Federal Promotion of State Unemployment Insurance

Report Outline
Advance Preparation for Future Emergencies
Growth of Sentiment for Unemployment Insurance
Provisions of Wagner-Lewis Insurance Bill
Federal Influence on State Legislation
Special Focus

Advance Preparation for Future Emergencies

A system of federal tax levies and tax credits which would afford a powerful incentive for the rapid adoption of unemployment insurance laws by the states is proposed in the Wagner-Lewis bill introduced in both houses of Congress, February 5, 1934, with administration support. The federal government is without constitutional authority to establish a national system of unemployment insurance, nor is it considered desirable that there be more than a rough uniformity in such systems of insurance or unemployment reserves as may be established by the states. Some form of protection for the workers in future unemployment emergencies, however, is considered highly desirable by the present administration, and the Wagner-Lewis bill is designed to bring pressure upon the state legislatures to exercise their authority in this field.

The Wagner-Lewis plan would afford no assistance in dealing with the present emergency, but is designed by its sponsors to stimulate preparation for future unemployment emergencies and to assist at the same time in smoothing out fluctuations in the business cycle. Senator Wagner (D., N. Y.) said, in introducing the bill in the Senate, that the American people had shown great fortitude through five winters of depression and that this “must be matched by the determination that we shall not again be caught unaware.”

If we wait, until a catastrophe occurs before attempting to alleviate it [Wagner continued] a vicious cycle is created. The crisis itself makes relief difficult, and attempts at. relief distract us from the main task of recovery. But if we prepare in advance, we may decrease enormously the liklihood of depressions and also store up adequate relief for the small amount of unemployment that may occur from time to time despite our best efforts.