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THE U.C.C. QUARTERLY VOLUME 3, NO. 1 WINTER, 1945 Logging Operations EMORY • inV LIBRARY PUBLISHED BY UNEMPLOYMENT COMPENSATION COMMISSION OF NORTH CAROLINA PAGE 2 THE U. C. C. QUARTERLY Winter, 1945 The U. C. C. Quarterly Volume 3; Number 1 Winter, 1945 Issued four times a year at Raleigh, N. C, by the UNEMPLOYMENT COMPENSATION COMMISSION OF NORTH CAROLINA Commissioners: Judge C. E. Cowan, Morganton; C. A. Fink, Spencer; R. Dave Hall, Belmont; R. Grady Rankin, Char-lotte; Dr. Harry D. Wolf, Chapel Hill. State Advisory Council: Capus Waynick, High Point, Chair-man; Willard Dowell, Raleigh; Marion W. Heiss, Greens-boro; H. L. Kiser, Charlotte; Dr. Thurman D. Kitchin, Wake . Forest; Robert F. Phillips, Asheville; Mrs. R. J. Reynolds,, Winston-Salem; Mrs. Bmil Rosenthal, Goldsboro; W. Cedric Stallings, Charlotte. A. L. FLETCHER Chairman WILLIAM R. CURTIS Director MRS. FRANCES T. HILL Editor Regular Contributions in each issue from the UNITED STATES EMPLOYMENT SERVICE FOR NORTH CAROLINA Agency of the War Manpower Commission Cover illustrations represent typical North Carolina industries under the unemployment compensation program. Cover for Winter 19^5—Logging Operations. Illustration from the N. C. Department of Conservation and Development. Logging and sawmilling comprise one of the most important basic industries in North Carolina. As an industry feature, this issue of the Quarterly presents a forward-looking arti-cle on timber resources and cutting practices by C. F. Kor-stian, Dean of the Duke University School of Forestry and President of the North Carolina Forestry Association. Sent free and upon request to responsible individuals, agencies, organizations and libraries. Address: U. C. C. Informational Service, Raleigh, N. C. CONTENTS Page Mrs. Bost Becomes Commissioner 2 Unemployment Compensation—1944 Review, By A. L. Fletcher. 4 U. C. Legislative Recommendations Recent Plant Awards 8 Merit System Administration and Operation, By Frank T. DeVyver 10 Cigarette Paper Plant Made Industry Indpend-ent, By Bill Sharpe 13 Timber Cropping Destined to Replace Mining of North Carolina's Forests, By C. F. Korstian 14 Workmen's Compensation in North Carolina, By T. A. Wilson__ 17 Post War Unemployment, By Silas Campbell 22 U. C. C. Operations 26 1945 Tax Savings to Employers of Four and One-half Million Dollars Compensable and Non-compensable Claims U.C.C. Cuts Out Red-tape Reporting for Employers Over 3,000,000 Separate Forms to be Eliminated The Course of Unemployment Research and Statistics Bulletins Manpower Priorities Referral Plan in Opera-tion in State 29 MRS. W. T. BOST BECOMES U. C. COMMISSIONER Mrs. W. T. Bost of Raleigh is our most recently appointed member of the Unemployment Compen-sation Commission of North Carolina. She was chosen by Governor Broughton to fill the vacancy created by the resignation of Mrs. Frank L. Fuller of Durham, and took the oath of office at the Com-mission's early fall meeting. Mrs. Bost is well known throughout the state in her former capacity of Commissioner of Public Welfare—a post which she held for 14 years. During this period, she became identified with the movement to establish a system of unemployment insurance in North Carolina, serving in 1934 as a member of the legislative commission which undertook an intensive study, prepared a report, and drafted a bill looking to an unemployment compensation law for this state. Thus the newest U. C. C. commissioner had a hand in framing the program which, with some modifi-cation, was eventually enacted into law and forms the basis of the present administration. Among Mrs. Bost's other distinctions is that of being a charter member of the American Public Welfare Association, as well as a member of its board of directors. She was one of the few women heading state welfare administration in the nation. For years she has been a member of both the State Con-ference for Social Service and the National Con-ference of Social Work, serving in 1937-1938 as president of the state organization. From 1934 on she served as chairman of the Eugenics Board of North Carolina, and has been a member of the State Commission for the Blind, the State Board of Cor-rection and of Training, the State Recreation Com-mittee, and the State Council of Defense. The Women's College of the University of North Carolina, where Mrs. Bost was graduated in 1903, awarded her an honorary Doctor of Laws degree in 1942. In 1941-1942, Mrs. Bost served as vice-chair-man of the National Council of State Public Assis-tance and Welfare Administrators. She is a past president of the Raleigh Woman's Club and served for three years before her appointment as welfare commissioner as executive secretary of the State Federation of Women's Clubs. The picture which was taken at the time of ad-ministering the oath of office to Mrs. Bost in the EDITOR'S NOTE This issue of the Quarterly is the first number of Volume 3. In consideration of paper shortages and printing loads the fourth number of Volume 2 has been omitted. An index to Volumes 1 and 2 is in preparation and will appear as a supplement to the next issue. Winter, 1945 THE U. C. C. QUARTERLY PAGE 3 Photo by Lewis P. Watson. Governor's office in ther Capitol includes, from left to right : J. Melville Broughton, former Governor of North Carolina, 1940-1944. William R. Curtis, Director of the U. C. Division and Secretary of the Commission. Mr. Curtis has been with the U. C. C. since its first year of operation. He organized and directed the Bureau of Research and Statistics until he was named U. C. Division Director in August of 1941. He holds the degrees of A. B. and M. A. from the University of North Carolina and a Ph. D. in economics from the University of Illinois. Acting Commission Chair-man, May-December 1942 and May 1943 to June 1944. E. B. Denny, Associate Justice of the Supreme Court of North Carolina. Charles A. Fink of Spencer, Commissioner. Mr. Fink has been President of the State Federation of Labor since August 1937, former President of the Salisbury-Spencer Central Labor Union, and mem-ber of the Commission's State Advisory Council for two years before his appointment as Commis-sioner. Judge C. E. Cowan of Morganton, Commissioner. Judge Cowan is a lawyer and former Judge of the Burke County Court. He is active in Bar Asso-ciation circles in the state, and has been attorney from its organization of the Burke-McDowell Electric Membership Corporation. Judge Cowan took both his undergraduate and law degrees at the University of North Carolina. Ralph M. Moody, Chief Counsel for the Commission at the time this picture was taken before his resig-nation to accept the post of Assistant Attorney General. Col. A. L. Fletcher, Commission Chairman, appointed in July 1941 when he was called here after serving at Selective Service Headquarters in Washington. Col. Fletcher was formerly Assistant Administra-tor of the Wage & Hour Division of the United States Department of Labor; he served as State Commissioner of Labor for seven years. Absent on leave for military duty in Washington from May 1942 to July 1944. Mrs. W. T. Bost, Commissioner. R. Dave Hall of Belmont, Commissioner. Mr. Hall is President of the Southern Combed Yarn Spinners PAGE 4 THE U. C. C. QUARTERLY WINTER, 1945 Association ; Secretary and Assistant Treasurer of the Stowe Thread Company ; Sales Manager of the Climax Spinning Company, the Sterling Spinning Company, and the Majestic Manufacturing Com-pany. He is a graduate of Davidson College and past Department Commander of the American Legion in North Carolina. R. Grady Rankin of Charlotte and Gastonia, Com-missioner. Mr. Rankin is an official of the Duke Power Company. He was formerly President of Ridge Mills, Inc., Secretary and Treasurer of Hanover Mills, Inc., Member of the Board of Gas-ton County Commissioners, and State Senator from Gaston County. He is also serving on the War Manpower Commission's State Management Labor Committee. Dr. Harry D. Wolf of Chapel Hill, Commissioner. Mr. Wolf is Professor of Economics at the Uni-versity of North Carolina. He was Executive Secretary of the North Carolina Commission on Unemployment, 1934-1935, provided by the General Assembly to make a special report; W. P. A. regional advisor on labor relations, 1936; and a member of the industry committee under the Fair Labor Standards Act. He is editor of the Southern Economic Journal and author of The Railroad Labor Board and various articles on labor condi-tions. He received his graduate degrees from the University of Chicago. Unemployment Compensation—1944 Review By A. L. Fletcher, Chairman Unemployment Compensation Commission of North Carolina During this past year of 1944, in the midst of which I returned from active military service to reassume my duties as Chairman of the Unemploy-ment Compensation Commission, a number of de-velopments have taken place of utmost importance to our employment security program. Intense war production on the part of industry has continued. Although employment has slackened and shifted slightly in some quarters, on the whole we have seen increased business and increased payrolls throughout the state, as in 1943, with a correspond-ing decrease in unemployment. The levels of each have reached a maximum and a minimum never before recorded in North Carolina. The Commission has had a constantly dwindling claim load on the one hand, and a constantly growing number of worker wage accounts and a growing re-serve fund balance on the other. It is expected that these trends will continue into 1945, or until the first big cutbacks are made. During the last few months our load of claims from unemployed workers has been close to the vanishing point. We have been paying checks each week to less than 500 workers on the average. The number of insured workers currently employed is around 585,000. The number of established wage credits against which benefit payments might be charged is close to a million ; while the funds available for unemployment benefit payments is now over $90,000,000. Except for the decrease in the claim load, the Com-mission's assigned responsibilities have increased. Yet it has been carrying on operations with a greatly reduced personnel force and an administrative bud-get periodically cut and restricted by the Social Security Board which allots federal funds for this purpose. SPECIAL MENTION There are some aspects of our activities which I believe deserve special mention. While Mr. Ralph Moody was still with us as Chief Counsel, a number of cases came up for decision by the Commission in which claimants protested our having denied them benefit payments because their unemployment stem-med from a labor dispute in which they were in-volved. In all these cases, the Commission sustained the earlier determinations, finding after a thorough review that although the claimants had not them-selves participated in the labor disputes, they be-longed to a grade or class of workers who had so participated. Through North Carolina's adoption of the inter-state plans for the reciprocal coverage of employers and for combining the wage credits of workers, a more equitable system of interstate collections from employers and of benefit payments to workers has been made possible. Under our plan of employer experience rating, during the past year 3,536 employers have been mak-ing tax payments to the Commission at reduced rates. Many more will be entitled to tax reductions on their 1945 payrolls. Most employer reserve ac-counts are in a fairly strong position now, with relatively few charges against them for unemploy-ment over the past three years. Our computation for 1945 tax rates which has just been completed indicates that some 5,022 employers will now be en-abled to save substantial portions of their unemploy-ment tax. Furthermore, our employers in 1945 will have a greatly lightened responsibility as to wage reporting, because during the last few months, the Commission has been able to obtain new equipment and set in operation machines which make it possible for us to process individual wage reports submitted on a list form. Thus, employer reports to the Commission for 1945 can be merely a carbon copy of the list report required by the Federal Government, eliminating the necessity of filing with us separate wage slip reports for each individual worker. Accordingly, more than three million separate clerical operations annually, will be spared employers in the future. LOOKING AHEAD As an unemployment compensation agency, the war activities of the Commission have been largely Winter, 1945 THE U. C. C. QUARTERLY PAGE 5 a hold-the-fort program, standing ready to serve a future need, accumulating reserves and preparing for their use as a cushion for post-war economic re-adjustments. With the skeleton force the Commis-sion has retained, training programs have been instituted designed to prepare this nucleus of per-sonnel as a corps around which an expanded staff must be built to handle additional claim loads. The present system of unemployment compensa-tion grew out of the urgent need for a program of this kind which was demonstrated during the catas-trophic years of this country's so-called "big de-pression." In facing post-war problems, there is now a well-organized program of unemployment in-surance, with large reserves at its command, which was wholly lacking before. It is recognized that the adequacy of this program probably faces a major test in the months and years that lie ahead. On the question of adequacy, the Commission has made several studies on various aspects of its pro-gram: fund solvency under likely postwar situa-tions, operation of the benefit formula and the ratio of exhaustions to maximum duration, the adequacy of present coverage provisions, and the inadequacy of certain restrictive requirements, etc. The results of these studies are contained in bulletins prepared by our Bureau of Research and Statistics under the direction of Silas F. Campbell, and comprise much of the substantive material on which the Commission bases its recommendations for revisions of the law. ADDITIONAL RESPONSIBILITIES In addition to claims from workers already covered by the unemployment compensation law, the Com-mission, because of its experience and facilities, was designated by the Veterans Administration to handle in this state the readjustment allowance provisions of the "G. I. Bill." Claims from veterans for re-adjustment allowances became payable for the week beginning September 4th, 1944. These are taken, processed and paid by our Commission, with reim-bursement from the Veterans Administration. Eligibility requirements for veterans closely parallel those of the state law, but they are given a uniform $20 weekly payment and a maximum duration of 52 weeks—the actual duration being determined by the length of the veterans' active military service. The potential number of claimants would include all North Carolina men and women in service, which has been estimated at around 325,000. Since September, the number of claims received from veterans has steadily increased, until during December we have been writing more checks for unemployed veterans than we have for unemployed workers. The amounts paid to veterans are, of course, much larger than those paid to workers under our present state law where benefits are determined by the amount of previous earnings with a $15 a week maximum. The total amount paid in readjust-ment allowances to veterans in this state in 1944 came to $108,371.00. Additional federal legislation has been proposed which might also bring within the jurisdiction of the Commission the payment, on a reimbursable basis, of unemployment benefits for federal employees who have been working in this state. Also, a revision of the Federal Unemployment Tax Act has been advo-cated to remove the present exclusion of maritime workers and to extend the payroll tax, which now applies only to employers of eight or more workers, to employers of one or more. These changes would bring additional administrative work to our state agency. The experience of other states where un-employment compensation laws now cover employers of one or more indicates that the Commission, if coverage were thus extended in North Carolina by either federal or state action, would be handling wage accounts for 15 percent more workers, and con-tribution accounts for more than three times as many employers. RE-EMPLOYMENT PROGRAM In view of these developments and prospects of handling benefit claims for larger numbers of persons who may become unemployed, it becomes increas-ingly urgent that the Commission regain control of the Employment Service which has been on loan to the Federal Government since the beginning of 1942. Both veteran and worker claims are filed through local employment offices where the applicants must be registered for work. If the speedy re-employment of benefit recipients is accepted as a prime con-sideration of the unemployment compensation pro-gram, then the Commission must have an employ-ment service under its direction. INTERSTATE ORGANIZATION Our Commission is a member organization of the Interstate Conference of Employment Security Agencies which studies problems affecting the states as a whole. North Carolina has participated in the meetings and the work of this Conference, chiefly through the representation of William R. Curtis, our director and acting chairman during my absence. Mr. Curtis was elected a Conference Vice President for Region IV which includes Maryland, Virginia, West Virginia, the District of Columbia and North Carolina. The primary objective of the Interstate Conference has been to improve the administration of the employment security program, and at the same time, preserve and advance our state systems. When unemployment compensation came up for discussion last spring and summer by the national Congress, state administrators presented testimony before the Senate and House committees. Repre-sentatives of the Interstate Conference demon-strated that the adequacy of state funds to meet present liabilities was pretty well assured with re-serves of nearly 5*4 billions of dollars at that time. For example, North Carolina's state fund on June 30th stood at $81,097,140.29. The funds are regu-larly increased each quarter by additional employer contributions. Added to these is United States Treasury interest, amounting in our own state to approximately $360,000 each quarter. The states could with their 1944 reserves, pay their highest average benefits to over 18,000,000 workers for their PAGE 6 THE U. C. C. QUARTERLY Winter, 1945 maximum duration. The North Carolina fund could pay 91 percent of the covered workers currently em-ployed a weekly benefit amount of $11.00 for 16 weeks. As to benefits, the average amounts paid increase in proportion as wages earned have increased, up to the allowable maximum. It may be expected that, even with present benefit schedules, average pay-ments in the postwar period will be substantially higher than those paid in the past, because they will be based on war-time earnings. In June, the average weekly benefit amount for the country as a whole had risen to $15, and in 1945 it will probably be higher under present laws. The states started out with a $15 a week maximum payment; but many have raised that maximum on their own initiative. In a number of states the maximum is now $20 ; one has $22. Under state laws, the maximum duration of bene-fits varies from 14 to 24 weeks. The longer periods represent the progress the individual states have made over durations specified in their original laws. Moreover, many states have substituted a flat dura-tion for variable durations. North Carolina took the lead in this respect, and now 17 other states have adopted flat durations. As to workers in small business—that is for em-ployers of fewer than eight workers—the postwar layoff problem is a small one, but their protection is being further considered. Twenty-seven states have already amended their laws to cover employers of fewer than eight workers; thirteen go all the way and cover employers of one or more. INSURANCE FOR SICKNESS UNEMPLOYMENT Kecognition has also been given by the Conference to the serious gap which exists in the employment security program in the general lack of any form of insurance for workers against the risk of unemploy-ment and loss of pay at such times as they are too sick to work. A worker who suffers industrial acci-dent or injury may recover wage loss under work-men's compensation acts. An insured worker who loses his job may apply for unemployment compen-sation— but only if he is well, able to work, and seeking work. The worker who is temporarily unable to work and earn his living needs some cash income for himself and his family during such periods of enforced idle-ness just as much if not more than does the worker who is without a job for economic reasons. The risk of wage income loss that workers face through sick-ness is equally insurable with unemployment. One state, Rhode Island, has had such an affiliated in-surance program, financed by the workers them-selves, in operation for nearly two years. Many other states have considered and are reconsidering similar legislation. NATIONAL DIRECTION The alternate proposals for federal legislation with regard to unemployment compensation which have been made in recent months appear to spring from differing social philosophies: (1) that government should provide for the people, and that provisions should be bounteous and uniform without regard to varying circumstances ; (2) that the people have a responsibility to take care of themselves, with a minimum of governmental direction and guidance; and that localized as much as possible. We believe that unemployment compensation is best conceived as an insurance program of local groups by local groups—a system that is consistent with the Ameri-can idea of individual and local community responsi-bility, as opposed to a nationalized program con-templating hand-outs and controls that, carried to logical extremes, could impoverish the country, both economically and morally. In thus far refusing to enact measures for nation-alized, or nationally extended unemployment com-pensation, Congress has left in the hands of state governments that responsibility for strengthening their own employment security programs, which state governors and administrators have claimed and asked permission to discharge. These have been strongly urged, however, to broaden their programs, especially where these are close to minimum stand-ards, as in North Carolina. RECOMMENDATIONS FOR NORTH CAROLINA At regular sessions throughout the year, our Com-missioners have studied many technical reports and have considered methods by which the unemploy-ment compensation program in this state could be broadened and its services extended. The U. C. Commissioners include Mrs. W. T. Bost, recently ap-pointed, Judge C. E. Cowan of Morganton, Charles A. Fink of Spencer, R. Dave Hall of Belmont, R. Grady Rankin of Charlotte, Prof. Harry D. Wolf of Chapel Hill, and myself as Chairman. At our November meeting we unanimously agreed on our recommendations for legislative revisions in the North Carolina law. U. C. C. LEGISLATIVE RECOMMENDATIONS The chief recommendations for revisions in the present unemployment compensation law which the Commission believes should be made by the General Assembly were agreed upon and approved unani-mously by the several Commissioners at their regu-lar bi-monthly meetings held in Raleigh. Meeting with the Chairman, Col. Fletcher, were Commission-ers Mrs. W. T. Bost, Charles A. Fink, R. Dave Hall, R. Grady Rankin, and Prof. Harry D. Wolf, and W. R. Curtis, Secretary. The Commission's recommendations and the reasons for their adoption are as follows: (1) Veterans. With regard to paying benefits from the state unemployment fund to veterans, technicalities in the law which now operate to ex-clude many veterans from receiving compensation should they become unemployed or continue without work after exhausting their rights to federal read- WINTER, 1945 THE U. C. C. QUARTERLY PAGE 7 justment allowances under the "G. I. Bill" ought to be modified. The Commission considers that all veterans should be enabled to share equally in the insurance protection afforded by the state unemploy-ment compensation program. The thought was ex-pressed in the meeting that regardless of provisions made by the Federal Government for unemployed veterans, the state also has an obligation of its own to those whose employment was interrupted by service—to make the benefit rights established by them before going to war available to them on their return, should occasion arise, after using up G. I. allowances. (2) Coverage. The Commission agrees that pro-tection of unemployment compensation coverage should be extended to workers now excluded because their employers do not have as many as eight workers. That means that the law should include employers of one or more workers, as well as those of eight or more as at present, so as to afford unemploy-ment insurance to employees of small businesses. This proposal of the Commission is in line with recommendations of such organizations as the Coun-cil of State Governments, the National Planning Association, the Interstate Conference of Employ-ment Security Agencies, and the United States Chamber of Commerce, as well as both Senate and House Committees of the National Congress which have urged that the states act on this coverage matter. Besides giving unemployment protection to an estimated additional 80,000 workers, such a revision of the N. C. law respecting coverage would remove the tax inequity now existing between a business operated with eight and one with seven employees. It would relieve the Commission of many employer liability problems. And it should not unduly burden small business with extra reports, since the Commis-sion is instituting a system of list reporting with 1945 whereby employers need send to the state agency only a carbon copy of the social security report they are required to make to the Federal Government for old age and survivors' insurance. North Carolina is now one of a minority among the states in still retaining the minimum unemploy-ment compensation coverage of employers of eight or more workers. The Commission studied the ex-perience of other states which have the full coverage of one or more and which shows that : (a) adminis-trative difficulties are overshadowed by administra-tive advantages ; (b) on the whole, contributions from employers of fewer than eight more than meet the benefit liability of their workers; (c) a higher proportion of small employers are likely to become eligible for reduced tax rates under employer ex-perience rating plans; (d) no evidence appears of any unwholesome economic effect on small firms be-cause of the unemployment tax. Rather, it has proven to be especially beneficial to them in removing any charge of discrimination among employers, in enabling small employers to obtain a better class of workers, and, as unemployment compensation oper-ates to maintain consumer purchasing power, it has a greater practical value to the smaller employers. (3) Benefits. The Commission proposes the sub-stitution of a new benefit formula for the one now in the law under which North Carolina's unemploy-ment benefit payments have averaged the lowest of any state in the country. This new formula is de-signed to bring payments in this state more nearly in line with those being paid to unemployed workers elsewhere, particularly in view of higher living costs. It is based on a detailed study made by the Commis-sion and was constructed with regard to several fac-tors. Among these was the desire to produce an av-erage weekly payment for total unemployment bear-ing approximately the same relationship to such national average weekly payments as the North Carolina wage level bears to the national wage level ; the intention to retain $130 as minimum qualifying wages and weight the schedule in proportion to earn-ings in favor of the lower-paid workers who, it is assumed, are more irregularly employed ; and the purpose of safeguarding the solvency of the fund. North Carolina's present maximum weekly pay-ment allowable is $15 for a maximum duration of 16 weeks. In other states which have already liberaliz-ed their benefit formulas, maximum weekly pay-ments range up to $22, and 29 states have maximums in excess of North Carolina's $15. Readjustment al-lowances for veterans under the G. I. Bill are a uni-form weekly payment of $20. Under the Workmen's Compensation Act in this state, the maximum weekly payment is $21.00. The Commission believes that the present rate of North Carolina's unemployment compensation bene-fits is too little and continues for too short a time to provide workers adequate insurance protection against wage loss due to unemployment. Likewise, if the fund is to serve the State as a check against a deflationary drop in purchasing power, it must be utilized more fully. The Commission's study of alternate benefit form-ulas shows that, even with severe and widespread post-war unemployment in North Carolina, the un-employment compensation fund could finance bene-fits at the proposed new rates and still have a fairly adequate balance to meet all potential liabilities. The proposed new benefit formula carries a minimum weekly payment of $4.00, a maximum weekly pay-ment of $20.00, and allows for a maximum duration of 20 weeks. Under this new plan, about half of North Carolina payments will be between $10 and $15; whereas in the past over 80 per cent of all weekly benefits paid have been less than $10 in amount. (4) Disqualifications. The Commission also recommends that the clause in the present law dis-qualifies an unemployed worker from receiving bene-fits if that worker voluntarily quit a previous job without good cause "attributable to the employer" be amended by striking out the last phrase. This restrictive provision in some state laws has resulted PAGE 8 THE U. C. C QUARTERLY WINTER, 1945 in severe criticism of state systems of unemployment compensation as being virtually a denial of the pur-pose of the program. The Commission feels strongly that as an adminis-trative agency it should have discretion in determin-ing good cause with respect to voluntary quits and not be barred from paying benefits to otherwise deserving claimants—such as a worker who cannot find a new job after having had to leave the last one to nurse a sick child, or care for a relative who was dangerously ill at the time. In many cases the Commission has to inflict a penalty on unemployed workers, by denying them benefits, where it is found that they had good cause for leaving their last employment, although it was in no way "attributable to the employer." (5) Sickness Compensation. The Commission further agreed to again recommend that the General Assembly undertake a study looking to the establish-ment in this state of an insurance program designed to compensate workers for wage loss during periods of unemployment when they are physically unable to work. The present unemployment compensation program issues payments based on past earnings in covered employment to a worker, by way of stand-by income, if he is out of work because there is no work for him. But the worker who has to be out of work tempo-rarily because of illness or other disability is barred from receiving unemployment benefits. This is recognized by the Commission as a serious gap in its insurance system. In another state, a plan providing workers with cash compensation for unemployment due to sick-ness is already in operation by its unemployment compensation board; while many other states, and the Federal Government as well, have considered and are considering similar plans. These generally con-template a separate cash sickness compensation fund built up from taxes withheld from workers' wages by their employers, to be administered by the unem-ployment compensation agency which already has the records, machinery and other facilities required. Benefit payments to covered workers when they are unemployed because of sickness or disability then parallel unemployment compensation practice. The Unemployment Compensation Commission of North Carolina believes that consideration by the General Assembly of a plan to indemnify workers for wage-loss incurred through illness is more than timely, in view of the attention it is receiving throughout the country, and especially in view of the recent recommendation of our State Hospital and Medical Care Commission for more insurance. It is impossible for the poorer half of the population to pay the cost of sickness without insurance. The cash sickness compensation program for unemployed workers carries the approval of welfare groups in the state, and has the support of the State Federa-tion of Labor. RECENT PLANT AWARDS The most recent awards of the coveted Army- Navy "E" to plants in this state have been bestowed upon two steel companies. The first of these to re-ceive the flag of merit was the Peden Steel Company at ceremonies held in Raleigh on October 25, 1944. The Dave Steel Company, Inc. of Asheville received the award early in December. The addition of these two plants to North Carolina's honor roll of firms which have won war production awards, brings the total to an even two dozen. In 1906 the Navy instituted in the Fleet an award for excellence which has been known ever since as the Navy "E". First awarded for excellence in gun-nery, this was later extended to include outstanding performance in engineering and communications. An honor not easily won nor lightly bestowed, it became and has remained a matter of deep pride to the men of the Service who receive it. When the rising tide of war in Europe placed a premium on the production of war equipment, the Navy "E" award was extended to embrace those plants and organizations which showed excellence in producing ships, weapons, and equipment for the Navy. Then came Pearl Harbor—and with it a de-mand for war production such as the world has never known, an awareness that our fighting forces and the men and women of American industry are part-ners in the great struggle for human freedom, and on the part of all Americans a grim and enduring re-solve to work and fight together until victory in that struggle is final and complete. From that high resolve was born the Army-Navy Production Award—which stands today as our fight-ing forces' joint recognition of exceptional per-formance on the production front, of the determined, persevering, unbeatable American spirit which can be satisfied only by achieving today what yesterday seemed impossible. The Army-Navy "E" which the Peden Steel Com-pany and its employees received was the first award to an industry of this kind in the state. In 1943, a prime contract was given them by the Federal Government to construct landing barges of a type re- Winter, 1945 THE U. C. C. QUARTERLY PAGE 9 quired for amphibious operation. The all-steel barges when assembled are 104 feet in length. Three railroad cars are required to transport the various parts to embarkation ports for shipment overseas. The barges are assembled at foreign ports or beaches from which our forces take off for landing operations on enemy soil. The contract required the Peden Steel Company to construct and ship the barges in accordance with a fixed schedule. Not only has the schedule been maintained, but in most instances ad-vance deliveries have been made. In commenting upon the accomplishment which earned the award of excellency for the company, Mr. James M. Peden said, "There was never a doubt in my mind as to whether or not we would be able to meet every requirement. We had the plant facilities and a corps of experienced and loyal craftsmen — that's all it takes to do a job in time of war or peace." The Peden Steel Company and its predecessors have the unique record of having served five wars during the 118 years of the plant's existence. Dur-ing each war munitions or other items of supplies have been shipped direct to fronts where the enemy was engaged. The Dave Steel Company, Inc., was the first Asheville firm to win the Army-Navy "E". Since the company was organized in 1929 with two em-ployees, it has expanded until now its activities ex-tend from the Gulf of Mexico to the Great Lakes. Earlier in the war, the firm fabricated steel for war plants, later it manufactured parts for cargo vessels and sub-assemblies for destroyer escort vessels, and in 1944 it chiefly turned out large sections of LSM's (Landing Ships Medium) for the Navy. "We are not so large as plants go, "President Dave said, in accepting the "E" on behalf of his firm and employees. "Our entire plant is made up mostly of Western North Carolina folks, from those who have really earned this award—the boys right here through the various departments in the plant. Every one of us has had a hand in the production record. We will wear the "E" pins as proudly as any service-man wears a decoration, for they mean that we have contributed our best." And Superintendent Center in accepting the pins on behalf of the employees, added, "Every man has worked—really worked—and at new things with added speed and determination. He was the man behind the man behind the gun and he knew it. We'll not rest on our laurels and keep the same old production records—we'll beat anything we have done before." The Asheville Branch of the American Optical Company has received its third star to the parent company's "E" for war production. A star is awarded a firm winning the original award each six months that production is maintained. The National Munitions Corporation of Carrboro has been awarded its third star following the Army- Navy "E" award. This plant was also one of the first in the state to receive the National Security Award. Photo by U. S. Army Signal Corps. Scenes taken during award ceremonies at the Peden Steel Co. plant. Above : Mr. James M. Peden addresses the gathering of officials and employees. The pictures immediately above and below illustrate the construction and the type of landing barge produced by the Peden Steel Co. Four railroad cars are required to transport each barge to the port of embarkation. They are assembled at foreign ports or beachis. PAGE 10 THE U. C. C. QUARTERLY Winter, 1945 Merit System Administration and Operation By Frank T. de Vyver, Supervisor Merit Examinations The Merit System in North Carolina first became effective July 1938 when the present supervisor was appointed Supervisor of Examinations for the Ad-visory Committee on Personnel of the North Caro-lina Unemployment Compensation Commission. In the six and one-half years that have passed, the agencies, the Merit System Supervisor, and Council have learned a great deal about merit system ad-ministration. We have learned that there are cer-tain fundamental changes in thinking that must take place if a merit system is to operate successfully. We have also learned that even after this funda-mental change in thinking has taken place there may still remain certain areas of conflict between the merit system and the agencies which it serves. It is the purpose of this article to examine briefly both these fundamental changes in thinking that accom-pany a successful merit system and also to examine some of the areas of conflict that arise in the ad-ministration of a merit system. APPOINTMENT BY EXAMINATION In the first place must come the realization that for better or worse, employees are to be chosen on the basis of a public examination rather than on the basis of the recommendation of some person of political importance. Certainly not all political ap-pointments are bad, nor are they necessarily good. Where thousands of political appointments are made, the law of averages would certainly result in many good appointments. Nevertheless, when an agency of government has accepted the principles of the merit system, it is saying that however poorly an examination system selects the best people, the chances are 100 to one that it will select better people on the average than could be selected by not using an examination system. The examination system is not perfect, but it is better than no system at all. Briefly, then, if an agency is to accept the principles of a merit system, it must put aside any thought that a congressman or senator can select better than it can, or that it can select a stenographer only by her looks. Recently this problem was brought to my atten-tion by a letter received from one of North Carolina's congressmen urging the appointment of a superin-tendent of welfare in his home county. In this letter the congressman advised that this young man had all the qualities necessary to make a good superin-tendent and he felt that his appointment should be approved. As is customary when such letters are received, the young man's qualifications were care-fully examined and compared with the minimum qualifications which must be met even before a per-son is admitted to a written examination. A superin-tendent of welfare in North Carolina must be a college graduate and have completed some graduate training in an accredited school of social work. He must also have had some experience in social case work. This young man whom the congressman claimed had all of the qualifications for a superin-tendent of welfare was a high school graduate with about three years of clerical experience. The young man may have belonged to the right political party in a close county, but with all modesty, we were better able to select a qualified person for that posi-tion than this congressman was. Perhaps the congressman was merely asking us to say "no" rather than having to tell the young man himself. PERSONNEL POLICIES Another point which the administrators must accept when they deal with a civil service system or state merit system is that they will be restricted on some of their internal policies such as promotions, salary increases, transfers and dismissals. An ad-ministrator of a governmental agency must remem-ber that he is administering public funds for a public purpose and that, therefore, he must expect to be regulated in what the public at that time feels is to the public's interest. Perhaps the administrator longs to be as free as a man in industry in carrying out the policies which he feels are wise, but the man in industry is not free either. When he gets through arguing with the trade union, he still has a board of directors and eventually stockholders to please. The state merit systems are established to represent the public interest in giving each citizen equal rights for jobs and security on those jobs with every other citizen and to attempt to provide satisfactory work-ing conditions. In carrying out these policies, the Merit System may have to say "no" to something the adminis-trator feels is extremely important to him. In North Carolina, for example, the rules require that promotions must be made from the first three names on a promotional register. The grade which the person has received that places him on this promo-tional register is a combination of the usual factors in the grade plus the service rating factor. If a job opens in one of the agencies we serve, we are asked to send a promotional register and we expect the agency to appoint from among the first three on that register. (The agency may, of course, select from the names on a competitive register.) In this way, we feel that we are protecting the right of each employee to be considered for promotion on the basis of merit rather than on the basis of being the most proficient "apple polisher." The "apple polishing" may find a place in the system, of course, in that part of the grade which comes from the service rating, but our agencies cannot dip to the bottom of the promotional register for whom they think is better qualified. This is a very controversial matter and it is one point on which we differ from the United States Civil Service, but we feel we are right. If selection of individuals for appointment is made on the basis of merit, then promotions should be made on the same basis. There is no more reason to suspect that a senator's judgment is correct on the Winter, 1945 THE U. C. C. QUARTERLY PAGE 1 1 selection for promotion than there is to suspect that he is correct on the original appointment. He may be or he may not be, but if we are going to have a merit system in government, it must be carried through and not confused with a merit system for selection and some other system for promotion. We have found that we have to control transfers. We adopted this policy several years ago when we found that one of our agencies appointed on an area basis and immediately transferred to some other area with the obvious intent of circumventing the principle of selection on the basis of merit. The man they wanted to appoint couldn't be reached on the Asheville area register so they appointed him from the Gastonia area register and had him up in Ashe-ville the next Monday. The man who did that had not accepted the principles of the Merit System, and, therefore, found himself tied up with what he un-doubtedly thought was more red tape. With reference to dismissals, the Merit System must see that each individual gets a fair and im-partial hearing on any charges brought against him. In some ways, the Merit System is taking the place of a labor union in this. When a person is discharged from an organized industry today, the union ex-amines the circumstances and if it feels an injustice has been done, raises the point with the manage-ment. The Merit System in North Carolina merely provides for a public hearing if the person discharged so wishes. The agencies have the final say, but as one administrator expressed it, if you discharge a man now you are the one that is on trial, not he. Because of this a person is not discharged unless the agency is quite sure that the discharge is justified or else is perfectly willing to accept any publicity that arises from it. ACCEPTANCE OF CONTROLS These are several illustrations of the type of con-trol that must be accepted when the very funda-mentals of a merit system are accepted. A bachelor is free to go and come as he pleases, to tell someone where he is going or not to as he pleases, to spend his money as he pleases, and to do pretty much as he pleases. The married man finds that there are certain restrictions imposed not necessarily by his wife, but which are a part of the state of marriage. The courteous thing to do is at least to tell your wife that you are going out and that you expect to be back at approximately a certain time unless you meet somebody on the way. A married man also takes on some financial obligations. It is much the same when a merit system is added to a government agency. There are very few married men, however, who object to the new restrictions of marriage. If they did, they would never have gotten married. They believe that marriage is a proper state and that it is not good for man to live alone. Therefore, the restrictions are not obnoxious and are accepted graciously. From the point of view of the public interest, it is not good for any government agency to live without some civil service system. When that fact is recognized, the added restrictions will not be obnoxious either. Of course, to many states this marriage with the Merit System has been a shot-gun wedding, for it was an act of Congress amending the Social Security Law that made state merit systems necessary where federal social security funds were being administered. Perhaps, however, love will grow. Even after the Merit System has been accepted by the agencies, there are likely to remain a number of problems which the sociologists might call areas of conflict. These areas of conflict are in reality areas of administration in which the interest of the agency and the best interest of the public as seen by the Merit System may not coincide. TECHNICAL PROBLEMS Ona of these problems is that of speeding up the procedure. Certainly all administrators have used rather strong language at times, referring to the red tape of the civil service system or the merit system under which they operate. Perhaps there is an opening for a claims taker in some area, and the Merit System Council has no one on the rolls who is willing to go there. Perhaps the agency has received the names of three prospective candidates for the job, and when these three prospects were approached they were really not interested in taking the job. Perhaps the agency has made a provisional appoint-ment to some job and when the examination is given, finds that the person who has the job failed the test and must be replaced. All of this upsets the agency because it has spent time and money training him. Recently one of the agencies served by the Merit System Council has grown critical about that par-ticular matter and has urged us to give make-up examinations to some of the provisional incumbents who failed, on the theory that time and effort have been spent training them and they should, there-fore, be kept on the job. The agency was unim-pressed when we have pointed out to them that several hundred people who had received no training were able to pass the examination. If the agencies have worried over the red tape in-volved in civil service, so have those who are ad-ministering the system. Unless a merit system supervisor is feeling too important and trying to im-press the agencies with how much power the Merit System does have, he worries just as much about the possible slowness of the procedure as the agencies. In many ways the supervisor can speed up the activi-ties by getting names to the agencies the day after the request is received, and by constantly checking on registers to make sure that the people on them are willing to take the jobs which are offered. After this is done, however, there still remain a number of problems which slow up the procedure. It is not the purpose of this article to defend merit system administration but rather to explain it, for if the agencies did understand a few of these difficulties of red tape, they would be somewhat more tolerant with merit system administrators. Giving an examination takes a considerable amount of time. Regulations require at least 30 days' notice to the entire public that an examination is to be given. Then, following the closing date for receipt of appli-cations for the examination, the applications must be processed, that is, someone decides whether the PAGE 12 THE U. C. C. QUARTERLY Winter, 1945 applicant is eligible. The appropriate number of examinations must be sent to the proctors in the various centers and notices of the examinations are sent to the individual applicants. All of this takes time. We must then wait for the proctors to send the test papers back. These days it takes a long time for express packages to be returned from cities a hundred miles from the center of our activities. When the papers are back, they must be graded. All merit systems have used various methods for shortening this process, but it still takes time and accuracy is essential. If the examination is to have an oral test as well as written, arrangements must be made for all those who passed the written to appear before one or more oral boards that must go from place to place in the area. Then there are any number of people who swear as often as they are asked that they are interested in a job. Hopefully, we send their names to the agen-cies requesting names from that register only to be told by the agency and to have it confirmed by the individual that he or she could not accept that job at that time. No amount of circularizing the people on the registers can possibly do away with that difficulty. It is simply one of those things which is going to slow up the procedure for selection of per-sonnel. Apparently each person who takes an exami-nation hopes against hope that the right job will come at the right time, and insists that his name be retained on the active register. Of course, if he refuses several times, his name may be taken from the active register, but for every name dropped there are two or three others added with whom we have the same difficulty. COOPERATION The agency may ask, "How can the agency help in speeding up this whole process ?" One suggestion would be that in so far as possible, the agency budget the needs for employees in the same way it budgets its needs for funds. By this time each agency should know what its possible turnover is for any particular job. Let the Merit System know about that ; it will help them plan an examination program. Of course, the need may be more or less than budgeted, but that is true even with a financial budget. Another thing which an agency can do is to ask for the type of person it wants. Recently one of the agencies asked for a junior general clerk register. In North Carolina, a junior general clerk is not re-quired to be a typist or a stenographer, yet the persons when interviewed for the job were asked whether they could take dictation and type; then they were told they were not satisfactory for the job. In such cases, we write to the individual to get his side of the case and in that way find out what the agency has done. We do not think that the agency was trying to get around the regulations for they could just as easily have asked for a typist clerk or a stenographer; but either through ignorance of the requirements of the job or carelessness, the wrong register had been requested. All this delayed the procedure. Another thing which the agency can do to help a merit system which is serving more than one oper-ating unit is to get the certificates back as quickly as possible. If we send the Unemployment Compen-sation Commission the names of three senior general clerks, we do not like to send the same three names to the State Board of Health, but we have found that some of our agencies keep a certificate for the full 30 days allowed under the rules. Meanwhile, the Super-visor is faced with the dilemma of sending the names to a second agency, thus involving competition be-tween the agencies for an applicant, or digging deeper into the barrel for the second agency that makes its request, whereas a better person might have been secured from the rejects of the first agency's list. It takes time for the agencies to get the names they request and it takes time for them actually to hire the person involved. In dealing with the state agencies served, since we both realize that time is of the essence, this problem has been worked out fairly satisfactorily. CHECK-UPS Another item involved in the merit system rule is the monthly audit of the payroll for merit system status of those on the payroll. This has great possi-bility as an area of conflict because this is the en-forcement procedure of the Merit System. The possibilities of any conflict are greatly reduced by proper records being kept both in the Merit System office and in the office of the agency, and by a will to abide by the merit system regulations. If an agency does not try to circumvent the merit system rule, the Supervisor will not find anything the matter; but if an agency insists on sneaking a person in now and then contrary to merit system rules, the Merit System is going to locate it by the payroll audit and file objections. Of course, we do not have as much trouble with state agencies in this as we do with a few county departments, who sometimes must stay awake nights thinking up ways to get around the regulations. Of fundamental importance in merit system-agency cooperation is the administration of salaries and personnel regulations. It has always seemed that, unless the Merit System Supervisor is the Personnel Director for the state, the Merit System's job is to advise and counsel the agencies in the de-velopment of salaries and personnel regulations. Each agency with whom we deal has different problems in this matter and we have, therefore, merely advised. With the county agencies which we serve we try to keep an administrative check to see that the regulations are followed. Obviously, in-vestigators cannot be sent into each of the hundred counties of North Carolina to see that the vacation rule is followed or that petty leave is not abused, but these things are kept constantly before the minds of the local administrators by asking for periodic re-ports on the hours worked or leave taken. SERVICE RATINGS Another problem with which the Merit System has dealt is the rating of employees. Here we have cooperated with the Unemployment Compensation Commission and will help the other agencies by de-veloping with them adequate methods for periodic rating of employees and making that rating amount to something by incorporating it as a part of the WINTER, 1945 THE U. C. C. QUARTERLY PAGE 1 3 promotional grade of each employee. Thus, when the Chairman of the Unemployment Compensation Commission gets a promotional register for any job, he knows that the estimate of his own supervisors of the various people involved is an important part of the grade. Ratings are naturally a difficult thing to administer in attempting to get uniformity as between individual raters and fairness to all the people who are rated. This fact is recognized; but we feel that these ratings should be dignified by being made part of the promotional grade and that a constant effort should be made to eliminate insofar as possible any personal prejudices on the part of the person doing the rating. DISMISSALS Possibly the area in which the greatest amount of conflict is likely to occur between the agencies and the Merit System is with respect to dismissal of an employee. The Merit System is supposed to protect employees from dismissal for trival causes or politi-cal reasons. The Merit System Council is supposed to be a group of judges in all such cases. We feel that the public service should not be a sinecure for incumbents, and certainly no Merit System Council would think of giving any aid to the obviously unfit. There is a six months' probationary period during which time the employing agency is supposed to find out whether the person is competent. If the agency, by lax administration retains some incompetents because it did not have the courage to discharge them before the six months' period was up, that agency owes the incompetents some consideration. CIGARETTE PAPER PLANT MADE INDUSTRY INDEPENDENT (By Bill Sharpe) Smokers inclined to grumble a bit because they can't always get their favorite cigarettes, might more logically join in an obscure little 5th Anniver-sary celebration on the banks of the Davidson River. Because without some shrewd foresight, or luck, or something, which established the Ecusta (cigar-ette) Paper Plant, you probably wouldn't be smoking a cigarette at all—at least, not one rolled in a thin, tasteless paper. When the Nazis marched into Poland, 90 percent of the cigarette paper used in this country was being imported from France. But, meantime, Harry H. Straus, who helped develop the French industry, had been hunting for pure, chemically-free water in this country. His search ended on the banks of the Davidson River, which comes tumbling out of Pisgah National Forest. Happily, it was also located near the center of tobacco manufacturing. In August 1939, the first cigarette paper was made in the new plant, and it was just in time. Sub-sequent expansion of the original plant has made American smokers virtually free of paper imports. The paper is now used to wrap Camels, Chester-fields, Philip Morris, Old Gold, Lucky Strikes, and many other well-known brands. Of course, people step down as well as step up and when that occurs, every agency must use the right of discharge. The Merit System Council is not an organization designed to keep poor workers on the job, but we are supposed to see that every change in the political wind does not bring about an upheaval in the working forces of government. Unless the protection of publicity, at least, is given, a person may be discriminated against either because he votes for the wrong candidate or because the successful candidate has a friend who wants the incumbent's position. In North Carolina, we have not had any cases of appeals from discharge under the present Merit System Council, but if we do, we will try to give the incumbent a fair hearing. We will not try to defend incompetent incumbents ; but we will try to give full publicity to any arbitrary discharge. BETTER PUBLIC SERVICE In conclusion, it should be reemphasized that only when governmental administrators understand that merit systems are designed to promote better govern-ment, can any merit system function properly. On the other hand, merit system administrators must constantly remember that they can serve the public best by serving the agencies best. We have, to be sure, certain powers and duties; but we should use these as state police used to when they drove around in white cars that could be seen for miles. They weren't trying to make arrests ; they were trying to cut down speeding. We are not trying to catch or badger an agency. We are trying to help the agen-cies and we exist only to serve the public interest as every government agency does. In saving the tobacco industry from a fate worse than death—and by a pretty terrifying margin — the infant industry had to solve many technical problems. Cigarette paper must be pure white and opaque; completely tasteless—directly and when burning ; must burn at the same rate as the tobacco ; must be thinner than the diameter of human hair, yet elastic and strong ; must not stick to the lip, yet must be sufficiently moisture resistant so the cigar-ette will not become soggy. As early as 1934, experiments with flax had been started in South Carolina. Now native flax is flow-ing to Ecusta and turning out what President Straus says is a product superior to that formerly imported from France. The use of flax also has created a source of income for farmers to whom it was a waste product. In some sections, flax had been such a nuisance that farmers paid $1.50 an acre to have it removed. Much of Ecusta's flax comes from Minnesota and Cali-fornia. A year's supply is now in storage. The industry has brought 1,500 jobs into this mountain community, with an annual payroll of more than $2,500,000. One bobbin of paper will make 85,000 cigarettes, and Ecusta's capacity is 20,000 bobbins a day. That adds up to 1,700,000,000 cigarettes, and U. S. con-sumption currently is only around 257 billions a year. PAGE 14 THE U. C. C QUARTERLY Winter, 1945 Timber Cropping Destined to Replace Mining of North Carolina's Forests By C. F. Korstian, Dean Duke School of Forestry and President, North Carolina Forestry Association For over 200 years we have "mined" our forests. Forest products were abundant and cheap and the United States attained a per-capita consumption of forest products far greater than that of any country in the world. The use of this forest heritage con-tributed largely to maintaining the living standards of our American people. But the pioneer belief that the plow would surely follow the axe was not always borne out, for many areas unsuited for agriculture were denuded of their forests even though they could best serve the nation for timber growing. A change in the attitude of the forest-products industries toward their raw material and of forest owners toward their lands is under way. Within the last decade forest management has come to the fore, involving a stabilizing of the forest industries in place of migratory mills and plants, and the develop-ment of a permanent interest in forest lands and the growing of new timber crops on a permanent basis instead of looking for additional virgin forests to cut. This evolution has really just gotten off to a good start and many years will be required to bring all forest lands in the United States under adequate protection and wise use. It is too much to expect that under the old, commonly accepted American system of free enterprise, in which the economic law of supply and demand and immediate financial re-turns rather than deferred income are dominant factors, reasonably good forestry will be practiced on a sufficiently large proportion of the privately owned forest lands of the country soon enough to obviate the necessity for some reasonably effective and yet practicable form of public supervision or control over cutting on these lands in order to keep them con-tinuously productive of future timber crops. North Carolina, with over 17 million acres of privately owned forest land and hundreds of thou-sands of ownerships is no exception to the general situation found in a recent study to prevail in the important forest regions of the country.1 Less than one-third of this area is being handled and managed for the growth of timber, most of which (4.8 million acres) only receives extensive management prac-tices involving fire protection and provisions for re-stocking such as the reservation of seed trees or partial cuttings.2 The remainder of this area under management, in addition to receiving extensive forestry practices, is handled under planned cutting programs or forest improvement operations aimed at the continuous growth of timber crops under technical forestry practices. RESOURCES Of the area under extensive forest management 600,000 acres are industrially owned, over 1.8 million acres are in farms, and the remainder (over 2.4 million acres) is in other forms of ownership. Of the area under intensive forest management, 60,000 acres are industrially owned, 100,000 acres are in farms and the remaining 260,000 acres are in other forms of ownership. Forests comprise important and integral parts of North Carolina farms. The 278,276 farms in the state, aggregating 18,845,000 acres, have a total of 9,093,000 acres in farm forests or an average of 33 acres of forest per farm. The total value of forest products sold from farms in 1937 was nearly 8.7 million dollars, ranking sixth in order of total sales of various farm products, being exceeded by tobacco, corn, cotton, hay, and peanuts. However, by adding to the value of forest products sold from farms that Cutting of short leaf pine leaving scattered seed Korstian, C. F., "Forestry on private lands in the United States." (1944.) Duke School of Forestry Bui. 8. 234 pp. These and other figures in this article are from "Forest Facts for North Carolina" reported May 18, 1944 by the Committee on Forestry Policy, North Carolina Forestry Association and compiled from data supplied by the Forest Survey, Appalachian Forest Experiment Station, AsheTllle, N. C, and by the Division of Forestry, State Department of Conservation and Development, Raleigh, N. C. Winter, 1945 THE U. C. C. QUARTERLY PAGE 1 5 * * * clear cutting to be followed by planting. of forest products used on farms (nearly 15.6 million dollars) the total value of forest products produced on farms displaces cotton in third place. There are about 3,850 sawmills in North Carolina, four pulp mills, approximately 65 veneer mills, 12 cooperage plants, nine tanning extract plants, five excelsior mills, 48 shuttle-block, handle and dimen-sion mills, and 41 other primary wood-using plants. Almost 2,900 of the sawmills operating in North Carolina in 1937 had a capacity of less than 10,000 board feet per day. These small mills cut two-thirds of all the lumber. The greatest concentration of these mills is in the Piedmont. Of 1,600 sawmills operating in this section of the state only 28 had a daily cutting capacity of more than 10,000 boara feet. All six of the largest mills—with a daily capacity of 40,000 or more board feet—were located in the Coastal Plain. These primary commercial forest industries afford approximately 8,039,000 man-days of employment per year. Only the textile industry provided the workers of North Carolina with more employment than did the primary forest industries. The secon-dary forest industries such as furniture factories provided an additional 9,395,500 man-days of em-ployment, bringing the total to about 17,434,500 man-days per year for the forest products industries. The total value of the primary forest products produced in North Carolina averages about 55 million dollars per year. The annual production of forest products in the state is approximately 1.7 billion board feet of lumber, 870,000 cords of pulpwood, 5.8 million cords of fuelwood, 612,500 hewn crossties, 151,000 poles and piling, 150 million square feet of veneer, and 100,000 cords of other products. To obtain a true picture of the forest resource situation it is necessary to determine not only the quantity of wood removed from the sound-tree grow-ing stock in the forests of the state by the forest industries and domestic users, but also the amount of growth in these forests for the same period. For 1937 the Forest Survey found that the pine stands in the state as a whole were being over-cut in the saw-timber sizes and were barely holding their own when all sizes were considered. The hardwood situation .Shelter wood cutting, when pine reproduction has become established in the openings, the remaining large trees will be cut. was more satisfactory as there was a small gain in saw-timber volume. This over-all picture does not, however, accurately portray conditions in the different parts of the state. For example, the mills and other users over-cut the pine stands of the Piedmont in 1937 by 184 million board feet. During the period from 1937 to 1944 the Forest Survey calculates that the volume of saw-timber in these Piedmont pine stands was reduced by 16 percent. Thus in certain areas of the state the drain ex-ceeds the current growth, in others the supply of large, high-quality trees is limited, and in still others the preponderance of cull trees in the forest stands hinders profitable timber growing. Moreover, on a large percentage of the forest land the volume of growing stock is not over one-half of what it could be under good forestry practices. Under present conditions the wood-using industries can continue to operate for a considerable time without losing their high rank in the industrial economy of North Carolina. However, if they are to remain perma-nently in business, and expansion rather than con-traction of these industries is anticipated, the neces-sary steps must be taken to build up the annual Thinning. Short leaf pine following thinning for fuel wood, pens of which are in foreground. PAGE 1 6 THE U. C C. QUARTERLY Winter, 1945 forest growth, in the most useful sizes and species, to more nearly the productive capacity of the land. FIRE PROTECTION To bring about this objective several approaches are desirable. First of all adequate fire protection must be considered as a prerequisite to timber grow-ing and the efforts of public and private fire control agencies must be strengthened and given whole-hearted support. Forest fire control should be ex-tended and expanded to a state-wide basis. Only about two-thirds of the counties of the state have organized fire control and most of this is inadequate-ly financed. The $169,000 recommended by the State Advisory Budget Commission for the fiscal year 1945-1946, although almost $66,000 above that for 1944-1945, is only about three percent of the 3.5 million dollars of annual tax income to the State Treasury from the forests and forest industries of North Carolina. This amount is still inadequate to protect the state's forests, the stumpage of which, exclusive of land value and of the forest products industries, is estimated at 188 million dollars. The increased recognition by the State Budget Bureau and by the Advisory Budget Commission of the importance of adequate forest fire control and certain other phases of the state's forestry program is indicated by the following excerpt from the fore-word of the Commission's report to the 1945 Legis-lature : "The appropriations for Forest Fire Control have been increased very materially. The pres-ent war emergency has definitely brought the Nation face to face with a realization that the forest products of the country are very vital, and that war uses have depleted these products to a very great extent and that, in order to have sufficient forest products to meet the needs dur-ing peace time, it will be necessary to preserve and to encourage forest production. With this in mind, it has been recommended that addi-tional funds be appropriated for forest fire con-trol and for certain other forestry work in order to preserve and to provide ample planning for future needs." HARVEST CONTROL Even though adequate control of forest fires is the first essential requirement for successful timber cropping, it alone will not necessarily keep forest lands continuously productive. Cutting methods that will assure perpetuation of well-stocked stands of desirable timber species should be more widely practiced. Many tree species now infrequently utilized, particularly of hardwoods, should be cut and marketed. This may involve a more extensive development of wood conversion or secondary wood-using industries, possibly at the expense of a de-crease in lumber production. More control must be exercised over cutting practices on privately owned forest lands to guard against stripping them with-out regard to their future productivity. Measures such as these will go far toward making the forests of North Carolina a growing permanent natural re-source, capable of supporting more forest products industries and a larger part of the state's population. The greater natural wealth thus created will not only support enlarged permanent forest industries and supply more permanent jobs, but will also pro-vide a wider tax base for equitable taxation. For a number of years the North Carolina Fores-try Association has sought to encourage, in coopera-tion with lumbermen, the pulp and paper industry, and other users of forest products, the more exten-sive adoption of a system of timber harvest that will provide for a sustained timber yield and make for better land use on a permanent basis. Pursuant to resolution of the Association adopted at its Septem-ber, 1944 meeting and with the concurrence of the Forestry and Parks Committee of the State Board of Conservation and Development, a conference was held in Asheville on November 14 and 15 to explore the possibilities of drafting a state bill for the con-trol of cutting practices which may reasonably be expected to be practicable of administration and to attain the objectives of increased and sustained yield of forest products. This conference was attended by representatives of forest owners and the ma~jor forest industries and by state and federal forestry officials. It reached a common accord to the extent of approving the context of a bill which it felt would be deserving of support in the State Legislature. Another important decision reached at the Asheville conference was that practical and yet reasonably effective forest cutting practices can be drafted for the more important groups of forest types in North Carolina. Such cutting practices have since been drafted by a committee of the Appalachian Section of the Society of American Foresters. It is uncertain whether a bill, patterned along the general lines of the recommendations of the Ashe-ville conference or of some other form, will be intro-duced in the 1945 session of the General Assembly. Some of our statesmen, however, have indicated that they believe that North Carolina's forest situation is sufficiently critical to demand the most thoughtful attention and remedial action by the State Legis-lature. FORESTRY SURVEY An independent survey of forestry administration and practice has been under way in North Carolina, the first state selected for this study which is being conducted as a joint project of the Society of Amer-ican Foresters—the national organization of profes-sional foresters in this country—and of the Charles Lathrop Pack Forestry Foundation. Made possible by a grant of funds from the Foundation, the project will subsequently be extended to other states in which administration of forest resources will be studied. The project is designed to render a service to the states by providing them with an objective professional analysis of their forestry problems, and to submit recommendations as to how those prob-lems might be solved for the states' social and eco-nomic welfare. The survey is being made in North Carolina with the cooperation of the State Depart-ment of Conservation and Development, and other state, federal and private agencies. Winter, 1945 THE U. C. C. QUARTERLY PAGE 1 7 Workmens Compensation in North Carolina By T. A. Wilson, Chairman, Industrial Commission Insofar as the comforts of life may be purchased in the open market, the people of the United States have made more progress in their mode of living since 1900 than all other people in the history of civilization, and most of this has taken place since the First World War. In the past we of the United States have felt that we could solve most of our social problems due to modern industry by our high standard of living as compared with many other industrial countries, but the severe and long eco-nomic depression of the late twenties and early thirties taught us that the individual is helpless when his limited savings are rapidly consumed through unemployment, whether caused by accident, sickness, a lack of opportunity to secure employment, or any other cause. Modern industry has solved many of the problems of supplying the needs of mankind in our complex civilization, but as we solve one problem others are created. Thus the need for a broad comprehensive social security program. The United States has been somewhat behind many other nations in trying to alleviate certain social problems through legislation. With the ex-ception of the Workmen's Compensation Laws, en-acted by individual states beginning in 1911, very little progress was made in this country until the present national administration took office in 1933. Since the Workmen's Compensation Law was the fore-runner in the United States of the broader social security program, of which we are now so proud, it probably will be of interest to briefly sketch its origin and history in Europe, in the United States, and here in North Carolina. HISTORY The modern Workmen's Compensation Law had its origin in Germany, and was offered by Chancellor Bismarck as a means of preventing the further spread of the socialistic doctrines of Marx and La- Salle. The first bill was introduced in the Reichstag in 1881, but because of objectionable amendments the bill was withdrawn by the Government. In 1882 a second essay was made with two bills : a revised compulsory accident insurance bill, and another bill providing for compulsory insurance of workmen against sickness. However, both bills dealt with the industrial accident problem, for it was contemplated that compensation benefits would be paid from the sickness funds during the first 13 weeks of disability resulting from accidental injuries, and that the acci-dent funds should be used to provide benefits only in case of serious injury that caused either death or disablement extending beyond the 13-week period. The committee considered the sickness bill first and it was enacted in 1883, effective December 1st, 1884. No action was taken on the accident bill, but a third bill was introduced in March, 1884, providing for a system of mutual accident insurance associations which was enacted effective October 1st, 1885. Its THURSTON ADGER WILSON Better known as "T. A." Like our Governor Cherry, born in South Carolina, but has developed into a fine North Caro-linian. Able, conscientious, honest, modest, hard-working. In every sense, a useful public servant. Leader of organized labor for many years. President of the North Carolina Federation of Labor, 1927-1930. Appointed member of the North Carolina Industrial Com-mission when it was set up, May 1, 1929. Chairman since March 1, 1939. National authority on industrial safety and member of all of the important national and international societies operating in this field. T. A. is presently the President of the International Asso-ciation of Industrial Accident Boards and Commissions, hav-ing been elected to that position at the international conven-tion of this organization at Boston, Massachusetts, last year. Previously he had served on important committees of this association and as one of its vice-presidents. With his state-wide, national and international interests, T. A. finds time to be one of Raleigh's most useful citizens. Member American Legion, 40 & 8, Lions Club, Junior Order, Masons, Typographical Union, Lutheran Church. Active in all. The Unemployment Compensation Commission is proud of its older sister organization, the North Carolina Industrial Commission, and we who are responsible for its administra-tion, are grateful to T. A. and his associates for their unfailing interest and their help in the stormy days of 1936-37, when we were launching our new agency. The relation between our agencies has been close and cordial and should so remain, because we are both in the same field, the Industrial Commis-sion bringing cash benefits when the worker is disabled by industrial accident or occupational disease, and the Unemploy-ment Compensation Commission providing income for him when he loses his job through no fault of his own. The Unemployment Compensation Commission salutes the Industrial Commission and its worthy Chairman. We are proud to present his story of "Workmen's Compensation in North Carolina."- —A. L. F. PAGE 18 THE U. C. C. QUARTERLY Winter, 1945 coverage was limited to manufacturing, mining and transportation. Later its scope was increased to cover employees in agriculture, forestry and public service in 1886; building trades in 1887, and in 1911 all Workmen's Compensation Laws were brought together. Previously in 1871 Germany had enacted the Employers Liability Law. Great Britain, too, had her problems. Prior to 1846 there was no right of action in England under the common law for wrongful death. The Lord Campbell's Act remedied this situation by permitting the personal representative to bring action within 12 months. The Employers Liability Act of 1880 modi-fied the fellow servant rule but did not stop the agitation for a broader reform. Amendments were offered to abrogate the fellow servant rule in its entirety, the defense of assumption of risk, and to limit the practice of contracting out. The situation in Great Britain became increasingly worse until a Workmen's Compensation Law was enacted in 1897, which was of an experimental nature, covering only hazardous employments such as railways, factories, mines, quarries, engineering work, and on buildings more than 30 feet high. The employer paid the en-tire cost. It was enacted over the opposition of both employers and employees—some employees feeling that somehow they would have to bear the cost. In 1900 its scope was extended to cover agricultural laborers and in 1906 it was further extended to cover most employments and the benefits were revised. Other European countries enacted compensation laws prior to the United States. The industrial accident problem in the United States was left to the individual states, and, of course, the early Compensation Laws had to hurdle the favorite legal question, to wit : constitutionality, both state and federal. And then there was the question of competition, that one state would have an advantage over another. However, in 1891 the United States Bureau of Labor studied the German system and published its findings in 1893. A similar study was made in 1898 by the Bureau of Labor Statistics in Massachusetts at the request of the Legislature. The first American Workmen's Compensation Law, modeled after the British Act, was introduced in the New York Assembly in 1898. It did not come out of the Committee. Maryland passed an Act in 1902 covering clay and coal mining, quarrying, operation of steam and street railways, and certain construction work for munici-palities. It was crude and limited death benefits to $1,000. It was declared unconstitutional in 1904 for the reason that it deprived parties of the right of trial by jury. Massachusetts in 1903 appointed a committee of five which the following year recommended a law modeled after the British Act of 1897. It was re-jected by the Legislature because it would impose too great a burden on industry. In Illinois it was op-posed in 1907 by both employers and employees, the former objecting to increased legal responsibility, and the latter to abrogating their common law rights and the limited benefits. Many other states ap-pointed committees to study the laws and make recommendations. In 1908 the United States Congress, upon request of President Theodore Roosevelt, passed a law with limited benefits for certain government employees. Finally the constitutional problem was solved by a system of elective laws. That is, the employer is presumed to have accepted the law and provide in-surance if he has a given number of employees and if his industry is not exempted. If he fails to provide insurance or if he rejects the compensation law his common law defenses are abrogated. Thus, if there is any negligence on his part and he is solvent it is only a question for the jury to say the amount of the monetary damages. Usually if the employer has failed to reject or provide insurance the injured em-ployee has the right to elect to sue at law or accept compensation. Thus there were investigations and experiments which ultimately resulted in 47 state compensation laws (Mississippi being the remaining exception), several territorial laws, the United States Long-shoremen's and Harbor Workers' Act, which was ex-tended to cover United States Government employees and civilian employees in the District of Columbia. New York amended its constitution to provide a compensation law. North Carolina in 1929 was the 44th state. NEED Why the necessity for Workmen's Compensation Laws? The common law system was slow, cumber-some, expensive, and many abuses developed. Good employer-employee relations could not be main-tained, which modern industry now realizes is most important for efficient production. Court trials with attendant witnesses interrupted production, and the employer, not infrequently, was held up to public abuse before the jury of 12, a crowded courtroom, and the press. On the other hand many sociologists estimate that only one injured worker out of eight (and some times less) ever recovered under the com-mon law system, and, therefore, they frequently became a charge first on their relatives and friends, and then on society as a whole. I have frequently said that no worker would roll dice with the pay-master to determine if he were to be paid off or the company keep his wages. Certainly he should not expect his widow and orphans to play a game of cards with the paymaster knowing that the cards will be stacked against them eight to one to de-termine as to whether they will be taken care of or not. "And judgment is turned away backward, and justice standeth afar off: for truth is fallen in the street, and equity cannot enter." (Isaiah, 59 Chap., 14 verse.) The late Justice Adams in Conrad vs. Foundry Company, (198 N. C. pp. 725-6) quoting from Stertz vs. Industrial Insurance Commissioner (91 Wash., 588, 158 Pac, 256) said: "Both had suffered under the old system, the employer by heavy judgments, * * * the employee through old de-fenses or exhaustion in wasteful litigation. Both wanted peace. The master in exchange for limited liability was willing to pay on some claims in the future where in the past Winter, 1945 THE U. C. C QUARTERLY PAGE 19 there had been no liability at all. The servant was willing not only to give up trial by jury, but to accept far less than he had often won in court, provided he was sure to get the small sum without having to fight for it." Justice Adams then said : "The result was that the compensation law discarded the theory of fault as the basis of liability and conferred an absolute right of compensation on every employee who is injured by an 'accident arising out of and in the course of the employment'." Justice Seawell in Barber vs. Miyiges (223 N. C, p. 216) says: "The primary purpose of legislation of this kind (Work-men's Compensation) is to compel industry to take care of its own wreckage. It is said to be acceptable to both em-ployer and employee, because it reduces the cost of settle-ment and avoids delay. To the employee, it means a cer-tainty of some sort of compensation for an injury received in the course of business; and to the employer, it reduces unpredictability of loss and puts it on an actuarial basis, permitting it to be treated as 'overhead', absorbed in the sales price, and thus transferred to that universal beast of economic burden, the consumer. * * * It is said to be permitting it to be treated as 'overhead,' absorbed in the conduct of the enterprise, and is referred to the propriety of keeping loss by accident incidental to employment 'chargeable to the industry where it occurs.' * * * It is called 'an economic system of trade risk.' " The North Carolina Supreme Court, like others, has said on many occasions that the law must be interpreted liberally in favor of the injured worker. As to delays in courts under the old system, in Rhode Island a certain case was tried before a jury five times, went to the Supreme Court five times, and finally a verdict for $22,895 was sustained eight years after the accident. A Missouri boy, age 18, lost his leg in 1872, 18 years later in 1890 he re-covered $12,000 with interest after three jury trials and three appeals. He was then 36 years old, mar-ried, and the father of three children. And then there is the famous old English case that Dickens portrayed of Jarndyce vs. Jarndyce, which remained in litigation for approximately 40 years. ACTION The Legislative history leading up to the enact-ment of the North Carolina Workmen's Compensa-tion Law ran true to form. The common law system was unsatisfactory. As North Carolina emerged from an agricultural state to an industrial state the dissatisfaction with the common law system of establishing liability for personal injury to employees increased, yet little was done until the Workmen's Compensation Law was enacted March 11th, 1929, upon the urgent request of Governor O. Max Gardner in his first message to the General Assembly (January 11th, 1929) in which he said: "North Carolina has grown so rapidly in industry during recent years that the state is passing through a transition period. Changing from an almost wholly agricultural state to a well advanced and almost evenly divided industrial state, this condition suggests the crying need for a fair and just workmen's compensation law, which I believe should be provided by the General Assembly. This would serve the needs of labor in providing a quick, economical, and efficient method of adjusting the claims for injuries, loss of time, and damages and would relieve the claimants of a large part of the expense and delay incident to court trials. It would relieve them of the burden of proving the negli-gence of the industry, and at the same time would tend to relieve some of the congestion now prevailing on the dockets of our courts. It would also be more satisfactory to in-dustry because it would mean fixed and stated standards for determining compensation, and would not leave the question open to the speculative determination of court trial. This law should be fair to the employee and not oppressive or unjust to the employer." In 1897 the North Carolina General Assembly abrogated the fellow servant rule, modified the doc-trine of contributory negligence and assumption of risk when due to defective machinery, but it only applied to railroads. From 1911 to 1921, 20 bills were introduced in the Legislature, including eight in 1913, and five in 1915, to modify the employers liability, but all failed of passage except three, and these applied only to railroads, including logging and tram roads. As to workmen's compensation, 17 bills were in-troduced in the North Carolina Legislature from 1913 through 1927, including three in 1913, and five in 1921, but only two passed. One passed the extra session of 1920 to appoint a special joint committee of the Senate and House to investigate and report upon workmen's compensation, and at the next regular session a bill passed to pay the expenses of this committee. With the exception of 1919 one or more bills were introduced at every regular biennial session of the Legislature from 1913 to 1929 to create a workmen's compensation law. Yet it was not until 1923 that a committee gave a compensation bill a favorable report, and this did not recur until 1927 when a bill was amended and placed on the favorable calendar. During this time the North Carolina State Federa-tion of Labor had gone on record in 1915 for a work-men's compensation law and at subsequent conven-tions. Also, Commissioner of Insurance, James R. Young, in 1914 and his successor, Stacy Wade, recommended the passage of a Workmen's Compen-sation Law; M. L. Shipman, State Commissioner of Labor and Printing, in 1916 and biennially there-after, while in office, recommended the passage of a law, as did his successor, Frank D. Grist, who aided in its passage in 1929. During the 19 years, 1911 to 1929, six governors held office, five of whom were elected upon a Demo-cratic platform pledged to the passage of a work-men's compensation law, but it was not until O. Max Gardner was elected that a governor really pressed for its passage. Not only did Governor Gardner vigorously recom-mend its passage but he was instrumental in getting representatives of employers and employees together outside of the legislative halls to agree upon a bill to the end that there would be unanimity of support from the two principally interested parties, and thus substantially reduce and narrow the opposition. The legislative action proved the wisdom of his strategy for after a lengthy public hearing before the 1929 Joint Senate-House Insurance Committee the bill was reported favorably to the Senate but re-referred to the committee for further hearing upon motion of Senator Walter Clark of Mecklenburg to hear certain of his constituents in opposition to its passage. Upon the bill being given a second favorable report there was a lengthy debate in the Senate extending over two days but the end result was its passage with PAGE 20 THE U. C. C. QUARTERLY Winter, 1945 only four votes being cast in opposition, and in the House there was not even a roll call. Among the leaders in the 1929 Legislative fight for passage of the Compensation Law were Governor J. M. Broughton, then State Senator ; Senator Claude C. Canaday of Johnston, both of whom introduced bills ; and Representatives W. E. Price of Mecklen-burg and Robert M. Hanes of Forsyth. The non-legislative committee, which agreed upon the terms of the bill passed in 1929 with minor amendments, included the following: For the Em-ployers, Stacy W. Wade, former Insurance Commis-sioner; V. P. Loftis, representing the contractors, and Frank S. Spruill, Sr., Attorney, representing the Yellow Pine Lumber Association. For the Em-ployees: T. A. Wilson, President, and James Ride-out, Secretary, North Carolina State Federation of Labor; J. E. Baumberger, representing the Brother-hood of Firemen and Engineers. However, the principal negotiations were carried on between Spruill and Wilson who agreed upon the benefits embodied in the bill that passed, except that the Senate increased the total compensation from $5,500 to $6,000. PROVISIONS Thus, the legislative history of Workmen's Com-pensation in North Carolina is not unlike that of Germany, England and the 43 States that preceded it. The Compensation Law was finally enacted, and became effective July 1st, 1929. The law provided for a Commission of three, who "shall devote their entire time to the duties of the Commission." The Governor shall appoint the members of the Commis-sion and "not more than one appointee shall be a person who, on account of his previous vocation, em-ployment, or affiliation, can be classed as a repre-sentative of employers, and not more than one ap-pointee shall be a person who, on account of his previous vocation, employment, or affiliations, can be classed as a representative of employees." The original members of the Commission were Matt H. Allen, Chairman, representing the public; J. Dewey Dorsett, representing the employers; and T. A. Wilson, then President of the North Carolina State Federation of Labor, as Labor's representative. Harry McMullan, now Attorney General, succeeded Matt H. Allen as Chairman and served for a short while. The present members of the Commission are T. A. Wilson, Chairman, Buren Jurney, Commis-sioner and Pat Kimzey, Commissioner. The 1929 law was modeled after the provisions of the Virginia, Georgia and Indiana Workmen's Com-pensation Laws. It provided for compensation at the rate of 60 % of the average weekly wage, but not less than $7.00 per week, nor more than $18.00 per week. In case of death, 350 weeks compensation; total disability not to exceed 400 weeks; for partial disa-bility (except for partial loss of or loss of use of members) 300 weeks, but in no case to exceed $6,000, including burial expense not to exceed $200 ; the em-ployer to pay the cost of medical, surgical and hospital expenses for 10 weeks, and thereafter upon order of the Commission when it "will tend to lessen the period of disability." There was a schedule of weeks to be paid for loss of members ranging from 200 weeks for loss of an arm to 10 weeks for loss of a toe, which was in keeping with other state laws in the South. However, as to percentage, total compen-sation and medical benefits, the 1929 law was then the most liberal in the South. OPERATION From 1929 to July 1st, 1944, a total of 650,812 cases have been reported to the Industrial Commis-sion, in which compensation has been paid in the amount of $18,511,060, and medical expenses paid in the amount of $9,217,842. Included in the 650,812 cases are 1,528 deaths, 62 permanent disability, 14,369 permanent partial disability, 122,080 tempo-rary total disability, and 512,773 medical only cases. With the beginning of the Compensation Act, the Commission realized that something should be done in the field of industrial safety to improve working conditions and create a safety minded attitude on the part of employers and employees. With this thought in mind the First Annual Statewide Industrial Safety Conference was organized in 1930, with the first meeting held in High Point. This was the first such Safety Conference in the entire South. Since that time, several southern states have started similar programs. The Statewide Safety Conference has been held each year since the beginning, and has increased in size and interest each year. In 1936 it appeared to the Commission that the textile industry of the state could make an improve-ment in its accident record. The present Chairman conferred with the late J. A. Long, then President of the North Carolina Cotton Manufacturers' Asso-ciation, and suggested a Statewide Textile Safety Contest might be of some value. This contest was begun that year with 173 textile mills participating, working 59,977 employees for a total of 33,187,587 hours. The Ninth Annual (1944) Contest had an enrollment of 395 mills employing 135,616 employees working 190,412,498 hours. During the time this contest has been operating the compensation in-surance rate for cotton spinning and weaving has been reduced from 72c to 56c—a savings of 16c on each $100 annual payroll of the industry. The con-test has grown to such size that now almost 97% of the textile mills in the state participate. The Textile Safety Contest created so much favor-able comment that the hosiery and furniture indus-tries requested the Commission to start a similar contest for their industries. This was done in 1942, and each year has shown a decided increase in size and interest. Realizing that safety training was the foundation of any good safety program, the Commission in July, 1942, began offering supervisory personnel of in-dustry of the state a 10-hour Industrial Safety Course. This was an immediate success. To date more than 3,600 persons have been enrolled in this course. The Commission engages in many other safety activities, all from the standpoint of educating em-ployees and employers in safe working methods. Winter, 1945 THE U. C. C. QUARTERLY PAGE 2 1 Some of these activities are: Organizing plant safety committees ; assisting in plant safety con-tests ; showing and loaning of safety film ; individual accident surveys for those plants making poor safety records; speaking before safety committees, plant executives, civic organizations ; publishing the monthly "Safety Bulletin," and other educational safety work. According to Keech On Workmen's Compensation in North Carolina, the ratio of rural to urban popu-lation in North Carolina in 1900 was nine to one. In 1930 this ratio had been reduced to three to one, and the state's population increased 43.7 percent between 1910 and 1930, with a gain of 73 percent for those employed in business establishments. According to the World Almanac there was an in-crease in the number of industrial wage earners of 4,970 from 1929 to 1939 in the states of South Caro-lina, Alabama, Tennessee, Mississippi, Virginia, Florida, Georgia and Kentucky, while in North Caro-lina during the same period there was an increase of 61,974—from 208,068 in 1929 to 270,042 in 1939— or an increase of a little more than 12 times the other eight southern states. The Industrial Commission cooperates very closely with the State Vocational Rehabilitation Division of the Department of Public Instruction by referring to the division all requests for lump sum settlements and the seriously permanently injured cases. Out-standing results have been obtained in many cases. Widows have been assisted in buying homes. Through rehabilitation some permanently injured workers are actually earning more today than before being injured. In 1935 the Compensation Law was amended to cover a comprehensive list of 25 occupational dis-eases, North Carolina became the first state in the South to incorporate occupational diseases and the first in the United States to specifically cover sili-cosis and asbestosis. In 1943 the maximum weekly compensation was increased from $18.00 to $21.00 per week and the number of weeks increased for the loss of certain members. The following tabulation shows the amount of compensation allowed for certain members of the body before and after March 6th, 1943, at the maxi-mum rate, the difference in amounts and the per-centage increase of money to the injured worker: MAXIMUM COMPENSATION Hand Arm Foot Leg Eye Thumb First Finger.. Second Finger $18.00 $21.00 Difference Number Compen- Number Compen- Weeks sation Weeks sation 150 $ 2,700 170 $ 3,570 $ 870.00 200 3,600 220 4,620 1,020.00 125 2,250 144 3,024 774.00 175 3,150 200 4,200 1,050.00 100 1,800 120 2,520 720.00 60 1,080 65 1,365 285.00 35 630 40 840 210.00 30 540 35 735 195.00 Percent Money Increase 32.2 28.3 34.4 33.3 40.0 26.4 33.3 36.1 In conclusion, the Industrial Commission started a campaign July 1st, 1944, to bring about the prompt payment of compensation. In November 46.92 per-cent of the compensable claims were paid within 21 days from the date of the accident, and 23.88 percent were paid within 14 days. Contrast this with the annual report of one casualty company a few years ago showing 15 common law cases pending nine years or longer, 107 for six years and 327 for five years, 561 for four years, 1,213 for three years and 2,436 for two years. SAFETY NOTES 1. New Publication American industry has exhausted practically every source of manpower save one, and that is the re-serve now wasted by industrial accidents, war plant management was told with the announcement of a new publication, Safety Through Management Lead-ership, issued in connection with the United States Labor Department's drive for a million fewer job accidents. Directed to smaller war plants which can seldom afford—and now cannot hire—trained safety engi-neers, the publication cites actual experience in plants of varying sizes in organizing for safety. Copies may be secured from the Division of Labor Standards, U. S. Department of Labor, Washington 25, D. C. 2. Industrial Safety Chart Series The Division of Labor Standards is cooperating with Mill & Factory on a series of industrial safety charts designed to promote safe working practices around common types of industrial equipment. The first of the series which has already been issued is on drill presses. Subsequent issues published month-ly and to be continued indefinitely, are planned to cover circular saws, power trucks, lathes and other types of industrial equipment. These charts should be particularly useful in em-ployee training and educational programs, for mount-ing on bulletin boards, for reproduction in house organs and trade pbulications, in safety training manuals and other related ways. Copyright restric-tions have been waived so that the charts may be reproduced, enlarged or used in any way that will make them more effective. They may be obtained from either Mill & Factory, 205 E. 42nd St., New York 17, N. Y. (with the name of any other organ-ization on them as desired) ; or the Superintendent of Documents, Government Printing Office, Wash-ington 25, D. C. A CORRECTION In the article on page 29 of this issue, "Manpower Priorities Referral Plan in Operation in State," the by-line was omitted through error. The article was written by Dr. J. S. Dorton, State Director, War Manpower Commission. PAGE 22 THE U. C C QUARTERLY Winter, 1945 Post War Unemployment By Silas F. Campbell, Supervisor, U. C. C. Bureau of Research and Statistics Looking more directly at the problems of post-war employment all sorts of predictions have been made as to the volume of unemployment expected to re-sult from the termination of war contracts. Such estimates have ranged from 6 to 19 million. Since North Carolina has 2.52 percent of the national labor force it might also be expected to sustain 2.52 per-cent of the unemployment burden. However, it must be borne in mind that North Carolina occupies a specially favorable position with respect to stability of employment. Being a pro-ducer largely of consumer goods, the purchase of which is mandatory, employment, both during de-pression and prosperity, has been at a higher level than in those areas devoted largely to the manu-facture of durable goods, the replacement of which is in large measure optional. Official records indicate that during the depression years of the thirties, and since, unemployment in North Carolina has been relatively 20 percent below the national level. It may be expected, therefore, that the effect of cut-backs in industrial production will strike North Carolina business with less severity than is predicted for the country as a whole, and that, within the limits of its own products, if freed from continued restrictions, the degree of inflation may depend largely upon the ability of industry to satisfy the accumulated consumer demand, except perhaps for cotton textiles which may be supplanted to an un-known extent by materials born in the laboratory. Localization of the problem of post-war unemploy-ment, both as to volume and industrial characteris-tics, will be needful for those charged with the responsibility of hastening post-war readjustments. For workers in war plants, or in expanded indus-tries, this presents no special difficulties since they are regularly reported by areas to the Commission in the usual course of business. However, the most important segment of the labor force from the stand-point of reemployment will be the discharged service men from North Carolina who will exceed 45 percent of the entire non-agricultural labor force of the state, and more than 55 percent of the number engaged in covered employment in 1943. Without some knowl-edge of where they came from and a general under-standing of their industrial background it will be difficult to plan intelligently for their reorientation into the industrial life of the state. It is known what percent of the labor force, based on the 1940 census, was engaged in covered employ-ment; what percent in agricultural work and what percent in schools, professions or other non-covered employment. By taking the 1940 labor force by counties it has also been possible to make an allo-cation of the probable number to be released after the war from covered employment in each county. In the table these percentages are also used for making an arbitrary distribution of the men to be released from military service. When information becomes available as to the number discharged for any county it will be possible, by applying the per-centages given, to estimate the number who may be expected to return to agriculture, the number who would probably seek employment in covered indus-tries, and the probable number from schools, pro-fessions, personal service or non-covered employ-ment. In the meantime this table will serve as the best estimate it is now possible to make, since it is generally known that more than 300,000 have been inducted from North Carolina. The result of this arbitrary interpolation of per-centages with aggregates to arrive at a final estimate of unemployment may be summed up on a state-wide basis upon the hypothesis that 28.98 percent of the unemployment will represent agriculture, 42.86 percent covered industries, and 28.16 percent schools, professions, personal service and other non-covered activities. The percentages for each county are indicated in columns two, three and four. In column five of the table is an estimate of the number who may be released from covered employ-ment due to a cessation of war production. This represents the actual increase in employment in each county since 1940, and it will be noted that in 13 counties employment was less in 1943 than in 1940. To the figures in column five has been added an estimate of the number of service men who may be expected to seek non-agricultural employment. This is shown in column six as the total estimate of non-agricultural unemployment in the first post-war year, based on simultaneous demobilization. Gradual de-mobilization, or the extension of the war in one area for a longer period than in another area would obviously reduce this number. It will be seen that the problem will be more acute in some areas than others, and that the character of the problem changes with the industrial charac-teristics of the area. For instance, in the mountain county of Transylvania, an area not usually asso-ciated with extensive industrialization, it will be noted that 78.76 percent of all men who may be dis-charged from military service presumably come from covered employment, and only 19.65 percent from agriculture, whereas, in Johnston County with its extensive commerce, textile plants, and numerous small towns, only 13.15 percent of its service men are presumed to have come from covered employment, and more than 60 percent from agriculture. Another striking contrast in the same industrial area is furnished in the counties of Durham and Wake. With a difference in the estimated number to be released from non-agricultural employment (includ-ing service men in that category) of only 374, it is estimated that as to Durham County more than 70 percent will have come from covered employment, and only 23.64 percent from schools, professions and non-covered employments ; whereas, in Wake County, only about 35 percent will have come from covered employment, and nearly half from schools, pro-fessions, and non-covered employment. Winter, 1945 THE U. C. C. QUARTERLY PAGE 23 ESTIMATE OF MAXIMUM UNEMPLOYMENT SN FIRST POST- YEAR—NORTH CAROLINA* Average Covered Employment 1943 Estimated Distribution Releases Fkom Military Service Estimated No. Workers Released From Covered Employment 1945 2 Total Estimate Non-Agricultural Unemployment Ratio to 1940 Percentage of Total From Non-Agricultural Agriculture Covered Employment Other (923028) STATE TOTALS ._._ 577,020 28.981 42.861 28.16i 107,844 335,209 36 32 Mountain Region. 69,052 29.64 32.69 37.67 12,938 54,485 38.00 19,831 16.43 39.67 43.90 3,566 15,370 37.86 19,683 148 10.35 65.94 44.29 1.98 45.30 32.18 3.513 53 14,791 579 3,248 36,28 13.21 50.51 539 5,409 < 374 794 509 335 1,144 92 29.74 38.26 41.58 28.79 32.64 53.83 23.36 13.01 10.17 9.52 16.79 5.78 46.90 48.73 48.25 61.69 50.57 40.39 51 3 105 131 252 8 557 1,130 943 1,057 1,464 Clay 258 5,858 28.17 38.30 33.53 1,098 5,233 9 2,296 2,879 683 28.36 19.65 38.24 25.88 78.76 17.68 45.76 1.59 44.18 188 910 3 2,303 2,152 Polk - 77S 8,450 14.76 62.14 23.10 1,953 5,079 47.59 Caldwell 8,450 14.76 62.14 23.10 1,953 5,079 11,868 16.15 49.70 34.15 2,060 7,243 39 20 7,755 4,113 15.73 16.74 49.54 49.92 34.73 33.34 1,178 882 4,251 2,992 7,903 49.92 30.09 19.99 1,500 4,801 35 98 7,689 111 103 37.42 75.55 61.30 49.30 1.61 1.92 13.28 22.84 26.78 1,500 3 8 3,957 322 Yadkin . 1 522 5.374 46.14 16. IS 37.68 1,091 5,212 28 87 1,248 153 260 359 3,354 46.74 54.21 52.64 52.18 39.22 28.49 3.51 3.31 6.04 23.47 24.77 42.28 43.05 41.78 37.31 397 S3 34 s 577 981 310 668 709 Wilkes, 2,544 2,328 41.48 14.87 43.65 436 2,486 29.77 527 1,413 388 39.74 32.08 52.13 11.30 25.41 8.00 48.96 42.51 39.87 199 97 140 873 892 721 Mitchell . 4,192 24.87 35.83 39.29 695 3,652 43 . 79 4,192 24.88 35.83 39.29 695 3,652 Piedmont Plateau. 377,987 20.45 53.95 25.60 50,726 189,598 33.94 9,869 . 23.55 52.58 23.87 1,643 5,272 36.57 2,316 7,553 30.31 20.19 42.83 57.43 26.84 22.38 516 1,127 1,615 Stanlv 3,657 10,410 28.81 41.43 29.76 1,034 4,787 25.95 2,011 8,399 43.65 22.74 24.06 48.53 , 22.29 28.73 118 916 978 Randolph 3,809 Burlington ______ __ _ 19,764 13.43 77.14 9.43 69 5,677 25.71 19,764 13.43 77.14 9.43 69 5,677 Charlotte.. __ 49,737 12.67 60.72 26.61 11,058 30,133 43.05 Mecklenburg _._ _ 47,737 2,000 6.44 51.83 68.08 14.46 25.48 33.71 10,669 3S9 28,300 1 , S33 25,805 9.23 90.77 6,226 24.77 Cabarrus : ____ 25,805 9.23 90. 773 » 6,226 PAGE 24 THE U. C. C. QUARTERLY Winter, 1945 ESTIMATE OF MAXIMUM UNEMPLOYMENT IN FIRST POST-WAR YEAR—NORTH CAROLINA-(Con.) Average Covered Employment 1943 Estimated Distribution Releases From Military Service i Estimated No. Workers Released From Covered Employment 1945 Total Estimate Non-Agricultural Unemployment Ratio to 1940 Non-Agricultura Labor Force (923028) Percentage of Total From Agriculture Covered Employment Other 28,389 19.87 55.81 24.32 4,908 15,198 35.41 22,807 2,964 2,618 5.99 30.20 70.20 70.37 26.28 29.80* 23.64 43.52 3,321 1,422 165 11,270 3,227 701 35,853 13.87 79.21 6.92 7,569 18,554 46.89 32,315 3,538 7.94 42.39 87.36 40.05 4.70 17.56 6,891 678 16,611 1,943 43,924 8.66 65.35 25.99 2,397 18,314 29.07 Guilford___ . , __ 43,924 8.66 65.35 25.99 2,397 18,314 Henderson _ 6,160 47.97 22.71 29.32 839 3,696 25.49 Granville. _ 1,300 3,994 866 57.50 33.02 60.87 14.27 36.46 10.35 28.23 30.52 28.78 228 339 272 1,018 1,893 785 Vance.. .. Warren Hickory 14,953 16.83 71.79 11.39 2,358 7,069 39.89 Catawba 14,953 16.82 71.79 11.39 2,358 7,069 Lexington-Thomasville.. .. 12,166 17.55 58.57 23.89 1,807 6,045 35.60 Davidson . 12,166 17.54 58.57 23.89 1,807 6,045 Raleigh 19,014 35.22 27.32 37.46 3,271 14,118 37.80 Franklin _ 1,284 15,036 2,694 61.13 21.40 60.79 10.88 35.28 13.15 27.99 43.32 26.16 530 2,342 399 1,139 10,896 2,083 Wake Johnston Reidsville-Spray.. 11,977 34.77 39.94 25.29 2,405 6,731 36 55 Caswell. . . 203 11,774 70.86 26.19 4.14 48.45 25.00 25.36 8 2,405 371 Rockingham 6,360 Rockingham. 11,442 33.08 36.39 30.53 2,419 7,209 33 49 Anson 2,025 6,080 3,337 46.08 20.09 43.18 21.37 41.05 44.76 32.55 38.86 12.06 348 1,202 869 1,439 3,907 1,863 Richmond Scotland Rutherfordton 7,364 29.87 43.29 26.83 1,204 4,181 » Rutherford.. 7,364 29.88 43.29 26.83 1,204 4,181 Salisbury 11,775 16.70 36.45 46.85 1,246 8,507 30 16 Davie 1,608 10,167 41.44 12.34 34.31 36.82 24.25 50.84 271 975 1,036 Rowan 7,471 San ford 6,283 29.84 31.68 38.48 1,743 4,598 36 12 Lee 2,645 3,638 35.04 25.97 34.64 29.48 30.32 44.55 1,020 723 2,144 Moore 2,454 Shelby 8,743 34.34 39.31 26.35 652 4,203 29 57 Cleveland 8,743 34.34 39.31 26.35 652 4,203 Statesville. _ ... 11,005 27.48 57.31 15.20 3,293 6,636 47 68 Iredell 11,005 27.49 57.31 15.20 3,293 6,636 Winston-Salem. 33,354 6.79 57.24 35.97 811 12,444 23.29 Forsyth 33,354 6.79 57.24 35.97 811 12,444 Coastal Area... 114,076 45.74 27.41 26.85 44.180 91,126 41.23 Elizabeth City. 7,330 35.79 26.82 37.39 3,102 6,775 43 50 Camden 14 2,214 150 232 97 56.43 48.54 54.73 19.79 64.02 1.14 44.51 7.75 11.24 4.63 42.43 6.95 37.52 68.97 31.35 8 1,461 26 99 8 139 1,838 249 842 241 Chowan Currituck Dare Yates. Winter, 1945 THE U. C. C QUARTERLY PAGE 25 ESTIMATE OF MAXIMUM UNEMPLOYMENT IN FIRST POST-WAR YEAR—NORTH CAROLINA-(Con) • Based on Complete Demobilization and simultaneous conclusion of War in European and Pacific Areas. 1 Based on ratio of employment in this category in 1940 to total labor force in 1940. 2 Total increase in covered employment from 1940 to 1943. ' Actual percentage 103.58. * Actual percentage 31.28. 8 Actual percentage 83.44. 8 Actual percentage 198.98. ' Actual percentage 125.60. 8 Declined from 1940. 1 Coverage not comparable because of shift in area served. Average Covered Employment 1943 Estimated Distribution Releases Fbom Military Service Estimated No. Workers Released From Covered Employment 1945 • Total Estimate Non-Agricultural Unemployment Ratio to 1940 Percentage of Total From Non-Agricultural Agriculture Covered Employment Other (923028) 4,270 353 17.28 52.02 46.91 12.11 35.81 34.87 1,499 17 3,206 260 13,036 42.07 24.94 32.99 851 7,886 24 07 7,685 3,748 422 1,181 19.72 49.91 62.56 69.80 33.24 29.14 8.83 7.95 47.04 20.95 28.61 22.25 a 500 82 209 4,190 2,296 416 984 Hoke... Goldsboro 7,515 52.51 22.35 25.14 2,544 5,839 25.15 1,048 6,467 67.42 43.14 7.59 31.65 25.49 25.21 318 2,226 1,191 4,648 3,075 52.53 14.81 22.66 86 2,066 18.94 Pitt 3,075 52.53 14.81 22.66 86 2,066 4,170 50.81 18.74 30.45 1,013 3,081 29.97 25 4,145 80.42 42.34 0.52 23.98 19.06 33.68 s 1,013 184 2,897 Lumberton ..: 6,377 57.01 18.34 24.65 1,803 5,015 32.95 1,977 4,400 52.35 58.29 22.41 17.21 25.24 24.50 564 1,239 1,335 3,680 11,751 46.19 33.57 20.24 7,231 11,632 73.74 Carteret 1,020 6,912 56 4,594 169 34.23 32.79 70.08 68.36 53.10 17.34 67.21* 1.09 31.64" 6.27 48.43 28.83 40.63 219 2,543 21 4,375 73 1,672 4,325 269 4,894 472 Jones Onslow Pamlico. Roanoke Rapids 9,291 46.10 29.18 24.73 1,242 4.571 24.68 Halifax. 7,370 1,367 564 39.10 50.85 62.24 39.52 19.66 7.41 21.38 29.49 30.35 943 216 83 3,240 751 580 Hertford Northampton Rocky Mount 10,412 45.96 28.67 25.37 1,605 5,525 26.99 Edgecombe 4.253 6,159 43.27 48.15 24.49 32.09 32.24 19.76 410 1,195 2,255 Nash 3,270 Washington .. _ . 5,678 63.57 16.49 29.94 926 4,651 25.49 Beaufort.. 1,988 812 1,325 118 1,436 46.76 61.79 100.00 57.31 36.21 33.70 16.68 8.20 17.30 9.51 38.83 26.56 30.01 25.39 44.28 27.47 281 239 222 a 184 1,839 777 894 261 880 Bertie Hyde Martin Tyrrell... Wilmington 32,589 33.90 49.26 16.84 23,318 31,494 100.00 364 1,898 29,714 613 47.05 61.32 6.27 60.99 8.33 13.69 93.73' 7.66 44.62 24.99 31.35 13 194 21,905 206 917 1,606 27,257 714 Cnliitnhns New Hanover Pender , Wilson . 3,852 44.82 20.13 35.05 459 2,591 25.55 Wilson 3,852 44.82 20.13 35.05 459 2,591 Out-of-State... ._ 14,905 PAGE 26 THE U. C. C. QUARTERLY WINTER, 1945 U. C. C. Operations 1945 TAX SAVINGS TO EMPLOYERS OF 8,479 active accounts, 1,592, or 19 percent, have been FOUR AND ONE-HALF MILLION DOLLARS paying contributions for less than three years and consequently were ineligible. Because of rate reductions allowable under our While there is no present basis for estimating the state law, North Carolina employers will save over effective average rate for 1946, it appears likely, four and a half million dollars this year. The tabu- should payrolls remain at their present level and no lation of employer accounts which will benefit by the severe cut-backs occur to increase the claim load, plan of experience rating shows that 5,022 em- that the average rate for 1946 may fall to 1.5 per-ployers— or nearly three-quarters of all accounts cent> producing savings to employers of approxi-which could be considered for rate reduction—will mately $8.9 millions. ' share in an estimated saving of $4,596,012. Because The classification of employer accounts for ex-of rate reductions, the average effective rate of pay- perience rating in 1945 listed 8,479 active reserve roll tax supporting the unemployment compensation accounts, of which 1,592 were not rated because of fund will be 2.08 percent for this year, instead of shortness of operation under the law. Of the 6,532 the standard rate of 2.7 percent. accounts rated, 5,022 received reduced rates. The The largest group to effect a saving are those total number of accounts, both rated and unrated, 1,124 employers who will pay a rate of 1.39 percent which will pay at the standard rate of 2.7 percent for 1945. Their payrolls, which average $105,000, during 1945 is 3,457. Seventy employers will pay represent 15.9 percent of the total payroll. This more this year than in 1944, although all but seven group will save $1,551,988 in 1945 or a third of the of them will do so at rates below the standard. total saving. The number who will pay the maxi- There are 500 accounts with reserve overdrafts. mum rate this year dropped from 4,402 in 1944 to The number of employer reserve accounts by 1945 3,457 for 1945, notwithstanding an increase in the rate classes is as follows: number of experience rating accounts. The number , 7 . T7 .. „„ .. ' , _ . . m .. , „ . • , i • , ^ ^ «-, i Number of Units Effective Rate Percent of Total of employers paying the minimum tax of 0.27 percent g 479 2 08 100 of payroll for 1945 is 277, or 224 more than in 1944. "" " — An employer is eligible for consideration as to 755 25 8 9 rate reduction if contributions have been payable to 927 _. 2.13 10.93 his account for the three preceding years, but can 940 — !- 76 n- 09 obtain a reduction only if his reserve balance ex- ' 695 "" {Q2 g^o ceeds 2.5 percent of his payroll for the last three 304 65 3.59 years and is five times the largest amount of benefits 277 - ------ — 27 3 - 26 paid from such account within any one of the three preceding years. Experience rating will have been COMPENSABLE AND in effect in North Carolina for three years with the NON-COMPENSABLE CLAIMS close of the present year While the annual decline Not aU CQvered workerg who become unemployed in average rate has not been.Precipitate> employers and fi ,e claimg fm compensation are eligible for have effected savings amounting to $7,000 000. This benefits _ There are reagons fQr tM the mogt is the difference between what they did pay and important from a numerical point of view being an what they would have paid if all tax contributions insufficient amount of wage credits reported for the to the Unemployment Compensation Fund were claimant>s base.period year, that is earnings of less made at the standard rate of 2.7 percent of payroll. ,, ,, 81on . . • _ , A1 . • ^ K J than the $130 minimum requirement. Also, since a During 1943, the first year experience rating was claimant's first week of unemployment is not com- 111 effect, 1,559 firms obtained a reduced rate and the pensable, it is necessary for the Commission to average for the state was 2.63 percent. This pro- handle a considerable number of claims which do not duced a net saving to employers of $448,251. Al- resuit in benefit payments. most 20 percent of all active reserve accounts shared Initial ciaimS( although not compensable, are in this amount, and 25 percent of all accounts which necessary to establish the claimant's benefit year, the were eligible for classification. base-period year, and the amount of the weekly In
Object Description
Description
Title | U.C.C. quarterly |
Date | 1945 |
Publisher | Raleigh, N.C.: North Carolina Unemployment Compensation Commission,1942-1946. |
Rights | State Document see http://digital.ncdcr.gov/u?/p249901coll22,63754 |
Language | English |
Digital Characteristics-A | 32 p.; 4.53 MB |
Digital Collection | North Carolina Digital State Documents Collection |
Digital Format | application/pdf |
Title Replaced By | E.S.C. quarterly** |
Audience | All |
Pres File Name-M | pubs_serial_uccquarterly19421946.pdf |
Pres Local File Path-M | Preservation_content\StatePubs\pubs_serial_escquarterly |
Full Text | THE U.C.C. QUARTERLY VOLUME 3, NO. 1 WINTER, 1945 Logging Operations EMORY • inV LIBRARY PUBLISHED BY UNEMPLOYMENT COMPENSATION COMMISSION OF NORTH CAROLINA PAGE 2 THE U. C. C. QUARTERLY Winter, 1945 The U. C. C. Quarterly Volume 3; Number 1 Winter, 1945 Issued four times a year at Raleigh, N. C, by the UNEMPLOYMENT COMPENSATION COMMISSION OF NORTH CAROLINA Commissioners: Judge C. E. Cowan, Morganton; C. A. Fink, Spencer; R. Dave Hall, Belmont; R. Grady Rankin, Char-lotte; Dr. Harry D. Wolf, Chapel Hill. State Advisory Council: Capus Waynick, High Point, Chair-man; Willard Dowell, Raleigh; Marion W. Heiss, Greens-boro; H. L. Kiser, Charlotte; Dr. Thurman D. Kitchin, Wake . Forest; Robert F. Phillips, Asheville; Mrs. R. J. Reynolds,, Winston-Salem; Mrs. Bmil Rosenthal, Goldsboro; W. Cedric Stallings, Charlotte. A. L. FLETCHER Chairman WILLIAM R. CURTIS Director MRS. FRANCES T. HILL Editor Regular Contributions in each issue from the UNITED STATES EMPLOYMENT SERVICE FOR NORTH CAROLINA Agency of the War Manpower Commission Cover illustrations represent typical North Carolina industries under the unemployment compensation program. Cover for Winter 19^5—Logging Operations. Illustration from the N. C. Department of Conservation and Development. Logging and sawmilling comprise one of the most important basic industries in North Carolina. As an industry feature, this issue of the Quarterly presents a forward-looking arti-cle on timber resources and cutting practices by C. F. Kor-stian, Dean of the Duke University School of Forestry and President of the North Carolina Forestry Association. Sent free and upon request to responsible individuals, agencies, organizations and libraries. Address: U. C. C. Informational Service, Raleigh, N. C. CONTENTS Page Mrs. Bost Becomes Commissioner 2 Unemployment Compensation—1944 Review, By A. L. Fletcher. 4 U. C. Legislative Recommendations Recent Plant Awards 8 Merit System Administration and Operation, By Frank T. DeVyver 10 Cigarette Paper Plant Made Industry Indpend-ent, By Bill Sharpe 13 Timber Cropping Destined to Replace Mining of North Carolina's Forests, By C. F. Korstian 14 Workmen's Compensation in North Carolina, By T. A. Wilson__ 17 Post War Unemployment, By Silas Campbell 22 U. C. C. Operations 26 1945 Tax Savings to Employers of Four and One-half Million Dollars Compensable and Non-compensable Claims U.C.C. Cuts Out Red-tape Reporting for Employers Over 3,000,000 Separate Forms to be Eliminated The Course of Unemployment Research and Statistics Bulletins Manpower Priorities Referral Plan in Opera-tion in State 29 MRS. W. T. BOST BECOMES U. C. COMMISSIONER Mrs. W. T. Bost of Raleigh is our most recently appointed member of the Unemployment Compen-sation Commission of North Carolina. She was chosen by Governor Broughton to fill the vacancy created by the resignation of Mrs. Frank L. Fuller of Durham, and took the oath of office at the Com-mission's early fall meeting. Mrs. Bost is well known throughout the state in her former capacity of Commissioner of Public Welfare—a post which she held for 14 years. During this period, she became identified with the movement to establish a system of unemployment insurance in North Carolina, serving in 1934 as a member of the legislative commission which undertook an intensive study, prepared a report, and drafted a bill looking to an unemployment compensation law for this state. Thus the newest U. C. C. commissioner had a hand in framing the program which, with some modifi-cation, was eventually enacted into law and forms the basis of the present administration. Among Mrs. Bost's other distinctions is that of being a charter member of the American Public Welfare Association, as well as a member of its board of directors. She was one of the few women heading state welfare administration in the nation. For years she has been a member of both the State Con-ference for Social Service and the National Con-ference of Social Work, serving in 1937-1938 as president of the state organization. From 1934 on she served as chairman of the Eugenics Board of North Carolina, and has been a member of the State Commission for the Blind, the State Board of Cor-rection and of Training, the State Recreation Com-mittee, and the State Council of Defense. The Women's College of the University of North Carolina, where Mrs. Bost was graduated in 1903, awarded her an honorary Doctor of Laws degree in 1942. In 1941-1942, Mrs. Bost served as vice-chair-man of the National Council of State Public Assis-tance and Welfare Administrators. She is a past president of the Raleigh Woman's Club and served for three years before her appointment as welfare commissioner as executive secretary of the State Federation of Women's Clubs. The picture which was taken at the time of ad-ministering the oath of office to Mrs. Bost in the EDITOR'S NOTE This issue of the Quarterly is the first number of Volume 3. In consideration of paper shortages and printing loads the fourth number of Volume 2 has been omitted. An index to Volumes 1 and 2 is in preparation and will appear as a supplement to the next issue. Winter, 1945 THE U. C. C. QUARTERLY PAGE 3 Photo by Lewis P. Watson. Governor's office in ther Capitol includes, from left to right : J. Melville Broughton, former Governor of North Carolina, 1940-1944. William R. Curtis, Director of the U. C. Division and Secretary of the Commission. Mr. Curtis has been with the U. C. C. since its first year of operation. He organized and directed the Bureau of Research and Statistics until he was named U. C. Division Director in August of 1941. He holds the degrees of A. B. and M. A. from the University of North Carolina and a Ph. D. in economics from the University of Illinois. Acting Commission Chair-man, May-December 1942 and May 1943 to June 1944. E. B. Denny, Associate Justice of the Supreme Court of North Carolina. Charles A. Fink of Spencer, Commissioner. Mr. Fink has been President of the State Federation of Labor since August 1937, former President of the Salisbury-Spencer Central Labor Union, and mem-ber of the Commission's State Advisory Council for two years before his appointment as Commis-sioner. Judge C. E. Cowan of Morganton, Commissioner. Judge Cowan is a lawyer and former Judge of the Burke County Court. He is active in Bar Asso-ciation circles in the state, and has been attorney from its organization of the Burke-McDowell Electric Membership Corporation. Judge Cowan took both his undergraduate and law degrees at the University of North Carolina. Ralph M. Moody, Chief Counsel for the Commission at the time this picture was taken before his resig-nation to accept the post of Assistant Attorney General. Col. A. L. Fletcher, Commission Chairman, appointed in July 1941 when he was called here after serving at Selective Service Headquarters in Washington. Col. Fletcher was formerly Assistant Administra-tor of the Wage & Hour Division of the United States Department of Labor; he served as State Commissioner of Labor for seven years. Absent on leave for military duty in Washington from May 1942 to July 1944. Mrs. W. T. Bost, Commissioner. R. Dave Hall of Belmont, Commissioner. Mr. Hall is President of the Southern Combed Yarn Spinners PAGE 4 THE U. C. C. QUARTERLY WINTER, 1945 Association ; Secretary and Assistant Treasurer of the Stowe Thread Company ; Sales Manager of the Climax Spinning Company, the Sterling Spinning Company, and the Majestic Manufacturing Com-pany. He is a graduate of Davidson College and past Department Commander of the American Legion in North Carolina. R. Grady Rankin of Charlotte and Gastonia, Com-missioner. Mr. Rankin is an official of the Duke Power Company. He was formerly President of Ridge Mills, Inc., Secretary and Treasurer of Hanover Mills, Inc., Member of the Board of Gas-ton County Commissioners, and State Senator from Gaston County. He is also serving on the War Manpower Commission's State Management Labor Committee. Dr. Harry D. Wolf of Chapel Hill, Commissioner. Mr. Wolf is Professor of Economics at the Uni-versity of North Carolina. He was Executive Secretary of the North Carolina Commission on Unemployment, 1934-1935, provided by the General Assembly to make a special report; W. P. A. regional advisor on labor relations, 1936; and a member of the industry committee under the Fair Labor Standards Act. He is editor of the Southern Economic Journal and author of The Railroad Labor Board and various articles on labor condi-tions. He received his graduate degrees from the University of Chicago. Unemployment Compensation—1944 Review By A. L. Fletcher, Chairman Unemployment Compensation Commission of North Carolina During this past year of 1944, in the midst of which I returned from active military service to reassume my duties as Chairman of the Unemploy-ment Compensation Commission, a number of de-velopments have taken place of utmost importance to our employment security program. Intense war production on the part of industry has continued. Although employment has slackened and shifted slightly in some quarters, on the whole we have seen increased business and increased payrolls throughout the state, as in 1943, with a correspond-ing decrease in unemployment. The levels of each have reached a maximum and a minimum never before recorded in North Carolina. The Commission has had a constantly dwindling claim load on the one hand, and a constantly growing number of worker wage accounts and a growing re-serve fund balance on the other. It is expected that these trends will continue into 1945, or until the first big cutbacks are made. During the last few months our load of claims from unemployed workers has been close to the vanishing point. We have been paying checks each week to less than 500 workers on the average. The number of insured workers currently employed is around 585,000. The number of established wage credits against which benefit payments might be charged is close to a million ; while the funds available for unemployment benefit payments is now over $90,000,000. Except for the decrease in the claim load, the Com-mission's assigned responsibilities have increased. Yet it has been carrying on operations with a greatly reduced personnel force and an administrative bud-get periodically cut and restricted by the Social Security Board which allots federal funds for this purpose. SPECIAL MENTION There are some aspects of our activities which I believe deserve special mention. While Mr. Ralph Moody was still with us as Chief Counsel, a number of cases came up for decision by the Commission in which claimants protested our having denied them benefit payments because their unemployment stem-med from a labor dispute in which they were in-volved. In all these cases, the Commission sustained the earlier determinations, finding after a thorough review that although the claimants had not them-selves participated in the labor disputes, they be-longed to a grade or class of workers who had so participated. Through North Carolina's adoption of the inter-state plans for the reciprocal coverage of employers and for combining the wage credits of workers, a more equitable system of interstate collections from employers and of benefit payments to workers has been made possible. Under our plan of employer experience rating, during the past year 3,536 employers have been mak-ing tax payments to the Commission at reduced rates. Many more will be entitled to tax reductions on their 1945 payrolls. Most employer reserve ac-counts are in a fairly strong position now, with relatively few charges against them for unemploy-ment over the past three years. Our computation for 1945 tax rates which has just been completed indicates that some 5,022 employers will now be en-abled to save substantial portions of their unemploy-ment tax. Furthermore, our employers in 1945 will have a greatly lightened responsibility as to wage reporting, because during the last few months, the Commission has been able to obtain new equipment and set in operation machines which make it possible for us to process individual wage reports submitted on a list form. Thus, employer reports to the Commission for 1945 can be merely a carbon copy of the list report required by the Federal Government, eliminating the necessity of filing with us separate wage slip reports for each individual worker. Accordingly, more than three million separate clerical operations annually, will be spared employers in the future. LOOKING AHEAD As an unemployment compensation agency, the war activities of the Commission have been largely Winter, 1945 THE U. C. C. QUARTERLY PAGE 5 a hold-the-fort program, standing ready to serve a future need, accumulating reserves and preparing for their use as a cushion for post-war economic re-adjustments. With the skeleton force the Commis-sion has retained, training programs have been instituted designed to prepare this nucleus of per-sonnel as a corps around which an expanded staff must be built to handle additional claim loads. The present system of unemployment compensa-tion grew out of the urgent need for a program of this kind which was demonstrated during the catas-trophic years of this country's so-called "big de-pression." In facing post-war problems, there is now a well-organized program of unemployment in-surance, with large reserves at its command, which was wholly lacking before. It is recognized that the adequacy of this program probably faces a major test in the months and years that lie ahead. On the question of adequacy, the Commission has made several studies on various aspects of its pro-gram: fund solvency under likely postwar situa-tions, operation of the benefit formula and the ratio of exhaustions to maximum duration, the adequacy of present coverage provisions, and the inadequacy of certain restrictive requirements, etc. The results of these studies are contained in bulletins prepared by our Bureau of Research and Statistics under the direction of Silas F. Campbell, and comprise much of the substantive material on which the Commission bases its recommendations for revisions of the law. ADDITIONAL RESPONSIBILITIES In addition to claims from workers already covered by the unemployment compensation law, the Com-mission, because of its experience and facilities, was designated by the Veterans Administration to handle in this state the readjustment allowance provisions of the "G. I. Bill." Claims from veterans for re-adjustment allowances became payable for the week beginning September 4th, 1944. These are taken, processed and paid by our Commission, with reim-bursement from the Veterans Administration. Eligibility requirements for veterans closely parallel those of the state law, but they are given a uniform $20 weekly payment and a maximum duration of 52 weeks—the actual duration being determined by the length of the veterans' active military service. The potential number of claimants would include all North Carolina men and women in service, which has been estimated at around 325,000. Since September, the number of claims received from veterans has steadily increased, until during December we have been writing more checks for unemployed veterans than we have for unemployed workers. The amounts paid to veterans are, of course, much larger than those paid to workers under our present state law where benefits are determined by the amount of previous earnings with a $15 a week maximum. The total amount paid in readjust-ment allowances to veterans in this state in 1944 came to $108,371.00. Additional federal legislation has been proposed which might also bring within the jurisdiction of the Commission the payment, on a reimbursable basis, of unemployment benefits for federal employees who have been working in this state. Also, a revision of the Federal Unemployment Tax Act has been advo-cated to remove the present exclusion of maritime workers and to extend the payroll tax, which now applies only to employers of eight or more workers, to employers of one or more. These changes would bring additional administrative work to our state agency. The experience of other states where un-employment compensation laws now cover employers of one or more indicates that the Commission, if coverage were thus extended in North Carolina by either federal or state action, would be handling wage accounts for 15 percent more workers, and con-tribution accounts for more than three times as many employers. RE-EMPLOYMENT PROGRAM In view of these developments and prospects of handling benefit claims for larger numbers of persons who may become unemployed, it becomes increas-ingly urgent that the Commission regain control of the Employment Service which has been on loan to the Federal Government since the beginning of 1942. Both veteran and worker claims are filed through local employment offices where the applicants must be registered for work. If the speedy re-employment of benefit recipients is accepted as a prime con-sideration of the unemployment compensation pro-gram, then the Commission must have an employ-ment service under its direction. INTERSTATE ORGANIZATION Our Commission is a member organization of the Interstate Conference of Employment Security Agencies which studies problems affecting the states as a whole. North Carolina has participated in the meetings and the work of this Conference, chiefly through the representation of William R. Curtis, our director and acting chairman during my absence. Mr. Curtis was elected a Conference Vice President for Region IV which includes Maryland, Virginia, West Virginia, the District of Columbia and North Carolina. The primary objective of the Interstate Conference has been to improve the administration of the employment security program, and at the same time, preserve and advance our state systems. When unemployment compensation came up for discussion last spring and summer by the national Congress, state administrators presented testimony before the Senate and House committees. Repre-sentatives of the Interstate Conference demon-strated that the adequacy of state funds to meet present liabilities was pretty well assured with re-serves of nearly 5*4 billions of dollars at that time. For example, North Carolina's state fund on June 30th stood at $81,097,140.29. The funds are regu-larly increased each quarter by additional employer contributions. Added to these is United States Treasury interest, amounting in our own state to approximately $360,000 each quarter. The states could with their 1944 reserves, pay their highest average benefits to over 18,000,000 workers for their PAGE 6 THE U. C. C. QUARTERLY Winter, 1945 maximum duration. The North Carolina fund could pay 91 percent of the covered workers currently em-ployed a weekly benefit amount of $11.00 for 16 weeks. As to benefits, the average amounts paid increase in proportion as wages earned have increased, up to the allowable maximum. It may be expected that, even with present benefit schedules, average pay-ments in the postwar period will be substantially higher than those paid in the past, because they will be based on war-time earnings. In June, the average weekly benefit amount for the country as a whole had risen to $15, and in 1945 it will probably be higher under present laws. The states started out with a $15 a week maximum payment; but many have raised that maximum on their own initiative. In a number of states the maximum is now $20 ; one has $22. Under state laws, the maximum duration of bene-fits varies from 14 to 24 weeks. The longer periods represent the progress the individual states have made over durations specified in their original laws. Moreover, many states have substituted a flat dura-tion for variable durations. North Carolina took the lead in this respect, and now 17 other states have adopted flat durations. As to workers in small business—that is for em-ployers of fewer than eight workers—the postwar layoff problem is a small one, but their protection is being further considered. Twenty-seven states have already amended their laws to cover employers of fewer than eight workers; thirteen go all the way and cover employers of one or more. INSURANCE FOR SICKNESS UNEMPLOYMENT Kecognition has also been given by the Conference to the serious gap which exists in the employment security program in the general lack of any form of insurance for workers against the risk of unemploy-ment and loss of pay at such times as they are too sick to work. A worker who suffers industrial acci-dent or injury may recover wage loss under work-men's compensation acts. An insured worker who loses his job may apply for unemployment compen-sation— but only if he is well, able to work, and seeking work. The worker who is temporarily unable to work and earn his living needs some cash income for himself and his family during such periods of enforced idle-ness just as much if not more than does the worker who is without a job for economic reasons. The risk of wage income loss that workers face through sick-ness is equally insurable with unemployment. One state, Rhode Island, has had such an affiliated in-surance program, financed by the workers them-selves, in operation for nearly two years. Many other states have considered and are reconsidering similar legislation. NATIONAL DIRECTION The alternate proposals for federal legislation with regard to unemployment compensation which have been made in recent months appear to spring from differing social philosophies: (1) that government should provide for the people, and that provisions should be bounteous and uniform without regard to varying circumstances ; (2) that the people have a responsibility to take care of themselves, with a minimum of governmental direction and guidance; and that localized as much as possible. We believe that unemployment compensation is best conceived as an insurance program of local groups by local groups—a system that is consistent with the Ameri-can idea of individual and local community responsi-bility, as opposed to a nationalized program con-templating hand-outs and controls that, carried to logical extremes, could impoverish the country, both economically and morally. In thus far refusing to enact measures for nation-alized, or nationally extended unemployment com-pensation, Congress has left in the hands of state governments that responsibility for strengthening their own employment security programs, which state governors and administrators have claimed and asked permission to discharge. These have been strongly urged, however, to broaden their programs, especially where these are close to minimum stand-ards, as in North Carolina. RECOMMENDATIONS FOR NORTH CAROLINA At regular sessions throughout the year, our Com-missioners have studied many technical reports and have considered methods by which the unemploy-ment compensation program in this state could be broadened and its services extended. The U. C. Commissioners include Mrs. W. T. Bost, recently ap-pointed, Judge C. E. Cowan of Morganton, Charles A. Fink of Spencer, R. Dave Hall of Belmont, R. Grady Rankin of Charlotte, Prof. Harry D. Wolf of Chapel Hill, and myself as Chairman. At our November meeting we unanimously agreed on our recommendations for legislative revisions in the North Carolina law. U. C. C. LEGISLATIVE RECOMMENDATIONS The chief recommendations for revisions in the present unemployment compensation law which the Commission believes should be made by the General Assembly were agreed upon and approved unani-mously by the several Commissioners at their regu-lar bi-monthly meetings held in Raleigh. Meeting with the Chairman, Col. Fletcher, were Commission-ers Mrs. W. T. Bost, Charles A. Fink, R. Dave Hall, R. Grady Rankin, and Prof. Harry D. Wolf, and W. R. Curtis, Secretary. The Commission's recommendations and the reasons for their adoption are as follows: (1) Veterans. With regard to paying benefits from the state unemployment fund to veterans, technicalities in the law which now operate to ex-clude many veterans from receiving compensation should they become unemployed or continue without work after exhausting their rights to federal read- WINTER, 1945 THE U. C. C. QUARTERLY PAGE 7 justment allowances under the "G. I. Bill" ought to be modified. The Commission considers that all veterans should be enabled to share equally in the insurance protection afforded by the state unemploy-ment compensation program. The thought was ex-pressed in the meeting that regardless of provisions made by the Federal Government for unemployed veterans, the state also has an obligation of its own to those whose employment was interrupted by service—to make the benefit rights established by them before going to war available to them on their return, should occasion arise, after using up G. I. allowances. (2) Coverage. The Commission agrees that pro-tection of unemployment compensation coverage should be extended to workers now excluded because their employers do not have as many as eight workers. That means that the law should include employers of one or more workers, as well as those of eight or more as at present, so as to afford unemploy-ment insurance to employees of small businesses. This proposal of the Commission is in line with recommendations of such organizations as the Coun-cil of State Governments, the National Planning Association, the Interstate Conference of Employ-ment Security Agencies, and the United States Chamber of Commerce, as well as both Senate and House Committees of the National Congress which have urged that the states act on this coverage matter. Besides giving unemployment protection to an estimated additional 80,000 workers, such a revision of the N. C. law respecting coverage would remove the tax inequity now existing between a business operated with eight and one with seven employees. It would relieve the Commission of many employer liability problems. And it should not unduly burden small business with extra reports, since the Commis-sion is instituting a system of list reporting with 1945 whereby employers need send to the state agency only a carbon copy of the social security report they are required to make to the Federal Government for old age and survivors' insurance. North Carolina is now one of a minority among the states in still retaining the minimum unemploy-ment compensation coverage of employers of eight or more workers. The Commission studied the ex-perience of other states which have the full coverage of one or more and which shows that : (a) adminis-trative difficulties are overshadowed by administra-tive advantages ; (b) on the whole, contributions from employers of fewer than eight more than meet the benefit liability of their workers; (c) a higher proportion of small employers are likely to become eligible for reduced tax rates under employer ex-perience rating plans; (d) no evidence appears of any unwholesome economic effect on small firms be-cause of the unemployment tax. Rather, it has proven to be especially beneficial to them in removing any charge of discrimination among employers, in enabling small employers to obtain a better class of workers, and, as unemployment compensation oper-ates to maintain consumer purchasing power, it has a greater practical value to the smaller employers. (3) Benefits. The Commission proposes the sub-stitution of a new benefit formula for the one now in the law under which North Carolina's unemploy-ment benefit payments have averaged the lowest of any state in the country. This new formula is de-signed to bring payments in this state more nearly in line with those being paid to unemployed workers elsewhere, particularly in view of higher living costs. It is based on a detailed study made by the Commis-sion and was constructed with regard to several fac-tors. Among these was the desire to produce an av-erage weekly payment for total unemployment bear-ing approximately the same relationship to such national average weekly payments as the North Carolina wage level bears to the national wage level ; the intention to retain $130 as minimum qualifying wages and weight the schedule in proportion to earn-ings in favor of the lower-paid workers who, it is assumed, are more irregularly employed ; and the purpose of safeguarding the solvency of the fund. North Carolina's present maximum weekly pay-ment allowable is $15 for a maximum duration of 16 weeks. In other states which have already liberaliz-ed their benefit formulas, maximum weekly pay-ments range up to $22, and 29 states have maximums in excess of North Carolina's $15. Readjustment al-lowances for veterans under the G. I. Bill are a uni-form weekly payment of $20. Under the Workmen's Compensation Act in this state, the maximum weekly payment is $21.00. The Commission believes that the present rate of North Carolina's unemployment compensation bene-fits is too little and continues for too short a time to provide workers adequate insurance protection against wage loss due to unemployment. Likewise, if the fund is to serve the State as a check against a deflationary drop in purchasing power, it must be utilized more fully. The Commission's study of alternate benefit form-ulas shows that, even with severe and widespread post-war unemployment in North Carolina, the un-employment compensation fund could finance bene-fits at the proposed new rates and still have a fairly adequate balance to meet all potential liabilities. The proposed new benefit formula carries a minimum weekly payment of $4.00, a maximum weekly pay-ment of $20.00, and allows for a maximum duration of 20 weeks. Under this new plan, about half of North Carolina payments will be between $10 and $15; whereas in the past over 80 per cent of all weekly benefits paid have been less than $10 in amount. (4) Disqualifications. The Commission also recommends that the clause in the present law dis-qualifies an unemployed worker from receiving bene-fits if that worker voluntarily quit a previous job without good cause "attributable to the employer" be amended by striking out the last phrase. This restrictive provision in some state laws has resulted PAGE 8 THE U. C. C QUARTERLY WINTER, 1945 in severe criticism of state systems of unemployment compensation as being virtually a denial of the pur-pose of the program. The Commission feels strongly that as an adminis-trative agency it should have discretion in determin-ing good cause with respect to voluntary quits and not be barred from paying benefits to otherwise deserving claimants—such as a worker who cannot find a new job after having had to leave the last one to nurse a sick child, or care for a relative who was dangerously ill at the time. In many cases the Commission has to inflict a penalty on unemployed workers, by denying them benefits, where it is found that they had good cause for leaving their last employment, although it was in no way "attributable to the employer." (5) Sickness Compensation. The Commission further agreed to again recommend that the General Assembly undertake a study looking to the establish-ment in this state of an insurance program designed to compensate workers for wage loss during periods of unemployment when they are physically unable to work. The present unemployment compensation program issues payments based on past earnings in covered employment to a worker, by way of stand-by income, if he is out of work because there is no work for him. But the worker who has to be out of work tempo-rarily because of illness or other disability is barred from receiving unemployment benefits. This is recognized by the Commission as a serious gap in its insurance system. In another state, a plan providing workers with cash compensation for unemployment due to sick-ness is already in operation by its unemployment compensation board; while many other states, and the Federal Government as well, have considered and are considering similar plans. These generally con-template a separate cash sickness compensation fund built up from taxes withheld from workers' wages by their employers, to be administered by the unem-ployment compensation agency which already has the records, machinery and other facilities required. Benefit payments to covered workers when they are unemployed because of sickness or disability then parallel unemployment compensation practice. The Unemployment Compensation Commission of North Carolina believes that consideration by the General Assembly of a plan to indemnify workers for wage-loss incurred through illness is more than timely, in view of the attention it is receiving throughout the country, and especially in view of the recent recommendation of our State Hospital and Medical Care Commission for more insurance. It is impossible for the poorer half of the population to pay the cost of sickness without insurance. The cash sickness compensation program for unemployed workers carries the approval of welfare groups in the state, and has the support of the State Federa-tion of Labor. RECENT PLANT AWARDS The most recent awards of the coveted Army- Navy "E" to plants in this state have been bestowed upon two steel companies. The first of these to re-ceive the flag of merit was the Peden Steel Company at ceremonies held in Raleigh on October 25, 1944. The Dave Steel Company, Inc. of Asheville received the award early in December. The addition of these two plants to North Carolina's honor roll of firms which have won war production awards, brings the total to an even two dozen. In 1906 the Navy instituted in the Fleet an award for excellence which has been known ever since as the Navy "E". First awarded for excellence in gun-nery, this was later extended to include outstanding performance in engineering and communications. An honor not easily won nor lightly bestowed, it became and has remained a matter of deep pride to the men of the Service who receive it. When the rising tide of war in Europe placed a premium on the production of war equipment, the Navy "E" award was extended to embrace those plants and organizations which showed excellence in producing ships, weapons, and equipment for the Navy. Then came Pearl Harbor—and with it a de-mand for war production such as the world has never known, an awareness that our fighting forces and the men and women of American industry are part-ners in the great struggle for human freedom, and on the part of all Americans a grim and enduring re-solve to work and fight together until victory in that struggle is final and complete. From that high resolve was born the Army-Navy Production Award—which stands today as our fight-ing forces' joint recognition of exceptional per-formance on the production front, of the determined, persevering, unbeatable American spirit which can be satisfied only by achieving today what yesterday seemed impossible. The Army-Navy "E" which the Peden Steel Com-pany and its employees received was the first award to an industry of this kind in the state. In 1943, a prime contract was given them by the Federal Government to construct landing barges of a type re- Winter, 1945 THE U. C. C. QUARTERLY PAGE 9 quired for amphibious operation. The all-steel barges when assembled are 104 feet in length. Three railroad cars are required to transport the various parts to embarkation ports for shipment overseas. The barges are assembled at foreign ports or beaches from which our forces take off for landing operations on enemy soil. The contract required the Peden Steel Company to construct and ship the barges in accordance with a fixed schedule. Not only has the schedule been maintained, but in most instances ad-vance deliveries have been made. In commenting upon the accomplishment which earned the award of excellency for the company, Mr. James M. Peden said, "There was never a doubt in my mind as to whether or not we would be able to meet every requirement. We had the plant facilities and a corps of experienced and loyal craftsmen — that's all it takes to do a job in time of war or peace." The Peden Steel Company and its predecessors have the unique record of having served five wars during the 118 years of the plant's existence. Dur-ing each war munitions or other items of supplies have been shipped direct to fronts where the enemy was engaged. The Dave Steel Company, Inc., was the first Asheville firm to win the Army-Navy "E". Since the company was organized in 1929 with two em-ployees, it has expanded until now its activities ex-tend from the Gulf of Mexico to the Great Lakes. Earlier in the war, the firm fabricated steel for war plants, later it manufactured parts for cargo vessels and sub-assemblies for destroyer escort vessels, and in 1944 it chiefly turned out large sections of LSM's (Landing Ships Medium) for the Navy. "We are not so large as plants go, "President Dave said, in accepting the "E" on behalf of his firm and employees. "Our entire plant is made up mostly of Western North Carolina folks, from those who have really earned this award—the boys right here through the various departments in the plant. Every one of us has had a hand in the production record. We will wear the "E" pins as proudly as any service-man wears a decoration, for they mean that we have contributed our best." And Superintendent Center in accepting the pins on behalf of the employees, added, "Every man has worked—really worked—and at new things with added speed and determination. He was the man behind the man behind the gun and he knew it. We'll not rest on our laurels and keep the same old production records—we'll beat anything we have done before." The Asheville Branch of the American Optical Company has received its third star to the parent company's "E" for war production. A star is awarded a firm winning the original award each six months that production is maintained. The National Munitions Corporation of Carrboro has been awarded its third star following the Army- Navy "E" award. This plant was also one of the first in the state to receive the National Security Award. Photo by U. S. Army Signal Corps. Scenes taken during award ceremonies at the Peden Steel Co. plant. Above : Mr. James M. Peden addresses the gathering of officials and employees. The pictures immediately above and below illustrate the construction and the type of landing barge produced by the Peden Steel Co. Four railroad cars are required to transport each barge to the port of embarkation. They are assembled at foreign ports or beachis. PAGE 10 THE U. C. C. QUARTERLY Winter, 1945 Merit System Administration and Operation By Frank T. de Vyver, Supervisor Merit Examinations The Merit System in North Carolina first became effective July 1938 when the present supervisor was appointed Supervisor of Examinations for the Ad-visory Committee on Personnel of the North Caro-lina Unemployment Compensation Commission. In the six and one-half years that have passed, the agencies, the Merit System Supervisor, and Council have learned a great deal about merit system ad-ministration. We have learned that there are cer-tain fundamental changes in thinking that must take place if a merit system is to operate successfully. We have also learned that even after this funda-mental change in thinking has taken place there may still remain certain areas of conflict between the merit system and the agencies which it serves. It is the purpose of this article to examine briefly both these fundamental changes in thinking that accom-pany a successful merit system and also to examine some of the areas of conflict that arise in the ad-ministration of a merit system. APPOINTMENT BY EXAMINATION In the first place must come the realization that for better or worse, employees are to be chosen on the basis of a public examination rather than on the basis of the recommendation of some person of political importance. Certainly not all political ap-pointments are bad, nor are they necessarily good. Where thousands of political appointments are made, the law of averages would certainly result in many good appointments. Nevertheless, when an agency of government has accepted the principles of the merit system, it is saying that however poorly an examination system selects the best people, the chances are 100 to one that it will select better people on the average than could be selected by not using an examination system. The examination system is not perfect, but it is better than no system at all. Briefly, then, if an agency is to accept the principles of a merit system, it must put aside any thought that a congressman or senator can select better than it can, or that it can select a stenographer only by her looks. Recently this problem was brought to my atten-tion by a letter received from one of North Carolina's congressmen urging the appointment of a superin-tendent of welfare in his home county. In this letter the congressman advised that this young man had all the qualities necessary to make a good superin-tendent and he felt that his appointment should be approved. As is customary when such letters are received, the young man's qualifications were care-fully examined and compared with the minimum qualifications which must be met even before a per-son is admitted to a written examination. A superin-tendent of welfare in North Carolina must be a college graduate and have completed some graduate training in an accredited school of social work. He must also have had some experience in social case work. This young man whom the congressman claimed had all of the qualifications for a superin-tendent of welfare was a high school graduate with about three years of clerical experience. The young man may have belonged to the right political party in a close county, but with all modesty, we were better able to select a qualified person for that posi-tion than this congressman was. Perhaps the congressman was merely asking us to say "no" rather than having to tell the young man himself. PERSONNEL POLICIES Another point which the administrators must accept when they deal with a civil service system or state merit system is that they will be restricted on some of their internal policies such as promotions, salary increases, transfers and dismissals. An ad-ministrator of a governmental agency must remem-ber that he is administering public funds for a public purpose and that, therefore, he must expect to be regulated in what the public at that time feels is to the public's interest. Perhaps the administrator longs to be as free as a man in industry in carrying out the policies which he feels are wise, but the man in industry is not free either. When he gets through arguing with the trade union, he still has a board of directors and eventually stockholders to please. The state merit systems are established to represent the public interest in giving each citizen equal rights for jobs and security on those jobs with every other citizen and to attempt to provide satisfactory work-ing conditions. In carrying out these policies, the Merit System may have to say "no" to something the adminis-trator feels is extremely important to him. In North Carolina, for example, the rules require that promotions must be made from the first three names on a promotional register. The grade which the person has received that places him on this promo-tional register is a combination of the usual factors in the grade plus the service rating factor. If a job opens in one of the agencies we serve, we are asked to send a promotional register and we expect the agency to appoint from among the first three on that register. (The agency may, of course, select from the names on a competitive register.) In this way, we feel that we are protecting the right of each employee to be considered for promotion on the basis of merit rather than on the basis of being the most proficient "apple polisher." The "apple polishing" may find a place in the system, of course, in that part of the grade which comes from the service rating, but our agencies cannot dip to the bottom of the promotional register for whom they think is better qualified. This is a very controversial matter and it is one point on which we differ from the United States Civil Service, but we feel we are right. If selection of individuals for appointment is made on the basis of merit, then promotions should be made on the same basis. There is no more reason to suspect that a senator's judgment is correct on the Winter, 1945 THE U. C. C. QUARTERLY PAGE 1 1 selection for promotion than there is to suspect that he is correct on the original appointment. He may be or he may not be, but if we are going to have a merit system in government, it must be carried through and not confused with a merit system for selection and some other system for promotion. We have found that we have to control transfers. We adopted this policy several years ago when we found that one of our agencies appointed on an area basis and immediately transferred to some other area with the obvious intent of circumventing the principle of selection on the basis of merit. The man they wanted to appoint couldn't be reached on the Asheville area register so they appointed him from the Gastonia area register and had him up in Ashe-ville the next Monday. The man who did that had not accepted the principles of the Merit System, and, therefore, found himself tied up with what he un-doubtedly thought was more red tape. With reference to dismissals, the Merit System must see that each individual gets a fair and im-partial hearing on any charges brought against him. In some ways, the Merit System is taking the place of a labor union in this. When a person is discharged from an organized industry today, the union ex-amines the circumstances and if it feels an injustice has been done, raises the point with the manage-ment. The Merit System in North Carolina merely provides for a public hearing if the person discharged so wishes. The agencies have the final say, but as one administrator expressed it, if you discharge a man now you are the one that is on trial, not he. Because of this a person is not discharged unless the agency is quite sure that the discharge is justified or else is perfectly willing to accept any publicity that arises from it. ACCEPTANCE OF CONTROLS These are several illustrations of the type of con-trol that must be accepted when the very funda-mentals of a merit system are accepted. A bachelor is free to go and come as he pleases, to tell someone where he is going or not to as he pleases, to spend his money as he pleases, and to do pretty much as he pleases. The married man finds that there are certain restrictions imposed not necessarily by his wife, but which are a part of the state of marriage. The courteous thing to do is at least to tell your wife that you are going out and that you expect to be back at approximately a certain time unless you meet somebody on the way. A married man also takes on some financial obligations. It is much the same when a merit system is added to a government agency. There are very few married men, however, who object to the new restrictions of marriage. If they did, they would never have gotten married. They believe that marriage is a proper state and that it is not good for man to live alone. Therefore, the restrictions are not obnoxious and are accepted graciously. From the point of view of the public interest, it is not good for any government agency to live without some civil service system. When that fact is recognized, the added restrictions will not be obnoxious either. Of course, to many states this marriage with the Merit System has been a shot-gun wedding, for it was an act of Congress amending the Social Security Law that made state merit systems necessary where federal social security funds were being administered. Perhaps, however, love will grow. Even after the Merit System has been accepted by the agencies, there are likely to remain a number of problems which the sociologists might call areas of conflict. These areas of conflict are in reality areas of administration in which the interest of the agency and the best interest of the public as seen by the Merit System may not coincide. TECHNICAL PROBLEMS Ona of these problems is that of speeding up the procedure. Certainly all administrators have used rather strong language at times, referring to the red tape of the civil service system or the merit system under which they operate. Perhaps there is an opening for a claims taker in some area, and the Merit System Council has no one on the rolls who is willing to go there. Perhaps the agency has received the names of three prospective candidates for the job, and when these three prospects were approached they were really not interested in taking the job. Perhaps the agency has made a provisional appoint-ment to some job and when the examination is given, finds that the person who has the job failed the test and must be replaced. All of this upsets the agency because it has spent time and money training him. Recently one of the agencies served by the Merit System Council has grown critical about that par-ticular matter and has urged us to give make-up examinations to some of the provisional incumbents who failed, on the theory that time and effort have been spent training them and they should, there-fore, be kept on the job. The agency was unim-pressed when we have pointed out to them that several hundred people who had received no training were able to pass the examination. If the agencies have worried over the red tape in-volved in civil service, so have those who are ad-ministering the system. Unless a merit system supervisor is feeling too important and trying to im-press the agencies with how much power the Merit System does have, he worries just as much about the possible slowness of the procedure as the agencies. In many ways the supervisor can speed up the activi-ties by getting names to the agencies the day after the request is received, and by constantly checking on registers to make sure that the people on them are willing to take the jobs which are offered. After this is done, however, there still remain a number of problems which slow up the procedure. It is not the purpose of this article to defend merit system administration but rather to explain it, for if the agencies did understand a few of these difficulties of red tape, they would be somewhat more tolerant with merit system administrators. Giving an examination takes a considerable amount of time. Regulations require at least 30 days' notice to the entire public that an examination is to be given. Then, following the closing date for receipt of appli-cations for the examination, the applications must be processed, that is, someone decides whether the PAGE 12 THE U. C. C. QUARTERLY Winter, 1945 applicant is eligible. The appropriate number of examinations must be sent to the proctors in the various centers and notices of the examinations are sent to the individual applicants. All of this takes time. We must then wait for the proctors to send the test papers back. These days it takes a long time for express packages to be returned from cities a hundred miles from the center of our activities. When the papers are back, they must be graded. All merit systems have used various methods for shortening this process, but it still takes time and accuracy is essential. If the examination is to have an oral test as well as written, arrangements must be made for all those who passed the written to appear before one or more oral boards that must go from place to place in the area. Then there are any number of people who swear as often as they are asked that they are interested in a job. Hopefully, we send their names to the agen-cies requesting names from that register only to be told by the agency and to have it confirmed by the individual that he or she could not accept that job at that time. No amount of circularizing the people on the registers can possibly do away with that difficulty. It is simply one of those things which is going to slow up the procedure for selection of per-sonnel. Apparently each person who takes an exami-nation hopes against hope that the right job will come at the right time, and insists that his name be retained on the active register. Of course, if he refuses several times, his name may be taken from the active register, but for every name dropped there are two or three others added with whom we have the same difficulty. COOPERATION The agency may ask, "How can the agency help in speeding up this whole process ?" One suggestion would be that in so far as possible, the agency budget the needs for employees in the same way it budgets its needs for funds. By this time each agency should know what its possible turnover is for any particular job. Let the Merit System know about that ; it will help them plan an examination program. Of course, the need may be more or less than budgeted, but that is true even with a financial budget. Another thing which an agency can do is to ask for the type of person it wants. Recently one of the agencies asked for a junior general clerk register. In North Carolina, a junior general clerk is not re-quired to be a typist or a stenographer, yet the persons when interviewed for the job were asked whether they could take dictation and type; then they were told they were not satisfactory for the job. In such cases, we write to the individual to get his side of the case and in that way find out what the agency has done. We do not think that the agency was trying to get around the regulations for they could just as easily have asked for a typist clerk or a stenographer; but either through ignorance of the requirements of the job or carelessness, the wrong register had been requested. All this delayed the procedure. Another thing which the agency can do to help a merit system which is serving more than one oper-ating unit is to get the certificates back as quickly as possible. If we send the Unemployment Compen-sation Commission the names of three senior general clerks, we do not like to send the same three names to the State Board of Health, but we have found that some of our agencies keep a certificate for the full 30 days allowed under the rules. Meanwhile, the Super-visor is faced with the dilemma of sending the names to a second agency, thus involving competition be-tween the agencies for an applicant, or digging deeper into the barrel for the second agency that makes its request, whereas a better person might have been secured from the rejects of the first agency's list. It takes time for the agencies to get the names they request and it takes time for them actually to hire the person involved. In dealing with the state agencies served, since we both realize that time is of the essence, this problem has been worked out fairly satisfactorily. CHECK-UPS Another item involved in the merit system rule is the monthly audit of the payroll for merit system status of those on the payroll. This has great possi-bility as an area of conflict because this is the en-forcement procedure of the Merit System. The possibilities of any conflict are greatly reduced by proper records being kept both in the Merit System office and in the office of the agency, and by a will to abide by the merit system regulations. If an agency does not try to circumvent the merit system rule, the Supervisor will not find anything the matter; but if an agency insists on sneaking a person in now and then contrary to merit system rules, the Merit System is going to locate it by the payroll audit and file objections. Of course, we do not have as much trouble with state agencies in this as we do with a few county departments, who sometimes must stay awake nights thinking up ways to get around the regulations. Of fundamental importance in merit system-agency cooperation is the administration of salaries and personnel regulations. It has always seemed that, unless the Merit System Supervisor is the Personnel Director for the state, the Merit System's job is to advise and counsel the agencies in the de-velopment of salaries and personnel regulations. Each agency with whom we deal has different problems in this matter and we have, therefore, merely advised. With the county agencies which we serve we try to keep an administrative check to see that the regulations are followed. Obviously, in-vestigators cannot be sent into each of the hundred counties of North Carolina to see that the vacation rule is followed or that petty leave is not abused, but these things are kept constantly before the minds of the local administrators by asking for periodic re-ports on the hours worked or leave taken. SERVICE RATINGS Another problem with which the Merit System has dealt is the rating of employees. Here we have cooperated with the Unemployment Compensation Commission and will help the other agencies by de-veloping with them adequate methods for periodic rating of employees and making that rating amount to something by incorporating it as a part of the WINTER, 1945 THE U. C. C. QUARTERLY PAGE 1 3 promotional grade of each employee. Thus, when the Chairman of the Unemployment Compensation Commission gets a promotional register for any job, he knows that the estimate of his own supervisors of the various people involved is an important part of the grade. Ratings are naturally a difficult thing to administer in attempting to get uniformity as between individual raters and fairness to all the people who are rated. This fact is recognized; but we feel that these ratings should be dignified by being made part of the promotional grade and that a constant effort should be made to eliminate insofar as possible any personal prejudices on the part of the person doing the rating. DISMISSALS Possibly the area in which the greatest amount of conflict is likely to occur between the agencies and the Merit System is with respect to dismissal of an employee. The Merit System is supposed to protect employees from dismissal for trival causes or politi-cal reasons. The Merit System Council is supposed to be a group of judges in all such cases. We feel that the public service should not be a sinecure for incumbents, and certainly no Merit System Council would think of giving any aid to the obviously unfit. There is a six months' probationary period during which time the employing agency is supposed to find out whether the person is competent. If the agency, by lax administration retains some incompetents because it did not have the courage to discharge them before the six months' period was up, that agency owes the incompetents some consideration. CIGARETTE PAPER PLANT MADE INDUSTRY INDEPENDENT (By Bill Sharpe) Smokers inclined to grumble a bit because they can't always get their favorite cigarettes, might more logically join in an obscure little 5th Anniver-sary celebration on the banks of the Davidson River. Because without some shrewd foresight, or luck, or something, which established the Ecusta (cigar-ette) Paper Plant, you probably wouldn't be smoking a cigarette at all—at least, not one rolled in a thin, tasteless paper. When the Nazis marched into Poland, 90 percent of the cigarette paper used in this country was being imported from France. But, meantime, Harry H. Straus, who helped develop the French industry, had been hunting for pure, chemically-free water in this country. His search ended on the banks of the Davidson River, which comes tumbling out of Pisgah National Forest. Happily, it was also located near the center of tobacco manufacturing. In August 1939, the first cigarette paper was made in the new plant, and it was just in time. Sub-sequent expansion of the original plant has made American smokers virtually free of paper imports. The paper is now used to wrap Camels, Chester-fields, Philip Morris, Old Gold, Lucky Strikes, and many other well-known brands. Of course, people step down as well as step up and when that occurs, every agency must use the right of discharge. The Merit System Council is not an organization designed to keep poor workers on the job, but we are supposed to see that every change in the political wind does not bring about an upheaval in the working forces of government. Unless the protection of publicity, at least, is given, a person may be discriminated against either because he votes for the wrong candidate or because the successful candidate has a friend who wants the incumbent's position. In North Carolina, we have not had any cases of appeals from discharge under the present Merit System Council, but if we do, we will try to give the incumbent a fair hearing. We will not try to defend incompetent incumbents ; but we will try to give full publicity to any arbitrary discharge. BETTER PUBLIC SERVICE In conclusion, it should be reemphasized that only when governmental administrators understand that merit systems are designed to promote better govern-ment, can any merit system function properly. On the other hand, merit system administrators must constantly remember that they can serve the public best by serving the agencies best. We have, to be sure, certain powers and duties; but we should use these as state police used to when they drove around in white cars that could be seen for miles. They weren't trying to make arrests ; they were trying to cut down speeding. We are not trying to catch or badger an agency. We are trying to help the agen-cies and we exist only to serve the public interest as every government agency does. In saving the tobacco industry from a fate worse than death—and by a pretty terrifying margin — the infant industry had to solve many technical problems. Cigarette paper must be pure white and opaque; completely tasteless—directly and when burning ; must burn at the same rate as the tobacco ; must be thinner than the diameter of human hair, yet elastic and strong ; must not stick to the lip, yet must be sufficiently moisture resistant so the cigar-ette will not become soggy. As early as 1934, experiments with flax had been started in South Carolina. Now native flax is flow-ing to Ecusta and turning out what President Straus says is a product superior to that formerly imported from France. The use of flax also has created a source of income for farmers to whom it was a waste product. In some sections, flax had been such a nuisance that farmers paid $1.50 an acre to have it removed. Much of Ecusta's flax comes from Minnesota and Cali-fornia. A year's supply is now in storage. The industry has brought 1,500 jobs into this mountain community, with an annual payroll of more than $2,500,000. One bobbin of paper will make 85,000 cigarettes, and Ecusta's capacity is 20,000 bobbins a day. That adds up to 1,700,000,000 cigarettes, and U. S. con-sumption currently is only around 257 billions a year. PAGE 14 THE U. C. C QUARTERLY Winter, 1945 Timber Cropping Destined to Replace Mining of North Carolina's Forests By C. F. Korstian, Dean Duke School of Forestry and President, North Carolina Forestry Association For over 200 years we have "mined" our forests. Forest products were abundant and cheap and the United States attained a per-capita consumption of forest products far greater than that of any country in the world. The use of this forest heritage con-tributed largely to maintaining the living standards of our American people. But the pioneer belief that the plow would surely follow the axe was not always borne out, for many areas unsuited for agriculture were denuded of their forests even though they could best serve the nation for timber growing. A change in the attitude of the forest-products industries toward their raw material and of forest owners toward their lands is under way. Within the last decade forest management has come to the fore, involving a stabilizing of the forest industries in place of migratory mills and plants, and the develop-ment of a permanent interest in forest lands and the growing of new timber crops on a permanent basis instead of looking for additional virgin forests to cut. This evolution has really just gotten off to a good start and many years will be required to bring all forest lands in the United States under adequate protection and wise use. It is too much to expect that under the old, commonly accepted American system of free enterprise, in which the economic law of supply and demand and immediate financial re-turns rather than deferred income are dominant factors, reasonably good forestry will be practiced on a sufficiently large proportion of the privately owned forest lands of the country soon enough to obviate the necessity for some reasonably effective and yet practicable form of public supervision or control over cutting on these lands in order to keep them con-tinuously productive of future timber crops. North Carolina, with over 17 million acres of privately owned forest land and hundreds of thou-sands of ownerships is no exception to the general situation found in a recent study to prevail in the important forest regions of the country.1 Less than one-third of this area is being handled and managed for the growth of timber, most of which (4.8 million acres) only receives extensive management prac-tices involving fire protection and provisions for re-stocking such as the reservation of seed trees or partial cuttings.2 The remainder of this area under management, in addition to receiving extensive forestry practices, is handled under planned cutting programs or forest improvement operations aimed at the continuous growth of timber crops under technical forestry practices. RESOURCES Of the area under extensive forest management 600,000 acres are industrially owned, over 1.8 million acres are in farms, and the remainder (over 2.4 million acres) is in other forms of ownership. Of the area under intensive forest management, 60,000 acres are industrially owned, 100,000 acres are in farms and the remaining 260,000 acres are in other forms of ownership. Forests comprise important and integral parts of North Carolina farms. The 278,276 farms in the state, aggregating 18,845,000 acres, have a total of 9,093,000 acres in farm forests or an average of 33 acres of forest per farm. The total value of forest products sold from farms in 1937 was nearly 8.7 million dollars, ranking sixth in order of total sales of various farm products, being exceeded by tobacco, corn, cotton, hay, and peanuts. However, by adding to the value of forest products sold from farms that Cutting of short leaf pine leaving scattered seed Korstian, C. F., "Forestry on private lands in the United States." (1944.) Duke School of Forestry Bui. 8. 234 pp. These and other figures in this article are from "Forest Facts for North Carolina" reported May 18, 1944 by the Committee on Forestry Policy, North Carolina Forestry Association and compiled from data supplied by the Forest Survey, Appalachian Forest Experiment Station, AsheTllle, N. C, and by the Division of Forestry, State Department of Conservation and Development, Raleigh, N. C. Winter, 1945 THE U. C. C. QUARTERLY PAGE 1 5 * * * clear cutting to be followed by planting. of forest products used on farms (nearly 15.6 million dollars) the total value of forest products produced on farms displaces cotton in third place. There are about 3,850 sawmills in North Carolina, four pulp mills, approximately 65 veneer mills, 12 cooperage plants, nine tanning extract plants, five excelsior mills, 48 shuttle-block, handle and dimen-sion mills, and 41 other primary wood-using plants. Almost 2,900 of the sawmills operating in North Carolina in 1937 had a capacity of less than 10,000 board feet per day. These small mills cut two-thirds of all the lumber. The greatest concentration of these mills is in the Piedmont. Of 1,600 sawmills operating in this section of the state only 28 had a daily cutting capacity of more than 10,000 boara feet. All six of the largest mills—with a daily capacity of 40,000 or more board feet—were located in the Coastal Plain. These primary commercial forest industries afford approximately 8,039,000 man-days of employment per year. Only the textile industry provided the workers of North Carolina with more employment than did the primary forest industries. The secon-dary forest industries such as furniture factories provided an additional 9,395,500 man-days of em-ployment, bringing the total to about 17,434,500 man-days per year for the forest products industries. The total value of the primary forest products produced in North Carolina averages about 55 million dollars per year. The annual production of forest products in the state is approximately 1.7 billion board feet of lumber, 870,000 cords of pulpwood, 5.8 million cords of fuelwood, 612,500 hewn crossties, 151,000 poles and piling, 150 million square feet of veneer, and 100,000 cords of other products. To obtain a true picture of the forest resource situation it is necessary to determine not only the quantity of wood removed from the sound-tree grow-ing stock in the forests of the state by the forest industries and domestic users, but also the amount of growth in these forests for the same period. For 1937 the Forest Survey found that the pine stands in the state as a whole were being over-cut in the saw-timber sizes and were barely holding their own when all sizes were considered. The hardwood situation .Shelter wood cutting, when pine reproduction has become established in the openings, the remaining large trees will be cut. was more satisfactory as there was a small gain in saw-timber volume. This over-all picture does not, however, accurately portray conditions in the different parts of the state. For example, the mills and other users over-cut the pine stands of the Piedmont in 1937 by 184 million board feet. During the period from 1937 to 1944 the Forest Survey calculates that the volume of saw-timber in these Piedmont pine stands was reduced by 16 percent. Thus in certain areas of the state the drain ex-ceeds the current growth, in others the supply of large, high-quality trees is limited, and in still others the preponderance of cull trees in the forest stands hinders profitable timber growing. Moreover, on a large percentage of the forest land the volume of growing stock is not over one-half of what it could be under good forestry practices. Under present conditions the wood-using industries can continue to operate for a considerable time without losing their high rank in the industrial economy of North Carolina. However, if they are to remain perma-nently in business, and expansion rather than con-traction of these industries is anticipated, the neces-sary steps must be taken to build up the annual Thinning. Short leaf pine following thinning for fuel wood, pens of which are in foreground. PAGE 1 6 THE U. C C. QUARTERLY Winter, 1945 forest growth, in the most useful sizes and species, to more nearly the productive capacity of the land. FIRE PROTECTION To bring about this objective several approaches are desirable. First of all adequate fire protection must be considered as a prerequisite to timber grow-ing and the efforts of public and private fire control agencies must be strengthened and given whole-hearted support. Forest fire control should be ex-tended and expanded to a state-wide basis. Only about two-thirds of the counties of the state have organized fire control and most of this is inadequate-ly financed. The $169,000 recommended by the State Advisory Budget Commission for the fiscal year 1945-1946, although almost $66,000 above that for 1944-1945, is only about three percent of the 3.5 million dollars of annual tax income to the State Treasury from the forests and forest industries of North Carolina. This amount is still inadequate to protect the state's forests, the stumpage of which, exclusive of land value and of the forest products industries, is estimated at 188 million dollars. The increased recognition by the State Budget Bureau and by the Advisory Budget Commission of the importance of adequate forest fire control and certain other phases of the state's forestry program is indicated by the following excerpt from the fore-word of the Commission's report to the 1945 Legis-lature : "The appropriations for Forest Fire Control have been increased very materially. The pres-ent war emergency has definitely brought the Nation face to face with a realization that the forest products of the country are very vital, and that war uses have depleted these products to a very great extent and that, in order to have sufficient forest products to meet the needs dur-ing peace time, it will be necessary to preserve and to encourage forest production. With this in mind, it has been recommended that addi-tional funds be appropriated for forest fire con-trol and for certain other forestry work in order to preserve and to provide ample planning for future needs." HARVEST CONTROL Even though adequate control of forest fires is the first essential requirement for successful timber cropping, it alone will not necessarily keep forest lands continuously productive. Cutting methods that will assure perpetuation of well-stocked stands of desirable timber species should be more widely practiced. Many tree species now infrequently utilized, particularly of hardwoods, should be cut and marketed. This may involve a more extensive development of wood conversion or secondary wood-using industries, possibly at the expense of a de-crease in lumber production. More control must be exercised over cutting practices on privately owned forest lands to guard against stripping them with-out regard to their future productivity. Measures such as these will go far toward making the forests of North Carolina a growing permanent natural re-source, capable of supporting more forest products industries and a larger part of the state's population. The greater natural wealth thus created will not only support enlarged permanent forest industries and supply more permanent jobs, but will also pro-vide a wider tax base for equitable taxation. For a number of years the North Carolina Fores-try Association has sought to encourage, in coopera-tion with lumbermen, the pulp and paper industry, and other users of forest products, the more exten-sive adoption of a system of timber harvest that will provide for a sustained timber yield and make for better land use on a permanent basis. Pursuant to resolution of the Association adopted at its Septem-ber, 1944 meeting and with the concurrence of the Forestry and Parks Committee of the State Board of Conservation and Development, a conference was held in Asheville on November 14 and 15 to explore the possibilities of drafting a state bill for the con-trol of cutting practices which may reasonably be expected to be practicable of administration and to attain the objectives of increased and sustained yield of forest products. This conference was attended by representatives of forest owners and the ma~jor forest industries and by state and federal forestry officials. It reached a common accord to the extent of approving the context of a bill which it felt would be deserving of support in the State Legislature. Another important decision reached at the Asheville conference was that practical and yet reasonably effective forest cutting practices can be drafted for the more important groups of forest types in North Carolina. Such cutting practices have since been drafted by a committee of the Appalachian Section of the Society of American Foresters. It is uncertain whether a bill, patterned along the general lines of the recommendations of the Ashe-ville conference or of some other form, will be intro-duced in the 1945 session of the General Assembly. Some of our statesmen, however, have indicated that they believe that North Carolina's forest situation is sufficiently critical to demand the most thoughtful attention and remedial action by the State Legis-lature. FORESTRY SURVEY An independent survey of forestry administration and practice has been under way in North Carolina, the first state selected for this study which is being conducted as a joint project of the Society of Amer-ican Foresters—the national organization of profes-sional foresters in this country—and of the Charles Lathrop Pack Forestry Foundation. Made possible by a grant of funds from the Foundation, the project will subsequently be extended to other states in which administration of forest resources will be studied. The project is designed to render a service to the states by providing them with an objective professional analysis of their forestry problems, and to submit recommendations as to how those prob-lems might be solved for the states' social and eco-nomic welfare. The survey is being made in North Carolina with the cooperation of the State Depart-ment of Conservation and Development, and other state, federal and private agencies. Winter, 1945 THE U. C. C. QUARTERLY PAGE 1 7 Workmens Compensation in North Carolina By T. A. Wilson, Chairman, Industrial Commission Insofar as the comforts of life may be purchased in the open market, the people of the United States have made more progress in their mode of living since 1900 than all other people in the history of civilization, and most of this has taken place since the First World War. In the past we of the United States have felt that we could solve most of our social problems due to modern industry by our high standard of living as compared with many other industrial countries, but the severe and long eco-nomic depression of the late twenties and early thirties taught us that the individual is helpless when his limited savings are rapidly consumed through unemployment, whether caused by accident, sickness, a lack of opportunity to secure employment, or any other cause. Modern industry has solved many of the problems of supplying the needs of mankind in our complex civilization, but as we solve one problem others are created. Thus the need for a broad comprehensive social security program. The United States has been somewhat behind many other nations in trying to alleviate certain social problems through legislation. With the ex-ception of the Workmen's Compensation Laws, en-acted by individual states beginning in 1911, very little progress was made in this country until the present national administration took office in 1933. Since the Workmen's Compensation Law was the fore-runner in the United States of the broader social security program, of which we are now so proud, it probably will be of interest to briefly sketch its origin and history in Europe, in the United States, and here in North Carolina. HISTORY The modern Workmen's Compensation Law had its origin in Germany, and was offered by Chancellor Bismarck as a means of preventing the further spread of the socialistic doctrines of Marx and La- Salle. The first bill was introduced in the Reichstag in 1881, but because of objectionable amendments the bill was withdrawn by the Government. In 1882 a second essay was made with two bills : a revised compulsory accident insurance bill, and another bill providing for compulsory insurance of workmen against sickness. However, both bills dealt with the industrial accident problem, for it was contemplated that compensation benefits would be paid from the sickness funds during the first 13 weeks of disability resulting from accidental injuries, and that the acci-dent funds should be used to provide benefits only in case of serious injury that caused either death or disablement extending beyond the 13-week period. The committee considered the sickness bill first and it was enacted in 1883, effective December 1st, 1884. No action was taken on the accident bill, but a third bill was introduced in March, 1884, providing for a system of mutual accident insurance associations which was enacted effective October 1st, 1885. Its THURSTON ADGER WILSON Better known as "T. A." Like our Governor Cherry, born in South Carolina, but has developed into a fine North Caro-linian. Able, conscientious, honest, modest, hard-working. In every sense, a useful public servant. Leader of organized labor for many years. President of the North Carolina Federation of Labor, 1927-1930. Appointed member of the North Carolina Industrial Com-mission when it was set up, May 1, 1929. Chairman since March 1, 1939. National authority on industrial safety and member of all of the important national and international societies operating in this field. T. A. is presently the President of the International Asso-ciation of Industrial Accident Boards and Commissions, hav-ing been elected to that position at the international conven-tion of this organization at Boston, Massachusetts, last year. Previously he had served on important committees of this association and as one of its vice-presidents. With his state-wide, national and international interests, T. A. finds time to be one of Raleigh's most useful citizens. Member American Legion, 40 & 8, Lions Club, Junior Order, Masons, Typographical Union, Lutheran Church. Active in all. The Unemployment Compensation Commission is proud of its older sister organization, the North Carolina Industrial Commission, and we who are responsible for its administra-tion, are grateful to T. A. and his associates for their unfailing interest and their help in the stormy days of 1936-37, when we were launching our new agency. The relation between our agencies has been close and cordial and should so remain, because we are both in the same field, the Industrial Commis-sion bringing cash benefits when the worker is disabled by industrial accident or occupational disease, and the Unemploy-ment Compensation Commission providing income for him when he loses his job through no fault of his own. The Unemployment Compensation Commission salutes the Industrial Commission and its worthy Chairman. We are proud to present his story of "Workmen's Compensation in North Carolina."- —A. L. F. PAGE 18 THE U. C. C. QUARTERLY Winter, 1945 coverage was limited to manufacturing, mining and transportation. Later its scope was increased to cover employees in agriculture, forestry and public service in 1886; building trades in 1887, and in 1911 all Workmen's Compensation Laws were brought together. Previously in 1871 Germany had enacted the Employers Liability Law. Great Britain, too, had her problems. Prior to 1846 there was no right of action in England under the common law for wrongful death. The Lord Campbell's Act remedied this situation by permitting the personal representative to bring action within 12 months. The Employers Liability Act of 1880 modi-fied the fellow servant rule but did not stop the agitation for a broader reform. Amendments were offered to abrogate the fellow servant rule in its entirety, the defense of assumption of risk, and to limit the practice of contracting out. The situation in Great Britain became increasingly worse until a Workmen's Compensation Law was enacted in 1897, which was of an experimental nature, covering only hazardous employments such as railways, factories, mines, quarries, engineering work, and on buildings more than 30 feet high. The employer paid the en-tire cost. It was enacted over the opposition of both employers and employees—some employees feeling that somehow they would have to bear the cost. In 1900 its scope was extended to cover agricultural laborers and in 1906 it was further extended to cover most employments and the benefits were revised. Other European countries enacted compensation laws prior to the United States. The industrial accident problem in the United States was left to the individual states, and, of course, the early Compensation Laws had to hurdle the favorite legal question, to wit : constitutionality, both state and federal. And then there was the question of competition, that one state would have an advantage over another. However, in 1891 the United States Bureau of Labor studied the German system and published its findings in 1893. A similar study was made in 1898 by the Bureau of Labor Statistics in Massachusetts at the request of the Legislature. The first American Workmen's Compensation Law, modeled after the British Act, was introduced in the New York Assembly in 1898. It did not come out of the Committee. Maryland passed an Act in 1902 covering clay and coal mining, quarrying, operation of steam and street railways, and certain construction work for munici-palities. It was crude and limited death benefits to $1,000. It was declared unconstitutional in 1904 for the reason that it deprived parties of the right of trial by jury. Massachusetts in 1903 appointed a committee of five which the following year recommended a law modeled after the British Act of 1897. It was re-jected by the Legislature because it would impose too great a burden on industry. In Illinois it was op-posed in 1907 by both employers and employees, the former objecting to increased legal responsibility, and the latter to abrogating their common law rights and the limited benefits. Many other states ap-pointed committees to study the laws and make recommendations. In 1908 the United States Congress, upon request of President Theodore Roosevelt, passed a law with limited benefits for certain government employees. Finally the constitutional problem was solved by a system of elective laws. That is, the employer is presumed to have accepted the law and provide in-surance if he has a given number of employees and if his industry is not exempted. If he fails to provide insurance or if he rejects the compensation law his common law defenses are abrogated. Thus, if there is any negligence on his part and he is solvent it is only a question for the jury to say the amount of the monetary damages. Usually if the employer has failed to reject or provide insurance the injured em-ployee has the right to elect to sue at law or accept compensation. Thus there were investigations and experiments which ultimately resulted in 47 state compensation laws (Mississippi being the remaining exception), several territorial laws, the United States Long-shoremen's and Harbor Workers' Act, which was ex-tended to cover United States Government employees and civilian employees in the District of Columbia. New York amended its constitution to provide a compensation law. North Carolina in 1929 was the 44th state. NEED Why the necessity for Workmen's Compensation Laws? The common law system was slow, cumber-some, expensive, and many abuses developed. Good employer-employee relations could not be main-tained, which modern industry now realizes is most important for efficient production. Court trials with attendant witnesses interrupted production, and the employer, not infrequently, was held up to public abuse before the jury of 12, a crowded courtroom, and the press. On the other hand many sociologists estimate that only one injured worker out of eight (and some times less) ever recovered under the com-mon law system, and, therefore, they frequently became a charge first on their relatives and friends, and then on society as a whole. I have frequently said that no worker would roll dice with the pay-master to determine if he were to be paid off or the company keep his wages. Certainly he should not expect his widow and orphans to play a game of cards with the paymaster knowing that the cards will be stacked against them eight to one to de-termine as to whether they will be taken care of or not. "And judgment is turned away backward, and justice standeth afar off: for truth is fallen in the street, and equity cannot enter." (Isaiah, 59 Chap., 14 verse.) The late Justice Adams in Conrad vs. Foundry Company, (198 N. C. pp. 725-6) quoting from Stertz vs. Industrial Insurance Commissioner (91 Wash., 588, 158 Pac, 256) said: "Both had suffered under the old system, the employer by heavy judgments, * * * the employee through old de-fenses or exhaustion in wasteful litigation. Both wanted peace. The master in exchange for limited liability was willing to pay on some claims in the future where in the past Winter, 1945 THE U. C. C QUARTERLY PAGE 19 there had been no liability at all. The servant was willing not only to give up trial by jury, but to accept far less than he had often won in court, provided he was sure to get the small sum without having to fight for it." Justice Adams then said : "The result was that the compensation law discarded the theory of fault as the basis of liability and conferred an absolute right of compensation on every employee who is injured by an 'accident arising out of and in the course of the employment'." Justice Seawell in Barber vs. Miyiges (223 N. C, p. 216) says: "The primary purpose of legislation of this kind (Work-men's Compensation) is to compel industry to take care of its own wreckage. It is said to be acceptable to both em-ployer and employee, because it reduces the cost of settle-ment and avoids delay. To the employee, it means a cer-tainty of some sort of compensation for an injury received in the course of business; and to the employer, it reduces unpredictability of loss and puts it on an actuarial basis, permitting it to be treated as 'overhead', absorbed in the sales price, and thus transferred to that universal beast of economic burden, the consumer. * * * It is said to be permitting it to be treated as 'overhead,' absorbed in the conduct of the enterprise, and is referred to the propriety of keeping loss by accident incidental to employment 'chargeable to the industry where it occurs.' * * * It is called 'an economic system of trade risk.' " The North Carolina Supreme Court, like others, has said on many occasions that the law must be interpreted liberally in favor of the injured worker. As to delays in courts under the old system, in Rhode Island a certain case was tried before a jury five times, went to the Supreme Court five times, and finally a verdict for $22,895 was sustained eight years after the accident. A Missouri boy, age 18, lost his leg in 1872, 18 years later in 1890 he re-covered $12,000 with interest after three jury trials and three appeals. He was then 36 years old, mar-ried, and the father of three children. And then there is the famous old English case that Dickens portrayed of Jarndyce vs. Jarndyce, which remained in litigation for approximately 40 years. ACTION The Legislative history leading up to the enact-ment of the North Carolina Workmen's Compensa-tion Law ran true to form. The common law system was unsatisfactory. As North Carolina emerged from an agricultural state to an industrial state the dissatisfaction with the common law system of establishing liability for personal injury to employees increased, yet little was done until the Workmen's Compensation Law was enacted March 11th, 1929, upon the urgent request of Governor O. Max Gardner in his first message to the General Assembly (January 11th, 1929) in which he said: "North Carolina has grown so rapidly in industry during recent years that the state is passing through a transition period. Changing from an almost wholly agricultural state to a well advanced and almost evenly divided industrial state, this condition suggests the crying need for a fair and just workmen's compensation law, which I believe should be provided by the General Assembly. This would serve the needs of labor in providing a quick, economical, and efficient method of adjusting the claims for injuries, loss of time, and damages and would relieve the claimants of a large part of the expense and delay incident to court trials. It would relieve them of the burden of proving the negli-gence of the industry, and at the same time would tend to relieve some of the congestion now prevailing on the dockets of our courts. It would also be more satisfactory to in-dustry because it would mean fixed and stated standards for determining compensation, and would not leave the question open to the speculative determination of court trial. This law should be fair to the employee and not oppressive or unjust to the employer." In 1897 the North Carolina General Assembly abrogated the fellow servant rule, modified the doc-trine of contributory negligence and assumption of risk when due to defective machinery, but it only applied to railroads. From 1911 to 1921, 20 bills were introduced in the Legislature, including eight in 1913, and five in 1915, to modify the employers liability, but all failed of passage except three, and these applied only to railroads, including logging and tram roads. As to workmen's compensation, 17 bills were in-troduced in the North Carolina Legislature from 1913 through 1927, including three in 1913, and five in 1921, but only two passed. One passed the extra session of 1920 to appoint a special joint committee of the Senate and House to investigate and report upon workmen's compensation, and at the next regular session a bill passed to pay the expenses of this committee. With the exception of 1919 one or more bills were introduced at every regular biennial session of the Legislature from 1913 to 1929 to create a workmen's compensation law. Yet it was not until 1923 that a committee gave a compensation bill a favorable report, and this did not recur until 1927 when a bill was amended and placed on the favorable calendar. During this time the North Carolina State Federa-tion of Labor had gone on record in 1915 for a work-men's compensation law and at subsequent conven-tions. Also, Commissioner of Insurance, James R. Young, in 1914 and his successor, Stacy Wade, recommended the passage of a Workmen's Compen-sation Law; M. L. Shipman, State Commissioner of Labor and Printing, in 1916 and biennially there-after, while in office, recommended the passage of a law, as did his successor, Frank D. Grist, who aided in its passage in 1929. During the 19 years, 1911 to 1929, six governors held office, five of whom were elected upon a Demo-cratic platform pledged to the passage of a work-men's compensation law, but it was not until O. Max Gardner was elected that a governor really pressed for its passage. Not only did Governor Gardner vigorously recom-mend its passage but he was instrumental in getting representatives of employers and employees together outside of the legislative halls to agree upon a bill to the end that there would be unanimity of support from the two principally interested parties, and thus substantially reduce and narrow the opposition. The legislative action proved the wisdom of his strategy for after a lengthy public hearing before the 1929 Joint Senate-House Insurance Committee the bill was reported favorably to the Senate but re-referred to the committee for further hearing upon motion of Senator Walter Clark of Mecklenburg to hear certain of his constituents in opposition to its passage. Upon the bill being given a second favorable report there was a lengthy debate in the Senate extending over two days but the end result was its passage with PAGE 20 THE U. C. C. QUARTERLY Winter, 1945 only four votes being cast in opposition, and in the House there was not even a roll call. Among the leaders in the 1929 Legislative fight for passage of the Compensation Law were Governor J. M. Broughton, then State Senator ; Senator Claude C. Canaday of Johnston, both of whom introduced bills ; and Representatives W. E. Price of Mecklen-burg and Robert M. Hanes of Forsyth. The non-legislative committee, which agreed upon the terms of the bill passed in 1929 with minor amendments, included the following: For the Em-ployers, Stacy W. Wade, former Insurance Commis-sioner; V. P. Loftis, representing the contractors, and Frank S. Spruill, Sr., Attorney, representing the Yellow Pine Lumber Association. For the Em-ployees: T. A. Wilson, President, and James Ride-out, Secretary, North Carolina State Federation of Labor; J. E. Baumberger, representing the Brother-hood of Firemen and Engineers. However, the principal negotiations were carried on between Spruill and Wilson who agreed upon the benefits embodied in the bill that passed, except that the Senate increased the total compensation from $5,500 to $6,000. PROVISIONS Thus, the legislative history of Workmen's Com-pensation in North Carolina is not unlike that of Germany, England and the 43 States that preceded it. The Compensation Law was finally enacted, and became effective July 1st, 1929. The law provided for a Commission of three, who "shall devote their entire time to the duties of the Commission." The Governor shall appoint the members of the Commis-sion and "not more than one appointee shall be a person who, on account of his previous vocation, em-ployment, or affiliation, can be classed as a repre-sentative of employers, and not more than one ap-pointee shall be a person who, on account of his previous vocation, employment, or affiliations, can be classed as a representative of employees." The original members of the Commission were Matt H. Allen, Chairman, representing the public; J. Dewey Dorsett, representing the employers; and T. A. Wilson, then President of the North Carolina State Federation of Labor, as Labor's representative. Harry McMullan, now Attorney General, succeeded Matt H. Allen as Chairman and served for a short while. The present members of the Commission are T. A. Wilson, Chairman, Buren Jurney, Commis-sioner and Pat Kimzey, Commissioner. The 1929 law was modeled after the provisions of the Virginia, Georgia and Indiana Workmen's Com-pensation Laws. It provided for compensation at the rate of 60 % of the average weekly wage, but not less than $7.00 per week, nor more than $18.00 per week. In case of death, 350 weeks compensation; total disability not to exceed 400 weeks; for partial disa-bility (except for partial loss of or loss of use of members) 300 weeks, but in no case to exceed $6,000, including burial expense not to exceed $200 ; the em-ployer to pay the cost of medical, surgical and hospital expenses for 10 weeks, and thereafter upon order of the Commission when it "will tend to lessen the period of disability." There was a schedule of weeks to be paid for loss of members ranging from 200 weeks for loss of an arm to 10 weeks for loss of a toe, which was in keeping with other state laws in the South. However, as to percentage, total compen-sation and medical benefits, the 1929 law was then the most liberal in the South. OPERATION From 1929 to July 1st, 1944, a total of 650,812 cases have been reported to the Industrial Commis-sion, in which compensation has been paid in the amount of $18,511,060, and medical expenses paid in the amount of $9,217,842. Included in the 650,812 cases are 1,528 deaths, 62 permanent disability, 14,369 permanent partial disability, 122,080 tempo-rary total disability, and 512,773 medical only cases. With the beginning of the Compensation Act, the Commission realized that something should be done in the field of industrial safety to improve working conditions and create a safety minded attitude on the part of employers and employees. With this thought in mind the First Annual Statewide Industrial Safety Conference was organized in 1930, with the first meeting held in High Point. This was the first such Safety Conference in the entire South. Since that time, several southern states have started similar programs. The Statewide Safety Conference has been held each year since the beginning, and has increased in size and interest each year. In 1936 it appeared to the Commission that the textile industry of the state could make an improve-ment in its accident record. The present Chairman conferred with the late J. A. Long, then President of the North Carolina Cotton Manufacturers' Asso-ciation, and suggested a Statewide Textile Safety Contest might be of some value. This contest was begun that year with 173 textile mills participating, working 59,977 employees for a total of 33,187,587 hours. The Ninth Annual (1944) Contest had an enrollment of 395 mills employing 135,616 employees working 190,412,498 hours. During the time this contest has been operating the compensation in-surance rate for cotton spinning and weaving has been reduced from 72c to 56c—a savings of 16c on each $100 annual payroll of the industry. The con-test has grown to such size that now almost 97% of the textile mills in the state participate. The Textile Safety Contest created so much favor-able comment that the hosiery and furniture indus-tries requested the Commission to start a similar contest for their industries. This was done in 1942, and each year has shown a decided increase in size and interest. Realizing that safety training was the foundation of any good safety program, the Commission in July, 1942, began offering supervisory personnel of in-dustry of the state a 10-hour Industrial Safety Course. This was an immediate success. To date more than 3,600 persons have been enrolled in this course. The Commission engages in many other safety activities, all from the standpoint of educating em-ployees and employers in safe working methods. Winter, 1945 THE U. C. C. QUARTERLY PAGE 2 1 Some of these activities are: Organizing plant safety committees ; assisting in plant safety con-tests ; showing and loaning of safety film ; individual accident surveys for those plants making poor safety records; speaking before safety committees, plant executives, civic organizations ; publishing the monthly "Safety Bulletin," and other educational safety work. According to Keech On Workmen's Compensation in North Carolina, the ratio of rural to urban popu-lation in North Carolina in 1900 was nine to one. In 1930 this ratio had been reduced to three to one, and the state's population increased 43.7 percent between 1910 and 1930, with a gain of 73 percent for those employed in business establishments. According to the World Almanac there was an in-crease in the number of industrial wage earners of 4,970 from 1929 to 1939 in the states of South Caro-lina, Alabama, Tennessee, Mississippi, Virginia, Florida, Georgia and Kentucky, while in North Caro-lina during the same period there was an increase of 61,974—from 208,068 in 1929 to 270,042 in 1939— or an increase of a little more than 12 times the other eight southern states. The Industrial Commission cooperates very closely with the State Vocational Rehabilitation Division of the Department of Public Instruction by referring to the division all requests for lump sum settlements and the seriously permanently injured cases. Out-standing results have been obtained in many cases. Widows have been assisted in buying homes. Through rehabilitation some permanently injured workers are actually earning more today than before being injured. In 1935 the Compensation Law was amended to cover a comprehensive list of 25 occupational dis-eases, North Carolina became the first state in the South to incorporate occupational diseases and the first in the United States to specifically cover sili-cosis and asbestosis. In 1943 the maximum weekly compensation was increased from $18.00 to $21.00 per week and the number of weeks increased for the loss of certain members. The following tabulation shows the amount of compensation allowed for certain members of the body before and after March 6th, 1943, at the maxi-mum rate, the difference in amounts and the per-centage increase of money to the injured worker: MAXIMUM COMPENSATION Hand Arm Foot Leg Eye Thumb First Finger.. Second Finger $18.00 $21.00 Difference Number Compen- Number Compen- Weeks sation Weeks sation 150 $ 2,700 170 $ 3,570 $ 870.00 200 3,600 220 4,620 1,020.00 125 2,250 144 3,024 774.00 175 3,150 200 4,200 1,050.00 100 1,800 120 2,520 720.00 60 1,080 65 1,365 285.00 35 630 40 840 210.00 30 540 35 735 195.00 Percent Money Increase 32.2 28.3 34.4 33.3 40.0 26.4 33.3 36.1 In conclusion, the Industrial Commission started a campaign July 1st, 1944, to bring about the prompt payment of compensation. In November 46.92 per-cent of the compensable claims were paid within 21 days from the date of the accident, and 23.88 percent were paid within 14 days. Contrast this with the annual report of one casualty company a few years ago showing 15 common law cases pending nine years or longer, 107 for six years and 327 for five years, 561 for four years, 1,213 for three years and 2,436 for two years. SAFETY NOTES 1. New Publication American industry has exhausted practically every source of manpower save one, and that is the re-serve now wasted by industrial accidents, war plant management was told with the announcement of a new publication, Safety Through Management Lead-ership, issued in connection with the United States Labor Department's drive for a million fewer job accidents. Directed to smaller war plants which can seldom afford—and now cannot hire—trained safety engi-neers, the publication cites actual experience in plants of varying sizes in organizing for safety. Copies may be secured from the Division of Labor Standards, U. S. Department of Labor, Washington 25, D. C. 2. Industrial Safety Chart Series The Division of Labor Standards is cooperating with Mill & Factory on a series of industrial safety charts designed to promote safe working practices around common types of industrial equipment. The first of the series which has already been issued is on drill presses. Subsequent issues published month-ly and to be continued indefinitely, are planned to cover circular saws, power trucks, lathes and other types of industrial equipment. These charts should be particularly useful in em-ployee training and educational programs, for mount-ing on bulletin boards, for reproduction in house organs and trade pbulications, in safety training manuals and other related ways. Copyright restric-tions have been waived so that the charts may be reproduced, enlarged or used in any way that will make them more effective. They may be obtained from either Mill & Factory, 205 E. 42nd St., New York 17, N. Y. (with the name of any other organ-ization on them as desired) ; or the Superintendent of Documents, Government Printing Office, Wash-ington 25, D. C. A CORRECTION In the article on page 29 of this issue, "Manpower Priorities Referral Plan in Operation in State," the by-line was omitted through error. The article was written by Dr. J. S. Dorton, State Director, War Manpower Commission. PAGE 22 THE U. C C QUARTERLY Winter, 1945 Post War Unemployment By Silas F. Campbell, Supervisor, U. C. C. Bureau of Research and Statistics Looking more directly at the problems of post-war employment all sorts of predictions have been made as to the volume of unemployment expected to re-sult from the termination of war contracts. Such estimates have ranged from 6 to 19 million. Since North Carolina has 2.52 percent of the national labor force it might also be expected to sustain 2.52 per-cent of the unemployment burden. However, it must be borne in mind that North Carolina occupies a specially favorable position with respect to stability of employment. Being a pro-ducer largely of consumer goods, the purchase of which is mandatory, employment, both during de-pression and prosperity, has been at a higher level than in those areas devoted largely to the manu-facture of durable goods, the replacement of which is in large measure optional. Official records indicate that during the depression years of the thirties, and since, unemployment in North Carolina has been relatively 20 percent below the national level. It may be expected, therefore, that the effect of cut-backs in industrial production will strike North Carolina business with less severity than is predicted for the country as a whole, and that, within the limits of its own products, if freed from continued restrictions, the degree of inflation may depend largely upon the ability of industry to satisfy the accumulated consumer demand, except perhaps for cotton textiles which may be supplanted to an un-known extent by materials born in the laboratory. Localization of the problem of post-war unemploy-ment, both as to volume and industrial characteris-tics, will be needful for those charged with the responsibility of hastening post-war readjustments. For workers in war plants, or in expanded indus-tries, this presents no special difficulties since they are regularly reported by areas to the Commission in the usual course of business. However, the most important segment of the labor force from the stand-point of reemployment will be the discharged service men from North Carolina who will exceed 45 percent of the entire non-agricultural labor force of the state, and more than 55 percent of the number engaged in covered employment in 1943. Without some knowl-edge of where they came from and a general under-standing of their industrial background it will be difficult to plan intelligently for their reorientation into the industrial life of the state. It is known what percent of the labor force, based on the 1940 census, was engaged in covered employ-ment; what percent in agricultural work and what percent in schools, professions or other non-covered employment. By taking the 1940 labor force by counties it has also been possible to make an allo-cation of the probable number to be released after the war from covered employment in each county. In the table these percentages are also used for making an arbitrary distribution of the men to be released from military service. When information becomes available as to the number discharged for any county it will be possible, by applying the per-centages given, to estimate the number who may be expected to return to agriculture, the number who would probably seek employment in covered indus-tries, and the probable number from schools, pro-fessions, personal service or non-covered employ-ment. In the meantime this table will serve as the best estimate it is now possible to make, since it is generally known that more than 300,000 have been inducted from North Carolina. The result of this arbitrary interpolation of per-centages with aggregates to arrive at a final estimate of unemployment may be summed up on a state-wide basis upon the hypothesis that 28.98 percent of the unemployment will represent agriculture, 42.86 percent covered industries, and 28.16 percent schools, professions, personal service and other non-covered activities. The percentages for each county are indicated in columns two, three and four. In column five of the table is an estimate of the number who may be released from covered employ-ment due to a cessation of war production. This represents the actual increase in employment in each county since 1940, and it will be noted that in 13 counties employment was less in 1943 than in 1940. To the figures in column five has been added an estimate of the number of service men who may be expected to seek non-agricultural employment. This is shown in column six as the total estimate of non-agricultural unemployment in the first post-war year, based on simultaneous demobilization. Gradual de-mobilization, or the extension of the war in one area for a longer period than in another area would obviously reduce this number. It will be seen that the problem will be more acute in some areas than others, and that the character of the problem changes with the industrial charac-teristics of the area. For instance, in the mountain county of Transylvania, an area not usually asso-ciated with extensive industrialization, it will be noted that 78.76 percent of all men who may be dis-charged from military service presumably come from covered employment, and only 19.65 percent from agriculture, whereas, in Johnston County with its extensive commerce, textile plants, and numerous small towns, only 13.15 percent of its service men are presumed to have come from covered employment, and more than 60 percent from agriculture. Another striking contrast in the same industrial area is furnished in the counties of Durham and Wake. With a difference in the estimated number to be released from non-agricultural employment (includ-ing service men in that category) of only 374, it is estimated that as to Durham County more than 70 percent will have come from covered employment, and only 23.64 percent from schools, professions and non-covered employments ; whereas, in Wake County, only about 35 percent will have come from covered employment, and nearly half from schools, pro-fessions, and non-covered employment. Winter, 1945 THE U. C. C. QUARTERLY PAGE 23 ESTIMATE OF MAXIMUM UNEMPLOYMENT SN FIRST POST- YEAR—NORTH CAROLINA* Average Covered Employment 1943 Estimated Distribution Releases Fkom Military Service Estimated No. Workers Released From Covered Employment 1945 2 Total Estimate Non-Agricultural Unemployment Ratio to 1940 Percentage of Total From Non-Agricultural Agriculture Covered Employment Other (923028) STATE TOTALS ._._ 577,020 28.981 42.861 28.16i 107,844 335,209 36 32 Mountain Region. 69,052 29.64 32.69 37.67 12,938 54,485 38.00 19,831 16.43 39.67 43.90 3,566 15,370 37.86 19,683 148 10.35 65.94 44.29 1.98 45.30 32.18 3.513 53 14,791 579 3,248 36,28 13.21 50.51 539 5,409 < 374 794 509 335 1,144 92 29.74 38.26 41.58 28.79 32.64 53.83 23.36 13.01 10.17 9.52 16.79 5.78 46.90 48.73 48.25 61.69 50.57 40.39 51 3 105 131 252 8 557 1,130 943 1,057 1,464 Clay 258 5,858 28.17 38.30 33.53 1,098 5,233 9 2,296 2,879 683 28.36 19.65 38.24 25.88 78.76 17.68 45.76 1.59 44.18 188 910 3 2,303 2,152 Polk - 77S 8,450 14.76 62.14 23.10 1,953 5,079 47.59 Caldwell 8,450 14.76 62.14 23.10 1,953 5,079 11,868 16.15 49.70 34.15 2,060 7,243 39 20 7,755 4,113 15.73 16.74 49.54 49.92 34.73 33.34 1,178 882 4,251 2,992 7,903 49.92 30.09 19.99 1,500 4,801 35 98 7,689 111 103 37.42 75.55 61.30 49.30 1.61 1.92 13.28 22.84 26.78 1,500 3 8 3,957 322 Yadkin . 1 522 5.374 46.14 16. IS 37.68 1,091 5,212 28 87 1,248 153 260 359 3,354 46.74 54.21 52.64 52.18 39.22 28.49 3.51 3.31 6.04 23.47 24.77 42.28 43.05 41.78 37.31 397 S3 34 s 577 981 310 668 709 Wilkes, 2,544 2,328 41.48 14.87 43.65 436 2,486 29.77 527 1,413 388 39.74 32.08 52.13 11.30 25.41 8.00 48.96 42.51 39.87 199 97 140 873 892 721 Mitchell . 4,192 24.87 35.83 39.29 695 3,652 43 . 79 4,192 24.88 35.83 39.29 695 3,652 Piedmont Plateau. 377,987 20.45 53.95 25.60 50,726 189,598 33.94 9,869 . 23.55 52.58 23.87 1,643 5,272 36.57 2,316 7,553 30.31 20.19 42.83 57.43 26.84 22.38 516 1,127 1,615 Stanlv 3,657 10,410 28.81 41.43 29.76 1,034 4,787 25.95 2,011 8,399 43.65 22.74 24.06 48.53 , 22.29 28.73 118 916 978 Randolph 3,809 Burlington ______ __ _ 19,764 13.43 77.14 9.43 69 5,677 25.71 19,764 13.43 77.14 9.43 69 5,677 Charlotte.. __ 49,737 12.67 60.72 26.61 11,058 30,133 43.05 Mecklenburg _._ _ 47,737 2,000 6.44 51.83 68.08 14.46 25.48 33.71 10,669 3S9 28,300 1 , S33 25,805 9.23 90.77 6,226 24.77 Cabarrus : ____ 25,805 9.23 90. 773 » 6,226 PAGE 24 THE U. C. C. QUARTERLY Winter, 1945 ESTIMATE OF MAXIMUM UNEMPLOYMENT IN FIRST POST-WAR YEAR—NORTH CAROLINA-(Con.) Average Covered Employment 1943 Estimated Distribution Releases From Military Service i Estimated No. Workers Released From Covered Employment 1945 Total Estimate Non-Agricultural Unemployment Ratio to 1940 Non-Agricultura Labor Force (923028) Percentage of Total From Agriculture Covered Employment Other 28,389 19.87 55.81 24.32 4,908 15,198 35.41 22,807 2,964 2,618 5.99 30.20 70.20 70.37 26.28 29.80* 23.64 43.52 3,321 1,422 165 11,270 3,227 701 35,853 13.87 79.21 6.92 7,569 18,554 46.89 32,315 3,538 7.94 42.39 87.36 40.05 4.70 17.56 6,891 678 16,611 1,943 43,924 8.66 65.35 25.99 2,397 18,314 29.07 Guilford___ . , __ 43,924 8.66 65.35 25.99 2,397 18,314 Henderson _ 6,160 47.97 22.71 29.32 839 3,696 25.49 Granville. _ 1,300 3,994 866 57.50 33.02 60.87 14.27 36.46 10.35 28.23 30.52 28.78 228 339 272 1,018 1,893 785 Vance.. .. Warren Hickory 14,953 16.83 71.79 11.39 2,358 7,069 39.89 Catawba 14,953 16.82 71.79 11.39 2,358 7,069 Lexington-Thomasville.. .. 12,166 17.55 58.57 23.89 1,807 6,045 35.60 Davidson . 12,166 17.54 58.57 23.89 1,807 6,045 Raleigh 19,014 35.22 27.32 37.46 3,271 14,118 37.80 Franklin _ 1,284 15,036 2,694 61.13 21.40 60.79 10.88 35.28 13.15 27.99 43.32 26.16 530 2,342 399 1,139 10,896 2,083 Wake Johnston Reidsville-Spray.. 11,977 34.77 39.94 25.29 2,405 6,731 36 55 Caswell. . . 203 11,774 70.86 26.19 4.14 48.45 25.00 25.36 8 2,405 371 Rockingham 6,360 Rockingham. 11,442 33.08 36.39 30.53 2,419 7,209 33 49 Anson 2,025 6,080 3,337 46.08 20.09 43.18 21.37 41.05 44.76 32.55 38.86 12.06 348 1,202 869 1,439 3,907 1,863 Richmond Scotland Rutherfordton 7,364 29.87 43.29 26.83 1,204 4,181 » Rutherford.. 7,364 29.88 43.29 26.83 1,204 4,181 Salisbury 11,775 16.70 36.45 46.85 1,246 8,507 30 16 Davie 1,608 10,167 41.44 12.34 34.31 36.82 24.25 50.84 271 975 1,036 Rowan 7,471 San ford 6,283 29.84 31.68 38.48 1,743 4,598 36 12 Lee 2,645 3,638 35.04 25.97 34.64 29.48 30.32 44.55 1,020 723 2,144 Moore 2,454 Shelby 8,743 34.34 39.31 26.35 652 4,203 29 57 Cleveland 8,743 34.34 39.31 26.35 652 4,203 Statesville. _ ... 11,005 27.48 57.31 15.20 3,293 6,636 47 68 Iredell 11,005 27.49 57.31 15.20 3,293 6,636 Winston-Salem. 33,354 6.79 57.24 35.97 811 12,444 23.29 Forsyth 33,354 6.79 57.24 35.97 811 12,444 Coastal Area... 114,076 45.74 27.41 26.85 44.180 91,126 41.23 Elizabeth City. 7,330 35.79 26.82 37.39 3,102 6,775 43 50 Camden 14 2,214 150 232 97 56.43 48.54 54.73 19.79 64.02 1.14 44.51 7.75 11.24 4.63 42.43 6.95 37.52 68.97 31.35 8 1,461 26 99 8 139 1,838 249 842 241 Chowan Currituck Dare Yates. Winter, 1945 THE U. C. C QUARTERLY PAGE 25 ESTIMATE OF MAXIMUM UNEMPLOYMENT IN FIRST POST-WAR YEAR—NORTH CAROLINA-(Con) • Based on Complete Demobilization and simultaneous conclusion of War in European and Pacific Areas. 1 Based on ratio of employment in this category in 1940 to total labor force in 1940. 2 Total increase in covered employment from 1940 to 1943. ' Actual percentage 103.58. * Actual percentage 31.28. 8 Actual percentage 83.44. 8 Actual percentage 198.98. ' Actual percentage 125.60. 8 Declined from 1940. 1 Coverage not comparable because of shift in area served. Average Covered Employment 1943 Estimated Distribution Releases Fbom Military Service Estimated No. Workers Released From Covered Employment 1945 • Total Estimate Non-Agricultural Unemployment Ratio to 1940 Percentage of Total From Non-Agricultural Agriculture Covered Employment Other (923028) 4,270 353 17.28 52.02 46.91 12.11 35.81 34.87 1,499 17 3,206 260 13,036 42.07 24.94 32.99 851 7,886 24 07 7,685 3,748 422 1,181 19.72 49.91 62.56 69.80 33.24 29.14 8.83 7.95 47.04 20.95 28.61 22.25 a 500 82 209 4,190 2,296 416 984 Hoke... Goldsboro 7,515 52.51 22.35 25.14 2,544 5,839 25.15 1,048 6,467 67.42 43.14 7.59 31.65 25.49 25.21 318 2,226 1,191 4,648 3,075 52.53 14.81 22.66 86 2,066 18.94 Pitt 3,075 52.53 14.81 22.66 86 2,066 4,170 50.81 18.74 30.45 1,013 3,081 29.97 25 4,145 80.42 42.34 0.52 23.98 19.06 33.68 s 1,013 184 2,897 Lumberton ..: 6,377 57.01 18.34 24.65 1,803 5,015 32.95 1,977 4,400 52.35 58.29 22.41 17.21 25.24 24.50 564 1,239 1,335 3,680 11,751 46.19 33.57 20.24 7,231 11,632 73.74 Carteret 1,020 6,912 56 4,594 169 34.23 32.79 70.08 68.36 53.10 17.34 67.21* 1.09 31.64" 6.27 48.43 28.83 40.63 219 2,543 21 4,375 73 1,672 4,325 269 4,894 472 Jones Onslow Pamlico. Roanoke Rapids 9,291 46.10 29.18 24.73 1,242 4.571 24.68 Halifax. 7,370 1,367 564 39.10 50.85 62.24 39.52 19.66 7.41 21.38 29.49 30.35 943 216 83 3,240 751 580 Hertford Northampton Rocky Mount 10,412 45.96 28.67 25.37 1,605 5,525 26.99 Edgecombe 4.253 6,159 43.27 48.15 24.49 32.09 32.24 19.76 410 1,195 2,255 Nash 3,270 Washington .. _ . 5,678 63.57 16.49 29.94 926 4,651 25.49 Beaufort.. 1,988 812 1,325 118 1,436 46.76 61.79 100.00 57.31 36.21 33.70 16.68 8.20 17.30 9.51 38.83 26.56 30.01 25.39 44.28 27.47 281 239 222 a 184 1,839 777 894 261 880 Bertie Hyde Martin Tyrrell... Wilmington 32,589 33.90 49.26 16.84 23,318 31,494 100.00 364 1,898 29,714 613 47.05 61.32 6.27 60.99 8.33 13.69 93.73' 7.66 44.62 24.99 31.35 13 194 21,905 206 917 1,606 27,257 714 Cnliitnhns New Hanover Pender , Wilson . 3,852 44.82 20.13 35.05 459 2,591 25.55 Wilson 3,852 44.82 20.13 35.05 459 2,591 Out-of-State... ._ 14,905 PAGE 26 THE U. C. C. QUARTERLY WINTER, 1945 U. C. C. Operations 1945 TAX SAVINGS TO EMPLOYERS OF 8,479 active accounts, 1,592, or 19 percent, have been FOUR AND ONE-HALF MILLION DOLLARS paying contributions for less than three years and consequently were ineligible. Because of rate reductions allowable under our While there is no present basis for estimating the state law, North Carolina employers will save over effective average rate for 1946, it appears likely, four and a half million dollars this year. The tabu- should payrolls remain at their present level and no lation of employer accounts which will benefit by the severe cut-backs occur to increase the claim load, plan of experience rating shows that 5,022 em- that the average rate for 1946 may fall to 1.5 per-ployers— or nearly three-quarters of all accounts cent> producing savings to employers of approxi-which could be considered for rate reduction—will mately $8.9 millions. ' share in an estimated saving of $4,596,012. Because The classification of employer accounts for ex-of rate reductions, the average effective rate of pay- perience rating in 1945 listed 8,479 active reserve roll tax supporting the unemployment compensation accounts, of which 1,592 were not rated because of fund will be 2.08 percent for this year, instead of shortness of operation under the law. Of the 6,532 the standard rate of 2.7 percent. accounts rated, 5,022 received reduced rates. The The largest group to effect a saving are those total number of accounts, both rated and unrated, 1,124 employers who will pay a rate of 1.39 percent which will pay at the standard rate of 2.7 percent for 1945. Their payrolls, which average $105,000, during 1945 is 3,457. Seventy employers will pay represent 15.9 percent of the total payroll. This more this year than in 1944, although all but seven group will save $1,551,988 in 1945 or a third of the of them will do so at rates below the standard. total saving. The number who will pay the maxi- There are 500 accounts with reserve overdrafts. mum rate this year dropped from 4,402 in 1944 to The number of employer reserve accounts by 1945 3,457 for 1945, notwithstanding an increase in the rate classes is as follows: number of experience rating accounts. The number , 7 . T7 .. „„ .. ' , _ . . m .. , „ . • , i • , ^ ^ «-, i Number of Units Effective Rate Percent of Total of employers paying the minimum tax of 0.27 percent g 479 2 08 100 of payroll for 1945 is 277, or 224 more than in 1944. "" " — An employer is eligible for consideration as to 755 25 8 9 rate reduction if contributions have been payable to 927 _. 2.13 10.93 his account for the three preceding years, but can 940 — !- 76 n- 09 obtain a reduction only if his reserve balance ex- ' 695 "" {Q2 g^o ceeds 2.5 percent of his payroll for the last three 304 65 3.59 years and is five times the largest amount of benefits 277 - ------ — 27 3 - 26 paid from such account within any one of the three preceding years. Experience rating will have been COMPENSABLE AND in effect in North Carolina for three years with the NON-COMPENSABLE CLAIMS close of the present year While the annual decline Not aU CQvered workerg who become unemployed in average rate has not been.Precipitate> employers and fi ,e claimg fm compensation are eligible for have effected savings amounting to $7,000 000. This benefits _ There are reagons fQr tM the mogt is the difference between what they did pay and important from a numerical point of view being an what they would have paid if all tax contributions insufficient amount of wage credits reported for the to the Unemployment Compensation Fund were claimant>s base.period year, that is earnings of less made at the standard rate of 2.7 percent of payroll. ,, ,, 81on . . • _ , A1 . • ^ K J than the $130 minimum requirement. Also, since a During 1943, the first year experience rating was claimant's first week of unemployment is not com- 111 effect, 1,559 firms obtained a reduced rate and the pensable, it is necessary for the Commission to average for the state was 2.63 percent. This pro- handle a considerable number of claims which do not duced a net saving to employers of $448,251. Al- resuit in benefit payments. most 20 percent of all active reserve accounts shared Initial ciaimS( although not compensable, are in this amount, and 25 percent of all accounts which necessary to establish the claimant's benefit year, the were eligible for classification. base-period year, and the amount of the weekly In |
OCLC number | 26477066 |