in the state is not strong enough to permit it to demand 
independent action. The implication is left that a constitutional change, 
and an increase in C.I.O. strength, may well be productive of a change in 
C.I.O. technique. 

Some generalizations may be made about the content of unemployment 
compensation legislation achieved through the use of the agreed bill technique. 
Pending a study of the development of policy in this field in a comparable 
state where joint conferences are not utilized, it would not seem possible 
to render conclusions on the comparative effect of the agreed technique. In 
Illinois, however, the use of the agreed bill has been accompanied by a 
steady development of the law. Given a basic situation where there is 
reason to believe that amendment of the lav; might have been withstood (at 
least temporarily) , the picture instead is of a law which has pretty well 
kept pace with unemployment compensation laws of other states. This has 
been true most notaW/y in those areas which seem to be a function of 
changing economic conditions. Thus, changes in benefit amount and duration, 
for example, have been easy subjects for agreement. 

On the other hand, a clue as to the maximum utility of the agreed 
bill may be found in comparing the standards of other forward states with 
those of Illinois. The most critical standards in the unemployment compensa- 
tion field would seem to include criteria governing such things as coverage, 
compensation payments during periods of temporary disability and a fair 






. 















69 

disqualification formula. Illinois has lagged in these areas. 

If it is true that labor agreement is related to a belief that the 
agreed bill guarantees some progress where otherwise there might be no pro- 
gress, a question remains as to the rationale for industry agreement. One 
of the points most consistently enunciated by some industry leaders is that 
there has come to be a belief in the principle of unemployment compensation. 
A typical comment v/as that compensation for involuntary unemployment tends 
to keep a man in the labor force and therefore available for work when 
business conditions warrant expansion, whereas ignoring the unemployed must 
work to industry's detriment through a lowered morale and possible loss 
of labor by removal from the area or transfer to a different industry. Most 
spokesmen went bejrond the self-interest argument and indicated a strong 
belief in the humanitarian aspects of a compensation program. The important 
fact to be drawn from this is that there seems to be an acceptance of the 
desirability of some program. Manifestly, this decision implies a willing- 
ness to pay compensation at a rate and for such duration as will meet the 
basic objective of the maintenance of stability, a rate and duration which 
must necessarily vary with economic conditions. 

There is no evidence, however, that management has gone beyond 
this basic decision. Moreover, it is very likely true that the decision 
is a consequence of management's perception of the demands of articulate 
public opinion. Indeed, one labor figure notes that "they might just as 
well agree because we could get that much anyhow, and they know it. But 
they know, too, and so do we that it would require a blazing fight which 
would leave scars. Neither side 3ees any point to that." 

There appears in general to be confirmation for the hypothesis 
that labor and industry agree on a legislative proposal in the Q.C. field 
because each party considers that sooner or later , the legislation is going 



70 

through anyway. Beyond this, labor agrees because it probably considers 
itself the weaker party in the legislature-'- and on the basis of experience 
and lack of inclination to fight feels that by agreement it will obtain no 
less than it might through independent action and perhaps a little more. 
Employers, perceiving too that the legislation is going to be enacted, seem 
to be anxious to agree so as to maintain stability in the law, and so as 
to insure that fundamental policy changes will not be made without its 
influence over the terms of these changes being felt. This type of analysis 
leads to a tentative generalization about agreed bills : labor-industry 
agreement would appear to be a practical method of establishing legislative 
policy in those areas of labor legislation where the two parties accept the 
desirability of the philosophy which the legislation is designed to implement. 

If this can be achieved, it appears that the agreed bill offers 
a tool whereby the two major groups most directly affected by public policy 
in this field may be able to establish a range of standards acceptable to both 
and may be able to develop legislation which bears the mark of expertise. 

In recapitulating the nature of the agreements on unemployment 
compensation that have been reached since 1937, and adding thereto a considera- 
tion of the 194-7 and 1949 experiences, some phases of agreement stand out 
prominently. It was originally hypothesized that benefit amount and duration, 
eligibility and disqualifications, and waiting periods were subjects of short- 
run disagreement susceptible to agreement, but that assumption of costs, 
merit rating provisions and disability compensation \^ere matters of long-run 
disagreement and opposition which do not lend themselves to an agreed bill. 
A test of this hypothesis against the evidence suggests that only phases of 
it have been sustained. 



1. This is not meant to suggest that labor necessarily considers itself 
the weaker party in any broad political sense, but rather that as a 
consequence of the constitutional majority requirement and of inequita- 
ble apportionment, it is at a practical disadvantage, an institutional 
disadvantage which it is not yot strong enough to combat. 



71 

With the acceptance of the unemployment compensation principle, 
the question of the amount of a woekly benofit to be paid a qualified 
claimant has nearly always been easily resolved. Although it appears likely 
that labor and industry reached overlapping limits through different processes, 
no general agreement has been endangered or even delayed because of the benefit 
amount question. Moreover, the prognosis seems good as long as the determin- 
ants of benefit amount include cost of living and experiences of other states 
as they have in the past. Although these are not factors which lend themselves 
to exact determination, they furnish an indication of the general trend from 
which an exact figure can be established depending, among other things, on 
concessions by one side or the other on issues. The question of duration of 
benefits is of much the same order, except that there seems to be a feeling 
on the part of some industry and labor leaders that the present 26 week 
period represents a fair maximum for some time to come. Again, the establish- 
ment of a waiting period prior to the payment of benefits has never been a 
hard core point of disagreement. Labor has pushed, fairly consistently and 
fairly successfully, for a lessening of the waiting period, and there has 
been a minimum of opposition from industry. The present one week period, 
reached through agreement, appears satisfactory to both sides. 

Inclusion of coverage and disqualification questions in the 
"susceptible to an agreed bill" category is an hypothesis that does not 
seem to be sustained. As early as 194-1 1 an apparent agreement was reached 
dealing with extension of coverage to employers of one or more employees. It 
will be remembered, however, that this section of the bill was deleted in 
the House after being sustained in the Senate by only two votes. Again, 
in 1945, the employers agreed not to oppose extended coverage, but this was 
once more lost in the legislature. Although the observer cannot be aware 
of the multitudinous inf orraal arrangements concluded in the course of the 



' 



- 



• 



72 

legislative process, it does seem apparent that some segment of industry, 
at least, was opposing the extension agreed to by top leadership. Since 
1945, labor's efforts to extend coverage through amendment of the state law 
seem to have slackened, and one labor leader admits that he sees little 
hope of achieving extension except through federalization of the unemploy- 
ment compensation program. Extended coverage is the sole point in the 
history of the Illinois law on which a formal agreement had seemingly been 
reached only to be rejected by the legislature. This would seem to suggest 
that real agreement, in the sense of positive political action from both 
sides, was lacking. In any event, considering the fact that all other agree- 
ments went unscathed in the legislature, and that on at least one occasion 
agreement on this issue took the form of willingness not to disagree, it 
appears that to be meaningful, an agreed bill must have active support from 
all parties to the agreement. Moreover, the action of industry representa- 
tives in 1945 — in withholding positive support for extended coverage because 
of some doubt as to how representative they really were — suggests that the 
broader the basis of representation the more likely is an agreed bill to 
succeed. 

In the related area of disqualifications, agreement has been even 
further from achievement. Particularly in recent years, the industry group 
has fought hard for tighter disqualification provisions. Labor has opposed 
change with equal vigor and, fairly clearly, it was labor opposition to 
industry demands in the disqualification area that made agreement impossible 
in 1947 and again in 1949 • Who shall be pai d unemployment c ompensation 
has-been a .much .more. _cpntr overs ial question in Illin ois than how muc h 3 h a 1 1 
be paid or how lon # shal l payments be m ade • 

This conclusion leads naturally into a consideration of the second 
phase of the hypothesis: that questions of cost assumption, merit rating 
and disability payments are matters of long-run opposition which do not 



73 

lend themselves to an agreed bill. Again, only a part of this hypothesis 
appears to be sustained. Disability benefit payments have not even reached 
the point of discussion in labor-industry conferences on unemployment compensa- 
tion legislation. ,,; . f e would be willing to talk with labor about this question," 
said an industry leader, "as a matter of fact, we would not only talk, we 
would holler our heads off — but we wouldn't agree." The peculiar position 
of disability benefits was further emphasized in the 194-9 session when a 
bill providing for such payments was sponsored by Senator Butler who has 
never been a spokesman for either industry or labor, and who believed himself 
to be acting out of an independent judgment. In almost all other cases where 
an issue appeared too controversial for agreement, either labor or industry 
arranged for sponsorship by one of their spokesmen in the legislature. This 
has been the case in recent years in the extended coverage area. It seems 
likely that if disability benefits are to be incorporated in the Illinois 
law, the major impetus will be forthcoming from a combination of labor 
strength with tangential strength in perhaps the same manner that the 
combination of industry strength and tangential strength killed extended 
coverage. It is significant, too, to observe that disability benefits fall 
into the catego^ of who shall be paid, thereby adding strength to the 
conclusion that this is the major controversial question in the field in 
Illinois. 

Assumption of costs of the unemployment compensation program seems 
to have become a dead issue in Illinois. Since the initial negotiations in 
1937, there has been no serious attention paid to the possibility of broaden- 
ing the contributory base so as to include employees. This question does 
not seem to be one on which a determination can be made as to whether or 
not it falls within the scope of an agreed bill. The facts are that it 
simply has not been a problem for potential legislative action. 



74 

Finally, the merit rating question is perhaps the most elusive. 
Merit rating has not been a subject of labor-industry agreement since the 
first negotiations of 1937 and the revision of 1939* Labor, from time to 
time, has proposed elimination of this feature, but there is some evidence 
to suggest that this may have been something of a bargaining tactic designed 
to compel concessions on other points. Employer leaders insist that this 
is a hard core point on which agreement is impossible because the only 
practical change would be elimination — to which industry would steadfastly 
refuse to subscribe. The merit rating question, all in all, seems to fall 
somewhere between the area of "no problem" and tnat cf "hard core disagree- 
ment." 

Tho rough continuum established here between agreement issues and 
non-agreement issues assumes major significance when it is related to current 
issues in unemployment compensation. The latter tend to appear at the non- 
agreement end of the scale, for they include such items as disability compensa- 
tion, payments to strikers, and disqualification provisions including suitable 
work, voluntary quits and availability for work in the state. The chairman 
of the Advisory Board made a special point of noting that the issues have 
come more and more to be matters of philosophical disagreement rather than 
specific agreement. Ultimately, it is possible to agree on whether total 
unemployment should be compensated v/ith ,)23 or ^27, but it is not so easy 
to agree on whether compensation should be made available to individuals who 
winter in Florida arguing that employment is more plentiful there than in 
Illinois. Moreover, on issues of this type, the experiences of other states 
are less likely to be binding in that the question is less one of careful 
economic computation as it sometimes tends to be with benefit amounts, and 
more one of moral judgments which Illinois leaders insist on making for 
themselves. 



75 

2. 

A consideration of the mechanics of formulating legislation through 
the agreed bill process involves initially a consideration of the role of 
the Unemployment Compensation Advisory Board. The legal basis for the existence 
of the Board is found in the Civil Administrative Code which simply provides 
for the establishment of a board of nine members. In practice, this has become 
a tripartite board, and an industry membor, Bertram J. Cahn, has been its 
only chairman. Members serve without compensation, but are reimbursed for 
necessary expenditures. 

Labor and employer leaders alike tend to argue that the very 
existence of the Board is the strongest possible pressure for agreement. An 
experienced industry leader calls it "the base and source for agreement," 
while other influential participants in the agreed bill process suggest that 
it is likely that without the statutory existence of the Board there would 
be no agreed bills. A somewhat more penetrating argument was advanced by 
one source who suggested that without the Advisory Board, the agreed bill process 
would be "transformed too easily into a political football to be utilized 
when an administration found it advantageous and to be suppressed when an 
administration found it embarrassing for any reason." 

It is a fact that the membership of the Board has been relatively 
untouched by the shifts in political power in the state. The chairman, 
appointed originally by Governor Horner, a Democrat, served through Dwight 
Green's administration, and remained in office under Governor Stevenson. 
Indeed, Mr. Cahn points to this with some pride and considers his uninterrupted 
service to be "an indication of the non-political character" of the activities 
of the Board. Again, Victor Olandcr for labor and Samuel Carson for industry, 
among others, have served irrespective of the politics of the state. In 
this respect, the Board has been non-partisan, perhaps almost "unpartisan" 
in character. 



76 

Of a different order, however, is the fact that from no quarter 
is there any assertion that the Advisory Board has actually been a factor 
in creating agreement. Rather, there seems to bo a belief that the Advisory 
Board represents a suggestion by the legislature that agreement would be 
desirable, and a further belief that the Advisory Board is the mechanism 
though which agreement should bo presented to the legislature. 

This point of view is shared explicitly by an experienced state 
administrator who is close to legislative developments in the unemployment 
compensation field. This official says that the Board does none of the 
actual negotiating on the terms of unemployment compensation policy. He feels 
that they have no understanding either of the necessary technical detail 
involved in this kind of law or of the collective bargaining techniques 
utilized in labor-management discussions. Advisory Board membership is 
primarily a function of prestige, and secondarily a function of competence 
in the field. Tripartite representation on the board, concludes the adminis- 
trator, enables it to serve as an admirable "front" for the presentation of 
agreements made elsewhere. Industry representatives have been described 
by one of their own number as "parrots" for the industry Joint Technical and 
Joint Executive Committees. 

The Advisory Board as established in the Civil Administrative Code 
was given no specific functions and duties. Partially as a consequence of 
this fact, it tended to develop into the kind of a board which receives 
reports and accepts them — which acts for the most part ex £ost facto and 
finds that it conducts inquests rather than inquiries. It is not, however, 
simply the general duties of the Board which tended to remove it from the 
real power situation and the real decision-making process. Some of the 
choice of personnel almost seemed consciously directed tox^ard making the 
board a "front" rather than the locus of power. Although the choice of 



77 

labor representation on the Board is not liable to this criticism, industry 
representatives have not been in possession of decision-making powers. While 
William MacPherson had primary responsibility on the industry side for 
conducting an agreed bill, he never sat on the Advisory Board. 

One of the possible virtues of the use of the agreed bill process 
would appear to be the fact that responsibility might be more easily focused 
through this method than through ordinary legislative enactment. The general 
public can know that introductory decisions on unemployment compensation 
policy are ni5.de preeminently by the "Big Five" and by its labor prototypes 
all acting through their acknowledged representatives, and subject to 
legislative approval. Manifestly, it is somewhat impractical to attempt 
to offer suggestions or criticisms to the organizations as such. This 
appears analagous to petitioning the legislature without paying attention 
to formal and informal leadership structure. If, however, responsibility 
for decisions were combined with formal appointment to a power position, 
this difficulty would be obviated. The conclusion suggests the desirability 
from the point of view of the general public of vesting real authority in 
the Advisory Board through the appointment of personnel who are endowed 
by their organizations with decision-making power. In effect, this involves 
the fusing of authority with what has appeared to be responsibility. 

Connected with this is a second point dealing v/ith the composition 
of the Advisory Board. Partially, perhaps, because of the indefiniteness 
of the role of the Board, it appears that its tripartite character has 
served no particularly useful function. So long as the Board does not 
have a real decision-making role, the public members do nothing more than 
lend their names to a pre-determined report. They do not persuade, compromise, 
or offer alternative solutions, functions which were of considerable importance 
in the tripartite organization of the National War Labor Board, for example. 
Moreover, insofar as decisions are not made by the Advisory Board, the public 



78 

members have no opportunity to function as one member of the Illinois legis- 
lature hopes they might, "as a jury, or a little legislature smoothing the 
path and easing the burden of the legislature." Advisory Board reports up 
to this time have been unanimous, and have been directly related to the 
ability of labor and management leaders to agree on substantive changes 
quite independent of the existence of the Board. Indeed, it will be 
remembered that in 194-7, Chairman Cahn opposed calling a meeting of his 
Board while labor and employer representatives were unable to agree, and 
that in neither that year nor in 194-9 did the Board meet. In neither of 
those years '/as there an agreed bill. 

All in all, it appears that by establishing the Advisory Board 
the legislature, insofar as the parties involved perceive the situation, was 
urging that the agreed process be utilized and that the interests of others 
beside labor and industry were to be considered. If the intent of the 
statute, however, was to make the Board a meaningful power force, that end 
has not been achieved. In turn, this seems to have vitiated any potentially 
desirable and influential role of the public members of the board. 

In establishing the framework for this investigation, consideration 
was given to the role of the legislator, the political party, and the adminis- 
trator in the agreed bill process. Primary interest i^as centered not so 
much on what is done by these forces as on why their attitudes and actions 
in dealing with agreed bills are as they are. Thus, it was hypothesized 
that the legislative path of an agreed bill is easier when there has been 
legislative participation in the agreement than when negotiations are con- 
ducted quite independent of the legislature. This hypothesis was based on 
the assumption that the legislature is anxious to retain a sense of public 
responsibility and yet develop the widest possible support for any program 
it enacts. 

It does not seem to be true that participation by the legislature 



■ 






n 



- 



79 

in the negoatiations leading to an agreed bill through a committee or sub- 
committee has made the likelihood of a successful agreed bill any greater. 
On the other hand, this in no way suggests that the absence of legislative 
participation would make no difference. Rather, legislative participation 
seems not to be a positive determinant of success. Nonetheless, labor and 
management people take infinite pains to avoid any possible feeling on the 
part of the legislature that it is being "frozen out." A labor attorney 
who has been important in negotiations made a particular point of the fact 
that "Labor requires that a joint legislative subcommittee sponsor the 
meetings so that labor cannot be accused of telling the legislature what to 
do." Industry people adopt much the same point of view. Even with legisla- 
tive participation in preliminary activities, however, a successful agreed 
bill is not guaranteed as may be demonstrated by the two attempts to extend 
coverage through an agreed bill, both of which were aborted in the legislature. 
Nor was legislative participation able to effect an agreement in 194-7 or in 
1949 • If an agreement is feasible, it is probably desirable to have legisla- 
tive participation, but the legislative participation does not mean that an 
agreement will be feasible. 

Members of the legislature, in talking frankly about the use of 
agreed bills, admit the desirability of the process as a method of avoiding 
antagonisms. A State Senator argues, for example, that on this level he 
would wholeheartedly support any agreed bill which he was convinced was really 
agreed to by all parties concerned. "There is no Rvalue, however, in giving 
blind support to an agreed bill which only part of labor or part of industry- 
supports," he said, "because this leaves the legislator open to attack and 
he derives no political advantage." Other members of the legislature suggest 
that they welcome the opportunity to avoid becoming embroiled in a controversy 
over labor legislation, describing this field as a "hot potato." 



GO 

Another consideration advanced by some legislators is that it is 
not possible for a state legislator with his limited time and even more 
limited research facilities to familiarize himself with the consequences of 
alternate lines of policy in such a complicated field as unemployment compensa- 
tion. A member of the Illinois House of Representatives with a statewide 
reputation for sincerity and competence says without reservation that "in 
no other area of public policy is the span of legislative ignorance as great 
as in unemployment compensation and workmen's compensation." Interestingly 
enough, however, nearly all legislators who made a point of the issue of 
complexity themselves suggested that this may be a rationalization because 
of possible undesirable connotations flowing from the use of the agreed 
bill as a political aid. In developing this further, a House member noted 
that the services of the Research Department of the Legislative Council 
were available if information were really desired. 

Nonetheless, members of the legislature insist that there is no 
such thing as automatic acceptance of an agreed bill, and this appears to 
be sustained by the evidence, notably the extended coverage issue. The 
Majority Whip of the State Senate, urging direct quotation, stated "I do 
admit that legislative activity is curtailed and influenced by an agreement 
between the parties, but I specifically deny that there is a complete legisla- 
tive surrender." In noting that, very frequently, agreed bills move through 
the legislature in a very brief time, it should be remembered that the chief 
source of delay in the legislative process is usually time consumed in attempts 
to hear the views of those groups most directly affected by the proposed 
legislation. Insofar as an agreed bill makes this unnecessary, the fact of 
speedy legislative action should not be considered an indication of any 
abdication of the legislative function. 

A final crucial question in this area has to do with whether the 
legislature properly safeguards the interest of groups other than labor and 



81 

management in subscribing to an agreed bill. That is to say, does the use 
of an agreed bill process furnish adequate safeguards against the possibility 
that labor and employers may together act in a manner inimical to the interests 
of the rest of society? Prior to a consideration of relative legislative 
awareness of this problem, however, it should be noted that in a very real 
sense this is something of a manufactured issue in the unemployment compensa- 
tion field. The issues in this area of labor legislation seem to be such 
that labor and employers have adversary interests thereby tending to minimize 
the possibility of collusion and maximize the likelihood of each party serving 
as a check on the other. Stated differently, this suggests that labor and 
industry tend to set internal limits on each other, the result of which is 
to set up that type of balance which diminishes the need for protective action 
by tangential groups—groups with an indirect rather than a direct interest 
in the results of labor-management interrelationships. 

Beyond this, however, there are indications that the legislature 
is not unaware of at least a potential need to protect tangetial groups 
from the results either of collusion or of that kind of non-balance which 
may compel either labor or industry to agree to a measure about which it 
has reservations. Moreover, participants in the agreed process are themselves 
aware of this legislative function. One top industry figure notes that he 
feels that if labor and management can come to an agreement, it is incumbent 
upon them to offer it to the legislature, "but that the legislature has an 
obligation which may not be delegated to study the problem independently with 
a view to the general welfare." Another man in a similar position likens 
the function of the legislature in the agreed process to a jury which must 
make a decision in the best interest of society as well as afford justice to 
the parties involved, an analogy which was also used, interestingly enough, 
by a labor leader. Members of the legislature, in talking of affording pro- 
tection to tangential groups, emphasize the notion that although they often 



32 

raise little question about the substance of an agreed bill, considerable 
attention is devoted to examining the source of agreement, particularly a 
determination of whether representatives for each side have consulted with 
leaders of tangential groups. "I believe," said a State Senator, "that in 
the unemployment compensation field, an agreed bill is achieved by participa- 
tion of no less than 95$ :>f the various groups affected by the law." 

Companion hypotheses were established at the outset dealing with 
the role of the political party and the administrator in the agreed bill 
process. It was tentatively generalized that the governor, acting as party 
leader, will exert all possible influence for agreement and will tond to 
claim the results as a party achievement. Perhaps no other point becomes 
so clear in considering agreed bills in unemployment compensation as the idea 
that the political party is almost completely by-passed, that party lines are 
ignored, and that frequently the consequences of one agreement are largely 
to eliminate unemployment compensation issues from party policy at ensuing 
elections, "We don't test legislators by their votes on unemployment compensa- 
tion issues, and we don't test party platforms by their stands on unemployment 
compensation legislation," said a labor leader, "because we know that this 
issue will be settled outside of party caucuses." Gubernatorial efforts, 
since Governor Horner's 1937 conference, appear to have been directed toward 
encouraging agreement, although there is no indication that the incumbent 
has used the results of an agreed bill as a campaign issue. Rather, the 
agreed bill fits into the larger picture in that it allows for no prolonged 
wrangling which might tend to slow up the overall legislative program of 
the governor. The Illinois legislature is practically compelled to adjourn 
its biennial session on June 30, and necessary business conducted in a minimum 
amount of legislative time permits that much more time to be devoted to other 
phases of a gubernatorial program. 



83 

Those who are charged with the administration of this program seem 
more concerned about maintaining the agreed bill process than do the formal 
policy makers. A highly placed administrative official advances a threefold 
rationale for his department's continuous interest in the success of agreed 
bill conferences: 1. Continuity in admini strati on. This involves the notion 
that administrative participation in agreed conferences furnishes some degree 
of assurance that amendments to the law will be forthcoming, at least partially, 
from the administrative group most intimately concerned with carrying out 
day to day problems. 2. A greater clarity in legislation. This was tied 
to the complexities of the unemployment compensation problem, and the fact 
that independent legislative action may sometimes produce a remedy that the 
legislature really didn't intend or a confusion that the legislature is 
unable to foresee. This was illustrated by a measure passed in 194V dealing 
with exemptions under the law for certain types of salesmen. The ambiguity 
of this statute is such that the Unemployment Compensation Division is unable 
to determine legislative intent as to which types of salesmen are to be 
exempted. "If it is understood that all unemployment compensation amendments 
are to come about as a consequence of agreed bills," said the administrator, 
"this sort of thing becomes impossible and saves us innumerable headaches." 
3. The elimination of radical changes in the law as a consequence of shifts 
in political power. This is tied back to the idea of continuity in administra- 
tion, and the administrator's feeling that the law should be a consequence 
of what the actual participants and beneficiaries feel is desirable rather 
than what seems politically beneficial to cither the Democrats or Republicans. 
It should be noted here that the Illinois Unemployment Compensation Division, 
which enjoys a high degree of confidence from both labor and management groups, 
has been relatively unaffected by political shifts. 

The relationship between the agreed bill and the judicial branch 



84 

of government is worthy of some consideration. Although no explicit hypothesis 
was developed on this subject, the facts tend to suggest that an agroed bill 
is less likely to be overthrown by the courts than is a bill which was not 
the result of agreement. Indeed, this appears to bo a belief strongly held 
by the legal leadership of the State Federation of Labor, at least. Federa- 
tion representatives emphasise tho 1935 experience when the Occupational 
Diseases Act was declared unconstitutional after twenty-five years of 
sustained constitutionality, and the 194-0 experience when the prevailing 
wage law was declared unconstitutional shortly after its onactmont over 
industry opposition. On the other hand, a prominent labor attorney notes 
that "no active labor legislation agreed on by employer and employee groups 
has ever been declared unconstitutional by tho Illinois Supreme Court. The 
courts always know the legislative histories of those acts — somehow they 
manage to get the knowledge. I think that tho success of these agreed bills 
in tho courts is largely due to the fact that you don't get responsible 
employer groups challenging constitutionality, and we have no troublo handling 
irresponsible challenges." This same attorney adds that on at least one 
occasion ho was asked by the court whether the bill under consideration was 
an agreed measure, and that his affirmative answer produced a positive 
reaction from what had seemed to be an unfriendly court. Be that as it mav ; 
no question of constitutionality of an agreed bill in the unemployment compensa- 
field has become a serious issue in Illinois. The notion that responsible 
employer groups, notably the "Big Five", will not challenge agreed measures 
is, moreover, confirmed by management leaders. 



ILIR-24 
(50-51) 



UNIVERSITY OF ILLINOIS-URBANA 
331 25IL67A C001 

THE AGREED BILL PROCESS IN THE FORMAT 



3 0112 005168163