[Annual Report of the United States Railroad Retirement Board for the Fiscal Year Ended June 30, 1940]
[From the U.S. Government Publishing Office, www.gpo.gov]
ANNUAL REPORT OF THE
RAILROAD
RETIREMENT
BOARD
FOR THE FISCAL YEAR ENDED JUNE 30
1940
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ANNUAL REPORT OF THE^RAILROAD RETIREMENT
BOARD
FOR THE FISCAL YEAR ENDED JUNE 30
1940
TABLE OF CONTENTS
CHAPTER PAGE
I. Introduction................................................... 1
II. Railroad unemployment insurance operations.................... 13
III. Administration of the Railroad Unemployment Insurance Act... 38
IV. Amendments to the Railroad Unemployipent Insurance Act ... 57
V. Railroad retirement finances and general operations........... 81
VI. Adjudication of employee annuities.............................. 92
VII. Employment relation claims and payments....................... 122
VIII. Analysis of employee annuities................................ 132
IX. Pension payments............................................... 153
X. Survivor payments.......................................... 158
XI. Service, compensation, and age of covered employees............ 172
XII. Employer and employee coverage................................ 177
Appendixes.......................................................... 195
Lists of tables and charts.......................................... 290
Index............................................................... 297
UNITED STATES GOVERNMENT
PRINTING OFFICE • WASHINGTON • 1941
RAILROAD RETIREMENT BOARD
Murray W. Latimer, Chairman M. R. Reed Lee M. Eddy
For sale by the Superintendent of Documents, Washington, D. C.
Price 40 cents (paper)
LETTER OF TRANSMITTAL
Railroad Retirement Board,
Office of the Chairman, Washington, D. C., November 15,19^0.
To the President of the United States of America:
Pursuant to the provisions of section 10 (b) (4) of the Railroad Retirement Act, approved June 24, 1937, and of section 12 (1) of the Railroad Unemployment Insurance Act, approved June 25, 1938, I have the honor to submit the report of the Railroad Retirement Board for the fiscal year ended June 30, 1940, including an estimate of the liabilities created by the Railroad Retirement Acts of 1935 and 1937 as required by subsection (d) of section 15 of the Railroad Retirement Act of 1937.
Respectfully,
Murray W. Latimer, Chairman.
OUTLINE CHART OF THE ADMINISTRATIVE ORGANIZATION OF THE RAILROAD RETIREMENT BOARD
APRIL 15, 19U0
COMMITTEE ON RAILROAD RETIREMENT COMMITTEE ON AUDITS
GENERAL CONTROL BOARD AND investigations
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SECRETARY CHIEF EXECUTIVE ACTUARIAL
OF THE BOARD OFFICER ADV ISORY COMM ITTEE
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GENERAL CONTROL LAW AND INVESTIGATIONS INFORMATI ON SERVICE
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DIVISION OF PERSONNEL I DIVISION OF_DIVISION OF...................................................DIVISION OF
SUPERVISION^ MANAGEMENT, FI NANCE RESEARCH STATISTICS
| DIRECTOR OF PERSONNEL | | DIRECTOR OF FINANCE | | CHIEF ECONOMIST | | CHIEF STATISTICIAN |
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DIVISION OF PLANS DIVISION OF PURCHASES 01VISI ON OF RE PORTS AND
AND PROCEDURES AND SUPPLIES OPERATIONS BRANCH INFORMATION SERVICE
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*■" ' I' ■ DIRECTOR OF UNEMPLOYMENT I__1 NFORMAT ION SERVICE |
INSURANCE, ANO COORDINATOR OF OPERATIONS
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BUREAU OF BUREAU OF EMPLOYMENT BUREAU OF WAGE
ADMINISTRATIVE SERVICES AND CLAIMS AND SERV|CE RECORDS
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OFFICE SERVICES CONTRIBUTIONS RET IREME NT C LA I MS AND COORD I NAT I ON EMPLOYMENT SERVICE | A PPEA LS COUNC IL I CERTIFICATION R^ISTRAT IM
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INTRODUCTION
SINCE the publication of the last annual report of the Railroad Retirement Board, the Congress has made important substantive changes in the retirement and unemployment insurance laws administered by the Board. The legislation also removed a number of administrative difficulties encountered in the operation of the two systems, modified the coverage of the acts, and authorized a program for the collection of prior service records which will make possible a more expeditious handling of future claims for annuities under the retirement system. During the fiscal year 1940, too, the Board further integrated the administrative machinery of the retirement and unemployment insurance systems by providing for greater utilization of the field staff set up in connection with unemployment insurance, in the receipt of claims for retirement annuities and in the assembly of the data necessary for the adjudication of these claims.
Railroad Retirement
During the fiscal year 1940, the Board certified to the Secretary of the Treasury for payment a total of $114,025,000 for retirement benefits of all classes, compared with $107,131,000 in 1939 and $82,655,000 in 1938. These figures are for payments certified through June 1940; they do not include subsequent certifications of benefits payable for these years. The accrued payable obligations for the fiscal year 1940, including estimates for claims pending adjudication on June 30, 1940, will be $113,733,000, compared with $103,346,000 for the fiscal year 1939 and $84,927,000 for the fiscal year 1938. These figures show a slowing up of the rate of increase in the obligations of the retirement system.
Total payments certified from the beginning of retirement operations through June 30, 1940, were $308,326,000. Additional amounts accrued but not yet paid for this period, estimated at about $7,144,000, will raise the total obligations of the retirement system through June 30, 1940, to about $315,470,000. As of that date, there was a balance of $71,719,000 in the railroad retirement account. After allowance for
1
. I .
2 • Annual Report of the Railroad Retirement Board
the $7,144,000 in accrued obligations not yet certified and for $32,169,-000 in taxes collected in the first quarter of the fiscal year 1941 on pay rolls for the last quarter of the fiscal year 1940, the balance in the retirement system would be about $86,901,000.
When all claims beginning before July 1, 1940, have been adjudicated, a total of about 221,000 individuals will have received benefits. This number will consist of 133,000 employee annuitants, 48,500 former carrier pensioners transferred to the pension rolls of the Board under section 6 of the 1937 act, 6,350 individuals receiving survivor or death benefit annuities or both, and 32,850 lump-sum death payments.
Actuarial valuation.—In accordance with section 15 (d) of the Railroad Retirement Act of 1937, there is included in this annual report, as appendix A, an actuarial valuation as of December 31, 1938, of the assets and liabilities under the Railroad Retirement Act, together with the Board’s recommendations based thereon. This report was transmitted to the President on August 15, 1940. The valuation, made by the actuary of the Board, was reviewed and the methods used were approved by the actuarial advisory committee. This committee is composed of two outside actuaries selected by the Railroad Retirement Board—one on recommendation of the employers and one on recommendation of the labor organizations—and one actuary designated by the Secretary of the Treasury.
The valuation was essentially an inquiry into the experience under the Railroad Retirement Act through December 31, 1938, primarily to determine whether the additional data now available are consistent with the initial assumptions as to the cost of the system, which were based principally on data collected by the Federal Coordinator of Transportation in 1933. On the basis of certain differences between the experience and the original assumptions, which are described in detail in the appendix, the actuary estimated that a level contribution of 11.11 percent annually on an estimated $2,000,000,000 pay roll is needed to finance the liabilities of the system. The earlier estimate had computed the level cost at 7.11 percent on an estimated $2,200,000,000 pay roll.
The Board recommended, however, that no increase in the tax rate be made at this time. For reasons which are given in detail in its statement in the appendix, the Board questions whether the initial experience of the system can be accepted as valid for the system in the long run, and it feels that the extent of a desirable increase cannot yet be determined. The Board therefore recommended that as soon after the end of 1941 as data can be made available, a second triennial valuation be made, incorporating the experience to the end
Introduction • 3
of 1941. The results of this valuation should be secured in time for a report to be made to Congress and for action to be taken in the 1942 session, effective January 1, 1943.
Assuming that it is possible at the present time to estimate accurately the level of cost, the question arises whether taxes should be levied under the Carriers Taxing Act in the full amount of the indicated increase. A basic problem in this connection is whether the financial policies applicable to private insurance are equally applicable to social insurance. The Board believes that they are not.
The existence of private insurance systems and their ability ultimately to pay all their liabilities can only be guaranteed by the accumulation of full reserves. It has been demonstrated time and again that the payment of private pensions from current revenue is likely sooner or later to result in burdens that will make the continuance of the system impossible, even where a company’s profits are maintained. Furthermore, profits of a single business may decline, companies may go out of business, the competitive situation may necessitate economies, and managements may change. Unless funded guaranteed reserves are maintained, private pension plans are subject to termination at the discretion of the company.
Social insurance—and the railroad retirement system is a form of social insurance—rests basically on the power of the state to collect and expend moneys in the public welfare. Social-insurance systems are subject to change, or even discontinuance, but such action implies a legislative decision that social welfare will be enhanced thereby. If a social-insurance system is discontinued, there is a further implication that the objectives sought by the legislation are no longer necessary, or have been accomplished by other means. So long as the objectives are of sufficient importance, state power is undoubtedly sufficient to insure the continuance of the system on a proper basis and scale.
Accumulation of full reserves under a system of social insurance is commonly recognized to be undesirable. In a system of limited coverage, such as the railroad retirement system, the accumulation of full reserves would not be attended with all the undesirable results that would follow from the adoption of such a policy for a system covering all industry and commerce, because smaller sums would be involved. The report of the actuaries indicates, however, that on the basis of experience to date, reserves sufficient to permit the use of a rate of contribution in the future just sufficient to support the cost of benefits to new employees would be almost $3,500,000,000. The accumulation of such a sum would probably give rise to substantial
4 • Annual Report of the Railroad Retirement Board economic problems. Even if this reserve is not accumulated and only interest is paid on it, as is contemplated by the actuaries’ report, the ultimate reserve will still be large.
Apart from the foregoing considerations for not levying, at present, additional taxes under the Carriers Taxing Act to the full amount indicated by the actuary’s estimates, there are good reasons why some of the funds for the support of a social-insurance system should come from general revenues. First, the operation of these systems and, specifically, of the railroad retirement system, is resulting in savings of general revenues. Without the operation of the retirement system, many of the beneficiaries under the retirement acts would probably be receiving old-age assistance. Under existing policies, the Federal Government pays for half of the cost of old-age assistance paid under State laws, insofar as recipients of grants are over 65, and within a limit of $40 per individual per month. Second, some contribution from the general revenues is necessary if reasonable equality in the ratio between contributions and benefits for employees of different ages is to be preserved, particularly if the finances are handled on a pay-as-you-go basis. Under the railroad retirement system, if no funds were to be accumulated, the disbursements might ultimately equal 14 to 15 percent of pay rolls.
Pay-roll taxes, whether levied upon the employer or the worker, are regressive taxes and as such tend to have a harmful influence on the general economy. If existing taxes are to be raised much above the present level, some substitution of progressive forms of taxes, at least in part, would be desirable.
The policy of financing adopted for the railroad retirement system ought to be consistent with that adopted for the general old-age and survivors insurance system. For the latter, Congress has definitely adopted a pay-as-you-go policy. The Board believes that such a policy is desirable for both systems. It suggests that if such contributions are provided, the contribution to the railroad retirement system should be, as nearly as can be determined, equivalent to the additional contribution which would be made by the Federal Government to the general old-age and survivors’ insurance system under a policy of Federal contributions if the coverage under the railroad retirement system were included under the general system.
The Board recommends, finally, that any changes liberalizing the retirement system should be accompanied by increases in the taxes under the Carriers Taxing Act (now subch. B, ch. 9 of the Internal Revenue Act) sufficient to cover the full costs of the changes on the basis of the factors indicated by the experience to date.
Survivor benefits.—The railroad retirement system was conceived
Introduction • 5
primarily as a system of retirement annuities for aged and disabled railroad workers. It was not intended to provide life annuities on a general scale for the survivors either of deceased annuitants or of employees who die before receiving an annuity. The provision which permits an employee annuitant to elect a reduced joint and survivor annuity so that his surviving spouse may receive a lifetime annuity after the death of the annuitant, has been utilized by a small and decreasing proportion of the annuitants. The lump-sum death benefit under the 1937 act was intended as provision for burial and other costs which arise in cases of death, and as a return of contributions made to the system, rather than as a means of sustaining the survivors for any period of time.
The enactment in 1939 of an amended Social Security Act with provision for annuities for survivors has raised the question of the advisability of providing similar benefits under the railroad retirement system. The Board is at present making a study of the relative benefits received under the Railroad Retirement Act by annuitants and survivors compared with the benefits which would have been payable to them if employment in the railroad industry were covered under the Social Security Act.
Dual coverage.—Another problem raised by the amendatory Social Security Act concerns individuals who have had covered employment under both the railroad retirement and the general old-age insurance system s. In some cases this division of employment or wage credits results in loss of annuity rights under the Social Security Act without a fully compensating increase in annuity rights under the raihoad retirement system. Other individuals, particularly those with substantial prior service credit under the raihoad retirement system, may receive annuities under both the general and railroad retirement systems which in combination amount to considerably more than would have accrued if the wage credits had been accumulated under a single, system. Possible means of handling these two situations are under consideration by the Board in connection with a study of individuals who in the period 1937—39 were covered under both systems.
Prior service records.—A joint Congressional resolution signed by the President on October 9, 1940, will enable the Railroad Retirement Board to secure complete individual records of service and compensation prior to 1937, and to determine in advance of the employee’s retirement the prior service which may be credited toward an annuity under the Railroad Retirement Act.
The number of employees entitled under the 1937 act to credit for service prior to January 1, 1937, or, under the 1935 act, for service
6 • Annual Report of the Railroad Retirement Board
prior to March 1, 1936, is estimated at about 1,200,000. The program authorized by the joint resolution will materially expedite the handling of these employees’ claims, and will safeguard the data on which then prior service rights depend. It will also reduce the number of special adjudication problems, and will ultimately reduce the operating expenses of the Board. In addition, the program will relieve the railroads of virtually all the cost and, ultimately, of the need for transcribing and checking individual prior service records. Finally, it will provide a much more accurate basis than has hitherto been available for estimating the prior service obligations of the retirement system.
Unemployment Insurance
The fiscal year 1940 was the first year of benefit payments and contribution collections under the Railroad Unemployment Insurance Act. During that year approximately $14,811,000 in benefits was paid to some 160,700 qualified employees, while the amount of taxes accruing for the year and collected by the end of September 1940 was approximately $65,470,000.
The striking disproportion between benefits and contributions was in large part due to the improvement in railroad employment conditions during the year. Employment on class I railroads, for example, increased by 49,000 between July 1939 and July 1940. Another factor in keeping down benefit payments was the relatively low level of railroad employment during 1938. This reduced the number of employees who earned at least $150 in creditable compensation in 1938, the minimum required to qualify for unemployment benefits in the fiscal year 1940. There were about 188,000 fewer class I railroad employees with qualifying earnings in 1938 than in 1937, the total number in 1938 being about 1,110,000, as compared with 1,298,000 in 1937. There is little doubt that if these employees had not lost their benefit eligibility, most of them would have been entitled to large benefits in the fiscal year 1940 because of extended unemployment.
The reduction in aggregate benefits due to depressed conditions in 1938 and reemployment in 1939-40 was anticipated in the planning for the fiscal year 1940, yet the total of actual payments fell far below the expectations of the Board. After a few months of operation it became clear that the reason for low benefits lay in the peculiarities of the benefit formula of the act as applied to the types of unemployment found in the industry. The benefit schedule of the act provided relatively larger benefits for low-pay employees with extended unemployment, at the expense of higher-pay groups and of employees with intermittent unemployment. The benefit formula of the act was based on the theory that the largest volume of unemployment in the
Introduction • 7
industry was found among the less skilled employees with comparatively low wage rates and that unemployment in this group tends to be continuous over long periods of time. Experience showed that unemployment among the higher paid skilled workers, particularly in the shops, was by no means small; it was also found that unemployment occurring in short spells was widespread. For skilled workers and for workers intermittently employed, benefits were found to be low not only by comparison with wages earned in full-time employment, but also when measured against the benefits that would have been paid under the unemployment compensation laws of most States. .
Unemployment insurance amendments. To correct this condition, amendatory legislation was submitted to Congress. The Board approved the following major changes in the benefit formula which were incorporated in the Wagner-Cross er bill: (1) substitution of a registration period of 14 consecutive days with benefits payable for each day of unemployment in excess of 4, for a half-month of 15 consecutive days with benefits payable for every day of unemployment in excess of 7; (2) increase in the maximum number of benefit days in any benefit year from 80 to 100; (3) increase in the daily benefit amount for employees with base-year wages of $1,000 or over; (4) shortening of the waiting period from one half-month with at least 8 days of unemployment, to the first 7 days of unemployment in the first registration period; and (5) carry-over of unused benefit days, up to a maximum of 50 days, from one benefit year into the next.
The amendments adopted by Congress and approved by the President to go into effect on November 1, 1940, incorporated the first four of these changes. Failure to adopt the carry-over amendment, originally accepted by the Senate, will probably be of relatively small consequence in the fiscal year 1941 and as long as employment conditions in the industry are as favorable as they are at present. But in the case of a decline in employment, other than of a seasonal nature, thousands of employees, particularly in the shops and m the train and engine service, would miss the additional benefit rights acciu-ing under the carry-over amendment. These employees under normal conditions draw few benefits or none; but in a year of depi ession they have considerably more than 20 weeks of unemployment, the maximum for which benefits are payable under the amended act. The provision of benefits for an additional period of 10 weeks under the carry-over amendment would have contributed significantly to t e adequacy of the system at a cost which can be fully sustained by the present 3-percent tax rate on the defined pay roll.
Dual coverage—In the amendatory legislation, Congress sought tQ
8 • Annual Report of the Railroad Retirement Board
remedy the major difficulties and weaknesses uncovered during the first year of operation of the unemployment insurance system. Some problems, however, are still unsolved.
One such problem relates to unemployment benefits for employees who fail to earn the required minimum of $150 in the base year. If the total annual income of such persons from all wages or salaries was below $150, the subject might be dismissed as falling outside the scope of social insurance. Persons of this type might be assumed to have so casual a connection with the labor market that assistance to them in periods of unemployment could be more effectively administered as public relief than as an insurance benefit earned by previous employment. This approach, however, is applicable only to a portion of the group whose creditable railroad compensation is less than $150 for the year. Studies carried out for 1937 showed that no less than 37 percent of this group also earned wages outside the railroad industry in employments covered by the old-age titles of the Social Security Act. Since the Social Security provisions do not extend to all employments outside of the railroad industry, it is not unlikely that, in the course of a year, one-half or more of the group with annual railroad wages below $150 earn wages and salaries from other employment as well. It cannot be assumed that these employees, who in 1937 numbered more than 200,000, had only a casual attachment to the labor market. It is casual only from the standpoint of the railroad industry, and their exclusion from benefits is due entirely to the existence of two separate systems of unemployment insurance—one for the railroads and another including most other employers.
The problem arising from the denial or reduction of benefit rights as a result of the splitting of wage credits is not confined to the group discussed above, nor is it peculiar to railroad unemployment insurance. A similar difficulty was mentioned above in connection with retirement benefits. In the field occupied by the general Federal-State system of unemployment insurance, workers who earn wages in more than one State often fail to qualify for benefits in one or more of the States.
A possible solution of this problem, as it bears on railroad unemployment insurance, lies in reciprocal agreements with State agencies to enable the States to pay benefits on the basis of combined wage credits, subject to equitable reimbursement by the Board. Because of the large number of jurisdictions involved and for other reasons, it is doubtful, however, whether rapid progress can be attained by this method.
Fluctuations in work load.—Another problem which has been only partly solved by the amendatory act of 1940 results from the large
Introduction • 9
fluctuations in the claim load, and hence in the work load of the staff administering unemployment insurance. In some of the regional offices the difference between peak and slack periods is enormous. In the Seattle office, for example, the lowest number of claims received in a week was 351 (week ended September 29, 1939) and the highest number was 2,824 (week ended March 8, 1940), or 8 times as large; the average for the year was only a little over 1,000 a week. In the Minneapolis office, with an average weekly claim load for the year of a little less than 2,000, the receipts in the highest week (ended March 8, 1940) amounted to 4,760 claims, as against a low of 541 claims in the week ended September 15, 1939.
In order to avoid unjustifiably high administrative cost, the personnel requirements of the regional offices in the fiscal year 1940 were estimated with a view to expeditious handling of average rather than peak loads. When the number of claims received was low, more of the attention of the staff could be devoted to such retirement work as assisting annuity claimants to prepare their applications and supply the necessary supporting documents. When the number of claims received was high, overtime work was necessary. Additional employees were also detailed temporarily from other regional offices, where the work load was not so heavy, or from the Washington headquarters. The amendatory act of 1940 gives the Board greater freedom in making such temporary details than was previously possible under existing civil service laws and regulations.
But these devices are of limited value. The fluctuations in the claim load are to some extent concurrent in all regional offices. For the country as a whole, the average weekly number of claims in the fiscal year 1940 was about 27,700, but in low weeks the total was less than 17,500 and in the high weeks it exceeded 38,000. Under these circumstances, the relief afforded by temporary detail of employees amounts to little more than the spreading of overtime work evenly among all the regional offices. Nor is the use of retirement work as a filler entirely satisfactory. Indeed, there is reason to believe that, under certain conditions, the retirement functions of the regional offices will aggravate rather than relieve the strain; in times of cyclical declines in employment it may be expected that an increased retirement rate will coincide with a pronounced rise in the number of unemployment insurance claims.
Employment service.—At the end of the fiscal year 1940 and in the months following, steps were taken to organize an employment service. Previously the Board had operated only an experimental placement office in the metropolitan area of Chicago. A regulation effective October 1, 1940, requires each employee applying for the
10 • Annual Report of the Railroad Retirement Board
first time for benefits to fill out a questionnaire, detailing his occupational experience and training and indicating his availability for placement with employers other than his last railroad employer. Beginning in October, a small employment service staff was attached to each of the regional offices. This personnel, assisted by the regular staff of the regional offices, maintains occupational files of persons available for employment, solicits orders from railroad employers as well as from employers outside the industry, and refers for placement the persons best qualified for the job. The employment service is to make referrals in a manner consistent with existing collective agreements and other established practices bearing on the hiring and furloughing of employees. The work of the employment service will also furnish a check on the genuine availability for employment of persons currently claiming benefits under the act.
Coverage Under the Acts
Considerable progress has been made in defining more precisely the companies, individuals, and compensation covered by the Railroad Retirement and Railroad Unemployment Insurance Acts. One problem was raised by the existence of Mexican legislation which made it impossible for employers under the act to deduct taxes under the Carriers Taxing Act from the compensation paid in Mexico to Mexican employees. Congress met this problem by excluding from taxation under the Carriers Taxing Act, and from employee status under the Railroad Retirement Act, individuals who are not citizens or residents of the United States and who work in a foreign country for a covered employer, when the laws of that country require the employer to hire citizens or residents of that country. The scope of the Railroad Unemployment Insurance Act was similarly narrowed by an amendment adopted in June 1939.
Administrative difficulties raised by compensation paid by local lodges to their officers were met by provisions excluding all such compensation from the determination of benefits and contributions under the Railroad Unemployment Insurance Act. At the same time it was provided that compensation of less than $3.00 in any month from a local lodge be eliminated from the definition of employee service under the Railroad Retirement Act and the Carriers Taxing Act, unless such compensation was earned before April 1, 1940, and taxes were paid on it under the Carriers Taxing Act before July 1, 1940.
The major problem of coverage continues to be the interpretation of the provision designating as employers “companies owned or controlled” by one or more carrier employers and performing a service in connection with transportation. Since the last annual report,
Introduction • 11
Congressional legislation has specifically excluded from coverage the coal-mining operations of coal companies owned or controlled by carriers and the directly operated coal-mining departments. The Board recommended this legislation on the ground that, while such operations could not be excluded from coverage under the present wording of the act, they belonged with other coal mines from the standpoint of social insurance and labor legislation.
The Board sought during the fiscal year to define more clearly the meaning of the provision which includes as compensation creditable under the act “payment for time lost as an employee.” In the Board’s opinion, the regulations governing this provision were too restrictive in several respects. Modifications were proposed and hearings held on the proposals. At the hearings, both labor and employer associations agreed that the matter could most effectively be handled by clarifying legislation. Employer associations proposed a method of handling the problem which was satisfactory in principle to the Board. These associations and labor organizations set up a committee to work out a draft of the legislation, and this committee is now working on the question. , , m .
Military Service and Benefit Rights
Passage of the Selective Service and Training Act has created another problem as to both unemployment and retirement insurance. Railroad employees who are drafted or who volunteer for service m the armed forces will lose most or all of the wage credits on the basis of which benefits would be payable to them when unemployed. Upon their discharge from the armed forces, these employees will presumably try to return to railroad service. Even if they should find such jobs, however, they would be likely to incur some unemployment during the first year of resumption of normal activity; but without special legislation, they would not be entitled to benefits.
They could be protected by the freezing of benefit rights for the period of military service. Another alternative is to provide a system of unemployment allowances payable in the first year following the period of military service. This system would protect all draftees and volunteers regardless of their status befoie enteiing the army, it would be all-inclusive and simple to administer, and for these reasons alone would appear to be preferable. From the standpoint of a social-insurance agency, a national unemployment allowance system has the additional advantage of divorcing payments based on emergency military service from payments the right to whic is acquired in regular employment.
No such simple solution is available for the problem of draftees in the field of retirement. An employee volunteering or drafted for
12 • Annual Report of the Railroad Retirement Board
military service will lose at least one year of his working life during which he might have accumulated rights toward a retirement annuity. Since retirement benefits are based upon employment and wage credits accumulated during a lifetime, it is impossible to establish a separate system of supplementary retirement benefits based upon a comparatively short period of service for the Government. The only available alternative is to credit military service as if it were service with employers covered by the retirement act. The increase in retirement annuities attributable to such credits would represent an additional cost not contemplated in the original legislation. It is properly a cost chargeable to the defense program, and the railroad retirement system would have to be reimbursed from the general funds of the Treasury.
Consideration of the protection of annuity rights of employees called to military service in the present emergency raised again the question of granting similar credits toward annuities for individuals whose railroad service was interrupted by military service during the World War, the Spanish-American War, and other war-service periods prior to January 1, 1937. The Board had in the past opposed such proposals because they placed the additional cost upon the railroad industry. Furthermore, under the proposals, the grant of credit for military service was made to depend upon the existence of an employment relation at the time military service began, a requirement which considerably complicated the administration of the provision.
At the request of the President, the Board in September 1940 drew up proposed legislation to protect both the annuity and unemployment insurance rights of individuals drafted under the Selective Service Act. At the same time, the Board recommended to Congress legislation which would grant credit for military service in warservice periods prior to January 1, 1937, to employees otherwise entitled to prior service credit under the act. It was recommended that the cost of the provision be borne by the Federal Government, and that the granting of credit depend upon active service within a specified period prior to the beginning of the military service, rather than upon the existence of an employment relation.
At the time of the preparation of this report, legislation protecting the annuity and unemployment insurance rights of employees called to service in the present emergency had not yet been enacted. But legislation providing credit for military service prior to 1937, along the lines recommended by the Board, was included by Congress in the Second Revenue Act of 1940. The provisions of this legislation are described in chapter XII.
RAILROAD UNEMPLOYMENT INSURANCE OPERATIONS
THE Railroad Unemployment Insurance Act provides that the Board shall collect contributions from employers and certify unemployment benefits to employees.1 The definitions of employer, employee, and creditable compensation in this act are the same as in the Railroad Retirement Act of 1937. Benefits to unemployed railroad workers are payable for every day of unemployment in excess of 7 in a period of 15 consecutive days or half-month, up to a maximum of 80 days of benefit in the course of a year. The daily benefit amount varies from $1.75 for employees whose credited compensation in a preceding calendar year was from $150 to $199.99, to $3 for workers with compensation of $1,300 or over. Within this range, the daily benefit amount is increased by 25 cents for each increase of $275 in credited compensation. To be qualified for benefits an employee must have had at least $150 in credited compensation in a preceding calendar year and served a waiting period within 6 months of the first half-month for which benefits are payable to him.
Benefits are paid from moneys deposited in the railroad unemployment insurance account in the unemployment trust fund kept by the Treasury. The deposits to the account come mainly from two sources. The continuing source consists of contributions from employers and employee representatives at the rate of 3 percent of the pay roll, the excess over $300 in the earnings of any employee or employee representative is disregarded. Ninety percent of the contributions are deposited to the account and the remainder to the railroad unemployment insurance administration fund in the Treasury, the money in which is permanently appropriated to cover the cost of administration. The second source of deposits to the account, important in the initial stages, consists of transfers from State unemployment compensation agencies of amounts proportional to the collections made by them from employers subject to the act, after deduction of unemployment benefits paid to employees under the act for 1937, 1938, and the first half of 1939. *
An outline summary of the act as passed in 1937 is given in ch. II and appendix A of the annual report for 1938. The amendments adopted in 1939, before operations began, are described in pp. 12-16 of the annual report for 1939. The act was again amended in October 1940; for a discussion of the 1940 amendments see ch. IV.
276117—41---2
13
14 • An nual Report of the Railroad Retirement Board
The act became effective in regard to both benefits and contributions on July 1, 1939. The fiscal year 1940 was therefore the first year of actual operations under the act. During that year, benefits were payable for unemployment occurring on or after July 1, 1939, to employees who qualified for benefits on the basis of compensation credited for 1938 and of a waiting period served after June 15, 1939. Contributions were payable by employers and employee representatives on pay rolls for the period beginning July 1, 1939.
Employment and Unemployment in 1939-40
Changes in employment.—During the fiscal year under review, employment conditions in the railroad industry were favorable. The midmonth figures for employees on class I railroads, who account for 85 percent of the total coverage of the act, show that employment was definitely on the upgrade, despite month-to-month fluctuation (see table 1). Throughout the period it was definitely above the average for 1938, and in the course of the year it rose by approximately 45,000. The increase from June 1939 to June 1940 was about 42,000, and from July 1939 to July 1940, about 49,000.
TABLE 1.—Number of employees of class I railroads at middle of the month by selected occupational groups, June 1939-July 1940
[In thousands]
Maintenance of way and structures Other than maintenance of way and structures
Month Total Total Maintenance of equipment and stores Train and engine service All other
Average, 1938. 939.5 186.9 752.6 239.8 202.7 310.1
1939 June July August September October. November December 191ft January February March April May June July 993.5 1,002. 5 1,005.1 1,020.8 1,055.8 1,038.8 1,008.9 989.2 994.9 986.8 985.0 1,012.8 1,036. 0 1,051. 2 223.7 226.1 225.9 224.2 224.2 204.0 183.3 173.1 179.6 178.6 189.5 214.1 229.1 234.6 769.8 776.4 779.2 796.6 831.6 834.8 825.6 816.1 815.3 808.2 795.5 798.7 806.9 816.6 256.3 257.6 258.5 266.5 287.4 290.6 286.0 280.9 278.5 276.2 270.4 271.1 275.9 281.0 203.1 205.7 207.3 214.3 225.0 226.6 222.1 220.9 222.8 217.5 212.5 214.2 213.6 216.8 310.4 313.1 313.4 315.8 319.2 317.6 317.5 314.3 314.0 314.5 312.6 313.4 317.4 318.8
Source: Wage Statistics of Class I Steam Railways, published monthly by the Interstate Commerce Commission.
The changes in the monthly totals shown in table I are due in part to seasonal fluctuation in maintenance of way and structures. Em-
Unemployment Insurance Operations • 15 ployment in this group is normally high during the summer and fall and begins to decline in October, reaching a low point m January or February. The level of employment in this department, however, was higher in the fiscal year 1940 than in the preceding year, the number of employees in June 1940, for example, totaling 229,100 as compared to 223,700 in June 1939.
Monthly changes in employment other than maintenance of way and structures are traceable to a somewhat more than seasonal rise in train and engine service employment from September 1939 through March 1940, and a rapid growth in employment m the shops, which reached a peak in November 1939. The fluctuations in the train and engine service reflect the changes in revenue carloadings, which were unusually high in the last quarter of 1939; throughout the first half of 1940, they were above the level of the corresponding months in 1939. The increase in shop employment was due to the large equipmentrepair and building program inaugurated by the carriers in the fall of 1939. For both these groups, employment at the end of the fiscal year was appreciably higher than at the beginning, the net gain being over 20,000 for the shops and about 10,000 for train and engine crews. . .
As will be shown later, these changes in employment are mainly responsible for the fluctuation in the number of unemployed workers eligible for benefits who registered as unemployed under the act. It should be noted, however, that unemployment as reflected m the statistics of the Board’s operations is confined almost entirely to employees who earned at least $150 in creditable compensation m 1938, and who were able and willing to accept suitable employment. A reduction in railroad employment which affects persons who lack qualifying earnings in the base year, as is true to some extent of the seasonal decreases in employment in maintenance of way and structures, does not increase the amount of unemployment registered with the Board. Likewise, the Board’s figures on unemployment are reduced by the fact that not all employees furloughed or separated from railroad employment register with the Board. Those who find employment outside the railroad industry, or who fail to register for other reasons, such as disabling illness, death, retirement, and vaca tions, are not counted in the Board’s statistics.
The number of registrants is also reduced by a lack of knowledge about the act. Despite the efforts made by the Board and the cooperation of labor organizations and carriers, there is no doubt that not all the employees who were qualified had registered during the first week of operation. Furthermore, many employees who expect to remain unemployed for only a few days do not registei, since
16 • Annual Report of the Railroad Retirement Board
CHART II.—Employment and unemployment in the railroad industry, monthly, fiscal year 1939-40
EMPLOYED (THOUSANDS)_ (THOUSANDS)
° 1,070
I00
90
80
70
60
50
40
30
20
I 0
1,060
1,050
1,040
1,030
1,020
l,01 0
1,000
990
980
IO
^UNEMPLOYED RECEIVING BENEFITS
PERSONS FILING CLAIMS
’■EMPLOYEES OF CLASS I RAILROADS
0“-------1----------------------------------------------------------------Lo
JULY AUG. SEPT. OCT NOV. DEC. JAN. FEB MAR APR MAY JUNE
I939 I940
Unemployment Insurance Operations • 17
no benefits are payable nor waiting-period credit given for less than 8 days of unemployment in a 15-day period. Finally, the Board’s figures on unemployment do not include employees who have drawn the maximum amount of benefits to which they are entitled in a benefit year and therefore do not register. This condition affects the count of unemployed in the second half of the year.
Number oj unemployed workers.—In the statistics of the Board’s operations, unemployment among eligible workers is represented by two series: the count of applications and the count of claims. An application for a certificate of benefit rights is made by an employee on the first day he becomes unemployed. On the basis of the application and supplementary records, a determination of the employee’s benefit rights is made which is generally valid for one year. Therefore, an employee who submitted an application at any time in the fiscal year 1940 would not need to file another application during that year. The number of applications received in a particular month is substantially equal to the number of eligible unemployed who registered for the first time during that month. The cumulative number of applications for the year approximates the total number of eligible unemployed who registered at any time during the year.
A claim or, more accurately, a registration and claim form generally covers a period of 15 consecutive days beginning with a day of unemployment and including from 1 to 15 such days. Since 2 claims may be received from one individual in a single month, and 24 claims in the course of 1 year, the total number of claims for the year far exceeds the number of qualified workers who experienced some unemployment. The number of qualified workers unemployed at any one time is approximated only by the number of claims received during a period of 15 consecutive days. The exaggeration in this figure, due to the filing of more than one claim by employees who transfer in the middle of a 15-day period from one claims agent to another, is slight. The count thus obtained is of workers who had 1 or more days of unemployment in the half-month immediately preceding the 15-day receipt period.
During the fiscal year 1940, the regional offices of the Board received nearly 211,000 applications for certificate of benefit rights (see table 2). Of these, less than 7,000 were received from workers held to be ineligible because their credited compensation in 1938 was below $150. The average weekly rate at which applications were received was very high in July, because applications at that time were received not only from workers who had just become unemployed but also from those who were already unemployed at the time operations under the act were first begun. This statement is supported
18 • An nual Report of the Railroad Retirement Board
by the following figures on the number of applications received during each week of that period:
Week ended:
July 1-------------------------------------------- 27, 848
July 8-------------------------------------------- 25, 013
July 15------------------------------------------- 10, 892
July 22-------------------------------------------- 7, 539
6-day period ended July 28____________________________ 5, 978
Week ended Aug. 4_____________________________________ 5; 899
It is probable that the filing of applications by the unemployed in this category continued also through most of August. A low weekly rate of application receipts was established in September and maintained in the following month. The rate, however, was nearly doubled in November, increased further in December, and continued relatively high through January. In these months, employment in the maintenance of way and structures dropped from the seasonal peak to the seasonal low; employment in the shops was also reduced from the relatively high level reached in November; and employment in other departments of service decreased by nearly 10,000. After January, the rate of application receipts declined fairly steadily to the end of the year, indicating that current unemployment among eligible workers was concentrated in those groups that had previously experienced some unemployment. A slight spurt in the rate of application receipts is shown, however, for April; following the high level reached in November, employment in the shops and among the train and engine crews in this month dropped to the lowest point.
TABLE 2.—Applications for certificate of benefit rights and unemployment insurance claims received, fiscal year 1939-40
Period Applications received Claims received
Total number Weekly average Total number Average for 15-day period
Total, July 1939-June 1940 ... ... . 210,823 3, 904 i 1,441,213 59,391
Period ended Aug. 4, 1939. ..
83,169 15, 444 9,828 8,892 21,265 21,136 18,899 9,117 6,410 8,167 6,237 2,259 11,881 3,861 2,457 2,223 4,253 5, 284 3,780 2,279 1, 603 2,042 1,247 564 129,859 105, 502 111, 843 84, 892 102,059 113, 786 181, 785 137, 954 140,326 125,366 124,214 1 83,627 55, 654 56,519 59,916 45,478 43, 740 60,957 77 908 73,904 75,175 67,160 53,235 44,800
Aug. 5-Sept. 1 ...
Sept. 2-Sept. 29. . ... ___ .
Sept. 30~Oct. 27 . ... .
Oct. 28-Dec. 1
Dec. 2-Dec. 29 ...
Dec. 30. 1939-Feb. 2, 1940
Feb. 3-Mar. 1 ... ...
Mar. 2-Mar. 29 . ... ... ... ... _
Mar. 30-Apr. 26
Apr. 27-May 31..
Junel-June29 ...... ... . .
1 Excludes claims received on June 29, the last working day in the fiscal year.
The number of claims submitted by the 211,000 applicants during the fiscal year exceeded 1,441,000. About 1,437,000 of the claims
Unemployment Insurance Operations • 19
were filed by workers eligible for benefits on the basis of their 1938 compensation. The rate at which claims were received, calculated so as to approximate the number of unemployed workers, shows that on the average through the year, the number of eligible unemployed was nearly 59,400.
At the beginning of operations, the number of unemployed apparently increased from 55,700 in July to 59,900 by the middle of September. It is probable that in July claims were filed mainly by workers who had been unemployed before operations began; to this number there were gradually added several thousand persons who had become unemployed subsequently. From the middle of September to the middle of November, the claim load declined by about 27 percent, reflecting the rise in employment between August and October.
The apparent lag in the movement of the claim load, as compared with changes in employment, particularly in September and to some extent also in November, is due to the fact that a claim for a 15-day period may include registrations with respect to a varying number of days of unemployment. As will be shown later, the changes in the number of days of unemployment per claim reflect more quickly the changes in unemployment. It should be noted also that in November the reduction in employment occurred mainly in maintenance of way, while employment in the shops and in the train and engine service was still rising. Reduction in maintenance of way employment may not be immediately reflected in the statistics of unemployment for eligible workers, since a large proportion of the track laborers laid off earliest probably lack qualifying base-year wages.
From the low point reached in November, the claim load rapidly rose to a level of 77,900 in January, which was substantially maintained in February and March; this increase reflected the decline in employment which occurred during the period. In the last 3 months of the fiscal year, the number of eligible unemployed who continued filing claims, rapidly declined to a level which was nearly as low as in November 1939. The decrease was due mainly to the rise in employment in the industry. A contributing factor was the gradual increase in the number of employees who were shifted from the category of eligibles to that of ineligibles because they had drawn the maximum amount of benefits to which they were entitled for the year. The number of such cases exceeded 29,000 by the end of the fiscal year.
Number of days of unemployment.—A complete measure of unemployment among eligible workers must take cognizance not only of the number of claims, but also of the number of days of unemployment in the half-months for which the claims were filed. As may be seen from table 3, the changes in the number of days of unemployment in
20 • Annual Report of the Railroad Retirement Board
the half-month were generally in the same direction as the changes in the number of claims. In the months when the claim load increased, the proportion of claims with 15 days of unemployment also rose. Conversely, a decrease in the claim load was accompanied by a decrease in the proportion of claims for total unemployment in the 15-day period. Exceptions are found to this statement only in September and November, when the changes in the distribution of claims by the amount of unemployment anticipated the changes in the claim load shown for the following month. It is evident, therefore, that an analysis of claims by the amount of unemployment confirms the general description of the monthly changes in unemployment based on fluctuations in the claim load.
TABLE 3.—Percent of processed claims with 1-7, 8-14, and 15 days of unemployment, fiscal year 1939-40 1
Period Claims with 1-7 days of unemployment Claims with 8-14 days of unemployment Claims with 15 days of unemployment
Period ended Aug. 4, 1939 _ _ _ _ 18.3 35.5 46.2
Aug. 5-Sept. 1 ... 18.2 34.2 47.6
Sept. 2-Sept. 29 19.2 35. 6 45.2
Sept. 30-Oct. 27. 22.0 32.4 45.6
Oct. 28-Dec. 1 15.1 31.2 53.7
Dec. 2-Dec. 29 13.0 30.0 57.0
Dec. 30, 1939-Feb. 2, 1940 12.9 30.7 56.4
Feb. 3-Mar. 1 . . ... . . 12. 6 30.0 57.4
Mar. 2-Mar. 29 .. 11.0 32.6 56.4
Mar. 30-Apr. 26 . 13.3 34.8 51.9
Apr. 27-May 31 16.4 38.6 45.0
June 1-June 29 17.5 42.2 40.3
1 Excludes claims submitted by ineligible employees and claims for half-months in which 1 or more days of unemployment were disqualified under sec. 4 of the act
Table 3 also shows that the proportion of claims with less than 8 days of unemployment was relatively small, ranging from 11 to 22 percent. In actual fact, the number of half-months with a small number of days of unemployment was probably much larger than these figures would indicate. It is not unlikely that the statistics are affected by underregistration, which is entirely natural because a claim for less than 8 days is of no practical effect. The existence of underregistration has been shown by sample counts which indicate that the number of claims with 7 days of unemployment, while substantially the same as that of claims with 1 or more days up to 7, is less than half of the number with 8 days of unemployment. The latter in its turn is substantially the same as the number of claims with 8 or more, up to and including 12 days of unemployment.
Beneficiaries and Benefit Payments
Number of beneficiaries and amount of benefits.—A total of about 204,000 individual employees were held eligible for benefits subject
Unemployment Insurance Operations • 21
to fulfilment of the waiting-period requirement (see table 4). About 190,800 employees served the waiting period, and for 160,700 of these, 1 or more benefit payments were certified before the end of the fiscal year. About 2,100 employees were added after the close of the year to the roll of beneficiaries drawing benefits based on compensation credited for 1938; to most of the employees in this group, the first benefit payment was certified for a 15-day period which began in June and ended before July 15, 1940. For about 13,000 of the eligible unemployed, therefore, the amount of unemployment was so small, or distributed over 15-day periods in such a way, as to bar them from satisfying the waiting-period requirement of the law. About 28,000 other employees, unemployed long enough to have received waitingperiod credit, had not begun, before July 1, 1940, a half-month with 8 or more days of unemployment for which a benefit payment could be certified.
TABLE 4.—Number of applications held eligible, waiting-period credits certified, initial benefit payments and final benefit payments certified, fiscal year 1939-40
Period Applications held eligible Waitingperiod credits certified Initial benefit payments certified Final benefit payments certified
Total, July 1939-June 1940 Period ended Aug. 4,1939 Aug. 5-Sept. 1 Sept. 2-Sept. 29 Sept. 30-Oct. 27 „ Oct. 28-Dec. 1 Dec. 2-Dec. 29 Dec. 30, 1939-Feb. 2, 1940 Feb. 3-Mar. 1 Mar. 2-Mar. 29 Mar. 30-Apr. 26 Apr. 27-May 31 June 1-June 29 204,017 > 190,802 160, 735 29, 298
78,467 16, 720 9,862 9,065 20,052 20,189 18,355 8,791 6,429 8,131 5, 914 2,042 51,887 21,537 14,938 8,243 13,795 19,857 22,580 9,660 8,519 6,612 8,797 i 4,377 22,813 23,548 18,456 7,842 9,246 14, 865 24,054 12,492 9,069 5,808 7,896 4,646 610 2,755 4,283 3,091 3,657 5,070 5,897 3,940
i Number of waiting-period credits certified on June 29, the last working day of the fiscal year, not available.
The total amount of benefits certified during the fiscal year to the 160,700 beneficiaries was about $14,811,000, or a little over $92 per claimant. However, the average payment thus calculated is not particularly significant, for included among the beneficiaries were more than 29,000 persons who received the maximum to which they were entitled for 1 year, varying from $140 to $240. It is estimated that the average benefit per person in this group was about $177, while for the other beneficiaries whose unemployment was of shorter duration, the payment for the year averaged about $73.
Changes in number of new beneficiaries.—Certification of applicants benefit eligibility, of claimants’ waiting-period credit, and of first benefits followed closely upon the receipt of the applications and of
22 • Annual Report of the Railroad Retirement Board
CHART III.—Average weekly number of initial applications and of initial unemployment benefits certified, monthly, fiscal year 1939-40
THOUSANDS THOUSANDS
2 ——n—'———~n———————12
10
8
6
4
2
0-
JUL.Y AUG. SEPT. OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY JUNE
1939 1940
10
8
6
4
2
•0
APPLICATIONS HELD ELIGIBLE
, INITIAL BENEFITS CERTIFIED
Unemployment Insurance Operations • 23
the effective claims for the first and second half-months. For this reason, the monthly changes in the series shown in table 4 resemble the monthly fluctuations in the number of applications received. The number of applicants held eligible for benefits and of claimants to whom waiting-period credit was granted was very large in the first month of operation, and fairly high in August as well as in the period from November through January, declining thereafter to a very low point in June. The number of claimants for whom the first benefit payment was certified was lower in July than in August because the first 15-day period for which benefits could be certified was not completed until the middle of July. Beginning with September, the movement of first or initial benefit certifications parallels with a lag of one month the changes in the number of applicants held eligible.
Even the changes in the number of beneficiaries who drew the maximum for the year, although relatively small, have a distinct regularity. In November, only 600 such cases were found because the earliest half-month for which the final payment for the year could be made was completed on November 27. Employees for whom a final benefit certification was made for this half-month were unemployed continuously from June 16 to November 27. Thereafter, the number of cases for which a final benefit payment was certified fluctuated from month to month within the range of 2,800 to 4,300, except for April and May when it was unusually high. The number of initial benefit certifications made in the period from December through February was also higher than in the months immediately preceding or immediately following. Since the act allows benefits for a maximum of 10 periods with 15 days of unemployment, the 15-day period for which a final certification is made can occur not earlier than 4J-2 months after the 15-day period for which the initial certification is made. Therefore, employees who received their first benefit payment for a half-month ended in December or January, and who remained continuously unemployed thereafter, would have received their final benefit payment for a half-month ended in April or May.
Number oj benefit certifications—The 160,700 beneficiaries had a total of nearly 1,000,700 half-monthly periods for which benefit payments were certified for them (see table 5). Except in the first 2 months when a large number of claims for 15-day periods with 8 or more days of unemployment was certified for waiting-period credit rather than for benefits, the monthly changes in the number of benefit certifications followed closely the fluctuations in the number of claims received. The average number of benefit certifications was fairly high in September and dropped in October and November as claims receipts declined. The number of benefit certifications
24 • Annual Report of the Railroad Retirement Board
increased in December, and for the first 3 months in 1940, fluctuated within the range of 57,400 to 61,800 per 15-day period. A decline in the rate of benefit certifications occurred in April and continued through the remaining 2 months, paralleling the movement in claims receipts.
TABLE 5.—Number and amount of unemployment insurance benefit payments certified, fiscal year 1939-40
Period Number Amount
Total Average per 15-day period Total Average per certification
Total, July 1939-June 1940 1, 000, 684 42, 764 $14,811, 065 $14.80
Period ended Aug. 4, 1939 26,174 63, 695 86,946 62, 630 70,875 75,130 134,015 111, 800 115,333 100, 687 91, 546 18, 695 34,122 46,578 33, 552 30,375 40,248 57,435 59,893 61, 786 53,939 39,234 31, 993 386,910 952, 692 1,269,397 933, 207 1,087,329 1,137, 973 2,016,070 1,690, 429 1, 714,152 1,471,226 1, 293, 767 857,913 14.74 14.98 14.60 14.90 15.34 15.15 15.04 15.12 14.86 14.61 14.13 13.87
Aug. 5-Sept. 1 _ _
Sept. 2-Sept. 29
Sept. 30-Oet. 27..
Oct. 28-Dec. 1
Dec. 2-Dec. 29._
Dec. 30, 1939-Feb. 2, 1940
Feb. 3-Mar. 1
Mar. 2-Mar. 29
Mar. 30-Apr. 26
Apr. 27-May 31
June 1-June 29 ... 61i 853
It will be noted that the number of benefit payments certified in December was lower and in March higher than might have been expected on the basis of claims receipts. In the first half of December, many of the workers who had become unemployed in November were still serving the waiting period required by the law; on the other hand, in March a much larger proportion of claims with 8 or more days of unemployment was certified for benefits.
Average benefit amounts.—The average for the year of the benefit amount per certification was $14.80. In the period from November through February, the average was above $15, and in the remaining months it fluctuated between $14 and $15, except in June when the average was below $14. The amount of benefit payment in a certification is the product of the daily benefit rate and the number of days of unemployment in excess of 7 in the half-month to which the certification applies. The benefit payment certified for 1 half-month may be as low as $1.75 (the lowest daily benefit for 1 day of unemployment) and as high as $24, for 8 days of unemployment at the rate of $3 per day. The changes from month to month in the average benefit payment per certification are therefore traceable to changes in the average daily benefit rate and in the average number of benefit days per half-month.
An analysis of a sample of benefit certifications (see table 6) shows
Unemployment Insurance Operations • 25
that, while the average daily benefit rate for all certifications during the year was $2.26, it was as low as $2.22 in some months and as high as $2.32 in others. Likewise, the average number of benefit days per half-month fluctuated from about 6.1 days to a little over 6.8 days, with the figure for the year approximating 6.6 days in the average certification. This analysis also shows that an important distinction must be drawn between certifications for a half-month of total unemployment, that is, a half-month with 15 days of unemployment of which 8 are benefit days, and other certifications. Although on the average, and for most months, the daily benefit rate in certifications for total unemployment was slightly lower than in other certifications, the benefit payment in certifications for total unemployment was from 73 to 95 percent higher than in other certifications. Taking the year as a whole, the average benefit payment per certification was $18 for the first group, and about $10 for the second group.
TABLE 6.—Average benefit payment, average daily benefit amount, and average number of benefit days for unemployment insurance
benefit certifications, fiscal year 1939-40 1
Period All certifications Certifications with 8 benefit days Certifications with 1-7 benefit days
Average benefit payment Average daily benefit Average number of benefit days Percent of total certifications Average benefit payment Average daily benefit Average benefit payment Average daily benefit Average number of benefit days
July 1939-June 1940... $14.80 $2.26 6.58 60.4 $18.00 $2.25 $10.01 $2.27 4.41
Period ended Aug. 4, 1939. 14.74 2.32 6. 36 56.6 18.51 2.31 9.81 2. 33 4. 21
Aug. 5-Sept. 1 14.98 2.31 6. 48 58.2 18.51 2. 31 10.05 2. 30 4.37
Sept. 2-Sept. 29 ... 14. 60 2. 31 6. 30 55.9 18. 51 2. 31 9. 50 2.30 4.13
Sept. 30-Oct. 27 14.90 2. 29 6.48 58.5 18. 31 2.29 9. 90 2.28 4.34
Oct. 28-Dee. 1 15. 34 2.26 6. 72 63.2 18.15 2.27 10.15 2.25 4. 51
Dec. 2-Dec. 29. _ . 15.15 2. 22 6.82 65.5 17.76 2.22 10.26 2.24 4. 58
Dec. 30,1939-Feb. 2, 1940... 15.04 2. 22 6.80 64.8 17.76 2. 22 10.26 2. 24 4. 58
Feb. 3-Mar. 1 15.12 2.22 6. 84 65.7 17.76 2. 22 10. 35 2. 25 4.60
Mar. 2-Mar. 29 14.86 2. 22 6. 71 63.4 17.68 2. 21 10.10 2.26 4.47
Mar. 30-Apr. 26 14.61 2.23 6. 59 59.9 17. 76 2.22 10.10 2. 26 4.47
Apr. 27-May 31 14.13 2.28 6.28 53.8 18.16 2. 27 9. 78 2.29 4. 27
June 1-June 29 13.87 2.32 6.05 48.7 18.56 2.32 9. 79 2.33 4.20
1 All data except average benefit payment for all certifications are based on 20-percent sample of benefit certifications.
The monthly changes in the average daily benefit rate and in the average number of benefit days appear to be interrelated. In July through October, the average daily benefit rate was fairly high, ranging from $2.29 to $2.32, and the average number of benefit days was relatively low. In this period, the beneficiaries apparently included a somewhat larger proportion of employees with higher baseyear wages; also, for more than 40 percent of the beneficiaries, unemployment in the half-month was less than 15 days, averaging about 11.3 days. In November, there was a drop in the average
26 • Annual Report of the Railroad Retirement Board
daily benefit rate and an increase in the average number of benefit days. The latter was traceable almost entirely to an increase in the proportion of certifications for total unemployment to 63 percent, as compared with 58 percent in the preceding month. These changes reflect the addition to the beneficiaries of a group with low base-year wages whose unemployment is continuous in character. The proportion that this group constituted of total beneficiaries was further increased in December and remained high in the first 3 months of 1940, when the average daily benefit rate was relatively low and the average number of benefit days per certification was fairly high. A return to the conditions characteristic of the initial period of operation began in April and continued through May and June. In the last month of the fiscal year, the average daily benefit was the same as in the first month, but the average number of benefit days was distinctly lower, reflecting the reduction in unemployment in the industry between July 1939 and June 1940.
Changes in occupation ofi beneficiaries.—The inferences drawn from an examination of the monthly changes in daily benefit rates and number of benefit days are confirmed by an analysis of the changes in the occupational composition of the beneficiaries whose right to benefit was earned in the service of class I railroads (see table 7). For the year as a whole, this group included a little over 87 percent of all employees for whom one or more benefit payments were certified.
This analysis shows that in the first 3 months of the year, employees in the skilled crafts, with an average daily benefit rate of $2.41, constituted more than half of the total beneficiaries, while employees in the less skilled occupations, with an average daily benefit rate of $2.11, accounted for 26 to 31 percent of the total. A marked change occurred in October when the proportion of benefit recipients from the skilled crafts declined to less than 40 percent of the total, and the proportion of employees with lesser occupational skills increased to about 40 percent. In November, the decline in the proportion of skilled and the increase in the proportion of unskilled became even more marked. The effect of this movement on the average daily benefit rate for all beneficiaries was obscured in both October and November, however, by the inclusion among beneficaries of an appreciable number of other employees, comprising mainly the supervisory and clerical occupations, for whom the average daily benefit rate was nearly as high as for the skilled crafts.
In the months from December through March, the number of beneficiaries in the less skilled occupations was at least twice as great as the number in the skilled crafts. During this period, the extra gang and section men alone accounted for 43 to 49 percent of the total number
Unemployment Insurance Operations • 27
of beneficiaries among employees of class I railroads, while the train and engine service and the skilled shop crafts, together with their helpers and apprentices, constituted only 25 to 29 percent. The predominance of extra gang and section men, for whom unemployment tends to be continuous, resulted in an increase in the proportion of certifications for total unemployment and raised the average number of benefit days for all certifications.
TABLE 7.—Unemployment insurance benefit certifications for class I railroad employees, distributed by selected occupations of beneficiaries, fiscal year 1939-40
Percentage distribution
Month
1939
July------
August____
September. October___
November. December-
1940
January_____
February____
March_______
April_______
May_________
June________
Average daily benefit for the year___________
Total Skilled crafts Other manual workers All other employees
Total Maintenance of equipment and stores Train and engine service Helpers and apprentices (maintenance) Total Maintenance of way and structures Maintenance of equipment and stores Freight handlers
100.0 58.7 18.3 26.5 13.9 26.1 9.3 7.1 9.7 15.2
100.0 55.3 13.9 24.9 16.5 29.7 13.8 5.9 10.0 15.0
100.0 51.5 17.0 19.9 14.6 30.9 15.8 8.0 7.1 17.6
100.0 37.8 8.9 17.6 11.3 40.2 23.7 9.3 7.2 22.0
100.0 29.8 8.5 13.4 7.9 47.2 32.3 7.8 7.1 23.0
100.0 25.2 6.1 12.1 7.0 55.6 43.3 5.8 6.5 19.2
100.0 27.6 9.0 9.5 9.1 59.2 47.9 4.5 6.8 13.2
100.0 25.3 8.2 7.9 9.2 60.8 49.2 4.8 6.8 13.9
100.0 28.8 9.4 11.1 8.3 56.4 45.8 5.3 5.3 14.8
100.0 32.9 8.4 15.2 9.3 52.6 41.4 5.2 6.0 14.5
100.0 45.8 13.7 19.8 12.3 37.8 25.7 5.6 6.5 16.4
100.0 54.0 16.8 20.2 17.0 30.4 15.8 7.3 7.3 15.6
$2. 26 $2.41 $2.51 $2.37 $2.36 $2.11 $2.08 $2.25 $2.18 $2.37
Note.—This table is based on a sample tabulation of benefit certifications. The occupation assigned to the benefit certification is that in which the beneficiary last worked in his base year, viz, the calendar year 1938. The Interstate Commerce Commission occupational division numbers of the occupations in the groups distinguished in the table are as follows: maintenance of equipment and stores, skilled—Nos. 54-63 and 73; train and engine service—Nos. 111-128; helpers and apprentices (maintenance)—Nos. 34, 36, 37, 49, 64, 65, 66, and 74; maintenance of way and structures, other—Nos. 41-43; maintenance of equipment and stores, other—Nos. 67, 70, 71, and 72; freight handlers—Nos. 87 and 91-94.
In April, the relationship between the skilled and the unskilled began to reverse itself, with an increase in the weight of the former and a corresponding reduction in the weight of the latter. This movement became more pronounced in May, and in June the occupational composition of the beneficiaries was substantially the same as in July 1939. The change was due mainly to the seasonal reemployment in maintenance of way, but the relatively low level of employment in the train and engine service during these months, and the greater proportion among beneficiaries in the less skilled occupations
28 • Annual Report of the Railroad Retirement Board
of cases in which benefit rights had been exhausted also contributed to this change.
Operations by Region
Comparison of unemployment.—A summary of operations by regional offices, which were established by the Board in 1939 with a view to decentralizing the administration of the act, is presented in table 8.2 The amount of unemployment in the regions, and hence the work load carried by the regional offices, was roughly proportional to the number of covered employees in the territory included in the region. Thus, New York and Chicago, the regional offices with the largest volume of applications, claims, and benefit payments, served also the largest number of covered employees, accounting between them for about 36 percent of the total number of railroad workers in the country. Conversely, Boston and Seattle, the offices with the smallest work loads, were also lowest in number of covered employees included in their jurisdictions.
TABLE 8.—Applications forcertificate of benefit rights and claims received, waiting-period credits and benefit payments certified, by administrative regions, fiscal year 1939-40
Region Applications received Claims received3 Waitingperiod credits certified 3 Benefit payments certified Average per certification
Number Amount Payment Daily benefit4 Benefit days4
All regions 210, 823 1,441, 213 190,802 1,000,684 $14,811,065 $14.80 $2. 26 6.58
Boston i 8. 913 55, 567 7, 870 37 652 568 274 1 5 09 2 28 6 62
New York 40,705 253, 402 36, 498 164 051 2 326 217 14 18 2 28 6 27
Cleveland 22,719 146,498 21,139 lOo’ 338 1 429’ 210 14 29 2 20 6 43
Chicago.. _ 35,125 246, 005 32, 008 171’ 399 2’ 527’ 812 14 75 2 24 6 58
Richmond 6,512 39, 682 5, 640 27 425 ’ 418’ 046 15 24 2 96 6 7?
Atlanta 16, 283 117; 177 14, 547 82,130 1,194^ 517 A 54 2.22 6.58
Minneapolis 13, 294 103, 377 12, 589 77 727 1 165 231 14 69 2 90 6 84
Kansas City 24,265 177j 801 22, 030 127 444 1’936’ 562 ] 20 9 9A 6 74
Dallas 10, 844 87,935 9 891 61 ’ 085 872 149 14 28 9 9Q 6 28
Denver 12^ 150 87,402 11, 275 62’ 680 964* 667 Is* 39 2 29 6 77
Seattle. ... . 8, 314 52,132 7 241 37’ 549 574’ 735 1^ 31 2 25 6 79
San Francisco 11, 699 74; 235 10,074 51, 204 833^ 645 16 28 2.35 6.92
1 Functions of Boston office transferred to New York on June 18,1940.
3 Functions of Richmond office transferred to Atlanta, Cleveland, and New York on May 30,1940.
3 Counts of claims received and of waiting-period credits certified on June 29, the last working day of the fiscal year, are not available.
4 Based on a 20-percent sample of benefit certifications.
Some differences among the regions, however, probably reflect underlying variations in unemployment conditions. For example, it is likely that unemployment among qualified employees in the areas served by the New York, Cleveland, Chicago, Dallas, and San Francisco offices 3 (comprising large sectors of the Great Lakes, Central
3 A description of the division of the country by regions is found in pp. 20-23 of the annual report for 1939.
3 The Richmond office is disregarded because operations there were discontinued at the end of May.
Unemployment Insurance Operations • 29
Eastern, Central Western, and Southwestern regions as defined by the Interstate Commerce Commission) was somewhat lower than in the rest of the country. For these regions, the proportion of applications and, even more, of claims to the total for the country was lower than the proportions of covered employees. Likewise, the proportion of claims in these regions which contained registrations with respect to eight or more days of unemployment, and which were therefore certified either for waiting-period credit or for benefits, was lower than for the rest of the country. This is clearly related, at least for the Great Lakes and Central Eastern areas, to changes in employment over the year. According to midmonth statistics for class I railroads compiled by the Interstate Commerce Commission, the increase in employment between June 1939 and June 1940 was much greater in these areas than in the rest of the country. I or the Central Eastern area, the increase was 9.3 percent and for the Great Lakes, 6.6 percent, whereas for the rest of the country, the increase was below 2.1 percent.
Differences in average benefits.—The differences among regions in the average benefit payment per certification are related, of course, to differences in the average daily benefit rate and in the average number of benefit days. In the San Francisco region, where the average benefit payment per half-month is considerably higher than in any other region, both the average daily benefit rate and the average number of benefit days are highest. At the other end of the scale, the aveiage benefit payments in the New York, Dallas, and Cleveland regions were relatively low, in New York and Dallas because of the low avei age number of benefit days, and in Cleveland because of the low aveiage daily rate. The information so far available is insufficient to afford an explanation for these variations among regions; it is probable that in the final analysis they will be traced to regional differences in the seasonal patterns of unemployment and in the amount of base-year employment.
Substantially the same conditions would probably explain the distribution of the number of benefit certifications and the amount of benefits by State of residence of the beneficiary, where they differ from the distribution of employees covered by the act (see table 9). One other factor, however, would have to be considered in connection with the State figures. The occupational composition of covered employees is substantially the same in every administrative region of the Board because such regions include entire railroad divisions or railroads. The occupational composition of railroad employees is likely to vary a great deal more from one State to another, depending on the concentration of terminal facilities, shops, and division points. Since the
276117—41----3
30 • Annual Report oF the Railroad Retirement Board
incidence of unemployment and the benefit paid for unemployment vary markedly by occupational groups, the differences in occupational composition of employees by States would serve to explain, in large part, the State differences in the ratio of beneficiaries to total covered employees and in the average benefit payment per half-mouth.
TABLE 9.—Number and amount of benefit payments by State of residence of beneficiary, fiscal year 1939-40 1
State Number Amount State Number Amount
Total 1,000, 379 $14,806,879 Nebraska 25,667 2,568 2,473 17,152 5,195 80,952 8, 642 11,931 46,092 16, 671 9,672 78, 313 1,420 5, 232 6,183 15,781 46, 053 10,982 2, 606 12, 231 16,292 11, 678 26,131 8, 864 5,161 $381,162 41,408 33,403 253,395 82,581 1,213,433 140,105 176,364 669,405 261,855 150,700 1,020,065 22, 717 78,068 90,949 224,118 680,599 169,572 40,567 181,860 244,417 173,413 395,848 138,944 76,203
Alabama _ _
12, 666 2, 916 17,423 45, 256 23,360 4,022 3,081 1,723 19, 941 13,479 8,198 84,613 27,986 32,042 33,809 16, 601 15, 611 9,810 6,557 13,861 23,074 42, 657 9,848 45, 897 12,004 179,151 46, 816 269,271 735, 590 353,619 60,066 51,648 25,909 306, 563 198, 725 129,884 1,246,408 407,441 459, 582 503, 236 238,455 193,985 145,742 91, 789 213, 366 336, 707 640, 390 147,411 703,856 180,118 Nevada
New Hampshire
Arizona
New Jersey ...
Arkansas
New Mexico
California
New York
Colorado _
Connecticut..
North Carolina..
North Dakota
Delaware _ .
Ohio _
District of Columbia Florida
Oklahoma.. ...
Oregon ___
Georgia _____
Idaho
Pennsylvania
Rhode Island
Illinois
South Carolina.. ._
Indiana ._
South Dakota.. ...
Iowa
Tennessee
Kansas ._
Kentucky _
Texas
Utah...
Louisiana _
Vermont
Maine..
Virginia ..
Maryland .
Washington .
Massachusetts
Michigan ___ _ ...
West Virginia
Wisconsin.
Minnesota _
Wyoming
Mississippi. __ __
Outside continental United States
Missouri.,
Montana. ._ _
' ™On 2O'Percent sample of benefit certifications. Does not include 305 certifications for $4,186 made. du j 11116 .
Characteristics of Unemployment Insurance Beneficiaries
Compensation classes.—Some data, by no means complete, are available at the date of writing to indicate the characteristics of the beneficiaries and to measure the differences in unemployment among the various groups. Perhaps the most obvious distinction among beneficiaries is related to the amount of their credited compensation for the base year. This characteristic reflects in a measure the amount of unemployment which they experienced in 1938 and to some extent, therefore, probably influences the amount of unemployment incurred by them during the fiscal year 1940.
The distribution of beneficiaries by compensation classes, shown in table 10, is strikingly different from the distribution of total eligible employees. While nearly 57 percent of the qualified employees had base-year compensation of $1,300 or over, only 13 percent of the beneficiaries fell into this class. On the other hand, with about 21
Unemployment Insurance Operations • 31
percent of the eligible workers in the compensation groups of $150 to $749, these groups comprised no less than 62 percent of the beneficiaries. This means that the rate of unemployment among employees with low earnings in the base year is very much greater than among employees with higher base-year wages. In the classes with annual earnings of $150 to $199 and of $200 to $474, the proportion of employees who were unemployed long enough to have at least one benefit payment certified for them was between 39 and 43 percent. For the group with annua] earnings of $475 to $749 the rate of compensable unemployment was still high, amounting to 32 percent; however, much lower rates obtained for the next two compensation groups. For the highest compensation class, which includes large numbers of employees enjoying substantially full employment, the proportion of employees incurring compensable unemployment was less than 3 percent.
TABLE 10.—Unemployment insurance beneficiaries and benefit certifications distributed by base-year compensation classes, fiscal year 1939-40
Item Total Credited compensation for 1938
$150-$199 $200-$474 $475-$749 $750-$1,024 $1,025-$1,299 $1,300 and over
Number of eligible employees 1,284, 084 30,993 124, 579 112, 328 148,934 138, 401 728, 849
Number of beneficiaries Percent of beneficiaries to eligible 162, 704 12,146 53, 576 35, 258 24,951 16, 386 20, 387
employees Benefit certifications: 12.7 39.2 43.0 31.9 16.8 11.8 2.8
Average number per beneficiary.._ Average number of benefit days 6.4 7.3 7.2 6.4 5.7 5.4 5.2
per certification 6.6 6.8 6.7 6.5 6.3 6.1 6.5
Percent with 8 benefit days 60.1 64.3 63.0 58.9 56.4 54.0 59.1
Percent of exhaustions 19.0 27.8 24.7 17.0 13.4 12.2 14.3
Note.—All items except the number of eligible employees are calculated from a tabulation of a 20-percent sample of benefit certifications.
Duration oj unemployment.—The greater incidence of unemployment for the lower compensation classes is reflected also in the average duration of unemployment per beneficiary. Thus the average number of half-months for which benefits were certified is highest for the compensation group of $150 to $199, and is progressively lower for each higher compensation group. The same is generally true of the number of days of unemployment, and hence of benefit days, per half-month, as well as of the proportion of all half-months in which total unemployment of 15 days is registered. Thus, beneficiaries with base-year compensation of $150 to $474 had on the average from 98 to 101 days of unemployment in the half-months following the waiting period, as compared with 70 to 71 days for beneficiaries with compensation of $1,025 or over.
32 • An nual Report of the Railroad Retirement Board
CHART IV.—Occupational composition of class I railroad employees for whom unemployment benefits were certified, monthly, fiscal year 1939-40
OTHER EMPLOYEES
FREIGHT HANDLERS
TRAIN AND ENGINE SERVICE
MAINTENANCE OF EQUIPMENT
MAINTENANCE OF WAY LABORERS
PERCENT PERCENT
100 .'I*;. . l1.. .1 . .1. . . .f.’.'. jIOO
90
80
70
60
50
40
30
20
10
0
90
80
70
60
50
40
.30
20
10
• 0
JULY AUG. SEPT. OCT NOV. DEC. JAN. FEB. MAR. APR. MAY JUNE
1939 1940
Unemployment Insurance Operations • 33
The above figures for duration of unemployment by compensation classes tend to minimize duration because no measure of it is available after the beneficiary has drawn the maximum benefits to which he is entitled for the year. It is important at this point to note that the proportion of beneficiaries who received the maximum benefits, or exhausted their benefit rights for the year, is also highest for the lowest compensation class and tends to decline for each higher compensation group. Therefore, the above figures underestimate duration for lower compensation classes to a greater extent than for the higher earnings groups. The true relationship of duration for the lowest compensation class to that for the highest is probably much greater than is implied in the figures of 100 days as compared with 70 days.
Occupation oj beneficiaries.—Another important distinction among beneficiaries is in terms of the occupation or department of service in which they are regularly employed. It was noted above that the changes in employment in the major operating divisions of the industry in 1940, as in previous fiscal years, did not follow a uniform pattern; pronounced seasonal swings were found in maintenance-of-way employment and to some extent also in the train and engine service, while employment in the shops increased sharply in the last quarter of 1939 but declined somewhat in 1940. For this reason alone, the incidence of unemployment would differ by occupational groups. Also, in the railroad industry as elsewhere, skilled occupations enjoy some preference with respect to available employment opportunities. Finally, in certain groups, a factor differentiating unemployment as between senior and junior occupations is the seniority principle by which, within specified limits, the security of job tenure is made dependent upon length of previous service.
Indeed, statistics of benefit certifications for the fiscal year (see table 11) show that the proportion of all qualified employees for whom benefits were certified was highest for the laborers in maintenance of way and structures, that is, the occupations of lowest skill in that department of service in which operations and employment are subject to widest seasonal fluctuations. Nearly 28 percent of the qualified employees in this group received benefits in the course of the year. High proportions of beneficiaries were found too among the freight handlers, where a certain amount of employment is allocated on the principle of spreading the available work.
Relatively high percentages of beneficiaries obtained also for employees in the shops, where unemployment was large at the beginning of the year. Here the difference between various degrees of skill is evident in the fact that both the percentage of beneficiaries
34 • Annual Report of the Railroad Retirement Board
and the duration of compensable unemployment per beneficiary were lower for the skilled crafts than for the group of helpers and apprentices. For laborers in maintenance of equipment and stores, the proportion of beneficiaries among eligibles is lower than for other shop employees; this is probably due to the fact that the laborer group includes a large number of persons in stores where employment is relatively stable. There was appreciable unemployment in the train and engine service, but it was confined almost entirely to the junior occupations; only 1 percent of the engineers and conductors were unemployed long enough to have benefits certified for them.
TABLE 11.—Compensable unemployment by selected occupational groups, fiscal year 1939-40
Occupational group Total eligible employees Beneficiaries Benefit certifications Percent of beneficiaries exhausting rights
Number Percent of eligibles Average number per beneficiary Average number of benefit days per certification
Total 1, 284,084 162, 704 12.7 6.4 6.6 19.0
Class I railroad employees. __ 1,110,113 141, 739 12.8 6.4 6.5 18.6
Maintenance of equipment and stores, skilled 132, 815 20, 756 15.6 4.8 6.0 10.7
Train and engine service 238,150 21, 436 9.0 6.4 6.3 16.2
Helpers and apprentices, maintenance.. 88, 460 18,351 20.7 5.4 6.5 13.9
Maintenance of way and structures, laborers 154,140 42, 715 27.7 7.2 7.1 23.6
Maintenance of equipment and stores, laborers 63, 357 8,836 13.9 6.2 6.4 21.2
Freight handlers 43, 990 7, 738 17.6 8.0 5. 5 21.1
All other employees 389, 201 21,907 5.6 6.8 6.6 20.9
Employees other than class I railroads 173,971 20, 965 12.1 6.5 6.8 21.1
Note. All data in this table, except the number of eligible employees, are derived from a tabulation of a sample of benefit certifications. For composition of occupational groups see note appended to table 7.
The data on duration of unemployment modify to some extent the conclusions drawn from the ratios of beneficiaries to eligibles. They show, for example, that while the proportion of beneficiaries was fairly high in the shops, the average number of half-months with compensable unemployment for both the skilled and the help er-apprentice groups was relatively low. The short duration of unemployment for them is further confirmed by the low percentages of cases in which benefit rights were exhausted.
For freight handlers, too, the figures on duration differentiate the character of unemployment from that found in other groups. Although they had a substantial proportion of beneficiaries and a high average of compensable half-months per beneficiary, the average duration of unemployment per half-month was relatively low; that is, unemployment for freight handlers was spread over the year more evenly than for other employees.
Unemployment Insurance Operations • 35
The duration averages are also illuminating for the “all other” group which consists mainly of supervisory and clerical employees. They show that, while the proportion of eligibles who received bene-fits is low, unemployment, when it occurs, extends over a long period of time; the average number of compensable half-months for this group is nearly as high as for the extra gang and section men, and the proportion of exhaustion cases is considerably above the average for all beneficiaries.
Age of beneficiaries.—Because of the concentration of unemployment in the groups with low base-year compensation and because of the heavier incidence of unemployment in such occupations as section men and freight handlers, it is not surprising that the age of the beneficiaries is generally much lower than that of the total eligible population. As may be seen from table 12, nearly 56 percent of the benefit certifications for class I railroad employees were made for persons under 40 years of age, an age group which includes less than 35 percent of the eligibles. On the other hand, eligible employees 50 years of age and over, constituting over 35 percent of the total, had less than 19 percent of all benefit certifications.
TABLE 12.—Percentage distribution by age groups of unemployment insurance beneficiaries in fiscal year 1939-40 and of total eligible employees in 1938, class I railroads
Age (in years) Benefit certifications Eligible employees Age (in years) Benefit certifications Eligible employees
Total 100.0 100.0 40-44 45-49 13.6 11 6 14.4 15 0
Under 20.. 0.5 0.5 50-54... 8.7 14.1
20-24 12.7 5. 2 55-59 6.2 10.8
25-29... 15.1 6. 7 60-64 3.4 7. 2
30-34 13. 5 9. 7 65 and over . 6 3.7
35-39... 14.1 12.7
Note.—The percentages for benefit certifications are derived from a sample tabulation.
Financial Operations
Employer contributions.—Contributions under the act became payable on the pay rolls covering employment from July 1, 1939. The first payment was due on November 30, 1939, representing contributions for the third calendar quarter of 1939. During the fiscal year, substantially complete collections were made of contributions applying to the pay-roll periods from July 1939 through March 1940, and a small amount of advance payment was received for the fourth quarter of the fiscal year. The somewhat higher contribution figure shown for the second quarter, as compared with the first and third quarters (see table 13), is explained mainly by the higher level of compensation m that quarter for class I railroads; the increase in the total pay roll
36 • Annual Report of the Railroad Retirement Board
of this class of employer in that period over the immediately preceding and immediately following quarters was nearly 4.3 percent.
TABLE 13.—Contributions collected under the Railroad Unemployment Insurance Act, fiscal year 1939-40
Item Total Pay-roll period to which contributions apply
July-September 1939 October-December 1939 January-March 1940 April-June 1940
Total Employers: Contribution Interest and penalty Employee representatives: Contribution Interest and penalty $49,176,958 49,172, 543 19 4, 391 5 $16,113,433 16,111,811 9 1, 610 3 $16,891,217 16,889,711 7 1,498 1 $16,171,107 16,169,820 3 1,283 1 $1,201 1,201
Receipts in the insurance account.—In addition to 90 percent of the contributions collected by the Board, the railroad unemployment insurance account from which benefits are paid also received certain amounts from State unemployment funds (see table 14). The moneys transferable from the States are supposed to include the contributions collected by State agencies from railroad employers and employees for 1937, 1938, and the first half of 1939, less the pro-rata share of benefits paid out over the same period. During the fiscal year 1940, about $1,801,000 was received from three State funds; this amount constitutes less than 2 percent of the total to be transferred from the States.
TABLE 14.—Receipts and expenditures in railroad unemployment insurance account, fiscal year 1939-40
Period Receipts Expenditures Balance at end of period
Advance from Treasury under sec. 10 (d) Deposits by Railroad Retirement Board Transfers from States under sec. 13 Interest credited Benefit payments certified Repayment of advance from Treasury
Total... . $15,000,000 $44,248, 658 $1,800,818 $201,845 $14, 811, 065 $15,000, 000 $31,440,255
1939 July
15,000,000 252. 589 9i; 040 277,423 1, 022,139 1, 329, 627 977, 372 951, 700 1, 209, 246 1,820,408 1, 796, 828 1,813, 900 1,580, 348 1,174,161 857,913 14,975,166 14,044,067 12,714,461 11,991,984 11, 662,468 24, 304,717 7,714,698 6.787,460 19, 298,499 17,754, 227 18, 789.075 31, 440,255
August
September 22
October... 254,895
November 622,184 13,851,104 21,101 869, 590 14, 324,139 36, 076 1, 219.479 13, 304.984
December ... 391 24,812
1940 January 184,476 15,000,000
February. _
March 799
April. .... _ ...
May.. .. 989, 530 28, 288
June... 175,821
Unemployment Insurance Operations • 37
All States and Territories except Arizona and Georgia have adopted the necessary enabling legislation, although in Kentucky a constitutional objection to the contemplated transfer was found by the highest State court. The crediting of State moneys to the account was delayed because, in the preparation of estimates of the preliminary and liquidating amounts to be transferred, it was necessary to settle a number of minor accounting and legal questions. By the end of the fiscal year 1940, considerable progress had been made, and over 90 percent of the amounts transferable under section 13 of the act were in fact credited to the account by the end of October 1940.
Receipts in the unemployment insurance account during the year included also nearly $202,000 in interest. This is the pro-rata share of the interest for the year on the investments in the special obligations of the Treasury made for the unemployment trust fund, of which the account is part. During the first 6 months of the year, the account also had the use of $15,000,000 advanced by the Treasury in order to permit the prompt commencement of benefit payments in July. This advance, authorized by section 10 (d) of the act, was repaid in January.
Administration fund.—The railroad unemployment insurance administration fund, from which the expenses of administering the act are met, received during the year about $12,868,000. Of this amount, $4,916,516 represented deposits by the Board of 10 percent of the collections for the year. The remainder was received in compliance with the provision of the law which directs the Treasury to credit to the fund the amounts collected or collectible under title IX of the Social Security Act4 from railroad employers for the calendar years 1936-39. The Treasury credit consisted of $1,114,937, a supplementary amount for collections applying to 1936 and 1937, and $6,837,014, representing the preliminary estimate of the collections for 1938. It is anticipated that the fund will receive from the Treasury an additional sum of $3,500,000 which would cover the amounts collected for the first half of 1939 and certain supplementary items in the 1938 collections.
4 Now subch. C of ch. 9 of the Internal Revenue Code.
. Ill .
ADMINISTRATION OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT
THE reorganization in the Washington headquarters of the Board and the establishment of a field organization, in preparation for the commencement of operations under the Railroad Unemployment Insurance Act, were completed by the close of the fiscal year 1939. Similarly, rules and procedures for taking registrations and adjudicating claims were largely fixed in June and July 1939.1 Experience in the fiscal year 1940, the first year of operation, showed that no major organizational or procedural changes were required. The provisions made were ample for carrying out the routine tasks of administration; they were also sufficiently flexible to cope with most of the problems naturally arising in the early stages of operation of a new social insurance system. In the field organization, the developments during the fiscal year were, apart from minor changes, directed toward greater integration of unemployment insurance and retirement operations. The work on procedures was oriented mainly upon the greatest possible uniformity and consistency in the application of statutory provisions. During the year, experimental work was done to lay the groundwork for a placement service and by the end of November, provision had been made for the collection of contributions under the act.
Field Organization
At the beginning of the fiscal year 1940, the field organization of the Board consisted of 12 regional offices located in the most important railroad centers of the country. These offices received applications and claims from unemployed workers through approximately 42,500 unemployment claims agents and 5,250 countersigning agents, designated employees of carriers and other employers cooperating with the Board, mainly under formal agreements, in the administration of the act.1 2 Until the end of October 1939, the Board assisted the carriers in training, supervising, and coordinating the work of their designated employees through the services of a varying number of special agents,
1 For a description of organization and procedure see chs. I and II of the annual report for 1939.
2 In Alaska and Hawaii, the functions of registration and claims-taking are performed by the territorial employment service under agreement with the Board.
38
Unemployment Insurance Act Administration • 39
which never exceeded 600, recruited on a temporary basis for handling the emergency phase of the program.
Subordinate to the regional offices were 53 district managers’ offices and the offices of field agents, 125 of which were located at base points outside district-manager cities. While the responsibility for the adjudication of applications and claims was vested in the regional offices, the district managers and field agents were concerned with the investigation and adjustment of claims. They also kept in touch with the countersigning and claims agents, assisting them in maintaining proper standards of procedure, and furnished information in regard to the Board’s forms and procedures to employees and employers.
Services by employers.—The services in regard to registration and claims-taking performed by the cooperating employers were basic to the entire process of administering the act. These services were rendered in a very satisfactory manner. There were only a few instances in which employees could not register with claims agents; these were handled through district managers’ offices. In a small number of cases, where employer facilities were not available because of the abandonment of railroad lines, the Board appointed ministers, school principals, or other leading citizens of the community as part-time claims-takers, compensated on the same basis as the cooperating employers, namely at the rate of 50 cents per claim.3 Nor was there any appreciable delay in the transmission of records from the claims-takers through the countersigning agents to the regional offices; the scattering of cases where applications for certificate of benefit rights were held by the claims agents until the completion of the halfmonthly period applicable to the registration and claim forms were due to a misunderstanding and were quickly cleared up.
An essential function performed by the claims and countersigning agents was the prevention of improper registrations. An audit against pay-roll records of a large eastern carrier of 18,000 claims, covering 200,000 days of unemployment, showed only 26 irregularities in the date of registration or in registration for days on which the claimant was employed. Of these, there were only 9 cases involving the payment of benefits for a day on which the employee worked; in none of them could evidence be found of an intent to defraud.
Because of the highly satisfactory manner in which the work of the claims and countersigning agents was done, it was not necessary to change the provisions of the agreement under which employers
3 This was done under the general authority granted the Board in administering the act. In the amendments to the act adopted in October 1940, specific authority was provided to engage part-time claims-takers to be compensated on a piece-rate basis (see p. 80).
40 • Annual Report of the Railroad Retirement Board
rendered their services to the Board or the procedures followed by their designated employees. The only change made was that applying to agreements executed after the middle of October 1939. It was then found that the so-called preliminary services—selection and training of employees to instruct claims and countersigning agents in the forms and procedures under the act—were no longer necessary. Accordingly, references to the performance of and compensation for such preliminary services were eliminated from the form of agreement. Changes also occurred from time to time in the number of claims and countersigning agents; these were entirely within the discretion of the employers and were meant to adjust the number of agents to the fluctuations in the claim load.
Board1 s field organization.—The changes in the Board’s own field organization were not confined to the release of the temporary field agents at the end of October 1939. Additions were made to the functions of the various offices, of which the most important related to retirement operations.4 The regional offices were also charged with the task of receiving wage reports from national labor organizations and employee representatives and of collecting contributions under the act from them. On a number of occasions during the year, regional office staffs were used in carrying out special studies essential to the work of the Board.
Expansion in the work program of the field organization was made possible in part by the increased efficiency of the staff after the first few months of operation. Also important in this connection were the large fluctuations in the unemployment insurance work loads, reflecting changes due to seasonal and other factors in unemployment in the industry. Consequently, periods of strain requiring considerable overtime and the shifts of personnel from one office to another 5 6 alternated with slack periods when additional tasks could readily be undertaken. The greater operating efficiency of the offices permitted a gradual reduction in personnel and led to the discontinuance of a number of offices. At the end of the fiscal year 1940, there were altogether 10 regional offices, 38 district managers’ offices, and 89 base points at which field agents’ offices were located. The location of regional and district managers’ offices, and the approximate territorial and numerical coverage of the regions, as of the end of the fiscal year, are shown in table 15. The changes made in the territories
4 The new functions of the field organization of the Board with respect to annuity applications are de-
scribed in ch. VI.
6 Such transfers were possible because peak loads did not occur in every office at the same time. In a number of situations, however, it was found that transfers could not readily be made because of the requirements of certain civil service laws and regulations. The amendment to the act adopted in October 1940 (see p. 80) will allow greater flexibility in this respect.
Unemployment Insurance Act Administration • 41
of the regional offices 6 reflect not only the closing of some offices, but also minor shifts of railroad divisions from one region to another, made at the request of some of the cooperating employers.
TABLE 15.—Regions of Railroad Retirement Board: Location of offices and territory served, end of June 1940
Region and location of offices
Percent of total railroad employees in region
Territory served
New York__________________________________
New York, N. Y. (regional).
Albany, N. Y. (district).
Altoona, Pa. (district).
Baltimore, Md. (district).
Boston, Mass, (district).
Buffalo, N. Y. (district).
New York, N. Y. (district). Philadelphia, Pa. (district). Scranton, Pa. (district).
Cleveland_________________________________
Cleveland, Ohio (regional). Cincinnati, Ohio (district). Cleveland, Ohio (district). Detroit, Mich, (district). Louisville, Ky. (district). Pittsburgh, Pa. (district).
Chicago___________________________________
Chicago, Ill. (regional).
Chicago, Ill. (district).
Des Moines, Iowa (district). Indianapolis, Ind. (district). Milwaukee, Wis. (district). Peoria, Ill. (district).
Atlanta___________________________________
Atlanta, Ga. (regional).
Atlanta, Ga. (district). Birmingham, Ala. (district). Nashville, Tenn, (district). Richmond, Va. (district).
Minneapolis_______________________________
Minneapolis, Minn, (regional). Bismarck, N. Dak. (district). St. Paul, Minn, (district).
Kansas City_______________________________
Kansas City, Mo. (regional).
Kansas City, Mo. (district).
St..Louis, Mo. (district).
Wichita, Kans, (district).
Dallas____________________________________
Dallas, Tex. (regional).
Dallas, Tex. (district).
Houston, Tex. (district).
Denver____________________________________
Denver, Colo, (regional). Cheyenne, Wyo. (district).
Denver, Colo, (district).
Salt Lake City, Utah (district).
Seattle___________________________________
Seattle, Wash, (regional). Portland, Oreg, (district).
Seattle, Wash, (district).
Spokane, Wash, (district).
San Francisco_____________________________
San Francisco, Calif, (regional). Los Angeles, Calif, (district). Sacramento, Calif, (district).
San Francisco, Calif, (district).
22.8
14.6
17.4
12.5
5.0
9.3
5.4
4.2
3.1
5.7
Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania east of Pittsburgh, Delaware, Maryland, small section of northeastern West Virginia, the Cape Charles Peninsula of Virginia, District of Columbia.
Pennsylvania (Pittsburgh and west), Ohio, eastern half of lower peninsula of Michigan, northeastern and central Kentucky, West Virginia (except small eastern section), small section in western part of Virginia.
Indiana, Hlinois, Iowa (except southwestern corner), southern and northeastern Wisconsin, southwestern Kentucky, Michigan (except eastern half of lower peninsula).
Georgia, Florida, Mississippi, Alabama, Tennessee, South Carolina, North Carolina, Virginia (except small section in western part and Cape Charles Peninsula), small section of southeastern West Virginia.
Minnesota, North Dakota, South Dakota (except section in southwest and small segment in south), eastern half of Montana, northwestern Wisconsin.
Missouri, Oklahoma (except tip of Panhandle), Arkansas (except southwestern corner), Kansas (except extreme west), eastern half of Nebraska, southwest corner of Iowa, small segment of southern South Dakota.
Louisiana, Texas, southwest corner of Arkansas, southern and eastern New Mexico (except small part in southwest), small piece of southeastern Arizona.
Colorado, Wyoming, Utah, western half of Nebraska, extreme west of Kansas, southwestern South Dakota, southern Idaho, southeast corner of Oregon, northeast corner of Nevada, northern half of Arizona, northern and western New Mexico, tip of Oklahoma Panhandle.
Washington, northern Idaho, western half of Montana, Oregon (except for segment in south and southeast corner), Alaska.
California, Nevada (except northeast corner), south segment of Oregon, southern Arizona (except small piece in southeast), small southwestern part of New Mexico, Hawaii.
• For the regions as they existed at the beginning of the fiscal year, see p. 23 of the annual report for 1939.
42 • Annual Report of the Railroad Retirement Board
Application Procedure
The procedure established for the filing of applications for certificate of benefit rights has remained substantially unchanged. The application, containing personal identification data, is prepared on the first day of unemployment during the year and is filed with the unemployment claims agent for transmission to the regional office. Usually the employee submits with the application his certificate of service months and wages for the base year, and indicates whether he accepts as correct the amount of credited compensation shown on the certificate. Where the applicant believes that the certificate is in error, he is requested to list the employers for whom he worked and the amount earned in each month of the base year. Similar information is requested from an employee who cannot submit his certificate with the application.
That this procedure worked well is evident from the fact that certificates of service months and wages were attached to about 174,800, or 83 percent, of the nearly 210,800 applications received during the year. In the first few months of the year, the proportion of applications with certificates was even higher. Beginning with October, however, the percentage of complete applications dropped to 80, and for the remainder of the year it fluctuated between 70 and 80, except in June 1940 when it was only 63. These figures suggest that as time went on an increasing number of employees lost the certificates distributed to them in May and June 1939. It is also probable that as the employees received certificates for 1939, some of them disposed of the certificates for the preceding year; this would help to explain the fact that 37 percent of applications in June 1940 were without certificates.
Applications with certificates attached can be more readily processed than others. True, some of them carry a protest as to the base-year wages shown on the certificate; this, however, is only a minor exception since such applications accounted for less than 5,000 of the total of 174,800 applications with certificates attached. Nor is the increase in the proportion of applications without certificates particularly important, because the largest number of applications is filed early in the year. Thus, by the end of September, the regional offices had received more than 108,400 of the total of 210,800 for the year.
In addition to the 36,000 applications without certificates for 1938, the regional offices received in the second half of the fiscal year about 3,500 applications based on credited compensation for 1939, to which no certificates were attached. These applications could not in any event be adjudicated until the record of 1939 wages was compiled, nor could these applicants draw benefits for unemployment occurring
Unemployment Insurance Act Administration • 43
before July 1, 1940. For this reason, such applications were held in suspense and the absence of certificates had no substantial effect on their processing.
Registration and Claims Procedure
Day oj registration.-—Changes were made during the year in the procedure governing the registration of days of unemployment and the handling of claims. Originally, a qualified unemployed worker was required to register with the unemployment claims agent on the first day of unemployment in a half-monthly period, except when it was a Sunday or holiday in which case he could register with respect to such day on the next business day. For subsequent days of unemployment in the half-month, the employee was required to register either on those days or on the first business day thereafter, the latter at the employee’s risk that he might be prevented by employment, sickness, or other causes.7 Provision was also made for employees prevented from registering for causes attributable to the claims agent or a representative of the Board; such employees were allowed an additional period of 48 hours during which they could register days of unemployment, either personally or in writing, with the district manager.
This procedure, which was adopted by the Board in compliance with the mandate of the law to require substantial evidence of days of unemployment, was later somewhat relaxed in order to prevent inequities and avoid unnecessary complications. By the end of July 1939, the Board ruled that if a day of unemployment other than the first in a half-month was a Sunday or holiday and the employee was prevented by employment, or other causes not attributable to his lack of diligence, from registering with respect to it on the next business day, he might register for such Sunday or holiday on the first business day when registration became possible, but not later than the last day of the week beginning with such Sunday or holiday. In March 1940, this regulation was extended to cover registrations with respect to days other than the first in a half-month, even if such days did not fall on a Sunday or holiday. At the same time, the requirement that the registration for the first day of unemployment in a half-month must be made on that day was eliminated for all cases except for half-months for which the employee claimed waitingperiod credit.
Retroactive registrations.—Special cases of delayed registration occurred when, the question of employer coverage and creditability of
7 By agreement with the Alaska Employment Service, employees in Alaska were allowed to register once a week.
44 • Annual Report of the Railroad Retirement Board
compensation earned in his employ was unsettled. In such cases, unemployed workers had no basis for registering with the Board and, while they could register with the employment office of a State unemployment compensation agency, they had not always done so because their right to State benefits might have been in doubt. The problem was met at first by a ruling covering the situation of employees of a single employer. This was later generalized to provide that for the period from June 16, 1939, through March 31, 1940, the regional directors should accept the employee’s registration for any day as a day of unemployment if the employee registered at a State unemployment office for the week which included such day, or if the employee was denied a reasonable opportunity to register for such day with the Board, or could show other reasonable excuse for failure to register. Such retroactive registration could be claimed, however, only by those employees who had by April 1, 1940, appeared before an unemployment claims agent or otherwise notified the Board of their status.
Another device for protecting the rights of such employees is an agreement with the State unemployment compensation agency through which either the State or the Board pays benefits to employees on the basis of wages earned from an employer whose status is in doubt, subject to reimbursement after the coverage question has been definitely settled. A formal statement to that effect was addressed to the Oregon agency as early as February 1940, and an agreement was executed with Rhode Island in April. Several other agreements of this type were completed after the close of the fiscal year, and a larger number were in process of negotiation when this report was being prepared.
Transfer orf registration.—An unemployed worker traveling in search of work, or for other reasons, was permitted to comply with the requirements of the Board by registering with any unemployment claims agent located along his route. Under the regulations, an employee transferring his registration was to notify the original claims agent and secure from him the duplicate copy of a transfer form to be turned over to the second claims agent. The transfer form was designed to facilitate the correct preparation of the claim and the matching in the regional office of the 2 or more claims relating to the same half-month. This procedure did not work smoothly. In some cases a large number of claims (occasionally as many as 10) would have to be combined in order to account for 1 half-month, while in other cases no matching claims would be received at all. Moreover, the matching claim form from the second claims agent would often include registrations not only for the remainder of the half-month, but
Unemployment Insurance Act Administration • 45
for an entire period of 15 consecutive days. Such, difficulties could not be avoided except by a ruling which would prohibit the transfer of a registration in the middle of a half-month. The Board had no authority to impose such a restriction, which would have been unduly onerous in any event.8
When properly prepared, claims from an employee transferring his registration could easily be processed in the regional offices, provided that the employee did not transfer from the jurisdiction of one regional office to that of another. In cases of transfer from one region to another, whether or not occurring in the course of one half-month, an administrative problem was created by the fact that all the records pertaining to a claimant were kept in one regional office. At the beginning of the year, it was thought that the best way to handle this problem was to have the region to which a claimant transferred request the records from the original region, either directly or through Washington. This procedure was soon found to be complicated and expensive, and it often delayed the processing of claims unnecessarily. In September 1939, the simpler procedure was substituted whereby the claimant’s records remained in the region where he first made application for a certificate of benefit rights. His claims received in other regions were immediately transmitted to the original region for processing.
Claims from nonqualified employees.—The Board’s procedure from the outset was such as to minimize the number of claims from persons whose credited compensation in the base year was below $150 and who were therefore ineligible for benefits. The distribution of certificates of service months and wages in May and June 1939 effectively accomplished this purpose insofar as applications were concerned, because the certificate clearly stated that an employee whose base-year wages were shown to be less than $150 need not apply unless he believed that the record was in error. The same end was substantially achieved for claims by requiring the claimant to indicate on the form the number of his certificate of benefit rights; failure to do so immediately raised a question as to the employee’s eligibility and led to explanation of the provisions of the act, frequently resulting in the withdrawal of the registration. Employees who were certified for the maximum amount of benefits to which they were entitled for the year were notified that no useful purpose would be served by their continuing to register, except within 6 months of the earliest possible beginning of a new benefit year, and that only for waiting-period credit. By these means, it was possible 9
9 The 1940 amendments to the act provide that an employee is to begin a new registration period with each transfer (see p. 75).
276117—41----4
46 • Annual Report of the Railroad Retirement Board
to restrict the proportion of claims from unqualified employees to about 0.3 percent of the total.
There was only one type of case in which claims from employees not currently qualified for benefits had to be accepted by the Board in order to protect the rights of employees under the act. This was the case of employees who might have been able to use current registrations of unemployment to satisfy the waiting-period requirement for a benefit year beginning within 6 months. Such claims 9 could not readily be processed because, until the last days of the fiscal year, the regional offices had no authentic information on credited compensation for 1939, the base year for the benefit year to begin on and after July 1, 1940. Nor was it known whether the claimant would actually begin a benefit year within 6 months of the period covered by the claim. The situation in which the claimant was put to the trouble of registering and the Board to the expense of accepting registrations and claims which could be of no immediate practical effect, could not be remedied without a change in the waiting-period requirement of the law.9 10
Definition of Unemployment
In order to assure uniformity and consistency in the adjudication work of the regional offices, it was found necessary to prepare a series of instructions defining in greater detail the various conditions set forth in the act under which a day could be considered as a day of unemployment. These instructions were prepared for the most part before applicable cases had been received; occasionally the instructions were expanded on the basis of experience with certain difficult situations referred from the field.
Availability J or work.—A crucial test of unemployment recognized under the act is the availability of the claimant for work. The adjudication instructions provided that the claimant must meet certain requirements if his availability was questioned. The first requirement was that he hold himself out for work; that is, the claimant must place himself in a position calculated to bring him in touch with job opportunities, by registering with public or private employment offices, advertising, or making other efforts to find work. This requirement was not applicable if the claimant had very good prospects of returning to his original job within 8 weeks of the first day of claimed unemployment, or if he had substantial seniority rights. The other requirements were that the claimant be in a position to receive notification of work and that his situation be such as not to prevent him from accepting work which might be offered.
9 No complete count was kept of these claims and they are excluded, so far as possible, from the statistics of claims received given in ch. IT.
10 The change was in fact made in the amendments adopted in October 1940 (see ch. IV).
Unemployment Insurance Act Administration • 47
Under these rules it was held, for example, that a claimant who farmed a 5-acre tract of land, but who was registered with the State employment service, who could be reached by telephone at any time, and who could turn his farm work over to his brother and leave the farm at once in order to accept employment, was available for work. Similarly, a former freight agent, although living in a small village which was 44 miles from the nearest railroad station and in which there were no employment opportunities, was ruled available for work since he had written to a number of railroads in other localities applying for work and since he was not prevented by personal circumstances from accepting any work which might be offered him. On the other hand, a claimant whose beliefs did not permit him on the holidays of his church to perform services for hire or engage in other activities from which he might receive economic gain, was ruled not to be available for work on such holidays.
Ability to work.—Another test of unemployment is that the claimant must be able to work. Where such ability was questioned, the claimant was, according to the instructions, held able to work, unless materially handicapped by a physical or mental disability. Even in such cases, he was ruled able to work if he could prove that (1) he could perform a type of work that is open to other persons with similar handicaps; (2) he could perform such work under the conditions under which it is generally performed; and (3) he was fitted by training, experience, skill, or knowledge for such work.
A claimant was presumed to be unable to work, unless he proved the contrary, when his condition was such that he was unable to perform regularly and in the customary manner the duties of any regular and gainful employment. There were certain enumerated handicaps, such as loss of both hands or blindness, where inability to work was presumed. A conclusive presumption of inability to work usually resulted from a determination under the Railroad Retirement Act of total or permanent disability. Claimants 60 years of age or over were presumably unable to work if they had been taken out of railroad service because of disability or age, as were claimants receiving disability pensions, payments under workmen’s compensation laws, or under sickness insurance plans.
It was held, for example, that a switchman removed from service by the chief surgeon of the railroad and declared unfit, because of high blood pressure, for work in a “hazardous” position, but fit for work in nonhazardous occupations, was able to work within the meaning of the act. On the other hand, a former carman who had recently received hospital treatment for delirium tremens, who had been declared by the company physician to be unable, because of
48 • Ann ual Report of the Railroad Retirement Board
chronic alcoholism, to perform work, and who was unable to carry on a coherent conversation, was held not able to work.
Remuneration. Under the act, a day with respect to which remuneration is payable cannot be claimed as a day of unemployment. Remuneration is defined to include only pay for services for hire, pay for time lost, and tips. This immediately requires a clarification of the distinction between services for hire and other services from which income may be received, such as self-employment or work as an independent contractor. According to the instructions, services were considered to be “for hire” when subject to continuing authority to supervise and direct the manner in which they were rendered. In this connection, actual supervision and direction are not essential; the existence of a right to supervise and direct is sufficient. Services rendered were not deemed to be for hire unless payment was made for them. If the payment was in medium other than cash, it was considered to be remuneration only if, before the performance of the service, there was an agreement on its value and that the payment should be in the form of a commodity, service, or privilege.
Under these instructions, the pay of an enlisted man in the National Guard was ruled not to be remuneration as defined in the act. Likewise, amounts realized from the operation of a claimant’s own farm were held not to be remuneration. City welfare payments were ruled not to constitute remuneration when the recipients were not required to perform work for the city. In a case which involved the issue of payment in kind, it was held that board and lodging furnished to a claimant while he was residing and assisting in the work on his mother-in-law’s farm were not remuneration. It was determined that, although it would not have been impossible for an employeremployee relationship to have existed with the board and lodging constituting remuneration in return for services, the kinship of the parties was a strong indication that there was no contract of employment, that the board and lodging were furnished without regard to the work done on the farm, and that the work was done gratuitously.
The definition of pay for time lost also required some clarification. The instructions provided that pay for time lost could be considered remuneration only when claimants were in an employer-employee relationship and when that relationship continued during the time they were not actually performing service. Such benefits paid out of a special fund, however, were not considered pay for time lost.
Remuneration disqualifies only the day with respect to which it is payable. Under this provision of the act, it was held that the earnings of W. P. A. workers, other than supervisory employees, are rem im era
Unemployment Insurance Act Administration • 49
tion attributable exclusively to the days on which they work. However, since supervisory W. P. A. employees are employed on a monthly basis, it was held that their earnings are attributable to every day in the month and that in their case no day in the month can be considered a day of unemployment.
Subsidiary remuneration —Early in the year several cases came to the attention of the regional offices, one of which was appealed directly to the Board, which compelled the recognition that a literal construction of the remuneration provision would work undue hardship and violate the purpose of the act. Such construction would deny benefits to claimants who were in fact unemployed, but earned small amounts for some subsidiary occupation or avocation. The difficulty was particularly apparent where claimants were officers of local labor or fraternal organizations, and actually worked only a few days of the month, but were paid small amounts on a monthly basis.
In order to meet this difficulty, the Board issued an order defining “subsidiary remuneration.” This order also provided that subsidiary remuneration should be deemed to be payable with respect to any specific days designated by the terms governing the position or employment as days on which services for which the remuneration is paid are required to be performed; any subsidiary remuneration not attributable to services so required to be performed on specific days was deemed not to be paid with respect to any day.
Subsidiary remuneration was defined as remuneration having all the following characteristics: (a) the services for which the remuneration is payable must be substantially less than full-time services as determined by generally prevailing standards; (&) the services must be susceptible of performance at such times and under such circumstances as not to be inconsistent with the holding of normal full-time employment in another occupation; (c) the services for which the remuneration is payable must be of such type and character as to indicate an understanding of the interested parties that the services would normally be performed while the person performing them is also engaged in regular full-time employment in another occupation; and (d) the remuneration must be attributed to periods of greater extent than the units of time required for the active performance of the services.
Whenever the remuneration payable is $25.00 per month or less, services performed in positions of the following classes were, in the absence of evidence to the contrary, presumed to be performed for subsidiary remuneration: officers of local lodges, divisions, or similar units of labor, fraternal, or social organizations; officers and directors of building and loan associations; officers, directors, members, or workers in religious, charitable, civic, political, athletic, or similar
50 • Annual Report of the Railroad Retirement Board enterprises; officers, directors, or committee members in professional or scientific societies.11
Disqualifying Conditions
Under the act, certain days cannot be considered as days of unemployment even if the claimant meets all the statutory conditions required with respect to these days, such as availability for work, ability to work, receiving no remuneration, and registering with an employment office designated by the Board. The disqualifying conditions occur in cases where the claimant leaves work voluntarily without good cause, or refuses to accept suitable work, or is unemployed because of a strike begun in violation of the Railway Labor Act, or is involved in fraud in connection with a claim for benefits. It was found that these provisions of the act were so detailed, and the number of cases to which they applied was so negligible, that it was unnecessary to issue any additional clarifying instructions to the regional offices. The decisions made on cases involving an application of the disqualifying conditions indicate the spirit in which the statutory provisions were interpreted.
Leaving work voluntarily without good cause.—Two typical cases may be cited in which claimants were held to have left work without good cause. One is that of a machinist who left his employment because his employer, in assigning work, had violated a provision of the collective agreement between the employer and the union. It was held that, although the employee may have had a legitimate grievance, he had not exhausted the means provided by the agreement for the handling of such grievances. Another was that of a machinist who, after 21 years of service, resigned when another employee was given the position of master mechanic. In this case, it was found that, although the claimant apparently believed himself next in line for the position, it had never been promised to him and there were no established practices or other circumstances to indicate that he was entitled to it.
Claimants were held to have left their jobs with good cause in a number of other cases. Typical instances are as follows: A claimant left his work when offered a railroad job elsewhere at a wage greatly in excess of that which he had been receiving as a track laborer, but found on reaching the point of the supposed employment that he had been victimized by a racketeering agency. An experienced lathe operator left his work because his machine was in such condition that to con-
11 The amendments to the act adopted in 1940 redefine remuneration in such a manner as to avoid both of the major difficulties experienced in the fiscal year 1940 with the enforcement of the provisions relating to remuneration—distinguishing services for hire from self-employment and work in a subsidiary occupation from true employment (see ch. IV).
Unemployment Insurance Act Administration • 51
tinue to operate it would endanger his hands, the employer having refused to comply with his request to remedy the condition. A girl 17 years of age, employed as a waitress, left work because her parents moved to another locality and desired her to live at home. A claimant, available for full-time work, left work in which he was employed 1 hour daily transferring express from train to depot wareroom, and for which he received only 25 cents a day. A claimant, subject to dizziness and nausea when high above the ground, left work as a laborer on a water-tank erection job which required him to be on a platform 60 feet above the ground.
Refusal to accept suitable work.—Perhaps the most important question that has arisen with respect to this statutory provision applies to cases where a claimant fails to obtain employment because he does not exercise his seniority rights. The Board ruled that this disqualification does not apply to an unemployed individual who fails to “bump” or displace an employee with lower seniority rights, because “bumping” does not involve the acceptance of an offer of employment.
A typical decision in which an employee was held to have failed to accept suitable work was in the case of a claimant who had been previously employed for several years as a yard switchman and who refused an offer of similar work on the ground that it was too dangerous. It was ruled that the risk to safety normal for an occupation does not render work in such occupation unsuitable for an individual who has had prior experience in such work and who is not suffering from any disability which would handicap him in it. The disqualification was also held to apply in the case of a carpenter who refused to accept work at his usual occupation on the sole ground that the employer would not agree to discharge a foreigner working on the same job.
Typical rulings in which failures to accept work were held not to be failures to accept suitable work are as follows: A former trainman, with a weak arm and subject to dizziness as the result of an injury, refused a call for work as car rider, that work being particularly hazardous for one having such disabilities. A railroad station organist, formerly paid $95 per month, after being unemployed only 5 weeks failed to accept a job as a kitchen helper at $55 a month. A claimant, standing third on a switchmen’s extra board and assured of rather frequent calls for work, refused an offer of full-time work as a crossing flagman at less then he had reasonable expectation of earning as an extra switchman; had he accepted, he would have been subject to loss of position on the switchmen’s roster. A claimant, 60 years of age, failed to accept work at a point 5 miles from his home, to and from which he would have been obliged to walk, since no transportation facilities were available. A claimant whose wife was so ill that at
52 • An nual Report of the Railroad Retirement Board
any time his presence at home might be essential, failed to accept an offer of 2 weeks’ work in his customary occupation at a point 180 miles from his home. A timekeeper, in poor physical condition and without experience in the performance of manual labor, refused work as a section hand.
Time Lapse in Adjudication of Claims
In unemployment insurance, more than in any other type of social insurance, it is essential that benefits be paid with the utmost celerity. Unlike old age or disabling illness, unemployment is a rapidly shifting condition. Unemployment benefits received after the worker has returned to service, or has qualified for relief, or was forced to accept employment in a position inferior in rank and pay to his usual occupation, defeat in part the purpose for which they are intended. Given the framework of the statute governing the frequency of payment, the speed with which benefits reach the claimant depends upon the design and smooth functioning of the administrative machinery. In railroad unemployment insurance, the controlling motive in favor of decentralization of operations in regional offices was the consideration of speed in the receipt and disposition of claims. Also on a number of other points—the selection of regional office cities, the instructions given to claim and countersigning agents, and the arrangements made with the disbursing offices of the Treasury—the factor of speed was paramount. Finally, in scheduling the operations in the regional offices themselves, the ideal sought was that claims received in the morning mail should be completely processed before the end of the day.
An indication of the extent to which this objective was attained is afforded by certain data compiled weekly for administrative control purposes. These are presented in table 16, in which the number of unprocessed claims on hand in the regional offices at the end of the last week of each month is shown by type and compared with the average daily receipts for the week. The balance on hand consists of two distinct groups of claims. One of them includes claims which require only routine processing, not fully completed as yet. The other includes claims which require special handling, such as transfer cases requiring the matching of two or more claim forms, claims from employees whose wage records the regional offices had to request from Washington, claims which must be investigated in the field in order to establish more clearly the identity of the registrant or the validity of registration with respect to particular days, or claims which require a new interpretation of statutory provisions. The first group, therefore, comprises only those claims the adjudication of which is completely under the control of the regional offices, whereas
Unemployment Insurance Act Administration • 53
in the handling of claims in the second group, the regional offices depend upon the assistance of the headquarters in Washington or of the field offices.
TABLE 16.—Balance on hand of unemployment insurance claims distributed by type, for selected dates in fiscal year 1939-40
Week ended— Claims received on average working day in week Balance of claims on hand at end of week
Awaiting routine processing Requiring special handling
Transfers of registration Other
1999
Aug. 4 .. _ 5, 514 17,121 (>) 15, 864
Sept. 1 _ _ _ 3,975 21,370 (i) 12,180
Sept. 29 _ _ _ 3, 618 7,482 1,773 6, 652
Oct. 27 2,909 1,825 873 3,454
Dec. 1 ... ... _ ... ... 3, 856 2,393 982 3,080
Dec. 29 4,910 4,190 1, 716 4,656
1940
Feb. 2 ... ... _ .. ... __ 5,982 2,938 1,648 4,722
Mar. 1 _ . _ 5,898 1,526 1, 343 3,400
Mar. 29._ . . _ . ... . . . 5,188 1,178 1,305 2,446
Apr. 26 _ . .. _ 4,809 1,072 1,163 1,853
M ay 31 3i 004 1, 393 1,138 1,456
June 28 2,902 1,457 1,156 1,692
1 Included in “other” group; no separate figures are available.
Table 16 shows that the number of claims on hand in the first group was fairly high in the first 2 months of operation. At the end of July, their number exceeded average receipts for 3 days, and almost a whole week’s receipts were awaiting processing at the end of August. Adjudication was expedited in September so that by the end of that month the balance on hand amounted to a little over 2 days’ receipts. In October and the 2 following months the balance did not exceed the receipts for 1 day, and in the second half of the fiscal year the balance was always less than one-half of the average number received in a single working day.
The balance of claims in the second group also declined after the end of August. This was due mainly to a reduction in the number of claims which were held in the first instance to require special handling. As the number of applications dropped, the number of claims the adjudication of which was controlled by the receipt of wage records from Washington also declined. Similarly, cases where processing was held to be other than routine because a new interpretation of a statutory provision was needed, decreased in number with the development of a more comprehensive set of adjudication instructions and precedent decisions. On the other hand, there was probably little or no change in the amount of time required for special handling, where
54 • An nual Report of the Railroad Retirement Board
such was needed. The only exception to this statement is the reduction in time effected by the change in procedure for cases involving the transfer of registrations from one region to another. Statistics available for the period from July 1939 through February 1940 indicate, however, that the additional time consumed in special handling did not exceed 5 days for over 60 percent of the claims in the group; only for 8 to 18 percent of the claims were more than 15 additional days required for complete processing.
A more comprehensive test of the speed with which claims were certified for benefit payment is available from sample tabulations which indicate the number of days that elapsed between the day on which the half-month was completed and the day on which the certification was made. Except for the preparation of benefit checks in the Treasury’s disbursing offices and their transmission in the mail to the beneficiaries, for which a period of 2 to 3 days should normally be allowed, these tabulations cover the entire time span between the end of the half-month and the receipt of the check. Percentage figures derived from these tabulations for 3 selected weeks (see table 17)
TABLE 17.—Unemployment insurance benefit certifications distributed by number of days elapsing between the, date on which half-month ended and the date on which certification was made, for
selected weeks in fiscal year 1939-40
show clearly the progress achieved during the year. In the last week of September 1939, about 25 percent of the certifications were made within 6 days of the date on which the half-month ended; but in the first week of June 1940 practically the same proportion of claims was certified within 4 days of the end of the half-month. The time
Certifications made in week of—
Item
Sept. 23-29, Jan. 20-26, June 1-7,
1939 1940 1940
Total number of certifications 19 995 27 693 18 638
Number of certifications in sample Percent of certifications in sample dated a specified number of days 3, 857 5,517 3,695
after completion of half-month:
1-2 days 0 4 2 n 2 2
3-4 days 4 9 18 2 21' 7
5 days 7 9 16 8 20 2
6 days 11 4 19 9 20 2
7 days 14 1 12 7 14 4
8 days 13 3 10 3 7 5
9-10 days 19 7 9 3 6 4
11-12 days . 9 7 3 5 2.9
13-15 days . _ 7 0 2 5 1.2
16-20 days . 4 1 1 9 1.3
21-25 days _ 2 6 1 1 .6
26-30 days 2 0 6 .5
31-45 days 1 8 * 6 .6
46-60 days 8 3 .1
61 days and over .’3 .3 .2
Unemployment Insurance Act Administration • 55
required to complete one-half of the certifications was nearly 8 days in September, nearly 6 days in the middle of the fiscal year, and only a little more than 5 days in the last month of operation. The proportion of certifications for which more than 15 days elapsed after the end of the half-month was nearly 12 percent at the end of the first quarter of operation; it dropped to less than 5 percent of the total by the middle of the year and was only 3.3 percent in the last month.
Employment Service
The act provides that the service to be rendered by the Board to railroad workers should consist not only of accepting registrations from the unemployed and the speedy certification of benefit payments for them, but should include also a series of measures which would tend to prevent unemployment and promote reemployment. In the fiscal year 1940, only tentative steps were made in the direction of realizing the second part of the program. In October 1939, a small experimental employment office was established in Chicago. It was felt that the experience gained from the operation of such an office would be of value in a later extension of the employment service on a nationwide basis. The Chicago office received cooperation from the Illinois and Indiana State employment services operating in the metropolitan Chicago district. On a number of occasions, the State services called on it to assist them to fill orders for jobs which they were unable to handle.
In approximately 10 months of operation, the Chicago office has interviewed and registered 6,458 unemployed railroad workers, nearly all of whom were current benefit claimants. Of this number, 3,324 have been referred to job openings for which orders have been received, and 2,284 unemployed railroad workers have thus been placed. Of those placed, only 267 were for employment expected to last less than 1 month. Of all placements made, 1,429 represented reemployment in the railroad industry, and 855 were in both allied and nonrailroad industries having need for employees with particular railroad skills.
Collection of Contributions
Unlike the contributions for the retirement system which are collected by the Treasury, the duty of collecting contributions under the Railroad Unemployment Insurance Act is vested in the Board. The regulations issued by the Board provide that contributions shall be collected quarterly and shall be due on or before the last day of the second month following the end of the calendar quarter. The quarter for contribution purposes is defined in the same way as for wage reports: employers with weekly pay rolls are instructed to include in
56 • Annual Report of the Railroad Retirement Board
the quarter all the weeks the major part of which fall within the quarter, but a cut-off is to be made at the end of the calendar year. Provision is made for the reconciliation of totals of creditable compensation obtained from individual wage reports with the totals of compensation on which contributions are paid; such reconciliation is simplified by the fact that the last due date for contributions is from 15 to 30 days later than the due date for wage reports. The regulations also include the usual type of interest and penalty provisions for delayed and delinquent contributions.
The major administrative problem relating to contributions concerns the collection from local lodges and other subordinate units of national labor organizations. The number of such units is fairly large and the contributions payable by them are so small as to entail a prohibitively high administrative cost. In a sense, this problem was not new in the fiscal year 1940; similar difficulties were presented in previous years in the collection of wage reports from these employers. In order to ease the situation in regard to both wage reports and contributions, agreements were entered with national labor organizations which provide that the national reporting officers shall, with the assistance of the field organization of the Board, collect wage reports and contributions from the subordinate units of the organizations and transmit them to the Board through the regional offices. The Board also attempted to resolve similar complications encountered in dealing with employee representatives by assigning the task of collecting wage reports and contributions from them to its field organization.12
12 For the future, these problems have been met by the 1940 amendments eliminating local lodges of labor organizations and employee representatives from the coverage of the unemployment insurance act (see ch. IV).
. IV .
AMENDMENTS TO THE RAILROAD UNEMPLOYMENT INSURANCE ACT
AMENDATORY bills introduced in May and June 1940 resulted in passage in both houses of the “act to amend the Railroad Unemployment Insurance Act * * * and for other purposes,” approved by the President on October 10. The new act modifies in several important respects the benefit structure of the unemployment insurance system and introduces a number of changes in its administration.
Inadequacy of Benefits Under Original Act
The request for amendments was due mainly to the dissatisfaction with the low level of benefits granted under the original act. During the first year of operation the benefit for a period of 15 consecutive days of unemployment amounted on the average to $18, and for a 15-day period with an average of 11.4 days of unemployment to about $10. These amounts are small, considering that the first average applies to more than 2 weeks of total unemployment and the second average measures compensation for more than 1% weeks of unemployment. In order to provide a quantitative measure of benefit adequacy, several tests were made.
Benefit compared with full-time wage.—One of them is a comparison of benefits with the full-time wage to show what proportion of the wage loss due to unemployment is compensated by the payment of benefits. In table 18 the average full-time wage for a period of 2 weeks in 1938 is compared with the average benefit for a period of 15 consecutive days of unemployment paid in the fiscal year 1940. The figures are presented by major occupational groups of employees of class I railroads, which account for 87 percent of the total compensable unemployment in the industry. In order to make the comparison as meaningful as possible, employees with annual earnings under $150, who cannot qualify for benefits, and employees with annual earnings of $2,000 or more, who normally experience little unemployment, have been omitted in the calculation of the average full-time wage.
The comparison shows that, on the average, benefits compensated for a little less than one-third of the wage loss due to unemployment,
57
58 • Annual Report of the Railroad Retirement Board
For occupations of lesser skill and lower pay about 40 percent of the wage loss was restored through benefits. This applies to extra gang and section men in maintenance of way, to shop laborers, to the helper-apprentice group, and to the miscellaneous group of low-wage occupations; together these occupations accounted for about 58 percent of the compensable unemployment for class I railroads. On the other hand, for the skilled and white-collar employees, the benefit was below 30 percent of the full-time wage. About one-third of the total compensable unemployment was experienced by this group, which includes the train and engine service with the benefit rate below 25 percent of the wage.
TABLE 18.—Average unemployment insurance benefit for half-month of total unemployment in fiscal year 1939-40, compared with full-time wage for same period in 1938, occupational groups of employees of class I railroads
Occupational groups Average full-time wage for 2 weeks, 1938 Average benefit for 15 consecutive days of unemployment, 1940 Percent of benefit to wage loss Percent of total benefit certifications, 1940
Total $58. 05 $18.11 31.2 100.0
Supervisory employees 77.80 20.98 27.0 1 9
Clerical employees 69.08 19. 39 28 1 3 5
Maintenance of way and structures, skilled 59. 26 19. 22 32.4 2.2
Maintenance of way and structures, laborers. __ 38.84 16. 62 42.8 33.8
Maintenance of equipment and stores, skilled.. 67. 56 20.08 29.7 10.9
Maintenance of equipment and stores, laborers. 43. 52 17. 97 41.3 6.1
Helpers and apprentices, maintenance „ 48. 22 18. 84 39.1 10.9
Station agents and telegraphers 70.90 19.49 27.5 1.9
Freight handlers.. . 50. 63 17.47 34. 5 6.8
Engineers and conductors . . 98.16 21.37 21. 8 1.1
Firemen and brakemen 78.97 18. 77 23.8 14.1
All other occupations 45. 08 17.85 39.6 6.8
Note.—Average full-time wage calculated from average hourly and daily earnings compiled by the Interstate Commerce Commission for 128 occupations. A full week was assumed to consist of 6 eight-hour days for all groups, other than skilled crafts in maintenance of way and structures and in maintenance of equipment and stores and helpers and apprentices (maintenance); for the latter a 40-hour week was used. The averages for occupational groups were calculated by means of weights representing number of employees with credited compensation of $150 to $1,999 for 1938. Average benefit calculated from a sample of benefit certifications, in which the occupation assigned was that last held in 1938.
The Interstate Commerce Commission occupational division numbers of the occupations in the groups in this table are as follows: Supervisory employees—Nos. 1-5, 11, 13,17, 19-22, 27-29, 38-40, 44, 45, 50-53, 68, 69, 75-78, 81, 84, 85, 88-90, 95, 99, 105, and 106; clerical employees—Nos. 6-10; maintenance of way and structures, skilled—Nos. 30-33, 35, 46-48; maintenance of way and structures, laborers—Nos. 41-43; maintenance of equipment and stores, skilled—Nos. 54-63 and 73; maintenance of equipment and stores, laborers—Nos. 67, 70-72; helpers and apprentices, maintenance—Nos. 34, 36, 37, 49, 64-66, and 74; station agents and telegraphers—Nos. 12, 79, 80, 82, and 83; freight handlers—Nos. 87, 91-94; engineers and conductors—Nos. 100, 111-114, 119,121-124; firemen and brakemen—Nos. 107-110, 115-118,120, 125-128.
This comparison shows that the level of benefits granted by the act was undoubtedly low. It was certainly lower than the level established in the Federal-State unemployment compensation system covering nonrailroad employees, which provides in principle for benefits equal to one-half of the full-time wage. That the comparison was so unfavorable to the railroad act is not surprising. One reason for it is that most State plans provide benefits as high as $15, and
Unemployment Insurance Act Amendments • 59
some as high as $18, per week whereas under the railroad act the top benefit was $24 for a half-month, or less than $12 per week.
Comparison with State benefits.-—Another test of benefit adequacy was made in a sample study of cases in which the benefits under the unemployment compensation law of the State where the railroad worker resided were compared with his benefits under the railroad act. For this study about 100 cases were selected for each State from the group of applicants under the railroad act in the first month of operation. The latest provisions of the State law were used in calculating the weekly benefit for total unemployment (those on the statute books by March 1, 1940); the base period was determined as if the workers first applied for benefits on July 1, 1939. In order to
TABLE 19.—Average weekly benefit for total unemployment under unemployment compensation laws of selected States, compared with equivalent weekly benefit under Railroad Unemployment
Insurance Act (prior to 1940 amendment)
State
Alabama____________________________________
Arkansas___________________________________
California_________________________________
Colorado___________________________________
Florida____________________________________
Georgia____________________________________
Illinois___________________________________
Indiana___________
Iowa_______________________________________
Kansas________________________________
Kentucky___________________________________
Louisiana______________________________LLLL
Maryland________________________________’’y
Massachusetts____________________________/"
Michigan_________________________________’’
Minnesota________________________
Missouri_____________________LLLLL
Montana______________________L„LLL I
Nebraska_________________________LLL'L"
New Jersey___________________LILLLLLL
New York_________________________
North Carolina____ .
Ohio_______________________________________
Pennsylvania____________
Tennessee____________________LLLLLLLL
Texas________________________
Virginia____......... ..
Washington______________LLLLLLLLLL
West Virginia________________LLLLLLL "
Average weekly benefit under State law Percent of cases in which weekly benefit under State law is—
Above R. U. I. A. rate Equal to R. U. I. A. rate Below R. U. I. A. rate
$8.50 35 10 55
9. 25 15.00 32 100 20 48
11.50 57 12 31
13. 50 76 17 7
11.25 56 13 31
14.00 90 3 7
12. 50 69 7 24
12.50 70 30
9. 75 39 16 45
11.75 61 39
10. 75 63 37
10. 25 52 13 35
12. 25 67 5 28
14.75 90 2 8
11.50 60 15 25
11.75 67 33
12.00 66 19 15
10.50 52 22 26
11.00 57 9 34
12. 25 66 13 21
7.25 5 11 84
13.00 72 13 15
14.25 83 17
9.75 43 20 37
8. 75 30 8 62
11.50 68 32
12. 25 67 16 17
8.00 13 4 83
hJStE-i~Based ?n a samPle of about 100 cases per State. The results originally compiled separately by uenent classes under the railroad act were combined for the State as a whole by means of weights proportion-fnr J° 1. ■ ®r of benefit certifications in fiscal year 1940. For this reason the average railroad benefit
nil btate 1S $9-25- The average State benefit was rounded to multiples of 25 cents. The table covers L exeeP( Wisconsin, which include at least 1 percent of the employees covered under the railroad • e Provisions of the Wisconsin law are such that it was not possible to calculate the State benefit on ine oasis of wage data available to the Board.
60 • Annual Report of the Railroad Retirement Board
guard against any exaggeration of the inadequacy of railroad benefits, the weekly benefit under the railroad act was assumed to equal one-half the benefit for a half-month with 15 days of unemployment. Cases which were found to be ineligible for either State benefits or railroad benefits because their base-period earnings were insufficient were eliminated from this comparison. The weekly benefit amounts under the State and the Federal act were compared for each case and the results of the comparison were compiled separately for each benefit class in each State, which were then combined to obtain summary averages by States. The results of this comparison for States, which include at least 1 percent of the employees covered under the railroad act, are shown in table 19.
Of the 29 States included in the table there are 4—Alabama, North Carolina, Texas, and West Virginia—in which the State weekly benefit was clearly lower than the equivalent weekly benefit under the railroad act. Only in these States was the average benefit below $9.25, which was the average railroad benefit for the cases used in this study; and only in these States more than half the cases have a State benefit lower than the railroad benefit. Except for Arkansas, all the other States showed higher weekly rates. In 4 of them (California, Illinois, Michigan, and Pennsylvania) which include nearly 26 percent of the total number of employees covered under the railroad act, the average State benefit was at least 50 percent greater than under the Federal act. This test shows therefore that railroad benefits were low not only as measured by general standards widely recognized in this country; it also indicates clearly the inadequacy of railroad benefits by comparison with those actually received by unemployed railroad workers prior to their exclusion from State coverage and transfer to a separate Federal system for railroad employees.
A summary of the results of the State comparison for the country as a whole is even more illuminating, particularly when analyzed by benefit classes under the act (see table 20). It shows that on the average the equivalent weekly benefit under the railroad act was about 29 percent lower than State rates. The difference between the two was in favor of the railroad act only for the lowest benefit class; for each of the higher benefit classes, the State average benefit was above the railroad benefit, the excess ranging from $1.50 to $4.00 per week. The higher the benefit class, the greater apparently was the difference in favor of State rates. This is shown by the percentage of cases in which the State rate was above the railroad benefit; it is also reflected in the averages, except for the two highest benefit classes in which the usual State maximum limit of $15 per week tended to reduce the average calculated for the country.
Unemployment Insurance Act Amendments • 61
TABLE 20.—Weekly benefit rates and maximum benefit amounts for year under the Railroad Unemployment Insurance Act (prior to amendment in 1940) compared with average State rates and maximum amounts
Note.—This table covers 43 of the 49 State jurisdictions in continental United States. The 6 jurisdictions omitted—Delaware, District of Columbia, Nevada, Rhode Island, Vermont, and Wisconsin—account for less than 4 percent of the total employees covered under the railroad act; for them calculations on basis of State laws could not be carried out because of insufficient data available in the files of the Board.
The averages for the United States were compiled from State figures by means of weights proportionate to the number of railroad employees in the State.
The United States summary also indicates that on the whole the maximum amount of benefits for the year was larger under the railroad act. This was due to the longer duration of benefits, the Federal act providing for a maximum benefit period of 5 months as compared with the 16 weeks maximum duration usual in the States. Despite the lower weekly benefit rates, the maximum for the year was definitely greater under the railroad act for benefit classes with base-year compensation under $750 and about the same on the average under both systems for employees with annual compensation of $750 or over. It appears, therefore, that for the higher benefit classes the effect of the low benefit rate under the railroad act was not compensated by the longer duration of benefits; on the average, employees in these groups received about the same total amount of benefits, but in order to become entitled to these total amounts they had to remain unemployed for a period nearly 5 weeks longer under the Federal act than under the State acts.
Benefits for intermittent unemployment.—In both tests of benefit levels under the act, the calculations were made only for cases in which the worker was unemployed for 15 consecutive days in a period. The conclusions drawn and the measures of benefit adequacy obtained apply therefore only to fairly long stretches of continuous unemployment. For short spells of unemployment or for intermittent unem-
276117—41--5
Item Total Employees with credited railroad compensation for 1938 of—
$150-$199 $200-$474 $475-$749 $750-$1,024 $1,025-$1,299 $1,300 and over
Weekly benefit: Under R. U. I. A $9.25 $11.90 74 3 23 $185 $163 33 5 62 $7.00 $5.75 21 5 74 $140 $54 6 $8. 00 $9.50 60 4 36 $160 $118 25 2 73 $9. 00 $12.50 77 4 19 $180 $167 36 2 62 $10. 00 $14. 25 86 3 11 $200 $205 47 1 52 $11.00 $15.00 97 1 2 $220 $219 55 $12.00 $15. 25 100
Average under State laws.. . _ .
Percent of cases in which weekly benefit under State laws is: Above R. U. I. A. rate _
Same as R. U. I. A. rate.
Below R. U. I. A. rate.. _ ..
Maximum benefits for year: Under R. U. I. A . $240 $241 27 30 43
Average under State laws . . .
Percent of eases in which maximum under State laws is: Above R. U. I. A. .
Same as R. U. I. A .
Below R. U. I. A. . .. ... 94 45
62 • Annual Report of the Railroad Retirement Board
ployment extending over long periods, the benefits granted under the act were even lower than for continuous unemployment. This can be inferred directly from the statutory formula which provided that benefits be paid only for unemployment in excess of 7 days in a 15-day period. Under this formula a worker unemployed for 7 or fewer days, whether consecutive or scattered over a 15-day period, received no benefits; and if his unemployment included, say, 10 days, he was granted less than half of the benefit payable for a 15-day period, although his unemployment covered two-thirds of that period. A complete statement of the relationship under this formula between benefits for total unemployment in a period of 15 days and for unemployment covering only part of the period may be presented in terms of the two percentage series shown below:
These series show that the rate of benefit per day of unemployment in the case of 8 days of unemployment amounted to only 25 percent of the rate applicable to the case of 15 days of unemployment. A comparison for 9 days of unemployment shows that the rate of benefit for intermittent unemployment was 42 percent of the rate for total unemployment. The larger the number of days of unemployment in the 15-day period, the closer did the rate of benefit per day for intermittent unemployment approach the rate for total unemployment. Nevertheless, it is clear that intermittent unemployment was compensated over the entire range at a rate lower than total unemployment.
Waiting period.—Another source of dissatisfaction with the benefit provisions of the act was the length of the waiting period. As passed in 1938, the act provided for a waiting period of 1 half-month with 15 days of unemployment or 2 half-months with at least 8 days of unemployment each. In the 1939 amendments, passed before benefit payments began, the waiting period was reduced to 1 half-month with at least 8 days of unemployment. Even this, however, proved somewhat onerous because a worker could not become entitled to
Duration of unemployment in 15-day period Percent of unemployment to maximum in 15-day period Percent of benefit to maximum for 15-day period
1-7 days . 7-47 53 60 0 13 25 38 50 63 75 88 100
8 days _ .
9 days
10 days 67
11 days. ... 73 80
12 days.
13 days. 87
14 days ___ ... 93 100
15 days..
Unemployment Insurance Act Amendments • 63
benefits until he had 2 half-months of unemployment. In addition, a week or so had to be allowed for the transmission of the various documents in the mail and for the adjudication of claims. Therefore, 37 or 38 days would elapse between the first day of unemployment and the receipt of the first benefit check.
Extent of possible increase in benefits.—The inadequacy of benefit levels stood out in sharp contrast to the large amount of contributions received under the act for the purpose of financing benefit payments. By the end of September 1940 a total of about $65,470,000 had been collected in contributions on pay rolls for the period from July 1939 through June 1940. Ninety percent of this figure, or about $58,923,000, was deposited to the railroad unemployment insurance account from which benefits are paid. On the other hand, the total amount of benefits certified during the fiscal year was only $14,811,000; even the addition of an allowance for benefits certified after the close of the fiscal year for unemployment in the second half of June, would not raise the total of benefits for unemployment in the fiscal year much above $15,000,000.
It is conceivable, of course, that in a year of highly favorable employment conditions only 25 percent of the contributions for the year should be expended in benefits. It is doubtful, however, whether the fiscal year 1940 was a period when unemployment was so exceptionally low and employment high. For class I railroads, employment during this fiscal year was about 1,011,400 on the average; this figure was exceeded by more than 100,000 in the calendar year 1937 when employment averaged about 1,114,700. It was obvious, therefore, that some increase in benefits could be effected without raising the original rate of contributions.
Just how far it is safe to raise benefit levels is a question difficult to answer with absolute certainty. There are no complete data which would measure for the railroad industry the fluctuations in benefit payments and contribution accruals as between good years and bad years, periods of prosperity when employment is high and periods of depression when benefit payments rise steeply because of severe unemployment and contributions decline because of reduction in pay rolls. Such data cannot become available until sufficient experience is accumulated in the operation of the railroad unemployment insurance system or a similar system. For the time being, reliance must be placed on such approximate indications as can be derived from other sources.
The experience of the British unemployment insurance system from 1929 through 1938 shows that at their peak annual benefit payments are about 2.4 times as large as the outlay in years when unem
64 • Annual Report of the Railroad Retirement Board
ployment is at its lowest. The differences between the benefit features of the British plan and the employment history of the British industry on the one hand, and the corresponding factors in the railroad system in this country on the other, all point to the fact that this measure of the range of benefit payments exaggerates the probable experience under the railroad act.
Paralleling this measure of fluctuations in benefits, statistics of railroad pay rolls in this country for the period from 1933 through 1939 indicate that in a year of low employment contributions are likely to be not less than 70 percent of the contributions applicable to a year of high employment. Even after account is taken of probable increases in railroad pay rolls in 1940 and 1941, as a result of industrial expansion in connection with the defense program, the lowest annual contribution amounts to not less than 66 percent of the highest annual figure.
Using the conservative assumption that the number of good years is the same as the number of bad years, the following equation can be set up: the total of benefits in a good year and in a bad year equals the total of contributions in a good year and in a bad year. Since benefits in a bad year were estimated to equal 2.4 times the benefits in a good year and contributions in a bad year to decline to 0.66 of contributions in a good year, the above equation can be transformed to read: 3.4 benefits in a good year equal 1.66 contributions in a good year. This equation shows that in a very good year benefit outlay may amount to nearly 49 percent of the contributions accruing for that year without destroying the solvency of the fund; this would permit the payment in a bad year of benefits 78 percent above the contributions applying to such period. In the light of this calculation, the experience of 1939-40, with benefits amounting to less than 26 percent of the contribution accruals, means that the benefit outlay could be nearly doubled. Since conditions in the fiscal year 1940 were by no means the most favorable for the period used in this estimate, it is safe to say that benefit payments could be raised by more than 100 percent, without destroying the solvency of the fund.
Increase in Benefits Under the Amended Act
The amendments approved on October 10 provide for a substantial addition in unemployment benefits to qualified workers. This is accomplished by a series of four changes as follows:
1. For the half-month of 15 consecutive days in which benefits are payable for every day of unemployment in excess of 7, the amendment substitutes a registration period of 14 consecutive days in which benefits are payable for every day of unemployment in excess of 4.
Unemployment Insurance Act Amendments • 65
2. For employees with credited compensation in the base year of $1,000 or more, the amendment provides for raising the daily benefit amount, the largest increase being for employees with compensation of $1,300 or over (see table 22).
3. For the maximum of 80 daily benefits in the year the amendment substitutes a maximum of 100 daily benefits.
4. For the waiting period of 1 half-month with at least 8 days of unemployment, the amendment substitutes a requirement of one registration period with at least 7 days of unemployment, in which no benefits are paid for the first 7 days.
Increase in number of benefit days.—The most far-reaching of the changes is obviously the increase in the number of days of unemployment for which benefits are paid in one registration period. This change raises benefits all along the line, and the relative increase is greater the smaller the number of days of unemployment in the registration period. For workers with 5 to 7 days of unemployment the amendment provides some benefits where none were payable under the original act, and for workers with 8 to 14 days of unemployment an addition of 3 benefit days is made. By virtue of this change alone, the increase in benefits for 14 days of unemployment amounts to 43 percent, and for 8-13 days of unemployment the increase averages 86 percent. The fact that the benefit for intermittent or partial unemployment in a 14-day period was raised much more than the benefit for total unemployment means also that the difference between total and partial benefit rates, provided in the original act, was considerably reduced and in some cases, entirely eliminated. For example, a worker with 8 days’ unemployment in a period, who under the original act received only 13 percent of the maximum benefit although he experienced 53 percent of the maximum unemployment, will now receive 40 percent of the maximum benefit for 57 percent of maximum unemployment.
The comparison of the amended with the original act on this point is somewhat obscured by the shift from a 15-day half-month to a 14-day registration period. This change was recommended because difficulties are likely to be encountered with half-months which include 3 Saturdays and 2 Sundays or 2 Saturdays and 3 Sundays. Employees who normally work a 5-day week would, when totally unemployed, receive under the half-mon th formula benefits for 11 days, or for 1 day more than they were actually unemployed. To take care of such a situation, retention of the half-month would have necessitated the payment of benefits only for days of unemployment in excess of 5, which is less generous than compensating every day of unemployment in excess of 4 in a 14-day registration period.
66 • Annual Report of the Railroad Retirement Board
Increase in daily benefit. The increase in daily benefit amounts for employees with base year compensation of $1,000 or over was designed to equalize, insofar as benefits are concerned, the position of employees in the higher wage brackets with those at the lower end of the wage scale. Under the original act, employees whose monthly wage exceeded $96 could not under any conditions qualify for a benefit equal to a half of the wage loss sustained from unemployment, because the maximum benefit for a half-month with 15 days of unemployment was $24, or $48 for a month. By the first change described above, the maximum benefit per week was raised from less than $12 to $15. This, however, would still leave workers whose full-time weekly wage is above $30 at a disadvantage in comparison with the lower-paid groups. Without an increase in daily benefits even employees with weekly wages of $26 or $27 would be in an inferior position. In order to qualify for benefits approximating half of their wage, they would need at least $1,025 in base-year compensation, or more than 39 weeks of full employment, whereas employees with a weekly wage of $24 or less could earn the right to a proportionate benefit on the basis of not more than 20 weeks of full employment in the preceding calendar year.
The effect of the increase in daily benefit amounts is to raise maxi-mum weekly benefits for employees with base-year compensation of $1,000 to $1,299 from $13.75 to $15 and for employees with com-pensation of $1,300 and over from $15 to $17.50 for some and to $20 for otheis. Thus somewhat more liberal weekly rates are provided than in State unemployment compensation systems, where the predominant maximum rate is $15, although in some jurisdictions weekly benefits of $16 and $18 are paid. By this change, the situation with respect to benefits of employees with weekly wages of $27 to $40 is brought closer to the position of employees with weekly wage rates of $25 oi less. As may be seen from table 21, which is limited to employees with annual wages of $150 to $2,000, who are likely to experience compensable unemployment, the group with wages of $27 to $40 accounts for nearly 43 percent of the total. This table also shows that employees with wages exceeding $40 per week, who cannot qualify for a benefit compensating half of their wage loss even under the amended law, constitute less than 9 percent of the total. Reference to table 10, chapter II, will also show that even in so favorable a period as the fiscal year 1940, when unemployment in the industry was mainly seasonal in character, the increase in daily benefit amounts provided by the amendments would have affected about 23 percent of the number of employees for whom benefits were certified and would have increased about 19 percent of all benefit certifications.
Unemployment Insurance Act Amendments • 67
TABLE 21.—Number and percent of employees of class I railroads with credited compensation of $150 to $2,000 for 1938, by amount of full-time weekly wage
Estimated full-time weekly wage Number Percent Estimated full-time weekly wage Number Percent
790,506 100.0 $27.00-$28.99 27,333 3.4
$29.00-$30.99 14,674 1.9
Under $17.00 13, 714 1.7 $31.00-$32.99 50,907 6.4
$17.00—$18.99 50, 614 6.4 $33.00-$34.99 140,545 17.8
$19.00-$20.99 152, 548 19.3 $35.00-$39.99 __ 105,084 13.3
$21.00-$22.99 50' 479 6.4 $40.00-$44.99 43,434 5.5
$23.00-$24.99 46,458 5.9 $45.00-$49.99 it 784 1.5
$25.00-$26.99 71i 026 9.0 $50.00 and over __ 11,906 1.5
Note.—Full-time wage by occupations estimated from average hourly or daily earnings for 1938 as compiled by the Interstate Commerce Commission, on the assumption of a 48-hour or 6-day week for all occupations, except the skilled crafts in maintenance of way and structures and in maintenance of equipment and their helpers and apprentices; for these groups a 40-hour week was assumed. The number of employees was obtained from the Board’s tabulations for 1938. The table excludes employees whose occupations were not reported to the Board as well as employees in 4 relatively small occupations not recognized as such in the occupational classification used by the commission.
Increase in benefits for the year.—The increase in the maximum benefits for the year from 80 daily benefit amounts to 100 is not an independent addition to the rights granted under the original act. It is merely a reflection of the increase in the number of days for which benefits are payable in a single half-month or registration period. The original act provided for a maximum of 8 compensable days in a benefit period and for a maximum of 10 full benefit periods in a year, thus assuring 80 days of benefit in a year. The amended law makes 10 days compensable in a benefit period and allows for 10 full benefit periods in a year, thus providing for 100 days of benefit. Failure to increase maximum benefits would, in the light of other changes made, have resulted in a reduction in the length of the period for which benefits are paid from 5 months provided in the original act to less than 16 weeks.1
A summary statement of the three changes described above is presented in table 22. It shows that for employees with annual compensation under $1,000, the increase in maximum benefits for a single period and also for the year amounts to 25 percent. For employees with higher base-year compensation, the increase is greater because the daily benefit amounts for these groups has been raised; the addition ranges between 36 and 67 percent. Unfortunately, it has not
1 A proposal for an independent increase in maximum benefits was contained in the Wagner-Crosser bill on which the amendatory act as finally adopted was largely based. Under this proposal, an eligible claimant who had also been eligible in the preceding benefit year would have been entitled to 100 days of benefit in the course of a benefit year plus an additional number of days equal to the difference between 100 and the number of days for which benefits were payable in the preceding benefit year. The carry-over of unused benefit rights from 1 year into the next would have been limited, however, to a maximum of 50 days of benefit. The carry-over was an adaptation of the principle incorporated in British unemployment insurance and in some of the early state unemployment compensation laws in this country, in accordance with which a man who has suffered little unemployment in the past is granted additional right to benefits. If enacted, it would have proved particularly helpful to workers who in normal times are fully employed but who are laid off for long periods in depression.
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been possible to include in this table figures reflecting the changes for employees whose unemployment is distributed over the year in short spells; as indicated in the discussion of the registration-period formula, the increase in benefits for them is much greater than for workers with continuous unemployment.
TABLE 22.—Comparison of benefits under Railroad Unemployment Insurance Act, before and after 1940 amendments
Credited compensation in base year Present act Amended act
Daily benefit amount Maximum benefits in one half-month Maximum benefits in 1 benefit year Daily benefit amount Maximum benefits in 1 registration period Maximum benefits in 1 benefit year
$150.00-$199.99 $1.75 $14.00 $140 $1.75 $17. 50 $175
$200.00-$474.99 2.00 16 00 160 2 oo 90 OO
$475.00-$749.99 2. 25 18 00 180
$750.00-$999.99 2.50 20 00 200 25 00
$1,000.00-$!,024.99 2.50 20.00 200 3.00 30.00 300
$l,025.00-$l,299.99 2. 75 22.00 220 3.00 30.00 300
$1,300.00-$!,599.99 3. 00 24.00 240 3.50 35.00 350
$1,600.00 and over 3.00 24. 00 240 4.00 40.00 400
Change in the waiting period.—The reduction in the waiting period in the amended act is more drastic than might appear at first sight. Under the act as it existed in the fiscal year 1940, no benefits were payable for the first half-month of unemployment. If the half-month included less than 8 days of unemployment, it was ineffective; and if the worker registered for 8 or more days of unemployment, waitingperiod credit but no benefit was allowed for the half-month. Under the amended law, the first registration period with 6 or fewer days of unemployment will be ineffective. If it contains 7 days of unemployment only, waiting-period credit will be certified. If it includes 8 or more days of unemployment, the employee will receive waiting-period credit as well as benefits for each day of unemployment in excess of 7. In a first registration period with 14 days of unemployment, therefore, 7 days will be compensable, as compared with 10 days in second and subsequent registration periods. The waiting-period requirement thus amounts to a net addition of 3 noncompensable days of unemployment in the first registration period, a considerable reduction from the 8 noncompensable days of unemployment in the act effective in the fiscal year 1940.
Apart from an obvious enhancement of benefit rights, the reduction in the waiting period meets two other objectives. First, for men who remain continuously unemployed it reduces from 37 days to 21 days the lapse of time between the first occurrence of unemployment and the receipt of the first benefit check. Second, it eliminates a dis
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criminatory feature of the original act by reason of which credit for waiting period was allowed on the basis of 8 days of unemployment in some cases and as many as 15 days of unemployment in others.
Addition to benefit cost.—The changes made in the benefit formula of the act were estimated, during the early stages of congressional discussions of the legislation, to entail an additional cost amounting to 72 percent. This figure was composed of several items. The substitution of a 14-day period with a maximum of 10 benefit days, for a 15-day period with a maximum of 8 benefit days, with the necessary increase in the maximum number of benefit days in the year from 80 to 100, was estimated to add about 42.8 percent. The changes in daily benefit amounts, limited as they are to employees with baseyear compensation of $1,000 or more, were estimated to add only about 5.6 percent. The reduction in the waiting period was calculated to increase benefit outlay by about 14 percent.
The estimated annual increase in cost applies to a complete business cycle; that is, to a period which includes years of prosperity and years of depression in about the same proportion as they are likely to recur over the next generation. It is probable that in a good year the addition to cost will be higher than this average indicates and in a bad year somewhat lower. Moreover, the basis for the calculation was incomplete, because there was less than a year’s experience with actual operation at the time the estimate was prepared; for a comprehensive estimate, statistics relating to at least one full business cycle would be required. For this reason, the estimate was deliberately made very conservative, the thought being that it would be better to overstate the cost than to underestimate it and run the risk of endangering the solvency of the unemployment insurance fund.
The conservative character of the estimate was confirmed later when information covering the entire fiscal year 1940 became available. Calculations based on these figures show that if the amended act were effective during that year, the benefit outlay would have amounted to $23,668,000, as compared with the actual total of approximately $14,811,000. The increase for the fiscal year 1940, when unemployment was relatively low, would therefore have been about 60 percent, considerably less than the estimated average increase of 72 percent.
Certain details of the estimated increase in benefit payments for the fiscal year 1940 are of interest, revealing as they do the important features of the changes in the benefit formula. As may be seen from table 23, the increase is smallest (amounting to about 25 percent) for beneficiaries with base-year compensation under $1,025, who drew the maximum amount of benefits to which they were entitled for the year. For these groups, the only significant change is the increase
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in the number of days for which benefits are payable in the course of a single period and therefore in the number of benefit days in the year. Except for employees with compensation of $1,000 to $1,025, no change in daily benefit amounts has been made for this group. The reduction in the waiting period is of no importance here because these employees remained unemployed long enough during the year to draw the maximum benefits even when the required waiting period was longer. For the beneficiaries in the base-year compensation classes of $1,025 and over who drew the maximum benefits for the year, the increase is somewhat greater because their rights also have been raised through an increase in the daily benefit amounts. Still larger increases are shown for beneficiaries who were not unemployed long enough to draw the maximum amount of benefits, because their rights are considerably enhanced by the reduction in the waiting period and because they include a significant proportion of employees with intermittent unemployment. For beneficiaries of this type, the increase is from 63 to 65 percent in compensation classes under $1,025, and from 72 to 118 percent in the higher compensation groups. In the latter groups, the amount of unemployment in the year is lowest and the proportion of intermittent unemployment is highest; in addition, rights are further enhanced by substantial increases in daily benefit amounts.
TABLE 23.—Estimated percent increase in amount of benefits certified under Railroad Unemployment Insurance Act in fiscal year 1939-40 if benefit provisions approved Oct. 10, 1940, had been in effect
Base-year compensation Total percent increase Percent increase for beneficiaries who received maximum for year Percent increase for other beneficiaries
Total $150-$199 59.8 45. 9 30.4 25 0 75.6 62 9
$200-$474 48 1 25 0 63 4
$475-$749 52. 5 25 0 65 0
$750-$l,024 69. 2 27 5 72 0
$l,025-$l,299 75. 4 86 4 91 7
$1,300 and over 98.0 58.1 117.6
Whether the changes in the benefit formula would entail an additional benefit cost of 72 percent or 60 percent, it was clear that the amendments could be put into effect without any increase in the rate of contribution provided in the original act. The estimates previously referred to indicated that benefit levels could be raised by 100 percent without endangering the solvency of the fund from which benefits are paid. Moreover, the system already had a large reserve of more than $130,000,000, consisting of a $30,000,000 excess in collections over
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benefit payments for the fiscal year 1940, and of over $100,000,000 transferable from State unemployment reserves under section 13 of the act. The solvency of the system for several years to come therefore would have been beyond any reasonable doubt even if benefits were raised considerably more than they were, or even if the estimates of probable cost were seriously understated.2
Change in Definition of Benefit Year
In addition to modifications in the benefit structure of the system described above, the amendatory act approved in October contains a number of other changes which relate mainly to the administrative procedures and affect only incidentally the benefit rights of covered employees. Perhaps the most important of these is the change in the definition of the benefit year. Under the original act the benefit year of an employee was defined as a period of 12 months beginning with the first day of the first half-month for which benefits were payable to him, or with the first day of the first half-month for which benefits were payable after the expiration of the preceding benefit year. During his benefit year the daily benefit amount of an employee was determined by the amount of credited compensation for the base year. For benefit years begun between July 1 and December 31, the base year was the calendar year preceding July 1. For benefit years begun between January 1 and June 30, the base year was the second preceding calendar year. Thus for employees who began a benefit year between July 1, 1939, and June 30, 1940, the base year was the calendar year 1938.
The definition contained in the original act meant that regardless of when the benefit year began it extended over a period of 12 months. A new benefit year could not begin until the expiration of the preceding benefit year. An employee starting a benefit year in June 1940, for example, could not begin another benefit year until June 1941. During this period his daily benefit amount was related to wages earned in 1938, removed by about two years from his unemployment. Nor could he exercise benefit rights based on wages for 1939 during any of that time, even though it might be to his advantage to do so because he had exhausted the rights based on 1938 wages or because the rights based on 1939 wages were larger. The principle underlying the benefit-year concept of the original act was that the amount of benefits to which a claimant was entitled depended upon the time when he first became unemployed.
2 In fact some consideration was given in the Congressional discussion of the amendments to possible changes in the contribution rate. The proposal made, however, was for a reduction rather than an increase in the contribution rate. The rate was to be reduced from 3 percent to 2 percent when the reserve exceeded $100,000,000 and to 1 percent when it exceeded $125,000,000. This proposal was rejected.
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The amended act departs from this principle by defining the benefit year uniformly for all employees as a period from July of one year through June of the following year. For simplicity in administration, it is provided that a registration period begun in June and ended in July shall be regarded as belonging to the benefit year expiring in June. The base year is also uniform for this uniform benefit year since it is the calendar year preceding the beginning of the benefit year. The employee’s rights in the benefit year are therefore dependent upon the time when his unemployment occurs rather than the particular date when he happens to become unemployed for the first time. Thus a claimant who begins to draw benefits in June 1941 will have his daily benefit amount determined by wages credited for 1939, but beginning in July 1941 his benefit rights will be based on wages credited for 1940. Also, an employee who began to draw benefits, say, in November 1940 and exhausted his rights by the following April will not have to wait until November 1941 to begin a new benefit year. If the wages earned in 1940 are sufficient to entitle him to benefits, he can begin to draw them in July 1941.
The change in the benefit year eliminates a number of unnecessary complexities which are apt to lead to misunderstanding and impede the administrative process. The employee’s right to benefits is made dependent upon the amount of credited compensation for the latest complete calendar year for which official records had been compiled. These records are the certificates of service months and wages prepared by the Board for the preceding calendar year and distributed to all employees in the latter part of May and in June. Shortly after he receives such a certificate, the worker may, if unemployed, claim benefits on the basis of this record. The right thus established does not carry him past June of the next year when the certificate for the following calendar year will have reached him and thus provided a basis for benefit rights in the next benefit year.
In connection with the new definition of the benefit year, a change was also made in the time when the waiting period is served. Under the original act, the waiting period was to be served within 6 months of the beginning of the benefit year. Under the amended act, the waiting period will be served in the first registration period in the benefit year which includes 7 or more days of unemployment. This will result in considerable simplification of operations since it will eliminate all registrations of workers who are not currently entitled to benefits but who might begin a new benefit year within 6 months.3 Under the amended act, a claimant cannot serve a waiting period for a benefit year beginning on July 1 before that date. Having served
• The difficulties caused by such registrations in the fiscal year 1940 are discussed in ch. III.
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such a waiting period, he does not need to serve any additional waiting period until the following July.
The changes in the benefit formula and in the definition of the benefit year went into effect on November 1, 1940. A new benefit year therefore began for all employees on or about November 1 to end by July 1, 1941. This creates a special problem in relation to waiting periods served and benefits drawn during the period from July through October 1940. Some of the benefits in that period were based on credited compensation for 1938 rather than for 1939, a more appropriate base under the amended act for a benefit year that is to be completed by July 1941. This problem is met by a series of provisions based on the principle that all unemployment which occurred subsequent to June 30, 1940, is to be regarded as if it fell within the benefit year ending June 30, 1941. Employees who completed a waiting period after June 30, 1940, will not need to serve another waiting period before July 1941. Employees to whom benefits were payable for days of unemployment in half-months begun after June 30 and before November 1, 1940, will have these days charged against their right to 100 days of benefit in the benefit year ending June 30, 1941, whether the benefits were paid on the basis of wages for 1938 or on the basis of wages for 1939.
Changes in Definition of Unemployment
The amendatory act carries a number of changes in the definitions of various terms modifying the concept of a day with respect to which an employee may register and claim waiting-period credit or benefits. These changes are described separately below.
Income from selfr-employment.—Originally the act provided that no day can be regarded as a day of unemployment if remuneration is payable with respect to such day. Remuneration was defined restrictively as pay for services for hire only (although it specifically included tips). Thus a claimant who was deriving income from some work during the lay-off period could be barred from benefits only if the work was performed in the capacity of an employee or on grounds of unavailability for suitable employment.
The first year’s experience revealed at least two difficulties in connection with this provision. First, it was apparent that in some cases its literal enforcement resulted in discrimination that could not be justified on any objective consideration of the facts. An electrician, for example, might have worked for an electrical contractor in which case his wage would definitely have barred him from benefits; or he might have undertaken to perform the same work directly for the customer or customers of the electrical contractor in which case the
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pay received would not have been for services for hire and would not have disqualified him from benefits. Second, it was obvious that to disqualify any day of unemployment on which the man might have earned a few cents as an employee was unduly harsh. This difficulty assumed grotesque proportions in some cases.4
These difficulties are resolved in the amended law. It provides that the term remuneration includes also earned income other than for services for hire, if its accrual is ascertainable with respect to particular days, so that a day with respect to which such income from self-employment is accruing cannot be regarded as a day of unemployment. However, an employee may be entitled to subsidiary remuneration with respect to a particular day and still register as unemployed for such day. Subsidiary remuneration is defined as pay not in excess of an average of $1 a day for work which requires substantially less than full time and which can be done without interfering with the holding of a full-time job in another occupation.
In order to assure consistency between the base-year earnings qualifications for benefit and the permission to earn as much as $1 per day without losing the status of an unemployed claimant, the amended act carries a special proviso for employees whose subsidiary remuneration for the base year must be included in compensation in order to make them eligible for benefits. For such employees earnings during the benefit year in the position or occupation in which, in the base year, they earned subsidiary remuneration must be considered as remuneration; the accrual of such earnings on a day or days in the benefit year would disqualify them as days of unemployment.
Sundays and holidays.—The original act specified that an employee might register as unemployed with respect to any day in the week, including Sundays and holidays. When only days of unemployment in excess of 7 in a half-month were compensable, there was no reason to register with respect to Sundays and holidays unless the employee had at least 4 additional days of unemployment. With benefits payable for each day in excess of 4 in a 14-day period, it appears more important to prevent a large volume of Sunday and holiday registrations on the chance that one or more days of actual unemployment will be added in the course of the same registration period. The amended act provides accordingly that no Sunday or holiday generally observed in the locality may be claimed as a day of unemployment unless such Sunday or holiday is immediately preceded and immediately followed by a day of unemployment. When the Sunday or holiday is the last day of a registration period, it may be claimed
4 See also discussion of adjudication instructions bearing on the definition of remuneration and subsidiary remuneration in ch. III.
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as a day of unemployment if it was immediately preceded by a day of unemployment. Two or more consecutive days consisting of a Sunday and one or more holidays are treated as if they occurred on a single day; viz, such 2 or more days can be claimed as days of unemployment only if they were immediately preceded by a day of unemployment and, if they occurred at the beginning or in the middle of a registration period, also immediately followed by a day of unemployment.
Work shifts including 2 calendar days.—In the original definition of a day of unemployment, a proviso was made vesting in the Board authority to prescribe a period of 24 hours equivalent to a calendar day for employees whose normal work shift included parts of 2 consecutive calendar days. The amended act provides that the remuneration for a working day which includes parts of 2 consecutive days is to be deemed as earned on the second of such days. The first day may therefore be regarded as a day of unemployment despite the fact that the claimant actually began working in the last few hours of such day.
Registration Period for Transfer Cases
The amended act defines the registration period so as to meet the difficulty of transfers from one claims agent to another in the middle of a registration period.5 As pointed out elsewhere, an obvious way of meeting this difficulty was to begin a new half-month each time the claimant transferred to another claims agent. This, however, was neither permissible under the law, nor fair to the claimant who was not given benefits for the first 7 days of unemployment in a half-month. With the change in the benefit formula to provide benefits for every day of unemployment in excess of 4, it was felt that the rights of the transferring claimant would not be appreciably reduced if he began a new registration period with every transfer. Accordingly, the amendatory act specifies 2 alternative definitions of a registration period: (a) a period of 14 consecutive days beginning with the first day of unemployment for which the employee registers; or, if shorter, (6) a period beginning with the first day of unemployment and ending with the day preceding that for which the employee registers with a different employment office (or claims agent).
Disqualification for Mileage Workers
Under the act as amended in June 1939, any half-month in which an employee earned in employment compensated on a mileage basis 8 times his schedule daily rate of pay could not be claimed as a half
5 See discussion in connection with claims procedure in ch. III.
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month of unemployment. This provision applied almost exclusively to employees in the train and engine service, and was justified on the ground that labor agreements supported by long-established practice imposed maximum limitations on the amount of work that any one employee was allowed to perform in the course of a month. Experience in the administration of the act showed that limitations of this type apply also to certain employees in departments other than train and engine. It was found, furthermore, that the disqualification as it stood discriminated in favor of workers who performed the maximum amount of work allowed for the month during the first half of it and were therefore free to register as unemployed in the second half of the month. Also, some difficulty was experienced in obtaining accurate information on the schedule daily rate of pay.
Accordingly, the old provision has been reworded in the amended act to apply specifically to employees in the train and engine service, yard service, dining, parlor car, and sleeping car service, and express service on trains. For such employees, the disqualification applies to any registration period in which they earn at least 20 times the daily benefit amount, and also to any registration period constituting the second half of a period of 28 days in which they earn at least 40 times the daily benefit amount. It is estimated that for this group of employees, 20 times the daily benefit is roughly equivalent to 8 times the schedule daily rate of pay.
Other Changes in Disqualifying Conditions
Penalty for failure to accept suitable work.—Under the act as it formerly existed, none of 30 days could be considered as days of unemployment following the failure of a claimant, without good cause, to accept suitable work available and offered to him. This provision has been extended in the amended act to cases of failure to comply with instructions requiring the claimant to apply for suitable work or to report in person or by mail to an employment office. The change was thought desirable because in the first year of operation instances were found in which claims agents advised claimants to apply for work. Since this did not constitute an offer of work, failure to comply with this advice was not subject to penalty although there is no real difference from the standpoint of unemployment insurance between failure to apply for a job and failure to accept it when offered. It was felt also that this change would implement the authority of the Board’s employment service.
Receipt of social insurance benefits.—Under the original act, no day could be considered as a day of unemployment with respect to which the claimant has received or was entitled to receive wages in lieu of
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notice, annuity or pension payments under the Railroad Retirement Acts, old-age benefits under title II of the Social Security Act, or benefits under State unemployment compensation laws. The amendment eliminates reference to wages in lieu of notice, in order to prevent confusion with dismissal compensation guaranteed to employees under the Washington job protection agreement in cases of displacement due to consolidation of facilities of two or more carriers. The amended act also omits reference to unemployment with respect to which an employee is merely entitled to receive unemployment benefits under any other Federal act or under a State law. Moreover, since it is unreasonable to delay the payment of unemployment benefits because a claim for old-age or retirement benefits is pending, the adjudication of which may take several months, the amended act provides in substance that unemployment insurance benefits be paid in such cases. If it is found later that days in a registration period overlap a period with respect to which an employee receives or is entitled to an annuity payment or insurance benefit under the Social Security or Railroad Retirement Acts, the increase in unemployment benefits, which occurred because the days were considered days of unemployment, is recoverable by offset against the annuity payments or otherwise.
Exclusion of Service with Local Lodges
In connection with unemployment insurance, the amendatory act provides that employment after June 30, 1940, in the service of a local lodge or division of a railway labor organization or as an employee representative, is to be disregarded for the purposes of both contributions and benefits. Compensation for local lodge service of less than $3 a month is also excluded from compensation creditable under the Railroad Retirement Act and from compensation taxable under the Carriers Taxing Act. The latter provision applies to compensation of this type earned after March 31, 1940, and also to compensation earned between December 31, 1936, and March 31, 1940, if taxes on such compensation have not been paid by July 1, 1940.
The change in coverage made by this amendment is unimportant. With very few exceptions local lodge officers and employee representatives receive only small amounts in compensation for performing the duties of their office. The addition of such compensation to the wages received from other subject employers makes no substantial difference in their credited compensation and therefore does not materially affect their right to either unemployment or retirement benefits. Nor does the exclusion have any appreciable effect on contributions collected under the Railroad Unemployment Insurance or Carriers Taxing Acts.
The objectives attained by this change are a mitigation of the 276117-41------6
78 • Annual Report of the Railroad Retirement Board reporting burden on local lodges and a reduction in the administrative cost of collecting small contributions and keeping records of wage credits for small amounts. It should be noted in this connection that the language of the amendment is such as not to place service with local lodges automatically within the scope of the old-age insurance and unemployment insurance titles of the Social Security Act (or the corresponding chapters of the Internal Revenue Code) and of the state unemployment compensation statutes.
Other Changes in Administrative Procedures
Appeal from initial determinations.—The original act provided for appeal in all cases to district boards. The amendment directs that appeals based on disagreement as to amount of compensation creditable for the base year should be made to the Board in Washington rather than to district appeal boards. The issues in appeals of this type involve technical problems of coverage and questions of accuracy in accounting records, in dealing with which the district boards would be quite helpless. In reviewing initial determinations on appeal, the Board shall grant, subject to recovery, benefits on the basis of compensation earned in the service of a company held by the Board to be a covered employer even though this ruling is contested by the company. Thereafter the Board is to institute proceeding, which may involve public hearings, for the purpose of receiving evidence bearing on the question of coverage.
Erroneous payments.—The original act directed that adjustments for overpayments be subject to provisions of section 9 of the Railroad Retirement Act of 1937. This section provides that the adjustment be made by deductions from subsequent payments, that no recovery be made from beneficiaries without fault if such recovery is against equity and good conscience, and that when recovery is waived no disbursing officer shall be held liable. In the amended act, the reference to section 9 of the retirement act is eliminated, but the substance of this section is reproduced with minor changes designed to clarify and adapt the language to unemployment insurance. Several additions are also made. The amendment permits adjustment or recovery in connection with subsequent payments under the retirement and unemployment insurance acts administered by the Board, including death benefits under the retirement act. The adjustment by deduction from annuity payments may be made by subtracting the entire excess from the actuarial value of the annuity and recertifying the monthly annuity payments on the basis of the reduced actuarial value. It also permits the waiver of recovery where such adjustment would defeat the purposes of the unemployment insurance
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act. The liability of disbursing officers is removed where recovery once begun by set-offs against subsequent payments cannot be completed. Section 9 of the Railroad Retirement Act is also amended to incorporate the same changes.
Another provision in the original act relating to recovery through deductions by employers has been changed by amendment, but only with a view to clarifying its language.
Wage reports.—Section 6 of the act, regulating the submission by employers of wage reports and the conclusiveness of such returns, is reworded in the amendments to provide for a better adaptation to the needs of the unemployment insurance as distinct from the retirement system. Several minor changes were thus made. The act no longer requires returns of monthly compensation but merely returns of compensation. The authority of the Board to require employers to distribute annual statements of compensation to employees is no longer limited to the statements prepared by the Board. The conclusiveness of the Board’s data on compensation is now specifically attached to the Board’s record of such compensation rather than to the report made by the employer and is specifically limited to the purpose of determining eligibility for and the amount of unemployment insurance benefits.
Transfer from the fund to the account.—Because of the unanticipated accumulation of money in the railroad unemployment insurance administration fund, the amendatory act carries also a change in the authority to transfer money from the fund to the railroad unemployment insurance account. The fund consists of moneys permanently appropriated for expenses in administering the act, which cannot be invested in any interest-bearing securities. The account includes the moneys from which benefits are paid; such part of that money as is not required to meet current withdrawals earns interest at a rate at least equal to the average rate of interest borne by all interest-bearing obligations of the United States. Originally the act vested authority in the Board beginning June 30, 1946, to transfer from the fund to the account all or part of the excess of the receipts in the fund over the withdrawals from the fund in the preceding fiscal years. Postponing the transfer to 1946, it was felt, was entirely unnecessary because, as of June 30, 1940, the fund had a balance of nearly $12,500,000. The probable balance in the fund as of June 30, 1941, was estimated at over $19,350,000. The amended act provides, therefore, for the transfer at the end of each fiscal year of any amount in excess of $6,000,000 from the fund to the account.
Powers of the Board in regard to personnel.—The amendatory act includes several provisions which give the Board greater latitude in the
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use of its personnel and thus correct some of the difficulties encountered in the first year of operation. The Board is specifically authorized to appoint claims takers without regard to civil service laws, to be compensated on a piece-rate basis, in those areas where there are no employer facilities for the taking of claims or where such facilities are not available to the Board. This provision merely confirms the existence of a power which the Board was compelled to exercise in order to furnish facilities for employees in isolated communities.
Another power given the Board is that of detailing, as distinct from transferring, employees between stations in the field and between Washington and the field stations, each period of detail to be limited to a maximum of 120 days. Such power is essential because the work load in connection with unemployment insurance fluctuates considerably over a period of time but in a manner which is not entirely uniform over the country. During the year there are also periods when the work load in the Washington headquarters is heavy although it is light in the field. The authority to meet such peak loads by temporary detail will make for greater flexibility and result in the long run in a reduction of administrative expense.
The amended act also grants competitive classified civil service status to certain employees with experience in railroad service who were in the employ of the Board both on June 30, 1939, and on June 30, 1940, if they pass noncompetitive tests of fitness prescribed by the Civil Service Commission. This provision covers a few employees who were temporarily engaged for special work, were found exceptionally qualified, and could not be continued otherwise or replaced by others because there are no civil service registers for positions with these qualifications.
RAILROAD RETIREMENT FINANCES AND GENERAL OPERATIONS
THE railroad retirement system operates under the Railroad Retirement Act of 1935 and the amendatory Railroad Retirement Act of 1937, administered by the Railroad Retirement Board. The finances of the system as of June 30, 1940, and the yearly changes in the accrued obligations of the system are discussed in the following pages. For the first time it has been possible to take account of estimated obligations arising from claims for periods prior to June 30, 1940, which were in process of adjudication on that date. These estimates have been used to supplement the figures derived from annuities actually certified by the end of the fiscal year. A section showing the distribution in the various States of benefit payments during the fiscal year 1940 is also included in the chapter.
Financial Status as of June 30,1940
Railroad retirement account.—Benefit payments under the Railroad Retirement Act are certified to the Secretary of the Treasury by the Board and are paid by the Treasury out of funds in the railroad retirement account. Annual appropriations to the railroad retirement account for benefit payments and for investments in a reserve fund are made by Congress before the beginning of the fiscal year on the basis of estimates prepared by the Railroad Retirement Board. Separate annual appropriations are made at the same time for administrative expenses.
Congress has based these appropriations on the amount of anticipated receipts under the Carriers Taxing Act (now subch. B, ch. 9 of the Internal Revenue Code) which levies an excise tax on employers and an income tax on employees payable on compensation defined in the same terms as in the Railroad Retirement Act. The Carriers Taxing Act is administered by the Bureau of Internal Revenue, and receipts from the tax go into the general fund of the Treasury.
In general, the Treasury does not make available for benefit payments and investments the entire amount appropriated to the railroad retirement account for any fiscal year, until sufficient taxes to cover the amount have been paid into the Treasury. Any balance
81
. V .
82 • Annual Report of the Railroad Retirement Board
from the preceding fiscal year in the appropriation fund is added to the appropriations for the next year. Any difference between appropriations and taxes in a fiscal year is adjusted in the appropriation for a succeeding year. Funds not currently required for benefit payments are invested in 3-percent Treasury notes, and the interest on these investments provides additional income for the railroad retirement account.
Several subsidiary accounts are maintained on the books of the Treasury to record the various operations of the railroad retirement account. These accounts are described in appendix B, which also contains a report on the operations of the several subsidiary accounts during the fiscal year 1940.
Financial operations through June 30, 1940.—From the beginning of operation through June 30, 1940, Congress appropriated $384,900,000 to the railroad retirement account for benefit payments and investments, and $10,939,000 for administrative expenses of the retirement system, a total of $395,839,000. Of the amount appropriated to the railroad retirement account, $10,750,000 had not been transferred by the Treasury by June 30, 1940, since tax collections under the Carriers Taxing Act before July 1940 were $380,700,538, or $15,138,462 under the total appropriation. Through June 30, 1940, the Treasury had made available a total of $384,648,316; $374,150,000 for benefit payments and investments, and $10,498,316 which was actually obligated for administrative expenses. The total made available for the railroad retirement system was 1.0 percent in excess of the tax collections under the Carriers Taxing Act.
The income of the railroad retirement account through June 30, 1940, included $5,895,215 in interest on investments in 3-percent special Treasury notes. This made a total of $380,045,215 available for benefit payments and investments.
TABLE 24.—Financial operations under the Railroad Retirement Act
To July 1, 1939 To July 1, 1940
Total appropriations „ $264,750,000 11,250, 000 $384, 900,000 10, 750. 000
Appropriations not transferred
Appropriations transferred ..
253, 500, 000 3, 612,698 374,150,000 5, 895, 215
Interest on investment
Total made available for benefit payments and investment
257,112, 698 194,300, 716 380,045, 215 308, 325,857
Benefit payments certified to Treasury.
Net balance. _
62, 811,982 71,719,358
From the beginning of the retirement system through June 30, 1940, the Railroad Retirement Board certified to the Treasury payments
Retirement Finances and General Operations • 83
totaling $308,325,857 on all classes of benefits. Additional payments estimated at about $7,144,000 remain to be paid for this period on account of annuities and death claims which had not yet been adjudicated by the end of June 1940, but will have a beginning date prior to that time. The total obligations of the retirement system were thus about $315,470,000 for the period.
TABLE 25.—Retirement benefits certified to the Secretary of the Treasury by class of benefit, fiscal years 1937-40
Period All classes of benefits Employee • annuities Pensions Survivor annuities Deathbenefit annuities Lump-sum death benefits
Cumulative through June 1940 Amount
$308,325,857 1 $211,287.928|$89, 565.456 $2.125, 367 $1,879, 526 $3,467, 585
Fiscal year: 1936-37
4, 514,617 82, 654, 660 107,131,438 114,025,141 4,409,019 46, 930,329 75, 418,986 84, 529, 592 36, 751 388, 479 787,240 912, 895 68,846 599, 217 716,261 495, 200
1937-38.. _ 34,701,617 28,887, 973 25, 975,863 35,017 1,320,976 2, 111, 590
1938-39
1939-40
Cumulative through June 1940 ....
Percent of fiscal year total
100.0 68.6 29.0 0.7 0.6 1.1
Fiscal year: 1936-37.. . . ...
100.0 100.0 100.0 100.0 97.7 56.8 70.4 74.1 0.8 .5 .7 .8 1.5 .7 .7 .4
1937-38 42.0 27.0 22.8 (*) 1.2 1.9
1938-39-
1939-40
—
* Less than 0.05 percent.
Balance in account as 0/ June 30, 1940.—After deduction of the $308,325,857 in benefit payments certified to the Treasury through June 30, 1940, a balance of $71,719,358 remained in the railroad retirement account. Investments in 3-percent special Treasury notes as of June 30, 1940, were actually $79,400,000. The difference between the net balance and the amount invested is accounted for by the fact that benefit certifications made toward the end of June were covered by transfers from the appropriation for the fiscal year 1941 rather than by the sale of Treasury notes. This made unnecessary the sale of Treasury notes late in June and a new purchase in July after transfers had been made from the new appropriation.
The balance of $71,719,358 as of June 30, 1940, does not take into account two other factors: on the one hand, the $32,168,521 in tax collections in the first quarter of the fiscal year 1941, virtually all of which accrued on pay rolls in the last quarter of the fiscal year 1940; and on the other hand, an estimated $7,144,000 in accrued obligations as of June 30, 1940, which had not yet been certified for payment by
84 • Annual Report of the Railroad Retirement Board
that date. If these two factors were taken into account, total tax collections would be $412,869,000; and total expenditures would be $325,968,000, consisting of $315,470,000 in benefit payments and $10,498,000 in administrative expenditures. This would result in a balance of about $86,901,000 for the retirement system as of June 30, 1940.
Administrative expenses.—For the fiscal year 1940 Congress appropriated $3,254,000 for administering the retirement system (see table below). Of this amount, $450,000 was designated for the collection of prior service records, which was to be done in conjunction with the Works Progress Administration. For reasons beyond the control of the Board, the project had to be discontinued at an early stage and only $41,000 of this portion of the appropriation was used. Of the remaining $2,804,000 available for current expenses in administration of the retirement system, substantially all had been expended or obligated for expenditure by the end of the fiscal year. Administrative expenditures for the fiscal year 1940 were about 3.3 percent lower than for the preceding fiscal year.
Fiscal year Appropriations Obligations
Total $10,939,000 $10,498, 316
1935-36 „ 600,000 599, 285
1936-37 1,305,000 1, 295, 807
Fiscal year Appropriations Obligations
1937-38 $2, 825,000 $2,818,152
1938-39 2,955,000 2,940,626
1939-40 3, 254,000 2,844,446
Total obligations for administrative expenses from the beginning of the retirement system to the end of the fiscal year 1940 were $10,498,316, or 3.4 percent of the total amount of benefit payments certified to the Treasury through June 30, 1940. Administrative obligations for the fiscal year 1940 constituted 2.5 percent of payments, as compared with 2.7 percent for the preceding fiscal year.
Tax collections.—Tax collections under the Carriers Taxing Act for the fiscal year ending June 30, 1940, totaled $120,966,719 (see table C-2), which was 10.7 percent higher than for the preceding fiscal year. A small part of this increase resulted from the increase in the tax rate from 2% percent to 3 percent each on employers and employees, which was applicable to pay rolls for the 3 months January-March 1940. Taxes on these pay rolls were payable in the last quarter of the fiscal year. Because of the increase in the tax rate, collections in the last quarter of the fiscal year exceeded the collections in the preceding quarter, despite a decline in employment and taxable pay roll during the January-March period for which the collections were made. Collections in the last quarter of the fiscal year 1940 were 17.8 percent
Retirement Finances and General Operations • 85
higher than in the corresponding quarter of the preceding fiscal year, reflecting not only the higher tax rate, but also a larger amount of taxable compensation accompanying a higher level of railroad employment than in the corresponding quarter of the preceding fiscal year. Over the entire fiscal year, the principal part of the increase in tax receipts was due to improvement in railroad employment.
Creditable compensation —Compensation creditable toward annuities and death benefits under the Railroad Retirement Act of 1937, shown in the following table, totaled $2,180,046,702 in the fiscal year 1940. This was $156,927,000 or 7.8 percent higher than for the preceding fiscal year, and was only 0.9 percent under the estimate of $2,200,000,000 annual income which was assumed in the original estimates of the cost of the retirement system.
Period Amount Period Amount
Jan. 1 to July 1, 1937 Fiscal year 1937-38 Fiscal year 1938-39 First quarter Second quarter Third quarter Fourth quarter $1. 097, 298, 051 2,100,468, 207 2,023,119,218 496, 231, 504 514,386, 942 500,457, 353 512, 043, 419 Fiscal year 1939-40 First quarter Second quarter Third quarter Fourth quarter Adjustments 1 $2,180,046, 702 536, 213, 589 562, 030, 305 539, 363, 000 542,439,808 29,847,631
1 Adjustments not readily distributable to individual quarters.
Annual Changes in Amount and Number of Benefits
To measure changes in the level of obligations accruing under the retirement act it is necessary to include all amounts which are payable with respect to particular periods, regardless of when payments are actually certified to the Treasury. Payments that have already been certified to the Treasury can readily be allocated to the months with respect to which they were payable.1
The amount of additional obligations for the period, which will arise from later certification of pending claims, however, can only be estimated. Since a relatively small proportion of claims payable for the fiscal years prior to 1940 had not been certified by June 30, 1940, the figures of obligations for those years will not be significantly affected by certifications made after that date. For the fiscal year 1940, however, accrued obligations would be considerably understated by figures for claims certified by June 30, 1940. Consequently, wherever new accruals for the fiscal year 1940 are used alone or combined with figures for other years, the estimated amount of additional accrued obligations arising from claims uncertified is taken into consideration. The estimate was prepared by utilizing the actual data on claims certi-
1 Amounts payable month by month on all certifications through June 30, 1940, are given in appendix table C-6.
86 • Annual Report of the Railroad Retirement Board
CHART V.—Retirement benefits certified through June 1940: Total amount for each fiscal year,11937-40
1 An estimated $7,144,000 for obligations accruing before July 1,1940, but not certified by that date, is not included in the figures on which these charts are based.
fled between July 1, 1940, and September 30, 1940, and estimating the additional obligations that will arise from claims uncertified as of the latter date.
Accrued obligations for the fiscal year 1940, based on certifications made through June 30, 1940, were $110,313,000, compared with $101,964,000 for 1939 and $83,477,000 for 1938 (table 26). These figures do not take account of obligations which have accrued for these years on claims still in the process of adjudication as of June 30, 1940. Allowing for these additional obligations, it is estimated that the total accrued obligations for all classes of benefit payments for the fiscal year 1940 will be $113,733,000, compared with $103,346,000 for the fiscal year 1939 and $84,927,000 for the fiscal year 1938. Although obligations under the system are continuing to increase, not only the rate of increase, but also the amount of increase, is smaller. Total accrued obligations for the fiscal year 1940 are estimated at 10.1 percent higher than those for 1939, as compared with an increase of 21.7 percent in 1939 over 1938.
The Railroad Retirement Acts provide five classes of benefits: (1) employee annuities paid to eligible individuals on the basis of their years of service and average monthly compensation with employers
0 15 30 45 60 75 90 105 120
AMOUNT (MILLIONS OF DOLLARS)
1936-1937
INCL. JUNE'36
1937-1938
1938-1939
1939-1940
Retirement Finances and General Operations • 87
CHART VI.—Retirement benefits certified through June 1940: Percentage distribution by class of benefit of amount for each fiscal year,1 1937-40
* An estimated $7,144,000 for obligations accruing before July 1, 1940, but not certified by that date, is not included in the figures on which these charts are based.
under the act; (2) survivor annuities paid to the surviving spouse of a deceased employee annuitant who had elected a reduced annuity during his lifetime in order to provide a lifetime annuity for his widow; (3) death benefit annuities under the 1935 act paid to the surviving spouse or dependent next of kin of a deceased annuitant for a period of 12 months; (4) lump-sum death benefits under the 1937 act paid to a designated beneficiary or to the deceased employee’s legal representative; (5) pensions under the 1937 act paid to individuals who were on the pension or gratuity rolls of employers under the act both on March 1 and July 1, 1937, and who were not eligible for an employee annuity.
The increases in total obligations for the fiscal years 1939 and 1940 result primarily from increases for employee annuities offset by decreases for pensions, which together account for more than 97 percent of the benefits under the retirement system to date. Estimated total employee annuity obligations increased 40.2 percent in the fiscal year 1939 over 1938, and 17.0 percent in the fiscal year 1940
| EMPLOYEE ANNUITIES
PENSIONS
SURVIVOR ANNUITIES
‘1 DEATH BENEFIT ANNUITIES
1936-1937 INCL.JUNE'36
1937-1938
1938-1939
1939-1940
0 10 20 30 40 50 60 70 80 90 100
PERCENT
88 • An nual Report of the Railroad Retirement Board
TABLE 26.—Accrued retirement obligations 1 by class of benefit, fiscal years 1936-40
[Amount in thousands of dollars]
Period All classes of benefits Employee annuities Pensions Survivor annuities Death benefit annuities Lump-sum death benefits
Amount
Cumulative through June 1940 $308, 369 $211, 288 $89, 618 $2,107 $1,889 $3,468
Fiscal year: 1935-36 238 235 1 2
1936-37 12, 376 83,477 101, 964 110, 313 9,129 49, 924 70, 648 81, 351 2,808 31,991 28,905 25,914 99 340
1937-38 426 692 444
1938-39 702 461 1,249 1, 775
1939-40 880 393
Percent
Cumulative through June 1940._ 100.0 68.5 29.1 0.7 0.6 1.1
Fiscal year: 1935-36 100.0 98.7 0.4 0.9
1936-37 100.0 73. 8 22.7 .8 2. 7
1937-38 . 100.0 59.9 38.3 . 5 .8 0.5
1938-39 100.0 69. 3 28.3 .7 . 5 1.2
1939-40 100.0 73.7 23.5 .8 . 4 1.6
1 Based on certifications through June 30, 1940. All figures will be affected by certifications made after June 30, 1940, for benefits which begin to accrue before that date. See text discussion for effects of these later certifications.
over 1939. These obligations will continue to increase for some time, although at a decreasing rate, as long as the amount payable on new accruals exceeds the amount payable on annuities terminated by death. Pensioners, on the other hand, are a closed group which is being steadily reduced by deaths. Since employee annuities constitute an increasing proportion and pension obligations a decreasing proportion of all obligations, the changes in total obligations more and more reflect the changes in employee annuity obligations.
Lump-sum death payments under the 1937 act, which increased both in 1939 and 1940, will continue to grow with the growth in the accumulated individual earnings after December 31, 1936, upon which the lump-sum death payments are based. Obligations for survivor annuities likewise increased in both years and will continue to increase because, although the number of new survivor annuities is small, it is still several times as large as the number among this class of annuitants. Death benefit annuities under the 1935 act decreased in both the fiscal years 1939 and 1940. These annuities are payable only with respect to the death of employee annuitants under the 1935 act, and the number of employee annuities in force under that act is decreasing; furthermore, these annuities terminate after 12
Retirement Finances and General Operations • 89
monthly payments and the number which may be payable at any one time is accordingly limited.
A detailed analysis of the factors accounting for the changes in each class of benefit is given in the separate chapters on employee annuities, pensions, and survivor payments.
Changing relative importance.—Obligations for employee annuities and lump-sum death payments constituted a larger proportion of total obligations in the fiscal year 1940 than in the fiscal year 1939; pensions, a smaller proportion; survivor annuities and death benefit annuities under the 1935 act, approximately the same proportion in both years. On the basis of certifications through June 30, 1940, employee annuity obligations account for 73.7 percent of the total for the fiscal year 1940, and pensions, for 23.5 percent. The corresponding figures for the fiscal year 1939 were 69.3 percent and 28.3 percent. The three classes of survivor payments constituted 2.8 percent of the estimated obligations for the fiscal year 1940, compared with 2.4 percent for the fiscal year 1939; this increase, however, was due almost entirely to the growing proportion of lump-sum death payments.
Of the total obligations of the retirement system on claims certified through June 30, 1940, employee annuities accounted for 68.5 percent, and pensions, 29.1 percent. The remainder were obligations with respect to survivor payments, with 1.1 percent for lump-sum death payments, 0.7 percent for survivor annuities, and 0.6 percent for death benefit annuities under the 1935 act.
These figures do not take account of additional obligations that have accrued on claims pending adjudication as of June 30, 1940. The percentages, however, will not be appreciably affected by these additional obligations. The percentages for employee annuities and lump-sum death payments for the fiscal years 1939 and 1940 and for the entire period will be increased slightly, and the percentages for pensions, decreased slightly.
Number of beneficiaries.—By the end of the fiscal year 1940, 207,880 individuals had been certified for benefits under the retirement system. Employee annuities had been certified to 124,055 persons, and pensions to 48,500. In addition, 5,946 individuals had been certified for survivor annuities or death benefits under the 1935 act or both, and 29,379 lump-sum death benefits had been paid under the 1937 act. It is estimated that later certification of claims pending on obligations which accrued prior to July 1, 1940, will increase the total number of beneficiaries to 221,000. Of these, 133,300 will be employee annuitants. The number of pensioners will remain virtually unchanged. The number of persons receiving survivor annuities or
90 • Annual Report of the Railroad Retirement Board
death benefit annuities, or both, will be 6,350, and the number of lump-sum death payments, 32,850.
The number and amount of annuities and pensions payable or in force for various months is useful in showing changes in the number of persons receiving benefits at any particular time. The number and amount payable for June of each year for each class of annuity and pension are shown in table 27 for all certifications made through June 30, 1940. It is estimated that, after all obligations on claims pending adjudication as of June 30, 1940, are certified, the total number of benefits for June 1940 will be about 148,000 and the monthly amount payable on these benefits for June 1940 will be $9,606,000.
TABLE 27.—Retirement benefits certified through June 1940: Number and amount payable for June1 of each year by class of benefit,
1936-40
[Amount in thousands of dollars]
Period All annuities and pensions Employee annuities Pensions Survivor annuities Death benefit annuities
June 1936: Number.-- - 4,174 $255 82, 763 $4,996 126, 834 $7,866 140, 511 $8, 793 144,290 $9,119 4, 094 $252 32, 254 $2, 111 80, 612 $5, 232 98, 256 $6, 399 106,078 $6,954 23 $1 428 $17 1,370 $48 1,971 $66 2,341 $78 57 $2 1,581 $60 1,146 $42 1,058 $37 725 $26
Amount.
June 1937: Number Amount June 1938: Number Amount June 1939: Number Amount June 1940: Number , Amount 48,500 $2,808 43, 706 $2,542 39, 226 $2,290 35,146 $2,062
1 All figures will be affected by certifications made after Juno 30, 1940, for benefits which begin to accrue before that date. See text discussion for effects of these later certifications.
Distribution of Retirement Benefits by State
A distribution of retirement act beneficiaries by State is shown in table C-7 for the 144,290 annuitants and pensioners on the Board rolls June 30, 1940, and for the 13,370 lump-sum death benefits that were paid during 1939-40. In the case of monthly benefits, these figures refer to the State to which the first benefit check was mailed, since information as to the current residence of annuitants and pensioners is not readily available. Comparison with similar distributions for June 30, 1938, and June 30, 1939, indicates little change from these years in the proportions of annuitants and pensioners in each State.
The distribution of benefit payments differs in general by region. This is due for the most part to differences in such factors as the age and size of the railroads, the age and scope of the private pension
Retirement Finances and General Operations • 91
plans, and the number and age distribution of the railroad employees. The group of North Central States from the Atlantic coast west to and including Indiana, where railroad pension plans were oldest and best developed, had a considerably larger percent of the pensioners and a somewhat larger percent of the annuitants than of the total railroad workers. In the Southern and Western States, the percentage of pensioners was very low and the percentage of annuitants somewhat low in comparison with the percentage of all railroad workers. In the New England States, the percentages were the same for pensioners and annuitants, and for both were slightly higher than the percentage of railroad employees. The distribution of lump-sum death payments by States conformed more closely to the distribution of employees than did the distribution of annuitants or pensioners. The distribution of pensioners showed the greatest variation from the distribution of employees.
The parallel between the proportion of lump-sum death benefits and the proportion of railroad employment in virtually all the States, probably arises from the fact that such benefits are payable to the families of any deceased employee with credited compensation after December 31, 1936, regardless of age.
. VI .
ADJUDICATION OF EMPLOYEE ANNUITIES
BY June 30, 1940, the Board had received 160,540 applications for employee annuities, of which 124,055 had been certified for payment and 10,464 had been denied because the applicant was held ineligible for an annuity. Of the remaining claims, 2,103 had been superseded by, or merged with, claims for death or survivor payments, 14,234 had accrual dates after June 30, 1940, and therefore could not have been certified before that date, and 9,684 were awaiting certification. Of the last, adjudication had been completed in 600 cases but the annuities had not yet been certified to the Secretary of the Treasury.
Number of Cases Adjudicated
Certifications.—The number of claims initially certified during the fiscal year 1940 was 23,402, compared with 34,813 during the previous fiscal year. There was little change in certifications from month to month during the fiscal year 1940, the number fluctuating around 2,000 initial certifications a month.
The decline in initial certifications was a result of the fact that the volume of adjudicating work to be done was smaller for 2 reasons. By June 30, 1939, the number of claims awaiting initial certification was less than 20,000, compared with about 33,000 claims pending as of June 30, 1938. The total number of applications for employee annuities received by the Board declined 7.5 percent, from 28,540 during the fiscal year 1939 to 26,406 during the fiscal year 1940, and the number of active applications, that is, applications which set a beginning date no more than 2 months beyond the month of receipt, declined even more between the 2 fiscal years.
Partial certifications.—Of the 23,402 employee annuities initially certified during the fiscal year, 5,976 or 25.6 percent were awarded subject to recertification.1 Under this method of certification, the failure of an applicant to prove part of his claim does not delay the award of payments to which he is clearly entitled. Thus, an applicant for an age annuity at 65 may claim 30 years’ service, of which only 28
1 A discussion of the different bases of certification used by the Board was presented in the annual report for 1939, pp. 65-67.
92
276117—41----7
Adjudication of Employee Annuities • 93
JULY OCT. JAN. APR. JULY OCT. JAN. APR. JULY OCT. JAN. APR. JULY OCT. JAN. APR. 1936 1937 1938 1939 1940
i Broken line includes estimates for annuities accruing before July 1,1940, but not certified by that date.
NEW ACCRUALS'*^
3
H Pd O o Z Ph
Total 27, 388 20,530 6,921 1, 255 1,039 11,173 142 60.5 6,858 25.0
Class I railroads, total - ——- 11 — — - ■■ - ■ -- ■ - — :• ■■
25, 601 19, 405 6,543 1,169 959 10, 597 137 60.6 6,196 24.2
Engineers 1,493 1,242 109 111 114 880 28 79.8 251 16.8
Firemen and hostlers 571 463 125 26 22 290 68.3 108 18.9
Conductors (road) 1,103 885 62 71 55 686 11 85.5 218 19.8
Trainmen 1,297 1,014 227 70 38 6'66 13 72.6 283 21.8
Yardmen 1,085 786 182 64 57 475 8 68.6 299 27.6
Yardmasters 72 45 4 7 6 28 77.8 27 37.5
Clerks 2,404 1,859 592 175 109 977 6 62.0 545 22.7
Telegraphers 938 714 176 78 61 389 10 65.4 224 23.9
Signalmen 186 159 53 7 5 93 1 62.9 27 14.5
Train dispatchers 54 38 2 6 2 27 1 86.8 16 29.6
Maintenance of way— skilled. 1,512 1,058 190 90 116 656 6 70. 5 454 30 0
Maintenance of way—laborers. Shops crafts—skilled 2, 594 8, 575 1,668 6,825 341 3, 673 86 244 96 173 1,139 2,701 6 34 73.4 43.2 926 1, 750 35.7 20.4
Shop and roundhouse—laborers. 1,796 1,376 529 49 22 772 4 59.7 420 23.4
Stationary engineers Telegraph linemen Dining-car employees 182 21 72 137 16 34 73 3 5 5 2 2 5 2 2 54 9 24 1 43.1 68.8 76.5 45 5 38 24.7 23.8 52.8
Crossing watchmen 918 683 107 40 41 488 7 77.3 235 25.6
Marine employees 84 58 12 3 9 34 63.8 26 31.0
Miscellaneous 644 345 78 33 24 209 1 70.1 299 46.4
Class II and III railroads Class I switching and terminal 435 236 81 20 17 118 58.5 199 45.7
companies Other switching and terminal 435 349 146 18 16 166 3 52.7 86 19.8
companies 209 123 28 8 11 74 2 66.7 86 41.1
Electric railroads 189 84 10 17 16 41 69.0 105 55.6
Express companies 191 134 45 15 10 64 59.0 57 29.8
Pullman Company All other 135 193 114 85 23 45 2 6 1 9 88 25 1 78.9 36.5 21 108 15.6 56.0
1 By employment relation unit.
2 Percentages in this column represent the proportion of applicants held in employment relation bcause oi leave of absence on account of sickness, and absence without leave on account of sickness or disability.
At the same time, rules and practices of employers frequently permit absent employees to maintain an employment relationship for relatively long periods of time. Nine percent of the 20,530 employment relation claims allowed to the end of the fiscal year were for applicants who last worked prior to 1930 (see table 36).
Sickness or disability was far more frequent than furlough as a cause of absence for applicants who last worked prior to 1935. Of the applicants with claims allowed, 68.0 percent were in an employ-
Employment Relation Claims and Payments • 129
TABLE 36.—Employment relation claims ruled on1 through June 1940: Number and percent of claims allowed and disallowed by status on Aug. 29, 1935, and year last worked
Year last worked Total Allowed Disallowed
Total Status on Aug. 29, 1935 Number Percent of total ruled on
Furlough Disability3 Other3
Number Percent of total allowed Number Percent of total allowed Number Percent of total allowed
Total 27.388 20,530 6, 921 33.7 12, 428 60.5 1,181 5.8 6,858 25.0
Prior to 1921 600 178 12 6.7 160 89.9 6 3.4 422 70.3
1921 159 40 3 7.5 36 90.0 1 2.5 119 74.8
1922 258 52 4 7.7 45 86.5 3 5.8 206 79.8
1923 „ 192 67 13 19.4 52 77.6 2 3.0 125 65.1
1924 208 79 15 19.0 64 81.0 129 62.0
1925 300 118 21 17.8 96 81.4 1 .8 182 60.7
1926 369 196 53 27.0 141 72.0 2 1.0 173 46.9
1927 478 232 73 31.5 156 67.2 3 1.3 246 51.5
1928 595 320 77 24.1 241 75.3 2 .6 275 46.2
1929 891 534 172 32.2 352 65.9 10 1.9 357 40.1
1930 . 1,647 1,081 449 41.5 623 57.7 9 .8 566 34.4
1931 2, 530 1.681 670 39.9 972 57.8 39 2.3 849 33.6
1932 2, 697 1, 843 612 33.2 1,184 64.2 47 2.6 854 31. 7
1933 2,418 1,757 466 26.5 1,241 70.7 50 2.8 661 27.3
1934 4’ 125 3, 498 708 20.2 2,674 76.5 116 3.3 627 15.2
1935 5,340 4,829 1.291 26.7 3,188 66.1 350 7.2 511 9.6
1936 ... 516 493 270 54.8 184 37.3 39 7.9 23 4.5
1937 1, 530 1,391 849 61.0 391 28.1 151 10.9 139 9.1
1938 1,044 969 542 56.0 296 30.5 131 13.5 75 7.2
1939 544 513 256 49.9 149 29.0 108 21.1 31 5.7
1940 120 117 66 56.4 31 26.5 20 17.1 3 2.5
Still working 233 220 106 48.2 70 31.8 44 20.0 13 5.6
Data not available. 594 322 193 59.9 82 25.5 47 14.6 272 45.8
1 By employment relation unit.
3 Includes individuals held in employment relation because of leave of absence on account of sickness, or absence without leave on account of sickness or disability.
’ Includes individuals held to be in employment relation because of leave of absence for reasons other than disability and because of reinstatement of rights.
ment relation by reason of sickness or disability, as compared with 28.1 percent on furlough. For those who last worked after 1935, 30.3 percent were in an employment relation by reason of sickness or disability, and 56.4 percent were on furlough.
Employment Relation Certifications
Not all the cases in which an employment relation had been allowed by the end of the fiscal year were certified by that time. Some of the uncertified cases were not completely adjudicated in respect to features other than employment relation. In others, the claim had become inactive because the applicant was not eligible for an annuity at the time, but might become eligible at a later date, either upon the attainment of age 65, the completion of 30 years of service, or the establishment of total and permanent disability.
130 • Annual Report of the Railroad Retirement Board
Decline in proportion to all certifications.—Of the 124,055 employee annuities certified through June 30, 1940, 17,211 or 13.9 percent were granted prior service credit on the basis of employment relation. The peak of accruals for employment relation cases was reached in June 1937 when 6,276 or 59.4 percent of the 10,567 annuities accruing in that period involved employment relation (see table 37). Of these 6,276 cases, 4,964 or 79.1 percent were allowed employment relation by reason of absence on account of sickness or disability on August 29, 1935. Leave of absence on account of sickness accounted for 602 or 9.6 percent of the employment relation annuities accruing in June 1937. The predominance of cases based on sickness or disability on August 29, 1935, among employment relation annuity
TABLE 37.—Employee annuities certified through June 1940: Number of annuities certified and number in which employment relation was allowed, by status on Aug. 29, 1935, and period annuity began to accrue
Period of accrual of annuity All annuity certifications Annuity certifications in which employment relation was allowed
Total Status on Aug. 29, 1935
Number Percent of all certifications Furlough Leave of absence on account of sickness 1 Leave of absence-other Absence on account of sickness or disability > Reinstatement
Number Percent of all employment relation certifications | Number 1 Percent of all employment relation certifications Number Percent of all employment relation certifications Number Percent of all employment relation certifications Number Percent of all employment relation certifications
Total 1936 June-December.. 1937 January-May June July-December.. 1938 January-June July-December.. 1939 January-June J uly-December.. 191ft January-June 124,055 17,211 13.9 5,542 32.2 1,083 6.3 865 5.0 9,598 55.8 123 0.7
10,193 12, 478 10, 567 35, 351 17,214 12,867 10,824 9,478 5,083 617 348 6,276 4,244 1,912 1,410 1,137 904 363 J 6.1 2.8 9.4 12.0 11.1 11.0 10.5 9.5 7.1 537 257 541 1,337 947 664 571 500 188 87.0 73.9 8.6 31.5 49.5 47.1 50.3 55.3 51.7 1 5 602 249 78 50 51 29 18 0.2 1.4 9.6 5.9 4.1 3.5 4.5 3.2 5.0 57 29 162 204 113 85 81 97 37 9.2 8.3 2.6 4.8 5.9 6.0 7.1 10.7 10.2 21 54 4,964 2,430 746 586 421 263 114 3.4 15.5 79.1 57.2 39.0 41.6 36.9 29.1 31.4 1 3 7 24 28 25 14 15 6 0.2 .9 .1 .6 1.5 1.8 1.2 1.7 1.7
' An?uit1i?'LshOxWn-2,n these columns with accrual dates prior to June 24, 1937, were cases adjudicated under the 1937 act with accrued rights under the 1935 act.
Employment Relation Claims and Payments • 131
accruals in June 1937 is closely related to the passage of the 1937 act on June 24, 1937. The 1937 act changed the definition of employment relation to provide for sickness and disability cases which had not been covered under the 1935 act.
The proportion of employment relation cases to all certified annuities dropped sharply after June 1937, and thereafter declined from 12.0 percent in the period July-December 1937 to 7.1 percent in the period January-June 1940. The latter decline is overstated, since employment relation cases take longer to adjudicate than other types of claims. When determinations have been made on claims pending on June 30, 1940, the percentage of employment relation cases in the last two or three accrual periods will be increased.
Change in character oj cases.—Through December 1937, a large majority of the applicants claiming an employment relation whose claims were allowed were absent on account of sickness or disability on August 29, 1935. A sharp change in the character of employment relation cases occurred beginning with annuities accruing in the period January—June 1938. In that period, annuities based on employment relation because of sickness or disability 2 declined to 43.2 percent of employment relation accruals from 63.1 percent in the previous 6 months’ period, and continued to decline to 32.4 percent in the period July-December 1939. In the latter period, furlough cases were 55.2 percent of employment relation accruals. In the last period, January-June 1940, the proportion of furlough cases was 51.7 percent, but the latter percentage will be increased when all pending cases with accrual dates in that period are certified.
It was anticipated that the percentage of furlough cases would be relatively small among employment relation annuities accruing in the early years of administering the act, but would increase in later periods. This follows because employees on furlough on August 29, 1935, were generally younger men with less seniority than those who were in active service. So far, the increase in the percentage of employment relation cases based on furlough is accounted for chiefly by a decline in the number of cases based on sickness or disability, rather than by any pronounced increase in the number of furlough cases. It is expected that eventually the number of employment relation cases based on furlough will be considerably increased.
2 T his includes as disability cases those absent without leave on account of sickness or disability and those on leave of absence because of sickness.
. VIII .
ANALYSIS OF EMPLOYEE ANNUITIES
ADMINISTRATIVE factors and problems in the adjudication of employee annuities in the last fiscal year were discussed in chapter VI by reference to certification data. The present chapter analyzes changes in the accrued obligations for employee annuities, regardless of the date certified. Changes in accrued obligations depend upon the number of annuities which begin to accrue in given months, the monthly amount payable to each annuitant, and the period of time during which these amounts are paid. The number of new accruals depends on the rate at which employees elect to retire, and the monthly amount payable on length of credited service and average monthly credited compensation; the duration of employee annuities depends on the age at the time the annuity begins to accrue, referred to in this report as the age at retirement, and the life expectancy of the annuitants.
Changes in the number of accruals of employee annuities by beginning date were available for the Board’s annual report of last year. Data showing changes in age at retirement, length of credited service, average monthly compensation, and average monthly annuity, by the beginning dates of new accruals and by type of annuity, are now available for the first time (see table C-16). Tables showing amount of annuity, credited service, average monthly compensation, and age at retirement for all annuities certified through June 30,1940, are given in the appendix. These tables are similar to those given in last year’s annual report for all annuities certified through June 30, 1939.
New Accruals
Number oj new accruals.—The number of employee annuities beginning to accrue each month, shown in chart VIII and table 38, has tended to level off since the end of 1938, following the sharp decline from the peak in June and July of 1937. During those months, new accruals averaged about 10,000 a month and declined rapidly thereafter. In 1938 the number of new accruals averaged about 2,500 a month. The causes of this decline were discussed in the Board’s
132
Analysis of Employee Annuities • 133
CHART VIII.—Employee annuities: Number beginning to accrue in each month/ by type of annuity, fiscal years 1937-40
FISCAL YEARS
1 Solid lines show annuities certified through June]30, 1940. Broken lines include estimates for annuities accruing before July 1,1940, but not certified by that date.
annual report of last year.1 Since 1938, the number of new accruals of employee annuities is estimated at about 1,860 a month, after allowance is made for claims for annuities to begin before June 30, 1940, but not yet certified by that date.
The monthly number of employee annuities of all 4 types has tended to remain fairly constant since the end of 1938. In the 18 months since December 1938, new accruals of age annuities beginning at age 65 and over are estimated to average 1,250 a month; of annuities
1 See 1939 annual report, ch. V.
-ALL EMPLOYEE ANNUITIES
AGE, OVER 65'
DISABILITY, BOTH TYPES
ISAND 12
IO
8
■ 6
■ 4
2
1 0
12
10
8
6
4
2
0
134 • Annual Report of the Railroad Retirement Board
TABLE 38.—Employee annuities certified through June 1940: Percentage distribution by type of annuity for annuities beginning to accrue during each half-year, 1936-40
Period of accrual All annuities Age annuities Disability annuities
65 and over Under 65 All 30 years’ service Under 30 years’ service
1936
June-December . 100.0 87.7 2.8 9.5 9.5
1937
January-June . 100. 0 79 8 1 4 1A 4 O A
July-December 100.0 80.8 3.4 in 4 4. ‘t
1938 0. 4
January-June 100 0 71 5 in
July-December 100.0 6&0 6.4 24.6 10. 0 17.1 0. 4 7.5
1939
January-June _ 100 0 67 7 IQ A
July-December 100.0 1 69. 2 1 6. 3 1 24 5 lo. 4 8.0
1940 January-June 100.0 1 65.8 16.5 1 27.7
1 The percentage of accruals by type of annuity for the last two accrual periods is based on the estimated figures given in table C-24.
beginning under age 65, 120 a month; and of disability annuities, 490 a month.
The table of new accruals by months (appendix table C-9) shows a relatively large number in January of each year, resulting from the preference among many employees for awaiting the end of a calendar year before retiring. These minor January peaks are marked only for age annuitants; the incidence of disability shows no regular seasonal variation and there are no peaks in monthly accruals of disability annuities. In the 18-month period, December 1938-June 1940, the relative proportions for the different types of employee annuity have changed little, as shown in table C-38.
Date of last compensated service.—The beginning date of accrual is relatively close to the date of last compensated service for the great majority of age annuities beginning at age 65 and over and of disability annuities with 30 years of service, and somewhat less so for age annuities beginning at less than 65. For almost half of the disability annuities with less than 30 years of service there is a considerable disparity between these two dates. For example, of the age annuitants with annuities beginning at age 65 or over, which began to accrue in the period July-December 1939, only 8.0 percent had last worked for an employer under the act before January 1, 1939; the corresponding percentage for disability annuities based on 30 years of service was 8.7 percent (table C—15). For age annuities beginning before 65, however, the percentage with date of last compensated service in
Analysis of Employee Annuities • 135
1938 or earlier was 14.9 percent, while for disability annuities with less than 30 years of service, it was 47.1 percent.
These differences are related to the eligibility requirements for the several types of annuity, and to the attachment which the individuals who at present meet these requirements have to the railroad industry. A large proportion of disability annuitants with less than 30 years of service become disabled before age 60 and have to wait until attaining that age before becoming eligible for an annuity. Individuals who become disabled with 30 years of service, on the other hand, can begin to receive an annuity immediately. A lag between date last worked and annuity beginning date may arise in some such disability cases, however, because it may not be apparent at once that the disability is permanent. Of the age annuitants with annuities beginning before 65, one group consists of individuals who, in spite of their long years
CHART IX.—Disability annuities: Number beginning to accrue in each month,1 by type of annuity, fiscal years 1937-40
1 Solid lines show annuities certified through June 30,1940. Broken line includes estimates for annuities accruing before July 1, 1940, but not certified by that date.
.DISABILITY, BOTH TYPES
ESTIMATED'
-i 25
- 20
- 15
- 10
L 5
-1 0
WITH LESS THAN
30 YEARS OF SERVICE ■
I I 1 i i i i I i I
WITH 30 YEARS OF SERVICE'
JUN JULY OCT JAN. APR. JULY OCT. JAN APR. JULY OCT JAN APR. JUNE
1937 1938 1939 1940
25 -
20 -
15
10 ■
5 ■
0 -1
136 • An nual Report of the Railroad Retirement Board
of service, have been furloughed and face the prospect of unemployment or intermittent employment. They may hesitate to relinquish their rights to employment in order to qualify for an annuity until it becomes clear that there is no immediate opportunity of reemployment at substantially full time. Another group is composed of individuals who are partially incapacitated but are not permanently and totally disabled within the meaning of the act. In some of these cases, as in some disability annuities with 30 years of service, there may be a lag between date of last compensated service and the accrual date of the annuity, because it may take some time for the severity of the disability to be recognized.
Of the annuitants retiring at 65 or over, the great majority at present were employees who stopped working in the railroad industry to receive an annuity. There was a large number of eligible individuals who had ceased work and were waiting for the retirement system to be set up; virtually all applied for annuities in the earlier periods. A small group of the present annuitants who retired at age 65 and over consists of individuals who became unemployed or lost their positions in the industry, but who had to wait until attaining age 65 before becoming eligible for an annuity. If they secure employment in other industries, they may delay in applying for an annuity even after they have reached age 65, because to receive an annuity they must relinquish rights to employment, not only in the railroad industry, but also with their last employer outside the railroad industry.
The number of annuitants who last worked outside the railroad industry is still small. Of the applications received in Washington during the fiscal year 1940, only 4.3 percent stated that the applicant had last worked outside the railroad industry. The percentage for age annuities to begin at age 65 or over was only 3.7 percent. However, the number of annuitants who last worked outside the railroad industry will increase in the future. There are already more than 600,000 living individuals, excluding annuitants, who have had compensated service in the railroad industry some time after December 31, 1936, but had no creditable service during the calendar year 1939. The number of individuals who have some credit for subsequent service but are no longer employed in the railroad industry will increase with the passage of time. In addition, it is estimated that there are over 100,000 individuals entitled to prior service credit who had no compensated service after December 31, 1936. As individuals in these groups reach age 65 and apply for an annuity, the proportion of annuities beginning at age 65 and over on which there is a considerable lag between date last worked and beginning date of annuity, will increase.
Analysis of Employee Annuities • 137
Age at retirement.—For annuities beginning at age 65 and over, age at retirement averaged above 70 for those that began to accrue during the first fiscal year of operations, 1936-37. This high average age at retirement was due to the accumulation of employees well above the minimum retirement age, most of them still in active service, who retired soon after the enactment of the Railroad Retirement Acts. Many of them would have retired at an earlier age had they been able to do so. As the proportion of such annuitants to total annuitants decreased, the age at retirement fell from above 70 to 68.4 for the half-year January-June 1938. Since then it has tended to decline somewhat, but has remained at 67.7 for both the first and second halves of the fiscal year 1940.
The average age at retirement has increasingly been determined by factors connected with the operation of an established retirement system, such as the number of people who have attained retirement age, the physical requirements of the work, the security of tenure and regularity of work around retirement age, and the amount of the annuity relative to current and prospective earnings. These factors vary from occupation to occupation and with the condition of employment in the railroad industry.
Employees in occupations characterized by irregularity of employment and junior employees in occupations with a greater stability of employment are more likely to retire at relatively earlier ages and also are more likely to retire during periods of declining employment than during periods of increasing employment. As a result of these factors, average age would be expected to decrease during a period of depression and to increase during a period of prosperity.
Although there has been no increase in average retirement age with the increased employment in the railroad industry during the last riscal year, the decline has apparently stopped and the average age at retirement for several occupational groups was higher in the last half than in the first half of the fiscal year.
The average age at retirement for age annuities beginning below age 65 rose sharply from 61.2 for the first 5 months of 1937 to 62.3 for June 1937 and then to 62.7 in the 6 months July-December 1937. Since then it has remained practically constant. The initial rise was due to the provisions of the amendatory act of 1937 which established 60 as the minimum age of retirement for nondisabled employees with 30 years of service. Previously, the only limitation on retirement in this group was the reduction for retirement at age less than 65. This, in effect, made the minimum retirement age 50 years.
The age at retirement of disability annuitants with 30 years of
138 • An nual Report of the Railroad Retirement Board
service has remained practically constant at about 59% since the January-June 1938 period. Prior to that period, it fluctuated around 60.
Disability annuitants with less than 30 years’ service have been retiring at steadily decreasing average ages from 62.5 years in June 1937, the first month in which such retirements were possible, to 61.7 years in the period July-December 1939. The proportion of retirements at age 60, the minimum age at which such annuities can begin to accrue, has gone up from 19.9 percent of the total in June 1937 and 24.9 percent in July-December 1937 to 47.6 percent in July-December 1939. At the time the 1937 act went into effect and annuities were provided for disabled employees with less than 30 years of service, between age 60 and 65, there were many such employees who were more than 60 years old but who had become disabled before age 60 and would have retired at age 60 had they been able to do so.
In computing average age at retirement for all employee annuitants to be used in appraising the cost to the system, variations in the age at retirement among annuitants receiving annuities reduced because of retirement before age 65 should be disregarded. Retirements for age before age 65 and for disability with less than 30 years of service are subject to a reduction of 1/180 for each month that the annuitant is below age 65 at the time the annuity begins to accrue. This reduction has the effect of making the cost to the system of a retirement below age 65 approximately equivalent, on an actuarial basis, to the cost of a retirement at age 65.
Counting all retirements on reduced annuities as retirements at age 65, the effective average age at retirement for all employee annuities declined from 69.2 years in the period June-December 1936, to 66.5 in the period January-June 1938, dropped to 66.1 for the period July-December 1938, and has remained about 66 since then. The average effective age at retirement for finally certified annuities beginning to accrue in each period on the basis of finally-certified annuities 2 is as follows:
2 The figures may slightly overstate the age at retirement for the later periods since they do not include about 1,150 disability annuities recertified to a final status in the period July-November 1940.
Accrual period Average age at retirement Accrual period Average age at retirement
All periods 67.2 69.2 68.4 68.1 67.8 1938 January-June 66.5 66.1 65.9 66.0 65.9
1936 June-December 1937 January-May
July-December
1939 January-June .
July-December
1940 J anuary-J une
June
July-December.
Analysis of Employee Annuities • 139
The sharper decline in average age for all annuities than for age annuities beginning at 65 and over was due to the increasing proportions of disability annuities, and of age annuities beginning before age 65. These proportions have tended to become stable for recent periods.
No figures are yet available on the average age at retirement on annuities certified to individuals who last worked outside the railroad industry. However, on 470 applications received during 1940 from such individuals for annuities to begin at age 65 or over, the average age on the date set for the annuity to begin was 68.5 years. If 167 applications for age annuities to begin before age 65 with a reduction are included as retirements at age 65, the average age at retirement for all age annuities becomes 67.7 years for individuals whose last work was outside the railroad industry. The comparable average for all age annuities certified with a beginning date in the fiscal year 1940 is 67.5 years.
Average service, compensation, and amount of annuity.—The average amount of annuity and the averages for the number of months of credited service and monthly compensation which determine the amount of annuity, as shown in table C-16 by period in which the annuities began to accrue, are calculated from all annuities finally certified by the end of November 1940. These averages tend to be overstated since they do not include annuities still subject to recertification and claims for annuities still pending as of November 30, 1940, which in general have a lower amount of annuity, credited service, and average compensation after final certification than those already finally certified. The amount of overstatement in the averages for the finally certified annuities, however, is appreciable only for the last 2 fiscal years, as indicated by studies of the effect of subsequent certifications and recertifications upon averages based on final certifications made up to a certain date. Consequently, in examining trends in the averages for finally certified annuities, allowances must be made for the overstatement in the last 2 years.
For age annuities beginning at 65 and over, the low average monthly compensation, length of credited service, and amount of annuity for June-December 1936 relative to those for January-May 1937, was connected with the general uncertainty that prevailed regarding the status of the railroad retirement system until a joint agreement was
140 • Annual Report of the Railroad Retirement Board
CHART X.—Employee annuities finally certified through June 1940: Percentage distribution by amount of single-life annuity for each type of annuity
MONTHLY AMOUNT OF SINGLE-LIFE ANNUITY (DOLLARS)
25
20
I5
IO
5
0
65 AND OVER
Illi
AGE ANNUITIES
25
20
UNDER 65
I5
IO
5
mi i innTiiiiiiinw
LESS IO 20 30 THAN TO TO TO
IO 20 30 40
40 50 60 70 80 90 I00 IIO I20
TO TO TO TO TO TO TO TO
50 60 70 80 90 I00 IIO I20
MONTHLY AMOUNT OF SINGLE-LIFE ANNUITY (DOLLARS)
less IO 20 30 40 50 60 70 80 90 I00 IIO I20 THAN TO
IO 20 30 40 50 60 70 80 90 I00 I IO I20
TO TO TO TO
TO
TO TO
■0
LESS THAN 30 YEARS OF SERVICE
0'* * U ■■■—! II 11 l.J.Q
less 10 20 30 40 50 60 70 80 90 100 110 120 LESS 10 20 30 40 50 60 70 80 90 100 110 120
THAN TO TO TO TO TO TO TO TO TO TO TO THAN TO TO TO TO TO TO TO TO TO TO TO
10 20 30 40 50 60 70 80 90 100 110 120 10 20 30 40 50 60 70 80 90 100 110 120
MONTHLY AMOUNT OF SINGLE-LIFE ANNUITY (DOLLARS)
* LESS THAN 0.05 %
30 YEARS OF SERVICE
DISABILITY ANNUITIES
ALL ANNUITIES
—■■——■“*—™—Ml——mb—M—O—Sa—iiBSft.__sw—Kt—Lo l£SS 10 20 30 40 50 60 70 80 90 100 110 120
than to to to to to to to to to to to
10 20 30 40 50 60 70 80 90 100 110 120
Analysis of Employee Annuities • 141
reached in February 1937 between the carriers and the unions on recommendations to be made to Congress for modification of the 1937 act. A relatively large proportion of those who applied for annuities to begin before the agreement was negotiated were aged employees who did not have the alternative of steady active service, either because of physical disability or because of low seniority standing relative to the considerable reductions in the labor force that were occurring at that time. Thus, not only does this period show the highest average age at which annuity began, but also the lowest average monthly compensation and the lowest average credited service relative to the average age.
During the 5-month period, January-May 1937, the uncertainties as to the status of the retirement system had largely been removed. Active employees in positions with relatively greater continuity of employment and generally higher compensation were less hesitant in relinquishing their rights to return to service in order to receive an annuity. In addition, there were several thousand individuals on pension rolls of railroads, who retired from active service after August 29, 1935, and were eligible for an annuity under the Railroad Retirement Acts. These individuals generally had longer service and higher compensation, and were no longer hesitant about applying for annuities under the retirement system. As a result, average credited service, average monthly compensation, and average amount of annuity rose very rapidly in this period.
The averages for June 1937, the beginning month under the 1937 act, shown separately, were sharply lower, primarily because the 1937 act made eligible a large number of aged and disabled individuals who were unable to establish an employment relation under the 1935 act. Nearly 40 percent of them had last worked for an employer under the act prior to 1935 and about 20 percent had last worked in 1935. These individuals in many cases had their service periods curtailed by disability. Furthermore, many of them had passed the peak of their earning power before the end of the base period 1924-31 and the average monthly compensation on which their annuity was based was therefore relatively low.
From the period July-December 1937 to the end of the period January-June 1938, average credited service dropped with average age at which annuity began. After that, the average age fell slightly and the average credited service tended to remain stable. Average monthly compensation and, to a lesser extent, the average amount of annuity have tended upward since the end of 1937, probably due to the declining proportion among the new accruals of very aged employees who had passed the peak of their earnings by 1924-31
276117—41—10
142 • An nual Report of the Railroad Retirement Board
and to the increasingly voluntary character of retirements in the more recent periods of full employment. A larger proportion of the retirements are of individuals having full employment in the period immediately preceding retirement and with relatively higher compensation.
For age annuities beginning at less than 65, all of which are based on 30 years of credited service, the average amount of annuity and the monthly compensation have been increasing since the passage of the 1937 act, even though the average age at which the annuity began has remained practically constant. The reasons for this increase in average monthly compensation are not clear, and a detailed analysis of all cases of this kind is now in progress to determine the causes of this steady upward trend. This group includes some partially disabled individuals, and as the accrual period moves further and further away from the base period 1924-31, the possibility that their disability may have affected their earnings in the base period becomes less and less. The rise in average compensation in recent periods may also be partly due to the increasingly voluntary element in retirements, strengthened by increased opportunities for continued employment in the railroad industry. There are probably fewer unemployed individuals who take a reduced annuity as an alternative to no income, and relatively more individuals in active service and with relatively higher compensation who retire because they have other resources.
For disability annuitants with 30 years of service, the average compensation and amount of annuity attained a peak in January-May 1937, and dropped to a low in July-December 1937. This group, just as the age annuitant group, includes a large number of individuals who had obtained disability pensions from the railroads after August 29, 1935, and were eligible for annuities. The annuities for these pensioners in most cases began to accrue in the period January-May 1937, and their generally higher compensation helped raise the average for the entire group. Since the end of 1937, the slight rise in average compensation shown may be related to the effect of disability on base-period earnings.
Disability annuitants with less than 30 years of service first became eligible for annuities under the 1937 act, and the first annuities of this type began to accrue in June 1937. For this first group of annuitants, who were an older group and also included a number of individuals who had been railroad pensioners, the average length of service and average compensation were relatively high. Since that time, no definite trends have become evident. In general, disability claims are the most difficult to adjudicate and hence future certifica
Analysis of Employee Annuities • 143
tions, recertifications, and transfers are likely to have an appreciable effect on the averages shown for these annuity groups.
Type oj credited service.—Virtually all annuitants have received credit for prior service, either service prior to March 1, 1936, under the 1935 act or service prior to January 1, 1937, under the 1937 act (table 39). There was one annuity based only on subsequent service under the 1935 act, and the proportion of such annuities under the 1937 act has not exceeded 0.2 percent in any period.
TABLE 39.—Employee annuities certified through June 1940: Number beginning to accrue in each period, classified by type of service credited
Number Percent
Accrual period All types of service Prior and subsequent service Prior service only Subsequent service only All types of service Prior and subsequent service Prior service only Subsequent service only
Total 124,055 99,441 24,468 146 100.0 80.2 19.7 0.1
1936
June-December 10,193 3,146 7,047 100.0 30.9 69.1
1937
January-May 12,478 10, 567 9,066 4, 671 30, 698 3,411 1 100.0 72.7 27.3 (*) O 0.1
June . 5j 895 4,618 1 100.0 44.2 55.8
July-December 35; 351 35 100.0 86.8 13.1
1938
January-June 17, 214 12,867 15,880 11,908 1,298 932 36 100.0 92.3 7.5 .2
July-December. __ 27 100.0 92.6 7.2 .2
1939
January-June 10,824 9,478 10,156 8,999 648 20 100.0 93.8 6.0 .2
July-December 461 18 100.0 94.9 4.9 .2
1940
January-June. . 5,083 4,917 158 8 100.0 96.7 3.1 .2
* Less than 0.05 percent.
The proportion of annuities certified only on the basis of prior service has decreased rapidly. It was 69.1 percent for annuities beginning to accrue in the 7-month period June-December 1936. In the next 5-month period this percentage dropped to 27.3 percent. In June 1937, however, when the 1937 act made eligible a large number of individuals who had not been able to qualify for an annuity under the 1935 act, the proportion rose to 55.8 percent. The percent of annuities with only prior service dropped to 13.1 percent in the 6-month period July-December 1937 and to 7.5 percent in the period January-June 1938. The decline continued thereafter, although probably not as rapidly as the figures for the last two periods in the table would indicate. The percentages for these two periods will probably be
144 • An nual Report of the Railroad Retirement Board increased somewhat by later certifications since annuities based only on prior service more frequently require determination that an employment relation existed on August 29, 1935, which normally delays adjudication somewhat.
Terminations of Employee Annuities
Terminations by death.—A. total of 18,060 employee annuities certified by July 1, 1940, with beginning dates prior to that date, have been terminated by the death of the annuitant.3 Of this total, 12,931 were for age annuities beginning at age 65 and over, 328 for age annuities beginning before age 65, 3,688 for disability annuities with 30 years of service, and 1,113 for disability annuities with less than 30 years of service. The percentage that these numbers are of all certified annuities beginning prior to July 1, 1940, are as follows: 14.6 percent for all annuities, 13.6 percent for age annuities beginning at age 65 or over, 6.5 percent for age annuities beginning before age 65, 21.2 percent for disability annuities with 30 years of service, and 17.9 percent for disability annuities with less than 30 years of service.
The total number of annuitant deaths and the number for each type of annuity was greater in the fiscal year 1940 than in the preceding fiscal year. This is primarily a result of the fact that the number of annuitants in the several types exposed to death, as represented by the annuities in force from month to month, has been increasing.
The number of terminations by death in each fiscal year for each type of annuity was as follows:
Fiscal years« All types of annuity Age annuities beginning Disability annuities
65 and over Under 65 30 years Less than 30 years
Total 18,060 12,931 328 3,688 1,113
1936-37 _ 935 755 5 175
1937-38 4,107 2,929 108 847 223
1938-39 ... 5', 962 4,245 103 1,248 366
1939-40 7i 056 5,002 112 1418 524
1 Figures include deaths which occurred prior to July 1, 1940, but were reported to the Board in the period July-September 1940. For this reason, the figures differ from those in tables C-9 through C-13.
The number of annuities terminated by death through June 1940, by age at end of year of death and by type of annuity, is presented in tables C-9—13 and C-22. The average age at end of year of death was 68.5 for all types of annuitants whose deaths had been reported to the Board by June 30, 1940, 71.7 for age annuitants retiring at
3 Figures include deaths which occurred prior to July 1,1940, but were reported to the Board after the end of the fiscal year. For this reason, the figures differ from those in tables C-9 through C-13.
Analysis of Employee Annuities • 145
65 or over, 63.7 for age annuitants retiring under 65, 60.6 for disability annuitants with 30 years of service, and 63.4 for disability annuitants with less than 30 years of service. Although the average age at death for each type of annuitants increased in the fiscal year 1940, the average age for all types of annuitants decreased from 68.6 for all terminations by death through June 1939 to 68.5 through June 1940, due to the increasing proportion of disability annuitants among the terminations.
Terminations for causes other than death.—Through June 30, 1940, a total of 213 employee annuities had been paid in the form of a commuted lump-sum value, in accordance with the provisions of the act permitting payments in this form when the amount of the annuity is small. A total of 133 annuities had been terminated because the annuitant returned to compensated service, either for an employer under the act or for his last employer if not an employer under the act. All but 16 of these had been reinstated when the annuitant again ceased compensated service. In 21 disability cases, the annuity was terminated because of recovery from disability, although 5 of these cases were reinstated as age annuities. In addition, as of June 30, 1940, there were 131 employee annuities suspended for various reasons.
Employee Annuities Payable
Monthly number and amount.—The amount of employee annuities payable for a given month is the sum of the monthly amounts due to individuals whose annuities began to accrue in that or prior months and were not terminated by the end of the month. New accruals still considerably exceed the number of annuities terminated by death, and as a result, the monthly number and amount payable continues to increase, as shown in table 40.
The increase in monthly amount payable from June 30, 1939, to June 30, 1940, however, was smaller both relatively and absolutely than the increase during the preceding fiscal year. On the basis of estimated totals after all pending claims have been adjudicated, the number and monthly amount of all employee annuities payable for June 1940 will be about 15 percent higher than for June 1939. The increases for June 1939 over June 1938 were about 22.5 percent. This slowing up in the rate of increase results from the fact that, while the number of and amount payable on new accruals have become more or less stable, the number of and monthly amount payable on annuities terminated by death have been growing rapidly.
For each type of annuity, there is the same general tendency for the rate of increase in monthly number and amount payable to slow up, although there are differences of degree among the several types.
146 • Annual Report of the Railroad Retirement Board
TABLE 40.—Employee annuities certified through June 1940: Number and monthly amount payable for June of each year by type of annuity, 1936-40
Year All annuities Age annuities Disability annuities
65 and over Under 65 30 years’ service Under 30 years’ service
Number Amount Number Amount Number Amount Number Amount Number Amount
June: 1936 1937 1938 1939 19401 4,094 32,254 80, 612 98, 256 106,078 $251,976 2,110,879 5, 232,457 6, 399,146 6,953, 664 3,616 26, 535 64,405 76,315 82, 561 $218,417 1, 692,481 4,132, 627 4,924,260 5, 372,138 120 591 2,673 4,024 4, 721 $6,311 31,841 164,023 254,035 301, 666 358 4,581 10,258 13,192 13, 713 $27, 246 364,841 819, 852 1,056, 363 1,102,726 547 3,276 4,725 5,083 $21, 714 115,954 164,487 177,132
1 The estimated total numbers and amounts payable for 1940 after all pending claims have been adjudicated are: for all annuities, 114,500 at $7,447,000; age annuities beginning at age 65 and over, 86,800 at $5,608,000; age annuities beginning at age under 65, 5,400 at $346,000; and disability annuities, 22,300 at $1,493,000. The figures for earlier years will be increased slightly by certifications made after June 30,1940.
The percent of increase for June 1940 over June 1939 was greater for disability annuities and for age annuities beginning before age 65 than for age annuities beginning at age 65 or later.
The proportion of age annuitants 65 and over among the total number of annuities payable again declined, on the basis of estimated totals after all pending claims have been adjudicated, from 77.3 percent for June 1939 to 75.8 percent for June 1940. At the same time, the proportion of disability annuities payable rose from 18.5 to 19.5 percent, and the proportion of age annuities beginning before age 65, from 4.2 to 4.7 percent.
Accrued yearly obligations.—The amount of benefits paid out for a given year can be obtained approximately by totaling the monthly amount payable for each month of the year.4 Like the monthly amount payable, the total yearly payments continue to increase, but at a decreasing rate. The amount paid out in 1940 on the basis of certifications through June 30, 1940, was 14.9 percent higher than the amount paid out in 1939. Payments which will result from certifications after June 30, 1940, will raise the percentage to an estimated 17.0 percent, compared with 40.2 percent increase in 1939 over 1938.
The proportion of the Board’s total obligations for employee annuities which was paid out for each of the various types of annuities differed somewhat in the fiscal years 1940 and 1939. The proportion for age annuities beginning at 65 years of age and over was lower, and
4 The procedure assumes that every annuity is paid the full monthly amount for the month in which it begins, whereas a large proportion of the annuities are paid for only a part of the beginning month. The error resulting from this assumption and from certain other minor factors amounts to $2,225,000, or 1.1 percent of the total paid out to June 30,1940, and has become of decreasing importance as the payments on new accruals for the month have constituted a decreasing percent of the total paid for the month.
Analysis of Employee Annuities • 147
the proportions for the age annuities beginning before age 65 and for disability annuities were higher in 1940 than in 1939, as shown in table 41.
TABLE 41.—Employee annuities certified through June 1940: Estimated total amount paid by type of annuity, fiscal years 1936-40
Period of accrual All annuities1 Age Disability
65 and over Under 65 30 years’ service Under 30 years’ service
Total..- Amount
$213,512,476 $167,194,403 $7, 529,393 $33,900,707 $4,887,970
Fiscal year: 1935-36
251,976 9,869,165 50, 762,016 71,032,792 81,596, 525 218,417 8, 263,918 40, 744, 276 55, 212,883 62, 754,907 6,311 205,445 1, 279,177 2, 609,018 3,429,441 27, 246 1,378,087 7,715, 629 11,483, 558 13, 296,185
1936-37 21,714 1,022,932 1,727,332 2,115,991
1937-38
1938-39
1939-40 2
Total
Percentages
100.0 78.3 3.5 15.9 2.3
Fiscal year: 1935-36
100.0 100.0 100.0 100.0 100.0 86.7 83.7 80.3 77.7 76.9 2.5 2.1 2.5 3.7 4.2 10.8 14.0 15.2 16.2 16.3
1936-37 0.2 2.0 2.4 2.6
1937-38
1938-39
1939-40 2
1 The total amounts payable for employee annuities shown in this table are not identical with the corresponding figures in table 26, ch. V. The amounts in table 26 have been adjusted to allow for payments for only part of a month on new accruals beginning after the first of the month. This adjustment was not made in the present table, since the distributions of the total amounts by type of annuity would not be significantly affected by it.
s The estimated total amount paid for all annuities certified in 1939-40 after all pending claims have been adjudicated is $84,199,000; for age annuities beginning at age 65 or over, $63,955,000 or 75.9 percent of the total; for age annuities beginning at age under 65, $3,680,000 or 4.4 percent; and for disability annuities, $16,564,000 or 19.7 percent. The figures for earlier years will be increased somewhat by certifications made after June 30, 1940.
It is estimated that when all applications pending as of June 30, 1940, with prior accrual dates have been adjudicated, 75.9 percent of total annuity obligations for 1940 will be accounted for by age annuities to individuals 65 years of age and over, 4.4 percent by age annuities to individuals under 65 and 19.7 percent on account of disability annuities of both types.
Of the total of $213,512,476 in obligations accrued on annuities certified through June 30, 1940, 78.3 percent were for age annuities beginning at age 65 or over, 3.5 percent for age annuities beginning before age 65, and 18.2 percent for disability annuities. The latter figure was made up of 15.9 percent for disability annuities with 30 years of service and 2.3 percent for disability annuities with less than 30 years of service. The percent for age annuities 65 and over
148 • An nual Report of the Railroad Retirement Board
CHART XI.—Employee annuities certified through June 1940: Total amount for each fiscal year,1 1937-40
1 An estimated $6,444,000 for obligations accruing before July 1,1940, but not certified by that date, is not included in the figures on which these charts are based.
will be decreased somewhat and the percent for each of the other 3 types increased somewhat after all pending claims have been adjudicated.
Annuities in force as of June 30, 1940.—The average actual annuity by type of annuity for finally certified annuities in force on June 30, 1939, and on June 30, 1940, is as follows:
Date All Age annuities Disability annuities
Over 65 Under 65 30 years’ service Under 30 years’ service
June 30, 1940 June 30, 1939 $67. 48 68.07 $66. 88 67.38 $64.17 63. 77 $80. 59 80. 64 $35.74 36.16
The average actual annuity for all annuitants decreased by 59 cents or 0.9 percent. This drop was the result of slight decreases in the average annuity for age annuitants 65 and over and for disability annui-
0 IO 20 30 40 50 60 70 80 90 I00
AMOUNT (MILLIONS OF DOLLARS)
I936-'37 (INCL. JUNE '36)
I937-38
I938-39
I939-40
Analysis of Employee Annuities • 149
CHART XII.—Employee annuities certified through June 1940: Percentage distribution by class of benefit of amount for each fiscal year,1 1937-40
1 An estimated $6,444,000 for obligations accruing before July 1,1940, but not certified by that date, is not included in the figures on which these charts are based.
tants with less than 30 years of service. For disability annuitants with 30 years of service, the change was but 5 cents in the average; for age annuitants under 65, however, a slight rise was shown. The decline in the average for all annuities was greater than for any one type because the proportion for the two types with lower averages was larger on the later date.
The number of finally certified annuities in force on June 30, 1940, by amount of single-life and actual annuity is shown in table 42. On the basis of actual annuity, 51 percent of all annuities in force on June 30, 1940, amounted to $50-$90 per month; 21 percent, to $90 per month or more; and 28 percent, to less than $50 per month. Nearly half of the annuities amounting to less than $50 a month were in the $40 to $50 class. The relatively large number of annuities in this class is a result of the minimum provision of the 1937 act, which applies only to age annuities beginning at age 65 or later. Most of the annuitants receiving small amounts are individuals who had short periods of credited service rather than low average monthly compensation.
0 10 20 30 40 50 60 70 80 90 100
PERCENT
1936-37 (INCL. JUNE '36)
1937-38
1938-39
1939-40
---AGE ANNUITIES-
- DISABILITY ANNUITIES
I LESS THAN 30 YRS OF SERVICE
30 YRS OF SERVICE
JNDER 65
] 65 ANO OVER
150 • Annual Report of the Railroad Retirement Board
TABLE 42.—Employee annuities in force June 30, 1940: Number of finally certified annuities by monthly amount of single-life and actual annuity, by type
Amount of annuity Total Age annuities Disability annuities
65 and over Under 65 30 years’ service Under 30 years’ service
Number Percent Number Percent Number Per- cent Number Percent Number Percent
Single-life annuity
Total 97,567 100.0 76, 233 100.0 4,360 100.0 13,359 100.0 3,615 100.0
$0-$9.99 317 0.3 261 0.3 12 0.3 1 (*) 43 1.2
$10.00-$19.99 2,769 2.8 2,231 4, 256 2.9 35 .8 5 (*) 498 13.8
$20.00-$29.99 5,261 5.4 5.6 108 2.5 51 0.4 846 23.4
$30.00-$39.99 5,156 5.3 3,818 5.0 214 4.9 249 1.9 875 24.1
$40.00-$49.99 12,930 8,842 13.3 11,198 14.7 521 11.9 555 4.2 656 18.1
$50.00-$59.99 9.1 6,762 8.9 887 20.3 756 5.7 437 12.1
$60.00-$69.99 13,271 13.6 10,380 13.6 937 21.6 1,782 13.3 172 4.8
$70.00-$79.99 15,278 15.6 11,440 15.1 745 17.1 3,029 22.6 64 1.8
$80.00-$89.99 12, 728 13.0 9,367 12.3 428 9.8 2,912 21.8 21 .6
$90.00-$99.99 8,683 8.9 6, 578 8.6 257 5.9 1,845 13.8 3 .1
$100.00-$109.99 7,091 7.3 5, 578 7.3 163 3.7 1,350 10.1
$110.00-$119.99 4,105 4.2 3,345 4.4 53 1.2 707 5.3
$120.00 1,136 1.2 1,019 1.3 — 117 .9 —
Actual annuity
Total 97,567 100.0 76, 233 100.0 4,360 100.0 13, 359 100.0 3,615 100.0
$0-$9.99 379 0.4 306 0.4 12 0.3 1 (*) 60 1.7
$10.00-$19.99 3,004 3.1 2,420 3.2 45 1.0 6 (*) 533 14.7
$20.00-$29.99 5,593 5.7 4,544 6.0 133 3.1 64 0.5 852 23.6
$30.00-$39.99 5,627 5.8 4, 292 5.6 227 5.2 247 1.8 861 23.7
$40.00-$49.99 13,057 13.4 11, 314 14.8 543 12.5 567 4.2 633 17.5
$50.00-$59.99 9,113 9.3 7,009 9.2 880 20.2 799 6.0 425 11.8
$60.00-$69.99 13,158 14,964 13.5 10, 256 13.5 916 21.0 1,820 3,024 13.6 166 4.6
$70.00-$79.99 15.3 11,136 14.6 743 17.0 22.7 61 1.7
$80.00-$89.99 12, 386 12.7 9,084 11.9 414 9.5 2,867 21.5 21 .6
$90.00-$99.99 8,406 8.6 6,341 8.3 244 5.6 1,818 13.6 3 . 1
$100.00-$109.99 6,846 7.0 5,355 7.0 154 3.5 1, 337 10.0
$UO.OO-$U9.99 3,953 4.1 3, 211 4.2 49 1.1 693 5.2
$120.00 1,081 1.1 965 1.3 — — 116 .9 —
Average normal annuity $69. 33 $67. 91 $78. 38 $80.90 $45.46
Average single-life annuity . 68.36 67.88 64.96 80.90 36.29
Average actual annuity 67.48 66.88 64.17 80.59 35. 74
* Less than 0.05 percent.
The average attained age as of the preceding December 31 of the annuitants with annuities in force on June 30, 1939, and June 30, 1940, is given below.
Date All Age annuities Disability annuities
Over 65 Under 65 30 years’ service Under 30 years’ service
As of Dec. 31,1939, for annuities in force, June 30,1940. _ 68.3 70.2 63.4 60.9 62.9
As of Dee. 31, 1938, for annuities in force, June 30,1939. 68.1 69.8 62.9 60.5 62.5
Analysis of Employee Annuities • 151
TABLE 43.—Employee annuities in force June 30, 1940: Number by attained age of annuitant as of Dec. 31, 1939, and by type of annuity
Attained age Total Age annuities Disability annuities
65 and over Under 65 30 years’ service Under 30 years’ service
Number Percent Number Percent Number Percent Number Percent Number Percent
Total 43 _ . 106,078 100.0 82, 561 100.0 4,721 100.0 13,713 100.0 5,083 100.0
1 1 1 4 12 35 60 75 119 203 280 352 451 544 682 707 1,029 1,878 2,397 2,601 3,167 4, 387 8,100 8,831 9,750 8, 777 9,021 8,862 7,837 6,900 5,957 3,760 2,221 1,690 1,366 1,055 833 619 439 332 270 166 103 67 52 36 22 10 6 4 2 1 (*) (*) (*) (*) (*) (*) 0.1 .1 .1 .2 .3 .3 .4 .5 .6 .7 1.0 1.8 2.3 2.5 3.0 4.1 7.6 8.3 9.1 8.3 8.5 8.4 7.4 6.5 5.6 3.5 2.1 1.6 1.3 1.0 .8 .6 .4 .3 .3 .2 .1 .1 (*) (*) (*) O (*) (*) (*) (*) 1 1 1 4 12 35 60 75 119 201 274 343 439 526 661 683 867 1,084 1,262 1,272 1,513 1,580 1,286 993 392 29 (*) (*) (*) (*) 0.1 .3 .4 .5 .9 1.5 2.0 2.5 3.2 3.8 4.8 5.0 6.3 7.9 9.2 9.3 11.0 11.6 9.4 7.2 2.9 .2
44
45
46 .
47 „ ..
48
49
50 .
51
52 2 6 9 12 18 21 24 63 260 424 545 743 902 950 615 116 11 (*) 0.1 .2 .3 . 4 .4 .5 1.3 5.5 9.0 11.5 15.7 19.2 20.2 13.0 2.5 .2
53
54
55
56
57 .
58
59 60 61 62. 63 64 . 65 66 67 68 69 1 1, 037 5,164 6, 817 9,172 8, 737 9,021 8,862 7,837 6, 900 5,957 3,760 2,221 1,690 1,366 1,055 833 619 439 332 270 166 103 67 52 36 22 10 6 4 2 1 1.3 6.3 8.3 11.1 10.6 10.9 10.7 9.5 8.4 7.2 4.6 2.7 2.0 1.7 1.3 1.0 .7 .5 .4 .3 .2 .1 .1 .1 (*) (*) (*) (*) (*) (*) (*) 2 99 534 711 784 911 868 700 406 70 1.9 10.5 14.0 15.4 17.9 17.1 13.8 8.0 1.4
70
71
72
73 .
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91...
92
93
94....
95
96.... 2 (*) 2 (*)
97
98
99.... 1 (*) 1 (*)
Average age
68.3 70.2 63.4 60.9 62.9
•Less than 0.05 percent.
1 Because attained age is given as of Dec. 31, 1939, persons retiring at age 65 after that date may be shown in the group age 64.
2 Because attained age is given as of Dec. 31, 1939, persons retiring at age 60 after that date may be shown in the group age 59.
152 • A nnual Report of the Railroad Retirement Board
The small increases in age for the various types of annuitants were due to the operation of several factors. The bulk of annuities in force on June 30, 1940, were in force on June 30, 1939, as well, and the average attained age of the annuitants receiving these annuities increased by 1 year. The average attained age, however, is decreased to the extent that annuitants whose monthly payments were terminated by death during the year were older than those surviving, and to the extent that annuitants with annuities beginning to accrue in the fiscal year 1940 were younger than those whose annuities began in previous years. The net result of these factors was to increase the attained age for all annuitants on the rolls of the Board June 30, 1940, by considerably less than 1 year.
The number of annuitants with annuities in force as of June 30, 1940, by attained age as of December 31, 1939, is given in table 43.
. IX .
PENSION PAYMENTS
THE private pensioners transferred to the pension rolls of the Board under section 6 of the 1937 act become each year of less importance in the operations of the Board. As of June 30, 1940, the number of pensions in force was 34,824 with a monthly amount payable of $2,043,856.’ The number of pensioners transferred as of July 1,1937, the beginning date for all pensions payable under section 6, was 48,500 and the monthly amount payable to them was $2,808,370. By June 30, 1940, the number of pensioners had been reduced by 13,676, or 28.2 percent, and the monthly amount payable by $764,514, or 27.2 percent. Except for 25 pensions which had been suspended, the reduction resulted from deaths among the pensioners.
The number of deaths among pensioners during the fiscal year 1940 was less than during the preceding fiscal years. There were 4,380 deaths in the fiscal year 1940,1 2 compared with 4,479 in the fiscal year 1939 and 4,792 in the fiscal year 1938. This decline in the number of deaths is principally due to the decreasing number of pensioners.
Compared with the number of pensions in force at the beginning of the respective fiscal years, however, the proportion of deaths has been growing. Of the 39,226 pensioners living on June 30, 1939, 11.2 percent had died by June 30, 1940. During the fiscal year 1939, 10.2 percent of those living on June 30, 1938, had died, and during the fiscal year 1938, 9.9 percent of those living on July 1, 1937. The growing percentage of deaths among pensioners results primarily from the rising average age of the pensioners.
The average attained age as of December 31, 1939, for all pensioners with pensions in force as of June 30, 1940, was 75.2 years. The corresponding figure as of December 31, 1938, for those in force as of June 30, 1939, was 74.4 years. The average age did not increase by a full year between the beginning and the end of the fiscal year, since a higher proportion of the older pensioners died during the year.
1 The figures differ from those shown in table 44 in that 322 deaths which occurred before July 1, 1940, but which were reported between June 30 and September 30, 1940, have been deducted. The 322 deaths resulted in a reduction in monthly amounts payable by the Board of $18,171.
2 This includes 322 deaths which occurred before July 1, 1940, but were reported to the Board between that date and September 30,1940.
153
154 • Annual Report of the Railroad Retirement Board
TABLE 44.—Pensions certified through June 1940: Number and monthly amount payable for terminations by death and all others, monthly,1 fiscal years 1938-40
Period Terminations by death Payable for the month1 * 3
Number Amount Number Amount
Cumulative through June 1940 13, 329 $745, 545
Fiscal year: =====
1937-38 4,792 265, 782
1938-39 4,479 252, 474
1939-40 3 <058 227; 288
1937
Transferred as of July 1, 19374 48, 500 $2, 808,370
July 372 20,813 48,128 2, 78< 557
August 333 18; 044 4< 795 2, 769, 512
September 372 21, 220 47 423 2; 748', 292
October ... 388 22; 002 47,035 2, 726, 290
November 378 20; 691 4< 656 2, 705, 515
December ... 475 2< 167 46,181 2,67< 348
1938
January ... . ... .. 498 28, 006 45,683 2, 651,341
February 390 21,210 45, 293 2, 630,131
March 458 24,829 44,834 2,605,294
April _ 387 21, 775 4< 447 2, 583; 519
May .. 402 22,047 44,045 2, 561', 472
June ... .. ... 339 1< 975 43, 706 2, 542,497
July . 344 19, 090 43, 362 2,523, 407
August 314 17,374 43', 048 2, 506; 032
September 304 1?; 632 42, 744 2, 488, 399
October . 397 21,919 42, 347 2, 466, 480
November . ... ... . 348 19; 790 41,999 2, 446, 689
December 406 23; 230 41, 593 2, 423, 458
1939
January 434 24, 444 41,159 2, 399,014
February ... 442 2< 421 40 717 2,374, 592
March ... 424 23,871 40, 293 2,350, 721
April . _ . 404 23,006 39, 889 2 327, 714
May _ _ . . 346 19, 600 39, 542 2, 308,064
June ... 316 18,091 39,226 2. 289,972
July _ ... 361 20, 924 38 865 2 269,048
August _ . ... 267 15,168 38, 598 2, 253, 879
September 335 18 374 38 263 2,235 504
October ... . . . 379 21, 602 37,884 2 213,902
November... . _ . 338 19, 030 37, 546 2,194,871
December 425 22,786 37,119 2,171,999
1940
January .... . 447 25,130 36, 672 2 146,868
February .. 450 25, 662 36, 221 2 121,181
March 385 21,299 35,836 2 099,882
April 345 18, 561 35, 490 2,081,27g
May 299 17,392 35,189 2 063,81!;
June . .. 27 1,354 35,146 2,061,71
1 All pensions are carried from July 1, 1937, and terminations are given according to the month in which death actually occurred. Pension payments, under the terms of the 1937 act, do not accrue with respect to a particular month, but are payable “on July 1,1937, and on the first day of each calendar month thereafter.” For purposes of this table, however, pensions payable as of the first of any month are considered as payable for the preceding month, in order to make pension figures comparable with those for annuities.
1 After deduction of 25 pensions amounting to $1,107, suspended and not yet reinstated as of June 30,1940. The number and amount of these pensions are distributed as follows bv month of initial suspension: November 1937, 1 at $83; March 1938, 1 at $7; May 1939,1 at $50; December 1939, 2 at $86; February 1940, 1 at $25; April 1940, 1 at $43; May 1940, 2 at $75; and June 1940, 16 at $739.
3 322 pensioners receiving a monthly amount payable of $17,861 died before July 1, 1940, but the deaths were reported to the Board after that date. Inclusion of these deaths would increase the number of deaths in 1939-40 to 4,380 at a monthly amount payable of $245,149, while the number payable at the end of the period would be reduced to 34,824 at $2,043,856.
‘ The total of 48,500 is 4 less than the number reported in the 1939 annual report as transferred as of July 1, 1937, 28 pensioners having been removed from the rolls during 1939-40 because of ineligibility, while 24 new pensioners were added.
Pension Payments • 155
The average attained age as of December 31, 1939, for age pensioners on the rolls on June 30, 1940, was 78.3 years, for disability pensioners, 72.9 years, and for pensioners retired for other reasons, 77.0 years.
The average attained age as of December 31, 1939, for all pensioners whose death was reported in the fiscal year 1940 was 77.6 years. The average was 80.2 years for age pensioners, 75.4 years for disability pensioners, and 79.6 years for “other” pensioners.
The average monthly amount for all pensions in force at the end of the fiscal year 1940, as shown in table 45, was $58.66. This is 29 cents higher than for those in force June 30, 1939, and 76 cents higher than the average for all pensioners ($57.90) who were transferred. This increase results from the fact that a larger proportion of pensioners who retired in earlier years, when pensions in general were somewhat smaller, are dying. For the age pensioners, the average pension in force was $59.74, while for the disability pensioners the average was $57.24, and for “other” pensioners, $80.79.
TABLE 45.—Pensions in force June 30, 1940: Number by monthly amount of pension and by cause of retirement
Amount Total Age Disability Other
Number Percent Number Percent Number Percent Number Percent
Total 35,146 100.0 14,462 100.0 20,095 100.0 589 100.0
$0-$9.99 43 0.1 22 0.2 21 0.1
$10.00-$19.99 1,246 3.5 581 4.0 659 3.3 6 1 0
$20.00-$29.99 . 5,419 15. 4 2, 266 15. 7 3,128 15. 5 25 4 3
$30.00-$39.99 A 874 13.9 2,040 14.1 2, 808 14.0 26 4 4
$40.00-$49.99 4,464 12.7 1, 636 11.3 2, 794 13. 9 34 5.8
$50.00-$59.99 4,244 12.1 1’ 580 10. 9 2304 13.0 60 10 2
$60.00-$69.99 3,595 10.2 1372 9.5 2,171 10. 8 52 8 8
$70.00-$79.99 2,940 8.4 1, 207 8. 3 1’655 8. 2 78 13 2
$80.00-$89.99 2,053 5.8 '829 5.7 1,158 5.8 66 11. 2
$90.00-$99.99 1,749 5.0 791 5. 5 ' 889 4.4 69 11 7
$100.00-$109.99 1'460 4.2 620 4.3 792 3. 9 48 8 1
$110.00~$U9.99 ' 990 2.8 464 3.2 494 2.5 32 5.4
$120.00 2,069 5.9 1,054 7.3 922 4.6 93 15.9
Average amount of pension—. $58.66 $59.74 $57.24 $80.79
The distribution by amount of pension for the 4,399 pensions terminated by death during the fiscal year 1940 is shown in table 46. The average such pension amounted to $55.97, as compared with an average of $58.66 for the pensions in force as of June 30, 1940.
As in previous fiscal years, a slightly larger proportion of the age pensioners than of the disability pensioners were reported to have died in the course of the fiscal year. The percentage was 11.9 for age pensioners, compared with 10.6 for disability pensioners. Age pensioners constituted 41.1 percent of the pensions in force on June 30, 1940, compared with 41.9 percent of the total transferred as of July 1,
156 • An nual Report of the Railroad Retirement Board
1937. On the other hand, disability pensioners were 57.2 percent of the pensions in force as of June 30, 1940, compared with 56.4 percent of the total pensions transferred.
TABLE 46.—Pensions terminated by death in the fiscal year 1939-40:1 Number by monthly amount of pension and by cause of retirement
Amount Total Age Disability Other
Number Percent Number Percent Number Percent Number Percent
Total 4,399 100.0 1,945 100.0 2,389 100.0 65 100.0
$0-$9.99 . . 9 0.2 7 0.4 2 0.1
$10.00-$19.99 190 4.3 107 5.5 83 3.5
$20.00-$29.99 745 16.9 339 17.4 400 16.7 6 9.2
$30.00-$39.99 636 14. 5 317 16.3 315 13.2 4 6.2
$40.00-$49.99 571 13.0 214 11.0 350 14.7 7 10.9
$50.00-$59.99 545 12.4 216 11.1 326 13.6 3 4.6
$60.00-$69.99 449 10.2 165 8.5 275 11.5 9 13.8
$70.00-$79.99 356 8.1 157 8.1 190 8.0 9 13.8
$80.00-$89.99 233 5.3 102 5.2 122 5.1 9 13.8
$90.00-$99.99 191 4.3 80 4.1 107 4.5 4 6.2
$100.00-$109.99 137 3.1 64 3.3 70 2.9 3 4.6
$110.00-$U9.99 99 2.3 51 2.6 43 1.8 5 7.7
$120.00 238 5.4 126 6.5 106 4.4 6 9.2
Average pension $55.97 $55.80 $55.64 $72.86
i The 4,399 cases included in this table are those for which death was reported to the Board during the fiscal year 1940, and not the number actually dying in this interval.
TABLE 47.—Pensions in force June 30, 1940: Attained age of pensioners as of Dec. 31, 1939, by cause of retirement
Attained age (years) Total Age Disability Other
Number Percent Number Percent Number Percent Number Percent
Total i 35, 084 100.0 14,439 100.0 20, 062 100.0 583 100.0
3 (*) 3 (*)
40-44 11 (*) 11 0.1
45-49 74 0.2 74 .4
50-54 330 .9 5 (*) 325 1.6
55-59 679 1.9 8 0.1 670 3.3 1 0.2
60-64 1,287 3.7 24 .2 1,262 6.3 1 .2
65-69 2,612 7.4 86 .6 2,513 12.5 13 2.2
70-74 8, 914 25.4 2,121 14.7 6,653 33.1 140 24.0
75-79 13,173 37.7 7, 269 50.2 5, 618 28.0 286 49.0
80-84 6,126 17.5 3, 769 26. 1 2,243 11.2 114 19.6
85-89 1,593 4.5 976 6.8 597 3.0 20 3.4
90 and over ' 282 .8 181 1.3 93 .5 8 1.4
Average age 75.2 78.3 72.9 77.0
•Less than 0.05 percent.
i This does not include 62 pensioners tor whom age was not known.
Pension Payments • 157
TABLE 48.—Pensions terminated by death in the fiscal year 1939-40:1 Number by cause of retirement and attained age of pensioners as of Dec. 31, 1939
Attained age (years)
Total
40-44________
45-49________
50-54_______
55-59_______
60-64_______
65-69_______
70-74 ______
75-79_______
80-84_______
85-89_______
90 and over.
Average age
Total Age Disability Other
Number Percent Number Percent Number Percent Number Percent
2 4, 388 100.0 1,943 0.0 2, 381 100.0 64 100.0
1 (*) 1 (*)
5 0.1 5 0.2
10 .2 10 . 4
41 .9 41 1.7
86 2.0 1 0.1 85 3.6
233 5.3 7 .4 224 9.4 2 3.1
818 18.6 156 8.0 658 27.6 4 6.3
1, 569 35.8 790 40.6 749 31.6 30 46.9
1, 051 24.0 633 32.6 400 16.8 18 28. 1
450 10.3 276 14.2 167 7.0 7 10.9
124 2.8 80 4.1 41 1.7 3 4.7
77.6 80.2 75.4 79.6
“Less than 0.05 percent.
t The cases included in this table are those for which deaths were reported to the Board during the fiscal year 1940, and not the number actually dying in this interval.
2 This does not include 11 pensioners for whom age was not known.
276117—41----11
. X .
SURVIVOR PAYMENTS
PAYMENTS to the survivors of employee annuitants and of employees under the act with credited compensation after December 31, 1936, constitute a small but increasing proportion of the benefit payments under the retirement system. After all certifications have been made on claims pending as of June 30, 1940, it is estimated that survivor payments will make up 3.2 percent of the estimated total accrued obligations for the fiscal year 1940, compared with 2.4 percent for the fiscal year 1939. The three different types of survivor payments provided by the system—lump-sum death benefits under the 1937 act, death benefit annuities under the 1935 act, and survivor annuities under both acts—have not moved in the same way, however. The changes in each type are discussed in this chapter on the basis of the periods in which the benefit obligations accrued. A statement of certifications, terminations, and other administrative actions during the fiscal year 1940 is also given.
Survivor Annuities
A survivor annuity under either the 1935 or 1937 act is payable to the wife (or husband) of an annuitant who had duly elected to receive a reduced annuity during his lifetime under the joint and survivor provisions of the act. The survivor annuity can be certified only after (1) a valid election of a joint and survivor option has been made, (2) the election became effective because the employee making the election lived at least to the day the employee annuity began to accrue, and (3) the employee subsequently died, leaving a survivor legally entitled to receive such an annuity.
The right to elect a joint and survivor option, which was relatively unrestricted in the 1935 act, was considerably restricted by the act of 1937. The latter act makes an option election inoperative if the employee is awarded an annuity based on disability and 30 years of service. The 1937 act also provides that if a joint and survivor election was not made before January 1, 1938, it can only be made at least 5 years prior to the beginning date of the employee annuity, unless the applicant furnishes satisfactory proof of health.
158
Survivor Payments *159
Since the number of survivor annuities depends upon the number of employee annuities certified under joint and survivor election and upon the number of deaths among these annuitants, data for this group are presented here with the discussion of survivor annuities.
Joint and survivor annuities.—During the fiscal year 1940, 587 employee annuities were certified under joint and survivor election. This made a total of 7,460 such annuities certified through June 30, 1940, or 6.0 percent of the total 124,055 employee annuities certified through that date. Employee annuities under joint and survivor election were terminated by death in 585 cases in the fiscal year 1940, making a total of 2,365 terminated through June 30, 1940. At the end of the fiscal year, after deduction for terminations other than by death, 5,076 employee annuities were in force under joint and survivor election.
The percentage of employee annuities accruing under joint and survivor elections has remained at about the same level since January 1939 (see appendix table C-27), indicating that the decline resulting from the restrictive effects of the 1937 act, which was evident in the figures presented in last year’s annual report, may have been halted and the percentage of elections become relatively stabilized. Of all employee annuities certified through June 30, 1940, with beginning date in the fiscal year 1940, 2.2 percent were certified under joint and survivor election.
Joint and survivor annuities beginning to accrue in the fiscal year 1940 were distributed by option in approximately the same proportions as in the previous fiscal year (see table 49). Option C, under which the widow receives half as much as the employee annuitant was
TABLE 49.—Employee annuities certified through. June 1940: Number with joint and survivor election by period in which annuity began
Accrual period All options Option A Option B Option C
Total 1936 7,460 2,310 1,206 3,944
June-December.. 1,336 467 247 622
1937
Januarv-Mav . 1,196 372 168 656
June. ' . . 950 345 160 445
Julv-Decamber _. 2,518 765 406 1,347
1938
Januarv-Jnne. 577 142 94 341
July-December. . . _ 343 94 46 203
1939 226 50 35 141
July-December 204 53 33 118
J anuary-J une. _.. 1940 110 22 17 71
160 • An nual Report of the Railroad Retirement Board
receiving or was entitled to receive during his lifetime, was elected in slightly more than 60 percent of the cases; option A, under which she receives as much as her husband was receiving or entitled to receive, in slightly less than 25 percent of the cases; and option B, in which she receives three-fourths as much, in about 15 percent of the cases. For all joint and survivor annuities certified through June 30, 1940, 52.8 percent were under option C, 31.0 percent under option A, and 16.2 percent under option B. The reasons for the shift in option selection from option A to option C, indicated by these figures, were discussed in last year’s annual report (p. 127).
The average percent reduction from single-life to actual annuity where joint and survivor election was made was 29.6 on all certifications through June 30, 1940 (table 50). The corresponding figure for all certifications through June 30, 1939, was 29.5 percent. The average age of annuitants electing options through June 30, 1940, was 1.3 years greater than for those not electing options. On all certifications through June 30, 1939, the difference between these two ages was 1.0 years. The average age of annuitants electing options has thus not decreased as much as that of single-life annuitants.
TABLE 50.—Employee annuities certified through June 1940: Number by type of joint and survivor election, with average annuity and average attained age 1 of annuitant and spouse
Type of election Number Average annuity 2 Average age at time annuity began
Singlelife Actual Average percent reduction Annuitant Spouse
Option A _ _ 2,310 $60.80 $37. 26 38.7 68. 5 61.4
Option B ______ 1,206 68. 30 46. 67 31. 7 68. 0 61.2
Option C . 3; 944 68. 81 51.97 24.5 68.3 61.0
All options _ 7, 460 66.30 46. 66 29. 6 68.3 61.2
No options no; 595 68. 41 68. 41 67.0 (3)
All annuities 124, 055 68. 29 67.15 1.7 67. 1 (3)
1 At time annuity began.
2 For finally certified only.
8 Not available.
Table 51 classifies the number of joint and survivor annuities finally certified through June 30, 1940, by the amount of single-life annuity and by the option elected. When compared with corresponding figures for certifications through June 30, 1939, the later figures show a slight increase in the proportion of joint and survivor elections in the groups with single-life annuities below the average for all annuitants. Of all employee annuitants certified under joint and survivor election through June 30, 1940, 39.8 percent had single-life annuities of less than $60.00, compared with 37.8 percent of all joint and survivor annuitants certified through June 30, 1939.
Survivor Payments • 161
TABLE 51.—Employee annuities finally certified through June 1940: Number by type of joint and survivor election and by monthly amount of single-life annuity
Single-life annuity All annuities All joint and survivor annuities Percent all joint and survivor annuities of all annuities Option A Option B Option C
Number Percent Number Percent Number Percent Number Percent Number Percent
Total 114, 069 100.0 6, 642 100.0 5.8 2, 016 100.0 1,059 100.0 3,567 100.0
$0-$9.99 552 0. 5 28 0. 4 5.1 13 0. 6 4 0. 4 11 0.3
$10.00-$19.99 3, 273 2.9 172 2. 6 5.3 87 4.3 24 2.3 61 1„7
$20.00-$29.99 6, 220 5. 5 376 5. 7 6. 0 173 8.6 54 5. 1 149 4. 2
$30.00-$39.99 6, 111 5. 4 389 5.9 6.4 155 7. 7 59 5.6 175 4.9
$40.00-$49.99 14; 957 13. 1 927 14.0 6.2 331 16.4 124 11.7 472 13.2
$50.00-$59.99 10, 264 9.0 745 11.2 7.3 239 11.9 118 11.1 388 10.9
$60.00-869.99 15, 287 13. 4 989 14. 9 6. 5 275 13.6 159 15.0 555 15. 6
$70.00-879.99 17, 751 15.5 1, 004 15.0 5. 7 272 13. 5 160 15.0 572 16.1
$80.00-889.99 14; 910 13. 0 ' 803 12.1 5. 4 185 9. 2 147 13.9 471 13.2
$90.00-899.99 10,235 9.0 511 7. 7 5.0 112 5.6 91 8. 6 308 8. 6
$100.00-8109.99 8, 363 7.3 390 5.9 4. 7 83 4. 1 72 6.8 235 6.6
$110.00-8119.99 4, 852 4.3 235 3.5 4.8 56 2.8 39 3.7 140 3.9
$120.00 1,294 1.1 73 1.1 5.6 35 1.7 8 .8 30 .8
The number of joint and survivor elections filed in advance of application for annuity, in accordance with the provision of the 1937 act, was smaller in the fiscal year 1940 than in previous fiscal years. During the fiscal year 1940, 282 such advance elections were filed, compared with 352 in 1939. As shown in the following table, the number of advance elections on file with the Board was 2,746 on June 30, 1940, compared with 3,079 on September 30, 1939. The number of advance elections received, disposed of, and pending is as follows:
Number of advance elections
Through September 1939
October 1939 to June 1940
Received during period__________________________
Disposed of during period____________________________
Applications for employee annuity received_______
Rendered inoperative by death of elector_________
Rendered inoperative because elector had no spouse Election not completed___________________________
On hand at end of period_____________________________
Election received prior to Jan. 1, 1938__________
Election received subsequent to Dec. 31, 1937____
4,696 196
1, 617
1,302
147
3,079 1,942
1,137
529 455
46
8
20 2,746 1,610 1,136
The effect of the 1937 act in restricting election of options by groups with markedly subnormal life expectancies is seen in the fact that the percentages of deaths among joint-and-survivor and single-life annuitants were closer together in 1940 than previously. Of the 5,681 employee annuities under joint and survivor election in force at some time during the fiscal year 1940, 585 or 10.3 percent were reported as terminated by death during the fiscal year 1940. The corresponding
162 • Annual Report of the Railroad Retirement Board
percentage for employee annuities in force on a single-life basis at some time during the fiscal year 1940 was 6.3 percent. The difference between the two percentages was much greater in the period prior to July 1, 1939. Of 6,873 joint and survivor annuities certified to July 1, 1939, 25.9 percent were reported as terminated by death up to that date. Only 9.0 percent of the single-life annuities had been terminated by death to July 1, 1939.
Survivor annuities.—Survivor annuity claims arising out of the death of joint and survivor annuitants in the fiscal year 1940 consisted of 585 deaths reported during the year and 104 cases carried over from the preceding year. Of this total of 689 cases, 612 were certified for a survivor annuity; in 23, the wife had died before the employee annuitant, or the option had been declared inoperative for other reasons, or the claim had been tentatively closed without certification because the survivor had failed to reply to requests for information; and 54 were pending as of June 30, 1940.
In addition to the 612 claims certified upon the death of an employee annuitant, there were 11 certified in which no prior annuity payments had been certified to the employee. Cases of this sort arise when the employee making a joint and survivor election lives at least to the accrual date of his employee annuity, but dies during the calendar month in which the annuity begins to accrue and notice of death is received prior to certification.
The total number of survivor annuities certified in the fiscal year 1940 was 623, at a monthly amount payable of $18,112, compared with 1,008 at a monthly amount payable of $30,653 certified in the fiscal year 1939. The total certified through June 1940 was 2,453 at a monthly amount payable of $80,690. Only 107 survivor annuities had been terminated by death in the period through June 30, 1940, and a few others had been suspended. As of June 30, 1940, there were 2,341 survivor annuities in force at a monthly amount payable of $77,595.
Survivor annuities begin to accrue in the month of the death of employee annuitants who have elected joint and survivor options. The number of new accruals in each fiscal year and the average monthly amount payable for them was as follows:
Fiscal year Number of new accruals Monthly amount payable Average monthly amount payable
1936 (June only). . 23 $895 $38.94
1937 405 15 683 38 72
1938 965 32* 533 33 71
1939 633 Iff 062 30 11
1940 ’ 427 12’ 943 30^33
Survivor Payments • 163
When all cases pending as of June 30, 1940, are adjudicated, it is estimated that accruals in the last fiscal year will be increased by about 100 cases and that from 10 to 15 cases will be added in each of the fiscal years 1937-39. Even after these additions, the number of new accruals in the fiscal year 1940 will be about 19 percent below those for the fiscal year 1939, continuing the decline from the peak figure for the fiscal year 1938. This decline results both from the decrease in the number of joint and survivor annuities in force and the smaller proportion of these annuitants who die. Both of these factors are related to the restriction upon joint and survivor elections introduced in the 1937 act.
The average monthly amount payable on survivor annuities beginning to accrue in the fiscal year 1940 was $30.33 on all certifications made through June 30, 1940. This was about the same as for the preceding fiscal year. For all survivor annuities certified through June 30, 1940, the average annuity was $33.07 and for those remaining in force on June 30, 1940, it was $33.15. Table 52 classifies all survivor annuities certified through June 30, 1940, and all those in force on that date by amount of annuity.
TABLE 52.—Survivor annuities: Number by amount of annuity for annuities certified through June 1940, and for annuities in force June 30, 1940
Amount of annuity Annuities certified through June 30, 1940 In force June 30, 1940
All options Option A Option B Option C
Number Percent Number Percent Number Percent Number Percent Number Percent
Total 2,453 100.0 1,028 100.0 453 100.0 972 100.0 2,341 100.0
$0-$9.99 118 4.8 39 3 8 12 2 6 67 6 9 108 4 6
$10.00-$19.99 455 18.5 158 15^4 58 12^8 239 24 6 435 18 6
$20.00-$29.99 616 25.2 193 18.8 96 21.2 327 33. 6 594 25 3
$30.00-$39.99 _ . 524 21. 5 167 16 2 95 21 0 262 27 0 500 21 4
$40.00-$49.99 349 14.2 170 16 5 103 22 8 76 7.8 325 13 9
$50.00-$59.99 217 8.8 145 14 1 71 15.7 1 . 1 212 9 1
$60.00-$69.99 . 94 3.8 78 7. 6 16 3.5 89 3.8
$70.00-$79.99 52 2.1 50 4.9 2 .4 52 2. 2
$80.00-$89.99.. .. .. 25 1.0 25 2.4 23 1.0
$90.00-$99.99 3 .1 3 .3 3 . 1
Average annuity S33. 07 $39 on san 04 S25 42 15
Average actual employee an-
nuity 45. 36 39.00 48.05 50.84 65. 55
Only a small proportion of survivor annuitants have died since their annuities began to accrue. As a result, the number of annuities payable for each month has increased fairly rapidly, as follows:
Month Number of annuities payable for the month Monthly amount payable for the month Month Number of annuities payable for the month Monthly amount payable for the month
June: 1936 23 428 1,370 $895 16,579 48,389 June: 1939 1,971 2,341 $66,454 77, 595
1937 1940
1938...
164 • A nnual Report of the Railroad Retirement Board
It is estimated that certifications made after June 30, 1940, will increase the figure for June 1940 to 2,500 annuities at a monthly amount payable of $82,000. Smaller increases would result for earlier fiscal years.
Lump-Sum Death Benefits
Lump-sum death benefits under the 1937 act are payable to the designated beneficiary or legal representative of a deceased annuitant or covered employee and are equal to 4 percent of his credited compensation earned after December 31, 1936, less any annuity amounts paid or payable. In actual operation, such payments are a result of three different types of claims: employee death claims, arising from the death of an employee who had not filed an application for an employee annuity; applicant death claims, arising from the death of an individual who had applied for an employee annuity which had not been certified at the time of his death and where either no annuity was payable or the amount payable was clearly less than 4 percent of credited compensation; and annuitant death claims, arising from the death of an employee annuitant who up to the time of his death had received less in annuity payments than 4 percent of his credited compensation after December 31, 1936. Of the 13,370 lump-sum death payments certified in the fiscal year 1940, 12,467 were paid on employee death claims, 833 on applicant death claims, and 70 on annuitant death claims (see appendix table C-29).
Employee death claims.—Although over 93 percent of the certifications made in 1940 were on employee death claims, there is probably a substantial number of employee deaths for which no claim has been filed. By the end of the fiscal year 1940, there were more than 2,250,000 living individuals who had credited earnings after December 31, 1936, excluding individuals who had applied for an employee annuity. During the fiscal year 1940, employers reported 11,884 employee deaths to the Board under the provision requiring employers to report the death of all employees in active service or in an employment relation within 30 days after they receive notice of it. Reports of deaths of employees who have left the railroad industry must come from survivors or from executors or administrators. There are no doubt thousands of deaths each year which are not reported and for which no death claims have been filed. In most of these cases, the amount of credited compensation is small.
A total of 12,794 employee death claims was received in the fiscal year 1940, as compared with 11,328 in the preceding fiscal year. The volume of claims in the fiscal year 1940 was smaller than in the fiscal year 1939, however, since the number of claims pending at the
Survivor Payments • 165
beginning of the fiscal year 1940 was smaller than the number pending at the beginning of the preceding year.
Annuitant death claims.—The deaths of 5,968 1 employee annuitants under the 1937 act were reported to the Board during the fiscal year 1940. The right to death benefits of survivors of these annuitants was determined by the Board, along with 70 similar cases which were pending at the beginning of the year. Of the total of 6,038 cases to be determined during the year, 70 were certified for a lump-sum payment, 5,895 were disposed of without such certification, and 73 cases were still pending as of June 30, 1940. Forty of the claims settled by a lump-sum payment were cases in which there had been no annuity payments because the annuitant had died without cashing his first check, and 30 were cases in which the annuity payments had amounted to less than 4 percent of the credited compensation after December 31, 1936. Cases disposed of without certification of a lump-sum death benefit consisted of 1,223 in which there had been no compensated service after December 31, 1936; 4,251 were cases where annuity payments exceeded 4 percent of the credited compensation after December 31, 1936; and 419 were cases of deceased joint and survivor annuitants in which a survivor annuity was certified, and no lump-sum death benefit will be payable until the death of the survivor. In two cases benefits were due but no claim was made. The 419 cases in which a survivor annuity was certified comprised 7.1 percent of the cases in which no payment was made, as compared to 12.7 percent through the end of the fiscal year 1939. Although the number of cases in which annuity payments did not at death equal 4 percent of credited compensation is still very small, it has grown somewhat, as compared with previous years. The number of such cases will no doubt increase with the growth in the annuitants’ accumulated compensation for service after December 31, 1936.
Certifications oj lump-sum benefits.—The 13,370 lump-sum death benefits certified by the Board during the fiscal year 1940 compares with 15,359 in the fiscal year 1939. Through June 30, 1940, a total of 29,379 lump-sum death benefits had been certified.
Although the number of certifications declined, the amount of lump-sum death benefits certified in the fiscal year 1940 increased to $2,111,590 from $1,320,976 in the fiscal year 1939. The average payment initially certified increased from $86.08 in 1939 to $157.57 in 1940, more than offsetting the decline in the number of certifications.
1 The total number of deaths for 1935-act and 1937-aet annuitants as given in this chapter exceeds the net number of terminations by death during the fiscal year as given elsewhere, by 43, because of corrections in the number of deaths reported as of June 30, 1939, and of reduction in the number of claims terminated by death prior to that date but not yet classifiable at that time under either act.
166 • Annual Report of the Railroad Retirement Board
The total amount of lump-sum death payments certified through June 30, 1940, was $3,467,584.
The number and average amount of lump-sum death benefit payments by filing date are shown in the following table for certifications through June 30, 1940:
Filing period Number Total amount Average amount
All periods 29,379 $3,467, 584 $118.03
1937
July-December 1,112 43,472 39.09
1938
January-June _ 6,767 400, 583 59.20
July-December 5; 407 496i 219 91.77
1939
January-June 5,898 752,345 127.56
July-December Si 574 873; 514 156.71
1940
January-June 4,621 901,447 195.08
These figures, based on filing date, give a better measure of changes in the obligations that have accrued for particular periods on account of deaths among covered individuals than certification data, which are considerably influenced by variations in the time necessary for adjudication. The month in which the claim is filed, however, is not the same as the actual month of death. This difference particularly affects the figures for the early period and the latest period. In the early period, in which survivors were less familiar with the procedure for filing claims, there was a relatively long delay between the occurrence of death and the filing of the claim. In the latest period, January-June 1940, a change in the procedure for assigning lump-sum death benefit claim numbers increased the number of claims recorded as filed in that period. While this increase in the period January-June 1940 is not shown in the certifications made through June 30, 1940, it is estimated that a total of 7,000 lump-sum death benefit claims will be certified as filed in this period when all pending claims have been adjudicated. This is considerably in excess of the number in any other period, even after allowance for a small number of claims from these periods still in the pending load on June 30, 1940.
The number of lump-sum death benefit claims filed has changed little, except for the earliest and latest periods. It is expected that the number will grow slowly, as survivors become more generally aware of the benefits to which they may be entitled. Furthermore, as the amount of benefits which can be paid increases, survivors will have greater incentive to claim the benefits due them. In addition,
Survivor Payments • 167
the number of deaths among covered employees increases as the number of individuals with credited compensation grows.
The average lump-sum death benefit has steadily increased, corresponding to the increase in the amounts of compensation credited to employees since December 31,1936. Lump-sum payments on claims filed in the period July-December 1939 averaged $156.71 and those on claims filed in the period January-June 1940 averaged $195.08. These averages will be little changed by the inclusion of cases pending as of June 30, 1940.
TABLE 53.—Lump-sum death benefits: Number1 by amount2 and fiscal year of certification, 1938-40
Amount Total 1937-38 1938-39 1939-40
Number Percent Number Percent Number Percent Number Percent
Total 29,379 100.0 666 100.0 15,359 100.0 13,370 100.0
Under $20.00_ 2,804 9.5 105 15.8 1,761 11. 5 943 7.1
$20.00-839.99 3,125 10.6 169 25.3 2,136 13.9 819 6.1
$40.00-859.99 3*263 11.2 144 21.5 2,266 14.7 855 6.4
$60.00-$79.99 3^209 11.0 125 18.7 2,153 14.0 933 7.0
$80.00-$99.99 2,804 9. 5 55 8.3 1,790 11.7 960 7. 2
$100.00-8119.99 2,330 7.9 39 5.9 1,' 333 8.7 960 7. 2
$120.00-8139.99 2,076 7.1 19 2.9 1,164 7.6 894 6.7
$140.00-8159.99 1,800 6.1 9 1. 4 862 5. 6 931 7. 0
$160.00-8199.99 2,746 9.3 1 .2 1,008 6.6 1,737 13.0
$200.00-8249.99 2^439 8.3 598 3.9 ij 843 13.7
$250.00-$299.99 1, 356 4.6 237 1.5 1,119 8.4
$300.00-8349.99 ' 758 2.6 51 .3 ' 707 5.3
$350.00-8399.99 419 1.4 419 3.1
$400.00-$449.99 193 .7 193 1.4
$450.00-$499.99 57 .2 57 .4
1 Fiscal year figures are for initial certifications. Cumulative figures through June 1940 exclude 16 claims for which payments were canceled.
’ Claims are grouped by amount of initial certification plus additional subsequent payments.
The number of lump-sum death benefits by amount for each fiscal year is shown in table 53. Changes in the distribution from year to year reflect the changes in the average amount noted previously. The proportion of payments for less than $80 has decreased rapidly from 81.3 percent in the fiscal year 1938 to 54.1 percent in the fiscal year 1939, and 26.6 percent in the fiscal year 1940. The proportion of payments for less than $20 has decreased less rapidly, from 15.8 percent in 1938 to 7.1 percent in 1940. A substantial number of employees enter the railroad industry for only a short period of employment and have only a small amount of credited compensation when they leave. Upon the death of such persons, only a small lump-sum benefit is payable.
Death beneficiary designations.—Under the 1937 act, lump-sum death benefits are payable to a beneficiary or beneficiaries named by an employee or an annuitant prior to his death or, in the absence of a valid designation, to his legal representative. If no beneficiary is
168 • Annual Report of the Railroad Retirement Board designated and the lump-sum death benefit amounts to more than $500, it can only be paid to a duly appointed executor or administrator. For amounts of less than $500, where no executor or administrator has been appointed, the Board certifies the payment to the legal representative as determined under the laws of the State in which the deceased last resided.
During the fiscal year 1940, 191,000 beneficiary designation forms were filed with the Board, bringing to 1,437,000 the total number filed through June 1940. Of the 191,000 forms filed in the last fiscal year, about 15 percent were corrections of incomplete forms and about 10 percent were changes in beneficiaries. It is estimated that about 10 percent of all forms filed to date are changes of beneficiary or corrections. Individuals who have filed designations therefore number about 1,393,000. This is a majority of the estimated 2,450,000 individuals with credit for service after December 31, 1936, but still leaves a considerable group who have not filed beneficiary designations.
The percentage of payments to designated beneficiaries has increased considerably. To June 30, 1939, only 23 percent of the lump-sum death benefits were paid to named beneficiaries, while about 19 percent were paid to executors or administrators and about 58 percent to individuals determined to be entitled thereto under State laws. During the last 2 months of the fiscal year 1940, however, about 70 percent of the lump-sum death benefits certified were paid to named beneficiaries, less than 10 percent to executors or administrators, and about 20 percent to the individual determined to be entitled thereto under State laws.
Death Benefit Annuities Under the 1935 Act
Death benefit annuities under the 1935 act are payable to the wife or husband, or dependent next of kin, of a deceased employee who has been certified for an annuity under the 1935 act or who was entitled to receive one. This death benefit annuity is payable for 12 months only, and amounts to one-half the monthly annuity paid or payable to the deceased annuitant before any reduction resulting from the election of a joint and survivor annuity.
The number of annuitants under the 1935 act is being constantly depleted by death and will eventually disappear, since few additional 1935-act annuities will be certified. In the fiscal year 1940 only 281 were certified. Of the 22,628 employee annuities certified under the 1935 act, 18,575 were in force at the beginning of the fiscal year 1940. During the fiscal year, deaths of 1,484 annuitants under the 1935 act were reported to the Board, bringing to 5,257 the total number of
Survivor Payments • 169
1935-act annuitants who have died. As of June 30, 1940, the number of employee annuities remaining in force under that act was 17,337, after adjustment for some suspended annuities.
Claims arising from deaths of annuitants under the 1935 act have been disposed of as follows:
Disposition of claims Cumulative to June 30, 1939 Fiscal year 1940
Claims awaiting disposition: Pending at beginning of period 310 1,484
Deaths of 1935-act annuitants reported _ 3, 773
Total - _ ------
3, 773 1,794
Claims disposed of: Certified for death benefit annuity
2,627 804 32 1,095 445 31
No surviving spouse or dependent next of kin
Certification not possible because necessary data not available
Total
3,463 1,571
Claims pending at end of period
310 223
Death benefit annuities were certified in the fiscal year 1940 with respect to 1,095 annuitant deaths, or in 69.7 percent of the cases on which determinations were made, compared with 2,627 or 75.9 percent of all determinations made through June 30, 1939. In the fiscal year 1940, annuitants under the 1935 act were an older group, and there were therefore more widowers among them than in the preceding years.
Certifications of death benefit annuities to survivors of employees entitled to receive employee annuities under the 1935 act but who had not been certified to receive them, constitute a small and decreasing proportion of all death benefit annuity certifications. During the fiscal year 1940, there were 107 such certifications compared with 1,095 arising from the death of employee annuitants. Of the death benefit annuity certifications made through June 30, 1939, the number where no employee annuity certification had been made was 778, compared with 2,627 arising from the death of employee annuitants.
The total number of death benefit annuities certified during the fiscal year 1940, including both those certified upon the death of an employee annuitant and those certified upon the death of an employee entitled to receive an employee annuity, was considerably lower than in the preceding fiscal year. Certifications in 1940 totaled 1,202 at a monthly amount payable of $42,477, compared with 1,716 at a monthly amount payable of $62,700 in the fiscal year 1939 (see appendix table C-8 for certifications month by month). The total number of certifications through June 30, 1940, was 4,607. Terminations by expiration of the 12 monthly payments and by death were 1,246
170 • Annual Report of the Railroad Retirement Board
during the fiscal year 1940, bringing the total terminations to 3,882 (see table 54). As of June 30, 1940, 725 death benefit annuities were in force at a monthly amount payable of $26,182. The total annuities certified, terminated, and in force on June 30, 1940, are classified by monthly amount in table 54.
TABLE 54.—Death benefit annuities: Number by monthly amount payable for certifications and terminations through June 1940, and for annuities in force June 30, 1940
Monthly amount payable All certifications Terminations In force June 30 1940
Number Percent Total i By completion of payments By death Number Percent
Number Percent
Total 4,607 100.0 3,882 100.0 3,810 70 725 100.0
$0-$9.99 94 2.0 79 2.0 77 2 15 2.1
$10.00-$19.99 508 11.0 425 10.9 415 9 83 11.4
$20.00-$29.99 678 14.7 569 14.7 560 8 109 15.0
$30.00-$39.99 1,362 29.7 1,123 29.0 1,100 23 239 33.0
$40.00-$49.99 1J186 25.7 1' 026 26.4 1,010 16 160 22.1
$50.00-$59.99 '729 15.8 621 16.0 609 12 108 14.9
$60.00 50 1.1 39 1.0 39 11 1.5
1 Includes 2 suspended annuities not yet reinstated as of June 30, 1940.
Number and average amount by accrual date.—As with other types of annuity payments, the trend in the number and average amount of death benefit annuities is more correctly shown by data classified by the period during which the annuity began to accrue, than by data classified by the date of certification.
The decline in the number of new accruals of death benefit annuities, pointed out in last year’s annual report, continued during the fiscal year 1940. On the basis of certifications through June 30, 1940, the number and monthly amount payable of new accruals in each fiscal year was as follows:2
Fiscal year Number Monthly amount payable Average monthly amount payable
1936 (June only) 57 $2,133 $37.44
1937 1 585 60 013 37.86
1938 1 155 42 532 36.83
1939 1 073 37* 471 34 92
1940 737 556 36.30
When all cases pending as of June 30, 1940, are adjudicated, it is estimated that about 970 death benefit annuities will have beginning dates in the fiscal year 1940, and that a few new accruals will be added
1 See appendix table C-30 for monthly accrual figures.
Survivor Payments • 171
to the figures for preceding fiscal years. The continuous decline in the number of death benefit annuities results from the decreasing number of employee annuities in force under the 1935 act and the consequent decrease in the number of deaths among these annuitants, as well as the increasing proportion of widowers as the group grows older.
The average monthly amount payable on new accruals of death benefit annuities was $36.03 for the fiscal year 1940, compared with $34.92 for the fiscal year 1939 and $36.62 for all certifications through June 30, 1940. The average for the fiscal year 1940, however, will be lowered somewhat by certification of claims pending adjudication as of June 30, 1940, to an estimated average of slightly more than $35.
. XI . SERVICE, COMPENSATION, AND AGE OF COVERED EMPLOYEES
THE practice of maintaining for each employee a record of monthly compensation received from employers under the retirement and unemployment insurance acts was continued by the Board in the fiscal year 1940. These records were summarized into annual statements of service months and wages distributed to employees through their last known employer. They were also tabulated for statistical purposes; the allocation of the accounts of individual employees by class of employer, by occupation, and by regions was based on the same criteria as those used in the tabulation for 1938.1 In this chapter, brief comment is made on the results of this tabulation. Some of the more important summary tables which present comparative distributions for 1939 and 1938 by wage and service month groups are carried in the appendix. Also included in the appendix are tables showing the age composition of employees in active service in 1938, data which were not available in time for publication in the annual report for 1939.
Employees, Service, and Compensation for 1939
According to the regular quarterly reports submitted by employers together with reports of monthly compensation for individual employees, the compensation credited for the calendar year 1939 was $2,110,-744,666. In addition, a net total of $13,996,267 was reported in adjustment items, of which not more than $6,000,000 is estimated to represent credited compensation for 1939. The increase in credited compensation from 1938, when the total subject to correction for adjustment items was $1,979,574,567, was therefore a little less than 7 percent. The distribution of the credited compensation for 1939 by months was as follows:
January----------------------------------------$167, 802, 562
February---------------------------------------- 159, 204, 033
March-------------------------------------------- 173, 450, 758
April-------------------------------------------- 164, 952, 694
1 See ch. VIII of annual report for 1939. The grouping of occupations into occupational groups, shown in table 56 in the text and in some of the appendix tables, also follows the principles used in the 1938 tabulation.
172
Service, Compensation, and Age
173
May__________________________________________
June_________________________________________
July-----------------------------------------
August_______________________________________
September____________________________________
October______________________________________
November_____________________________________
December_____________________________________
$172, 256, 693
174, 834, 032
175, 207, 679
180, 495, 468
180, 510, 442
194, 368, 159
184, 809, 956
182, 852, 190
The increase in credited compensation in 1939 is due to two factors—the rise in the number of employees and the increase in annual compensation per employee. The number of employees rose from 1,544,350 in 1938 to 1,605,337 in 1939, or by about 3.9 percent. As may be seen from table 55, five-sixths of this rise occurred in employment on class I railroads. The increase in annual compensation per employee was a little over 3 percent. For most classes of employer, the increase in compensation per employee was somewhat greater—or the decline smaller—than in the average number of months of service.
TABLE 55.—Number of employees, average credited compensation, and average number of months of service per employee in 1939 and 1938, and percent change from 1938, by selected classes of employers
Class of employer Number of employees Average credited compensation Average number of service months
1939 1938 Percent change 1939 1938 Percent change 1939 1938 Percent change
Class I railroads Switching and terminal companies, class I _ 1, 376,266 42, 485 25, 560 23, 211 17, 726 26,106 64, 677 12, 333 1, 325, 971 37, 457 26, 305 22, 753 15, 951 25, 955 61, 573 12, 096 +3.8 +13.4 -2.8 +2.0 +11.1 +• 6 +5.0 +2.0 $1, 324 1, 336 930 1, 111 1,217 1, 180 1, 252 982 $1, 280 1, 322 919 1,139 1, 186 1, 147 1, 263 997 +3.4 +1.1 +1.2 -2.5 +2.6 +2.9 -.9 -1.5 9.4 9.2 8.7 8.6 9.5 10.4 8.9 8.4 9.3 9.5 8.7 8.9 9.5 10. 1 9.0 8.4 +1.1 -3.2
Class II and class III railroads.
Switching and terminal companies, other than class I -3.4 +3.0 -1.1
Electric railroads.
Pullman Company..
Express companies.
Car loan companies
Note.—In order to assure greater comparability between data for the 2 years, minor adjustments were made in the number of employees for 1938 to cover cases of wage reports filed too late for inclusion in the tabulation for that year.
In table 56, the changes between 1938 and 1939 are shown for selected occupational groups of employees of class I railroads. Since this class of employer comprises about 86 percent of employees covered under the acts, the changes recorded for this class are probably indicative of the movement between the 2 years for the entire covered population. The percent changes for the number of employees show that, apart from a slight decline in employees in the white-collar groups (clerks, station agents, and telegraphers), employment increased in all other important occupational groups. The largest increases 276117—41----------12
174 • Annual Report of the Railroad Retirement Board
occurred, as might be expected in a period of revival following a year of depression, in the less skilled occupations.
TABLE 56.—Percent change, in 1939 from 1938 in number of employees, average credited compensation, and average number of months of service, for selected occupational groups of class I railroad employees
Occupational groups Number of employees Average credited compensation Average number of service months
Clerical -0.4 +3.9 +12.3 +4.6 +5.3 +8.6 +7.0 -2.8 +9.0 +3.1 +4.3 +1.9 +5.6 +22.2 +3.9 +11.3 +• 5 +10.3 +2.3 +1.3 +3.0 +7.0 +0.9 +4.0 +15.8 +1.4 +4.9 -2.1 +4.2 +1.8 -2.5 +.9 +1.0
Maintenance of way and structures, skilled Extra gang men
Maintenance of way and structures laborers, other than extra gang
Maintenance of equipment and stores, skilled Maintenance of equipment and stores, laborers Helpers and apprentices . _
Station agents and telegraphers
Freight handlers
Engineers and conductors ..
Firemen and brakemen
The data in table 56 also indicate that for every occupational group, the increase in average annual compensation was greater than in the average number of months of service, a finding similar to that noted in connection with table 55. Since there were no important increases in the wage rates during or after 1938, it may be concluded that, on the average, there was fuller employment per month of service in 1939 than in the preceding year.
In appendix table D-8, a comparison is presented of the distribution of employees in the 2 years by compensation classes established under the unemployment insurance act. Although the compensation classes shown for 1939 follow the amended act and are somewhat different from the classes shown for 1938, the comparison between the 2 years is not seriously affected thereby. This comparison shows that there has been little or no change in the number of employees by classes, except for the group with annual compensation of $1,300 or over. In this group the number of employees increased by about 69,000. This change accounts for virtually the entire increase in the number of employees qualified for unemployment insurance benefits because their annual compensation was at least $150.
Changes in Covered Population, 1937-39
In the statistical tabulations for 1939, it was possible to classify wage records according to the service status of the employees in the 2 preceding years. Thus, the records of employees who had credited service in each of the 3 years were segregated from those of other employees. The wage and service months data for the various groups of employees thus established are presented in tables D-5 through D-7
Service, Compensation, and Age • 175
in the appendix. These show that of all employees in 1939, about 78 percent were employed also in 1937 and in 1938, about 13 percent entered service (or reentered it for the first time since December 1936) in 1939, and a little over 9 percent were employed in the industry in 1937 or in 1938, as well as in 1939. An analysis of these distributions by occupational groups shows that in the skilled occupations the proportion of employees who had some employment in 1937, 1938, and 1939 is at least 90 percent. For these employees, employed more or less continuously over the 3-year period, the average compensation and number of months of service in 1939 are substantially greater than for the other groups. Also, the fluctuations from year to year in compensation and months of service for the continuously employed group are very much smaller than for all employees taken together.
The segregation of records by service status of employees affords also some approximation of the turnover in the group covered by the retirement and unemployment insurance acts. The total number of employees for whom compensation and service was credited in the period from January 1937 through December 1939 was about 2,343,000. This number consists of 1,952,000 employees with credited compensation for 1937, some 165,000 employees for whom service was credited for the first time in 1938, about 210,000 with first service credited for 1939, and nearly 16,000 employees with service in 1939 and in one or both of the preceding years. By the end of the fiscal year 1940, more than 89,000 employees who last worked for employers under the act in the calendar years 1937,1938, or 1939 were certified for employee annuities. The number of deaths reported to the Board for the same group of employees was approximately 26,000; this figure is seriously incomplete because the reporting of deaths is irregular and covers at best only fatalities among employees in active service at the time death occurs. The maximum estimate of the number of active compensation accounts as of the end of 1939 is therefore 2,228,000. Included in this figure are 457,000 accounts to which wages were last posted for 1937, and 190,000 accounts of employees who were in service in 1938 but not in 1939.
Age of Employees
In appendix tables D-9 and D-10, the number of employees in 1938 is distributed by 5-year age groups. In the use of these tables, as of all other figures derived from the statistical tabulations of annual wage and service data, it must not be assumed that the data apply to the end of 1938. This caution is particularly applicable to the numbers of employees in the higher age groups. For example, table D-9 shows that 41,414 employees age 65 to 69 in 1938 were in service in that year.
176 • An nual Report of the Railroad Retirement Board
From table D-ll, however, it is obvious that at least 12,618 of them were no longer in service at the end of the year. For employees age 70 and over, the relative reduction through retirement or death was even greater, amounting to nearly 45 percent.
. XII .
EMPLOYER AND EMPLOYEE COVERAGE
DETERMINATIONS on employer and employee coverage under the Railroad Retirement and Railroad Unemployment Insurance Acts during the past fiscal year are discussed in this chapter. A more complete analysis on employee coverage is presented than was given in previous annual reports. The chapter also includes discussions of what constitutes creditable compensation, which is essentially the same under both the retirement and unemployment insurance acts, and of creditability under the retirement act of prior service to nonemployers. The final section is a statistical analysis of the employers who, by June 30, 1940, have been held to be covered under the acts.
Employer Coverage
The general principles governing the determination of employer coverage under the Railroad Retirement and Unemployment Insurance Acts, and the application of these principles to various types of situations, were discussed in the 1938 and 1939 annual reports. Most of the employer coverage rulings made during the year covered by this report were applications of these same principles to essentially similar situations. Some rulings, however, were on new types of situations. The discussion in this chapter on employer coverage will be largely limited to these new rulings.
Carriers by railroad.—Following the decision of the Supreme Court of the United States that the Union Stock Yard & Transit Co. of Chicago, which operates a terminal of line-haul railroads entering Chicago and loads and unloads livestock, is a common carrier subject to the provisions of the Interstate Commerce Act,1 the Board ruled that company to be an employer under the acts as a “carrier by railroad subject to part I of the Interstate Commerce Act.” The status as carrier employers of other public stock yards companies and terminal companies engaged in similar operations is now under consideration by the Board.
The Board has made a number of rulings as to when a carrier em
1 Union Stock Yard & Transit Co. v. United States, 308 U. S. 213 (1939).
177
178 • Annual Report of the Railroad Retirement Board
ployer’s status as a covered employer ceases. In general, the employer status of a carrier employer ceases on the date of its complete cessation or effective abandonment of those operations which have made it a carrier subject to part I of the Interstate Commerce Act. The determination of this date requires a consideration of such factors as the effective date of an Interstate Commerce Commission certificate authorizing abandonment, the date on which all interstate transportation operations of the carrier ceased, and the effective date of its tariff cancelations. A carrier which continues to hold itself out to carry goods in interstate commerce under tariffs filed with the Interstate Commerce Commission has been held to remain an employer although its operations have been temporarily suspended by a lack of goods to carry.
Electric railways.—During the period covered by the present report, the Board has ruled as to whether five currently operating electric railways fall within the terms of the proviso which exempts from coverage certain kinds of street, suburban, or interurban electric railways. Three of the electric railways were held nonexempt and two exempt. There was no dissent from these rulings of the Board.
The determination of the status of electric railways may be referred to the Interstate Commerce Commission by the Board or any interested party. During the past year, although no new cases were submitted to the commission, it determined the status of five electric railways in cases previously submitted. It held four not exempt from coverage, and one exempt. There is only one electric-railway case now before the commission, a case previously decided but reopened for the purpose of receiving and considering evidence of changed conditions.
Court review of a commission determination of electric-railway status has been made in only one case in the past year: that involving the status under the Railway Labor Act of the Chicago South Shore and South Bend Railroad. In this case the Circuit Court of Appeals reversed a district court which refused to uphold a commission determination of nonexemption {Chicago South Shore and South Bend Railroads. Fleming, 109 Fed. 2d, 419 (1940)).
Among the commission’s decisions in the past year on electricrailway status, three are of especial significance. In one case {Denver & Intermountain R. R. Co. 237 I. C. C. 641 (1940)), an electric railway which was predominantly a carrier of freight was ruled not exempt from coverage even though the bulk of its freight traffic was not handled in standard-gauge equipment and consisted of local traffic moving between a large city and nearby localities in the same State. In another case {San Francisco and Napa Valley R. R. Co., 237 I. C. C. 675 (1940)), an electric railway which conducted a substantial, wholly
Employer and Employee Coverage • 179
local passenger business was held nonexempt because of its handling of freight for one customer, the revenues from which exceeded its passenger revenues. The fact that its rail operations became restricted to the transportation of freight between a junction point on a trunk-line railroad and the Mare Island Navy Yard was held not to affect its status. In the third case (Portland Traction Co., 237 I. C. C. 647 (1940)), an electric railway exclusively engaged in carrying passengers in street and suburban operations was held to be exempt from coverage even though it was owned by and had common directors, officers, and employees with a nonexempt electric railway, honored tickets of the latter, used certain tracks and shop facilities jointly with it, and was formerly operated by that railway. There was in this case also the fact that operating revenues of the subsidiary were many times greater than the operating revenues of the parent and no interchange of traffic with other railroads took place.
Carrier affiliates.—The application to different types of situations of the carrier affiliate provision, which is the same in both the retirement and unemployment insurance acts, has resulted in a fairly precise determination of the scope of such coverage and has been analyzed at some length in previous annual reports. Most of the cases ruled on in the past year have involved no new application of the tests contained in the provision which includes as an employer under the acts “any company which is directly or indirectly owned or controlled by one or more * * * carriers (that is, carriers by railroad, express companies, or sleeping-car companies subject to part 1 of the Railroad Retirement Act) or under common control therewith, and which operates any equipment or facility or performs any service (except trucking service, casual service, and the casual operation of equipment or facilities) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad.”
During the past year, in a large majority of the cases in which the Board found the necessary control to exist, it found ownership or control of a majority of the voting securities. In several cases, however, control was found to exist through contracts which insured that the operations of the company ruled on would be conducted in the interests of a carrier employer. In another case, a company was ruled to be indirectly controlled by one or more carriers where, among other circumstances, it was found that 50 percent of its voting stock was owned by another company which was indirectly owned entirely by a number of carriers and that its contracts were subject to the approval of, and its accounts kept by, the other company.
180 • An nual Report of the Railroad Retirement Board
During the past fiscal year the Board has ruled to be employers, within the meaning of the carrier affiliate provisions, some carrier-controlled companies which are engaged in types of operation with respect to which no previous determinations had been made. One such case was of a company which negotiates contracts for the furnishing of cars, containers, and other railroad equipment to railroads and shippers on a per diem basis in behalf of its controlling company. The controlling company was in turn indirectly owned by a number of railroad companies. The right to receive mileage allowances from railroads was reserved in these contracts to the controlling company.
Other carrier-controlled companies ruled under the act were: a company organized and maintained by its controlling railroad for the purpose of acquiring and holding title to the various common carrier properties of such railroad; a company engaged almost exclusively in the operation of boarding cars and commissary or store cars for the benefit of its controlling carrier’s construction and maintenance gangs working at various places on the line; and an athletic association operated for the purpose of promoting the welfare and morale of its controlling carrier’s employees through recreational activities.
Principal business within United States.—Sections 1 (c) and 1 (d) of the Railroad Retirement and Railroad Unemployment Insurance Acts, respectively, provide that: “An individual is in the service of an employer whether his service is rendered within or without the United States if he is subject to the continuing authority of the employer to supervise and direct the manner of rendition of his service, which service he renders for compensation: Provided, however, That an individual shall be deemed to be in the service of an employer not conducting the principal part of its business in the United States only when he is rendering service to it in the United States.”
In cases of companies which do not conduct all their business in the United States, it is necessary to determine whether or not such companies conduct the principal part of their business within the United States or outside of the United States. Several recent rulings on this question illustrate the factors considered relevant.
In one case, an employer steamship company was held to be conducting the principal part of its business within the United States when it was found that two of the employer’s three terminals are in the United States, that approximately 80 percent of the line operated by it lies within the United States, and that most of its employees perform their services in the United States.
In another case, an employer dock company which operated a freight car-ferry across Lake Erie between the United States and
Employer and Employee Coverage • 181
Canada was held to conduct the principal part of its business within the United States. It was incorporated and had its principal office in the United States; virtually all of its directors and officers were located in the United States, although the employees were divided equally between the United States and Canada; and most of its traffic originated in the United States.
Another employer, however, which operates steamships across Lake Erie between the United States and Canada was held not to be conducting the principal part of its business in the United States, because it is incorporated and has its principal office in Canada, most of its employees perform all their services in Canada, and it operates unloading and storing docks in Canada.
Coal-mining operations.—On May 31, 1940, the Board ruled that the Union Pacific Coal Co. had been an employer under the carrieraffiliate provision of the Railroad Retirement and Unemployment Insurance Acts, at least since August 28, 1935. This was done after elaborate evidence and oral argument had been presented to the Board in connection with the question of the coverage status of railroad-controlled coal-mining companies. The Board found that the Union Pacific Coal Co. had always been maintained by the Union Pacific Railroad, its controlling carrier, for the purpose of insuring an adequate and dependable supply of fuel coal for the Union Pacific’s railroad transportation; that it was, in substance, a fuel department of the Union Pacific Railroad; that its principal, primary, and predominant function and activity during its entire existence had been the production of coal for the railroad’s use, for railroad fuel purposes; and that its operations had been, at least since August 28, 1935, reasonably directly related, functionally and economically, to the performance of the transportation obligations which the Union Pacific Railroad has undertaken as a common carrier by railroad.
The Board’s conclusion that the Union Pacific Coal Co. was an employer followed from a consistent application of its interpretation of the carrier-affiliate provision of the acts, as expressed in its regulations and in numerous precedent decisions. The Board had ruled that other carrier affiliates were subject to the act when engaged in such activities as manufacturing and supplying railroad equipment parts, furnishing water for locomotives, furnishing auxiliary or substitute bus- and water-transportation services, furnishing railroad dining facilities, treating ties, transmitting telegraphic communications, providing hospital and medical facilities, and providing maintenance of buildings.
It was, however, the belief of the Board, the Federal Security Administrator, and representatives for railroad employers, railroad
182 • Annual Report of the Railroad Retirement Board employees, and mine workers that for social-insurance purposes, coal-mining activities, whether conducted by carriers or by subsidiaries of carriers, should be covered by the system of laws applicable to coal mining generally, rather than by the system of laws applicable to the railroad industry. Legislation was, therefore, proposed to Congress to amend the Railroad Retirement and Railroad Unemployment Insurance Acts so as to exclude from their coverage all coalmining companies and the individuals engaged in the physical operations of coal mining. This would permit the application of the Social Security Act and State unemployment compensation laws to the companies and individuals involved.
The recommended amendatory legislation (Public, No. 764, 76th Cong., ch. 664, 3d sess.) was passed by Congress and signed by the President on August 13, 1940. It provides, in part, that the term “employer” in the Railroad Retirement Act of 1937 and the Railroad Unemployment Insurance Act (and the corresponding term “carrier” in the Railroad Retirement Act of 1935) “shall not include any company by reason of its being engaged in the mining of coal, the supplying of coal to an employer where delivery is not beyond the mine tipple, and the operation of equipment or facilities therefor, or in any of such activities”; and that the term “employee” in such acts “shall not include any individual while such individual is engaged in the physical operations consisting of the mining of coal, the preparation of coal, the handling (other than movement by rail with standard railroad locomotives) of coal not beyond the mine tipple, or the loading of coal at the tipple.”
Railway labor organizations.—Since the last annual report, no additional employee labor organizations have been ruled to be employers under the acts as railway labor organizations, national in scope. Several railway labor organizations were unable to establish that they were national in scope, but in certain instances some service rendered to them was ruled creditable as “employee representative” service. Other employee organizations which did not have as their primary function the promotion of the interests of employees through collective bargaining as to wages, hours, working conditions, and other matters arising out of the employee-employer relationship, were ruled not to be “labor organizations.”
The Board has ruled that a local lodge of a railway labor organization employer which has no covered employees is not an employer, and if a local lodge has some covered employees, it is an employer only to that extent. The conditions under which local lodge employees may not be covered employees is discussed in the following section on employee coverage.
Employer and Employee Coverage • 183
Employee Coverage
For most individuals covered by the Railroad Retirement and Railroad Unemployment Insurance Acts, it is easily established that they are “subject to the continuing authority of the employer to supervise and direct the manner of rendition of their service, which service they render for compensation,” and, therefore, “in the service of an employer.” The problems which arise in cases where this is not easy to determine are discussed below, as is also “employee representative” service, which is not service to an employer.
The determination of the more complicated cases, often after considerable investigation, has resulted in a substantial body of rulings. In these rulings the Board has been guided by well-established principles of common law governing the existence of an employeremployee relationship in its application of the statutory test. The Board has recognized that the distinction between coverage and noncoverage under the statutory test closely corresponds to that between “employee” and “independent contractor” at common law. The cases, however, are extremely varied with respect to their facts and circumstances.
In applying the statutory test, the fundamental consideration is the interpretation of the agreements or understanding between the employer and the individuals or companies concerned on the question of the authority to supervise and direct the manner of rendition of the service for compensation. Such elements as the emergency or part-time nature of the employment, receipt of compensation from the employer indirectly or by special voucher rather than through the regular pay rolls, absence of free transportation privileges, failure of the employer to accord the individual seniority rights or report him to the Interstate Commerce Commission as an employee, and express provisions that the company or individual shall be an independent contractor, are only evidence of the existence or nonexistence of the requisite supervisory authority in the employer.
A broad division of the subject may be made by distinguishing between (1) situations where the relation is between an employer and an individual through direct agreement or understanding, and (2) those in which the relation is between an employer and a group of individuals through a contractor. Among the first group are persons ordinarily engaged in independent occupations such as physicians, surgeons, attorneys, and registered nurses. The employer-employee relationship is found to exist less frequently here than for cases of persons, such as unskilled or semiskilled laborers, engaged in services ordinarily providing little opportunity for the exercise of an independent judgment.
184 • Annual Report of the Railroad Retirement Board
In the second group, an employer-employee relationship is found to exist less frequently in cases where workmen are engaged to perform nonrecurring construction work than in those where workmen are engaged for such continuing services as freight handling, repair of equipment (especially if performed on the employer’s property), or maintenance of way.
Indirect and joint employment.—Other types of situations, not necessarily assignable to either of the two broad divisions mentioned above, are encountered. A problem is presented when an admitted employee of an employer hires another to assist him in the performance of his duties, and there is no direct payment of remuneration by the employer to the assistant. The Board has ruled that the hired assistant is also an employee of the employer if it is found that the admitted employee had express or implied authority to hire him for the employer’s account.
Another problem arises when the individual is the joint employee of an employer and a nonemployer, and the extent to which the individual’s services and compensation are allocable to the employer must be determined. This situation is much like that encountered by the Board when workmen in the general employ of a nonemployer perform services for an employer. The Board has recognized the common-law rule that workmen in the general employ of one company may become employees of another through a loan or transfer of their services and the authority to supervise and direct the manner in which these services are performed. Where this occurs, it has been ruled that an employee relation to the employer exists to the extent of the transfer or loan. On the other hand, where an individual is engaged by a nonemployer and renders services for him in connection with operations over the tracks of a carrier employer under trackagerights agreements between the latter and the nonemployer, an employer-employee relationship is usually found not to exist.
Foreign residence.—In a limited number of situations, the fact that an individual “is subject to the continuing authority of the employer to supervise and direct the manner of rendition of his service” for compensation is not enough to establish employee status.
Under Public Resolution No. 81, 76th Congress, approved June 11, 1940, an individual who is not a citizen or resident of the United States and who works in a foreign country for an employer which conducts the principal part of its business in the United States is not an employee under the act if the employer is required under the laws of the place where the service is rendered to employ therein, in whole or in part, citizens or residents.
An individual is deemed to be in the service of an employer who
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does not conduct the principal part of his business in the United States only to the extent that his services to that employer are rendered while physically present in the United States.
Service to local lodges.—Under an amendment to the Railroad Retirement Act, approved October 10, 1940, service after March 31, 1940, to a local lodge or division of a railway labor organization employer is treated as being not covered employee service for any calendar month in which the amount earned for such service is less than $3.00. Similar service in the period between December 31, 1936, and April 1, 1940, is treated in the same way, if taxes with respect to it under the Carriers Taxing Act or corresponding provisions of the Internal Revenue Code are not paid before July 1, 1940. Where local lodge service is covered, it must be established that the individual rendering it was in the service of, or in an employment relation to, a carrier employer on or after August 29, 1935. For local lodge service after December 31, 1936, to be creditable, the individual’s carrier connection must have preceded the local lodge service.
The Railroad Unemployment Insurance Act was amended on October 10, 1940, to provide that employment after June 30, 1940, in the service of a local lodge or division of a railway labor organization employer is to be disregarded for the purposes of determining eligibility for, and the amount of, benefits, and the amount of contributions due pursuant to that act.
Service as employee representatives—representatives consist of (1) individuals who are officers or official representatives of a railway labor organization, not itself an employer, when they are duly authorized and designated to represent employees in accordance with the Railway Labor Act, as amended, and have been in the service of an employer prior to the performance of service in their representative positions, and (2) individuals who are regularly assigned to or employed by such officers or official representatives in connection with the duties of their offices, regardless of whether they previously were in the service of an employer. Whether an individual is duly authorized and designated to represent employees in accordance with the Railway Labor Act, as amended, is frequently determinable upon proof that the National Mediation Board has certified his railway labor organization as the collective bargaining agent for a group of railroad workers, and that the organization has designated him as a representative of these workmen in negotiations with employers.
Problems arise in considering the creditability of employee representative service that may have been performed before the enactment of the 1934 amendments to the Railway Labor Act. Practices which were then not specifically prohibited but which do not meet the tests
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prescribed by the Railway Labor Act as amended, and adopted by the Railroad Retirement Act, prevent service from being creditable, regardless of when performed. In several cases where the apparent employee representative received remuneration for his representative service only from the employer with whom he was supposed to negotiate, it has been ruled that such services are not creditable under the employee representative provisions of the Railroad Retirement Act.
Creditable Compensation
The question of what constitutes “compensation” arises under both the Railroad Retirement and Railroad Unemployment Insurance Acts. Under the Railroad Retirement Act, only service for “compensation” may be credited toward annuities, and amounts of annuities and death benefits depend upon the amount of “compensation.” Under the Railroad Unemployment Insurance Act, both eligibility for, and the amount of, benefits for days of unemployment are dependent upon the amount of “compensation.”
“Compensation” is defined in the Railroad Retirement Act of 1937 as: “* * * any form of money remuneration earned by an individual for services rendered as an employee to one or more employers, or as an employee representative, including remuneration for time lost as an employee * * *. Such term does not include tips, or the voluntary payment by an employer, without deduction from the remuneration of the employee, of any tax now or hereafter imposed with respect to the compensation of such employee.” The definition of “compensation” in the Railroad Retirement Act of 1935 is similar; the principal points of difference are that remuneration to be “compensation” must be “received * * * from a carrier”; that there is no express inclusion of “remuneration for time lost”; and that there is no express exclusion of “tips.” The Railroad Unemployment Insurance Act contains a definition of “compensation” identical in practical effect with that of the Railroad Retirement Act of 1937.
“Compensation” under the acts requires a “form of money remuneration.” This does not mean, however, that remuneration paid in something other than money may not constitute “compensation.” A commodity, service, or privilege may constitute “ compensation” if, before the performance of service by an individual, he agrees with the employer (1) that all or part of the remuneration for that service may be paid in the form of a commodity, service, or privilege, and (2) upon the money value of that part of the remuneration not to be paid in actual money.
In determining whether money remuneration for service is “compensation,” it is immaterial whether the remuneration is measured on a
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commission, mileage, piecework, or time basis, or whether denominated as “wages,” “salary,” “allowance,” “per diem,” etc.
It is necessary, however, that the remuneration be for service as an employee (or for time lost as an employee). For example, it has been held that payments for expenses are not “compensation.” Consider the case of an individual employed to drive a truck subject to the employer’s authority to supervise and direct the manner of rendition of his service, but who furnishes his own truck and pays all the expenses of its operation. The amount which the employer pays to the truck driver as reimbursement for the use of the truck and the expenses incurred in its operation in the employer’s business is not payment for the driver’s personal service, and has been held not to be “compensation.”
Remuneration for service.—In determining whether remuneration is for service, the intention of the parties is the governing factor, but mere statements of the parties as to their intention are not controlling. The Board seeks more objective factors in arriving at its conclusion. It has been held that a reasonable presumption can be made that any payment, in addition to regular compensation made by an “employer” to an “employee,” is added remuneration for service rendered as an “employee” and hence is “compensation” unless a clear intention is expressed that such payments are made in the nature of “gifts” or “gratuities.” An amount paid an employee by an employer purely as a gratuity is not remuneration for service and is not “compensation.”
It has been held that for remuneration to be “compensation” under the Railroad Retirement Act of 1937 or the Railroad Unemployment Insurance Act, it need only be “earned” or “payable”; it need not be actually paid. In a case where there was an understanding that the service would be paid for, or such an understanding could reasonably be inferred from the circumstances, the service was held to be for “compensation” even though payment was later waived or not made for other reasons. A waiver of compensation prior to the rendition of the service, however, does prevent such service from being for compensation. Under the Railroad Retirement Act of 1935 there is an express requirement that remuneration for service be “received.” Accordingly, it has been held that unless the remuneration is actually received by the employee, it is not “compensation” under that act.
Moreover, under the Railroad Retirement Act of 1937 and the Railroad Unemployment Insurance Act, it has been ruled that the remuneration for service need not be payable by or earned from an “employer” to whom the service was rendered; it may be payable even by a nonemployer. For example, in one case where an individual
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was subject to the continuing authority of the employer to supervise and direct the manner of rendition of his service and was entitled to money remuneration for this service, the remuneration was “compensation” even though the arrangement for remuneration was made with a third party and the “employer” himself neither paid nor had the obligation to pay for the service. Under the Railroad Retirement Act of 1935, however, it has been held, in view of the specific language of the “compensation” definition, that remuneration for service paid by some one other than the employer is not “compensation,” unless the person making the payment is acting for the employer.
“Tips” are expressly excluded from the definition of “compensation” in the Railroad Retirement Act of 1937 and the Railroad Unemployment Insurance Act. Accordingly, “tips” received by railroad redcaps or porters have been held not to be “compensation” under those acts. Since the tips received by redcaps or porters are gratuities paid by railroad patrons and therefore are not “received from carriers,” it has also been held under the Railroad Retirement Act of 1935 that these tips are not “compensation.” After the enactment of the Fair Labor Standards Act, the railroads generally made arrangements under which redcaps, although allowed to retain all amounts received as tips from railroad patrons, are required to report these to the railroads and to apply them against the minimum wage required by the Fair Labor Standards Act and which the railroads guarantee to pay. The Board has not yet decided whether under these arrangements the redcaps do earn merely “tips.”
Remuneration for time lost.—“Remuneration for time lost” as an employee is expressly included as compensation under the Railroad Retirement Act of 1937 and the Railroad Unemployment Insurance Act. It has been ruled under the Board’s present regulations on “remuneration for time lost” that in the category of “remuneration for time lost” are such payments as those made by the employer for vacation periods, payments for periods during which an individual has been wrongfully withheld from service, and payments made as temporary sick allowances pursuant to a regular practice and through the regular payroll. In all these cases, however, the payments ruled to be “compensation” were for periods during which the individual, while not engaged in active service, retained an employment-relation status.
Pension payments made with respect to periods of retirement status have been held not to be “remuneration for time lost.” Payments by an employer to an individual for serving as representative of an employee labor organization not organized in accordance with the Railway Labor Act have been held not to be “remuneration for time
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lost,” even though, the individual retained an employment-relation status with the “employer” throughout the period covered by the payments.
The Board’s general counsel, in a recent opinion, expressed the view that the Board’s present regulations with respect to “remuneration for time lost” have proved unduly restrictive and impracticable in application.
A hearing has been held on proposed changes in the regulations, in which representatives of railroad management and labor participated. All parties have agreed on the desirability for revising the “time-lost” provisions, but it has been thought best to secure the desired changes by amendment of the acts involved, including the taxing acts.
Creditability of Prior Service to Nonemployers
Service before August 29, 1935, rendered to a company which was a covered employer on August 29, 1935, may be creditable, although at the time of the service the company was not a covered employer. Such service may be creditable as far back as the date of the company’s incorporation or organization. In determining this date, it sometimes is necessary to determine whether a company’s identity has been preserved after reorganization.
Service before August 29, 1935, may also be creditable if rendered to “any express company, sleeping-car company, or carrier by railroad” which at the time was not a covered employer but was a predecessor of a company which was covered on August 29, 1935. Under the 1937 act, the latter must have been covered on August 29, 1935, as a carrier by railroad, sleeping-car company, or express company, subject to part I of the Interstate Commerce Act. Service to the predecessor company is creditable back to the date of its incorporation. The predecessor company need be identifiable as an express company, sleeping-car company, or carrier by railroad for only part of its existence. It has been ruled that to be a predecessor carrier by railroad it is sufficient, but not necessary, for it to have been subject to the Interstate Commerce Act. Intrastate railroads, whether steam or electric, of the kind which if engaged in interstate operations would have been subject to the Interstate Commerce Act, have been ruled to be predecessor carriers by railroad. The Board has ruled that a predecessor relationship may be established by a succession of operations as well as by a succession in corporate identity. It has also ruled that the succession may be through a series of predecessors. In the case of a company principally engaged in noncarrier business which operated a railroad as a separate and distinct 276117—41--------13
190 • Annual Report of the Railroad Retirement Board enterprise, it was' held that only this railroad enterprise is the predecessor.
Creditability oj prior military service.—Under a provision of the Second Revenue Act of 1940, approved by the President on October 9, voluntary or involuntary military service in a war-service period before January 1, 1937, may be credited toward retirement annuities. A war-service period is defined as one during which the United States was engaged in a war, or when the individual was required to continue in service after a war, or when he was required by an act of Congress or call of the President to serve in the armed forces.
Such military service may be credited to individuals entitled to prior service under the Railroad Retirement Act, and is subject to the limitation on combined prior and subsequent service which exists for all annuities. To be eligible for military service credit, the individual must have served actively in the railroad industry either in the calendar year in which his military service began or in the next preceding calendar year.
All military service in a war-service period irrespective of its duration, is covered, provided it began in a war-service period, but military service begun before a war-service period is not covered. If a period of voluntary service expired in a war-service period, however, and the individual voluntarily or involuntarily reentered military service, his subsequent military service before January 1, 1937, in a war-service period will be creditable, provided he was in the railroad service within the required period of time prior to his reentry into military service.
Duplication of Federal benefits for the same period of military service is avoided by providing for a reduction in the retirement annuity of any individual who is receiving under any other act or acts of Congress any periodic benefits for the military service included in his years of service for retirement benefit purposes.
Statistical Summary of Coverage
Rulings through June 30, 1940.—Through June 30, 1940, service with 4,615 companies or organizations had been held creditable toward annuities under the Railroad Retirement Act. This total does not include 215 entities, such as contractors, who are not themselves employers under the act, but service with whom was held to be service for a covered employer and therefore creditable. Of the 4,615 employers, 56.6 percent were ruled to be carrier predecessors under sections 1 (f) and 202 of the 1937 act (table 57). Another 34.4 percent were ruled to be carriers subject to part I of the Interstate Commerce Act, including 109 electric-railway employers held not to be exempt
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under the proviso exempting any street, interurban, or suburban railway not operating as part of a or the general steam railroad system of transportation. The proportions covered under the other provisions were relatively small.
TABLE 57.—Companies or organizations held to be employers 1 under the Railroad Retirement Act through June 1940: Number by provisions of act under which covered and whether operating under the act on or after Jan. 1, 1939
Provision of the act Total Operating on or after Jan. 1,1939 Ceased operations prior to Jan. 1,1939
Total held to be employers. Carriers subject to part I of the Interstate Commerce Act Carrier predecessors - 2 4,615 21,130 2 3, 485
3 1, 590 2,613 141 245 4 26 3 878 3 712 2,613 35 125
Carrier affiliates . 106 120 4 26
Railroad associations
Railway labor organizations
> Including persons or organizations service to which has been held creditable by reason of their being carrier predecessors under the provisions of secs. 1 (f) and 202 of the act of .Tune 24, 1937.
2 The figures for rulings prior to Sept. 30, 1939, have been revised slightly since last year’s annual report. The total does not include 215 units, not ruled to be employers, such as contractors and others rendering service to employers, service with which is held tobe in fact service for an employer under the act and as such creditable. Of these 215 units, 128 were operating on or after Jan. 1,1939, and 87 had ceased operations prior to that date.
3 Including a total of 109 employers held not to be exempt under the proviso exempting any street, interurban, or suburban electric railway not operating as part of a or the general steam railroad system of transportation. Of these 109 employers, 83 were operating on or after Jan. 1,1939, and 26 had ceased operations prior-to that date.
4 Including Railway Labor Executives Association, Railway Employes Department of the American Federation of Labor, and insurance departments of two national railway labor organizations.
Service was held not creditable under the acts in 797 rulings made through June 30, 1940. Of the organizations ruled upon, 392 were not covered because they were not owned or controlled by or under common control with a carrier employer under the acts. Another 160, though owned or controlled by, or under common control with, a carrier, furnished no service connected with transportation. The remaining 245 were held not to be covered for a variety of reasons, including the proviso exempting any street, interurban, or suburban electric railway not operated as a part of a or the general steam-railroad system of transportation.
Active employers.—Of the 4,615 employers held to be covered under the act through June 30, 1940, 1,130 or less than one-fourth were in operation on or after January 1, 1939. Service with these 1,130 employers in 1939 is creditable toward unemployment insurance benefits under the Railroad Unemployment Insurance Act, as well as toward retirement benefits.
Over three-fourths of these employers with active status in 1939 (table 58) were held under the act as carriers subject to part I of the Interstate Commerce Act (and not exempt under the electric line proviso). About 10 percent each were covered under the railroad
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association and carrier affiliate provisions, and the small remainder as railway labor organizations. Companies ruled in as carriers, which have on the average a much larger number of employees than do employers covered by the other provisions, account for 97.1 percent of the employees currently covered by the acts (see table 59). Carrier affiliates employ 2.0 percent of all covered employees, carrier associations 0.5 percent, and railway labor organizations 0.4 percent. In these percentages, union officials who receive their major income from employment with some other employer under the act, and other joint employees are allocated to their major employer.
TABLE 58.—Employers with active status1 ruled under the Railroad Retirement and Railroad Unemployment Insurance Acts through June 1940:
Number by class of employer and by provision under which covered under the acts
When the 1,130 employers with active status in 1939 are classified according to the type of economic function which they perform, the largest groups numerically are railroads other than class I, with 39.2 percent, and switching and terminal companies, with 21.4 percent, of the total number of active employers (table 58). Class I railroads constitute 12.6 percent of the number of employers with active status in 1939. From the standpoint of number of employees, class I railroads account for the overwhelming proportion of the individuals currently covered by the acts, with 84.2 percent of the total covered employees. Express companies and switching and terminal companies accounted for 4.5 percent and 4.1 percent of covered employees, respectively. Miscellaneous companies, although accounting for 6.6 percent of the number of employers, included only 1.1 percent of the covered employees in 1939.
Provision under which covered
Class of employer All Carrier Carrier association Railway labor
Number Percent Carrier affiliates organization
Total Percent of total 1,130 100.0 100.0 878 77.7 106 9.4 120 10.6 26 2.3
Class I railroads Railroads other than class I Switching and terminal companies Express companies Sleeping-car companies Electric railroads.. Car loan companies. Miscellaneous companies Railroad associations Railway labor organizations 142 443 242 3 1 84 10 75 104 2 26 12.6 39.2 21.4 .3 .1 7.4 .9 6.6 9.2 2.3 142 443 208 2 1 82 18 1 2 10 75 16 104 26
1 On or after Jan. 1, 1939. 2 See footnote 4, table 57.
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TABLE 59.—Employees with credited earnings for 1939s Estimated number by class of employer1 and by provision under which employer is covered
[In thousands]
Estimated3 Total of employees (cols. 2, 3, and 4) Provision under which employer is covered
Class of employer (1) Reported 3 employees (2) Adjustments for employees included in consolidated reports (3) Additional employees not yet reported (4) Number (5) Percent (6) Carrier (7) Carrier affiliate (8) Carrier association (9) Railway labor organization (10)
Total (number) Percent of total 1,605.4 — 22.8 1,628.2 100.0 1,582. 2 97.1 31.8 2.0 7.4 .5 6.8 .4
Class I railroads 4 1,377.0 26.1 —4. 5 1,372.5 27.8 84.2 1,372. 5 27.8
Railroads other than class 14 +1.6 +.2 0.1 1.7
Switching and terminal companies Express companies 65.7 64.7 .2 9.0 66.1 73.7 4.1 4. 5 61.8 73.7 2.0 2.3 —
Sleeping car companies Electric railroads Car loan companies 26.1 26.1 1. 6 26.1
17.7 12.3 +.1 2.6 20.4 12.3 1.3 . 8 20.3 .1 12.3 —
Miscellaneous companies Railroad associations 3.9 5.1 +2.6 10.9 17.4 5.1 1.1 .3 — 17.4 5.1 —
Railway labor organizations 6.8 6.8 .4 6.8
1 Employees who worked for more than 1 employer, but not jointly, are classified with the last employer in the year. Joint employees are classified with the major employer.
2 Through Mar. 13,1940.
3 All of the estimated adjustments and some of the estimated additions were based on average midmonth or other periodic counts for 1939, obtained from I. C. C. reports or other sources. This average for a particular company was increased by 40 percent in every case. This 40 percent is the ratio of the number of employees with credited compensation reported to the Railroad Retirement Board for 1939 to the average I. C. C. midmonth count for the companies reporting these employees to the Railroad Retirement Board in 1939, minus 100 percent. Where separate quarterly reports for 1939 had been made to the Board after Mar. 13, 1940, or where separate reports were not available for 1939 but were for the first or second quarter of 1940, the highest quarterly figure, plus 10 percent, was used. This 10 percent is roughly the ratio of the highest quarterly number of employees to the total number of employees reported to the Board for 1939. The addition of 9,000 to the number of express company employees is for certain joint employees, who were reported by the company for the first time in 1940 after the 1939 tabulations had been prepared, and is based on an estimate made by the company of the number of these joint employees who are not also employees of other employers under the act.
4 Includes railroads in Hawaii and Alaska.
New rulings.—In the 1939 annual report, statistics of coverage were reported through September 30, 1939. In the 9 months between October 1, 1939, and June 30, 1940, service to 100 additional companies or organizations was held creditable toward annuities. Forty-four of these were in operation on or after January 1, 1939, and service for them is also creditable in determining eligibility for unemployment insurance benefits under the Railroad Unemployment Insurance Act. Fifty-six had ceased operations prior to January 1, 1939, and were therefore not in active operation at the time they were ruled under the act.
Carrier affiliates, which raise difficult questions of coverage, made up 42 of the 100 organizations ruled under the act between October 1, 1939, and June 30, 1940. Twenty-one were covered as carrier as-
194 • An nual Report of the Railroad Retirement Board sociations, and an equal number as carrier predecessors under sections 1 (f) and 202 of the 1937 act. Fifteen were covered as carriers subject to part I of the Interstate Commerce Act, including 8 electric railways held not to be exempt under the electric line exemption proviso. The insurance department of one additional railway labor organization was ruled to be covered as an employer.
Between October 1, 1939, and June 30, 1940, service was held not creditable under the acts in 145 cases. In 99 of these cases the units were not owned or controlled by, or under common control with, a carrier-employer under the act. In 9 cases the organizations were found to be owned or controlled by, or under common control with, a carrier-employer, but they did not perform a service in connection with railroad transportation. Seven came within the proviso excluding street, interurban, or suburban electric railways not operated as a part of a or the general steam-railroad system of transportation. The remaining 30 were held not to be covered for a variety of reasons.
LIST OF APPENDIXES
Page
A. Actuarial valuation of assets and liabilities under the Railroad Retirement Acts_______________________________ 197
B. Operations of the railroad retirement account---------- 241
C. Railroad retirement statistics_________________________ 243
D. Wage and service statistics___________________________ 279
APPENDIX A
Recommendations of the Railroad Retirement Board based on the actuarial valuation, as of December 31, 1938, of the assets and liabilities under the Railroad Retirement Acts;
With the report of the Board’s actuary and statement of approval of the actuarial advisory committee
I. Recommendations of the Railroad Retirement Board
II. Statement of the actuarial advisory committee
III. Report of the actuary
APPENDIX A
I. Recommendations of the Railroad Retirement Board
THE preparation of an actuarial valuation is not a simple matter. It must take into account many factors which are the result of compilations based on the records of separate individuals numbering more than two millions. The accumulation of the necessary data is itself a task of rather large dimensions. In order to secure a valuation as of the present time, the terminal point for the data used had to be placed at some time in the past. Wage records are accumulated by the Board on an annual basis for calendar years, beginning in 1937. The wage records for the year 1939 were not available before June 1940. The basic valuation, therefore, had to be dated December 31, 1938; use, however, has been made of more recent data on retirements and mortality.
When the Railroad Retirement Act of 1937 was under consideration in Congress, cost estimates were made by this Board. The sources of the data and the assumptions involved in the initial cost calculations were as follows:
1. The primary data were collected by the Federal Coordinator of Transportation from the following 13 railroads for the period July 1, 1924-December 31, 1933: Atchison, Topeka and Santa Fe; Atlantic Coast Line; Baltimore and Ohio; Boston and Albany; Central of New Jersey; Chicago, Burlington and Quincy; Delaware and Hudson; Kansas City Southern; Minneapolis, St. Paul and Sault Ste. Marie; Northern Pacific (Western Grand division); Oregon Short Line; Southern Pacific (Oakland division); and Texas and New Orleans.
2. Withdrawal rates were based on the experience of these 13 roads in the period 1925-28, inclusive. A separation from any of the above roads was counted as a withdrawal. While the shift of employees from one carrier to another has not been allowed for directly (except insofar as these were recorded, an infrequent occurrence), we believed that the withdrawal rates used were reasonable. The period covered was one when withdrawals were lower than they have been before or since, over an equal time interval. If an employee left service prior to the end of 1928, and returned before the end of 1933, no withdrawal was recorded.
3. The rate of mortality in active service was based on the experience under group life-insurance plans on railroads in the period 1927-
198
Actuarial Valuation • 199
32. The rate of disability was taken from the same experience, but for the 5-year period 1930-34, inclusive.
4. The salary scale used (which was select throughout) was developed from the experience of the following railroads in 1929: Baltimore and Ohio; Boston and Albany; Delaware and Hudson; Kansas City Southern; Minneapolis, St. Paul and Sault Ste. Marie; Northern Pacific (Western Grand division); and Oregon Short Line. The actual scale used for the calculations was taken at 5 percent below the 1929 level. A salary scale was worked out for all 13 roads on a 10-year select and ultimate basis.
5. For age retirements, the mortality basis was the combined annuity table; for disability retirements, the mortality basis was the experience among disabled lives under group life-insurance plans in all industries. These mortality rates follow closely the mortality experience with age and disability retirements under voluntary railroad pension plans in the period 1921-33. Had actual railroad experience been used, the costs would be about 1 percent less (about 0.07 percent of pay roll). Since mortality experience had been improving, this slight scaling down of the mortality rates (and scaling up of costs) was clearly necessary.
6. The initial age and service distribution was based on that of the 13 roads on December 31, 1933. Service was counted from date of original entry.
7. It was assumed that the number of employees would remain constant and that new entrants to replace employees withdrawing, dying, and retiring would be distributed as to age as were entrants into the service of the 7 railroads listed under item 4, in the period July 1, 1924-July 1, 1929. This distribution was used because, in using the 13-road data, tabulations were made on an annual census basis and new entrants were not separately distinguished. The assumption was also made that the aggregate pay roll would be constant at the present level $2,200,000,000 annually.
8. Interest on accumulated funds at the rate of 3 percent per annum was used.
9. Healthy employees who do not previously withdraw were assumed to retire from rail service at 70, disabled lives upon becoming disabled; annuities for those employees who leave railroad service before qualifying for an immediate annuity (those under age 65, or who are not 60 with 30 years of service, or under 60, if disabled) were started at 67)£, except for those who were disabled at or after leaving service, when 65 was taken as the commencement date.
The present valuation is essentially an inquiry as to whether the experience under the Railroad Retirement Acts and the additional
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data which have been collected, and which have a bearing on costs, are consistent with the initial assumptions. It is to be expected that in some respects the actual experience under any retirement system will not be in exact conformity with estimates of cost made before the system begins to operate. The questions, therefore, might perhaps better be stated not as to whether the experience is consistent, but the degree to which it is inconsistent.
The report prepared by the actuaries indicates that, with respect to certain factors, the variation of experience from what was anticipated was not sufficiently serious to result in any noticeable change in cost. These factors were: mortality among employees in active service; mortality among nondisability annuitants; mortality among pensioners; salary scales; and withdrawals from service for causes other than death, disability, and retirement. The nature of the retirement system is such that a very high withdrawal rate will not produce a cost markedly different from that which would result if there were no withdrawals other than for death, disability, and retirement.
There are other points, however, at which differences have developed which, if persistent, will result in substantial changes in estimated costs. First, the age and service distributions prepared on the basis of the data collected by the Federal Coordinator of Trans-portation have proved to be somewhat in error. There are somewhat larger numbers of men in the upper age groups than was indicated to be the case by the original data. Second, apart from the service of persons who have retired, no service periods have been secured from railroad records. Instead, the length of service of railroad employees as a whole has been estimated on the basis of a sample of 250,000 statements of service made by employees themselves. The sample indicates the possibility that the initial estimates of service were, on the whole, too low.
Third, the average pay roll for the years 1937, 1938, and 1939 has been $2,108,000,000 as compared with the estimate of $2,200,000,000. More serious than any of the foregoing, however, has been the fact that the retirement rate has been such that the average age of retirement has been less than 66, rather than 67% as estimated. This result has been caused both by a higher than anticipated rate among persons 65 years of age and over, and by a rate of disability retirement about twice as high as anticipated. Finally, the mortality rate among persons retired on account of disability has been lower than expected.
If the initial experience under the Railroad Retirement system were to continue without substantial change, and if the taxes under the Carriers Taxing Act were to be fixed on the same assumptions as those originally made, with respect to interest and the investment of
Actuarial Valuation • 201
excess of income over disbursements, the tax rates would be raised immediately to almost 11 percent (taking the pay roll at $2,108,-000,000).
This finding raises two major questions: first, is the initial experience likely to be typical of that over a long run of years; and second, if the answer to the first question is in the affirmative, should the taxes levied for the support of the Railroad Retirement system be raised to the full amount indicated to be permanently required?
There appear to be sound reasons for hesitating to accept at this time the initial experience as permanently valid. It is to be noted first of all that shortly after the Railroad Retirement Act became law, employment in the railroad industry turned sharply downward. General business receded during the latter part of 1937, taking place at an almost unprecedented rate. The decline in railroad employment, of course, resulted from the effect of the general business depression on railroad traffic. A substantial number of persons in the railroad industry found their incomes declining because of short time in shops, closing down or partial operation of other facilities, demotions resulting out of the operation of the seniority system, and so on. Many persons affected were advanced in years and found the annuity available under the Railroad Retirement Act a substantial fraction, if indeed, not as much as the compensation which they could earn by continuing in active service. Even where under the seniority rules a worker had rights to a job which provided compensation of the normal amount, he found himself subjected to pressure from younger employees whose incomes were reduced by the decline in employment.
The operation of private retirement systems in the railroad field had been curtailed for some years before the enactment of the Railroad Retirement Act of 1937. There had been, moreover, but very few annuities granted under the Railroad Retirement Act of 1935, because most employees who had a choice were unwilling to relinquish their rights until the legality of the Railroad Retirement system had been determined. It appears true also that many employees who were suffering from substantial disabilities had been retained in light jobs or had been holding on to employment rights in order to qualify for retirement under the governmental system. The effect of this accumulation of delayed retirements affected the picture to an overwhelming degree in 1937, and there is no reason to suppose that its effects have been completed even yet. That, however, the initial rates were much larger than they have been subsequently is cleanly indicated by the studies made by the actuaries.
To a considerable degree the experience under a retirement system
202 • Annual Report of the Railroad Retirement Board
will reflect general business conditions. If for some time to come business conditions are good and railroad traffic is in large volume, with prospects of increased traffic so that the railroads find it necessary to keep substantial maintenance forces continuously at work, the income to railroad employees will be substantial as compared with the annuities, persons on the rosters will secure reasonably full employment, and the retirements will consequently drop. The result will come about both because older employees will not wish to retire, and because there will be a diminution in the pressure on them exercised by younger men. There are substantial reasons to suppose that we are entering a period of expanded domestic business. The rearmament program which is just getting under way, if carried to a point of constructing a large new navy and of securing military equipment sufficient to defend the Western Hemisphere, will necessarily mean a large increase in industrial activity. This increase will be reflected in railroad traffic and in railroad employment and pay rolls in the incomes of individual railroad workers. In addition to this, it may well be that the railroads, which themselves are an essential and highly important part of the national defense, will find it desirable to enter into a program of rehabilitation which will require substantial employment itself. With retirements falling and pay rolls and pay-roll tax receipts rising, the balance between the receipts and disbursements of the retirement system will change for the better.
It may very well be that some increase in taxes will be required for the support of the Railroad Retirement system. We believe, however, that such an increase ought not now to be made. First, the extent of a desirable increase cannot now be determined because of doubts as to the validity in the long run of the initial experience; and second, because the policy with respect to contributions, if any, from the general revenues has not been determined.
We recommend therefore first, that no tax increase be made at the present time; second, that a revaluation be made, based on experience to the end of 1941 as soon after the end of 1941 as data can be made available. The results should be secured in time for a report to be made to Congress and action be taken in the 1942 session, effective January 1, 1943.
We recommend further that Congress outline a definitive policy with respect to contributions from the general revenue. In this connection we feel that the contribution to the Railroad Retirement system should be, as nearly as can be determined, the additional contribution which would be made to the general old age and survivors’ insurance system if the coverage under the Railroad Retirement system were included under the general system. We recommend finally that
Actuarial Valuation • 203
any changes in the retirement system in the direction of liberalization should be accompanied immediately by increases in the taxes under the Carriers Taxing Act sufficient to cover the full costs of the changes on the basis of the factors indicated by the experience to date.
Subsection (d) of section 15 of the Railroad Retirement Act of 1937 provides that the actuarial report shall contain an estimate of the reduction in liabilities under title II of the Social Security Act arising as a result of the maintenance of the Railroad Retirement Acts of 1935 and 1937. Since the 1937 retirement act was passed, title II of the Social Security Act has been completely rewritten. It now includes not only old-age, but dependents’ and survivors’ benefits. The operations of the Railroad Retirement Acts have yielded no data on which to base any estimate of reduction in liabilities under title II of the Social Security Act. No attempt to make a guess seems warranted now and the estimate has therefore been omitted.
II. Statement of the Actuarial Advisory Committee
July 18, 1940. Railroad Retirement Board,
Washington, D. C.
Gentlemen: The actuarial advisory committee appointed in accordance with section 15 of the act of June 24, 1937, has held several meetings to consider the data and the methods to be employed in their use in the development of an actuarial valuation of the assets and liabilities under the Railroad Retirement Act as of December 31, 1938. The results of this valuation appear in the report of the actuary of the Railroad Retirement Board, Mr. Joseph B. Glenn, as such report was submitted to the committee under date of May 29, 1940.
The report recites the benefits of the system and then gives the number of employees and of pensioners used as a basis for the valuation as follows:
1,029,094 active employees entitled to prior service credit
230,411 inactive and terminated employees entitled to prior service credit
89,898 pensioners
After reciting the various methods by which the liabilities and contingent assets were computed, the report gives the present value of the liabilities on account of employees and retired members, which in round figures is $4,462,400,000. To cover this liability there were funds amounting to $75,700,000 in hand which leaves a balance of $4,386,700,000 as the liabilities to be covered by future contributions. The report then indicates that the future contributions of employees and of the railroads, at the rates set under the act, which now provide for an increase in the combined rate from 6 percent to a combined rate of 7J4 percent in 1949 are inadequate.
The valuation report shows that a level contribution of approximately 11.11 percent of the pay roll is needed to finance the liabilities from now on. If the present rates were subjected to an increase of 0.98 percent instead of 0.25 percent of the pay roll for both the railroads and the employees for each of the next three
204 • Annual Report of the Railroad Retirement Board
scheduled increases, the liability would be covered. In the judgment of the actuarial advisory committee, the important result of the valuation to the employees of the railroads, the railroads themselves, and the general public, is the statement of the contributions needed to support the benefits, because it shows that the rates set in the tax act are insufficient and that some additional source of revenue is necessary if the prescribed benefits are to be maintained.
The actuarial advisory committee does not take a position on the question of the method to be followed in increasing the rates of payment by the railroads and the employees thereof to those indicated by this valuation to be required. While a first valuation gives the best indication available at the outset of the probable future cost, it is true that the basic assumptions as to mortality and service experience have not been tested by actual experience under the fund and may be subject to adjustments in future years. Inasmuch as the act provides for an increase in the rate of tax for a number of years in the future, there may be some question as to the advisability of making an immediate change in the current rates of tax until after the next valuation, although an immediate increase in the present rate or in the future increase in the rates as provided in the law would be the more conservative course to follow.
In the opinion of the actuarial advisory committee the valuation has been prepared in accordance with sound actuarial practice and it is a reliable presentation of the actual financial condition of the system.
Respectfully submitted,
George B. Buck,
Robert D. Holran,
R. R. Reagh,
Actuarial Advisory Committee.
III. The Report of the Actuary
The following statement of the coverage and benefit provisions of the acts is a summary for actuarial purposes. More detailed statements concerning these and other provisions of the acts appear elsewhere in this annual report and in previous annual reports.
Cove rage
The Railroad Retirement Act of 1935 is now in force only with respect to employees who relinquished rights and became eligible for annuities prior to June 24, 1937. The beneficiaries under this act therefore constitute a closed group. The future benefits to this group consist of life annuities, or joint and survivor annuities where an optional form of settlement is elected upon making application for annuity, and a death benefit equal to 12 monthly installments at one-half of the monthly rate to which the annuitant was entitled. This death benefit is payable to the surviving spouse, or if there is no surviving spouse, then to the next of kin if dependent on the annuitant, and if neither of these exists, then no death benefit is payable. The monthly amount of annuity is calculated by the same formula as under the 1937 act.
The Railroad Retirement Act of 1937 is now in force with respect to all other persons. This act covers employees of railroads, express companies, and sleeping car companies subject to part I of the Interstate Commerce Act, and any company which is directly or indirectly owned or controlled by one or more of these if it is engaged in performing any noncasual service (other than trucking) in connection with the transportation of passengers or property by railroad. It does not include a street, interurban, or suburban electric railway unless it is operating as part of
Actuarial Valuation • 205
a railway system. It covers employees of railroad associations, traffic associations, tariff bureaus, demurrage bureaus, weighing and inspection bureaus, collection agencies, and other associations, bureaus, agencies, or organizations controlled or maintained by the employers covered under the act. It also covers officials and employees of railway labor organizations.
Benefits
The amount of annuity payable under the act is calculated by taking 2 percent of the first $50 of average monthly earnings, excluding compensation in excess of $300 in any month, percent of the next $100, and 1 percent of the next $150, and multiplying by the number of years of service, not exceeding 30 years if any service prior to January 1, 1937, is included but otherwise without limit. This basic amount is reduced for certain classes of retirements before age 65.
Individuals who were “employees” on August 29, 1935, may receive credit for service rendered prior to January 1, 1937, while others may receive credit only for service rendered after January 1, 1937. An individual was an “employee” on August 29, 1935, if he was in service on that date or if he was in an “employment relation.” A person is in the “employment relation” if he is not in service but is, in accordance with an established rule or practice in effect on the employer, on furlough, leave of absence, or absent on account of sickness or disability.
Service rendered after June 30, 1937, by an employee age 65 or over is not creditable, but his earnings after that date may be used in determining his average earnings if the effect is to increase his average.
The average monthly earnings of an employee is computed as follows: the number of months of service prior to January 1, 1937, is multiplied by the average monthly amount earned by the employee in the 8-year period 1924-31, and to this product is added the gross amount earned after January 1, 1937. This sum is divided by the total number of months, giving the average monthly earnings on which the annuity is calculated. In determining the average, any earnings in excess of $300 in any month are excluded. Where the service in the period 1924-31 is insufficient to constitute an equitable basis for determining the monthly compensation for service prior to January 1, 1937, the Board is authorized to determine the average on some basis that is fair and equitable.
Employees are entitled to immediate annuities if they satisfy one of the following conditions:
1. Are age 65 or over, irrespective of the length of service or physical condition.
2. Are age 60 to 65 and have 30 or more years of service, irrespective of physical condition. The basic amount of annuity is reduced by 1/180 for each month the employee is under age 65 at the time the annuity begins to accrue.
3. Are under 65 and have 30 or more years of service, and are permanently and totally disabled for regular employment for hire.
4. Are age 60 to 65 and are permanently and totally disabled for regular employment for hire, irrespective of the length of service. The basic amount of annuity is reduced by 1/180 for each month the employee is under age 65 at the time the annuity begins to accrue.
An applicant need not be an employee at the time of retirement. Any employee whose service is terminated for any cause prior to retirement age is entitled to a 276117—41------------14
206 • An nual Report of the Railroad Retirement Board
deferred annuity of an amount computed in the same way and beginning upon attaining eligibility under one of the four conditions above.
An applicant is not eligible for an annuity until he has ceased all employment irrespective of whether it is covered under the act. After the annuity has been granted, it will not be paid with respect to any month in which he reengages in employment under the act or with his last outside employer.
If an applicant for an annuity was an employee under the act on attaining age 65 and had at least 20 years of service, he is entitled to a minimum annuity of at least $40 monthly if his average monthly compensation is $50 or more, or if his average earnings were less than $50 monthly, he is entitled to an annuity of 80 percent of his average earnings, but if this is less than $20 he is entitled to $20 or the same amount as his average earnings, whichever is less.
A death benefit is payable in event of the death of any person employed after January 1, 1937. The amount is 4 percent of the total creditable compensation earned by the employee after January 1, 1937, less any annuity payments received. It is payable even though the employee may have separated from service before the time of death.
In lieu of the regular life annuity, an employee may receive a joint and survivor annuity by making advance election or by furnishing proof of health. The amount of the joint and survivor annuity is the actuarial equivalent, and thus involves no additional cost.
On July 1, 1937, the Railroad Retirement Board assumed the payment of future benefits to individuals who were not eligible for annuities under the act but who were on the employers’ pension rolls on March 1, 1937. The amount of benefits to this group is the amount previdusly paid by the employer, but with a restoration of any general reduction in amounts made after December 31, 1930. The benefit is a life annuity only; there is no death benefit and no right to elect a joint and survivor option. The employers’ pension plans were completely unfunded, and no assets were acquired in the transfer.
Source and Construction of Basic Tables
Number of individuals entitled to credit for service rendered prior to January 1, 1937. As previously stated, individuals who were “employees” on August 29, 1935, may receive credit for service rendered prior to January 1, 1937. The term employee” includes those who were actually in service and those who were in the “employment relation.”
The individuals entitled to credit for prior service have never been enumerated. The enumeration of those actually at work would not be very difficult, but a complete enumeration of those in the employment relation would involve a considerable amount of difficulty, particularly in those cases where the relationship exists through a custom or practice. A substantial number of instances would require detailed individual consideration. However, the total nunber of individuals entitled to prior service credit can be estimated with a high degree of accuracy.
Class I railroads report to the Interstate Commerce Commission the number of employees actually at work on the middle day of each calendar month. On August 15, 1935, they reported 1,011,030 employees and on September 15, 1,008,606 employees. While the number decreased slightly from August 15 to September 15, the figure of 1,011,030 may be taken as the number at work on August 29, 1935, on class I railroads. Reports to the Railroad Retirement Board for 1937 and 1938 show that the compensation of all employees covered under the act is 16.7 percent greater than the compensation of class I railroad employees.
Actuarial Valuation • 207
Increasing the above figure by 16.7 percent gives 1,179,872 as the number of persons at work on August 29, 1935, for all employers covered under the act.
The Board has asked each employer to state the number of persons who were in the employment relation to him on August 29, 1935, and the number of names appearing on the last pay roll (semimonthly in almost all cases) for August 1935. Replies were received from employers having 946,509 names on this pay roll stating that they had 145,736 persons in the employment relation, or 15.4 percent as many as names on the pay roll. The remaining employers did not reply or replied that they did not know the number. An examination of annuity claims approved indicates that the employers who did not reply had about 75 percent more persons in the employment relation in proportion to the number of active employees than did the employers who replied. Increasing 15.4 by 75 percent gives 27.0 as the percentage for employers who did not reply. The percentage in the employment relation on August 29, 1935, cannot be derived directly from annuity claims approved, since persons in the employment relation tend to be younger than those in active service as a result of the seniority system and therefore the percentage in approved annuity claims is lower.
Reports to the Interstate Commerce Commission showed that the number of different individuals receiving pay for any part of the month of August 1935 was 11.9 percent greater than the number of persons employed on the middle day of the month. Taking a 6-1 percent increase as the proper figure to obtain the number on the pay roll in the last half of the month, we multiply 1,179,872 by 1.06 and obtain 1,250,664 as the total number on the pay roll during the last half of August. Subtracting 946,509 from 1,250,664 leaves 304,155, and multiplying this by 27.0 percent gives 82,122 as the number in the employment relation to employers who did not reply. Adding this 82,122 to 145,736 gives 227,858 as the total number of persons in the employment relationship.
Adding 1,179,872 and 227,858 gives 1,407,730 as the total number of persons entitled to prior service credit on August 29, 1935. By applying a mortality table to an age distribution of railroad employees on January 1, 1937, we find that the average annual rate of mortality is 0.01243. Multiplying 1,407,730 by 0.01243 gives 17,498 deaths per year. Deducting these deaths, we have the following number of persons living on the date specified who were entitled to prior service credit:
Aug. 29, 1935_____________________________________________1, 407, 730
Dec. 31, 1936_____________________________________________1, 384, 399
Dec. 31, 1937_____________________________________________1, 366, 901
Dec. 31, 1938_____________________________________________1, 349, 403
This number includes any retired employees who were receiving annuities on the date specified. If they are deducted, the remainder represents living, nonretired persons entitled to credit for prior service.
Age and service distribution of employees in active service December SI, 1938.— For information on the age and service distribution of employees entitled to credit for service rendered prior to January 1, 1937, the Board has available approximately 875,000 prior service forms filled out by employees. The claimed service has not been verified and verification would be an extensive undertaking, but judging from comparisons of claimed and proved service on applications for annuities, the claimed service is generally accurate.
The prior service forms were distributed to employees near the end of 1938. In most instances, the forms were delivered only to employees in active service, but in some cases the forms were obtained and filled out by inactive or terminated
208 • Annual Report of the Railroad Retirement Board
employees. The Pennsylvania Railroad undertook to fill out the forms from personnel records for the employee’s signature and completed the forms for employees whose name began with A or B, but then discontinued the work. Except for this instance, completed forms were obtained from apparently 90 percent of employees in service at the end of 1938. The remainder either did not receive forms or failed to return them.
The prior service forms showed the employee’s name, Social Security account number, date of birth, service prior to January 1, 1937, and occupation. Every third form in the order received was selected and a punch card was prepared showing all of this information except the name. An exception was made in the case of the Pennsylvania Railroad, where all of the forms were used, still leaving this railroad underrepresented. To allow for breaks in service an equated date of entry was used.
Beginning January 1, 1937, the employers under the act reported current service and earnings to the Board. The reports show the number of calendar months in which an employee has earnings and the amount of earnings not exceeding $300 in any calendar month. A punch card for every employee with service in 1937 or 1938 was available for use in this valuation. In addition to service and earnings, these current service report cards show the Social Security account number, the year of birth given on the application for account number, and the last occupation. Service and earnings for 1939 were not available until after the valuation was completed.
The prior service cards were matched by account number with the current service cards by the use of collating machines. When a match was obtained, the service and earnings for 1937 and 1938 were reproduced on the prior service cards. The prior service card for a particular individual then showed his reported service and earnings subsequent to January 1, 1937, as well as his claimed service prior thereto. By this matching it was determined that the 272,178 prior service cards were distributed as follows:
Total. ------------------------------------------ 272, 178
Group 1. No service after Jan. 1, 1937_____________________ 1, 692
Group 2. Service in 1937 only_____________________________ 4; 955
Group 3. Service in both 1937 and 1938__________________ 264, 370
Group 4. Service in 1938 only_____________________________ 1, 161
The prior service cards in groups 3 and 4 were sorted by year of birth and occupation, and compared with similar tabulations from the current service and earnings cards. As nearly as could be determined, the prior service cards wer.. free from bias as far as age and earnings were concerned, and no other characte: istics could be compared. Groups 1 and 2 appeared not to be representative the whole group of which they form a part, a point which will be discussed lat-
It would have been mechanically possible to determine from the current service reports which of the prior service cards pertained to employees who were in service at some time during the month of December 1938, though it is not possible to ascertain which ones were at work on December 31. In the time available it was impractical even to determine which ones were employed in December. Since the prior service forms were distributed near the end of 1938, and since from the figures above it appears that in all except a small fraction of the cases the forms were filled out only by employees in active service, it seemed reasonable to use the prior service cards of employees having earnings in 1938 (groups 3 and
ge and service distribution of employees in active service Dec. 31, 1938
Adjusted year of entry
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
19
22.494
26, 705
29,630
22, 420
26, 217
29, 349
26,169
31,059
30, 781
25, 526
26, 732
36,444
49, 854
52,099
38,430
46,369
25,483
53, 515
48,491
33, 232
35,468
35, 750
29,026
26,928
26,
TABLE A-1
Year of birth Total
1877 1878 1879 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 | 1896 1897
Total 1,094,521 9 7 9 18 15 32 46 96 150 335 601 835 1,152 1,539 1,862 2,425 2, 412 2,352 3, 204 3,328 4,264 6
1R44 1 — —
1845 - — — — — _______
1846 1847 1848 1849 1850 1851 1852 1853 1854 1855 1856 1857 1858 1859 1860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 2 1 1 5 3 10 9 9 21 23 62 61 85 110 113 178 333 536 783 1,194 2,386 3,639 4,325 6,374 8,004 11,616 14,409 16,817 17,009 19,711 20, 953 23, 580 23,740 27, 619 27, 859 31, 660 31, 226 32,643 31,188 37,004 35, 454 2 ----- 1 2 2 2 1 1 2 1 3 2 1 2" 1 4 2 1 2 3 1 2 "2’ 3 2 1 4 2’ 1 ■"■3’ 4 1 2 5 4 6 2 2 2 3 3 ...... 9 7 3 4 3 2 ----- 1 2 - 2 2 4 8 15 12 14 11 12 4 3 2 2 ‘■‘i’ 2 2 4 3 3 12 8 9 13 22 27 21 11 8 2 1 2 3 10 21 23 39 50 62 43 47 23 6 3 7 27 50 43 78 136 81 85 39 35 —-- 3 2 2 3 8 31 44 47 109 147 101 124 89 78 1 2 3 13 22 35 78 109 167 151 194 112 132 —- 4 3 1 2 6 15 39 51 155 163 178 225 221 182 ----- 4 2 8 14 12 43 101 128 174 256 267 318 —--- 3 1 3 5 6 13 27 39 74 151 185 252 337 384 —--- 2 2 ■■”2' 7 11 18 47 78 131 128 229 213 364 i' 3 4 3 4 9 17 25 23 62 97 155 198 215 291 2’ 4 3 2 5 14 12 17 78 116 132 174 240 419 4 6 5 14 20 61 65 112 186 202 353 - i ””2' 2 2 3 7 8 13 54 70 120 161 232 434
1875 2 1 9 26 66 163 213 376 318 329 376 477 438
1876 4 15 42 66 178 256 326 333 519 399 593
1877 2 3 14 27 74 163 259 217 407 402 469
1878 1 6 23 39 74 147 153 311 326 446
1879 5 11 16 53 62 104 190 287 407
1880 3 7 17 45 58 101 264 310
1881 2 5 13 32 39 70 202
1882 6 11 24 37 155
188.8 3 7 13 22 78
1884 1 4 10 39
1885 3 14
9
1890
33,327 38,102 35,056 35, 522 33,379 34,023 32,309
1893 1894 — — — — — — — — — — — — — -- — — — — — — —
loVD__________ 1896 1897 — — — — — — — — — — — — — — - — — — — — — —
1898 33,958 30, 717 35,403 28, 568 29,062 26, 660 24,064 23,041 21,613 19,889 18,161 15,810 14,112 11,366 9,933 8,476 7,736 7,087 6,972 6.229 3,283 2,584 1,941 617 226 52
—
■
1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 — — — ——- - — —
1924 1925 1926 20 3 1 — — — — — — — — — — — — — — — — —
1898
2
>, 276
5
2
2
3
701
713
717
612
597
395
329
171
85
43
21
8
8 23 17 72 62
97 194 279 457 659
276117—41 (Face p. (209)
1899
1900
1901
1902
1903
1904
29
1930
1931
1932
1933
1934
1935
1936
1937
1938
Year of birth
7,798
10, 265
12,360
15, 736
11,455
8, 857
10,161
14,974
15,704
5,075
52, 342
13,085
Total
3
1
2
3
3
7
1
4
1
2
6
4
2
3
5
3
4
12
6
13
55
143
124
213
275
422
647
763
771
895
926
682
636
527
318 194 112
31
14
4
9
11
23
47
85
13
16
35
43
124
8
12
31
74
78
105
229
283
457
667
163
186
314
488
655
140
194
298
426
651
814
748
988
1,031
1,046
938
849
837
500
295
182
62
27
12
5
833
849
1,070 1,197
1, 252
1,209
1,093 934 829
554
279
101
70
26 8
4
845 977
1,015 1,197 1,542
1,426 1,488 1,535 1,314
930
791
403
225
93
19
7
3
15,310
J56
17,529
17, 776
1 —
— - —
— — —
1 — — —
— — —
2 — —
— — — 1
2 3
1 i 1
4 2 2
4 2 — —
1
2 3
3 1 3
2 1 2 6
4 3 4 5
7 10 13 18
15 9 16 23
23 17 31 19
58 40 43 43
89 47 74 81
109 128 112 101
202 155 143 163
267 252 194 267
473 326 391 453
678 481 523 543
845 6^5 694 632
934 651 806 814
1,011 872 876 934
1,244 1,004 1,132 1,050
1, 364 1,054 1,360 1,407
1,631 1,279 1, 453 1,411
1,639 1, 608 1,763 1,790
1, 566 1,709 1,907 2,015
1,674 1,674 2,058 2,182
1,267 1,438 1,988 2,379
1,116 1,418 1,868 2,271
794 1,058 1, 608 2,073
388 833 1,480 2, 085
217 461 1,027 1, 659
97 205 593 1,248
23 78 217 566
14 43 58 310
5 15 31 97
9 18 37
3 11
2
— — —
— — —
— — —
— — — —
_________ — — —
— —
— — —
- - — —
------ — — —
- — —
— _
- — - - -
—
— —
— — — —
— - - - - —
— —
— —
— — — —
— — —
— — —
- — —
— — — —
1
2
3
3
7
12
14
23
39
105
78
190
240
388
465
647 756
965
1, 070 1,314
1,306 1,535 1,682 2, 282 2,488
2,600 2,445 2,519 2,209 1,783
1,271
740
279
101
43
17
4
— —
— ____
— —
— — — — —
— — — —
1 1 _ 2
— — —
___ — 1 —
— — — — — —
— — — — 1
2 — — 1
- - — — _ —
2 3 2 4 —
— 4 — — — —
1 1 2
2 5 1 3
2 2 1
3 4 3 3 2 2
4 6 6 4 3 3
10 7 8 6 3 5
8 18 12 9 11 12
21 24 21 13 17 15
35 19 27 39 34 23
58 58 38 43 41 50
85 93 62 54 64 47
101 128 102 89 120 78
209 136 171 159 147 132
279 264 236 213 194 225
407 329 318 271 271 256
438 399 438 318 326 322
484 453 465 372 333 341
729 620 531 473 515 481
663 647 585 519 531 527
915 779 705 647 605 519
891 771 814 674 787 620
1,015 1,166 1,031 740 856 740
1,093 1,263 1,132 814 934 814
1,298 1,422 1,372 1,135 1,135 1,070
1,507 1,496 1, 635 1, 279 1,321 1,015
1,736 1,868 1,786 1,345 1,190 1,062
1,748 1,891 1,941 1,352 1,469 1,271
1,941 2,403 2,465 1,790 1,976 1,488
1,949 2,186 2, 585 1,961 2,081 1,907
1, 511 1,972 2, 275 2,120 2,310 2,000
1,294 1,891 2,255 2,073 2,554 2, 259
1,170 1,744 2, 298 2,155 2, 592 2,488
550 1,132 1, 759 1,879 2,414 2,364
178 651 1, 244 1. 558 2,263 2, 499
41 256 601 1,066 1, 678 2,054
26 58 253 605 1,306 1,790
15 31 77 267 616 1,201
3 12 58 89 233 682
5 31 23 58 267
4 7 43 97
2 13 35
— — — — 4 10
— — — — 3
— — — —
— — — — — —
— — — —
— — — — — —
— — — —
— — — — —
— — — — — —
— — —
— —
— — — — ___-_
— — — —
— — — —
— — - - — —
— - — —
— — — —
— — — — — —
— — —
_____ — — — __—_—
— — — — — —
________ — — — —
— — — — — —
1844
2" - 4 3 2 2 4 9 16 40 58 49 44 128 177 260 291 236 322 422 438 512 554 562 756 825 973 1,008 1,275 1,174 1,434 1, 631 1,856 1,786 1,883 1,829 1, 659 1,527 903 488 252 81 35 12 3 - 2‘ 2' 1 1 3 12 13 21 38 66 109 112 151 256 256 279 407 349 422 512 562 550 698 705 911 880 1,166 1,170 1,252 1,461 1,899 1,841 2,046 1,938 1,856 1,597 1,414 938 535 190 66 25 !7 2 2 2~ 3 7 15 20 39 58 85 116 159 186 248 380 318 434 442 477 543 690 744 744 841 1,035 1,000 1,360 1,453 1,585 1,705 2,151 2, 279 2,302 2,488 2, 647 2, 534 2, 569 1,721 1,783 806 314 93 46 13 - 2 4 3 2 4 6 5 6 11 19 31 54 70 105 217 236 244 395 434 469 399 624 651 663 841 895 1,077 1,046 1,349 1,256 1, 616 1,763 1,728 2,015 2,422 2,530 2, 999 2,899 3,236 3,298 3,395 3, 383 3,112 2,306 1, 387 473 101 49 19 4 3 7 2 5 7 14 22 35 74 148 151 244 295 388 457 570 577 682 616 802 814 1,035 876 1, 236 1,205 1,259 1,236 1,604 1,631 1,752 1,895 2,251 2,085 2,306 2,310 2, 612 2,685 3,460 3,484 3, 716 2,980 2,705 1, 279 446 105 27 6
— — | — ::::::::
1 1 1 3 5 8 13 9 18 24 62 81 70 124 • 163 275 248 298 357 492 426 450 566 651 636 822 791 868 833 1,120 1,306 1,267 1,287 1,748 1,814 1,895 2,031 2,155 2,182 2,476 2,426 2,453 2, 069 1, 662 1,244 686 233 55 23 2 2 4 3 10 16 19 41 66 89 74 89 163 244 318 384 318 438 422 523 481 775 663 829 . 864 977 1,039 1,323 1,325 1,294 1,259 2,042 1,690 2,104 2,213 2,523 2,685 2,957 2, 813 2,964 2,705 2,747 2,306 1,550 709 221 59 14 9 4 - 2 1 5 2 2 7 11 14 21 36 43 66 58 89 124 202 202 244 256 283 329 326 395 380 473 539 612 554 725 698 787 682 984 1,058 1,151 1,209 1,391 1,256 1,387 1, 360 1,635 1,256 1,376 1,383 899 601 236 68 39 16 7 2 x 3~ 2 2 3’ 12 10 13 26 42 101 109 182 213 318 399 446 461 566 620 713 605 864 810 1,019 1,062 1,089 1,066 1,538 1,345 1, 577 1,418 2,000 1,845 2,073 2,069 2,538 2,558 3,007 2,740 3,468 3,065 2,837 2, 732 2,333 1,794 1,201 446 124 35 12 4 - 2 1 3 4 6 11 9 16 23 39 54 78 101 97 174 217 233 264 345 314 496 500 620 659 794 628 740 732 1,097 1,019 1,135 1,108 1,453 1,488 1,597 1,631 1,876 2,000 2,414 2,189 2,837 2,697 3,209 3,077 2,821 2,926 2,310 1, 624 554 198 50 13 6 1 - 3’ 4 14 12 11 18 31 43 44 53 74 132 136 171 155 221 264 291 236 310 388 570 473 461 504 663 674 670 678 837 1,019 1,023 1,031 1,104 1, 201 1,368 1,469 1,825 1, 639 2,007 1,996 2,034 2,096 2,093 1,476 1,201 337 116 31 14 8 2 2 - - 2 2 5 4 7 13 22 39 58 74 .58 66 97 132 136 182 236 275 248 368 298 426 438 543 527 682 562 667 589 806 868 763 1,108 1,132 1,240 1,360 1,228 1,790 1,659 2,000 2,085 2,174 2,329 2,387 2,224 1,748 1,213 450 85 35 17 6 1 4 2 2 3’ 6 7 3 8 16 30 43 70 54 93 112 128 167 81 167 198 225 322 318 376 337 450 465 651 585 577 554 752 763 864 798 965 918 1,178 1,124 1, 620 1,457 1,604 1,976 2,259 2,286 2, 558 2,441 2,492 1,876 1,259 360 112 19 13 2 2 1 2 1 3 4 5 5 9 12 23 47 54 66 70 89 78 100 105 132 174 179 221 256 314 326 318 380 461 364 411 403 581 651 694 814 752 860 872 903 1,194 1,027 1,275 1,399 1,492 1,837 1,833 2,027 1,992 1,856 1, 287 729 236 78 16 5 1 - . 3 4 2 8 6 10 19 23 43 54 46 52 70 78 93 97 155 136 198 147 209 256 329 236 384 349 357 399 512 504 577 554 601 612 806 709 1,023 849 1,004 1,352 1,426 1,593 1,724 1,976 1,752 1,736 1,647 1,259 678 205 50 12 3
— — — — — — —
2
4
3
2
3
2
4
4
8
13
16
17
28
37
51
47
58
62
120
85
105
109
140
163
244
252
229
194
368
337
384
337
403
481
512
504
550
632
566
659
938
744 008 155 178 364
1,589 1,825
1,887 1,887 1,957
1,721 1,209
531
182 35
8
2
1
— — — —
___ — — —
— — -------
— — — — — —
— — — —
— _ - - --
— — — _______ _-
_ __ 1 — — —
— — — 1 — —
— —
1 — — 2 — —
1 _______ — —
2 i 1
1 — — 2 — 4
2 2 2 3 .
2 1 3
5 4 1 3 2 3
2 3 2 4 2 2
3 3
5 4 2 4
3 7 5
3 2 3 4 _
7 4 6 5 2 3
9 8 6 4
13 7 4 7 8 5
21 14 12 11 14 8
29 20 10 15 17 13
35 19 17 13 11 12
43 28 31 21 15 14
52 32 25 23 16 10
48 27 21 24 21 14
47 35 37 22 27 17
59 39 34 28 23 22
50 50 28 35 37 26
66 54 24 23 39 41
89 65 45 62 43 53
97 74 52 43 36 34
124 89 42 46 51 45
163 93 58 47 62 70
124 78 101 50 58 78
209 85 89 78 63 66
217 140 97 89 101 58
186 124 89 120 132 97
186 124 101 159 143 99
205 143 151 97 109 140
275 194 124 132 151 132
252 198 136 120 143 124
310 205 174 178 147 174
298 209 167 163 186 194
349 213 167 171 252 159
306 236 194 221 194 221
322 264 236 205 229 233
329^ 217 229 202 279 275
543 399 349 341 364 399
453 306 182 233 248 310
550 395 314 310 384 329
612 508 376 376 318 331
713 535 368 395 469 407
783 550 450 461 562 508
845 694 438 457 589 558
837 636 574 492 616 562
946 856 543 531 639 589
1,054 752 512 655 709 709
1,128 705 574 639 841 841
895 698 539 632 1, 011 744
705 570 364 670 1,116 1,124
411 403 376 531 1,380 1,170
225 190 167 488 1,170 1,341
54 101 127 322 984 1,197
15 19 43 109 605 1,027
6 14 24 57 233 729
1 3 11 22 85 271
2 1 7 28 70
0 1 3 18
8
____ _- 2
— — — — —
— — — — —
1
3
109
140
101
147
159
333
236
182
89
23
8
15
18
23
21
89
54
89
74
93
112
143
202
174
186
225
314
322
384
434
3
3
4
7
10
1
2
1
3
6
5
26
32
27
48
53
4
5
39
66
85
58
59
2
15
3
1
3
2
5
1
1
1
1847
1848
1849
1850
1851
1852
1853
1854
1855
1856
1857
1858
1859
1860
4
5
5
7
12
11
12
27
26
40
34
41
61
58
83
99
101
129
138
202
181
239
250
300
288
335
334
438
424
460
424
573
617
749
739
775
710
937
875
1, 295
918 1,112 1,158 1,252 1,305
1,330 1,464 1,640
1,666 1,927
1,934 2,224 2,419 2,802 3,051
3,847 3,942 2,166 1,909 1,515
475 177
41 16
2 1
1
1
1
2 3
3
3
7
7
10
9
10
15
14
21
25
25
32
34 .50
45
60
63
75
72
84
84
109
106
115
106
143
154
187
185
194
177
234
219
324
229
278
290
313
326
332
366
410
416
482
484
556
605
700
762
962
986
542 477
379
119
44
10
4
1861
1862
1863
1864
1865
1866
1867
1868
1869
1870
1871
1872
1873
1874
1875
1876
1877
1878
1879
1880
1881
1882
1883
1884
1885
1886
1887
1888
1889
1890
1891
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
Actuarial Valuation • 209
4) to represent the age and service distribution of employees entitled to prior service credit who were in service on December 31, 1938.
Class I railroad reports to the Interstate Commerce Commission showed 943,682 employees on December 15, 1938, and 931,849 on January 15, 1939. Averaging these gives 937,766 on December 31. Increasing this by 16.7 percent to include employees of other than class I railroad employers covered under the act gives a total of 1,094,373 employees in service on December 31, 1938. This of course includes a number of employees not entitled to credit for service prior to January 1, 1937.
The number of employees in service December 31, 1938, who were entitled to prior service credit can be determined only by indirect methods. The total number of cards in groups 3 and 4 above is 265,531. If these were increased proportionally to a figure greater than 1,029,000, the number of employees at the high ages who are entitled to prior service credit would exceed the total number of employees in service at such ages. On the other hand, if the number is less than 1,029,000, there would be a substantial number of employees in service at the higher ages who are not entitled to prior service credit, whereas very few new employees are hired at such ages. Accordingly, the age and service distribution of the 265,531 was increased proportionally to 1,029,000.
The difference between 1,094,000 and 1,029,000 represents employees in service December 31, 1938, who either had no service prior to Japuary 1, 1937, or who were not entitled to credit for it under the act by reason of not being an employee on August 29, 1935. From a small number of prior service forms filled out by such employees (even though they did not claim any prior service credit) and from general considerations, it seemed probable that 80 percent of these were entitled to credit beginning in 1937 and the other 20 percent beginning in 1938. The age distribution of those entering in 1938 can be determined from tabulations of current service cards of employees who had service in 1938 and not 1937. No similar distribution is available for those entitled to credit beginning in 1937, and consequently the same distribution was used as for 1938. The number of employees entitled to credit beginning in 1937 may seem high, but it can be accounted for by two causes: (a) it includes employees who entered service after August 29, 1935, and before January 1, 1937, who therefore are entitled to credit only for service after January 1, 1937, and (6) railroad employment was higher in 1937 than in preceding and following years. In subsequent valuations, the age and service distribution of employees entitled to credit for subsequent service only will presumably be obtained by direct tabulation, but it was not practicable in this case.
After assembling the age and service distribution in the manner described above, it was adjusted slightly at the extreme high ages to bring the number of employees into line with tabulations of all persons employed during 1938 after excluding deaths and retirements; to eliminate the repetition of 4’s that resulted from increasing proportionally the age and service distribution of the prior service cards, and to avoid negative results in the age distribution of inactive and terminated employees. This adjustment had no effect on the over-all averages, but it did change the number of persons slightly from the numbers stated above. The final result is shown in table A-l.
Two previous age and service distributions including a substantial part of the coverage under the act are available for comparison with the distribution as of December 31, 1938. The first of these was compiled from reports of class I railroads to the Association of American Railroads on December 31, 1931. The
210 • An nual Report of the Railroad Retirement Board
second was compiled by the Federal Coordinator of Transportation as of December 31, 1933, from the personnel records of 13 railroads employing about 22 percent of the total number of railroad employees. The first appears to include only the service with the employer on December 31, 1931, and in some cases perhaps only the continuous service with such employer, while the second included an average of 1.0 years of service with previous employers. After the strike in 1922, a substantial number of employees secured employment with a different railroad without giving a record of previous railroad employment. For this reason, the personnel records appear to omit an average of about 1.0 years of service with a previous employer, which means that the total service with previous employers is about 2.0 years. For comparison, the December 31, 1931, distribution should have 2.0 years added to the service and 2.0 years deducted from the age at entry, while the correction for the December 31, 1933, distribution is 1.0 years. A comparison of the percentage distributions by attained age, by length of service, and by age at entry, without any corrections having been made, is shown in table A-2.
TABLE A-2.—Comparison of 3 age and service distributions by attained age, by length of service, and by age at entry
Attained age Length of service Age at entry
Age Dec. Dec. Dec. Service Dec. Dec. Dec. Age Dec. Dec. Dec.
31, 31, 31, 31, 31, 31, 31, 31, 31,
1931 1933 1938 1931 1933 1938 1931 1933 1938
Total-. 100.0 100.0 100.0 Total-- 100.0 100.0 100.0 Total-- 100.0 100.0 100.0
Under 15- 0-4 15.8 5.0 9. 2 11-15 1.6 2.1 2.7
15-19 . 5 .1 .5 5-9 27.1 16.5 6.6 16-20 20.1 24.9 29.1
20-24 5.5 2.7 2.9 10-14- 19.7 25.1 14.7 21-25 28.2 30.1 30.7
25-29 -. 10.3 8.2 5.4 15-19 11.7 17. 5 19.4 26-30 17.6 16.7 17.3
30-34 13.4 12.7 9.7 20-24 9. 5 13. 5 17.4 31-35 12.4 10.9 9.5
35-39 14.6 14.6 13.7 25-29 7.8 10.4 13.1 36-40 8.9 7.4 5.5
40-44 . - .. 15.1 15.7 15.5 30-34 3.9 6.4 10.9 41-45 6.1 4.6 3.1
45-49 14.2 15.9 16.1 35-39 _ „ - 2.0 2.5 5.8 46-50 2.8 2.0 1.3
50-54 10.4 12.4 15.0 40-44 1.7 2.0 1.8 51-55 1.4 .9 .5
55-59 7.6 8.5 11. 3 45-49 .6 .9 .9 56-60 .7 .3 .2
60-64 5.0 5.6 7.3 50-54 .2 .2 .2 61-65 .2 .1 .1
65-69 2. 6 2.8 2.3 66-70
70-74 , 6 _ 6 _ 3 71-75
75-79 . 2 .2 76-80
Average serv-
Average age— 42.5 44.1 45.4 ice 14.5 17.7 20.3 i A ver age age.. 28.0 26.4 25.1
Owing to the fact that about two-thirds of the retirements are affected by the 30-year maximum service credit that applies when any service prior to January 1, 1937, is included, the effect of variations in the initial age and service distribution is limited. To show the effect of variations a number of cost computations have been made that are identical in every respect except for the initial age and service distribution. The scale of benefits is that provided under the Railroad Retirement Act of 1937, and the cost as a percentage of pay roll includes interest on the initial deficit as well as the cost of currently accruing annuity credits.
Age and service distribution Average years of service Average age Cost as percent of pay roll
A _ - 14.5 42.5 8.390
B - . ... 17.7 44.1 9.050
C. . _ 19.3 45.0 9.480
D 20.8 46.3 10.008
Actuarial Valuation
Allowing credit for only 30 years considerably limits the financial effect of a change in average prior service. Increasing the service by 43 percent from 14.5 to 20.8 years results in an increase in cost of only 19 percent.
Age distribution and total service of inactive and terminated employees on December 31, 1938.—As previously stated, the total number of living persons on December 31, 1938, who were entitled to prior service credit was 1,349,403. These are
accounted for as follows:
Total__________________________________________ 1, 349, 403
Retired and receiving annuities_______________________ 89, 898
In active service Dec. 31, 1938----------------------- 1, 029, 094
Inactive and terminated on Dec. 31, 1938-------------- 230, 411
The term “inactive and terminated” is used advisedly because of the fact that a number of the individuals included in this group probably will return to service at a later date.
The Railroad Retirement Act does not provide for the forfeiture of annuity or insurance credits in event of separation from service prior to retirement and it is therefore necessary to include these credits in the valuation. The same rules for crediting service and calculating the amount of annuity or death benefit apply to separations as to those who remain in service to retirement age.
The inactive and terminated group consists of three classes: (a) those having service prior to January 1, 1937, only; (6) those having service prior and subsequent to that date; and (c) those having service subsequent to that date only. It is convenient to obtain the prior service of (a) and (6) separately, and the subsequent service of (6) and (c) together.
The total number of inactive and terminated employees entitled to prior service credit was stated above to be 230,411. As nearly as can be determined, 159,463 of these had no service after January 1, 1937, while the remaining 70,948 did have service after that date. For indications of the age and prior service of these, the Board has only the tabulations of the prior service cards in groups 1 and 2 above. An examination of these groups leads to the conclusion that they are not a fair sample, but are older and have longer service than the whole group of which they are a part. This bias might have been expected since the prior service forms in this case were filled out by persons who had not been in railroad service for some time prior to the date when the forms were distributed. The older employees with longer service probably remain in closer touch with the previous employer than do the younger employees with shorter service, and were more likely to obtain and complete a prior service form.
The 159,463 individuals who had no service after January 1, 1937, include a substantial number of seasonal or short term employees on August 29, 1935, who have a much lower average age than permanent employees. For this reason, the age distribution (reduced in number) of employees separating from service in 1937, as determined from the current service reports was substituted for the age distribution obtained from the prior service cards in group 1 above. The average prior service at each attained age was calculated from the cards in group 1 and applied to the substituted age distribution to obtain the total amount of prior service. The resulting amount of service seemed out of line with the average age of the group, and the amount of service was reduced, the reduction being greater proportionally at the younger ages where the bias in the prior service cards is probably greater. The amount of this reduction may possibly have been somewhat too large.
212 • Annual Report of the Railroad Retirement Board
For the 70,948 employees entitled to both prior and subsequent service credit, the age and service distribution from the cards in group 2 above was used even though the average age and service probably is greater than for the whole group of which it is a part. The number at each age and length of service in group 2 was increased proportionally so that the total became 70,948.
The service rendered prior to January 1, 1937, by inactive and terminated employees has thus been determined. The determination of the amount of service rendered subsequent to January 1, 1937, is an easier matter. The Board has tabulations, by year of birth, of service rendered by all employees in 1937 and 1938, from which the subsequent service of inactive and terminated employees can be obtained by a process of elimination. The tabulated total service rendered in 1937 was 1,392,056 service years and in 1938 was 1,189,679. This may be accounted for as follows:
Service rendered in Total
1937 1938
Total subsequent service years Terminated by: Retirements in 1937 Deaths in 1937 Retirements in 1938 Deaths in 1938 Included in census of active employees Dec. 31,1938 Included in census of inactive and terminated employees 1,392,056 1,189,679 2,581,735
28,738 8,293 27,414 13,089 1,019,431 295,091 15,386 6,820 1,020,727 146,746 28,738 8,293 42,800 19,909 2,040,158 441,837
The amount of service pertaining to each year of birth was determined in this way and the number of persons entitled to subsequent service was determined by a similar process of elimination. The final result appears in table A-3.
TABLE A-3.—Age distribution and total service of inactive and terminated employees Dec. 31, 1938
Year of birth Number of individuals entitled to— Years of service
Total Prior service credit only Prior and subsequent credit Subsequent service credit only Total Prior Subsequent
Total 1,084, 241 159,463 70,948 853,830 1,939,968 1,498,131 441,837
1846
1847
1848 1 2 1 1 2 1 1 2 1 1 2 1
1849...
1850
1851
1852 3 2 9 7 3 2 9 7 2 2 12 8 2 2 12 8
1853
1854
1855
1856
1857
1858 1 16 10 12 7 7 16 26 1 16 10 12 5
1859 17 9 10 48 154 329 536 17 9 10 4
1860
1861
1862 2 7 15 11 44 154 329 522
1863
1864 1 5
1865 10 14
Actuarial Valuation • 213
TABLE A-*3.—Age distribution and total service of inactive and terminated employees Dec. 31, 1938—Continued
Number of individuals entitled to—
Years of service
Year of birth Total Prior service credit only Prior and subsequent credit Subsequent service credit only Total Prior Subsequent
1866 42 15 21 6 914 889 25
1867 74 15 42 17 1,506 1,449 57
1868 245 21 56 168 2,159 U944 215
1869 236 37 99 100 3; 598 3; 409 189
1870 283 86 128 69 5; 395 5; 208 187
1871 319 123 128 68 6,106 5,921 185
1872 435 198 215 22 9; 825 9; 605 220
1873 537 228 228 81 10; 641 10; 354 287
1874 1, 267 276 514 477 19,227 18; 310 917
1875 1,130 298 686 146 23; 415 22, 658 757
1876 1,238 389 586 263 22,138 21,374 764
1877 2i 265 524 772 969 29; 266 27; 711 1,555
1878 2,817 599 1,016 1,202 35,973 34; 103 1,870
1879 3,985 633 1,102 2; 250 39; 432 35', 899 3; 533
1880 .. 4,381 791 1,116 2,474 41,040 37; 779 3,261
1881 4,140 703 1,202 2,235 40, 234 37, 444 2,790
1882 5,696 784 i; 316 3', 596 44', 760 40', 130 4; 630
1883 5,432 849 i; 431 3; 152 46; 403 42,397 4,006
1884 4,791 1,006 i;760 2; 025 53; 243 50; 089 3,154
1885 4,597 i; 137 1; 431 2; 029 45; 693 43', 357 2,336
1886 6, 228 1,558 1,732 2,938 56,746 52,765 3,981
1887 7, 650 1,471 i; 560 4; 619 51, 539 46', 555 4,984
1888 9,827 i; 533 h732 6, 562 55, 246 48; 632 6; 614
1889 9’047 i;260 U846 5; 941 52,287 46.010 6; 277
1890 10, 272 2,427 2,304 5,541 68, 556 62,692 5, 864
1891 9, 881 2,551 1,832 5,498 58,217 52, 821 5,396
1892 13i 514 2,593 2,104 8,817 62,710 55,065 7,645
1893 13,270 2,632 2,032 8, 606 57', 959 5i; 434 6, 525
1894 14, 608 2,861 2,433 9, 314 64,342 56,552 7,790
1895 14,911 3; 116 2; 190 9', 605 59; 441 51,404 8,037
1896 16,398 3, 594 2,175 10, 629 59, 414 50,899 8,515
1897 16,723 3; 275 2; 333 11,115 57; 344 48; 370 8; 974
1898 19,837 3,894 2; 334 13,609 58, 907 48.230 10,677
1899 16; 776 3,505 2, 176 Hi 095 48; 862 41, 508 7', 354
1900 23,131 4, 212 2; 846 16,073 59; 287 49,288 9,999
1901 . _ 18,153 4,092 2,692 11,369 51,488 43,647 7,841
1902 2i; 760 4,393 2, 277 15; 090 47; 071 36; 808 10, 263
1903 20; 686 4; 526 2; 248 13; 912 42; 038 33,881 8; 157
1904 23, 155 4,655 2; 048 16; 452 40; 087 29; 193 10, 894
1905 23; 649 5,310 2; 219 io; 120 39; 019 28; 998 10,021
1906 24,165 5,279 2,062 16, 824 35,081 24,638 10,443
1907 27,331 5; 513 i; 790 20', 028 3i; 637 18; 935 12; 702
1908 28; 435 6; 259 2; 390 19; 786 34; 906 22', 378 12', 528
1909 28,774 6; 274 i; 475 21 025 25; 429 13; 366 12; 063
1910 32; 813 7; 444 1,289 24,080 23; 856 10; 508 13, 348
1911 . 34, 331 8, 069 1,375 24,887 23,973 9,021 14,952
1912 40; 878 9; 549 i; 031 30,298 23,589 5; 568 is; 021
1913 45,920 Hi 935 745 33; 240 22,790 3,427 19; 363
1914.... 50; 212 9; 920 659 39; 633 25; 551 2,340 23; 211
1915 . 54; 266 6,138 587 47, 541 28,347 i;529 26; 818
1916.... 47,378 6,069 229 41,080 18,518 392 18,126
1917 33,483 3,329 186 29,968 13,145 149 12; 996
1918.... 27,419 1,017 100 26,302 13; 153 40 13,113
1919.... 15; 835 351 29 15; 455 5; 022 6 5; 016
1920.... 6, 520 69 29 6,422 1, 616 3 i;ei3
1921.... 2,085 28 2, 057 411 411
1922 576 11 565 99 99
1923... 151 4 147 22 22
1924.... 54 54 7 7
1925.... 12 12 2 2
Unknown 230,097 230,097 40,155 40,155
214 • Annual Report of the Railroad Retirement Board
Age distribution of new employees.—The method employed in calculating costs is to calculate first the level percentage of pay roll necessary to support benefits to a group of new employees, then to calculate the initial deficit for the initial group of employees as the difference between the present value of benefits and the present value of contributions at the rate determined for new employees. The annual interest on the initial deficit is expressed as a percentage of the assumed pay roll and this percentage is added to the percentage for new employees, giving the total rate required permanently to support benefits.
The age distribution of new employees is therefore a matter of considerable importance. The only available age distribution of new employees is one obtained by the Federal Coordinator of Transportation in the survey of 13 railroads previously mentioned. This age distribution includes new employees entering the service of 7 of the 13 railroads in the period 1924-29; new employees on the remaining 6 railroads were not tabulated.
Two other age distributions are available for comparison, though they include a substantial number of employees returning to service in addition to the strictly new employees. The first of these consists of individuals who were reported to the Board as having earnings in 1938 but not in 1937, that is, who were new employees or old employees returning after an absence of at least 1 year. The second of these is a sample of new registration forms received in the latter part of 1939 for the purpose of setting up a wage record under the current service reporting system, representing new employees or old employees who had not been in railroad service for nearly 2 years. A comparison of these distributions with the age distribution of new employees in the Federal Coordinator’s survey, and with the distribution by age at entry of employees in active service December 31, 1938, appears in table A-4.
TABLE A-4.—Percentage age distributions of new or reemployed employees
Age at entry or reentry Federal Coordinator Earnings in 1938 but not in 1937 New account applications Active employees Dec. 31, 1938
New employees 1924-29 Sample, 1939 Age at entry
Total 100.00 100.00 100.00 100.00
15 and under. _ _ . .35 . 12 .08 2.71
16-20 26.85 11.93 15.91 29.12
21-25. . _ 26.38 30.68 32.74 30.72
26-30. . . .. 14.85 17.94 14.80 17.26
31-35... 10.89 12.43 10.12 9.50
36-40 .... 9.19 9.81 8.95 5.46
41-45... 6.69 6. 86 6.76 3.05
46-50 2.07 4.43 4.24 1.34
51-55 1.37 2.88 3.25 .54
56-60 . . .85 1.70 1.51 .20
61-65. ... .29 .77 .97 .07
66-70 .16 .32 .38 .02
71-75. .05 .09 .22 .01
76-80 .01 .04 .07
Average age 27. 62 30.42 29.86 25.13
The average age at entry in the Federal Coordinator’s distribution is lower than for either of the two distributions obtained from the current reporting system, as the two include a substantial number of returning employees who are somewhat older, but it is higher than the average age at entry of the active employees. The higher average age for new employees than for active employees can be explained
Actuarial Valuation • 215
by three causes: (a) the age distribution of new employees may include some returning employees whose previous service was not shown on the personnel records; (&) the lower hiring age limit has been raised over the last 20 or 30 years; and (c) deaths and retirements reduce the average age at entry of those continuing in service.
The financial effect of different age distributions is shown by the following four cost computations which are on an identical basis except for the age distribution used for new employees. The figures include the initial group of employees in addition to the cost for new employees.
Cost as percent
Age distribution for new entrants oj pay roll
Federal Coordinator’s survey, 1924-29___________________________9. 480
New account registrations, 1939.._______________________________9. 585
Earnings in 1938 and not in 1937________________________________9. 621
Active employees, Dec. 31, 1938, by age at entry..._____________9. 363
The substantial decline in railroad employment that has taken place in recent years has resulted in the existence of a considerable body of experienced workers who may be reemployed to fill the vacancies that occur. For some time in the future the proportion of strictly new employees is likely to be low, and therefore the average age of accessions will be higher than the average in the Federal Coordinator’s distribution, but eventually the difference will probably disappear.
In the discussion of withdrawal rates, it is shown that the withdrawal rate has only a negligible effect on the total cost. It is therefore unnecessary to take temporary separations from service into account in the computations, and employees may be assumed to remain in service until final separation. An age distribution of reemployed individuals is therefore not required in the computations.
Salary scale.—As previously stated, the service and earnings for 1937 and 1938 from the current service cards were reproduced on the prior service cards. The prior service cards were sorted by age and length of service, and tabulated to provide material for a salary scale.
The unit of service under the act is a service month. A service month is any calendar month in which an employee has earnings, whatever the amount. Twelve service months, consecutive or otherwise, constitute a service year. The average earnings used in calculating the amount of annuity is the average per service month. No earnings in excess of $300 in any service month are shown on the current service cards, as the excess is not used in calculating the average earnings.
The available material for the construction of a salary scale covered 270,486 employees, 6,105,989 service months, and $907,192,216 of earnings in the calendar years 1937 and 1938, about equally divided between the 2 years. As nearly as could be determined this material was free from bias.
The ungraduated average earnings are shown in tables A-5 and A-6 and the graduated averages in table A-7. The figures shown are 12 times the average earnings per service month rather than the average per service month.
The use of earnings for the 2 years 1937 and 1938 is appropriate, as 1937 was a relatively prosperous year while 1938 was a year of severe recession. A variation is introduced by the wage increase that was granted in the latter part of 1937 and which can be seen in the earnings for 1938; however, the effect is not large.
In the same way that a salary scale is used to represent future earnings, it may sometimes be used to represent earnings in the past. The average earnings applicable to prior service under the act is the average monthly amount earned by the employee during the 8-year period 192F-31. Because of the wage increase granted in 1937, however, it seems advisable to use only 97 percent of the earnings in the salary scale when obtaining earnings for prior service.
216 • An nual Report of the Railroad Retirement Board
TABLE A-5.—Ungraduafed average earnings in 1937 and 1938 by year of birth and by adjusted year of entry
[12 times the average earnings per service month]
Year of birth 1937 1938 Year of entry 1937 1938
1922 $14 $14 1936 $1,035 1,125 1,172 1,172 1,198 1,244 1, 254 1,288 1,304 1, 353 1, 395 1,434 1,473 1, 535 1,644 1,592 1,691 1,688 1, 726 1,802 1,832 1,856 1,857 1,925 1,963 1,988 2,049 2,088 2,093 2,184 2,221 2,232 2,240 2,281 2,345 2, 361 2, 365 2,426 2,418 2,417 2,422 2, 454 2,467 2,492 2, 488 2,576 2,566 2,710 2, 634 2,756 2,622 2,571 2,629 2,568 2, 319 3,067 3,093 3,041 2,790 2,844 $987 1,117 1,177 1,173 1,168 1,222 1,239 1,276 1,292 1,344 1,386 1,424 1,456 1,520 1,622 1,579 1,701 1,695 1,742 1,820 1,841 1,868 1,877 1,943 1,984 2,017 2,083 2,116 2,133 2,228 2,263 2,279 2,290 2, 332 2,395 2,407 2,418 2,483 2,476 2,481 2,477 2,506 2,525 2,536 2,552 2,626 2,617 2,752 2,674 2,795 2,701 2,629 2,666 2,606 2,408 3,045 3,468 2,851 2,880 2.882
1921 1935
1920 517 902 852 963 1,076 1,084 1,116 1,161 1,206 1, 257 1,273 1,329 1,352 1,406 1,451 1,467 1,512 1,569 1,608 1,657 1,629 1,701 1,723 1,740 1,767 1,778 1,799 1,823 1,840 1,892 1,890 1,925 1,888 1,948 1,942 1,939 1,939 1,978 1,939 1,936 1,943 1,960 1,948 1,965 1,944 1,919 1,932 1,937 1,991 1,995 2,080 2,041 2,007 1,993 2,043 1,867 1,808 1,679 1,926 1,689 2,031 1,586 1,785 1, 526 962 672 929 905 982 1,093 1,117 1,128 1,161 1, 217 1, 256 1, 273 1,323 1,354 1,395 1,445 1,462 1,501 1, 563 1,602 1,654 1,631 1,710 1,732 1,746 1,771 1,787 1,816 1,834 1,855 1,908 1,915 1,944 1,910 1,980 1,975 1,967 1,972 2,010 1,965 1,975 1,978 2,004 1,988 1,994 1,986 1,962 1,975 1,981 2,028 2,047 2,123 2,088 2,038 2,035 2,111 1,874 1,800 1,710 1,967 1,655 2,009 1,700 1,736 1,695 1,114 1934
1919 1933
1918 1932
1917 1931
1916 1930
1915 1929
1914... 1928
1913 1927
1912 1926
1911 1925
1910 1924
1909 1908 1923 1922
1907 1921
1906— . . 1920
1905 1919
1904 1918
1903 1917
1902 1916
1901 1915
1900 1914
1899 1913
1898 1912
1897 1911
1896 1910
1895 1909
1894 1908
1893 1907
1892 1906
1891 1905
1890 1904
1889 . 1903
1888 1902 1901
1887
1886 1900
1885 1899
1884 1898
1883 1897
1882 1896
1881 1895
1880 1894
1879 1893
1878 1892
1877. . 1891
1876 . 1890
1875. 1889
1874... 1888
1873 . 1887
1872 1886
1871. 1885
1870. . 1884
1869 . 1883
1868 . 1882
1867 . . 1881
1866 . 1880
1865... 1879
1864 1878
1863 1877
1862 All
1,773 1,793
1861
1860
1859 . .
1858
1857
1856
1855..
1854
1853 3,600 2,452 985 3,600 2,525 1,059
1852
1851
All 1,773 1,793
Actuarial Valuation • 217
TABLE A-6.—Ungraduated average earnings in 1937 and 1938 combined by age and length of service
[12 times the average earnings per service month]
Central age at entry
Duration 13 18 23 28 33 38 43 48 53 58 63 68
y . $906 1,017 1,081 1,139 1,143 1,201 1, 255 1,292 1,310 1,364 1,406 1,445 1,502 1,566 1,628 1,655 1,731 1,779 1,804 1,857 1,926 1,976 2,021 2,044 2,064 2,114 2,161 2,208 2,235 2,285 2,346 2,367 2, 361 2, 360 2,417 2,462 2,459 2,458 2,496 2,517 2,492 2,474 2,498 2,515 2,518 2,573 2,604 2,654 2, 717 2,769 2,802 2,728 2,705 2,687 2,567 2,926 3,260 $1,004 1,101 1,163 1,199 1,222 1,263 1,298 1,317 1,339 1,369 1,446 1,493 1,522 1,580 1,667 1,701 1, 754 1, 795 1,806 1,862 1,913 1,919 1,929 1,970 2,021 2,051 2,098 2,144 2,159 2,208 2,250 2, 263 2,281 2,318 2,364 2,389 2,375 2,417 2,435 2, 402 2,432 2,460 2,474 2,474 2,516 2,560 2,659 2,770 2,654 2, 551 2,872 2,621 $1,063 1,142 1,181 1,217 1,231 1,245 1,260 1,291 1,307 1,336 1,382 1,420 1,459 1,520 1, 610 1,632 1,657 1,691 1,702 1,763 1,788 1,793 1,792 1,814 1,864 1,855 1,881 1,920 1,917 1,969 2,053 2,083 2,092 2,112 2,145 2,191 2,247 2,319 2,384 2,373 2,258 2, 328 2,422 2,569 2,274 1,796 1,683 $1,156 1,174 1,182 1,191 1,202 1,215 1,226 1,244 1,258 1,285 1,327 1,370 1,410 1,441 1,547 1,582 1,567 1,581 1,594 1,629 1,638 1,624 1,600 1,621 1,682 1,693 1, 714 1,746 1,759 1,860 1,907 1,905 1,906 1,981 2,082 2,042 1,993 2,023 2,250 2,352 2,243 1,938 $1,094 1,137 1,134 1,118 1,143 1,169 1,156 1,209 1,237 1,254 1,273 1,283 1,299 1,337 1,453 1,471 1,443 1,475 1,477 1,495 1,495 1, 514 1,470 1,485 1, 531 1,553 1, 548 1,632 1,786 1,831 1,796 1,887 1,888 1,834 1,968 2,378 2,906 2,286 1,362 1,452 $1,127 1,119 1,171 1,160 1,168 1,157 1,154 1,159 1,178 1, 210 1,216 1,247 1,265 1, 297 1, 387 1,389 1,353 1,401 1,417 1,415 1,409 1,471 1,428 1,386 1,444 1,478 1,472 1,634 1,718 1,876 1, 515 1,630 $1,063 1,142 1,163 1,135 964 958 1,088 1,128 1,116 1,150 1,145 1,128 1,200 1,257 1, 343 1,370 1,296 1, 322 1,393 1,442 1,444 1,433 1, 529 1,732 1,594 1,114 1,219 $1,007 972 989 949 1,007 1,091 1,083 1,115 1,102 1,083 1,133 1,127 1,117 1,220 1,350 1,336 1,267 1,330 1,177 1,114 1,039 846 $1,150 1,063 1,116 1,120 1,017 1,035 1,099 1,001 1,025 1,043 1,065 1,036 1,232 1,249 1,048 1,139 1,067 $1,001 836 928 1,031 938 780 554 751 1,033 1,125. 964 1,015
\y2 $362 598 579 716 868 999 1,110 1,127 1,126 1,189 1,201 1,229 1,361 1,453 1,503 1,588 1,632 1,742 1,835 1,835 1,838 1,863 1,938 1,963 2,023 2,110 2,169 2,226 2,227 2, 294 2,299 2,305 2,308 2,325 2,392 2,420 2,452 2,448 2,473 2,529 2,561 2,516 2,523 2,503 2,574 2,549 2,594 2,701 2,624 2,568 2,573 2,647 2,550 2,625 2,752 2,904 2,905 $713 512 1,064 997 370 507
iy
ay2
4^
sy
tiy . .
7'y
sy
gy
wy
liy
i2y
isy
iiy
uy
iey
17'y
isy
igy
wy
2iy
22y
2sy
24j^
25^
26ji
27^
28
29J^
30 y...........
siy
my
33^
34^
35^
36
37J^
38 y
my...........
40^
ny
42^
43^
44^
45M
46^
47J^
48 y
49^
60^
51^
52^
53 y
54^
ssy
ssy
57y
ssy
59J^ 2,870 3,010
60H
61J$
218 • An nual Report of the Railroad Retirement Board
TABLE A-7.—Graduated salary scale 1937-38
[12 times the average earnings per service month]
Duration Central age at entry
13 18 23 28 . 33 38 43 48 53 58 63 68
0 $442 $956 $1,053 $1,098 $1,121 $1,061 $1,114 $1,037 $954 $926 $840 $673
1 . 517 1,002 1,091 1,126 1,140 1,084 1,124 1,046 971 954 855 690
2 592 1,047 1,128 1,153 1,158 1,105 1,133 1,054 988 980 872 705
3 667 1,091 1,164 1,179 1,175 1,124 1,141 1,061 1,005 1,000 893 718
4 742 1,134 1,199 1,205 1,192 1,141 1,149 1,067 1,022 1,018 914 729
5 818 1,177 1,234 1,230 1,207 1,158 1,156 1,072 1,039 1,030 932 738
6 . 894 1,219 1,269 1,254 1, 224 1,176 1,164 1,078 1,055 1,040 946 745
7 969 1,262 1,304 1,280 1,242 1,194 1,173 1,087 1,071 1,052 958 740
8 1,039 1,304 1,341 1,307 1,264 1,214 1,184 1,100 1,089 1,070 969
9 h 105 1, 346 h 379 1,338 1^ 291 1,237 1,199 1,120 1,109 1,092 978 1
10 1,164 1,391 1,421 1,373 1,323 1,262 1,218 1,144 1,132 1,113 984
11 1'221 1337 1', 467 1' 413 1'359 1'290 1342 1', 172 1,158 1,134 986
12 1', 277 1,486 1315 1', 456 1,399 1,321 1,268 1,203 1,185 1,154 987
13 1' 337 h536 1366 1301 1' 441 1,352 1,295 1', 234 1,210 1,176
14 1,402 h 588 1', 617 1' 547 h 481 h 383 1322 i; 265 1329 1,196
15 1,471 1,640 1, 667 1,591 1, 517 1,412 1,347 1,296 1,239 1, 218
16 1, 542 1,692 1,715 1', 633 1,548 1336 1368 h 327 h 239 1,239
17 1, 611 1', 744 ij 760 1'670 h 573 1356 1385 i; 358 1,231 1,260 \
18 1’ 677 1395 1, 800 1’ 703 1', 591 1,470 1' 398 1,388 1,219
19 1 735 1, 844 1,837 1, 732 1,604 1379 1306 1315 1', 208
20 1, 788 1,891 1,872 1, 756 1, 614 1,485 1,413 1,438 1,198
21 1, 836 1,937 1 905 h778 1'622 1', 490 h 419 1,455 h 189
22 1,881 1,981 1,937 1, 797 1,632 1397 1329 1367 i; 181
23 1,926 2 023 1,970 1' 816 1,644 h 510 1345 1,476
24 1,973 2,064 2,004 1,836 1, 661 h 530 1,468 1384
25 2 021 2,105 2 039 1,857 1,683 1, 557 1,497 1,491 )
26 2 071 2,145 2 075 1,880 1, 710 1, 592 1330 1397
27 2 120 2,185 2,112 1,906 1,741 h 632 1365 h 502
28 2 166 2, 224 2,149 1,936 h 776 1' 679 1300
29 2, 208 2 261 2,184 1,968 1,812 1' 731 h 634
30 2 244 2,296 2,218 2,002 1,850 1,790 1,667
31 2 274 2, 328 2 251 2 038 h 887 li855 1, 699
32 2 300 2, 357 2, 281 2 075 1,924 1,925 1,729
33 2 324 2 383 2,309 2 114 1 960 1398
34 2 348 2 407 2 334 2 154 1,995 2,071
35 2 372 2 427 2 357 2 195 2 030 2,144
36 2 397 2 445 2 376 2 236 2 064 2,217
37 2 423 2 459 2, 392 2, 275 2 097 2,290
38 2 448 2 471 2 406 2 306 2 130
39 2,470 2 480 2320 2,328 2,163
40 2 489 2 488 2 434 2, 335 2,195
41 2 506 2 496 2 452 2, 328 2, 226
42 2 520 2 507 2 473 2 309 2 256
43 2 533 2 523 2 499 2 284
44 2 546 2 545 2 529 2 259
45 2 559 2 573 2 561 2 233
46 2 570 2 603 2 594 2 206
47 2 580 2 634 2 626 2 178
48 2 588 2 663 2 658
49 2 594 2’ 689 2 690
50 2 601 2 712 2 722
51 2 611 2 733 2 754
52 2 628 2 754 2 786
53 2 652 2 775
54 2 685 2 796
55 2 723 2 817
56 2 765 2’ 838
57 2 806 2* 859
58 2 847
59 2 887
60 2 927
61 2 965
62 3,000
Actuarial Valuation • 219
By using 97 percent of the earnings in the salary scale for prior service, we obtain the following comparison between actual and theoretical earnings on annuities in force December 31, 1939: 1
Year of birth Number of annuitants Average monthly earnings Percent ratio
Actual Expected
Total 62,798 $153.80 $159.10 96.7
1874-70 33,665 23,790 4, 345 891 153.05 158.90 96 3
1869-65 157.76 158.86 99.3
1864-60 143.45 162.09 88. 5
1859-55 129.08 160.21 80. 6
' 1854-50. 107 132.63 147.60 89.9
Retirements tend to occur mainly among employees with lower than average earnings. This has the double effect of increasing the earnings in the salary scale, which is based on employees remaining in service, and of depressing the average earnings on retirements. This accounts for the small discrepancy between the actual and theoretical earnings.
Except for the wage increase granted in 1937, the general wage level in 1937 and 1938 was much the same as during the period 1924-31. The general reductions that were made during the depression took effect after the end of the 1924-31 period and were restored before 1937. The use of the salary scale with the 3-percent reduction to obtain average earnings for prior service appears to be appropriate.
With respect to inactive and terminated employees, it is convenient to use a different salary scale because of the manner in which these employees have been tabulated and because terminated employees have lower average earnings than continuing employees. The average earnings of inactive and terminated employees in table A-8 was derived from tabulations of earnings in 1937 of employees
TABLE A-8.—Average earnings of inactive and terminated employees
Year of birth 7 Average earnings per service year Year of birth Average earnings per service year Year of birth Average earnings per service year Year of birth Average earnings per service year
1846 .. 1866 .. $1, 610 1,629 1,633 1,623 1,599 1,566 1, 530 1,494 1,462 1,434 1,409 1,386 1,364 1,340 1,316 1,291 1,266 1,241 1, 217 1,194 1886 . $1,172 1,151 1,130 1,110 1,090 1,070 1,053 1,036 1,020 1,004 990 976 964 953 942 932 919 906 890 872 1906 $852 831 810 792 774 758 742 726 706 682 650 617 575 518 434 346 289 251 227 216
1847 1867 ... 1887 1907
1848 $799 883 960 1,030 1,093 1,149 1,198 1,240 1, 278 1, 310 1,341 1, 368 1,395 1,426 1,461 1,500 1, 542 1, 580 1868 1888 1908
1849 1869 1889 1909
1850 1870 . 1890 .. 1910
1851 1871 1891 - 1911
1852 1872 . 1892 . . 1912
1853 1873 1893 1913
1854— 1874 1894 1914
1855-.. 1875 1895 1915
1856... 1876 1896 1916
1857.... 1877 1897 1917
1858.... 1878 1898 1918
1859.... 1879 1899 1919
I860.. . 1880 1900 1920
1861... 1881 1901 1921
1862.. 1882 1902 1922
1863... 1883 1903 1923
1864. 1884 1904 1924
1865— 1885 1905 1925
—
220 • Annual Report of the Railroad Retirement Board
who separated from service in 1937, as shown by the current service cards. This is the only year for which tabulations of terminations were available in time for the valuation.
The majority of inactive and terminated employees were hired after the end of the 1924-31 period used as a base for prior service earnings. Their earnings for prior service probably will be based on their earnings during the period of actual employment, though that is a matter to be determined by the Board when an application for an annuity is filed. The use of table A-8 for the average earnings of this group appears to be reasonable.
Withdrawal rates.—The rates of withdrawal for causes other than death, disability, or retirement in table A-9 are double the withdrawal rates for the period 1925-28 obtained by the Federal Coordinator from the personnel records of 13 railroads. The source of the discrepancy appears to be that personnel records are not maintained for certain classes of employees with high withdrawal rates, and that the procedure followed in the survey omitted a number of withdrawals where records were available.
By applying the withdrawal rates in table A-9 to an age and service distribution of employees in service in 1937 we obtain 473,008 expected withdrawals while the actual number obtained from the current service cards was 519,444 or a ratio of 109.8 percent. The number of withdrawals was obtained from the current service cards by considering as a withdrawal any employee who had earnings in 1937 and not in 1938, excluding deaths and disabilities calculated from mortality and disability tables, and retirements from annuities approved by the Board. Figures are not yet available for any year after 1937.
Withdrawal rates have a negligible effect on the total cost of a retirement system such as the Railroad Retirement Act. To demonstrate this rather unusual result, two computations have been made which are on an identical basis in every respect, except that in one case the withdrawal rates in table A-9 have been used while in the other the rates are 50 percent of those in table A-9. The figures represent the percentage of pay roll required permanently to support the benefits.
50 percent
Table A-9 of table A-9 Total____________________________________ 9. 938% 10. 008%
Retirement annuities:
Nondisability_____________________________ 4. 942 5. 825
Disability________________________________ 1. 513 1. 856
Withdrawal deferred annuities_________________ 2. 676 1. 510
Death benefits_________________________________ . 807 .817
The effect of decreasing the withdrawal rate is a negligible increase in the total cost, indicating that the contributions with respect to withdrawing employees are about equal to the cost of the deferred annuities to which they are entitled. While the total cost is unaffected, the distribution of the cost among the various causes of separation is substantially affected and for some purposes this may be important.
The withdrawal rates in table A-9 are almost identical with the rates obtained in a valuation of the Pennsylvania Railroad pension plan made by Fackler and Breiby. The rates of separation required for the valuation of the Railroad Retirement Act are rates of separation from the entire railroad industry rather than separation from a particular unit in the industry. There is a certain amount of
Actuarial Valuation • 221
shifting of employees from one railroad to another which does not constitute separation from the industry. While the Pennsylvania rates quite properly included these transfers as separations, they are offset by the fact that withdrawal rates on the Pennsylvania are lower than average.
TABLE A-9.—Rates of withdrawal for causes other than death, disability, or retirement
Central age at entry
uurauon 13 18 23 28 33 38 43 48 53 58 63
0 0. 62320 . 29748 . 19536 . 14544 . 11584 . 09624 . 08232 .07192 .06386 .05742 . 05216 .04778 .04408 .04090 .03816 .03576 . 03366 . 03178 . 03010 . 02858 .02722 . 02598 . 02484 . 02380 . 02284 .02196 . 02114 . 02038 . 01968 . 01902 . 01842 .01784 . 01730 . 01678 .01630 .01584 .01542 .01502 .01462 . 01426 .01392 . 01358 . 01326 . 01296 . 01268 .01240 .01214 0. 63580 . 30080 . 19700 . 14646 . 11656 . 09680 . 08276 . 07228 .06416 .05768 .05238 .04798 .04426 .04108 .03832 .03590 .03378 . 03190 . 03020 . 02870 . 02732 .02608 .02494 .02388 .02292 .02204 .02122 .02046 .01976 .01910 .01848 .01790 .01736 .01684 .01636 .01590 .01548 .01506 . 01468 .01430 .01396 .01362 0. 64000 . 29940 . 19540 . 14502 . 11530 .09568 .08178 .07140 .06336 . 05694 .05170 .04736 . 04368 .04054 .03780 .03542 .03332 .03146 . 02980 .02830 . 02694 .02572 .02460 .02356 . 02262 .02174 .02092 . 02018 .01948 .01882 . 01822 . 01764 . 01710 . 01660 . 01612 .01568 . 01526 0. 63580 .29810 . 19468 . 14454 . 11494 . 09540 . 08154 .07120 . 06318 .05678 .05156 . 04722 . 04356 .04042 .03770 .03534 . 03324 . 03138 .02972 .02822 .02688 .02564 .02452 .02350 .02256 . 02168 . 02088 . 02012 . 01944 .01878 .01818 .01760 0. 62320 .29520 . 19340 . 14382 . 11446 . 09506 .08128 .07100 .06302 . 05666 .05146 .04714 .04348 .04036 .03764 .03528 .03318 .03134 .02968 . 02818 .02684 .02562 . 02450 . 02346 .02252 .02166 .02086 . 02010 . 01940 .01876 0.60220 . 28894 . 19008 . 14162 .11284 .09380 .08024 .07012 .06226 .05598 .05086 . 04658 .04298 . 03990 . 03722 .03488 .03282 .03100 .02936 .02788 . 02654 .02534 . 02424 . 02322 . 02228 . 02142 .02064 0.57280 . 27670 . 18240 .13604 .10848 .09020 .07718 .06746 .05990 .05388 .04896 .04484 .04138 .03842 .03584 .03360 . 03160 . 02984 . 02826 .02686 .02556 .02440 0.53500 . 26720 . 17808 . 13352 .10682 .08900 .07628 . 06674 .05932 .05340 .04854 .04450 .04108 .03814 .03560 .03336 .03140 0. 48880 .25502 . 17252 .13034 . 10474 .08754 .07520 .06590 .05866 .05284 .04808 .04410 0.43420 .23598 . 16202 .12334 .09958 .08350 . 07188 0.37140 .20968
1 2
3
4
5...
6
7
8
9
10
11...
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34....
35
36....
37
38
39
40
41
42...
43
44....
45
46...
Disability rates.—The rates of disability in table A-10 are double the permanent and total disability rates in the group life-insurance experience on steam railroad employees for the years 1930-34. This experience is compiled and published privately by the seven largest life insurance companies writing group insurance.
276117—41-----15
222 • Annual Report of the Railroad Retirement Board
TABLE A-10.—Rates of permanent and total disability
Age Rate Age Rate Age Rate Age Rate
13 0.00226 28 0.00370 43 0.00676 58 0.02166
14 .00238 29 .00378 44. .00718 59 .02476
15 .00248 30 .00386 45 .00764 60 .02866
16 .00260 31 .00396 46 .00812 61 . 03362
17 . 00270 32 .00406 47 .00866 62 . 03992
18 .00280 33 .00418 48 .00926 63 . 04798
19 .00290 34 .00432 49 .00986 64 . 05834
20 .00300 35 . 00448 50 . 01046
21 . 00308 36 . 00464 51 .01114
22 . 00318 37 . . 00484 52 . 01198
23 . 00326 38 . 00508 53 .01306
24 . 00334 39 . 00536 54 .01418
25 . 00344 40 . . 00566 55 . 01530
26 .00352 41 . 00600 56 . 01672
27 .00360 42 . 00636 57 . 01872
Using these rates and approximate age and service distributions for 1937, 1938, and 1939, it is possible to get a comparison of actual and expected disabilities for employees with 30 or more years of service and under age 65, and for employees age 60-65 irrespective of service, as such employees are eligible for immediate annuities under the act. Owing to the usual lag in filing and approving disability claims it is necessary to make an allowance for pending applications and for incurred but not yet reported claims, in addition to those already approved. The comparison is as follows:
Year Exposure Expected disabilities Actual disabilities Percent ratio
Approved Additional Total
Total 1937 1938 1939 744,416 17,734 13,969 5,703 19, 672 110.9
7,173 6,812 5,687 119.2 114.6 98.5
252,147 247,138 245,131 6,016 5,944 5,774 6,705 5,539 1,725 468 1,273 3,962
The operation of the act does not provide any disability experience at the lower ages. It is possible that the number of terminations by reason of disability is lower than table A-10 indicates at the lower ages in the absence of immediate annuity benefits. However, if the act were amended to provide immediate annuities at the lower ages, as frequently proposed, it is probable that the disability rates would be in line with the present experience at the higher ages.
Mortality rates.—While the act provides for the payment of a death benefit in event of death before retirement, or after retirement before annuity payments exceed the death benefit, no application is received for this benefit in many instances where it is due, either because the amount is too small, or for lack of an interested party to serve as a claimant. Mortality tables must therefore be obtained from other sources.
The best source for active life mortality is the group life-insurance experience on steam-railroad employees compiled annually by the seven largest insurance companies engaged in this line. The most recent material is for the years 1932-38. This material is confined to policies which were issued without a disability provision.
Table A-ll has been prepared in this office from this material. A comparison of the actual and expected deaths on the basis of this table appears in table A-12.
Actuarial Valuation • 223
TABLE A-11.—Railway employees mortality table and monetary values at 3 percent
Ager L d, D, Nx a ™
13 100,000 205 0.00205 68,095.10 1,807,617.48 15,446, 083 26. 0038
14 99,795 206 . 00206 65,976. 27 1,739,522.38 15,310. 554 25. 8242
15 99, 589 207 . 00208 63,922. 39 1, 673,546.11 15,178. 330 25.6392
16 99,382 209 .00210 61,931. 58 1,609,623.72 15,049. 334 25.4487
17 99,173 210 .00212 60,001. 25 1, 547,692.14 14,922.886 25. 2526
18 98,963 213 .00215 58,130.37 1,487, 690.89 14,799. 533 25. 0506
19 98,750 215 . 00218 56,315. 74 1,429,560. 52 14,678.062 24.8430
20 98, 535 219 . 00222 54,556. 46 1,373,244. 78 14,559. 022 24.6294
21 98,316 223 .00227 52,849.67 1,318,688.32 14,441. 299 24. 4100
22 98,093 229 .00233 51,194.05 1, 265, 838.65 14,324.917 24.1846
23 97,864 235 . 00240 49,586.91 1, 214,644. 60 14, 208. 885 23.9536
24 97, 629 242 .00248 48,027. 02 1,165,057.69 14,093. 281 23.7167
25 97,387 250 .00257 46, 512.62 1,117,030. 67 13,977.700 23. 4739
26 97,137 259 .00267 45,041.94 1,070, 518. 05 13,861. 776 23. 2254
27 96,878 269 .00278 43,613. 41 1, 025,476.11 13,745.177 22.9712
28 96,609 280 . 00290 42,225.57 981,862.70 13,627.603 22.7111
29 96,329 293 . 00304 40,876.83 939,637.13 13, 508.786 22.4453
30 96,036 306 .00319 39, 565. 58 898, 760. 30 13,388.074 22.1740
31 95. 730 321 .00335 38, 290.76 859,194. 72 13, 265. 678 21. 8970
32 95,409 336 . 00352 37,050. 84 820,903.96 13,141.022 21. 6144
33 95, 073 351 . 00369 35,844.99 783,853.12 13,014. 341 21.3262
34 94,722 367 .00387 34, 672. 51 748,008.13 12,885.859 21. 0318
35 _ 94,355 383 . 00406 33, 532.16 713,335.62 12,755.433 20.7315
36 93,972 400 .00426 32,423.35 679,803.46 12, 623. 286 20.4248
37 93,572 417 . 00446 31,345. 03 647, 380.11 12,489. 293 20.1117
38 93,155 436 .00468 30,296.43 616,035.08 12,353.674 19.7919
39 92,719 456 .00492 29, 276.40 585,738.65 12,216.005 19. 4655
40 92,263 477 .00517 28,283.87 556,462. 25 12,076.215 19.1325
41 91,786 501 .00546 27,318.08 528,178.38 11,934. 246 18. 7927
42 91, 285 528 . 00578 26, 377. 62 500,860.30 11,789.478 18. 4464
43 . 90,757 559 . 00616 25,461. 24 474,482. 68 11, 641.351 18. 0938
44 90,198 594 . 00659 24,567.41 449,021.44 11,489. 095 17. 7354
45 89,604 634 . 00708 23, 694. 79 424,454.03 11, 332. 018 17. 3717
46 88,970 680 . 00764 22 841. 89 400,759. 24 11,169. 247 17.0032
47 . 88,' 290 731 .00828 22,007. 08 377,917.35 10,999.751 16. 6308
48 87,559 787 .00899 21,189.19 355,910. 27 10,822. 850 16. 2551
49 86,772 849 . 00978 20, 387. 08 334, 721.08 10, 637.944 15.8766
50 85,923 915 .01065 19, 599. 64 314,334. 00 10,444. 281 15.4960
51 . . 85,008 986 .01160 18,826.13 294,734.36 10,241.647 15.1139
52 84,022 1,060 . 01262 18,065. 82 275,908.23 10,029. 639 14. 7307
53 82,962 1,139 .01373 17,318. 32 257, 842.41 9,808.364 14.3467
54 . 81,823 1,219 .01490 16,583. 07 240,524.09 9,577.523 13.9625
55 80,604 1,303 .01616 15,860. 21 223,941.02 9,337. 664 13. 5780
56 79,301 1,387 .01749 15,149. 35 208,080.81 9,088.744 13.1936
57 77,914 1,474 . 01892 14,450.87 192,931.46 8, 831.494 12.8092
58 76,440 1,562 . 02043 13,764. 55 178,480. 59 8, 566.071 12.4250
59 74, 878 1,651 . 02205 13, 090. 55 164, 716. 04 8, 292.994 12.0411
60 73i 227 1,743 . 02380 12,429. 04 151, 625. 49 8, 012.765 11.6576
61 71,484 1, 838 . 02571 11, 779.78 139,196.45 7,725. 538 11. 2749
62 69, 646 1,937 .02781 11,142. 66 127,416.67 7,431.476 10. 8933
63 . 67,709 2,041 . 03014 10, 517. 24 116,274.01 7,130. 602 10.5139
64 65,668 2,149 . 03273 9,903.13 105, 756. 77 6,822. 807 10.1374
65 63,519 2, 260 . 03558 9,300.01 95,853. 64 6,508.165 9.7651
66 61, 259 2,370 . 03869 8,707.91 86, 553. 63 6,186.908 9.3980
67 58,889 2,478 . 04208 8,127. 21 77,845. 72 5,859.827 9.0367
68 56, 411 2,581 . 04575 7, 558.45 69,718. 51 5,527.802 8.6822
69 53,830 2,675 . 04970 7,002. 53 62,160. 06 5,192.050 8. 3351
70 51,155 2,756 .05388 6,460. 72 55,157. 53 4,854. 206 7.9957
71 48, 399 2,821 . 05828 5,934. 64 48, 696.81 4, 516. 268 7.6638
72 45; 578 2,867 . 06291 5,425. 92 42, 762.17 4,180.436 7.3394
73 42, 711 2,894 .06776 4, 936. 54 37,336. 25 3,849.068 7.0215
74 39; 817 2,900 . 07284 4, 468.02 32,399.71 3,524.321 6.7098
75 36, 917 2, 885 . 07815 4,021.92 27,931. 69 3,208. 380 | 6.4032
76 34; 032 2,878 . 08458 3, 599.63 23,909.77 2,903. 228 | 6.1006
77 31,154 2,851 .09150 3,199.24 20,310.14 2, 607. 683 1 5.8067
224 • Annual Report of the Railroad Retirement Board
TABLE A-11.—Railway employees mortality table and monetary values at 3 percent—Continued
Ager I. dx Dx Nx Mx a ™
78 28,303 2, 798 0.09886 2,821.81 17,110.90 2,323.438 5. 5221
79.. 25, 505 2,725 .10684 2,468. 78 14, 289.09 2,052.603 5. 2462
80 _ 22,780 2,628 .11538 2,140. 80 11,820.31 1, 796. 516 4. 9797
81 _ 20,152 2,508 . 12446 1,838.67 9, 679. 51 1, 556. 737 4.7227
82 17, 644 2,368 . 13419 1, 562.94 7,840.84 1, 334. 573 4.4750
83 15, 276 2,208 . 14454 1,313. 77 6, 277.90 1,130.920 4.2368
84 13, 068 2,034 . 15568 1,091.14 4,964.13 946. 559 4.0078
85 li;034 1,848 . 16751 894.48 3, 872.99 781.673 3.7882
86 9,186 h 654 .18003 722.97 2,978.51 636. 228 3.5781
87 7,532 1,455 . 19320 575. 54 2, 255. 54 509. 843 3.3773
88 6,077 1,261 . 20747 45Q. 83 1, 680.00 401.902 3.1848
89 4,816 1', 071 .22245 346.88 1, 229.17 311. 077 3. 0018
90 3^ 745 892 . 23830 261. 88 882. 29 236.184 2.8274
91 . 2,853 726 .25454 193. 69 620.41 175.625 2.6&14
92 2,127 581 .27292 140. 20 426. 72 127. 771 2. 5020
93 .. _ 1, 546 449 . 29060 98.93 286. 52 90. 590 2.3545
94 097 339 .30909 68.16 187. 59 62. 694 2. 2105
95 758 250 . 32960 45.72 119.43 42.246 2.0705
96 508 178 . 34944 29. 75 73. 71 27. 605 1.9359
97 330 124 . 37689 18. 76 43.96 17.484 1. 8016
98 206 80 . 38899 11.37 25.20 10. 639 1. 6747
99 . 126 54 .42500 6. 75 13. 83 6. 351 1. 5072
100 72 34 .47813 3. 75 7.08 3. 541 1.3463
101 38 18 . 48572 1.92 3. 33 1.823 1.1927
102 20 11 . 56667 .98 1.41 .940 .8971
103 9 9 1. 00000 .43 .43 .416 .4583
TABLE A-12.—Comparison of actual and expected deaths based on group life-insurance experience
Central age Years of exposure Deaths Ratio actual to expected
Actual Expected
Total 1,089,358 14,387 14,360.67 100.2
18 5,274 10 11.34 88.2
23_ _ _ _ _ 35, 561 92 85. 35 107.8
28 72,644 194 210. 67 92.1
33 . _ 116,958 456 432. 74 105.4
38 148, 478 708 696.36 101.7
43-. - - 163,474 975 1, 010. 27 96.5
48 166,612 1,563 1,504. 51 103.9
53.- -_ - . 143,426 1,971 1,982.15 99.4
58 102, 771 2,128 2,121.19 100.3
63 . 68,160 2,088 2,085. 70 100.1
68 40,139 1,883 1,879.31 100.2
73 15,956 1,116 1,119.15 99.7
78 7,138 722 742.35 97.3
83 2,212 352 344.63 102.1
88 _- 498 112 115. 28 97.2
93 55 16 18.70 85.6
98 2 1 .97 103.1
While the group life-insurance experience is almost entirely limited to employees in active service, the mortality table derived from it may be used also to represent the mortality of nondisability retirements. A comparison of actual and expected deaths by this table for nondisability annuitants under the Railroad Retirement Act appears in table A-13. The proportion of female lives in this experience is less than 1 percent.
Actuarial Valuation • 225
TABLE A-13.—Mortality of nondisability annuitants, June 1, 1936, to June 30,1939
Attained age Exposure Actual deaths Expected deaths Ratio of actual to expected
Number Amount Number Amount Number Amount Number Amount
Total 137,927 $8,849, 215 7, 688 $474,914.12 7,606.72 $482, 522.14 101.1 98.4
50 54 63 840 0.86 11.79
55-59 292 10,133 6 224.95 5.71 202.28 105.1 111.2
60-64 3, 997 252,893 88 5,232.86 117.83 7, 541.40 74.7 69.4
65-69 67,896 4,408,983 3, 347 215, 377.07 2,914.44 189,340. 89 114.8 113.8
70-74 50, 552 3, 305, 802 2,832 176,947.83 3,060.41 199, 646. 71 92.5 88.6
75-79 11,715 687,982 1,020 57,425.11 1,039.07 60,872.64 98.2 94.3
80-84 2,934 158,162 313 16,071. 63 377.02 20, 278.64 83.0 79.3
85-89 438 22, 543 70 3,101.62 80.30 4,130. 63 87.2 75.1
90-94 35 1,736 11 531. 01 9.46 446.90 116.3 118.8
95-99 5 141 1 2.04 1.62 50.26 61.7 4.1
Table A-13 includes annuitants who were retired under the act. In table A-14 appears a comparison of actual and expected deaths for nondisability pensioners who retired under the railroad pension plans existing before the passage of the act, and who were taken over by the Board on July 1, 1937. The proportion of female lives in table A-14 is less than 1 percent.
TABLE A-14.—Mortality of nondisability pensioners, July 1, 1937, to June 30,1939
Attained age Exposure Actual deaths Expected deaths Ratio of actual to expected
Number Amount Number Amount Number Amount Number Amount
Total 40,005 $2,379,444 4,179 $234, 608. 26 3,964.59 $227, 288.42 105.4 103.2
■ .
45-49 1 23 0.01 0.22
50-54 16 656 1 50.00 .20 8.54 500.0 585.5
55-59 23 945 .46 19.10
60-64 74 3,948 6 215.10 2.14 113.91 280.4 188.8
65-69 786 48, 308 31 1,977.70 36.88 2, 275.13 84.1 86.9
70-74 ... 10,749 689,696 711 44,899. 71 723.17 46,406. 24 98.3 96.8
75-79 17; 483 1,071,623 1,667 102,046.05 1, 587.96 97,147.79 105.0 105.0
80-84 8,015 440,129 1,118 58,270.43 1,042.23 56, 878. 50 107.3 102.4
85-89 2, 394 106, 829 517 22,810.97 446.98 19,830. 99 115.7 115.0
90-94 419 15, 700 113 3,819. 67 108.87 4,056.46 103.8 94.2
95- 45 1, 587 15 518. 63 15.69 551. 54 95.6 94.0
Table A-ll appears to be satisfactory for use in obtaining deaths in active service and after nondisability retirement. It may be used also to obtain deaths after withdrawal for causes other than disability.
The mortality experience of disability retirements under the act is of too short duration to permit the construction of a disabled life mortality table. The mortality of these disability annuitants may be compared with the select and ultimate mortality rates in table A-15 which were derived from the disabled life mortality under group life insurance. This group life-disability-mortality experience has never been published, but is commented on in Transactions of the Actuarial Society of America, XXXIII, page 337. A comparison of actual and expected deaths by this table on a calendar year basis appears in table A-16. It is evident that table A-15 is not suitable to represent the mortality in this group.
226 • An nual Report of the Railroad Retirement Board
TABLE A-15.—Select and ultimate rates of mortality among disabled lives
Age at disability Duration since disability Attained age 8 and over
0 1 2 3 4 5 6 7
16 0. 336 0.203 0.152 0.120 0. 097 0.080 0.063 0. 049 24 0 037
17 .324 .193 .142 .110 .089 .073 . 057 .044 25 . 034
18 .313 . 184 .133 .101 .082 .067 .052 .040 26 .031
19 .301 .175 .124 .093 .076 .061 .047 .037 27 028
20 .290 .166 .115 .086 .070 .056 .043 .034 28 .026
21 — .279 .157 .106 .079 .064 .052 . 040 .032 29 .025
22.... .268 .149 .098 .073 .060 .048 .038 .030 30 .024
23 .256 . 141 .091 .068 .056 .045 .036 .029 31 .024
24 .246 .134 .085 .064 .053 .043 .035 .029 32 .024
25 .238 . 128 .080 .061 .051 .041 .034 .029 33 .024
26 .229 . 122 .076 .058 .049 .040 .034 .028 34 .024
27 .221 .117 .073 .056 .047 .039 .033 .028 35 .024
28 .215 . 113 .071 .054 .046 .038 .032 .028 36 .025
29 .209 . 109 .069 .052 .044 .037 .032 .028 37 .025
30 .203 . 106 .067 .050 .043 .037 .032 .029 38 .026
31 . 198 .103 .066 .048 .042 .037 .033 .029 39 .026
32 . 194 . 101 .065 .047 .042 .037 .033 .029 40 .026
33 . 191 . 100 .064 .046 .042 .038 .034 .030 41 .026
34 . 188 .099 .064 .046 .042 .038 .034 .030 42 .026
35 . 185 .098 .064 .047 .043 .039 .035 .031 43 .027
36 . 181 .097 .064 .048 .043 .039 .035 .031 44 .027
37 .179 .096 .064 .049 .044 .039 .035 .031 45 .027
38 .176 .096 .064 .049 .044 .039 .035 .031 46 .027
39 .175 .096 .065 .050 .044 .039 .035 .031 47 .028
40 .174 .097 .067 .050 .044 .039 .035 .031 48 .029
41 .174 .099 .069 .051 .045 .040 .035 .031 49 .030
42 .174 . 102 .071 .051 .046 .041 .036 .032 50 .031
43 . 174 . 104 .074 .052 .047 .042 .037 .034 51 .033
44 . 175 .106 .077 .054 .049 .044 .039 .036 52 .035
45 .175 .109 .080 .056 .050 .045 .042 .039 53 .039
46 .175 .112 .083 .059 .052 .047 .045 .043 54 .044
47 . 176 . 115 .085 .062 .054 .050 .048 .048 55 .049
48 .178 .117 .086 .065 .056 .053 .051 .052 56 .053
49 .179 . 118 .087 .068 .059 .056 .054 .055 57 .056
50 .180 .118 .089 .070 .062 .059 .057 .058 58 .058
51 . 181 .119 .091 .072 .065 .062 .060 .060 59 .060
52 . 183 .119 .093 .074 .068 .065 .063 .062 60 .062
53 . 184 .119 .094 .076 .070 .067 .066 .064 61 .065
54 .184 .119 .096 .078 .072 .070 .068 .067 62 .069
55 .184 .120 .098 .080 .075 .073 .071 .071 63 .073
56 .184 .120 .100 .083 .078 .076 .075 .076 64 .077
57 .184 .121 .102 .086 .081 .080 .080 .081 65 .081
58 . 184 .122 .103 .090 .085 .084 .085 .085 66 .085
59 .184 .122 .105 .095 .090 .089 .089 .089 67 .088
60 .184 .123 .107 .099 .094 .093 .093 .092 68 .091
61 . 184 .123 .109 .102 .098 .097 .096 .095 69 .094
62 .184 .124 . 112 .106 .102 . 100 .098 .097 70 .096
63 . 184 .125 .115 . 109 .105 .102 .100 .098 71 .098
64 .184 . 127 .117 .111 .107 .103 .101 .100 72 .099
65 . 183 .129 .118 .112 .108 .104 . 102 .101 73 .101
66 .184 .131 .119 .113 .108 .105 .103 .102 74 .103
67 .184 .132 .120 .114 .109 .106 .104 . 104 75 .106
68 . 184 .132 .120 .115 .110 .107 . 106 .107 76 .110
69 .. .184 .133 .121 . 116 .111 .109 .109 .111 77 .115
70 .184 .134 .122 .117 . 113 .112 .113 .116 78 .122
71 .184 .135 .124 .119 .116 .116 .118 .123 79 .132
72 . 185 .136 . 126 .122 .120 .121 .125 . 133 80 .144
73 . 185 . 137 .128 .125 .124 .127 .133 .144 81 .159
74 ... .. _ . 186 . 138 .130 .128 .129 .134 .144 .159 82 .174
75 . 186 .138 .132 .131 .135 .144 .159 .174 83 .192
76 .186 .138 .134 .135 .144 .159 .174 .192 84 .211
77 . 186 .138 . 135 . 144 .159 .174 .192 .211 85 .236
78 .187 .141 .144 .159 .174 .192 .211 .236 86 .266
79 . 188 . 144 . 159 .174 .192 .211 .236 .266 87 .303
80 .189 .159 .174 .192 .211 .236 .266 .303 88 .347
81 . 190 .174 .192 .211 .236 .266 .303 .347 89 .396
82 . 191 . 192 .211 .236 .266 .303 .347 .396 90 .455
83 . 192 .211 . 236 .266 .303 .347 .396 91 .532
84 .211 .236 .266 .303 .347 .396 92 .634
85 _ . 236 .266 .303 .347 .396 93 .734
86 .266 .303 .347 .396 94 .857
87 .303 .347 .396 95 1.000
88 .347 .396
89 .396
Actuarial Valuation • 227
TABLE A-16.—Mortality of disability annuitants, June 1, 1936, to Dec. 31, 1939
Year of retirement Year of exposure Exposure Actual deaths Expected deaths Ratio of actual to expected
Number Amount Number Amount Number Amount Number Amount
Total.— 29,171 $2.068,440. 75 3,099 $223, 754. 31 4.486. 08 $317,412. 27 69.1 70.5
1936 All 1,993 155,939. 56 242 17,923.07 267. 64 20,903. 61 90.4 85.7
1936 260 20,161. 53 31 2, 091. 57 47.85 3, 706. 72 64.8 56.4
1937 663 51, 672. 52 96 7,166. 76 101. 95 7, 943. 92 94.2 90.2
1938 567 44, 505. 76 64 4,906.01 65.80 5,162.41 97.3 95.0
1939 503 39, 599.75 51 3, 758. 73 52. 04 4,090. 56 98.0 91.9
1937 All 16,008 1,132, 644.91 1,583 112,463. 57 2, 345. 76 165,762.48 67.5 67.8
1937 3,496 247, 531. 52 381 27, 333. 74 642. 71 45, 500. 39 59.3 60.1
1938 6,611 467, 729. 31 710 50, 345. 23 1.016. 67 71, 876.90 69.8 70.0
1939 5,901 417,384. 08 492 34,784. 60 686.38 48, 385.19 71.7 71.9
1938 All 9,189 639,047.82 1,042 76,013. 32 1, 508. 52 104,864.79 69.1 72.5
1938 3,192 222,185.16 386 27, 507. 65 586. 77 40, 843. 39 65.8 67.3
1939 5,997 416,862.66 656 48, 505. 67 921. 75 64,021.40 71.2 75.8
1939 1939 1,981 140,808.46 232 17,354. 35 364.16 25,881.39 63.7 67.1
During 1936 the Railroad Retirement Act was the subject of litigation. As a result, relatively few disability retirements occurred and their mortality corresponded fairly closely to table A—15. In 1937, the litigation was terminated; the number of disability retirements increased and the mortality decreased. In view of the rates of disability that were found to exist in the years 1937-39, the mortality of retirements in these years is not surprising.
Table A-16 excludes disability annuitants who were not in railroad service after January 1, 1936. Under the “employment relation” provision of the act a number of individuals who had been disabled for a considerable period of time were entitled to annuities. The mortality cards show durations computed from the beginning date of the annuity, and in order to prevent the disabilities of long standing from distorting the results, they have been excluded. About 20 percent of the total number of retirements were excluded. Except for these “employment relation” cases, the average interval between date of last employment and the beginning date of the annuity is 4 months.
Where an applicant dies after filing an application and before the application is approved, the claim sometimes is settled as a death claim by the payment of 4 percent of earnings after January 1, 1937. In other cases, the application lapses through lack of an interested party to serve as a secondary claimant. As a result, probably 10 percent of the deaths occurring in the first 6 months are omitted from the exposure and the actual deaths, thereby understating the mortality. This accounts for the lower mortality in the year of retirement.
The disability pensioners taken over by the Board on July 1, 1937, present a problem from a mortality standpoint. In this group, the fact of disability was determined by the railroads rather than by the Board. The standard of disability varied from one railroad to another, and frequently also from one age to another on the same railroad. The result is a heterogeneous composite that cannot be expected to follow any mortality table very closely. A comparison of the actual mortality with the expected according to table A—15 indicates that that table is not suitable.
The aggregate rates of mortality among disabled lives in table A—17 have been obtained by graduating the experience on disabled pensioners for the period July
228 • Annual Report of the Railroad Retirement Board
1, 1937, to June 30, 1939. A comparison of the actual and expected according to this table appears in tables’A-18 and A-19.
TABLE A-17.—Disabled railway employees mortality table and monetary values at 3-perceni interest
Age, I, d, 5* Dx Nt Mx (12 « t
13 2,774,938 645,478 0. 23261 1,889, 596.81 11, 202,153. 91 1, 563,321.9 5.3867
14 2,129,460 442, 736 .20791 1,407,824.34 9, 312, 557.10 1,136, 584.8 6.0732
15 1, 686, 724 314,152 . 18625 i; 082,644.04 7, 904,732. 76 ' 852,409. 3 6. 7597
16 1', 372', 572 229; 727 .16737 ' 855,341. 58 6, 822,088. 72 656,640.2 7.4342
17 i; 142; 845 172,558 .15099 691,439. 51 5,966, 747.14 517,651.7 8.0878
18 970, 287 132,745 .13681 569, 941. 73 5, 275,307. 63 416,292.0 8.7142
19 837', 542 104,383 . 12463 477,638. 48 4 705,365.90 340, 589. 4 9.3096
20 733,159 83,529 .11393 405,932. 54 4,227, 727. 42 282,795.0 9.8732
21 649,630 67,912 . 10454 349,207. 96 3,821, 794.88 237, 894.1 10. 4025
22 581,718 56; 136 . 09650 303,594,55 3,472,586.92 202,451.3 10.8966
23 525,582 46,404 . 08829 266,308.19 3,168,992. 37 174, 007.6 11.3581
24 479; 178 38; 809 .08099 235, 723. 95 2, 902, 684.18 151,179. 9 11.7722
25 440,369 32,468 .07373 210,322.88 2, 666,960.23 132, 644. 5 12.1386
26 407,901 27,407 . 06719 189,141. 65 2, 456, 637. 35 117, 589.2 12.4467
27 380; 494 23,343 . 06135 17i; 294.21 2,267,495. 70 105,250.9 12.6958
28 357,151 20,065 . 05618 156t 102.49 2,096, 201.49 95, 048.2 12.8867
29 337; 086 17', 522 . 05198 143,041.10 1,940, 099. 00 86, 583. 7 13.0216
30 319, 564 15, 489 .04847 131, 656, 21 1, 797, 057.90 79, 314. 9 13.1080
31 304, 075 13; 884 .04566 12i; 626.05 1, 665,401. 69 73,119. 5 13.1511
32 290,191 12,647 . 04358 112,691.90 1, 543, 775. 64 67, 727.8 13.1574
33 277, 544 11, 524 . 04152 104. 641. 30 1,431,083. 74 62,959. 6 13.1344
34 266, 020 10; 643 . 04001 97,375. 29 1,326,442. 44 58,741.3 13.0803
35 255', 377 9,870 . 03865 90, 756. 64 1, 229, 067.15 54,958.9 13. 0008
36 245; 507 9, 238 . 03763 84, 707.77 1,138, 310. 51 51, 553. 4 12.8964
37 236,269 8,725 . 03693 79,146.10 1,053, 602.74 48,458.9 12.7705
38 227.544 8,280 . 03639 74, 003.22 974, 456. 64 45, 621. 3 12.6261
39 219, 264 7,935 . 03619 69, 233.49 900,453.42 43, 006. 8 12.4644
40 211, 329 7,599 . 03596 64k 784. 38 831, 219.93 40, 574. 3 12.2889
41 203, 730 7,416 . 03640 60, 635. 75 766,435. 55 38, 312.6 12.0983
42 196, 314 7,234 . 03685 56, 726. 70 705,799. 80 36,169. 7 11.900.4
43 189, 080 7,064 . 03736 53, 045. 07 649,073.10 34k 140.3 11.6946
44 182,016 6,948 . 03817 49, 576. 06 596, 028.03 32,216. 2 11.4808
45 175, 068 6, 826 . 03899 46,294.81 5'46,451.97 30,378. 9 11.2621
46 168; 242 6; 721 . 03995 43,193.95 500,157.16 28,626.4 11.0377
47 161.521 6,732 . 04168 40, 260. 56 456,963. 21 26,950.9 10. 8085
48 154, 789 6,741 . 04355 37, 458. 78 416, 702. 65 25,321. 8 10. 5826
49 148, 048 6, 755 . 04563 34, 783.88 379, 243. 87 23, 738. 0 10. 3612
50 141, 293 6,795 . 04809 32, 229.92 344, 459.99 22,197. 2 10,1459
51 134,498 6,828 . 05077 29, 786.33 312, 230. 07 20,692. 3 9.9407
52 127, 670 6,853 . 05368 27,450.71 282,443.74 19, 224.2 9.7475
53 120,817 6,818 . 05643 25, 220. 55 254, 993. 03 17,793. 6 9. 5689
54 113,999 6, 651 . 05834 23,104.18 229, 772.48 16,411.8 9.4034
55 107,348 6,460 . 06018 21,122. 54 206, 668.30 15,103.1 9. 2426
56 100,888 6, 257. 9 . 06203 19, 273. 24 185, 545.76 13, 869. 0 9. 0855
57 94', 630.1 6,045.0 . 06388 17, 551. 23 166, 272. 52 12, 708.3 8. 9319
58 88,585.1 5,829.8 . 06581 15,951. 52 148, 721. 29 11,619.8 8. 7817
59 82; 755. 3 5, 584.3 . 06748 14,467. 70 132, 769. 77 10,600. 6 8. 6353
60 77,171. 0 5,343. 3 . 06924 13,098. 47 118, 302.07 9, '652. 78 8.4901
61 71,827. 7 5,099.8 . 07100 11,836.41 105,203. 60 8,772. 26 8.3465
62 66, 727.9 4,857.8 . 07280 10,675.80 93,367.19 7,956. 34 8.2040
63 61,870.1 4, 610. 6 . 07452 9, 610. 28 82, 691. 39 7, 201. 78 8.0628
64 57, 259. 5 4, 359. 7 . 07614 8, 635.08 73,081.11 6, 506.48 7.9216
65 52, 899. 8 4. 093.9 .07739 7, 745. 22 64,446.03 5, 868.16 7. 7791
66 48; 805.9 3, 834. 7 . 07857 6, 937. 71 56, 700.81 5, 286. 22 7. 6312
67 44,971. 2 3, 584. 2 . 07970 6, 206. 43 49,763.10 4, 756.99 7.4763
68 41, 387.0 3,345. 3 . 08083 5, 545.40 43,556.67 4,276. 75 7.3129
69 38; 041. 7 3; 120. 2 . 08202 4,948. 69 38; Oil. 27 3,841. 57 7.1394
70 34; 921. 5 2,910. 7 . 08335 4,410.48 33,062. 58 3,447. 50 6.9547
71 32,010.8 2, 718. 0 . 08491 3,925.13 28,652.10 3, 090.59 6. 7580
72 29, 292.8 2,541.4 . 08676 3,487. 22 24,726.97 2,767.02 6.5491
Actuarial Valuation • 229
TABLE A-17.—Disabled railway employees mortality table and monetary values at 3-percent interest—Continued
Age z lz dz 9 » D z Nz Mz (IS) 0 z
73 26, 751. 4 2,391.8 0.08941 3, 091.93 21,239.75 2,473. 29 6.3277
74 24,359.6 2,253. 5 . 09251 2, 733.49 18,147.82 2, 204.89 6.0974
75 22,106.1 2,126. 6 . 09620 2,408. 35 15,414. 33 1, 959. 39 5. 8587
76 19,979. 5 2,009. 3 . 10057 2,113. 27 13, 005.98 1, 734.45 5. 6128
77 17,970.2 1,900. 0 . 10573 1,845.38 10,892. 71 1,528.12 5.3610
78 16,070.2 1, 820.9 .11331 1, 602. 20 9,047.33 1,338. 69 5.1051
79 14,249.3 1, 732.1 .12156 1,379.28 7,445.13 1,162.43 4.8562
80 12, 517. 2 1, 630. 6 . 13027 1,176.33 6 065.85 999.652 4.6149
81 10,886. 6 1, 515.31 .13919 993. 293 4,889. 52 850.876 4. 3809
82 9,371.29 1,388.17 . 14813 830.128 3,896. 23 716.647 4.1519
83 7,983.12 1, 256.62 . 15741 686. 564 3, 066.10 597. 262 3. 9242
84 6, 726. 50 1,124.40 . 16716 561. 643 2,379. 54 492.338 3.6951
85 5,602.10 997.12 . 17799 454.134 1,817. 90 401.188 3.4613
86 4,604.98 877. 76 . 19061 362.430 1, 363. 76 322. 711 3. 2212
87 3, 727.22 766. 50 . 20565 284.804 1, 001.33 255. 640 2. 9742
88. 2, 960. 72 669.15 . 22601 219. 644 716. 527 198.776 2. 7205
89 2, 291.57 574. 75 . 25081 165.053 496.883 150.580 2. 4688
90 1, 716.82 481.91 . 28070 120.054 331.830 110.389 2. 2223
91 1, 234.91 390. 614 . 31631 83.8393 211. 776 77. 6713 1.9843
92 844.296 302.494 . 35828 55.6509 127.937 51.9243 1. 7573
93 541.802 220.654 .40726 34.6721 72.2860 32. 5665 1. 5432
94 321.148 148.977 . 46389 19.9529 37.6139 18.8573 1. 3435
95 172.171 91. 044 .52880 10.3854 17.6610 9.8710 1.1589
96 81.127 48.890 . 60263 4. 7510 7.2756 4. 5392 .9897
97 32.237 22.116 . 68603 1.8329 2. 5246 1.7594 .8357
98 10.121 7.891 . 77963 .5587 .6917 .5386 .6964
99 2.230 1.971 . 88408 .1195 .1330 .1156 .5713
100 .259 .259 1. 00000 .0135 .0135 .0131 .4583
TABLE A-18.—Mortality of disability pensioners by attained age July 1, 1937, to June 30, 1939
Attained age Exposure Actual deaths Expected deaths Ratio
Number Amount Number Amount Number Amount Number Amount
Total.. 51,916 $2,955,874. 00 5,034 $280,927.57 4,994.19 $281, 651.89 100.8 99.7
35-39 11 267.79 .40 9.83
40-44 49 2,142. 25 4 109.00 1. 82 79.31 219.8 137.4
45-49 324 n; 8n. ii 19 742. 56 13.90 507.80 136.7 146.2
50-54 996 41,478.57 52 1,997.26 53.97 2,253.84 96.3 88.6
55-59 2, 025 92,860.24 125 5,930.74 130.25 5,977.77 96.0 99.2
60-64 3,810 193, 082. 70 271 14,275.41 278.86 14,142.85 97.2 100.9
65-69-.. 9,778 560,270. 04 793 44,993.17 785.00 45,005.07 101.0 100.0
70-74 17,112 1,055, 424.81 1,490 92,084. 76 1,493.15 92,097.29 99.8 100.0
75-79 11, 688 696, 439. 22 1,269 72,613. 20 1, 235.82 73,469.17 102.7 98.8
80-84 4,631 236^ 649.38 '691 34, 530.00 668.43 33,992.97 103.4 101.6
85-89 1, 275 57,941.85 254 11,418.06 254. 70 11,539.49 99.7 98.9
90 and over ' 217 7, 506.04 66 2,233.41 77.89 2,576.50 84.7 86.7
At the lower ages where no experience is available, table A-17 has been extended in such a manner that the immediate annuity values tend to approximate those obtained by using 70 percent of the rates in table A-15, except at the very low ages where they approach 100 percent of table A-15. A comparison of immediate annuity values payable monthly calculated at 3-percent interest appears in table A-20.
While the mortality experience of disability annuitants (as distinguished from disability pensioners) is of too short duration to give much of an indication of the
230 • Annual Report of the Railroad Retirement Board
future mortality of this group, it is evident that table A-15 is not suitable as long as disability rates remain at their present level. If the future mortality is in line with the past experience, then the annuity values by table A-17 are adequate. Table A-17 has therefore been used to represent the future mortality of both disability annuitants and disability pensioners. It is used also to represent the mortality of employees separating from service by reason of disability before they are eligible for immediate annuities.
TABLE A-19.—Mortality of disability pensioners by duration since retirement
Duration Exposure Actual deaths Expected deaths Ratio
Total __ - 51,916 5,034 4,994. 22 100.8
0-7 29,190 2,494 2,464.82 101.2
o 31 4 1.80 222.2
i 217 15 12.17 123.3
2 _ 2,095 193 161.92 119.2
3 ... 4,672 395 378,96 104.2
4 5,432 487 450.87 108.0
5 _ - - 5,582 438 473.07 92.6
6 5,812 481 507.06 94.9
7 . 5,349 481 478.97 100.4
8 and over __ 22,726 2,540 2, 529. 40 100.4
TABLE A-20.—Comparison of disabled life annuity values
Age Table A-17 70 percent of table A-15 Table A-15 Age Table A-17 70 percent of table A-15 Table A-15
20 9. 8732 12. 2303 8.7463 45 11. 2621 11.6080 9.0578
25 12.1386 13. 5692 10.3239 50 10.1459 10.3871 7.9721
30 13.1080 13.9458 10.9409 55 9. 2426 9.4355 7.1830
35 13.0008 13. 5831 10. 7602 60 8. 4901 8. 5180 6.4476
40 12.2889 12.8691 10. 2030 65 7.7791 7.7968 5.9224
Nondisability retirement rates.—The operation of the act yields the necessary data for the construction of nondisability retirement rates for employees who were in service after January 1, 1937. The necessary exposures for constructing retirement rates applicable to persons who terminated service prior to that date are not available at present, though the number of retirements is available.
For the exposures at ages over 65 of employees in service after January 1, 1937, the Board has tabulations compiled from the current reports of service and earnings of individuals covered under the act. The applications for account numbers filed by employees for the purpose of setting up individual wage records gave the year of birth, and this year of birth appears on the punch card which carries the record of earnings. For exposures at ages under 65 where the employee is eligible for retirement only if he has 30 years of service, it is necessary to obtain an approximate percentage of the employees at a given age who have 30 years of service, and apply these percentages to the tabulations of the wage record cards. The approximate percentages are obtained by constructing an age and service distribution in the same manner that the distribution on December 31, 1938, was constructed.
For the number of retirements, the Board has tabulations of annuities approved. To the number of annuities approved must be added an allowance for pending
Actuarial Valuation • 231
and incurred but not yet reported claims. The number approved and the estimated number of additional cases are as follows:
Year Approved Additional Total
All 67,999 6,798 74,797
1937
39,332 19,590 9,077 409 1,012 5,377 39,741 20,602 14,454
1938
1939.
Crude retirement rates for the calendar years 1937-39 are shown in table A-21. The age at retirement has been obtained by subtracting the calendar year of birth from the calendar year of retirement and then deducting one-half year to obtain the age on January 1.
TABLE A-21.—Crude rates of nondisability retirement 1937-39
Age at retirement Crude rate of nondisability retirement
1937 1938 1939 1937-39 1938-39
0.7972 0.8195 1. 0000 0.8613 1.0000
74}4 .7907 .9321 1.0000 .9096 1.0000
73j^ .7868 .9547 1.0000 .8376 .9878
72]^ .8234 .6701 1.0000 .8268 .8335
71H .7414 .7128 .5983 .7136 .6686
70J4 .7356 .5820 .4762 .6524 .5350
69>§ .7434 .6289 .7026 .7028 .6603
68^ .5197 .3953 .2712 .4269 .3403
67^ .4692 .3288 .2566 .3800 .2985
66^ .4250 .3186 .2007 .3326 .2589
65^ .. .4027 .2891 .2458 .3214 .2698
64 .3597 .3974 .3773 .3774 .3873
63^ .0832 .0716 .0230 .0590 .0472
62^ .0372 .0273 .0131 .0254 .0199
61>§ .0185 .0199 .0097 .0161 .0149
60 y-i .0134 .0149 .0069 .0116 .0107
59^ .0097 .0117 .0053 .0088 .0084
During 1937, the first year of full operation of the act, the retirement rate was higher than in 1938 or 1939 due to the pressure of the accumulated number of employees over the retirement age. The rates in 1938 and 1939 are substantially the same, though 1939 is somewhat lower.
The nondisability retirement rates used in constructing the service tables appear in table A-22.
TABLE A-22.—Nondisability retirement rates
Age Rate Age Rate Age Rate Age Rate
60 0.02 .02 .02 .03 64 0.15 .45 .30 .35 68 0. 40 .60 .75 .70 72.. 0.75 .80 .90 1.00
61 65 69 73
62 66 70 74
63 67 71 75
The rates in table A-22 are on a life-year basis instead of the calendar-year basis of table A-21. The rates in table A-22 are based on the crude retirement rates for 1938-39 though obviously they are not derived from them by any mechanical process. By constructing a service table at ages and over, using
232 • Annual Report of the Railroad Retirement Board
the crude retirement rates in table A-21 and mortality rates from table A-ll, it is possible to obtain a comparison between the present values at age 64)4 of 1 per annum payable monthly beginning at retirement based on the crude rates and on the rates in table A-22.
Rates Present value Percent ratio
Table A-22 Crude 1937 Crude 1938 7.9843 100.0
8. 2332 8.0411 103.1 100.7
Rates Present value Percent ratio
Crude 1939 7.7784 97.4
Crude 1937-39 8.0781 101.2
Crude 1938-39 7. 9221 99.2
The financial effect of the use of retirement rates based on a different period apparently would not be large. The pressure of the accumulation of employees over retirement age in 1937 makes it appear inadvisable to use the experience of that year.
A substantial number of age discrepancies are found between the age given on the application for account number and the age proved when an annuity is granted. These discrepancies complicate matters in obtaining retirement rates and have the effect of slightly overstating the rate. They explain the rates of 1.0000 obtained at certain ages.
In the calendar year in which the employee attains age 65, about 85 percent of the retirements occur after the birthday. Retirements at 65 and 70 tend to occur immediately after the birthday but at other ages they are more or less evenly distributed over the interval between birthdays.
Formulas
Service tables.—The service tables were derived from the rates of mortality in active service qx from table A-ll, the rates of disability (iq)x from table A-10, and the probabilities of withdrawal qx from table A-9 by means of the formulas:
(i)
(2)
wx=i‘xq” (3)
The values of qx were derived originally as probabilities and hence their different treatment. At those ages in the service table where an employee is eligible for an immediate annuity on separation from service the nondisability retirement probabilities from table A-22 are used in formula (3).
Amount of annuity.-—The usual procedure of using the salary scale as a rate of increase rather than as an absolute amount cannot be followed in this instance, as the amount of annuity payable under the act depends on the absolute amount of the average earnings. The present values are therefore obtained in dollars per capita rather than as a percentage of the current earnings.
The assumption is made with respect to service rendered subsequent to December 31, 1938, that an employee will receive credit for 11 service months for each year of elapsed time between that date (or the date of employment for new employees) and the date of final termination, excluding service after attaining age 65.
Actuarial Valuation • 233
The figure of 11 months has been derived from the prior service cards by comparing the net service as indicated by the equated date of entry with the elapsed time since the date of original entry. The same figure was obtained in the survey of the Federal Coordinator based on the personnel records of 13 railroads.
With respect to service rendered prior to January 1, 1937, this adjustment is not required. The service prior to January 1, 1937, was tabulated on a net basis in obtaining the age and service distribution of active employees on December 31, 1938. Theoretically, the adjustment should be made for service in 1937 and 1938, but it has been omitted in this instance.
Let S' represent the average earnings of an employee at attained age x who entered at age k and has t years of service prior to January 1, 1939. Then in general
pSp + p > 5, S’ = —*+* \P~ (7)
P ~ °
k+t-8
.97 23 Sr
TX7K Qp — fc+i-15 (8)
Where p>z 13, S’----------g----- v ’
The reason for the 0.97 factor was given previously in the discussion of the derivation of the salary scale.
234 • Annual Report of the Railroad Retirement Board
The act provides that earnings after attaining age 65 shall be included if the effect is to increase Sx. The slope of table A-7 is such that there is in fact no upper limit on x in formulas (4) and (5) except that there is a limit imposed on x in obtaining m.
Let aBx represent the basic annual amount of annuity payable monthly either as an immediate or deferred annuity to an employee separating from service at attained age x and having t years of service prior to January 1, 1939. This basic amount of annuity is subject to reduction in certain classes of retirements before age 65.
If S‘^600, aBx = .02S£(p+?n) (9)
If 1800^S£ >600, = (3+.015&) (p+?n) (10)
If 3600^i>1800, “B^ = (12+.01S‘) (p+m) (11)
when t—0, the factor (p+m) becomes (x—k) where x cannot be assigned a value greater than 65.
Amount of death benefit.—The death benefit provided under the 1937 act is 4 percent of the employee’s earnings after December 31, 1936. For an employee entering at age k and having t years of service prior to January 1, 1939, the death benefit for service to age is
44J Fz—* 1 19
.01 + ±SX +^(Sk+t-2 +^+<-!)
Lfc+t 2 11
44
12 •
(12)
This amount of death benefit is reduced by the amount of annuity payments received by the employee, or if a joint and survivor option has been elected it is reduced by the amounts received by the employee and the surviving spouse. When t~0, Sk+t-2 and Sk+t-i are omitted.
Monetary values.—The monetary values are defined as follows:
waCx = vx+yi-wx-a^ (13)
iaC.x=v^.ix.ai^ (14)
(15)
iiaC>x=v^^-ix.65.x-ii\ai^ (16)
dC‘x=vx+*-d‘x (17)
wAC,x = vx+H-wx-A i (18)
x+M : 68-»-H!l
iAC‘x=vx+ii-ix-A< i _____ (19)
:65— x—ytl
D'x = vxlx (20)
The deferred annuities to employees withdrawing on account of disability are assumed to begin at age 65. For other withdrawals the requirement of the cessation of outside employment is assumed to defer the beginning date of the annuity for 1 year beyond age 65. While in some cases the withdrawing employee may receive a reduced annuity before age 65, the amount of the reduced annuity is sufficiently close to the actuarial equivalent that the additional cost of earlier retirement may be neglected.
Actuarial Valuation • 235
Insurance or annuity values involving a disabled life are taken from table A-17, while active life values are taken from table A-ll. The rate of interest is 3 percent.
Present values of benefits.—The present value at age k + t of the various benefits expressed in dollars per capita are as follows:
NONDISABILITY RETIREMENTS
+^aC^B‘x+ii
D’k+i
(21)
where <3 is 60, or the age on completing 30 years of service, or k + t, whichever is greatest. The age on completing 30 years of service may or may not be A:+ 30 because of the assumption made above that the employee will receive credit for 11 months of service for each year of elapsed time after December 31, 1938. If fc+t>65 the second summation starts at k+t.
DISABILITY RETIREMENTS
Din
(22)
where a is the attained age on completing 30 years of service. If a^60, the first summation disappears while if a 2s 65, the upper limit of the first summation is 64 and the second summation disappears. If fc + i is greater than the lower limit in either summation, the summation starts at k+t.
WITHDRAWAL DEFERRED ANNUITIES
/3—1 7-1
^iaC'x+B'x^ +^iA*C+“B^ k+t___________k+t__________
Dl+t
(23)
where y = a or 60, whichever is less.
DEATH IN ACTIVE SERVICE
k+t_______
D’lcU
DEATH AFTER WITHDRAWAL AND BEFORE RETIREMENT
7-1 £3!
^C^B^ +^AC‘x-dBlx^
k+t___________k+t__________
Dl+t
(24)
(25)
After retirement, the death benefit is reduced by the amount of annuity payments made. The maximum duration of the benefit after retirement is about 30 months. The present value is small and is difficult to calculate, and it has therefore been omitted.
236 • An nual Report of the Railroad Retirement Board
PRESENT VALUE OF 1 PERCENT OF EARNINGS
D’k+i
(26)
GENERAL
The annuity values used in the formulas assume that the annuity begins at retirement and that the first monthly payment is made 1 month after retirement. If we take the date of last employment as the date of retirement there is actually an interval of 1% and 4 months between retirement and the beginning date of the annuity for nondisability and disability retirements respectively. The first payment is made on a pro-rata basis on an average of two-thirds of a month after the beginning date. There is no payment for any part of the calendar month in which the annuitant dies.
GENERAL PROCEDURE
Active employees.—The age and service distribution of employees in active service December 31, 1938, as shown in table A-l was summarized in 5-year groups by age at entry and length of service as shown in table A-23. The present value of future benefits and the present value of 1 percent of earnings were calculated on a dollars per capita basis for the mid-point of each of the age and service groups and multiplied by the number of employees in the group. Employees over the highest age in the service tables were valued as immediate annuities at an average amount of annuity derived from annuities already approved by the Board at the corresponding ages.
TABLE A-23.—Age and service distribution of employees in active service Dec. 31, 1938, in 5-year groups
To allow for the cost of the minimum annuity provision the present value of benefits for nondisability retirement was increased by 0.83 percent. The figure of 0.83 percent was derived from the nondisability annuities in force December 31, 1939, by comparing the actual payment with the formula amount. The amount of annuity calculated from the salary scale exceeds the minimum at every point where the minimum is applicable, but the minimum provision nevertheless results in an increase in cost.
The act contains a provision that in no case “shall the value of the annuity be less than the value of the additional old-age benefit he would receive under title
Completed years of service All Ages Central age at entry
13 18 23 28 33 38 43 48 53 58 63 68 73 78
Total . 0-2 1,094,521 29,688 318, 759 336,112 188,913 104,014 59, 708 33,384 14, 692 5,964 2,178 719 273 91 26
70, 502 61,151 133, 970 196,189 223,196 140, 267 134, 321 85,895 31,931 12, 255 4,462 339 43 271 165 1,416 2,913 7,188 4,760 5,057 3,706 1,697 1,298 1,064 136 17 12,431 10, 917 36, 258 47,971 65, 219 44, 436 46,184 31,486 13, 421 7,439 2,813 160 24 20,037 19, 789 37, 797 53,857 60,939 45,480 47, 238 33,442 13, 743 3,195 557 36 2 11, 796 12, 222 22, 427 35,996 39, 755 24,979 24,141 14,433 2,841 289 27 7 8, 440 7,179 14, 439 23, 703 24, 544 13, 219 9,676 2,583 200 30 1 6,418 4,660 9,918 15,933 14,806 5,953 1, 786 203 27 4 4,657 3, 022 6, 376 9, 658 8,157 1,285 197 30 2 2,845 1,641 3,138 4,680 2, 229 122 29 8 1,875 874 1,616 1,251 313 24 9 2 999 446 479 199 40 9 4 2 465 156 71 21 6 187 49 30 7 59 27 5 22 4
3-7
8-12 13-17
18-22
23-27 28-32 33-37 38-42 43-47 48-52
53-57
58-62
Actuarial Valuation • 237
II of the Social Security Act if his service as an employee after December 31, 1936, were included in the term ‘employment’ as defined therein.” In the opinion of the Board’s general counsel, this language does not incorporate the amendments to the Social Security Act which were adopted subsequent to the enactment of the Railroad Retirement Act. While the cost of this provision does not admit of precise calculation, it was felt that the cost would be negligible and no cost was included for it in the valuation.
Inactive and terminated employees.—The annual amount of annuity per year of service was calculated for each year of birth from table A-8 by taking 2 percent of the first $600 of earnings, 1% percent of the next $1,200, and 1 percent of the next $1,800. This amount of annuity was multiplied by the total number of years of service, both prior and subsequent, giving the total annuity credits for each year of birth. The total annuity credits were multiplied by the present value of an annuity deferred to age 66 calculated from table A-ll. While the inactive and terminated group includes a number of employees who separated from service because of disability and who are assumed in other parts of the valuation to retire at age 65 instead of 66, the great majority in the group consists of active lives. It is impossible on the basis of available information to separate the active and disabled lives, and therefore the active life values were applied to the entire group.
The amount of death benefit per year of service was calculated by taking 4 percent of the amounts in table A-8 and multiplying by the number of years of subsequent service. The total insurance credits for each year of birth was then multiplied by : 66_^~i/,| from table A-ll. At attained ages over 66 no death benefit was included as the assumption had been made that persons at such ages would retire immediately. In obtaining the present values of both the annuity and insurance credits, the employees with unknown year of birth were taken at the average age of those with a known year of birth.
Probably 175,000 or 200,000 of the inactive and terminated employees will return to service at a later date. They will thus accumulate additional annuity and insurance credits and will receive compensation for their services. The present value of the additional benefits and the present value of 1 percent of earnings for the future service of this group has been omitted from the valuation. The result of this omission is a slight understatement of the rate required to support benefits.
Retired employees and surviving spouses.—The present value of annuity benefits to retired employees was obtained from tabulations of annuities and pensions in force by attained age, by multiplication with the annuity values from tables A-l 1 and A-17. An additional amount of $6,000,000 was included to cover future increases in the amount of annuity. About 11,000 of the annuities were in force on a partial approval basis, that is, the annuities had been certified for payment before all of the service had been proved or before some other point affecting the amount of annuity had been cleared up. This practice was followed in order to give the applicant a partial income while an investigation was made as to the remainder. Upon final approval, the future rate is increased and a retroactive adjustment is made which, on the average, covers 10 months. From observations of such matters in the past it was concluded that about 7,500 of the 11,000 partial annuities would be recertified for an average increase of $90 in annual annuity. Multiplying $90 by 7,500 and by the average annuity value applicable to all annuities in force, and adding 10 months’ retroactive adjustment gives a present value of future rate increases of approximately $6,000,000. Of this amount, 276117—41----------16
238 • Annual Report of the Railroad Retirement Board
$840,000 has been allocated to disability annuities and the remainder to nondisability annuities.
The annuities to employees’ surviving spouses resulting from joint and survivor elections which were in course of payment on December 31, 1938, were valued by multiplying the amount of annuity at any attained age by annuity values from table A-ll with a 4-year rate down in age. Nearly all of the survivorship annuitants are female lives while table A-ll represents mortality among male lives. The actual mortality of this group has not yet been investigated.
The present value of survivorship annuities payable in event of future deaths of retired employees on December 31, 1938, has been obtained by taking the present value of the difference between the original and reduced amount of annuity to the employee. This involves the assumptions that the joint and survivor annuities are actuarially equivalent to the single life annuities both at the time of retirement and subsequently. Actually, some of the joint and survivor options for employees retiring under the 1935 act are larger than the actuarial equivalent, and of course the equivalence that existed at the time of retirement on the others does not exist subsequently. The necessary tabulations for a more precise procedure were not available as of December 31, 1938. Another difficulty was the fact that some of the options were calculated on non-Makeham-ized tables. Partial calculations show that the value of the benefit is understated by not more than 2 percent by the method used.
Prior to January 1, 1938, the joint and survivor options could be elected at the time of retirement. Thereafter, an employee was required to elect the option at least 5 years in advance or furnish a medical examination, unless he had filed an election prior to January 1, 1938. A considerable amount of adverse selection resulted on optional annuities beginning prior to 1938. While the matter has not been fully investigated, the excess mortality appears to be in line with the excess mortality on conversions of group life insurance. No allowance for this adverse selection has been made in the valuation. For future retirements, the amount of optional annuity is the actuarial equivalent and no additional cost is involved.
The 1935 act provided that on the death of an annuitant there should be paid 12 monthly installments at one-half of the rate received by the retired employee. This benefit was payable to the surviving spouse, if any, and if none, then to the next of kin if dependent on the annuitant, and if neither of these existed, then no benefit was payable. The experience under this provision is that the benefit is payable in about 90 percent of the cases of death. The present value of this benefit at attained age x is the monthly amount of annuity received by the retired employee multiplied by 5.4 Ax where Ax is taken from table A-ll or table A-17 depending on the cause of retirement. If the employee had elected a joint and survivor optional annuity this death benefit is calculated as one-half of the rate he would have received if he had not made the election. The annuitants under the 1935 act constitute a closed group so this benefit is not involved in future retirements. The death benefits in course of payment December 31, 1938, have been valued as 6 times the monthly rate in force.
New employees.—The cost of benefits to new employees expressed as a percentage of earnings was obtained by use of the foregoing formulas and the age distribution of new employees. If (PB)k represents the present value of all of the various benefits to an employee entering at age k; yk the number of employees entering at age k; and (PE)k the present value of 1 percent of earnings, the cost of benefits as a percentage of earnings is
S(P-B)fc.?7fe
(27)
Actuarial Valuation • 239
where the summations extend over all ages at entry. Since r)k is involved in both the numerator and denominator, the absolute number of new employees is immaterial as far as this result is concerned as long as the relative age distribution remains unchanged.
The increase of 0.83 percent for minimum annuities applied to the present value of nondisability retirement annuities to employees in active service December 31, 1938, has not been applied to new employees. New employees may receive credit for more than 30 years of service while the 0.83-percent increase was derived from annuities in force which were subject to the 30-year maximum. While some of the new employees will no doubt be affected by the minimum, the omission of the increase is offset by the fact that some of the employees in active service December 31, 1938, will receive credit for more than 30 years of service and the cost of the minimum provision to them will be less than the 0.83 percent that was used.
General.—Section 15 (d) of the act requires that the actuarial report “shall also contain an estimate of the reduction in liabilities under title II of the Social Security Act arising as a result of the maintenance of this act and the Railroad Retir-ment Act of 1935.” The reference is to the Social Security Act as originally enacted and not as subsequently amended. The material necessary for the preparation of the estimate could not be obtained and the estimate is omitted.
Results of Calculations
The present value of future benefits to active employees, inactive and terminated employees, and retired employees and surviving spouses as of December 31, 1938, appears in table A-24. The figure for funds on hand is the amount standing to the credit of the railroad retirement account in the statement of the United States Treasury.
TABLE A-24.—Present value of future benefits as of Dec. 31,1938
I. Benefits to active employees: Retirement annuities: (a) Nondisability (b) Disability Withdrawal benefits: (c) Deferred annuities (d) Death benefits (e) Benefits for death in active $2, 146, 211, 708 714, 434, 487 518, 957, 131 34, 674, 020 120, 292, 576 $3, 534, 569, 922
service
2. Benefits to inactive and terminated employees: (a) Deferred annuities (b) Death benefits 149, 270, 470 2, 898, 439 152, 168, 909
3. Benefits to retired employees and surviving spouses: (a) Nondisability annuities (b) Disability annuities (c) Nondisability pensions (d) Disability pensions 467, 343, 714 109, 504, 751 74, 471, 680 101, 162, 461
240 • An nual Report of the Railroad Retirement Board
Survivorship annuities:
(e) In course of payment Dec. 31, 1938__ $8, 507, 993
(f) Prospective benefits for future beneficiaries_____________________________ 9, 052, 704
1935 act death benefit temporary annuities:
(9 17,010
1,649,679 11,187 18,885 31,847
2,197,493 7, 553 38, 511 66,382
1, 353,234 3,937 27,373 51,761
1,717,901 2,873 14,698 33,530
1, 314,534 4,360 18,143 45,234
1,478, 382 6,980 25,690 32,860
l,417„028 5,744 33, 011 50,932
1,447,886 2,930 18,821 26, 795
1,374,480 8, 557 19,273 44,107
1,134, 745 2,280 12, 318 25,664
937,291 10,469 9,025 26,083
1,067,249 6,299 9,699 21,556
959,424 5,041 15,904 42,913
910, 560 4,037 10,428 34,242
813,752 4,922 10,612 28,849
666,927 2,371 18,300 31,559
645,106 1,156 8,860 26,665
644,452 2,027 7,389 15,305
622,867 60,951 8, 760 24, 532
702,447 7,083 4, 724 12,378
672,409 7,835 6,588 21,404
602,137 2,542 4,691 9,919
520,634 3,451 4,649 14,302
608,484 1,223 4,985 13,295
559,554 4,939 5,069 11,372
664,069 4,902 5,911 17,799
505,389 1,019 5,602 15,567
560,716 6,608 6,498 10,209
1 Payments for any month include those arising from new certifications and recertifications from the 21st of the preceding month to the 20th of that month.
’Includes total payments of $17,679 made to temporary pensioners as follows: August 1937, $12,283; September 1937, $5,395.
Retirement Statistics • 247
TABLE C-5.—Annuities and pensions in force: Number and monthly amount payable at end of period by class of benefit, fiscal years 1937-40, and monthly for 1939-40
Period All annuities and pensions Employee annuities Pensions Survivor annuities Death benefit annuities
Number Amount | Number Amount 1 Number Amount Number I Amount | I Number 1 Amount
Fiscal year: 1936-37 7,223 108, 240 132, 239 144, 290 133, 272 134,134 135, 328 136, 400 137, 634 138,820 $466,614 6,708, 316 6,870 62, 870 $433, 047 4, 097,616 115 $4,651 238 $8,916
1937-38 43,914 $2, 554,978 807 31,489 649 24, 232
1938-39. 8, 290, 476 9,119,160 8, 363,866 8, 426, 897 8, 504, 443 8, 578, 481 8, 662, 207 8, 740, 555 90, 185 106, 078 91,488 92, 712 94, 046 95, 472 97, 021 98, 551 5, 896,101 6,953, 664 5, 986,408 6, 071, 013 6,159,122 6, 253, 357 39, 500 2, 305, 770 1, 783 361, 239 771 27,364
1939-40 35,146 2, 061, 717 2, 341 77, 595 725 26,182
1939 July .. 39,184 2, 287, 509 1,836 62, 853 764 27, 095
August 38,820 2, 266, 263 1, 875 63,914 727 25, 705
September 38, 575 2, 252, 608 1,939 65, 633 768 27, 079
October _ _ 38,223 2, 232, 721 1, 970 66, 637 735 25, 764
November 6, 355,676 6, 454,041 37,872 2,213, 312 2,024 68,149 717 25,069
December.. 37, 514 2,192,903 2,064 69, 449 691 24,161
1940
January 139,406 140, 469 141, 273 8, 782, 640 8, 859, 275 8,914,995 8,983,939 9, 044,983 9,119,160 99, 525 6, 518,122 37, 089 2,170, 091 2,107 70, 636 685 23, 790
February 100, 995 6, 618,529 36,630 2,144, 369 2, 149 72, 013 695 24, 362
March 102, 211 103, 523 104, 717 106, 078 6, 699,004 36,181 2,118,466 2, 096, 769 2,198 73, 505 683 24,019
April—, 142, 275 143, 205 144, 290 6,786,880 6, 863,136 35, 785 2,250 74. 835 717 25, 453
May_______________ 35,460 35,146 2, 079, 330 2, 294 76, 135 734 26,381
June 6,953,664 2, 061, 717 2,341 77, 595 725 26,182
1 In a few eases payments on account of the death of a single individual are made to more than one person. Such cases are here counted as single items.
248 • Annual Report of the Railroad Retirement Board
TABLE C-6.—Annuities and pensions certified through June 1940: Number and amount payable 1 for month by class of benefit, monthly, June2l936-June1940
Year and month All annuities and pensions Employee annuities Pensions2 Survivor annuities Death benefit annuities
Number Amount Number Amount 1 । Number Amount Number | | Amount Number Amount
1936 June 4,174 5,137 6,221 7,132 8,089 9,268 10, 633 12, 380 13,916 15,980 19,823 23, 693 82,763 91, 531 98,412 103, 781 108,004 111, 696 114, 721 118,055 119, 750 121, 306 123, 508 125,194 126,834 128,627 129,935 131,431 132, 538 133,834 134,949 136, 462 137,192 137,774 138,858 139, 538 140, 511 141, 309 142,040 142, 770 143, 395 144,182 144, 698 145, 587 145, 577 145, 317 145,125 144, 535 144, 290 $255,005 312,459 375,093 426, 553 483, 285 554, 279 639, 569 749,367 845, 264 981, 863 1, 246,892 1, 505, 836 4,995, 650 5, 562,628 6,013,139 6, 360,891 6,629,316 6,863,627 7,052, 726 7, 272, 725 7, 382,254 7,485, 257 7, 632, 241 7, 750, 510 7,865, 527 7,983,601 8,067, 757 8,168, 272 8,245, 771 8,331,795 8, 408, 453 8, 517,166 8, 567, 239 8,608,814 8, 681,447 8, 727,404 8, 792, 540 8,847,839 8,898, 742 8,952,369 8,999, 946 9,057, 223 9,101, 736 9,172,826 9,175,426 9,164,892 9,161,173 9,131,814 9,119,160 4,094 4,965 5, 952 6,755 7,606 8,668 9,904 11, 443 12,768 14, 622 18, 227 21,842 32, 254 41, 264 48,366 54,023 58,494 62,481 65, 865 69, 678 71, 805 73,834 76, 448 78, 590 80, 612 82, 724 84, 307 86, 064 87, 538 89,102 90, 577 92,491 93, 619 94, 563 96,027 97,013 98, 256 99, 392 100, 396 101,445 102,423 103, 546 104,459 105,736 106,133 106, 248 106,400 106,195 106, 078 $251, 976 305,822 364,681 412,012 464, 913 531, 509 612,013 713, 620 801,683 930,061 1,186, 373 1,435, 593 2,110,879 2, 693,608 3,158,432 3, 524,063 3,809, 594 4,061, 559 4, 273, 282 4, 521,386 4,654, 230 4, 783,478 4,953, 585 5,096, 335 5,232,457 5, 369,679 5,470,161 5, 587, 340 5,686,400 5,790,124 5,888,489 6,020, 554 6,093,815 6,157, 287 6, 252,443 6, 317,351 6, 399,146 6, 474, 663 6,541,141 6,612,887 6, 681, 210 6, 757, 555 6,823, 940 6,918,502 6, 945,408 6,955, 776 6, 970,451 6,961, 323 6, 953, 664 23 44 65 91 125 150 176 219 253 290 336 386 428 507 580 664 769 853 969 1,057 1,115 1,188 1, 263 1,315 1,370 1,427 1,482 1, 530 1,579 1,643 1,696 1, 743 1,795 1,846 1, 884 1,933 1,971 2,007 2,041 2,068 2,108 2,152 2,196 2,233 2, 269 2, 307 2,341 2,343 2,341 $895 1,678 2,578 3,533 4, 767 5, 714 6,570 8,505 9,674 11,266 12, 908 14, 799 16, 579 19, 731 22,337 25, 556 28, 896 31, 839 35, 713 38, 506 40,359 42, 654 45,028 46, 660 48, 389 50,027 51, 520 52,960 54,269 56, 226 57,963 59,402 60,984 62, 624 63, 812 65,255 66,454 67,400 68,402 69,330 70, 629 71, 938 73, 257 74, 387 75, 390 76, 485 77, 637 77, 645 77, 595 57 128 204 286 358 450 553 718 895 1,068 1,260 1, 465 1,581 1,632 1,671 1,671 1, 706 1,706 1,706 1,637 1, 537 1,450 1,350 1,244 1,146 1,114 1,098 1,093 1,074 1,090 1,083 1,069 1,061 1,072 1,058 1,050 1,058 1,045 1,005 994 980 938 924 946 954 926 894 808 725 $2,133 4, 958 7, 833 11,007 13, 603 17,055 20,985 27,241 33,906 40, 536 47,609 55, 443 59,822 61,731 62,856 62,979 64, 533 64, 711 64, 382 61, 490 57, 532 53,829 50,108 46,041 42,183 40,487 40,043 39, 571 38,622 38, 755 38, 542 38,194 37,846 38,180 37, 476 36,732 36, 966 36,727 35, 318 34, 646 34, 205 32, 858 32, 539 33,068 33,445 32, 748 31,806 29,034 26,182
July
August
September
October
November
December
1937 January
February
March April
May
June 48,500 48,128 47, 795 47,423 47,035 46, 656 46,181 45,683 45, 293 44,834 44,447 44,045 43, 706 43, 362 43, 048 42, 744 42, 347 41,999 41, 593 41,159 40,717 40, 293 39,889 39, 542 39,226 38,865 38, 598 38, 263 37,884 37, 546 37,119 36, 672 36, 221 35,836 35,490 35,189 35,146 $2,808, 370 2, 787, 557 2, 769, 512 2,748, 292 2,726, 290 2, 705, 515 2, 679, 348 2,651,341 2,630,131 2, 605, 294 2, 583, 519 2, 561,472 2,542,497 2, 523,407 2, 506,032 2,488, 399 2,466,480 2, 446, 689 2,423, 458 2, 399,014 2, 374, 592 2,350, 721 2, 327, 714 2,308,064 2, 289,972 2, 269,048 2, 253, 879 2, 235, 504 2,213,902 2,194,871 2,171, 999 2,146,868 2,121,181 2,099,882 2,081,278 2,063,810 2,061, 717
July August September October November
December
1938 January February March April May.- __
June
July August September October
November
December
1939 January February March
April May June July
August September
October November
December 1940 January February
March. April
M'ay June
1 New accruals are included at a full month’s rate in the month of initial accrual, although payment may actually have been for only part of the month of initial accrual.
’ Pension payments, under the terms of the 1937 act, do not accrue with respect to a particular month, but are payable “on July 1, 1937, and on the first day of each calendar month thereafter.” For purposes of this table, however, pensions payable as of the first of any month are included with the annuities payable for the preceding month, checks for which are also dated as of the first of the following month.
Retirement Statistics • 249
TABLE C-7.—Retirement payments by class of benefit and State,1 fiscal year 1939-40
In force as of June 30,1940 Lump-sum
State All annuities and pensions Employee annuities Pensions Survivor and death-benefit annuities death benefits certified in 1939-40
Number Monthly amount payable Number 1 Monthly amount payable Number Monthly amount payable Number ’ Monthly amount payable Number fl 3 o a
Total 144, 290 $9,119,160 106,078 $6,953, 664 35,146 $2,061,717 3,066 $103,778 13,370 $2, 111, 590
Alabama-. - 1,736 99,622 25,066 77,830 482,120 1, 491 89,789 19,921 65,323 328, 534 86,494 192 8,223 53 1,609 200 28,459
Arizona 376 273 96 4,864 11,005 148,832 7 281 46 6, 248 20, 479 102,180 18,960
Arkansas California 1,280 7,358 1,007 4,674 225 2,556 485 48 128 1,502 4,753 137 649
Colorado 1,769 115, 223 1,253 27,652 31 1,076 135
Connecticut 1,013 64, 229 46, 687 29,787 672 44,171 29,183 22,301 314 19,113 17,381 27 944 80 14, 800
Delaware 662 401 257 4 121 52 8,022
District of Columbia _ _- 434 311 117 7,221 35, 234 14,114 6 263 52 8, 250
Florida .... 1,707 120,458 114,475 1, 150 84, 203 528 29 1,020 188 28,987
Georgia 1,841 1,506 98,074 264 71 2,286 326 44,830
Idaho 389 25, 571 287 18,984 96 6, 359 6 227 46 7,532
Illinois 10, 701 666,187 8,148 527,575 2,292 129,714 261 8,897 1, 203 195,775
Indiana 5,969 372,958 4,528 291,383 208,875 152,697 133, 430 54,163 45,898 1,313 77,437 46, 260 40,006 25, 586 128 4,138 436 69, 339
Iowa 4,170 258,457 194,811 161, 002 3, 286 783 101 3,320 279 45,868
Kansas-- 3, 221 2,858 2,375 783 63 2,107 243 40, 640
Kentucky 2,292 497 69 1,985 295 47,047
Louisiana .. 1,175 68,387 57,909 178, 536 206,401 890 251 13,150 34 1,073 189 22,333
Maine - 1,052 766 258 11,035 28 975 72 10,349
Maryland 2,768 1,871 126,129 157,760 862 51, 390 35 1,016 204 33, 566
Massachusetts 3,318 2, 427 797 45,267 94 3,373 332 50,054
Michigan . 3,789 239,528 2,761 180,515 942 55,837 86 3,175 335 54,279
Minnesota - 4,342 263,795 3,131 872 196,077 51,432 237,886 42,742 71,441 1,115 64,433 96 3, 284 315 51,080
Mississippi.-, ... . 1,166 4,827 815 64, 510 267 12,126 27 951 130 18,789
Missouri ' 299,760 50,673 106,424 9,843 44,100 345, 789 3,672 1,041 114 57,888 114 3,986 421 68,865
Montana 685 7, 415 34,073 16 515 87 14,876
Nebraska 1,682 158 1,087 568 27 909 157 25,947
Nevada 125 8, 218 38,155 249,013 19, 639 543,466 28 1,428 5 197 26 4,068
New Hampshire. . -New Jersey 717 5,146 458 586 3, 636 314 118 1,425 135 5, 526 93,618 13 85 418 3,157 50 503 6, 688 87, 076
New Mexico 25, 239 719,370 77,112 27, 908 633,960 60, 650 78,396 5,309 9 290 43 6,449
New York. . 11, 282 1, 245 484 9,812 1,008 1,249 20,535 421 8, 209 2,851 147 110 2,461 171 168, 407 222 7,497 1,154 193, 242
North Carolina.... North Dakota Ohio. 1,051 365 7,173 813 67,747 21, 680 478,943 52, 255 58, 291 993,033 17, 225 37,742 20,593 7,939 5,981 148,985 47 9 178 1, 424 247 6,032 204 42 838 27,474 6,488 136,987
Oklahoma... 7,702 24 692 123 18,154
Oregon. . 867 358 19,393 24 711 112 16,273
Pennsylvania 1,382,867 25,624 41,689 24,033 14, 934 271 5,833 130 379,058 308 10,775 1, 295 205,384
Rhode Island 7, 655 20 743 24 4,185
South Carolina South Dakota 707 423 623 351 53 61 2,962 3,189 31 11 984 250 144 35 17,720 5,668
Tennessee 2,627 3,986 601 152,959 257, 540 38,455 31,693 196,032 142,910 131, 700 210, 405 20,081 50,375 2,188 2,963 440 134,274 202, 314 29,346 26,674 150,891 116,429 102.121 170,836 351 15,839 88 2,845 274 40,981
Texas 940 52.236 83 2,989 725 551 88, 452
Utah 144 8,383 17 57 10,196
Vermont 520 416 93 4,641 42, 563 11 376 41 6,394
Virginia 3, 269 2,303 2, 254 3,528 2,439 1,816 1, 676 2,782 754 76 2,577 407 64,624
Washington 430 24,435 57 2,045 181 33,191
West Virginia Wisconsin 543 640 28, 594 36,137 35 106 984 3, 431 208 285 32,136 43, 620
Wyoming ... . 290 205 14,696 35,080 81 5, 269 14, 832 4 115 41 7,028
Outside of Continental United States < 849 559 276 14 463 123 11, 532
1 State of residence at time first check was mailed.
’Does not represent number of individuals receiving annuities. In 2 cases death-benefit annuity payments were made to more than 1 individual and in 130 cases 1 individual received both a survivor and a death-benefit annuity.
* Represents amount certified minus cancelations.
‘ Includes: 16 employee annuities with a monthly amount payable of $889 for Alaska; and 25 employee annuities with a monthly amount payable of $1,374 and 7 lump-sum death benefits amounting to $722 for Hawaii.
250 • Annual Report of the Railroad Retirement Board
TABLE C-8.—Annuities and pensions by class: Number and monthly amount payable for new certifications, terminations by death, and annuities in force,1 fiscal years 1937-40, and monthly for 1939-40 i 2
Period New certifications Terminations by death In force at end of period
Number Amount Number Amount Number Amount
Employee annuities
124,055 $7, 624,727 17,601 $1,131,376
Fiscal year:
1936-37 7,158 445,285 284 17, 414 6,870 $433,047
1937-38 . 58,682 3, 612, 542 2,815 177,693 62,586 4,084,961
1938-39 34,813 2,094,809 7,093 456,935 90,162 5,895,234
1939-40 . 23,402 1, 472,089 7,409 479,333 106,078 6,953, 664
1939
July 1,827 114,194 534 34,538 91, 471 5,985,772
August 1,858 117,411 591 38,569 92,697 6,070,420
September. _ 1,753 109,031 436 27,917 94,031 6,158, 529
October . _ 2,061 127,512 576 36,835 95,460 6,253,132
November . 2,142 135,388 585 38,620 97, 009 6, 355,231
December 2,022 127, 257 565 37,382 98, 539 6,453,596
1940
January 1,681 105,209 687 44,846 99,514 6,517,715
February 2,168 141,936 700 45,117 100,984 6,618,122
March 1,903 121,433 684 44,985 102, 202 6, 698,722
April _______ __ _ 2,094 130,921 768 48,565 103,515 6, 786, 615
May 1,816 111, 312 605 38,832 104,709 6,862,870
June 2,077 130,479 678 43,124 106,078 6,953,664
Pensions
2 48, 500 2 $2,808,370 13,329 $745,545
Fiscal year:
1936-37
1937-38 4,420 244,854 43,914 $2, 554,978
1938-39 4,510 254,490 39,500 2,305,770
1939-40 4,399 246,200 35,146 2,061,717
1939
July 317 18, 225 39,184 2, 287, 509
August 376 21, 790 38,820 2,266,263
September - _ 242 13,443 38, 575 2,252,608
October - -- 347 19,300 38, 223 2,232,721
November _ 358 20,142 37,872 2,213,312
December 358 20,444 37,514 2,192,903
1940 January 423 22,667 37,089 2,170,091
February . 437 24,447 36,630 2,144,369
March _ - 446 25, 628 36,181 2,118,466
April . 395 21,579 35,785 2,096,769
May .. 382 20, 511 35, 460 2,079, 330
June _ - 318 18,019 35,146 2,061, 717
i Figures for new certifications are for the period during which payment was first certified and not for the period during which the annuity began to accrue. Figures for terminations by death are for the period during which notice of death was received and not for the period during which the beneficiary died. In force figures as of any date include only certifications made up to that date, less terminations by death reported by that date; they are also adjusted for terminations other than by death, for reinstatements and for recertifications, items which are not shown in the table.
2 New certifications are not shown for pensioners, since all private pensions transferred to the rolls of the Railroad Retirement Board under sec. 6 of the Railroad Retirement Act of 1937 were first payable as of July 1,1937, regardless of when actually transferred. Practically all of them were transferred by the end of July 1937. The cumulative figure shown is the total transferred under sec. 6.
Retirement Statistics • 251
TABLE C-8.—Annuities and pensions by class: Number and monthly amount payable for new certifications, terminations by death, and annuities in force, fiscal years 1937-40, and monthly for 1939-40—Continued
Period New certifications Terminations by death In force at end of period
Number Amount Number Amount Number Amount
Survivor annuities
CiiTriulativft through June 1940 2,453 $80,690 107 $3,458
Fiscal year:
1936-37 115 4,651 115 $4,651
1937-38 707 27,273 15 533 807 31,489
1938-39 1,008 30,653 31 1,017 1,783 61,239
1939-40 _ 623 18,112 61 1,908 2,341 77,595
1939
July -- 58 1,715 5 102 1,836 62,853
A ugust 45 1,197 6 170 1,875 63,914
September - 70 1,879 5 149 1,939 65, 633
October 33 1,030 3 95 1,970 66,637
November 58 1,664 5 192 2,024 68,149
December _ 45 1,460 3 135 2,064 69,449
1940 January 46 1,319 3 105 2,107 70, 636
February .. 52 1,577 9 229 2,149 72,013
March 53 1,619 5 151 2,198 73,505
April _ - 62 1,643 7 252 2,250 74,835
May 49 1,456 4 140 2,294 76,135
June 52 1,548 6 183 2,341 77,595
Death benefit annuities
4,607 $168,076 3 3,880 3 $142,490
Fiscal year:
1936-37 _ 250 9,380 12 464 238 $8,916
1937-38 . 1,435 53, 518 1,023 38,354 649 24, 232
1938-39 1,720 62,700 1,599 59,847 771 27,364
1939-40 - 1,202 42,477 1, 246 43,824 725 26,182
1939
July. . _ 119 4, 218 126 4,498 764 27,095
August 84 2,846 120 4,251 727 25, 705
September . __ 144 5,099 103 3, 747 768 27,079
October 65 2,266 99 3,625 735 25, 764
November 114 3,955 132 4,660 717 25,069
December 77 2,603 103 3,518 691 24,161
1940 January .. . 86 3,009 92 3,382 685 23,790
February. _ 89 3,349 79 2,799 695 24,362
March . 92 3,104 104 3,485 683 24,019
April ... _ 131 4,723 94 3,208 717 25,453
May. . . 118 4,342 101 3,442 734 26, 381
June 83 2,959 93 3, 202 725 26,182
3 Includes terminations by expiration of 12-month period for which death benefit annuities are payable. Practically all terminations of death benefit annuities are for this reason.
252 • An nual Report of the Railroad Retirement Board
TABLE C-9.—Employee annuities certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable,1 monthly, June 1936-June 1940
Period New accruals 1 2 Terminations by death 3 Payable for the month 4
Number Amount Number Amount Number Amount
Cumulative through June 1940 124,055 $8,094,279 17, 601 $1,131,376 106,078 $6, 953,664
Fiscal year: — — —
1935-36___. 4 095 251,978
1936-37 29 143 1 919 140 935 58 474
1937-38 52 565 3" 381" 846 4 107 260' 080
1938-39._ 23? 691 1", 551’ 605 5 9 62 383 715
1939-40 . 14', 561 989 708 6 597 429 106
1936
June 4 095 251,978 4,094 251,976
July 903 55 764 32 1 918 4 965 305 822
August - - 1 022 6o’ 852 33 1' 981 5, 952 364 681
September - } 356 50’ 478 51 3 099 6 755 412 012
October - - -- - 904 55’ 942 53 3" 052 7 606 464 913
November -- - 1 113 69’ 424 51 2 865 8 668 531 509
Dppp.mhp.r 1 300 84> 274 62 3? 758 g 904 612 013
1937
1 636 107 436 95 5 834 11 443 713 620
February _ _ - - - - f 413 93’ 949 93 5 886 12, 768 801,683
March _ _ ___ _ f 962 135? 604 106 7,160 14 622 930,061
April 3’ 723 263* 389 114 6 978 18, 227 1,186,373
May - - - - 3 739 257 067 125 7 914 21,842 1,435 593
June - - - -- io" 567 684, 956 120 8, 024 32,254 2,110 879
July 9 192 594 042 177 11,311 41,264 2, 693, 608
August - _ - - - 7 330 478 598 220 13 810 48, 366 3,158 432
September - 5? 900 380 377 235 14 851 54 023 3 524 063
October- - - 4? 810 306* 075 326 2QJ 488 58 494 3 809,594
November _ __ _ _ __ 4J 321 273 359 327 21 489 62 481 4 061 559
"Dppath bar __ 2 793 237 228 406 25,349 65,865 4, 273, 282
1938
4 199 271 440 386 23 773 69 678 4, 521,386
February 2 481 154 300 346 21, 505 71, 805 4, 654 230
March 2 446 154, 702 410 25 313 73 834 4, 783 478
April 3 085 198 909 454 28,410 76,448 4, 953, 585
May - - -- - - - - 2 575 170 810 421 27,959 78,590 5,096 335
June - - - - - - 2 428 162, 002 399 25,816 80, 612 5,232,457
July 2, 556 165,468 438 28, 264 82, 724 5,369,679
August - - - 2 047 130 652 449 29 597 84, 307 5 470,161
September - - - - 2 188 144' 398 429 27,416 86 064 5 587,340
October _ 1, 954 129 550 471 30 304 87,538 5, 686,400
November __ 2 104 137,399 534 33 607 89,102 5 790,124
December _ _ . 2,018 133,204 538 34,974 90,577 5,888,489
1939
2,462 167,325 536 35, 008 92,491 6,020, 554
February _ 1,604 102, 739 472 29, 569 93, 619 6 093,815
March -- - 1,553 101, 805 602 38,139 94, 563 6,157,287
April _ - 1,995 129,202 527 34,170 96,027 6, 252,443
May - - - 1,492 97’ 033 495 31,547 97,013 6, 317,351
June -- - - p 718 112,825 471 31,114 98, 256 6, 399,146
July - 1,670 110,117 534 34,983 99,392 6,474,663
August - - 1,454 95, 322 446 28,894 100,396 6 541,141
September - __ 1, 555 104,538 497 32,586 101,445 6, 612,887
October 1, 537 104,698 552 36 059 102, 423 6 68i; 210
November _ __ 1 701 114 813 570 38, 063 103 546 6 757,555
December __ 1,561 108, 713 652 42, 628 104,459 6,823,940
1940
1 958 137,808 660 42,312 105, 736 6, 918, 502
February __ _ - - 1 043 69,425 634 41,733 106,133 6,945,408
March - 839 56,351 715 45,608 106,248 6, 955, 776
April - ... 784 54,420 617 39,056 106,400 6, 970, 451
May - - 459 33,497 603 39, 520 106,195 6.961,323
June 117 7,659 106; 078 6,953, 664
1 The monthly amount payable is, in all eases, the monthly amount to which the annuitant is entitled after any recertifications which may have been made prior to July 1,1940. Since an annuitant is paid only a proportional part of his regular annuity for the month in which the annuity begins to accrue, the monthly-amount payable shown for new accruals may differ slightly from the amount actually paid to these annuitants in the month of accrual.
2 New accruals are shown in the month in which the annuities began to accrue rather than in the month in which they were certified.
3 Only those deaths which had been reported to the Board and on which action had been taken prior to July 1, 1940, are shown. Thus, although terminations are shown in the month of death, all deaths which occurred through June 30,1940, are not included.
4 After adjustments for suspensions, returns to service, recoveries from disability, commuted lump-sum payments, and reinstatements.
Retirement Statistics • 253
TABLE C-10.—Age annuities beginning at 65 years and over certified through June 1940: Number and monthly amount payable for annuities beginning to. accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940
Period New accruals Terminations by death Payable for the month
Number Amount Number Amount Number Amount
Cumulative through June
1940 95,428 $6,159,078 12, 597 $783,241 82, 561 $5,372,138
Fiscal year:
1935-36 3,617 218, 419
1936-37 23,710 1, 521,051 755 45,777
1937-38 40, 891 2,618i 872 2,929 178,829
1938-39 16j 220 1,054,349 4,245 262,389
1939-40 10; 990 ' 746, 385 <668 296,245
1936
June.-- _ ._ . 3,617 218,419 3,616 218, 417
July 762 45,505 28 1,596 4,350 262,326
August 899 52,547 29 1,703 5,218 313,159
September _ 747 42,882 40 2,290 5,924 353, 748
October . __ 787 47,690 46 2,640 6,664 398,764
November _ _ 983 60,040 41 2,284 7,606 456, 557
December 1,138 72,302 54 3,219 8,688 525, 628
1937
January .. 1,409 90, 576 74 4,281 10,021 611,927
February 1,160 74, 638 77 4, 775 11,104 681, 790
March 1,577 105,187 80 5,379 12,600 781, 597
April... ... ... 3,153 217,998 98 5,920 15,652 993,633
May.. 3,067 204,430 94 5,761 18,625 1,192,302
June.. 8, 028 507,251 94 5,923 26, 535 1, 692,481
July . 7,442 486,256 119 6,934 33,854 2,171,801
August 6,016 392, 526 153 8,748 39, 710 2, 555, 681
September 4,798 310, 795 171 10, 667 44, 329 2,855, 842
October . 3,906 247,209 233 14,407 47,991 3,088, 668
November . . 3,442 215,953 234 14, 964 51,194 3, 289, 806
December __ 2,970 184,030 302 18,033 53,854 3,455,631
1938 January 3,282 210,420 283 17,124 56,850 3,649,126
February . 1,737 104,002 241 14,475 58, 337 3, 738, 647
March. .. 1,659 103,332 292 17, 285 59, 699 3,824, 634
April... 2,172 137,807 310 18,625 61, 546 3, 943,630
May 1,763 114,129 305 19, 576 62, 993 4,038,177
June 1,704 112,409 286 17, 986 64, 405 4,132, 627
July _ ... 1,799 114,972 303 18, 847 65, 897 4, 228, 787
August 1,315 82,330 320 20, 221 66,886 4, 290,832
September _ 1,515 99,435 300 18, 550 68,097 4,371, 753
October 1,370 90, 593 335 20, 752 69,125 4, 441, 574
November . 1,468 96,141 394 24,145 70,194 4, 513, 567
December 1,417 93,107 390 24,467 71,215 4, 582, 223
1939
January 1, 794 122,071 374 23,070 72,623 4,681,063
February... . '989 62,080 357 21,105 73, 254 4, 722, 210
March.. 1,004 65,006 434 26, 206 73, 820 4, 760,972
April 1,389 88,443 363 23,125 74, 841 4,826, 347
May 979 63, 512 332 20,177 75,481 4, 869,289
June 1,181 76,655 343 21, 717 76,315 4, 924, 260
July 1,173 76, 881 370 23,832 77,119 4,977,617
August... '965 62,102 298 19,032 77,783 5,020,746
September.. 1,106 75,046 353 22,317 78, 530 5,073,434
October.. 1,120 75,690 387 24, 794 79, 261 5,124,296
November 1,279 85,629 406 26,044 80,130 5,183,835
December.. 1,177 81,826 465 29,364 80, 845 5,236, 572
T mo January 1, 558 109,837 473 29,862 81,917 5,316,108
February.. '818 54,396 454 29,160 82,277 5,341,095
March. 691 46,630 517 32, 255 82,448 5, 355,367
April 699 48,922 442 27, 592 82,699 5, 376,480
May... 404 29,421 425 26, 913 82,639 5,377,214
June 78 5,075 82,561 5,372,138
276117—41----17
254 • Annual Report of the Railroad Retirement Board
TABLE C-11.—Age annuities beginning before 65 years certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940
Period New accruals Terminations by death Payable for the month
Number Amount Number Amount Number Amount
Cumulative through June 1940. 5,043 $319,113 318 $17,179 4,721 $301,666
Fiscal year:
1935 36 120 6,311
1936-37 482 26,103 5 282
1937-38 2,189 137,150 108 4,977
1938-39 1,454 95, 550 103 5,471
1939-40 798 53,998 102 6,448
1936
120 6,311 120 6,311
July 31 1,685 151 7,996
36 1,836 187 9,833
September _______ 23 1,103 209 10,891
October __ 25 1,342 235 12,278
November - 26 1,341 1 74 260 13,545
December 28 1,386 288 14,931
1937
January _ -- 39 2,013 1 48 326 16,896
February 32 1,742 1 48 357 18,590
March 35 2,022 1 33 390 20,512
April - 40 2,378 429 22,834
May 48 2, 467 1 77 477 25,291
June - - 119 6,784 591 31,841
July 248 14,983 4 191 835 46,634
August 205 12,707 3 115 1,037 59,233
September .. _ .. 206 12,376 8 379 1,235 71,230
October 175 10, 544 9 287 1,401 81,486
November - 175 10,797 9 367 1,567 91,916
December... . 181 11,019 10 513 1, 738 102,437
1938
January - _ _ _ 214 13, 423 13 507 1,940 115,387
February _ 94 6,106 9 293 2,026 121,255
March . 152 9, 476 14 781 2,164 129,950
April 200 12,898 12 656 2,350 142,045
May . 175 11,997 8 465 2,517 153,577
June _ 164 10,819 9 420 2,673 164,023
July 157 10,719 12 464 2,818 174,278
August 137 9,153 8 380 2,947 183,051
September _ 140 9,133 11 636 3,076 191,502
October 128 8,725 12 622 3,192 199,605
November ... _ _ 135 8,228 8 356 3,319 207,476
December . .. 123 7,978 2 160 3,440 215,294
1939
January . 156 10, 216 6 290 3,591 225, 251
February _ _ . . 101 6, 388 2 156 3,688 231,345
March 84 5,546 7 356 3,766 236,607
April . 106 6,988 17 918 3,856 242,742
May 89 5,924 11 720 3,932 247,826
June. ... .... 98 6, 548 7 407 4,024 254,035
July _ 80 5,157 1 77 4,103 259,137
August . .. __ 90 6,190 6 311 4,186 264,983
September 90 6, 329 4 255 4,272 271,056
October.. .. 86 5,988 15 940 4, 344 276,134
November.. . 73 4,645 6 511 4,411 280,268
December 104 6,846 12 881 4,505 286, 347
1940
January 106 7, 285 9 502 4,601 293,083
February.. ... . . .. 57 3, 675 11 691 4. 648 296,113
March..' 45 3,033 10 529 4,683 298,618
April 35 2,380 13 745 4,705 300,253
May 32 2; 464 12 886 4, 724 301,779
June .... 3 112 4, 721 301, 666
Retirement Statistics • 255
TABLE C-12.—Disability annuities with 30 years* service certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940
Period New accruals Terminations by death Payable for the month
Number Amount Number Amount Number Amount
Cnmnlnt.ivp. thrmiffh Jimp 1940 17,364 $1, 399,454 3,601 $292,688 13, 713 $1,102, 726
Fiscal year: 358 27, 246 350,269 524,185 339,662 158,089 27,246 8, 574
1936-37 4,402 6,525 4,190 175 12,414 69,015 102, 534 108,723
1937 38 847
1938 39 1,248
1Q8Q-40 1,889 358 1, 331
1936 358 27, 246
July . 110 4 321 464 35,499
August _ - 87 6,468 4 277 547 41,689
September _ _ . 86 6,492 11 809 622 47, 373
October _ 92 6,909 7 412 707 53,870
November 104 8,042 9 506 802 61,406
December 134 10, 585 8 538 928 71, 453
1937 188 14,845 17, 569 20 1,503 1,096 84, 795
February _ _ .. . 226 15 1,062 1,307 101,302
March _ - - - 350 28,395 25 1,747 1,632 127, 950
April 530 43,012 16 1,058 2,146 2,740 169,905
May _ . - 624 50,170 30 2,075 217, 999
June - -- 1,871 149, 203 26 2,101 4,581 364,841
July 866 68, 780 52 4,135 4,710 5, 395 429,486
August . - 785 62,797 58 6,121 487,500
September .. 599 47, 536 43 3, 338 6,678 ' 531,770
October _ ------ 507 41,174 60 5,001 7,124 567,865
November _ __ - _ 501 40, 018 70 5,775 7,554 602,068
December 434 35,406 78 6,317 7,910 631,157
1938 500 40,840 65 5,422 6, 088 8,349 666,801
February - 469 37, 557 77 8,741 698, 270
March _ - 454 35,427 73 6,060 9,121 727,597
April. _ -------- 509 41, 235 97 8,061 7,284 9, 532 760, 700
May.-. - - -_ 479 39,205 89 9, 922 792,560
June.- _ _ - - ------ 422 34, 205 85 6,817 10, 258 819,852
July.. . 429 34,170 98 7,922 10,589 846,099
August.. _ 415 33, 303 93 8,055 10, 906 870,893
September _ _ 370 30,181 91 7,248 11,187 894,033
October. - ---- - . . 295 24,595 93 7,641 11, 388 910,820
November . - __ 347 28,007 99 7,983 11, 635 930, 742
December _. _ _ 341 27, 465 119 9,488 11,858 948,839
Januarv 1939 363 29,871 118 10, 314 12,102 968, 275
February . - 344 28,168 92 7, 582 12, 355 988, 988
March. __ 322 26, 366 129 10,440 12, 545 1,004,733 1,024,934
April _ -_ 357 28, 802 109 8,601 12,793
May.. _ _ _ . . 287 23,134 112 9,188 12,967 1,038, 834
June . _ _ _ ... 320 25,594 95 8, 065 13,192 1,056,363
July . _ . 281 23, 365 112 9,175 13, 363 1,070,658
August -_- _ 275 22,633 103 8,286 13, 535 1,085,029
September _ ---------- 235 19,264 104 8,693 13, 664 1,095, 436
October. __ ... ... 224 19,008 111 8,815 13, 774 1,105, 387
November.. _ __ . . 250 20,969 125 10, 359 13,895 1,115, 639
December 202 17,114 134 10, 905 13,962 1,121, 759
Januarv _ 1940 217 18,048 118 9,889 14,057 1,129, 550
February . 109 9,293 125 10, 381 14,035 1,127,987
March _ . _ 58 4,946 132 10,813 13,960 1,122,019
April ... . 27 2,398 114 9,041 13,868 1,115,063
May 11 1,047 126 10,161 13, 740 1,104, 926
June 27 2,199 13,713 1,102, 726
256 • Annual Report of the Railroad Retirement Board
TABLE C-13.—Disability annuities with less than 30 years* service certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940
Period New accruals Terminations by death Payable for the month
Number Amount Number Amount Number Amount
Cumulative through June 1940. 6,220 $216,632 1,085 $38, 267 5,083 $177,132
Fiscal year:
1935-36
1936-37 549 21,716
1937 38 2,960 101,637 223 7,257
1938 39 1327 62^ 042 366 13,320
1939 40 ' 884 31, 235 496 17,688
1936
In no.
July
Dp.ep.mbpr
1937
January
M ay
549 21,716 547 21, 714
July 636 24,021 2 50 1,180 45,685
August 324 10, 567 6 235 1,498 56,017
September 297 9,669 13 466 1,781 65,220
October — - - . . 222 7,146 24 791 1,978 71, 574
November 203 6,589 14 382 2,166 77,768
December ______ _ 213 6,772 16 484 2,363 84,056
1938
January . 203 6,756 25 718 2,539 90,071
February . . .. 181 6,633 19 647 2,701 96,057
March .. 181 6,465 31 1,186 2,850 101,296
April 204 6,967 35 1,068 3,020 107, 209
May.. 158 5,477 19 632 3,158 112,020
June - - 138 4,568 19 592 3, 276 115,954
July 171 5,607 25 1,030 3,420 120, 513
August _ __ ... 180 5,864 28 938 3, 568 125,383
September 163 5,648 27 981 3,704 130,050
October ... 161 5,636 31 1,287 3,833 134,399
November 154 5,021 33 1,122 3,954 138,337
December . . 137 4,652 27 858 4,064 142,131
1939
January 149 5,165 38 1,333 4,175 145,964
February .... 170 6,102 21 725 4,322 151, 270
March . _ . ... 143 4,886 32 1,135 4,432 154,974
April .. _ 143 4,968 38 1,523 4, 537 158,418
May.. . . 137 4,461 40 1,460 4,633 161,400
June. 119 4,027 26 923 4, 725 164,487
July.. .. ... 136 4, 713 51 1,898 4,807 167, 250
August .. . 124 4,396 39 1,264 4,892 170, 382
September 124 3,898 36 1,319 4,979 172,960
October. .. . . 107 4,010 39 1,508 5,044 175,391
November 99 3, 567 33 1,147 5,110 177,811
December _ _ . ... 78 2,927 41 1,477 5,147 179,261
19JfO January . ... 77 2,636 60 2,057 5,161 179,759
February.. 59 2,059 44 1,499 5,173 180,211
March 45 1,740 56 2,009 5,157 179, 771
April .. . . . .. 23 '719 48 1,676 5,128 178,653
May 12 564 40 li 559 5,092 177, 404
June 9 271 5,083 177,132
Retirement Statistics • 257
TABLE C-14.—Employee annuities certified through June 1940: Number by period of last compensated service 1 and by type of annuity
Period of last compensated service Total Age annuities Disability annuities
65 and over Under 65 30 years' service Under 30 years’ service
Total 124,055 95,428 5,043 17, 364 6,220
1891 95 1 1
1896-1900 3 2 1
1901-05 8 5 3
1906-10 17 9 8
1911-15 44 28 16
1916-20 67 40 27
1921-25 - 257 173 3 10 71
1926 . 150 104 1 9 36
1927 182 137 1 10 34
1928 253 181 3 21 48
1929 . 433 322 9 32 70
1930 857 649 20 53 135
1931.. 1,358 1,010 37 125 186
1932 . 1,462 1,008 43 191 220
1933. 1,418 977 44 207 190
1934. 2,891 1,975 72 526 318
1935.. 7,233 5,520 178 1,092 443
1936 14,699 11,401 422 2,180 696
1937. 46,505 38,173 1,512 5,139 1,681
1938 25,859 18, 299 1, 639 4, 647 1, 274
1939 17,065 12,618 905 2,848 694
January-June 1940 _ _ _ . 3,293 2,796 154 274 69
1935
January. 565 471 9 62 23
February . ._ ... . 311 239 2 47 23
March 383 283 11 55 34
April . .... . 382 274 13 63 32
May .. .... 353 239 11 71 32
June . 418 297 12 69 40
July.. .. . . . . _ . . 424 287 13 81 43
August .. . ... ... - 662 523 12 92 35
September. _ 913 722 26 128 37
October.. .... ... 872 682 21 120 49
November . . ... ... 867 658 19 139 51
December.. 1,083 845 29 165 44
1936
January ... . . .. 993 731 44 161 57
February ._ .. . ... 966 752 28 142 44
March ' .... 946 700 33 161 52
April... _. _ 976 729 34 156 57
May. ... . . . 1,337 1,070 23 184 60
June . _ . __ .. 1,076 817 38 177 44
July 1, 278 1,050 27 156 45
August. ___ _ 1, 252 1,004 31 167 50
September. _ 1,091 856 24 160 51
October ... 1, 336 1,019 46 206 65
November .. . . .. 1,539 1,172 53 232 82
December _ 1,909 1, 501 41 278 89
1937
January ... . _ _ .... 1,604 1,183 48 283 90
February... . . ... 1,384 1,032 41 231 80
March ........... 1,875 1,420 45 314 96
April 2,249 1,748 55 327 119
May. .... 2,871 2,271 65 403 132
June... ... 6,456 5,712 143 472 129
July . ... 8,036 7,011 207 612 206
August 5,585 4,656 192 558 179
September .. . ... 4,727 3,952 177 462 136
October . 3,847 3,100 154 443 150
November.. ... 3,348 2,529 167 473 179
December 4,523 3,559 218 561 185
1 For an employer under the act.
258 • An nual Report of the Railroad Retirement Board
TABLE C-14.—Employee annuities certified through June 1940: Number by period of last compensated service1 and by type of annuity—Continued
Period of last compensated service Total Age annuities Disability annuities
65 and over Under 65 30 years’ service Under 30 years’ service
1938
January _ ._ _ _ 2,611 1,762 162 533 154
February.- _ 2,019 1,406 109 391 113
March 2, 710 1,899 181 491 139
April _ ... 2,447 1,723 177 424 123
May. .. . 2,380 1,646 168 443 123
June ------ _ . ------- 2, 291 1,662 128 392 109
July . 1,809 1,246 135 326 102
August ... - -- --- -- 1,814 lj 300 116 319 7 !
September _ _ 1,827 1,298 119 325 85
October. 1,756 1,275 94 311 76
November - __ - 1,801 1,262 113 333 93
December 2,394 1,820 137 359 78
1939
January. _ . . . 1, 411 924 80 327 80
February . .... . ... 1,252 856 67 264 65
March . _ ._ ._ 1,479 1,061 73 268 77
April.. . . 1,517 1,078 85 294 60
May . ... 1, 440 1,005 78 273 84
June. -. _. _. .. 1,490 1,130 76 225 59
July . 1,285 922 72 233 58
August . _. _. . 1,249 921 64 204 60 1
September _ .... 1,322 1,034 71 172 45
October ... 1, 433 1,089 78 230 36
November ...... .. b 246 978 56 168 44
December 1,941 1,620 105 190 26
1940 January __ 1,000 794 47 131 28
February -. 861 727 38 78 18
March. 766 675 30 46 15
April.. . _ _ - 612 552 37 17 6 f
May __ ... 54 48 2 2 2
June i
1 For an employer under the act.
Retirement Statistics • 259
TABLE C-15.—Employee annuities certified through June 1940: Number of annuities beginning to accrue in each half-year period, classified by date of last compensated service and by type of annuity, June 1936-June 1940 Number by date of last compensated service Percent by date of last compensated service
Accrual period to 1935 1935 1936 1937 1938 1939 1940 Total to 1935 1935 1936 1937 1938 1939 1910
All annuities
Total_____________ 124,055 9,401 7,233 14,699 46,505 25,859 17,065 3,293 100.0 7.6 5.8 11.8 37.5 20,8 13.8 __Z7
1936 ~ === ==== '==== ===== “ — ~
June-December__________ 10,193 409 2,034 7,750 ___________________ 100.0 4.0 20.0 76.0 ---------------------
1937
January-May ___________ 12,478 152 1,450 4,124 6,752 ______________ 100.0 1.2 11.6 33.1 54.1 ----------------
June ______ 10,567 4,182 2,241 675 3,469 ______________ 100.0 39.6 21.2 6.4 32.8 ----------------
July-December__________ 35,351 2,486 958 1,334 30,573 _____________ 100.0 7.0 2.7 3.8 86.5 ----------------
1938
January-June __________ 17,214 792 195 346 4,310 11,571 _______ 100.0 4.6 1.1 2.0 25.0 67.3 ----------
July-December__________ 12,867 591 171 196 738 11,171 ________ 100.0 4.6 1.3 1.5 5.7 86.9 ----------
1939
Januarv-June _______ 10,824 407 94 146 373 2,653 7,151 _ 100.0 3.8 . 9 1.3 3.4 24.5 66.1 ----
July-December.—________ 9,478. 294 66 96 223 389 8,410 ___ 100.0 3.1 .7 1.0 2.4 4.1 88.7 ----
January-June.. —_______ 5,083 88 24 32 67 75 1,504 3,293 100.0 1.7 .5 .6 1.3 1.5 29.6 64.8
Age a nnuities beginning at 65 and over
Total_____________ 95,428 6,621 5,520 11.401 38,173 18,299 12,618 2,796 100.0 6.9 5.8 11.9 40.1 19.2 13.2 2.9
7.935 " ' " ' = ' ' ==== ' == -
June-December__________ 8,933 380 1,695 6,858 ------------------- 100.0 4.3 19.0 76.7 ---------------------
1937
January-May ___________ 10,366 143 1,246 3,142 5,835 _____________ 100.0 1.4 12.0 30.3 56.3 ----------------
june . 8,028 3, 119 1,697 359 2.853 _____________ 100.0 38.9 21.1 4.5 35.5 ----------------
July-December.-________ 28,574 1,566 553 657 25,798 ______________ 100.0 5.5 1.9 2.3 90.3 ----------------
1938
January-June ... 12,317 538 120 166 3,064 8,429 _______ 100.0 4.4 1.0 1.3 24.9 68.4 __________
July-December__________ 8,884 384 112 92 311 7,985 _______ 100.0 4.3 1.3 1.0 3.5 89.9 __________
1939
January-June _____ 7,336 243 49 67 175 1,692 5,110 ___ 100.0 3.3 . 7 . 9 2.4 23.1 69.6 ____
July-December__________ 6,820 196 37 46 105 164 6,272 ___ 100.0 2.9 .5 .7 1.5 2.4 92.0 ____
1940
January-June___________ 4,170 52 11 14 32 29 1,236 2,796 100,0 1.2 . 3 . 3 . 8 , 7 29,6 67.1
260 • Annual Report of the Railroad Retirement Board
TABLE C-15.—Employee annuities certified through June 1940: Number of annuities beginning to accrue in each half-year period, classified by date of last compensated service and by type of annuity, June 1936-June 1940—Continued
Number by date of last compensated service Percent by date of last compensated service
Accrual period
Total 1935 1936 1937 1938 1939 1940 Total ^1935 1935 1936 1937 1938 1939 1940
Age annuities beginning under 65
Total_____________ 5,043 233 178 422 1,512 1,639 905 154 100.0 4.6 3.5 8.4 30.0 32.5 17.9 11
1936
June-December_________ 289 27 71 191 _____________________ 100.0 9.3 24.6 66.1 --------------------
1937
January-May___________ 194 7 13 69 105 _______________ 100.0 3.6 6.7 35.6 54.1 ---------------
June_____ .. .. __ 119 44 14 11 50 ________________ 100.0 37.0 11.8 9.2 42.0 _______________
July-December_________ 1,190 86 51 82 971 _______________ 100.0 7.2 4.3 6.9 81.6 ---------------
1938
Januarv-June__________ 999 29 9 38 256 667 __________ 100.0 2.9 . 9 3.8 25.6 66.8 ---------
July-December_________ 820 20 10 14 63 713 __________ 100.0 2.4 1.2 1.7 7.7 87.0 ---------
1939
January-June.. ______ 634 11 4 8 38 201 372 ____ 100.0 1.7 .6 1.3 6.0 31.7 58.7 ----
July-December_________ 523 6 4 5 18 45 445 ____ 100.0 1.1 .8 1.0 3.4 8.6 85.1 ----
1949
January-June__________ 275 3 2 4 11 13 88 154 100.0 1.1 .7 1.5 4.0 4.7 32.0 56.0
Disability annuities—30 years’ service
Total_____________ 17,364 1,184 1,092 2,180 5,139 4,647 2.848 274 100.0 6.8 6.3 12.6 29.5 26.8 16.4 __L6
1936
June-December......... 971 2 268 701 .____________________ 100.0 0.2 27.6 72.2 --------------------
1937
January-May......... 1,918 2 191 913 812 _______________ 100.0 .1 10.0 47.6 42.3 ---------------
June______ . 1,871 828 435 172 436 _______________ 100.0 44.3 23.2 9.2 23.3 ---------------
July-December_________ 3,692 270 155 290 2,977 ______________- 100.0 7.3 4.2 7.9 80.6 ---------------
1938
January-June... ..... 2,833 43 20 55 651 2,064 _________ 100.0 1.5 . 7 1.9 23.0 72.9 ---------
July-December_________ 2,197 23 10 32 182 1,950 _________ 100.0 1.0 .5 1.5 8.3 88.7 ---------
Retirement Statistics • 261
1939
anuarv-June 1,993 9 11 10 57 537 1,369 ------ 100.0 .5 .6 .5 2.9 26.9 68.6 -----
______________________ 1,467 5 1 7-23 91 1,340 100.0 .3 .1 .5-1.6 6.2 91.3 anuary—June -___________ 422 2 1 1 5 139 274_100.0 .5 .2 .2 1.2 32.9 65.0
Disability annuities—less than 30 years’ service
Total_______________ 6,220 1,363 443 696 1,681 1,274 694 69 100.0 21.9 7.1 11.2 27.0 20.5 11.2 1.1
1938 une-December-----------------------------------------—-------------------- -------------------------------------------------
1937
?Se^™ay7777777777 ■■"549 191 95 133 i§6’ 7777 7777 7777 "ioo.'o' '"ms’ "nJ "HT ■"23.'7' 7777 7777 7777
uly-December____________ 1,895 564 199 305 827 ------------------ 100.0 29.8 10.5 16.1 43.6 -----------------
1938
anuary—June____-________ 1,065 182 46 87 339 411 ------------ 100.0 17.1 4.3 8.2 31.8 38.6 -----------
nly—Dp.r.p.Tnbar________ 966 164 39 58 182 523 ------------- 100.0 17.0 4.0 6.0 18.8 54.2 -----------
1939
anuary—June_________- 861 144 30 61 103 223 300 ------ 100.0 16.7 3.5 7.1 12.0 25.9 34.8 ---------
uly—December____________ 668 87 24 38 77 89 353 ------ 100.0 13.0 3.6 5.7 11.5 13.3 52.9 ---------
anuary-June______-______ 216 31 10 14 23 28 41 69 100.0 14.4 4.6 6.5 10.6 13.0 19.0 31.9
262 • Annual Report oF the Railroad Retirement Board
TABLE C-16.—Employee annuities certified through November 1940: Averages of selected characteristics for each type of annuity by period in which annuity began to accrue, June 1936-June 1940
Age at retirement Average months of credited service Average monthly compensation Amount of annuity
Accrual period Number Normal Singlelife
Age annuities beginning at 65 and over
Total 92,511 69.0 321.4 $152.64 $67.20 $67.16
June-December. 1936 8,544 9,958 7,506 27,065 11, 488 8,338 6,933 6,506 6,173 70.4 318.0 145.19 63.73 63.48
Januarv-Mav 1937 70.1 332.6 156.21 69. 72 69. 59
June 70.3 325.1 149. 92 66.74 66.74
Julv-December 69.2 324.5 149. 72 66.92 66.92
Januarv-June 1938 68.4 315.8 150.68 65.72 65. 72
Julv-December _ _ .... 68.1 314.7 155.04 67.08 67.08
1939 67.9 314.6 155. 64 67. 30 67.30
Julv-December . 67. 7 318.0 160.18 69.18 69.18
January-June.._ 1940 67.7 320.6 162. 38 70. 34 70.34
Age annuities beginning under 65
Total 5,022 62.5 360.0 $167. 95 $78.46 $65.00
J une-December 1936 268 60.6 360.0 164.11 77.16 53.97
Januarv-Mav 1937 182 61.3 360.0 161. 92 76.14 56. 63
June .. ... . .. 95 62.4 360.0 161. 58 76.60 63.61
Julv-December _ . 1,037 916 62. 6 360.0 163. 90 76.99 64.68
1938 62.7 360.0 164. 91 77.49 65.17
788 62.7 360.0 169.32 79.02 66.68
1939 630 62.6 360.0 169. 66 78.99 65. 77
Julv-December . ... 551 62.6 360.0 174. 44 80. 66 67.60
1940 555 62.7 360.0 175.16 80. 91 67.80
Retirement Statistics • 263
TABLE C-16.—Employee annuities certified through November 1940: Averages of selected characteristics for each type of annuity by period in which annuity began to accrue, June 1936-June 1940—Continued
Accrual period Number Age at retirement Average months of credited service Average monthly compensation Amount of annuity
Normal Singlelife
Disability annuities—30 years’ service 1
Total 18,287 59.6 360.0 $176.24 $81. 33 $81.33
1936
June-December 959 60.0 360.0 176. 78 81.47 81.47
1937
.Tannarv-Mav 1,885 59.9 360.0 182.44 83.26 83.26
June - 1,812 60.1 360.0 173.51 80.45 80. 45
Julv-December — _ 3,609 59.7 360.0 173.14 80. 27 80. 27
1938
2, 775 59.5 360.0 174.44 80. 71 80.71
2,175 59.3 360.0 174.49 80.84 80. 84
1939
1,972 59.3 360.0 176.12 81.29 81.29
1,518 59.3 360.0 181.28 83.16 83.16
191ft
January-June.— — 1,582 59.2 360.0 179. 55 82. 38 82.38
Disability annuities—under 30 years’ service 1
Total — 4,876 62.1 260.7 $120. 59 $45. 29 $36.26
June-December. 1936
1937
.1 aniiarv-Mfiv
June . 407 62.6 282.2 126.79 50.89 42.38
Jnlv-Dp.cember 1,486 62.3 258.8 120.32 45.01 36.69
1938
823 62.2 260.2 117. 54 44.30 35.63
732 62.0 255.7 117.02 43.29 34.33
1939
622 61.9 258.8 123.20 45.73 35. 63
453 61.8 260.0 122.68 45. 68 35.48
January-June... 19/ft 353 61.8 259.4 121.85 45. 29 34.96
1 About 1,150 disability annuities recertified to a final status in the period July-November 1940 are not included.
264 • Annual Report of the Railroad Retirement Board
TABLE C-17.—Employee annuities finally certified through June 1940: Num her by amount of single-life and actual annuity and by type of annuity
Amount of annuity Total Age annuities Disability annuities
Number Percent 65 and over Under 65 30 years’ service Under 30 years’ service
Number Percent Number Percent Number Percent Number Percent
Total. _ Single-life annuity
114,069 100.0 88,034 100.0 4, 591 100.0 16,904 100.0 4, 540 100.0
$0-$9.99
552 3,273 6,220 6,111 14,957 10,264 15,287 17, 751 14,910 10,235 8,363 4,852 1,294 0.5 2.9 5.5 5.4 13.1 9.0 13.4 15.5 13.0 9.0 7.3 4.3 1.1 476 2,624 4,993 4, 507 12, 907 7,869 11,884 13,083 10, 730 7,527 6,427 3,856 1,151 0.5 3.0 5.7 5.1 14.7 8.9 13.5 14.8 12.2 8.6 7.3 4.4 1.3 12 35 111 226 545 927 981 797 447 277 176 57 0.3 .8 2.4 4.9 11.9 20.2 21.4 17.4 9.7 6.0 3.8 1.2 1 5 58 295 671 914 2,199 3,786 3,706 2,428 1,759 939 143 (*) (*) 0.3 1.7 4.0 5.4 13.0 22.5 21.9 14.4 10.4 5.6 .8 63 609 1,058 1,083 834 554 223 85 27 3 1 1.4 13.4 23.3 23.8 18.4 12.2 4.9 1.9 .6 . 1 (*)
$10.00-$19.99
$20.00-$29.99
$30.00-$39.99
$40.00-$49.99
$50.00-$59.99
$60.00-$69.99
$70.00-$79.99
$80.00-$89.99
$90.00-599.99
5100.00-5109.99
$110.00-5119.99
$120.00
Total
Actual annuity
114,069 100.0 88, 034 100.0 4,591 100.0 16,904 100.0 4,540 100.0
$0-$9.99
642 3, 656 6, 712 6,753 15,185 10,672 15,163 17,293 14,371 9,806 7,978 4, 617 1,221 0.6 3.2 5.9 5.9 13.3 9.4 13.3 15.1 12.6 8.6 7.0 4.0 1.1 539 2,915 5,396 5,144 13,107 8,223 11,716 12,660 10,303 7,171 6,112 3,667 1,081 0.6 3.3 6.1 5.8 15.0 9.3 13.3 14.5 11.7 8.1 6.9 4.2 1.2 12 50 159 256 579 906 953 777 424 259 164 52 0.3 1.1 3.5 5.6 12.6 19.7 20.8 16.9 9.2 5.6 3.6 1.1 1 6 77 300 714 1,018 2,283 3, 776 3, 617 2,373 1,701 898 140 (*) (*) 0.5 1.8 4.2 6.0 13.5 22.3 21.5 14.0 10.1 5.3 .8 90 685 1,080 1,053 785 525 211 80 27 3 1 2.0 15.1 23.7 23.2 17.3 11.6 4.6 1.8 .6 .1 (*)
510.00-519.99
$20.00-529.99
530.00-539.99 .. ..
540.00-549.99
$50.00-559.99
$60.00-569.99
570.00-$79.99
580.00-589.99
$90.00-599.99
$100.00-5109.99.
$110.00-5119.99
$120.00
Average normal annuity Average single-life annuity. _ Average actual annuity
$69.21 68. 29 67.15 $67.62 67.58 66.33 $78.50 65.15 63.86 $81.40 81.40 80.75 $45.45 36.44 35.53
*Less than 0.05 percent.
Retirement Statistics *^265
TABLE C-18.—Employee annuities certified through June 1940: Number by age of annuitant at time annuity began and by type of annuity
Age annuities Disability annuities
Age at time annuity began Total 65 and over Under 65 30 years’ service Under 30 years’ service
Number Percent Number Percent Number Percent Number Percent Number Percent
Total 124,055 100.0 95,428 100.0 5,043 100.0 17, 364 100.0 6,220 100.0
42 2 (*) 2 (*)
43
44 4 (*) 4 (*)
45 3 (*) 3 (*)
46 24 (*) 24 0.1
47 65 0.1 65 .4
48 83 . 1 83 .5
49 138 . 1 138 .8
50 . 204 .2 3 0.1 201 1.2
51 327 .3 7 . 1 320 1.8
52 . 435 .4 12 .2 423 2.4
53 511 .4 17 .3 494 2.8
54 683 .6 17 .3 666 3.8
55 838 . 7 28 .6 810 4.7
56 965 .8 42 .8 923 5.3
57 . 1,096 .9 26 .5 1,070 6.2
58 1,251 1.0 40 .8 1, 211 7.0
59 1,463 1. 2 51 1.0 1,412 8.1
60 _ 4,785 3.9 895 17.7 1, 780 10.3 2,110 34.0
61 3,608 2.9 635 12.6 1,865 10.7 1,108 17.8
62 3, 943 3.2 843 16.7 1,959 11.3 1,141 18.3
63 . 4, 202 3.4 1,087 21.6 2,069 12.0 1,046 16.8
64 __ 3,997 3.2 (') 1,340 26.7 1,842 10.6 815 13.1
65 22, 383 17.9 22, 383 23.5
66 11' 545 9.2 IL 545 12.1
67 10, 401 8. 4 10, 401 10.9
68 9^ 269 7.5 9,269 9.7
69 9^ 432 7. 6 9j 432 9.9
70 11, 559 9.2 IL 559 12.1
71 5’924 4.8 5,924 6.2
72 3,605 2.9 3,605 3.8
73. . 2, 601 2.1 2^601 2.7
74... 2^047 1. 7 2', 047 2.1
75... 1, 703 1.4 1’703 1.8
76.... 1,316 1.1 L 316 1.4
77... 970 .8 970 1.0
78 744 .6 744 .8
79... 587 . 5 587 .6
80 400 . 3 400 .4
81__ 289 . 2 289 .3
82.. 231 . 2 231 . 2
83.. 136 . 1 136 . 1
84... 102 . 1 102 . 1
85.... . 56 (*) 56 . 1
86.... 52 (*) 52 . 1
87 37 (*) 37 (*)
88 13 (*) 13 (*)
89 12 (*) 12 (*)
90 8 (*) 8 (*)
91 1 (*) 1 (*)
92.... 1 (*) 1 (*)
93 2 (*) 2 (*)
94...
95
96 2 (*) 2 (*)
Average 61 . 1 61 .0 62.5 59.6 62.1
* Less than 0.05 percent.
1 Age annuities totaling 977 which began to accrue before age 65, but within the calendar month in which age 65 was attained, and which were therefore not subject to reduction are included with the age 65 class.
266 • An nual Report of the Railroad Retirement Board
TABLE C-19.—Employee annuities finally certified through June 1940: Number by years of service on which annuity is based and by type of annuity
Age annuities Disability annuities f
Total
Years of credited service 1 65 and over Under 65 30 years ’service Under 30 years’ service
Num- Per- Num- Per- Num- Per- Num- Per- Num- Per-
ber cent ber cent ber cent ber cent ber cent
Total 114,069 100.0 88,034 100.0 4, 591 100.0 16,904 100.0 4,540 100.0
Less than 1 z==: ■ ■ - - — ■
57 *) 52 0.1 — 5 0.1
1 55 *) 48 . 1 7 . 2
2 22 *) 21 (*) 1 (*)
3 25 *) 25 (*) (*)
4 27 *) 25 (*) 2
0 29 *) 26 (*) 3 . 1
6 77 *) 7 2 . 1 5 .1
7 116 U. 1 108 . 1 -- 8 .2
8 190 . 2 177 . 2 13 .3
9________ 287 . 3 254 . 3 — 33 .7
10 448 . 4 411 . 5 — 37 .8
11 571 .5 511 .6 — 60 1.3
12 746 . 7 666 . 8 — 80 1.8
id 952 . 8 857 1. 0 — 95 2.1
14 1,214 1.1 1,087 1, 332 1. 2 — 127 2.8
15 1, 520 1. 3 1. 5 — 188 4.1
10 1,400 1. 2 1, 210 1. 4 — 190 4.2
17 1, 726 1. 5 1,532 1, 633 1. 7 — 194 4.3
18 1,824 1. 6 1.9 — 191 4.2
iy 2, 095 1.8 1,870 2.1 — 225 5.0
20 2,376 2.1 2,121 2.4 — 255 5.6
21 1,957 1.7 1,685 1.9 — 272 6.0
22 1, 725 1,686 1. 5 1,493 1. 7 — 232 5.1
23 1. 5 1,432 1.6 — 254 5.6
24 1, 774 1. 6 1,497 1,608 1.7 — 277 6.1
25 1,941 2,015 1.7 1.8 — 333 7.3
26 1.8 1,652 1.9 — 363 8.0
27 2,020 1.8 1,666 1.9 — 354 7.8 '
28 2,168 1. 9 1,783 2.0 — 385 8-s
29 2, 317 2.0 1,966 2. 2 4,591 100.0 16,904 100.0 351 7.7
30 80, 709 70.9 59,214 67.3
Average years of
credited service L 27.3 26.9 30.0 30.0 21.8
•Less than 0.05 percent.
1 Each class includes all persons with less than the next full year of credited service. Since any fraction of 6 months or more is counted as a full year, each class includes those with a maximum of 5 months of credited service more than the year figure used to designate that class.
2 The average years of credited service are computed on the basis of the actual months of credited service, without allowance for the fact that ultimate fractions of 6 months or more are credited as a full year of service.
Retirement Statistics • 267
TABLE C-20.—Employee annuities finally certified through June 1940: Number by average monthly compensation on which annuity is based and by type of annuity
Average monthly compensation All annuities Age annuities Disability annuities
65 and over Under 65 30 years’ service Under 30 years’ service
Number Percent Number Percent Number Percent Number Percent Number Percent
114,069 100.0 88,034 100.0 4,591 100.0 16,904 100.0 4,540 100.0
$0-$9 99 40 (*) 0.1 39 (*) 0.1 1 (’)
$10 00-$19. 99 81 77 2 (*) 2 (*)
$20.00-$29.99 113 .1 104 .1 3 0.1 3 (*) 3 0.1
$30.00-$39.99 . 220 .2 184 .2 8 .2 12 0.1 16 .4
$40.00-$49. 99. 694 .6 586 .7 16 .3 47 .3 45 1.0
$50.00-$59.99 1,505 3,059 4,926 5,175 5,182 5,169 7,209 8,801 9,000 8,373 7,296 6,818 5,588 4,689 4,189 3,655 3,211 1.3 1,247 1.4 26 .6 111 .7 121 2.7
$60.00-$69.99 2.7 2,641 3.0 43 .9 142 .8 233 5.1
$70.00-$79.99 __ 4.3 4,236 4,419 4.8 66 1.4 247 1.5 377 8.3
$80.00-$89.99 4.5 5.0 84 1.8 317 1.9 355 7.8
$90.00-$99.99 4.5 4,434 5.0 98 2.1 325 1.9 325 7.2
$100.00-$109.99 4.5 4,317 5,844 4.9 128 2.8 361 2.1 363 8.0
$110.00-$119.99 6.3 6.6 274 6.0 637 3.8 454 10.0
$120.00-$129.99 7.8 7,009 8.1 409 9.0 889 5.3 494 10.8
$130.00-$139.99 8.0 6,953 8.0 401 8.7 1,211 7.2 435 9.6
$140.00-$149.99 7.3 6,222 7.1 435 9.6 1,380 8.1 336 7.4
$150.00-$159.99 6.4 5,297 4,914 6.0 373 8.1 1,343 7.9 283 6.2
$160.00-$169.99 6.0 5.6 355 7.7 1,338 7.9 211 4.6
$170.00-$179. 99 4.9 3,948 4.5 297 6.5 1,190 7.0 153 3.4
$180.00-$189.99. 4.1 3,286 3.7 216 4.7 1,087 6.4 100 2.2
$190.00-$199.99 3.7 2,925 3.3 200 4.4 993 5.9 71 1.6
$200.00-$209.99 3.2 2,599 3.0 165 3.6 849 5.0 42 .9
$210.00-$219. 99 2.8 2,308 2.6 148 3.2 722 4.3 33 .7
$220.00-$229.99 . 2,919 2,873 2,827 2,501 2,099 1,755 1,257 2.6 2,123 2.4 120 2.6 651 3.9 25 .6
$230.00-$239.99. _ 2.5 2,140 2.4 124 2.7 596 3.5 13 .3
$240.00-$249.99 2.5 2,123 2.4 135 2.9 555 3.3 14 .3
$250.00-$259.99 .. 2.2 1,862 2.1 118 2.6 509 3.0 12 .3
$260.00-$269.99 1.8 1,581 1.8 79 1.7 432 2.6 7 .2
$270.00-$279.99 1.5 1,355 1.5 74 1.6 322 1.9 4 .1
$280.00-$289.99. . 1.1 986 1.1 52 1.1 217 1.3 2 (*)
$290.00-$299.99 1,471 1,374 1.3 1,103 1.3 87 1.9 277 1.6 4 .1
$300.00. 1.2 1,172 1.3 57 1.2 139 .8 6 .1
Average monthly compensation $155.99 $153.25 $168.06 $176.42 $120.78
’Less than 0.05 percent.
268 • An nual Report of the Railroad Retirement Board
TABLE C-21.—Employee annuities certified through June 1940: Number by class of employer and occupational group and by type of annuity
Class of employer and occupational group i Total annuities Age annuities Disability annuities
Number Percent 65 and over Under 65 30 years’ service Under 30 years’ service
Number Percent Number Percent Number Percent Number Percent
Total. 124, 055 100.0 95, 428 100.0 5,043 100.0 17,364 100.0 6,220 100.0
Class I railroads, total. Executive, professional, 112, 796 91.0 86, 581 90.6 4, 518 89.6 16,088 92.6 5,609 90.2
and supervisory2 6,907 5.6 5,199 5.4 397 7.9 1,228 7.1 83 1.3
Foremen 7,493 6.0 5,804 6.1 408 8.1 1, 090 6.3 191 3.1
Clerical Maintenance of way and 5,930 4.8 4, 400 4.6 326 6.5 956 5.5 248 4.0
structures, skilled 3,186 2.6 2, 516 2.6 123 2.4 337 1.9 210 3.4
Track labor Maintenance of equip- 9,243 7.5 7,383 7.7 218 4.3 720 4.1 922 14.8
ment, skilled Maintenance of equip- 18,925 15.2 14, 509 15.2 917 18.2 2,285 13.2 1, 214 19.6
ment, unskilled 6, 488 5.2 5,373 5.6 146 2.9 421 2.4 548 8.8
Helpers and apprentices. _ Station agents and teleg- 6,660 5.4 5,395 5.7 191 3.8 524 3.0 550 8.8
raphers 2 Station and platform 6,265 5.1 4, 708 4.9 336 6.7 1,126 6.5 95 1.5
laborers Train and engine service, engineers and conduc- 3, 711 3.0 3,104 3.3 79 1.6 269 1.5 259 4.2
tors Train and engine service, firemen, brakemen, switchmen, and hos- 18,697 15. 1 13, 690 14.3 662 13.1 4, 075 23.5 270 4.3
tiers 9,923 8.0 6,498 6.8 479 9.5 2,414 13.9 532 8.6
Other occupations Part-time union officials Class II and class III rail- 9, 229 139 7.4 .1 7,886 116 8.3 . 1 229 7 4.5 .1 627 16 3.6 .1 487 7.8
roads Class I switching and termi- 1,992 1.6 1, 487 1.6 126 2.5 285 1.6 94 1.5
nal companies . Other switching and terminal 2.811 2.3 2, 267 2.4 97 1.9 305 1.8 142 2.3
companies 1. 054 .8 882 .9 41 .8 78 .4 53 .9
Electric railroads 1, 139 .9 922 1.0 68 1.3 75 .4 74 1.2
Express companies 2, 111 1.7 1. 656 1.7 93 1.8 255 1.5 107 1.7
Pullman Company 1,051 .8 812 .9 29 .6 114 .7 96 1.5
Car loan companies Railroads in Alaska and Ha- 235 .2 195 .2 9 .2 14 . 1 17 .3
waii 63 . 1 55 . 1 3 . 1 3 (*) 2 (*)
Railway associations 268 .2 229 .2 13 .3 18 . 1 8 . 1
National labor organizations. Employee representatives 288 2 .2 (*) 168 1 .2 (*) 12 .2 97 1 .6 (*) .2 11 .2
Miscellaneous employers 245 .2 173 .2 34 .7 31 7 .1
*Less than 0.05 percent.
1 For occupations included in each occupational group, see p. 27.
2 Figures are not directly comparable with those given in the 1939 annual report. In coding occupations for annuitants, it is necessary to combine I. C. C. reporting divisions 79, nontelegrapher agents at smaller stations, and 80, station agents who are telegraphers and telephonists, under 78, consisting of supervisory agents at major stations, who are nontelegraphers. In the 1939 annual report, annuitants in occupation 78 were included in the executive, professional, and supervisory group. In the present table, they are included in the station agents and telegraphers group. If the same grouping had been used in the 1939 annual report, the number of annuitants in the executive group given there would have been smaller by 2,807 and the station agents group correspondingly larger.
Retirement Statistics • 269
TABLE C-22.—Employee annuities terminated by death through June 1940:1 Number by age of annuitant at end of year of death and by type of annuity
Age at end of year of death Total Age annuities Disability annuities
65 and over Under 65 30 years’ service Under 30 years' service
Number Percent Number Percent Number Percent Number Percent Number Percent
Total 17,601 100.0 12, 597 100.0 318 100.0 3,601 100.0 1,085 100.0
45 1 (*) 1 (*)
46
47 2 (*) 2 0.1
48 11 0.1 11 .3
49 18 . 1 18 .5
50 30 .2 30 .8
51 40 .2 40 1.1
52 57 .3 57 1.6
53 90 .5 90 2.5
54 . . 102 .6 102 2.8
55 131 .7 1 0.3 130 3.6
56 157 .9 1 .3 156 4.3
57 . 175 1.0 1 .3 174 4.8
58 238 1.4 238 6.6
59..-. 251 1.4 3 .9 248 6.9
60 347 2.0 9 2.8 293 8.1 45 4.1
61 476 2.7 33 10.4 287 8.0 156 14.4
62 503 2.9 33 10.4 302 8.4 168 15.5
63 592 3.4 54 17.0 362 10. 1 176 16.2
64 661 3.8 60 18.9 390 10.9 211 19.5
65 799 4.5 185 1.5 61 19.3 355 9.9 198 18.2
66 1,084 6.2 740 5.9 42 13.2 210 5.8 92 8.5
67 1.245 7. 1 1,110 8.8 17 5.3 83 2.3 35 3.2
68 . 1,318 7.5 1', 292 10.2 3 .9 19 .5 4 .4
69... 1, 258 7.1 1, 255 9.9 3 . 1
70 1,249 7.1 1, 249 9.9
71 . 1, 257 7. 1 1, 257 10. 0
72.... 1,116 6. 3 1,116 8.9
73.... 942 5.4 942 7. 5
74. 741 4. 2 741 5. 9
75.... 524 3.0 524 4. 2
76.... 440 2.5 440 3. 5
77 345 2.0 345 2. 7
78 317 1.8 317 2. 5
79.... 251 1. 4 251 2 0
80 202 1.1 202 1. 6
81 149 .8 149 1. 2
82 135 . 8 135 1.1
83 109 . 6 109 .9
84 68 .4 68 . 5
85 53 . 3 53 . 4
86 33 . 2 33 .3
87 37 . 2 37 .3
88... 8 (*) 8 . 1
89 14 . 1 14 . 1
90 13 . 1 13 . 1
91 6 (*) 6 (*)
92... 3 (*) 3 (*)
93 1 (*) 1 (*)
94 1 (*) 1 (*)
95
96
97 1 (*) 1 (*)
98
99
Average age 65 .5 1.7 6! J. 7 6( 1.6 63.4
Tess than 0.05 percent.
1 Does not include some deaths which had occurred prior to July 1, 1940, but had not yet been reported to and acted on by the Board by that date.
276117—41-------18
270 • Annual Report of the Railroad Retirement Board
TABLE C-23.—Employee annuities after claims pending June 30, 1940, are adjudicated: Estimated number and monthly amount payable for annuities beginning to accrue each month, by type, January 1939-June 1940
Disability annuities
All annuities
Age annuities
Month of accrual Number Amount 65 and over Under 65 Number
Number Amount Number Amount
1939 January 2,530 1,670 $172,000 1,820 $124,000 170 $11,000 540
February 106, 000 1,020 1,040 63,000 110 7,000 540
March 1,630 105,000 66,000 100 6,000 490
April 2,070 1,590 133,000 1,440 91, 000 110 7,000 520
May 103,000 1,010 65,000 100 7,000 480
June 1,830 119,000 1, 220 79,000 110 7,000 500
July 1,800 117,000 1,220 79,000 100 6,000 480
August 1,590 102,000 1,030 65,000 110 7,000 450
September 1,690 112,000 1,160 78,000 110 8,000 420
October 1,700 113,000 1,190 79,000 110 7,000 400
November 1,930 126,000 1,410 91,000 100 6,000 420
December 1,840 124,000 1,290 87,000 130 8,000 420
1940 January 2,440 168,000 1,740 120,000 150 10,000 550
February 1,680 107,000 1, 050 66,000 100 6,000 530
March 1, 720 112,000 1,050 67,000 120 8,000 550
April 1,880 125,000 1,190 78,000 130 9,000 560
May 1,780 119,000 1,170 77,000 100 7,000 510
June 2,070 135,000 1,410 92,000 150 10,000 510
$37, 36, 33, 35, 31, 33,
32, 30, 26, 27, 29, 29,
§§§§§§ §§§§§§ §§§
38, 35,
37, 38,000
35,000 33,000
Retirement Statistics • 271
TABLE C-24.—Employee annuities certified through June 1940 and after claims pending June 30, 1940, are adjudicated: Number and monthly amount payable for annuities beginning to accrue for each half-year period, by type of annuity, June 1936-June 1940
Period of accrual All annuities Age annuities Disability annuities
Certifications Estimated total 65 and over Under 65 Certifications Estimated total
Certifications Estimated total Certifications Estimated total 30 years’ service Under 30 years’ service Total
1936 Number
June-December 10,193 10, 260 8,933 8,990 289 290 971 971 980
1937
January-June _ 23,045 35,351 23, 330 35, 650 18, 394 28, 574 18, 530 28, 720 313 340 3, 789 3,692 549 4,338 4, 460 5,710
July-December 1,190 1,220 1,895 5,587
1938
January-June _ ___ 17, 214 12,867 17,500 13,120 12, 317 8,884 12,480 9,010 999 1,040 2,833 1, 065 3, 898 3, 980
July-December _ 820 840 2,197 966 3,163 3,270
1939
January- June 10, 824 9,478 11, 320 7,336 6,820 7,550 7,300 634 700 1,993 1,467 861 2,854 2,135 3,070 2,590
J uly-December 10; 550 523 660 668
1940
January-June 5,083 11, 570 4,170 7,610 275 750 422 216 638 3,210
Amount
1936
June-December $628, 714 $635, 000 $539, 389 $545, 000 $15, 006 $15, 000 $74, 319 $74, 319 $75,000
1937
January-June 1, 542,404 2, 269, 680 1, 567, 000 2,295, 000 1, 200, 082 1,836,771 1,213, 000 1,852, 000 17,408 72, 428 19, 000 303,196 295, 713 $21, 716 324, 913 335,000
July-December.._ __ 75,000 64, 767 360,481 368,000
1938
January-June 1,112,166 840, 673 1,132,000 856,000 782,101 576, 580 793,000 64, 722 67,000 228,472 36,869 265, 341 272, 000
J uly-December 584,000 53,937 55,000 177,723 32,431 210,154 217, 000
1939
January-June 710,931 638,204 738,000 694,000 477, 768 457,175 488,000 479,000 41, 612 45, 000 161,939 29,611 191, 550 205,000
July-December 35,157 42,000 122,355 23,514 145,870 173,000
1940
January-June 351,504 766,000 289,209 500,000 18,840 50,000 35,734 7,720 43,454 216,000
272 • An nual Report of the Railroad Retirement Board
TABLE C-25.—Employee annuities after all claims pending as of June 30, 1940, are adjudicated: Estimated number and monthly amount payable, by type of annuity, monthly, January 1939-June 1940
Month All annuities Age annuities Disability annuities
Number Amount 65 and over Under 65 Number Amount
Number Amount Number Amount
1939 January February March April May June July August September October November December 1940 January February March April May June 93, 550 94, 730 95, 740 97, 270 98,340 99,700 100,940 102,090 103,270 104,400 105,720 106,900 108, 650 109,650 110,620 111,840 112,910 114, 510 $6,101,000 6,176,000 6,243,000 6,342,000 6,410,000 6,498,000 6, 579, 000 6,653, 000 6,731,000 6, 807,000 6,892,000 6,973,000 7,092,000 7,154,000 7, 215,000 7, 293,000 7, 364,000 7,447,000 73,160 73,810 74,410 75,480 76,140 77,010 77,850 78,590 79, 390 80,190 81,180 82,000 83,250 83,830 84, 350 85,090 85,780 86,800 $4, 727,000 4,769,000 4,809,000 4,876,000 4,920,000 4,977,000 5,032,000 5,078,000 5,133,000 5,187,000 5, 251,000 5,309,000 5,396,000 5,432,000 5,464,000 5, 511,000 5,554,000 5,608,000 3,710 3,820 3,910 4,000 4,090 4,200 4,290 4,390 4,500 4,590 4,670 4,790 4,930 5,010 5,110 5,220 5,290 5,420 $232,000 238,000 244,000 251,000 256,000 263,000 269,000 276,000 283,000 289,000 294,000 302,000 311,000 317,000 324,000 331,000 338,000 346,000 16,680 17,100 17,420 17,790 18,110 18,490 18,800 19,110 19,380 19,620 19,870 20,110 20,470 20,810 21,160 21, 530 21,840 22, 290 $1,142,000 1,169,000 1,190,000 1,215,000 1,234,000 1,258,000 1,278,000 1,299,000 1,315,000 1,331,000 1,347,000 1,362,000 1, 385,000 1,405,000 1,427,000 1,451,000 1,472,000 1,493,000
Retirement Statistics • 273
TABLE C-26.—Employee annuities in force June 30, 1940: Number and average actual annuity by last railroad occupation
I.C.C. code No.1 Occupation Number Percent Average actual annuity
Total 106, 078 100 0 $65 55
1 Executives, general officers, and assistants ___ 737 0 7 110 74
2 Division officers, assistants, and staff assistants. ... 747 . 7 109 93
3 Professional and subprofessional assistants .... 234 .2 87 85
4 Superintendents or chief clerks, and assistants and superintendent
cashiers 663 6 90 89
6 Clerks and clerical specialists . 5, 273 5.0 66.14
8 Mechanical device operators (office) . 16 (*) 53.88
9 Stenographers, secretaries, and typists . ... 181 . 2 61.80
11 Storekeepers, sales agents^ and buyers. ... ... 149 . 1 81. 26
12 Ticket agents and assistant ticket agents. ... ..... 114 . 1 74.32
13 Traveling auditors or accountants 86 . 1 97.43
14 Telephone switchboard operators and office assistants.. 36 (*) 49.91
15 Messenger and office boys _ 81 .1 50 60
16 Elevator operators and other office attendants 128 . 1 42.36
17 Lieutenants and sergeants of police 72 . 1 69.76
18 Patrolmen and watchmen . . . _ 913 .9 50.41
19 Traffic and other agents, inspectors, and investigators 818 .8 98.96
20 Claim agents or investigators ... 108 . 1 89. 06
22 Chief claim agents or investigators.. . _ 15 (*) 99.39
23 Miscellaneous trade workers (other than plumbers) 39 (*) 54.74
24 Motor-vehicle and motorcar operators. ... _. 31 (*) 58 61
25 Teamsters and stablemen ... .. ... 4 (*) 48.69
26 Janitors and cleaners.__ .. _ 817 . 8 37.05
27 Roadmasters, general foremen, and assistants _ . 492 .5 98.93
28 Maintenance-of-way and scale inspectors... 84 . 1 84.17
29 Bridge and building gang foremen (skilled labor) 632 .6 76.06
30 Bridge and building carpenters _ 1, 685 1.6 51. 26
31 Bridge and building ironworkers 44 (*) 60 23
32 Bridge and building painters _ _ . .... ... . 88 . 1 50.74
33 Masons, bricklayers, plasterers, and plumbers... . 198 .2 65. 20
34 Maintenance of way and structures helpers and apprentices 301 .3 44.73
35 Portable steam-equipment operators.. _. 117 . 1 64.95
36 Portable steam-equipment operator helpers 16 (*) 47.31
37 Pumping equipment operators ." 460 .4 40.32
39 Gang foremen (bridge and building, signal and telegraph laborers). _ 104 . 1 69.05
40 Gang or section foremen (track and roadway, section labor) 4,797 4.5 61.80
42 Track and road way and section labor... _ . _ _ _ 8,053 7.6 33.56
43 Maintenance of way laborers (other than track and roadway).. .. 693 .7 39.43
44 General and assistant general foremen and inspectors _ _ _ 71 .1 100.86
45 Gang foremen (signal and telegraph, skilled labor) 71 .1 85.47
46 Signalmen and signal maintainers ... . . ..... .. 509 .5 74.30
47 Linemen and groundmen . .......... 103 . 1 68 13
48 Assistant signalmen and assistant signal maintainers (and helpers). 213 .2 61.13
50 General foremen, assistant general foremen, and department foremen
(shops). _ ... _. . ... ___ ... 768 .7 104.18
51 General and assistant general foremen (stores) _ 19 (») 85.48
52 Equipment, shop, electric, material, and supplies inspectors 212 .2 81.43
53 Gang foremen and gang leaders (skilled labor).. . .. 917 .9 94.30
54 Blacksmiths ... ~ .. ._ . 882 .8 62. 25
55 Boilermakers . ... .. .. 1,372 1.3 69.35
56 Carmen. __ 9, 413 8.8 59.80
58 Electrical workers '398 .4 60.88
61 Machinists _ 4,151 3.9 68.94
62 Molders ... 155 .1 65.75
63 Sheet metal workers ... 770 .7 65.27
64 Skilled trades helpers (maintenance of equipment and stores) 4, 763 4.5 46.14
65 Apprentices . 6 (*) 58.45
*Less than 0.05 percent.
1 Certain combinations of the Interstate Commerce Commission codes have been made here. Combinations were made in the following classifications: 5 with 4; 7 with 6; 10 with 9; 21 with 20; 38 with 40; 41 with 42; 49 with 48; 57 with 56; 59 and 60 with 58; 66 with 65; 71 with 70; 79 and 80 with 78; 89 with 88; 94 with 93; 109 with 108; 112, 113, 114 with 111; 117 and 118 with 116; 122 and 123 with 121; 126 and 127 with 125.
274 • Annual Report of the Railroad Retirement Board
TABLE C-26.—Employee annuities in force June 30, 1940: Number and average actual annuity by last railroad occupation—Continued
I. c.c. code No. Occupation Number Percent Average actual annuity
67 Coach cleaners ___ ... 809 0.8 $40.41
68 Gang foremen (shops, engine houses, and power plants) 109 .1 63.39
69 Gang foremen (stores and ice, reclamation, etc., plants) 74 . i 57.77
70 Laborers (shops, engine houses, and power plants) 4,126 3.9 41.10
72 Laborers (stores and ice, reclamation, etc., plants) 956 .9 35.95
73 Stationary engineers __ 307 .3 63.97
74 Stationary firemen, oilers, coal passers, water tenders 400 .4 49.05
75 Chief train dispatchers 65 . 1 113.12
76 Train dispatchers 459 .4 102.05
77 Train directors 40 (*) 89.01
78 Station agents 3,152 3.0 74.62
81 Chief telegraphers and telephoners or wire chiefs 59 .1 87.65
82 Clerk-telegraphers and clerk-telephoners 196 .2 69.80
83 Telegraphers, telephoners, and towermen _ . __ 2,191 2.1 70.28
84 Station masters and assistants 106 . 1 88.11
85 Supervising baggage agents .. _ 15 (*) 73.90
86 Baggage agents and assistants 139 .1 65.92
87 Baggage, parcel room, and station attendants.. 811 .8 47.61
88 General and assistant general foremen (freight station, etc.) 51 (*) 87.10
90 Gang foremen (freight station, warehouse, etc.) . 314 .3 67.17
91 Callers, loaders, scalers, sealers, and food inspectors 443 .4 46.46
92 Truckers (stations, warehouses, and platforms) I, 210 1.1 40.15
93 Laborers (dock, elevator, station, warehouse, platform) 1,104 1.0 40.70
95 Stewards, restaurant managers, and dining car superintendents 85 .1 72.24
96 Chefs and cooks (restaurants or dining cars) 100 . 1 56. 61
97 Waiters, camp cooks, kitchen helpers, etc ... ... 186 .2 31.64
98 Officers and workers on barges, boats, etc., and shore workers... ... 617 .6 67.00
99 Transportation and dining service inspectors 106 . 1 76.50
100 Parlor and sleeping-car conductors . . ... 178 .2 77.46
101 Train attendants. _ 527 .5 44.62
102 Bridge operators and helpers _ 164 .2 52.89
103 Crossing and bridge flagmen and gatemen 4, 775 4.5 42.34
104 Laundry foremen and laundry workers ... 33 (*) 38.02
105 Yardmasters _ ._ _ _ 357 .3 101. 46
106 Assistant yardmasters _ ... 114 .1 102.04
107 Switch tenders . ... 413 .4 65.67
108 Hostlers 755 .7 71.69
110 Hostler helpers .. ... ... .... 75 .1 54.32
111 Road conductors and assistants .. _ 6,388 6.0 91.83
115 Road passenger baggagemen ... ' 319 .3 83.28
116 Road brakemen and flagmen.. ... _ 3,477 3.3 76.11
119 Yard conductors and foremen _ ... ' 972 .9 84.31
120 Yard brakemen and helpers .. 3, 018 2.8 77.13
121 Road engineers and motormen.. 8; 881 8.4 96.80
124 Yard engineers and motormen 315 .3 87.16
125 Road firemen and helpers. . ._ . 1,006 .9 78.22
128 Yard firemen and helpers .. . ... . ... 71 .1 71.00
Full-time employees of employee organizations 233 .2 83.95
Part-time employees of employee organizations 144 .1 86.93
All occupations—express companies 1,814 1.7 67.52
Less'than 0.05 percent.
Retirement Statistics • 275
TABLE C-27.—Employee annuities certified through June 1940: Number with joint and survivor election, and by type of annuity for annuities beginning to accrue during each half-year, January 1937-June 1940
Disability annuities Under 30 years’ service Joint and survivor Percent of all *6 6.4 10.7 3.8 1.4 1.5 1.0 2.3
Number 317 35 203 40 14 13 7 5
All 6,220 549 1,895 1,065 966 861 668 216
30 years’ service Joint and survivor Percent of all 3.3 24.8 15.2 1.3 .4 (*) (*)
Number 573 241 292 25 13 1 1
All 17,364 971 1,918 1,871 3,692 2,833 2,197 1,993 1,467 422
Age annuities Under age 65 Joint and survivor Percent of all 6.7 9.3 6.7 24.4 13.6 3.6 3.5 3.2 2.7 2.2
Number 336 27 13 29 162 36 29 20 14 6
All 5,043 289 194 119 1,190 999 820 634 523 275
Age 65 and over Joint and survivor Percent of all 3 12.0 8.6 10.7 7.5 4.1 3.4 2.6 2.7 2.4
Number 6,234 1,068 891 861 2,140 500 299 193 183 99
All 95,428 8,933 10,366 8,028 28, 574 12,317 8,884 7,336 6,820 4,170
J I Joint and survivor Percent of all 6.0 13.1 9.6 9.0 7.1 3.4 2.7 2.1 2.2 2.2
Number 7,460 1, 336 1,196 950 2, 518 577 343 226 204 110
All 124,055 10,193 12,478 10,567 35, 351 17, 214 12,867 10,824 9,478 5,083
Accrual period Cumulative through June 1940 Prior to January 1937.. 1937 January-May June July-December. 1938 January-June July-December 1939 January-June July-December 1940 January-June
'Less than 0.05 percent.
276 • An nual Report of the Railroad Retirement Board
TABLE C-28.—Survivor annuities certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940
Accrual period New accruals Terminations by death Payable for the month 1
Number Amount Number Amount Number Amount
Cumulative through June 1940 2,453 $81,124 107 $3, 458
Fiscal year:
1936-37 405 15, 683
1937-38 965 32 533 22 721
1938-39 633 19,062 32 997
1939 40 427 12; 948 53 1,740
1936
June _ 23 895 23 $895
July 21 782 44 1,678
August 21 900 65 2,578
September 26 955 91 3,533
October 34 1, 234 125 4,767
November 25 946 150 5. 714
December 26 856 176 6,570
1937
January - - 43 1,935 219 8,505
February 34 1,168 253 9, 674
March 37 1, 591 290 11,266
April - _ . _ 46 1', 642 336 12,908
May 50 1.890 386 14, 799
June 42 1, 779 428 16,579
July 80 3,180 1 27 507 19,731
August 73 2, 605 580 22,337
September. 85 3,247 1 28 664 25,556
October .. .. 106 3, 342 769 28,896
November ... . _ _ 86 2, 965 2 21 853 31, 839
December 116 3, 873 969 35, 713
1938
January 90 2,855 2 62 1,057 38, 506
February. _ . .. 59 1, 886 1 33 1, 115 40, 359
March . . 78 2,559 5 263 1, 188 42. 654
April . 79 2,462 4 89 1,263 45,028
May . . 56 1,756 4 125 1,315 46,660
June _ ... 57 1,798 2 68 1,370 48,389
July _ . 59 1,738 2 100 1,427 50,027
August . . . . 55 1,492 1,482 51,520
September. ... .... . 49 1,450 1 9 1,530 52, 960
October .... . 51 1,422 2 113 1. 579 54, 269
November _ . _ _ _ 68 2,091 4 133 1,643 56, 226
December. . . 54 1, 771 1 34 1,696 57,963
1939
January . .. . 50 1, 541 3 102 1,743 59,402
February. ... _ ... .. 55 1,651 3 69 1,795 60,984
March. _ 56 1,822 5 183 1,846 62,624
April. _. 42 1,288 4 100 1,884 63,812
May .. ... . 51 1,489 2 46 1,933 65,255
June. . .. _ 43 1,301 5 102 1,971 66,454
July 42 1,115 6 169 2,007 67,400
August. 37 1,100 3 97 2,041 68,402
September .. 30 h 025 3 97 2,068 69,330
October... .. _ 43 1,413 3 114 2,108 70,629
November ... ... .. . 50 1,521 5 210 2,152 71,938
December. 47 1,425 3 105 2,196 73, 257
1940 January. _ _. 44 1,332 7 202 2,233 74,387
February... 43 1,176 6 165 2,269 75,390
March ... _ 45 1,347 7 252 2,307 76,485
April . 37 1,263 2 83 2,341 77, 637
May . 9 ' 228 7 220 2,343 77,645
June 1 20 2,341 77,595
1 After adjustments for 3 annuities totaling $66.22, which were suspended and not yet reinstated as of June 30, 1940, and 2 annuities totaling $3.89, which were commuted into lump-sum payments.
Retirement Statistics • 277
TABLE C-29.—Lump-sum death benefits: Number of employee death claims received, and employee and other death claims certified, by fiscal years 1938-40 and monthly for fiscal year 1939-40
Period Employee death claims1 Applicant death claims certified 1 2 Annuitant death claims certified3 Total death claims certified 4 * 6
Received Certified
Cumulative through June 1940 32,320 27,481 1,792 106 29,379
Fiscal year: —
1937-38 (6 months) 8,198 598 63 5 666
1938-39 11,328 14,430 898 31 15 359
1939-40 12i 794 12,467 833 70 13* 370
1939
July 819 785 63 1 849
August 1.065 1,150 58 6 1 214
September 1,015 827 38 2 ’ 867
October ___ '973 1,267 73 4 1 344
November-.. 881 1,105 63 3 1 171
December _ 861 681 62 4 ’ 747
19^0 January 932 967 69 5 1 041
February 1,176 1,133 84 7 1’ 224
March 1J137 ' 910 78 11 999
April i; 135 1,345 89 5 1 439
May 8 1,480 1,206 61 11 1 278
June « 1, 320 1,091 95 11 1,197
1 An “employee death claim” is one filed with respect to the death of an individual who had not made application for an employee annuity.
2 An “applicant death claim” is one filed with respect to the death of an individual who had applied for an annuity which had not yet been certified at the time of death, where it is clear that the 4-percent lump-sum payment would exceed any accrued annuity payments.
3 An “annuitant death claim” is one filed with respect to the death of an annuitant, where annuity payments accrued up to his death are less than 4 percent of credited compensation.
4 Fiscal year and monthly figures are for initial certifications. Cumulative figures through June 30, 1940,
are corrected for cancelations and transfers.
6 Effective May 15, claims are counted upon receipt of notice of death rather than of completed application for benefits.
278 • Annual Report of the Railroad Retirement Board
TABLE C-30.—Death benefit annuities certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by completion of payment and by death, and annuities payable, monthly, June 1936-June 1940
New accruals
Accrual period
Number
4,607
Fiscal year: 1936-37 1,585 1,155 1,073 737
1937-38
1938-39
1929-40
1936 57
July 71
August ______ _ _ - -- 76
September 83
October __ _ __ - 72
November _ _ __ 92
Do.rp.mber . 103
1937 165
February _ _ - 177
March 173
April - - 194
May - - 205
June _ 174
July - - - 122
August 115
September _ . .. 82
October . .. - 109
November - 93
Dppp.mhpr . _ . 103
1938 95
February 78
March - 88
April _ - - -- - 97
May _ 100
June 73
July . 90
August _ _ ___ _ _ _ _ 96
September 77
October 89
November _ - - -- 112
Dppp.mbp.r _ 96
1939 82
February. - 73
March 100
April - -- - - 82
May ... _ - 94
June - - 82
July ... _ . . 83
August _ 56
September . .. 66
October . . ... 72
November . . . 68
“December 81
1940 102
February . . 78
March. 76
April ... 47
May... _ 8
June
Termination by completion of payments and by death
Payable for the month
Amount Number Amount Number Amount
$168,708 3,880 $142,490 —
60,013 61 2,325
42, 532 1,590 60', 171
37' 471 1' 161 42' 687
26,556 1,068 37', 305
2,133 57 $2,133
2,824 128 4,958
2,874 204 7,833
3i 225 1 51 286 11,007
2,596 358 13,603
Si 451 450 17,055
3' 929 553 20,985
6,256 718 27,241
6,664 895 33,906
6,629 1,068 40, 536
7i 167 2 94 1,260 47,609
7,834 1,465 55,443
6, 557 58 2,179 1,581 59,822
4,721 71 2,812 1,632 61,731
3,999 76 2,874 1,671 62,856
3, 309 82 3,186 1,671 69,979
4,254 74 2,700 1,706 64, 533
3, 633 93 3,455 1,706 64, 711
3,599 103 3,929 1,706 64, 382
3,332 164 6, 223 1,637 61,490
2,741 178 6, 700 1,537 57, 532
3,010 175 6,713 1,450 53,829
3, 539 197 7,260 1,350 50,108
3,830 206 7,896 1,244 46,041
2,560 171 6,419 1,146 42,183
3,008 122 4, 705 1,114 40,487
3, 449 112 3,894 1,098 40, 043
2,838 82 3, 309 1,093 39,571
3,290 108 4,240 1,074 38,622
3,903 96 3,770 1,090 38,755
3, 414 103 3, 627 1,083 38, 542
3,012 96 3,360 1,069 38,194
2,491 81 2,838 1,061 37,846
3,357 89 3,023 1,072 38,180
2, 775 96 3,479 1,058 37,476
3,123 102 3,867 1,050 36,732
2,805 74 2,571 1,058 36,966
3,004 96 3,244 1,045 36,727
1,994 96 3,403 1,005 35,318
2,160 77 2,833 994 34,646
2,684 86 3,125 980 34, 205
2,487 110 3,834 938 32,858
3,081 95 3,401 924 32, 539
3, 464 80 2,935 946 33,068
2,824 70 2,446 954 33,445
2,803 104 3,500 926 32,748
1,705 79 2,647 894 31,806
345 93 3,107 >808 1 29,034
82 2,827 2 725 2 26,182
i One annuity at $10 was suspended in May 1940 and not yet reinstated as of June 30,1940. > One annuity at $24 was suspended in June 1940.
Wage and Service Statistics
• 279
a
x
q z w a. a. <
TABLE D-1.—Number of employees in 1939 and 1938 and percent change from 1938, total and for selected classes of employers, distributed by amount of credited compensation for the year
All other classes Percent change +9.7 +9.3 +16.7 +3.0 -2.7 +1.6 +.7 -8.4 +25.3 +14.3 +5.3 +5.1 +.2 +• 4 +11.9 +12.8 +2.1 +10.8 +16.0 +10.8 +20.8 +13.6 +24.2 +7.1 OO 0 ¥ '
S C00 co 00 10,848 3,687 2, 595 2,127 3, 228 2,974 3,046 2,616 2,757 2,865 2,955 3, 228 3,123 2, 770 2,973 3, 364 3,148 7, 715 7,232 7,633 3,067 1, 666 1,707 0'6 sn ‘1$
Number, 1939 95,823 11,852 4,304 2,674 2,069 3, 279 2,994 2,789 3, 279 3,151 3,017 3,107 3, 235 3,135 3,099 3, 353 3,435 3,489 8,946 8,013 9,220 3,484 2,070 1,829 $1,144 9.0
Pullman Company Percent change +0.6 CO^N’+'-d xj< id id 06 id id cd cd ■’*< rd id 06 cd il 77771771+1++++77711+1++ 0 cd cd + +
fl «7co 25, 955 856 503 411 338 692 714 818 739 900 1,154 1,419 2, 516 2,033 2,311 2,273 1,442 860 1,990 1,189 1, 579 887 172 159 $1,147 10.1
Number, 1939 26,106 614 395 285 296 643 553 625 697 940 1,092 1,492 2,728 2,115 2,434 2, 627 1,784 968 1,903 1,098 1,669 810 178 160 $1,180 10.4
Express companies Percent change +5.0 +9.1 +29.3 +5.4 -4.5 —4.1 -6.7 -8.2 -13.7 +4.9 -8.0 +8.4 -2.7 -1.8 -.6 -.6 +7.8 -1.8 +3.1 +10.0 +7.9 -29.1 +1.5 -2.1 -0.9 -1.1
Number, 1938 61, 573 8,787 3,114 1,284 962 1,466 1,199 1,036 969 899 1,098 1,140 1,059 1,052 1,174 1,219 1, 373 1,836 8,875 10,170 10, 510 1,600 468 283 0’6 £95 ‘1$
Number, 1939 64,677 9,590 4,026 1, 353 919 1,406 1,119 951 836 943 1,010 1,236 1,030 1,033 1,167 1,212 1,480 1,804 9,148 11,184 11, 343 1,135 475 277 $1, 252 8.9
Class I switching and terminal companies Percent change +13.4 Qi cd cd cd 00 0 »-< cd 00 rd r-< cd r-< cd cd rd rd cd rd »-< ^++^+^+Ti++i 1+++3W +1.1 -3.2
Number, 1938 37,457 4,603 1,099 551 449 814 710 676 647 673 703 1,228 1,169 1,671 1,616 1,317 1, 575 1,585 3,951 3,441 5,432 2,247 939 361 $1, 322 9.5
fl 42,485 5, 959 1,174 589 523 963 811 777 845 749 721 884 1,118 1,687 1,647 1,234 1, 554 1,690 4,440 4,053 6, 923 2,543 1,197 404 $1,336 9.2
Class I railroads Percent change +3.8 HCDrHt^dOCiCOCiHOO‘OHrHlOCDO0H^COO’fClO cd 0 00 _i_ r-< cd cd cd rd cd rd Tji id cd rd cd od cd cd cd cd 1 'y' 1 ^++ 1 ++ 1 1 ] ++++++ip.^.+++ cd rd + +
Number, 1938 1,325,971 132,770 49,332 33,756 27,117 43,754 37, 649 36,144 33, 713 35,867 39, 794 45,152 50,829 46,805 41,653 41,243 40,074 42,646 122,345 115,209 163,638 78,325 51,531 16,625 $1, 280 9.3
Number, 1939 1,376,266 129, 927 44,127 31,023 27, 313 44, 524 38,471 34,972 34, 799 36,248 37,888 42, 204 50, 294 48, 737 43,926 42, 717 43,135 45,461 132, 221 129,444 185,337 81,432 54,813 17,253 $1, 324 9.4
Total Percent change + r-.C©C5C0CQi-tt^t^r^CC5COTtir^»-iWCCOO2,000.00-$2,499.99_ 22,572 21,100 +7.0 6,301 5,668 +11.2 41,151 30,061 +36.9 12,514 12,304 +1.7 17,193 19,416 -11.4 57,719 49,897 +15.7
$2,500.00-$2,999.99__ 2,854 3,524 -19.0 241 429 -43.8 2,817 2,720 +3.6 1,720 2,081 -17.3 30,412 26,590 +14.4 23,732 21,469 +10.5
$3,000.00-$3,600.00__ 1,303 1,239 +5.2 26 20 +30.0 346 245 +41.2 576 559 +3.0 29,237 26,035 +12.3 4,188 3,071 +36.4
Average’credited compensation...... $1,644 $1,613 +1.9 $1,489 $1,410 +5.6 $1,688 $1,516 +11.3 $1,728 $1,689 +2.3 $2,664 $2,587 +3.0 $1,734 $1,621 +7.0
282
Annual Report of the Railroad Retirement Board
TABLE D-3.—Number of employees of class I railroads in selected occupational groups, distributed by amount of credited compensation for 1939 and 1938, average credited compensation, and percent change from 1938—Continued
PART B
Extra gang men structures laborers, MaHe Ipers and apprentices Freight handlers
Annual credited other than extra St°reS lab°rerS
compensation------------------------------------------------------------------------------------------
Number Number Percent Number Number Percent Number Number Percent Number Number Percent Number Number Percent 1939 1938 change 1939 1938 change 1939 1938 change 1939 1938 change 1939 1938 change
Total_________ 97,282 86,639 +12,3 197,453 188,805 +4,6 78,697 72,465 +8-6 102,504 95,807 +7.0 74,233 68,091 +9.0
Under $50.00_____ 31,572 32,295 -++ 48,905 46,915 ++2 A407 +246 +378 1,839 ' 2^800 -34.3 19,107 17,211 +11.0
$50.00-$99.99______ 12,027 12,549 -4.2 13,300 13,487 -1.4 2,089 2,654 -21.3 1,442 2,451 -41.2 4,374 4,092 +6.9
$100.00-8199.99___ 13,790 13,282 +3.8 14,636 14,757 -.8 5,171 4,045 +27.8 3,234 4,124 -21.6 5,129 4,742 +8.2
$200.00-$299.99___ 8,917 7,795 +14.4 9,620 9,988 -3.7 5,335 3,351 +59.2 3,538 4,018 -11.9 3,364 2,990 +12.5
$300.00-$399.99___ 7,004 5,447 +28.6 7,724 8,263 -6.5 3,592 3,228 +20.6 4,133 3,970 +4.1 2,552 2,282 +11.8
$400.00-8499.99___ 5,822 4,139 +40.7 8,026 9,043 -11.2 2,759 3,068 -10.1 4,028 3,932 +2.4 2,023 2,126 -4.8
$500.00-8599.99__ 4,657 2,602 +79.0 10,396 9,140 +13.7 2,441 2,964 -17.6 3,042 3,849 - 21.0 2,147 2,207 - 2.7
$600.00-8699.99_____ 3,375 1,761 +91.7 12,754 11,502 +10.9 3,026 3,116 -2.9 2,921 3,810 -23.3 2,483 2,393 +3.8
$700.00-$799.99_____ 2,341 1,530 +53.0 14,382 13,391 +7.4 3,635 4,046 -10.2 3,079 3,818 -19.4 2,443 2,511 -2.7
$800.00-8899.99____ 1,894 1,187 +59.6 14,957 15,174 -1.4 4,698 4,739 -.9 3,588 4,507 -20.4 2,527 2,579 -2.0
$900.00-8999.99 ____ 2,106 1,211 +73.9 17,429 16,699 +4.4 6,073 5,739 +5.8 4,445 5,019 -11.4 2,864 2,640 +8.5
$1,000.00-81,099.99_ 1,927 1,232 +56.4 14,380 12,075 +19.1 7,408 6,724 +10.2 5,433 5,625 -3.4 3,037 2,769 +9.7
$1,100.00-81,199.99 _ 975 719 +35.6 6,954 5,281 +31.7 8,965 8,099 +10.7 7,631 6,545 +16.6 3,313 2,934 +12.9
$1,200.00-81,299.99___ 381 369 +3.3 2,024 1,519 +33.2 7,888 7,273 +8.5 10,183 8,328 +22.3 4,109 3,559 +15.5
$1,300.00-81,399.99__ 200 202 -1.0 828 606 +36.6 4,902 4,165 +17.7 10,664 7,972 +33.8 4,680 4,387 +6.7
$1,400.00-81,499.99_ 112 120 - 6.7 419 340 +23.2 2,869 2,504 +14.6 9,817 7,274 +35.0 4,410 3,974 +11.0
$1,500.00 and over___ 182 199 -8.6 719 625 +15.0 3,139 2,504 +25.4 23,487 17,765 +32,2 5,671 4,695 +20,8
Average credited compensa-tion______________ $259 $212 "+22.2 $482 $464 +3.9 $823 $819 +.5 $1,105 $1,002 +10.3 $645 $637 +1.3
TABLE D-4.—Number of employees of class I railroads in selected occupational groups, distributed by months of credited service in 1939 and 1938, average credited months of service, and percent change from 1938
Average Months of service
Occupational group months Total ----------------------------------------------------------■-----------
ofservice 12 11 10 9 8 7 6 5 4 3 2 1
Clerical:
Number, 1939___________ 11.2 117,880 101,924 2,256 1,463 1,748 1,033 1,113 1,105 1,029 1,194 1,602 1,608 1,805
Number, 1938___________ 11.1 118,400 99,639 2,530 1,633 2,198 1,257 1,376 1,413 1,361 1,523 1,847 1,540 2,083
Percent change_________ +.9 -0.4 +2.3 -10.8 -10.4 -20.5 -17.8 -19.1 -21.8 -24.4 -21.6 -13.3 +4.4 -13.4
Wage and Service Statistics • 283
688 991 -30.8 25, 752 27, 067 -4.9 37, 244 37,151 +.3 1,792 3,070 -41.6 3, 619 4, 011 -9.8 2,201 3, 781 -41.8 635 875 -27.4 13, 064 11, 279 +15.8 577 757 -23.8 4,148 6.259 -33.7
704 810 -13.1 17, 526 17, 742 -1.2 20,594 18, 574 +10.9 2, 298 2,840 -19.1 4,087 3,073 +33.0 2,935 3,572 -17.8 492 588 -16.3 5, 607 4, 557 +23.0 534 635 -15.9 5,046 5, 274 -4.3
617 772 -20.1 10, 226 9, 520 +7.4 11,606 11, 338 +2.4 2,956 3,763 -21.5 5,708 3,005 +90.0 4,282 4.046 +5.8 493 629 -21.6 4,401 4. 244 +3.7 649 703 -7.7 6,593 4,882 +35.0
508 818 -37.9 6, 788 6,747 +.6 7, 734 7,980 -3.1 3, 623 3, 237 +11.9 4,532 2,585 +75.3 5, 523 3, 440 +60.6 442 548 -19.4 3,610 2,819 +28.1 544 637 -14.6 5,143 4,934 +4.2
468 718 -34. 8 5,946 4, 892 +21.5 6,201 6,374 -2.7 1,922 3, 438 -44.1 1,935 2, 337 -17.2 2,329 3, 320 -29.9 402 551 -27.1 1,929 2,099 -8.1 593 692 -14.3 4,007 4, 712 -15.0
616 793 -18.5 5, 365 3,990 +34. 5 6,015 6,164 -2.4 2,145 3, 639 -41.1 1,859 2, 359 -21.2 2,647 3, 529 -25.0 461 590 -21.9 1,783 1,725 +3.4 612 788 -22.3 4,372 4,824 -9.4
729 797 -8.5 4,795 3,078 +55.8 5,687 5,518 +3.1 2,256 3,673 -38.6 1,857 2,120 -12.4 2,480 3,612 -31.3 507 600 -15.5 1,759 1,539 +14.3 669 724 -7.6 4, 598 4, 727 -2.7
763 813 -6.2 4,064 2,171 +87.2 6,023 5,420 +11.1 2,406 4, 015 -40.1 1,691 2,109 -19.8 2,530 3,440 -26.5 529 592 -10.7 1,466 1,566 -6.4 761 839 -9.3 4, 660 4,962 -6.1
991 1,129 -12.2 3,340 2,060 +62.1 6,740 6,132 +9.9 3, 215 4,784 -32.8 2,084 2,363 -11.8 3,027 3, 960 -23.6 798 919 -15.9 1, 766 1,939 -8.9 1,251 1,435 -12.8 5, 270 5,692 -7.4
1,198 1,207 -.8 2,502 1, 509 +65.8 6,177 5, 524 + 11.8 4,440 5,601 -20.7 2,256 2,495 -9.6 4,022 4, 211 -4.5 858 953 -10.0 1,902 1,814 +4.9 1, 711 1,700 +.6 6,013 5,958 +■9
1,717 1,617 +6.2 2,066 1, 388 -f—iO. O 7,754 7,002 +10.7 7,827 7,927 -1.3 3,201 3,412 -6.2 6,255 5, 660 +10.5 1,617 1,812 -10.8 2,562 2,516 +1.8 3,708 3,384 +9.6 9,231 8, 549 +8.0
21, 596 18,997 +13.7 8,912 6, 475 +37.6 75, 678 71, 628 +5.7 110, 382 91,923 +20.1 45,868 42, 596 +7.7 64, 273 53, 236 +20.7 40, 604 40, 550 +.1 34, 384 31, 994 +7.5 75, 361 72, 071 +4.6 118, 228 109,193 +8.3
30,625 29,465 +3.9 97, 282 86, 639 +12.3 197,453 188, 805 +4.6 145, 262 137,910 +5.3 78, 697 72,465 +8.6 102, 504 95,807 +7.0 47,838 49, 237 -2.8 74, 233 68,091 +9.0 86,970 84, 365 +3.1 177, 310 169, 966 +4.3
10.5 10. 1 +4.0 4.4 3.8 +15.8 7.2 7.1 +1.4 10.8 10.3 +4.9 9.2 9.4 -2.1 9.9 9.5 +4.2 11.3 11.1 +1.8 7.7 7.9 -2.5 11.5 11.4 +•9 10.1 10.0 +1.0
Maintenance of way and structures, skilled:
Number, 1939_________
Number, 1938_________
Percent change_______
Extra gang men:
Number, 1939_________
Number, 1938_________
Percent change_______
Maintenance of way and structures laborers, other than extra gang:
Number, 1939_________
Number, 1938_________
Percent change_______
Maintenance of equipment and stores, skilled:
Number, 1939_________
Number, 1938_________
Percent change_______
Maintenance of equipment and stores, laborers:
Number, 1939_________
Number, 1938_________
Percent change-------
Helpers and apprentices:
Number, 1939_________
Number, 1938_________
Percent change_______
Station agents and telegraphers:
Number, 1939_________
Number, 1938_________
Percent change_______
Freight handlers:
Number, 1939_________
Number, 1938_________
Percent change-------
Engineers and conductors:
Number, 1939_________
Number, 1938_________
Percent change-------
Firemen and brakemen:
Number, 1939---------
Number, 1938_________
Percent change-------
_______________________
284 • An nual Report of the Railroad Retirement Board
TABLE D-5.—Number and percent of employees in active service in 1939, distributed by service status in 1937 and {1938, for selected classes of employers and selected occupational groups of class I railroad employees
Class of employer and occupational group Total in active service in 1939 i In active service in 1937,1938, and 1939 In active service in 1937 and 1939 In active service in 1938 and 1939 In active service in 1939 only
Number Percent of total 1939 Number Per-centof total 1939 Number Percent of total 1939 Number Percent of total 1939
Total 1,605, 357 1,247,163 77.7 69,016 4.3 62, 780 3.9 210,424 13.1
Class I railroads 1,376, 266 1,079,878 78.5 61, 931 4.5 50,527 3.7 175, 361 12.7
Clerical Maintenance of way and 117,880 110,131 93.5 1,441 1.2 1,686 1.4 4,287 3.6
structures, skilled 30,625 27, 466 89.7 735 2.4 673 2.2 1,652 5.4
Extra gang men Maintenance of way and structures laborers, other 97,282 28,302 29.1 9,743 10.0 10,937 11.2 47,080 48.4
than extra gang Maintenance of equip- 197, 453 113, 755 57.6 11,615 5.9 15, 794 8.0 54, 501 27.6
ment and stores, Skilled-Maintenance of equip- 145, 262 134,007 92.2 6,483 4.5 840 .6 3,609 2.5
ment and stores laborers 78,697 58,691 74.6 6,245 7.9 1, 952 2.5 11,455 14.6
Helpers and apprentices--Station agents and teleg- 102, 504 85,062 83.0 7,590 7.4 2,058 2.0 7,462 7.3
raphers 47, 838 45, 260 94.6 443 .9 865 1.8 1,133 2.4
Freight handlers 74, 233 44, 799 60.3 3,085 4.2 5,627 7.6 19,633 26.4
Engineers and conductors. 86,970 85, 703 98.5 519 .6 320 .4 344 .4
Firemen and brakemen Class I switching and terminal 177,310 159, 530 89.9 8,862 5.0 1,885 1.1 6,573 3.7
companies 42,485 32, 608 76.8 1,994 4.7 1, 530 3.6 5,995 14.1
Express companies 64,677 46,721 72.3 1,060 1.6 4,041 6.2 12,498 19.3
Pullman Company 26,106 23, 304 89.2 692 2.7 548 2.1 1,481 5.7
Other classes 95,823 64, 652 67.5 3,339 3.5 6,134 6.4 15,089 15.7
* The total in active service in 1939 includes 15,974 employees who were in active service also in one or both of the 2 preceding years. No information is readily available, however, which would permit the allocation o fthis number among the several groups in this table.
Wage and Service Statistics • 285
TABLE D-6.—Average credited compensation and average number of months of service in 1939, for employees distributed by service status in 2 preceding years, by selected classes of employers and selected occupational groups for class I railroad employees 1
Class of employer and occupational group All employees in active service in 1939 Employees in active service in 1937, 1938, and 1939 Employees in active service in 1939 and in either 1937 or 1938 Employees in active service in 1939 only
Average credited compensation Average number of service months Average credited compensation Average number of service months Average credited compensation Average number of service months Average credited compensation Average number of service months
Total $1, 308 9.4 $1, 606 11.0 $422 5.2 $160 2.8
Class I railroads 1,324 9.4 1,618 11.0 407 5.2 162 2.8
Clerical Maintenance of way and struc- 1,644 11.2 1,722 11.6 866 7.9 382 4.3
tures, skilled 1.489 10.5 1, 602 11. 1 755 6.6 365 3.7
Extra gang men Maintenance of way and structures laborers, other than extra 259 4.4 539 7.9 219 4.1 113 2. 5
gang Maintenance of equipment and 482 7.2 735 10.2 232 4.5 98 2.3
stores, skilled Maintenance of equipment and 1,688 10.8 1, 774 11.3 784 6.1 416 3.5
stores laborers 823 9.2 1, 001 10.8 415 5.4 217 3.4
Helpers and apprentices 1,105 9.9 1,239 10.9 551 5.9 320 4.0
Station agents and telegraphers-- 1, 728 11.3 1, 796 11.5 787 8.3 337 4.4
Freight handlers 645 7.7 968 10.4 280 5.5 101 2. 5
Engineers and conductors 2, 664 11.5 2,682 11.5 1,429 7.8 426 3.8
Firemen and brakemen Class I switching and terminal com- 1,734 10.1 1,876 10.8 562 4.7 289 2.9
panies 1,336 9.2 1,668 11. 1 422 4.3 134 2.2
Express companies 1,252 8.9 1,658 11.1 397 5.0 122 2.2
Pullman Company 1,180 10.4 1,271 11.0 648 7.3 258 4.0
Other classes 1, 144 9.0 1, 466 10.7 580 6.4 178 3.0
1 The wage averages in this table are preliminary and subject to minor revisions.
TABLE D-7.—Average credited compensation and average number of months of credited service in 1937,1938, and 1939 for employees in active service in each of the 3 years, by selected classes of employers and by selected occupational groups for class I railroad employees 1
Class of employer and occupational group Average credited compensation in Average number of months of service in
1939 1938 1937 1939 1938 1937
Total $1,606 $1,504 $1, 565 11.0 10.7 11.1
Class I railroads 1,618 1,509 1,579 11.0 10.6 11.1
Clerical _ 1,722 1,602 1,686 1,659 11.6 11.6 11.6
Maintenance of way and structures, skilled 1,484 1,552 11.1 10.7 11.2
Extra gang men 544 452 510 8.0 7.0 7.8
Maintenance of way and structures laborers, other than extra gang . _ - 735 687 687 10.2 9.9 10.1
Maintenance of equipment and stores, skilled 1,774 1,545 1,778 11.3 10.6 11.6
Maintenance of equipment and stores laborers 1,001 902 996 10.8 10.2 11.0
Helpers and apprentices 1,239 1,043 1,241 10.9 9.9 11.2
Station agents and telegraphers 1,796 1,779 1,702 11.5 11.6 11.5
Freight handlers _ - 968 897 943 10.4 10.3 10.4
Engineers and conductors 2,682 2, 661 2, 633 11.5 11.7 11.8
Firemen and brakemen 1,876 1,638 1,845 10.8 10.1 11.2
Class I switching and terminal companies 1,668 1,536 1,620 11.1 10.9 11.1
Express companies 1,658 1,604 1.555 11.1 11.1 11.0
Pullman Company .. 1,271 1,237 1,229 11.0 10.8 11.2
Other classes 1,466 1,422 1,428 10.7 10.8 10.8
The wage averages in this table are preliminary and subject to minor revisions.
276117—41----19
286 • Annual Report of the Railroad Retirement Board
TABLE D-8.—Number of employees with credited compensation of $150 and over, distributed by railroad unemployment insurance compensation groups, total and for selected classes of employers and selected occupational groups of
class I railroad employees, 1939 and 1938
Amount of compensation in 1939 Amount of compensation in 1938
Class of employer and occupational group $150- $2Q0- $475_ $750_ $i(000- $1,300- , $150- $200- $475- $750- $1,025- $1,300
1 otai $199 $474 $749 $999 $1> 299 $1; 599 ami i oiai $lgg $474 $749 024 2gg or over
____________________________x_________________________________________________________________________________________________ Total____________ 1,357,465 31,120 124,510 114,575 129,335 160,123 165,589 632,213 1,284,084 30,993 124,579 112,328 148,934 138,401 728,849
Class I railroads... _ . ... 1,171,189 27,313 108,945 98,862 111,593 135,380 140,238 548,858 1,110,113 27,117 108,613 97,945 129,132 116,913 630,393
Clerical__________________ 114,276 753 3,292 2,717 3,279 7,127 25,800 71,308 114,370 849 3,942 3,409 4,251 7,118 94,801
Maintenance of way and structures, Skilled____ ______ 29.536 275 1,328 1,325 1,761 3,434 7,505 13,908 27,993 319 1,694 1,817 2,298 3,291 18,574
Extra gang men___________ 46,005 6,112 20,402 10,642 5,072 3,283 378 116 34,060 5,547 16,442 6,136 3,442 1,972 521
Maintenance of way structures laborers, other than extra gang. 127,076 6,464 23,210 32,563 39,515 23,358 1,477 489 120,080 6,434 24,959 29,463 42,598 15,055 1,571
Maintenance of equipment and stores, skilled___________ 142,507 828 5,542 5,921 4,489 7,752 17,242 100,733 132,815 1,366 7,985 8,119 8,818 11,091 95,436
Maintenance of equipment and stores, laborers__________ 69,727 2,697 11,174 8,039 12,646 24,261 9,159 1,751 63,357 1,837 8,923 8,767 14,196 20,461 9,173
Helpers and apprentices_ 97,717 1,728 10,714 8,456 9,604 23,247 29,990 13,978 88,460 2,028 10,907 10,582 12,766 19,166 33,011
Station agents and telegraphers... 46,383 321 1,267 1,380 1,342 2,168 4,926 34,979 47,247 395 1,660 1,504 1,769 2,098 39,821
Freight handlers . ______ 47,954 2,331 7,432 6,319 6,652 10,459 11,522 3,239 43,990 1,944 6,871 6,330 7,230 8,559 13,056
Engineers and conductors_ 86,073 149 878 840 751 1,081 1,468 80,906 83,138 230 1,062 971 1,092 1,215 78,568
Fireman and brakemen______ 167,877 2,065 11,227 10,253 7,786 9,947 12,318 114,280 155,012 2,589 11,429 9,466 8,798 9,455 113,275
Class I switching and terminal companies _______________________ 34,763 523 2,344 2,169 2,355 4,568 5,219 17,585 31,204 449 2,035 1,809 3,198 4,182 19,531
Express companies . . 49,708 919 3,234 2,530 2,767 3,412 6,176 30,670 48,388 962 3,452 2,632 3,043 3,184 35,115
Pullman Company__________ 24,812 296 1,641 2,325 4,804 7,176 3,342 5,228 24,185 338 2,017 2,418 5,047 6,087 8,278
Other Classes 76,993 2,069 8,346 8,689 7,816 9,587 10,614 29,872 70,194 2,127 8,462 7,524 8,514 8,035 35,532
Wage and Service Statistics • 287
TABLE D-9.—Number of employees, with 10 to 12 and less than 10 months of service in 1938, total and for selected classes of employers, distributed by age groups Class of employer Total U^der 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 a?d , Un’
■4V over Known
All employers___________________________ 1,538,280 20,620 130, 517 132,172 158, 347 190, 576 205, 575 202,458 185,448 140, 613 93,291 41,414 9,359 27,890
10-12 months of service____________ 1,036,561 2,506 34,558 57,106 94,500 132,483 156,239 165,560 157,113 120,483 79,089 28,871 5,016 3,037
1-9 months of service________________ 501,719 18,114 95,959 75,066 63,847 58,093 49,336 36,898 28,335 20,130 14,202 12,543 4,343 24,853
Class I railroads----------------------- 1, 325,971 17, 305 107, 555 108, 669 133,825 161,979 176, 509 177,150 164,079 125,126 83,153 36,596 7,989 26,036
10-12 months of service______________ 892,570 2,063 27,317 45,810 79,462 111,656 133,102 144,400 138,879 107,024 70,443 25,378 4,284 2,752
1-9 months of service________________ 433,401 15,242 80,238 62,859 54,363 50,323 43,407 32,750 25,200 18,102 12,710 11,218 3,705 23,284
Class I switching and terminal companies_ 37,457 528 3,206 3,202 4,093 4,909 5,315 5,179 4,462 3,103 2,078 937 306 139
10-12 months of service_______________ 27,030 80 1,048 1,595 2,650 3,683 4,275 4,394 3,873 2,737 1,820 676 177 22
1-9 months of service_________________ 10,427 448 2,158 1,607 1,443 1,226 1,040 785 589 366 258 261 129 117
Express companies_______________________ 61,573 925 8,762 7,810 6,580 8,741 8,994 6,885 5,142 3,686 2,682 1,205 143 432
10-12 months of service_______________ 41,872 47 2,226 3,470 3,885 6,874 7,820 6,284 4,760 3,441 2,039 956 48 22
1-9 months of service_________________ 19,701 878 6,536 4,340 2,695 1,867 1,174 601 382 245 229 249 95 410
Pullman Company__________________________ 25,955 197 1,905 2,509 3,123 3,676 3,904 3,336 2,980 2,075 1,371 565 72 242
10-12 months of service_______________ 19,319 57 944 1,403 2,026 2,710 3,094 2,808 2,619 1,885 1,236 445 16 76
1-9 months of service__________________ 6,636 140 961 1,106 1,097 966 810 528 361 190 135 120 56 166
All others_______________________________ 87,324 1,665 9,089 9,982 10,726 11,271 10,853 9,908 8,785 6,623 4,421 2,111 849 1,041
10-12 months of service_______________ 55,770 259 3,023 4,828 6,477 7,560 7,948 7,674 6,982 5,396 3,551 1,416 491 165
1-9 months of service_________________ 31,554 1,406 6,066 5,154 4,249 3,711 2,905 2,234 1,803 1,227 870 695 358 876
288 • An nual Report of the Railroad Retirement Board
TABLE D-10.—Employees in selected occupational groups of class I railroads, distributed by age, number, and percent, 1938
Occupational group Total U°der 20-24 25-29 I 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 7°|frd k^n
__________________________________________________________I_________________I____J_________________'________________
Number
Clerical 118,400 953 6,932 9,866 16,993 22,629 20,219 14,843 10,683 7,295 4,747 2,358 606 276
Maintenance of way and structures, skilled_ 29,465 45 888 1,751 3,614 4,342 4,360 4,262 3,956 3,044 2,101 734 95 273
TCxtra gang men _________________ 86,639 3,585 21,805 14,827 10,512 8,652 7,197 5,226 3,774 2,149 943 274 40 7,655
Maintenance of way and structures laborers, other than extra gang ________________ 188,805 5,303 29,225 29,637 28,285 23,885 18,351 14,739 12,901 9,401 5,711 2,119 297 8,951
Maintenance of equipment and stores, skilled . ... 137,910 27 625 4,133 10,034 17,881 22,898 24,124 23,098 18,148 11,756 4,268 578 340
Maintenance of equipment and stores, laborers. 72,465 798 8,445 8,932 9,700 9,027 8,010 7,576 7,196 5,750 4,122 1,947 401 561
Heiners and apprentices 95,807 889 10,730 9,540 12,813 13,251 12,278 11,048 10,118 7,585 4,732 1,893 347 583
Station agents and telegraphers _ 49,237 183 952 1,380 3,058 4,954 6,864 8,789 8,852 6,425 4,435 2,338 613 394
Freight handlers ___________________ 68,091 2,386 11,211 8,808 8,096 7,729 6,986 6,105 5,485 4,475 2,943 1,434 284 2,149
Engineers and conductors _______ 84,365 5 104 185 568 2,168 5,437 11,917 19,534 20,790 15,327 6,706 1,368 256
Firemen and brakemen......I... . _ 169,966 43 3,639 5,724 11,459 22,746 35,129 36,897 27,384 15,206 7,500 2,391 315 1, 533
, Percent of total (excluding age unknown)
Clerical____________________„_________________ 100.0 0.8 5.9 8.4 14.4 19.1 17.1 12.6 9.0 6.2 4.0 2.0 0.5 ___
Maintenance of way and structures, skilled_:... 100.0 .2 3.0 6.0 12.4 14.9 14.9 14.6 13.6 10.4 7.2 2.5 .3 ----
Extra gang men________________________________ 100.0 4.5 27.6 18.8 13.3 11.0 9.1 6.6 4.8 2.7 1.2 .3 .1 ----
Maintenance of way and structures laborers, other than extra gang_____________________________ 100.0 2.9 16.2 16.5 15.7 13.3 10.2 8.2 7.2 5.2 3.2 1.2 .2 -----
Maintenance of equipment and stores, skilled_ 100.0 (*) .5 3.0 7.3 13.0 16.6 17.6 16.8 13.2 8.5 3.1 .4 ----
Maintenance of equipment and stores, laborers_ 100.0 1.1 11.7 12.4 13.6 12.6 11.1 10.5 10.0 8.0 5.7 2.7 .6 ----
Helpers and apprentices_______________________ 100.0 .9 11.3 10.0 13.5 13.8 12.9 11.6 10.6 8.0 5.0 2.0 .4 -----
Station agents and telegraphers __________ 100.0 .4 1.9 2.8 6.3 10.1 14.1 18.0 18.0 13.2 9.1 4.8 1.3 -----
Freight handlers_.________________________ 100.0 3.6 16.9 13.4 12.3 11.7 10.6 9.3 8.3 6.8 4.5 2.2 .4 -----
Engineers and conductors_ ________ 100.0 (*) .1 .2 .7 2.6 6.5 14.2 23.2 24.7 18.2 8.0 1.6 --
Firemen and brakemen__ ______________________ 100.0 (*) 2.2 3.4 6.8 13.5 20.9 21.8 16.3 9.0 4.5 1.4 .2 ----
*Less than 0.05 percent.
Wage and Service Statistics • 289
TABLE D-11.—Number of retirements and deaths 1 among employees with last railroad service in 1938, by age attained m 1938, for selected occupational groups of employees of class I railroads and for selected classes of employers Total Under 50 50-54 55-59 60-64 65-69 70 and over Age unknown
Class of employer and--------------------•----------------------------------—~ ~
.ooupstlonl groups R.tt.- R.tt.- Deaths R.tte- Rett.. Deaths Rett.- Death, R.tte- Deaths RettJ Desths Rett.. De,Hls
Total_______________ 23,360 10,098 90 3,619 567 1,852 1,698 1,974 5,106 1.633 11,858 760 3,988 225 53 35
Class I railroads_______ 21,098 8,757 85 3,087 518 1,622 1,576 1,735 4,619 1,429 10,733 665 3,514 187 53 32
Clerical________________ 1,325 616 10 283 39 98 97 94 291 87 621 44 267 10 -----------
Maintenance of way and structures, skilled_______ 524 202 2 77 8 29 32 40 124 37 309 15 49 3 ----- 1
Extra gang men_______ 93 147 ____ 112 1 16 6 3 23 8 47 3 12 ----- 4 5
Maintenance of way and struc-
tures, laborers, other than extra gang_________ 1,382 708 7 384 26 120 80 98 334 62 793 26 129 8 13 10
Maintenance of equipment and stores, skilled__ 3,248 1,025 12 317 97 203 245 244 838 200 1,720 52 335 8 1 1
Maintenance of equipment and stores, laborers_ 1,234 514 5 210 20 87 71 100 278 69 642 37 209 11 9 ------
Helpers and apprentices_ 1,265 542 3 222 25 108 86 105 279 75 696 26 174 5 2 1
Station agents and telegraphers _______________ 1,143 423 6 124 47 76 90 89 215 77 533 44 251 12 1 1
Freight handlers________ 688 328 1 135 10 60 37 59 148 52 377 21 111 1 4 -----
Engineers and conductors_ 3,164 970 6 94 70 194 275 274 653 241 1,584 136 572 29 4 2
Firemen and brakemen_____ 1,724 1,258 13 567 76 301 248 207 466 135 754 37 165 5 2 6
Other than class I railroads_ 2,262 1,341 5 532 49 230 122 239 487 204 1.125 95 [ 474 38 ----- 3
1 The retirements include employees whose annuities were certified by the Board age used in this table, as in the two preceding tables, is derived from employee regis-by the end of 1939; for technical reasons it was necessary to omit from this table about trations for account numbers; this may differ from age as proved by birth certificates
2,000 annuity certifications. The number of deaths is obtained from reports filed or other documents used in the tabulations of employee annuitants in chapters dealing
with the Board by the end of 1939; reports on death cases are incomplete, particularly with retirement operations.
for persons separated from service for some time before death. The information on
LIST OF TABLES AND CHARTS
Tables
Table Page
1. Number of employees of class I railroads at middle of the month by
selected occupational groups, June 1939-July 1940_______________ 14
2. Applications for certificate of benefit rights and unemployment insurance claims received, fiscal year 1939-40_________________________ 18
3. Percent of processed claims with 1-7, 8-14, and 15 days of unemployment, fiscal year 1939-40____________________________________________ 20
4. Number of applications held eligible, waiting-period credits certified, initial benefit payments and final benefit payments certified, fiscal year 1939-40_________________________________________________________ 21
5. Number and amount of unemployment insurance benefit payments certified, fiscal year 1939-40_______________________________________ 24
6. Average benefit payment, average daily benefit amount, and average number of benefit days for unemployment insurance benefit certifications, fiscal year 1939-40___________________________________________ 25
7. Unemployment insurance benefit certifications for class I railroad employees, distributed by selected occupations of beneficiaries, fiscal year 1939-40_________________________________________________________ 27
8. Applications for certificate of benefit rights and claims received, waiting-period credits and benefit payments certified, by administrative regions, fiscal year 1939-40--------------------------------- 28
9. Number and amount of benefit payments by State of residence of beneficiary, fiscal year 1939-40_____________________________________ 30
10. Unemployment insurance beneficiaries and benefit certifications distributed by base-year compensation classes, fiscal year 1939-40------ 31
11. Compensable unemployment by selected occupational groups, fiscal year 1939-40_________________________________________________________ 34
12. Percentage distribution by age groups of unemployment insurance beneficiaries in fiscal year 1939-40 and of total eligible employees in
1938, class I railroads_________________________________________ 35
13. Contributions collected under the Railroad Unemployment Insurance Act, fiscal year 1939-40_____________________________________________ 36
14. Receipts and expenditures in railroad unemployment insurance account, fiscal year 1939-40-------------------------------------------------- 36
15. Regions of Railroad Retirement Board: Location of offices and territory served, end of June 1940________________________________________ 41
16. Balance on hand of unemployment insurance claims distributed by type, for selected dates in fiscal year 1939-40---------------------- 53
17. Unemployment insurance benefit certifications distributed by number of days elapsing between the date on which half-month ended and the date on which certification was made, for selected weeks in fiscal year 1939-40__________________________________________________ 54
18. Average unemployment insurance benefit for half-month of total unemployment in fiscal year 1939-40, compared with full-time wage for same period in 1938, occupational groups of employees of class I railroads____________________________________________________________ 58
290
List of Tables and Charts • 291
Table Page
19. Average weekly benefit for total unemployment under unemployment compensation laws of selected States, compared with equivalent weekly benefit under Railroad Unemployment Insurance Act (prior to 1940 amendment)_________________________________________________ 59
20. Weekly benefit rates and maximum benefit amounts for year under the Railroad Unemployment Insurance Act (prior to amendment in
1940) compared with average State rates and maximum amounts. _ 61
21. Number and percent of employees of class I railroads with credited compensation of $150 to $2,000 for 1938, by amount of full-time weekly wage________________________________________________________ 67
22. Comparison of benefits under Railroad Unemployment Insurance Act, before and after 1940 amendments___________________________________ 68
23. Estimated percent increase in amount of benefits certified under Railroad Unemployment Insurance Act in fiscal year 1939-40 if
benefit provisions approved Oct. 10, 1940, had been in effect_ 70
24. Financial operations under the Railroad Retirement Act__________ 82
25. Retirement benefits certified to the Secretary of the Treasury by class of benefit, fiscal years 1937-40___________________________________ 83
26. Accrued retirement obligations by class of benefit, fiscal years 1936-
40__________________________.1________________________________ 88
27. Retirement benefits certified through June 1940: Number and amount payable for June of each year by class of benefit, 1936-40_________ 90
28. Applications for employee annuities: Total number received by fiscal years 1936-40, and number of active applications received monthly for 1939-40________________________________________________________ 96
29. Applications for employee annuities: Number received classified by number of months between filing and apparent accrual dates, by type of annuity, fiscal year 1939-40_______________________________ 98
30. Disability claims handled by the ’disability rating board: Number by fiscal years 1938-40, and monthly for 1939-40___________________ 102
31. Appeals council decisions through June 1940: Number by appellant and nature of appeal, classified by whether involving eligibility for benefits or additional benefits, and by whether decision of division of retirement claims was sustained or reversed________________________ 107
32. Rules and practices governing employment relation established through June 1940: Number__________________________________________ 123
33. Employee annuity applicants through June 1940 held not to be in an employment relation on Aug. 29, 1935: Number by cause of termination of rights and period of determination_________________________ 126
34. Employment relation claims ruled on through June 1940: Number and percent of claims allowed and disallowed, by period when annuity application was filed______________________________________ 127
35. Employment relation claims ruled on through June 1940: Number allowed and disallowed, by status on Aug. 29, 1935, class of employer, and occupational group_____________________________________ 128
36. Employment relation claims ruled on through June 1940: Number and percent of claims allowed and disallowed by status on Aug.
29, 1935, and year last worked________________________________ 129
37. Employee annuities certified through June 1940: Number of annuities certified and number in which employment relation was allowed, by status on Aug. 29, 1935, and period annuity began to accrue________ 130
292 • Annual Report of the Railroad Retirement Board
Table Page
38. Employee annuities certified through June 1940: Percentage distribution by type of annuity for annuities beginning to accrue during each half-year, 1936-40--------------------------------------------------------- 134
39. Employee annuities certified through June 1940: Number beginning to accrue in each period, classified by type of service credited----------- 143
40. Employee annuities certified through June 1940: Number and monthly amount payable for June of each year by type of annuity, 1936-40. _ 146
41. Employee annuities certified through June 1940: Estimated total amount paid by type of annuity, fiscal years 1936-40----------------------- 147
42. Employee annuities in force June 30, 1940: Number of finally certified annuities by monthly amount of single-life and actual annuity, by type----------------------------------------------------------------------- 150
43. Employee annuities in force June 30, 1940: Number by attained age of annuitant as of Dec. 31, 1939, and by type of annuity---------------------- 151
44. Pensions certified through June 1940: Number and monthly amount payable for terminations by death and all others, monthly, fiscal years 1938-40____________________________________________________________________ 154
45. Pensions in force June 30, 1940: Number by monthly amount of pension and by cause of retirement-------------------------------------------- 155
46. Pensions terminated by death in the fiscal year 1939-40: Number by monthly amount of pension and by cause of retirement----------------------- 156
47. Pensions in force June 30, 1940: Attained age of pensioners as of
Dec. 31, 1939, by cause of retirement------------------------------- 156
48. Pensions terminated by death in the fiscal year 1939-40: Number by
cause of retirement and attained age of pensioners as of Dec. 31,1939. 157
49. Employee annuities certified through June 1940: Number with joint and survivor election by period in which annuity began--------------------- 159
50. Employee annuities certified through June 1940: Number by type of joint and survivor election, with average annuity and average attained age of annuitant and spouse--------------------------------------- 160
51. Employee annuities finally certified through June 1940: Number by type of joint and survivor election and by monthly amount of singlelife annuity--------------------------------------------------------------- 161
52. Survivor annuities: Number by amount of annuity for annuities certified through June 1940, and for annuities in force June 30, 1940_______________________________________________________________________ 163
53. Lump-sum death benefits: Number by amount and fiscal year of certification, 1938-40----------------------------------------------------- 167
54. Death benefit annuities: Number by monthly amount payable for certifications and terminations through June 1940, and for annuities in force June 30, 1940----------------------------------------------------- 170
55. Number of employees, average credited compensation, and average number of months of service per employee in 1939 and 1938, and percent change from 1938, by selected classes of employers----------------- 173
56. Percent change in 1939 from 1938 in number of employees, average credited compensation, and average number of months of service, for selected occupational groups of class I railroad employees------------- 174
57. Companies or organizations held to be employers under the Railroad Retirement Act through June 1940: Number by provisions of act under which covered and whether operating under the act on or after Jan. 1, 1939--------------------------------------------------------- 191
List of Tables and Charts • 293
Table Page
58. Employers with active status ruled under the Railroad Retirement and Railroad Unemployment Insurance Acts through June 1940: Number by class of employer and by provision under which covered under the acts_______________________________________________________________ 192
59. Employees with credited earnings for 1939: Estimated number by class of employer and by provision under which employer is covered___________ 193
Charts
Chart
I. Outline chart of the administrative organization of the Railroad Retirement Board________________________________________________ face p. 1
II. Employment and unemployment in the railroad industry, monthly, fiscal year 1939-40_________________________________________________ 16
III. Average weekly number of initial applications and of initial unemployment benefits certified, monthly, fiscal year 1939-40____________ 22
IV. Occupational composition of class I railroad employees for whom unemployment benefits were certified, monthly, fiscal year 1939-40. 32
V. Retirement benefits certified through June 1940: Total amount for each fiscal year, 1937-40___________________________________________ 86
VI. Retirement benefits certified through June 1940: Percentage distribution by class of benefit of amount for each fiscal year, 1937-40. 87
VII. Employee annuities: Number certified and beginning to accrue in
each month, fiscal years 1937-40_______________________________ 93
VIII. Employee annuities: Number beginning to accrue in each month, by type of annuity, fiscal years 1937-40_______________________________ 133
IX. Disability annuities: Number beginning to accrue in each month, by type of annuity, fiscal years 1937-40_____________________________ 135
X. Employee annuities finally certified through June 1940: Percentage distribution by amount of single-life annuity for each type of annuity_____________________________________________________________ 140
XI. Employee annuities certified through June 1940: Total amount for
each fiscal year, 1937-40______________________________________ 148
XII. Employee annuities certified through June 1940: Percentage distribution by class of benefit of amount for each fiscal year, 1937-40. 149
Appendix Tables
Table
A- 1. Age and service distribution of employees in active service Dec. 31, 1938_______________________________________________________________face p. 209
A- 2. Comparison of 3 age and service distributions by attained age, by
length of service, and by age at entry_________________________ 210
A- 3. Age distribution and total service of inactive and terminated employees Dec. 31, 1938____________________________________________ 212
A- 4. Percentage age distributions of new or reemployed employees______ 214
A- 5. Ungraduated average earnings in 1937 and 1938 by year of birth and by adjusted year of entry____________________________________ 216
A- 6. Ungraduated average earnings in 1937 and 1938 combined by age
and length of service__________________________________________ 217
A- 7. Graduated salary scale 1937-38___________________________________ 218
A- 8. Average earnings of inactive and terminated employees____________ 219
A- 9. Rates of withdrawal for causes other than death, disability, or retirement_______________________________________________________ 221
294 • Annual Report of the Railroad Retirement Board
Table Page
A-10. Rates of permanent and total disability----------------------------- 222
A—11. Railway employees mortality table and monetary values at 3 percent_____________________________________________________________ 223
A—12. Comparison of actual and expected deaths based on group life-insurance experience------------------------------------------------ 224
A-13. Mortality of nondisability annuitants, June 1, 1936, to June 30, 1939_________________________________________________________________________ 225
A-14. Mortality of nondisability pensioners, July 1, 1937, to June 30, 1939_i_______________________________________________________________________ 225
A-15. Select and ultimate rates of mortality among disabled lives------- 226
A-16. Mortality of disability annuitants June 1, 1936, to Dec. 31, 1939__ 227
A-17. Disabled railway employees mortality table and monetary values at 3-percent interest----------------------------------------------- 228
A-18. Mortality of disability pensioners by attained age July 1, 1937, to
June 30, 1939____________________________________________________ 229
A-19. Mortality of disability pensioners by duration since retirement----- 230
A-20. Comparison of disabled life annuity values-------------------------- 230
A-21. Crude rates of nondisability retirement 1937-39--------------------- 231
A-22. Nondisability retirement rates-------------------------------------- 231
A-23. Age and service distribution of employees in active service Dec. 31, 1938, in 5-year groups---------------------------------------------- 236
A-24. Present value of future benefits as of Dec. 31, 1938---------------- 239
C-l. Financial operations under the Railroad Retirement Act, fiscal years 1937-40---------------------------------------------------------.- 243
C-2. Collections under the Carriers Taxing Act by fiscal years 1938-40, and monthly, July 1938-June 1940---------------------------------------- 244
C-3. Benefit payments certified to the Secretary of the Treasury: Total amount by class of benefit, monthly, July 1936-June 1940---------------- 245
C-4. Benefit payments certified to the Secretary of the Treasury: Retroactive amounts by class of benefit, monthly, fiscal years 1937-40- 246
C-5. Annuities and pensions in force: Number and monthly amount payable at end of period by class of benefit, fiscal years 1937-40, and monthly for 1939-40------------------------------------------------- 247
C-6. Annuities and pensions certified through June 1940: Number and amount payable for month by class of benefit, monthly, June 1936-June 1940__________________________________________________________ 248
C-7. Retirement payments by class of benefit and State, fiscal year 1939-40_________________________________________________________________ 249
C-8. Annuities and pensions by class: Number and monthly amount payable for new certifications, terminations by death, and annuities in force, fiscal years 1937-40, and monthly for 1939-40------------ 250
C-9. Employee annuities certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940_ ________________________________________________________________ 252
C-10. Age annuities beginning at 65 years and over certified through
June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940------------------------------- 253
List of Tables and Charts • 295
Table Page
C—11. Age annuities beginning before 65 years certified through June
1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940____________________________________ 254
C-12. Disability annuities with 30 years’ service certified through June
1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940____________________________________ 255
C-13. Disability annuities with less than 30 years’ service certified through
June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940______________________________ 256
C-14. Employee annuities certified through June 1940: Number by period of last compensated service and by type of annuity________________ 257
C-15. Employee annuities certified through June 1940: Number of annuities beginning in each half-year period, classified by date of last compensated service and by type of annuity, June 1936-June 1940 259
C-16. Employee annuities certified through November 1940: Averages of selected characteristics for each type of annuity by period in which annuity began to accrue, June 1936-June 1940________________ 262
C-17. Employee annuities finally certified through June 1940: Number by amount of single-life and actual annuity and by type of annuity. _ 264
C-18. Employee annuities certified through June 1940: Number by age of annuitant at time annuity began and by type of annuity_______________ 265
C-19. Employee annuities finally certified through June 1940: Number by
years of service on which annuity is based and by type of annuity. 266
C-20. Employee annuities finally certified through June 1940: Number by average monthly compensation on which annuity is based and by type of annuity________________________________________________ 267
C-21. Employee annuities certified through June 1940: Number by class of employer and occupational group and by type of annuity_______________ 268
C-22. Employee annuities terminated by death through June 1940: Number by age of annuitant at end of year of death and by type of annuity___________________________________________ ____________ 269
C-23. Employee annuities after claims pending June 30, 1940, are adjudicated: Estimated number and monthly amount payable for annuities beginning to accrue each month, by type, January 1939-June 1940__________________________________________________________ 270
C-24. Employee annuities certified through June 1940 and after claims pending June 30, 1940, are adjudicated: Number and monthly amount payable for annuities beginning to accrue for each half-year period, by type of annuity, June 1936-June 1940____________________ 271
C-25. Employee annuities after all claims pending as of June 30, 1940, are adjudicated: Estimated number and monthly amount payable, by type of annuity, monthly, January 1939-June 1940. 272
C-26. Employee annuities in force June 30, 1940: Number and average actual annuity by last railroad occupation______________________________ 273
C-27. Employee annuities certified through June 1940: Number with joint and survivor election, and by type of annuity for annuities beginning to accrue during each half-year, January 1937-June 1940________________________________________________________’___________ 275
296 • Annual Report of the Railroad Retirement Board
Table Page
C-28. Survivor annuities certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by death, and annuities payable, monthly, June 1936-June 1940______________________________________________________________ 276
C-29. Lump-sum death benefits: Number of employee death claims received, and employee and other death claims certified, by fiscal years 1938-40 and monthly for fiscal year 1939-40---------------------- 277
C-30. Death benefit annuities certified through June 1940: Number and monthly amount payable for annuities beginning to accrue, terminations by completion of payments and by death, and annuities payable, monthly, June 1936-June 1940---------------------------------- 278
D-l. Number of employees in 1939 and 1938 and percent change from 1938, total and for selected classes of employers, distributed by amount of credited compensation for the year--------------------------- 279
D-2. Number of employees, distributed by selected classes of employers and by months of credited service in 1939 and 1938, and percent change from 1938_______________________________________________________ 280
D-3. Number of employees of class I railroads in selected occupational groups, distributed by amount of credited compensation for 1939 and 1938, average credited compensation, and percent change from 1938______________________________________________________________ 281
D—4. Number of employees of class I railroads in selected occupational groups, distributed by months of credited service in 1939 and 1938, average credited months of service, and percent change from 1938______________________________________________________________ 282
D-5. Number and percent of employees in active service in 1939, distributed by service status in 1937 and 1938, for selected classes of employers and selected occupational groups of class I railroad employees______________________________________________________________ 284
D-6. Average credited compensation and average number of months of service in 1939, for employees distributed by service status in 2 preceding years, by selected classes of employers and selected occupational groups for class I railroad employees--------------------- 285
D-7. Average credited compensation and average number of months of credited service in 1937, 1938, and 1939 for employees in active service in each of the 3 years, by selected classes of employers and by selected occupational groups for class I railroad employees— 285
D-8. Number of employees with credited compensation of $150 and over, distributed by railroad unemployment insurance compensation groups, total and for selected classes of employers and selected occupational groups of class I railroad employees, 1939 and 1938__ 286
D-9. Number of employees with 10 to 12 and less than 10 months of service in 1938, total and for selected classes of employers, distributed by age groups_____________________________________________________________ 287
D-10. Employees in selected occupational groups of class I railroads, distributed by age, number, and percent, 1938-------------------------- 288
D-ll. Number of retirements and deaths among employees with last railroad service in 1938, by age attained in 1938, for selected occupational groups of employees of class I railroads and for selected classes of employers------------------------------------------ 289
INDEX
Page
Ability to work, unemployment insurance__ 47
Account, railroad retirement:
Appropriations_____________________ 81, 82, 241-243
Assets_____________________________ 1, 2, 83, 242
Disbursing officer’s cash_____________ 241-243
Interest______________________________ 82,243
Investments________________________ 83,242,243
Payments_______________ 1, 81-83, 242, 243, 245, 246
Transfers by Treasury______________ 82, 241/243
Trust fund___________________________ 241,242
Account, railroad unemployment insurance:
Advance from Treasury_____________________ 36, 37
Contributions______________________ 6,13,35,36
Deposits_______________________________ 13,36
Interest credited______________________ 36,37
Payments___________________________________ 6, 36
Transfers from States_______________ 13,36,37
Unemployment trust fund________________ 13,37
Accruals, new. (See Annuities, employee.)
Actuarial valuation:
Actuarial advisory committee, statement of. 203,
204
Actuary, report of______________________ 204, 240
Board recommendations___________________ 198,203
Summary__________________________________ 2
Adjudication, employee annuity:
Appeals. (See Appeals, retirement.)
Applications. (See Applications, employee
annuity.)
Certifications. (See Certifications, employee
annuity.)
Claims:
Denied_______________________________95,96
Inactive_____________________________96,97
Superseded_____________________________ 95
Disability annuities. (See Disability rating board.)
Employment relation. (See Employment relation.)
Insufficient service. (See Service, insufficient.)
Legal questions_________________________ 116-121
Pending load_______________________________97-98
Prior service. (See Service, prior, records.)
Adjudication under 1935 or 1937 act_______ 116-117
Adjudication, unemployment insurance claim 39,
52-55
Administration, unemployment insurance:
Changes in______________________________ 38,78-80
Field organization______________________9,38-41
Page
Personnel requirements of________________9,40,80
Procedures set up for____________________ 42-46
Administration fund, unemployment insurance____________________________________ 13,37
Administrative funds, retirement:
Appropriations___________________________82,84
Expenditures_______________________________ 84
Affiliates, carrier__________________ 10,11,179,180
Age:
Employee annuitants______ 137-139,141,151,152, 265
Employees----------- 175-176, 210-219, 236, 287, 288
Pensioners_______________________________ 153,155
Unemployment insurance beneficiaries_____ 35
Age annuities. (See Annuities, employee.)
Agreements, unemployment insurance_______ 38
Amendments, retirement act:
Coal mining, exclusion from coverage-. 11,181,182
Erroneous payments, recovery of__________ 78
Foreign service, changes in coverage_____ 10,184
Local lodges, changes in coverage of_ 10,77,185
Military service credited toward annuities.. 11, 12,190
Amendments, unemployment insurance act: Account, unemployment insurance, funds transferred to______________________________ 79
Annuity applicants, unemployment insurance benefits of_________...._________76,77
Appeals procedure..._______________________ 78
Benefit amounts, daily___________________ 7,66
Benefit days____________________________ 7,65,67
Benefit year_________________________ 7,67,71-73
Coal mining, exclusion from coverage.. 11,181-182
Disqualifying conditions________________ 75-77
Erroneous payments, recovery of__________ 78, 79
Half-month, elimination__________________ 7, 64, 65
Local lodges, exclusion of service___ 10,77, 78
Maximum benefit amounts__________________ 65,67
Mileage workers, disqualification________75,76
Penalty for failure to accept suitable work.. 76
Personnel, appointment and transfer______ 9,80
Registration period__________________ 7, 64, 65, 75
Remuneration____________________________ 73,74
Self employment__________________________ 73, 74
Subsidiary remuneration____________________ 74
Sundays and holidays, registration for___74,75
Transfer cases, registration periods for_ 75
Unemployment, definition_________________46-50
Wage reports, requirements_________________ 79
Wages in lieu of notice__________________76,77
Waiting period___________________________7,68, 69
Working shift overlapping 2 calendar days.. 75
297
A
298 • Index
Page
Annuitants, employee:
Age:
At retirement___________ 137-139,141, 262, 263,265
Attained______________________________ 151-152
Compensation, average monthly------------- 139,
140-143,262,263, 267 ... 134-136,257-261 144-145,162,168, 269 ____________ 136,268 ... 137,268,273-274
Date last worked Deaths___________
Employer, last... Occupation, last.. Service:
Credited____________________ 141-144,262,263,266
Type of credited______________________ 143-144
Annuities, death benefit. (See Death benefit annuities.)
Annuities, employee (see also Annuitants, employee):
Accruals, new________ 132-134,135,252-256,259-263
Actual______________________ 149-150,264, 273-274
Adjudication. (See Adjudication, employee annuity.)
Age_______ 134-150,253-254,257-260,262,264-272,275
Amount:
Monthly____________________________90,140,145-
146,149-150,247-250, 252-256,263,264,270-272
Tabulation by States------------------ 90, 91,249
Yearly________________________________146-148
Appeals. (See Appeals, employee annuity.) Applications. (See Applications, employee annuity.)
Average, actual... 139,141-142,148-150, 264, 273-274
Benefits, calculation of------------------ 205
Benefits, eligibility for----------------- 205-206
Certifications. (See Certifications, employee annuity.)
Disability___________ 134-150,255-258,260-272, 275
Increase, rate of__________________ 86,88,132-134
In force_______________________________2,148-152
Joint and survivor. (See Joint and survivor annuities.)
Lump-sum, commuted payments--------------- 145
Minimum____________________________ 119-120,124,206
Normal_____________________________ 150, 262-264
Number payable, accrual basis... 145-146,270-272
Number under 1935 act------------------- 168,169
Obligations, accrued________ 1,2,83, 85-89,146-148
Payments (see also amount)------------------ 1,2
Reductions___________________________ 94,138,160
Single-life_________________ 140,149-150,262-264
Suspensions_________________________ 117-118,145
Terminations_____________ 144-145, 250, 252-256, 269
Annuities, joint and survivor. (See Joint and survivor annuities.)
Annuities, survivor. (See Survivor annuities.)
Annuity payments, suspension of-------- 117-118,145
Appeals, retirement:
Appeals Council--------------------
Board, appeals to------------------
Court cases________________________
Number_____________________________
Procedure__________________________
Appeals, unemployment insurance-..
105-108 108-109 109-110 .. 105
104-106 78
Applications, employee annuity: Page
Active____________________________________ 96,97
“Carrier specials”________________________ 100
Denied_______________________________________ 96
Field, receipt in___________________ 1,96,98-100
Inactive__________________________________ 96,97
Number, total_______________________________ 97
Type of annuity claimed______________________ 98
Applications, unemployment insurance. (See Certificate of benefit rights.)
Appropriations, retirement account... 81,82,241-243
Assets, retirement account_________ 1,2,83,242
Attorneys, claimants’_______________________ 120
Availability for work, unemployment insurance------------------------------------- 46,47
B
Base period, retirement----------------110-114
Base year, unemployment insurance-------13,46,71
Beginning date, employee annuity---------- 117
Beneficiaries, retirement, number------2,89,90
Beneficiaries, unemployment insurance (see
also Benefits, unemployment insurance).
Age_____________________________________ 35
Compensation_______________________ 6, 7, 30, 31
Number receiving maximum benefits-----21,33-35
Number, total______________________ 6,16, 20, 21
Occupation_________________________ 26-28,32-35
Unemployment, duration-------------6,15,31,33-35
Beneficiary designation, death-benefit.- 119,167-168
Benefit days, unemployment insurance:
Amounts payable:
Average________________________________ 25
Scale of___________________ 13,65,68
Carry-over provision--------------------- 7,67
Maximum____________________________7,13,64,67
Number, increase in---------------- 7,64,65,67
Number in half-month, average______19, 20,25,26,65
Benefit rights, unemployment insurance (See
also Certificate of benefit rights):
Carry-over of___________________________ 7,67
Exhaustion of______________________ 19,21, 23,34, 35
Benefit year, unemployment insurance.. 46,67,71-73
Benefits, retirement (see also Annuities, employee; Death benefit annuities; Joint and survivor annuities; Death benefits, lump-sum; Pensions; Survivor annuities):
Amount_______________________________ L 85-89
Classes.._______________________________86-87
Tax exemption___________________________ 120
Benefits, unemployment insurance:
Amount:
Average________________________ 21,24-29,58
Compared with State benefits----7,58-61,66
Compared with wages------------------ 7,57
Daily benefit_______________________13, 65,68
Total certified_____________________6, 24,28, 30
Annuity applicants, payments to--------- 77
Benefit days, in half month, average----25,26
Certification, rate of__________________52-55
Index • 299
Page
Benefits, unemployment insurance—Continued. Certifications:
Final----------------------------- 19,21,23
Initial_______________________________21-23
Number________________________________23,24
Costs, under amended act__________________69-71
Disqualifications for________________ 50-52,73-77
Inadequacy of___________________________7,57,62
Increases under amended act_____________7,64-71
Maximum_____________________________13,19,21,23
Payments, erroneous_______________________78,79
Regions, tabulation by____________________28, 29
Rights to-------------------------------- 13,14
Scale of_______________________________13,63-71
States, tabulation by_____________________29,30
Business conditions, effect on retirement_9,202
c
Carrier affiliates___________ 10,11,179-180,191-194
Carriers, coverage of........ 10,11,177-179,191-194
Carriers Taxing Act:
Amendments________________________________ 10,77
Collections__________________________ 82-84, 244
Rates_____________________________________2-4,84
Carry-over of unemployment insurance benefit days-------------------------------------- 7,67
Certificate of benefit rights, applications for:
Number held eligible_________________17,18,20-23
Numberreceived_________________________17,18,28
Procedure for applying______________________ 42
Regional distribution_____________________ 28
Certificates of service months and wages________ 42
Certifications, employee annuity (see also
Annuities, employee):
Initial--------------------------------- 92,250
Partial-----------------------------------92,94
Recertifications__________________________94,95
Certifications, retirement benefits. (See Annuities, employee; Certifications, employee annuity; Death benefit annuities; Death benefits, lump-sum; Joint and survivor annuities; Pensions; Survivor annuities.)
Certifications, unemployment insurance. (See Benefits, unemployment insurance; Waiting period.)
Claim agents, unemployment insurance_______38,39
Claims, retirements. (See Adjudication, employee annuity; Annuities, employee; Applications, employee annuity; Death benefit annuities; Death benefits, lump-sum; Pensions; Survivor annuities.)
Claims, unemployment insurance (see also Benefits, unemployment insurance; Waiting-period, unemployment insurance):
Days of unemployment________... 19,20,25, 26,31
Fluctuations in load________________8,9,16-20
Number held eligible______________________ 16
Numberreceived__________________________16-18
Procedure_______________________________43-46
Regional distribution__________________ 28,29
Coal mining, coverage of__________ 11,181-182
Compensation classes, unemployment insurance---------------------------- 13,30-31,286
Page
Compensation, creditable, defined________ 186-190
Compensation, credited, fiscal year 1940___ 85
Compensation, credited 1939:
Amount, total____________________________ 172
Changes from 1938_______ 173-174, 279, 281, 282, 286
Employer, by---------------------- 173, 279,285, 286
Occupation, by_______________ 174, 281, 282,285,286
Reported by month________________________172-173
Unemployment insurance classes, by 13,30-31,286
Contribution, Federal, retirement________4,202
Contributions, unemployment insurance (see
also Account, unemployment insurance):
Amount________________________________ 6,35,36
Board authorized to collect______________13,14
Collection procedure for_________________55,56
Labor organizations_____________________ 10,56
Rate of_____________________________________ 7
Countersigning agents______________________ 38
Coverage:
Carrier affiliates________________10,11,179-180
Carriers by railroad______________ 10,11,177-179
Coal mining company__________________11,181-182
Dual, railroad and general systems_______5,7,8
Electric railways_____________________ 178-179
Employee representatives_______________182,185
Employees______________________________183-186
Foreign service_____________________10,184-185
Joint employment__________________________ 184
Labor organizations, railway_______ 77,182,185
Local lodges______________________ 10, 77,182,185
Principal business in United States_______ 180
Statistics____________________________ 191-194
D
Daily benefit amounts, unemployment insurance. (See Amendments, unemployment insurance; Benefits, unemployment insurance.)
Day of registration. (See Registration, un-
employment insurance.)
Day of unemployment, defined______________46-52
Death benefit annuities:
Accruals, new_________________________ 170-171, 278
Amount_________ 88,90,169,170,171,245,248,251, 278
Amount, tabulation by State_________________ 249
Certifications________________________ 2,169,251
Claims______________________________________ 169
Deaths______________________________________ 170
Definition________________________________87,168
In force__________________________________ 170, 251
Payments. (See Amount.)
Rulings___________________________________ 120
Terminations__________________________ 169,251, 278
Death benefits, lump sum:
Amount________________________ 2,88,90,166,167,245
Amount, tabulation by State_______91,249
Annuitant death claims_____________ 95,164,165,277
Applicant death claims__________ 164,277
Average_________________________ 165-167
Beneficiary designations______________119,167-168
Certifications—.......................... 165,166
300 • Index
Death benefits, lump sum—Continued. Page
Claims:
Disposal______-___________________ 164,165,277
Number__________________________________ 166
Definition______________________________ 87,164
Employee death claims________________ 164-165,277
Payments. (See Amount.)
Purpose of___________________________________ 5
Deaths:
Annuitants, employee________ 144-145,162,168, 269
Death benefit annuitants___________________ 170
Employees______________________________ 164,289
Joint and survivor annuitants---------- 161-162
Mortality rates__________________ 198-200, 222-230
Pensioners_________________________________ 155
Survivor annuitants________________________ 163
Designation, death benefit beneficiary.._ 119,167-168
Disability annuities. (See Annuities, employee;
Disability rating board.)
Disability rate__________________________ 222
Disability rating board:
Claims:
Denied________________________________ 101,102
Granted_______________________________ 101,102
Handled_________________________________ 101
Function of board_______________________ 101,104
Health determinations______________________ 104
Medical examinations_______________________ 103
Mental competency determinations---------------- 104
1935 act decisions______________________ 101,102
Disqualifying conditions, unemployment benefits_____________________________ 50-52,75-76
District managers___________________________ 39
Dual coverage, railroad and general systems... 5, 7,8
E
Elections, joint and survivor----------5,158-163
Electric railways_________________ 178-179,191-193
Eligibility, unemployment insurance-------- 6,7,
13,14,17,19, 21
Employee accounts--------------------------- 175
Employee annuitants. (See Annuitants, employee.)
Employee annuities. (See Adjudication, employee annuity; Annuitants, employee; Annuities employee, Applications, employee annuity.)
Employee coverage____________ 5,7,10,183-186,192-194
Employee representatives__________________ 182,185
Employees:
Age__________________ 175-176, 210-219, 236, 287, 288
Compensation, credited----------------- 172-174,
279, 281, 282, 285, 286
Coverage________________________________ 183-186
Deaths_________________________________ 164, 289
Earnings 1937-38________________________ 216-219
Employer, class of___________ 173, 279, 280, 284-287
Number, 1939 and 1938_____________ 173-175, 279-286
Occupation________________________ 14,15, 281-289
Retirements_______________________________ 289
Service, credited_________________________ 173-174,
206-213, 279, 280, 282, 283, 285, 287
Employees—Continued. Page
Turn-over_____________________ 175-176, 284, 285
Unemployment compensation classes, by. 67,287
Employer contributions. (See Contributions, unemployment insurance.)
Employer coverage. (See Coverage.)
Employment, railroad_____________________ 14-16
Employment relation, adjudication of:
Accrual period__________________________ 130,131
Allowed claims__________________ 124,125,127-129
Certifications, number__________________ 130,131
Claims:
By class of employer___________________ 128
By date last worked________________ 127-129
By occupational group---------- 125,127,128
Definition_________________________ 122,131,205
Disability______________________ 124,126,128-130
Disallowed claims__________________ 125,126-129
Furlough________________________ 123,128,129,131
Leave of absence___________________ 128,130,131
Minimum annuity____________________________ 124
Nonagreement employees_____________________ 123
Rules and practices____________________ 122-123
Sickness or disability__________ 124,126,128-130
Superannuated employees-------------------- 123
Termination of rights, cause of- 125-126,128-131
Employment service______________________9,10,50
Exemption, tax_____________________________ 125
F
Failure to accept suitable work------------- 76
Federal contribution, retirement----------4,202
Field agents________________________________ 39
Field organization (see also Administration, unemployment insurance; Regional offices):
Annuity applications handled by------------ 1,9
Description of___________________________ 38-41
Personnel detailed to and from----------9,79-80
Work load__________________________________ 8_9
Financial operations, retirement. (See Ac-
count, railroad retirement; Administrative funds, retirement.)
Financial operations, unemployment insurance. (See Account, railroad unemployment insurance; Administration fund, unemployment insurance.)
Foreign service coverage___________________ 10,184-185
Furloughs__________________________________ 123,128-131
G
Gratuities, compensation defined to exclude.. 187
121
Guardianship.
H
Half-month, unemployment insurance-----7,64,65
I
Incompetency___________________________ 121
Initial certifications. (See Certifications, employee annuity; Benefits, unemployment insurance.)
Index • 3
Page
Insufficient service. (See Service, insufficient.).
Interest: Retirement account_____<....____ 82,243
Unemployment insurance account_________... 36,37
Investments: Retirement account________________________ 82
Unemployment trust fund:________________ 37
J
Joint and survivor annuities:
Accruals, new_________________________ 159,275
Age:
Of annuitant___________________________ 160
Of spouse____________________________ 160
Amount________________________________ 160,161
Annuity, type of___________________________ 275
Certifications_____________________________ 159
Deaths of annuitants___________________ 161,162
Elections, advance_________________________ 161
In force___________________________________ 159
Option, type of________________________ 159-161
Payments. (See Amount.) Reduction, percent, in amount______________ 160
Restrictions under 1937 act______ 158,159,161,163
Rulings__________________________________ 119
Terminations_____________________________ 162
L
Labor organizations, railway_______________ 10,
56,77,182,185,192-194
Liabilities, railroad retirement. (See Account, railroad retirement; Actuarial valuation.)
Lodges, local__________________________10,56,77
Lump-sum death benefits. (See Death benefits, lump-sum.)
Lump-sum payments, commuted annuity.... 145
M
Medical examinations___________________ 103,104
Mental competency........................ 104
Mileage workers_____________________________ 75,76
Military service, credit for:
Retirement________________________ 11,12,190
Unemployment insurance______________________ 11
Minimum annuities________________ 119-120,124,206
Mortality rates._______________ 198-200,222-230
o
Obligations for retirem ent, accrued............. 1,2,
83, 85,89,146-148
Occupations:
Annuitants, employee___________ 137,268,273-274
Beneficiaries, unemployment insurance..... 7,
14,15,17, 26-28,32-35
Employees------------------------ 14,15,281-289
Options, joint and survivor. (See Joint and survivor annuities.)
P
Payment for time lost_____________ 11,48,188-189
Payments:
Retirement (see also Annuities, employee; Death benefit annuities; Death benefits, lump-sum; Joint and survivor annuities;
Pensions; Survivor annuities)____________ 1,2,
85-89,243,245,246
Page Payments—Continued.
Unemployment insurance (see also Benefits, unemployment insurance).. 6,21,24,26,28,30,36
Penalty, delinquent contributions___________ 36
Pensions:
Age---------------------------------- 154-157
Age of pensioners_______________________ 153,155
Amount:
Monthly----------------------- 90,155,247, 248
Tabulation by States_________________91,249
Yearly__________________________________ 88
Average___________________________________ .155
Deaths of pensioners____________________ 155
Definition______________________________ 87,206
Disability_____________________________ 154-157
In force__________________________ 153,155,156,250
Number transferred July 1, 1937____________ 153
Payments. (See Amount.)
Pensioners denied annuities_________________ 96
Terminations______________________... 154-157, 250
Personnel, Railroad Retirement Board.. 9,10,79,80 Placement service. (See Employment service.)
Prior service. (See Service prior; Service, prior, records.)
R
Recertification of employee annuities______ 94,95
Regional offices________________________ 9,10,41
Regions, unemployment insurance operations by--------------------------------------- 28-30
Registration, unemployment insurance: Administration and procedure..............38-40
Change in period__________________________ 7,64
Day of-------------------------------------- 43
Factors limiting__________________________ 6,15
Retroactive_____________________________ 43,44,
Transfer of_____________________________ 44,45,75-
Remuneration:
Definition______________________________ 73,74,187
Rulings---------------------------- 48,186-189’
Subsidiary_______________________________ 49,74
Time lost, for-------------------- 11,48,188-1891
Reserves:
Retirement_______________________________ 3,4
Unemployment insurance_______________ 13,63,70, 71
Retirement acts, railroad (see also Account, railroad retirement; Benefits, retirement;
Annuities, employee, etc.)_ 116-117,204-205
Retirement rates_____________ 9,200,201,230-232
Retirements since 1938____________________2,289
Rights, relinquishment_____________________ 117
s
Self-employment______________________________73,74
Service, credited (see also Service, prior; Serv-
ice, subsequent):
Age, by------------------------ 210, 212. 213, 236, 287
Change from 1938---------------- 173.282,283,285
Employer, by----------------------- 173,280,287
Occupation, by--------------------- 173,282,283,285>
276117—41----20
302 • Index
Page
Service, Insufficient, in base period: Definition............................. 110-111
Procedure for making determinations_____112-114
Types of cases__________________________... 111-112
Service months and wages, certificates of____ 42
Service, prior:
Annuitants with credit______________ 116,143,203
Definition______________________________ 122,143
Employees with credit.5,6,114,116,136,203,206-213
Employment relation, based on...........107,124
Military service credit_________________ 12,190
Rulings on______________________________ 189-190
Service, prior, records:
Forms completed, 1938_______________ 116,207-209
Joint resolution____________________ 5,114,115
Program: Advantages of.___________________________ 114
Need for___________________________6,114-115
Steps in____________________________ 115-116
WPA project_____________________________ 114,116
Service, subsequent____________ 136,143,208,212,213
Single-life annuity. (See Annuities, em-
ployee.) Social Security Act........................5,7,8
States:
Board agreements with___________________ 44
Employment service assistance by........ 55
Railroad unemployment insurance benefits, tabulation by__________________________ 29,30
Retirement benefit payments, tabulation by____________________________________ 90-91,249
Transfers to railroad unemployment insur-
ance account________________________.... 36,37
Unemployment compensation benefits of, compared with railroad unemployment insurance benefits____________________7,58-61
Suitable work, rulings on--------------- 51
Survivor annuities:
Accruals, new_______________________ 162,163,276
Amount:
Monthly_________________ 90,162,163,245-248,276
Tabulation by State_____________________ 249
Yearly___________________________________ 88
Average_________________________________ 162,163
Certifications__________________________ 162,251
Claims, disposition of_____________________ 162
Conditions of certification_________________ 158
Deaths______________________________________ 163
Definition_________________________________ 87
In force.---------------------------..... 163,251
Options_________________________________ 163
Payments. (See Amount.)
Terminations_____________________________ 251,276
Pag*
Survivor benefits (see also Death benefit annuities, Lump-sum death benefits; Survivor annutities)________________________4,5,158-171
T
Taxation, social insurance_______________ 3-4
Tax collections:
Carriers Taxing Act________________ 2,82-84,244
Railroad Unemployment Insurance Act______ 6,13,
14,35,36
Tax exemption of annuties________________ 120
Tax rates:
Retirement_______________________ 2-4,200-203
Unemployment insurance__________________ 7,13
Terminations. (See Annuities, employee;
Death benefit annuities; Death benefits, lump-sum; Joint and survivor annuities;
Pensions; Survivor annuties.)
Time lost, payment for_____________ 11,48,188-189
Tips_____________________________________73,188
u
Unemployment:
Board statistics__________________ 15,17-20
Compensation classes, by_________________31,33
Days of.____________ 19,20,25,26,28,31,46-52
Duration:
Average_____________________________ 31
Occupation, by_____________ 14,15,18,27,32-35
Region, by____________________________ 28
Seasonality____________________14,15.18,27,33
Unemployment, defined:
Availability for work--------------------- 46
Ability to work...______________________ 47
Changes under amendments. (See Amend-
ments, unemployment insurance.)
Remuneration______________________________ 48
Self employment___________________________ 73
Subsidiary remuneration_________________ 49
Sundays and holidays..__________________ 74
Unemployment insurance, British----------63,67
Unemployment insurance act, railroad. (See also Account, unemployment insurance; Amendments, unemployment insurance;
Benefits, unemployment insurance; etc.)__6-10,
13-80
V
Valuation, actuarial_______________ 2,3,198-240
w
Wage reports, changed requirements for...... 79
Wages. (See Compensation, credited.)
Wagner-Crosser bill----------------------- 7,67
Waiting period__________________ 7,21,23,28,62,68-70
Withdrawal rates_______________ 198,199,220-221
o
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WlVERSI TV Govern:.
Deposit Bellsoap Louisville,
IWISVILLB
: Dept, m
40808
Art Guild Bindery, tuck
MAY 1980