Dismissal Pay

April 1, 1944

Report Outline
Dismissal Pay and Industrial Reconversion
Development of Severance Pay Programs
Mustering-Out Pay and Severance Bonuses
Special Focus

Dismissal Pay and Industrial Reconversion

Dismissal pay or severance compensation for war workers is being urged by trade unions with large numbers of members engaged in war production as a protection against the hardships that will be suffered by working people during the postwar period of industrial reconversion. A guaranteed nest egg for use while war workers are seeking reemployment would serve also, it is asserted, to reduce labor turnover and absenteeism, and to minimize labor unrest during continuance of the war.

A plan to reward war workers who stay on the job by granting them dismissal bonuses and high job priorities in the reconversion period is under study by the War Manpower Commission. The plan was developed by Clinton S. Golden, vice chairman of the commission, and was “endorsed in principle,” Feb. 23, by Manpower Commissioner McNutt. Meanwhile, labor leaders and industrialists have been asked by the War Contracts Subcommittee of the Senate Military Affairs Committee to give their comments on a proposed dismissal-pay amendment to a reconversion bill under study by the subcommittee. The amendment would permit severance payments to war workers in amounts up to $200 upon termination of war contracts.

President Roosevelt indicated his opposition to special provision for dismissal compensation in war industries in a passage of his Budget Message, Jan. 13, in which he recommended that the present unemployment insurance system be strengthened “so that we shall be able to provide the necessary protection to the millions of workers who may be affected by reconversion of industry.” He added: “I prefer an extension of coverage and liberalization of unemployment benefits to any special legislation, such as that providing for dismissal payments through war contractors.” The President similarly recommended in 1942, when unemployment developed as an accompaniment of the conversion of industry to war production, that the situation be dealt with through the established unemployment compensation system. In a special message to Congress, Jan. 19. he asked a federal appropriation to raise state unemployment benefits for displaced workers to 60 per cent of their regular earnings and to extend the duration of benefits to 26 weeks. The absorption of displaced workers proved more rapid than had been anticipated and on Feb. 19 the Ways and Means Committee tabled a bill to authorize an appropriation of $300 million to carry out the President's plan.

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