[Annual Report of the United States Railroad Retirement Board for the Fiscal Year Ended June 30, 1938]
[From the U.S. Government Publishing Office, www.gpo.gov]
ANNUAL REPORT OF THE
RAILROAD RETIREMENT BOARD
FOR THE FISCAL YEAR ENDED JUNE 30
1938
/ /1 1/13 7/^a
ANNUAL REPORT
• •
OF TH E//RAILROAD
RETIREMENT
BOARD
FOR THE FISCAL YEAR ENDED JUNE 30
1938
(With supplementary data, July 1-October 31,1938)
TABLE OF CONTENTS
CHAPTER PAGE
I. Introduction...................................... 1
II. Unemployment insurance for railroad workers...... 11
III. Claims and payments during the fiscal year 1937-38 . . 15
IV. Adjudication of employment relation annuity claims . . 41
V. Railroad retirement account....................... 59
VI. Death benefits and beneficiary designations....... 66
VII. Analysis of employee annuitants................... 77
VIII. Analysis of permanent pensioners................. 96
IX. Analysis of railroad wages and months of service for 1937 108
X. Employers under the Railroad Retirement Act......... 134
Appendices...................................................... 147
List of Tables and Charts....................................... 160
Index........................................................... 165
UNITED STATES GOVERNMENT
PRINTING OFFICE • WASHINGTON • 1938
/?/?/-/ 1^37/33
RAILROAD RETIREMENT BOARD
Murray W. Latimer, Chairman
M. R. Reed Lee M. Eddy
For sale by the Superintendent of Documents, Washington, D.C.
Price 20 cents
LETTER OF TRANSMITTAL
Railroad Retirement Board, Office of the Chairman, Washington, D. C., November 15, 1938.
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, 1938, together with supplementary information covering the period July 1 to October 31, 1938.
Respectfully,
Murray W. Latimer, Chairman.
INTRODUCTION
THE Railroad Retirement Board administers three acts of Congress covering two principal aspects of social insurance for employees of the railroad industry—a retirement system and an unemployment insurance system. The retirement system operates under the Railroad Retirement Act of 1935* 1 and the amendatory Railroad Retirement Act of 1937.2 The Railroad Unemployment Insurance Act3 establishes a Federal system of unemployment insurance for employees of the railroad industry. It became law June 25, 1938, but does not become effective with respect to benefits and contributions until July 1, 1939.
The Retirement Acts
The Railroad Retirement Act of 1935, enacted August 29, 1935, was superseded in large part by the amendatory act of 1937. The latter became law on June 24 of that year, so that the fiscal year 1937-38, covered by this report was, in effect, the first year of operation under that act. In section 3 of the annual report of the Railroad Retirement Board for 1936-37, the principal differences between the acts of 1935 and 1937 are set forth in considerable detail.
Employees who, before June 24, 1937, relinquished their rights to return to service in the railroad industry and were eligible for an annuity under the provisions of the 1935 act, have been or will be granted annuities under that act. All other employees who have or will become eligible for annuities will do so under the 1937 act. As of June 30,1938, there were approximately half as many annuities being paid under the 1935 act as under the 1937 act. More than 2,100,000 separate individuals to date have accumulated rights, based on service after January 1, 1937, to annuities or death benefits which will be paid under the 1937 act. Employees who on August 29, 1935, were in active compensated service, or in an employment relation to an employer under the act, may become eligible for annuities based on service prior to January 1,1937.
149 Stat. 967, Tit. 45, U. S. C. Supp. II § 215 et seq.
150 Stat. 307, Tit. 45, U. S. C. Supp. Ill § 228a et seq.
8 52 Stat. 1094, Tit. 45, U. S. C. Supp. IV § 351 et seq.
1
. I.
2 • Annual Report of the Railroad Retirement Board
The Board will continue for some time to handle matters pertaining to individuals eligible for or receiving annuities under the 1935 act. Besides a limited number of applications for employee annuities under that act, claims for 12-month-death benefit annuities under the death benefit provisions, and also for survivor annuities under joint and survivor elections, will be filed upon the death of employee annuitants4 under the 1935 act.
The Unemployment Insurance Act
The Railroad Unemployment Insurance Act was signed by the President on June 25, 1938. It creates a Federal system of unemployment insurance for the railroad industry. It removes railroad employees from the coverage of title IX of the Social Security Act and from the coverage of the State unemployment compensation laws, and places them under the provisions of an act which is national in scope. The act provides appropriate amendments to the Social Security Act and the District of Columbia Unemployment Compensation Act. The provisions of the statute, with respect to the actual payment of unemployment compensation, will become effective on July 1, 1939.
The Railroad Retirement Act of 1937 and the Railroad Unemployment Insurance Act of 1938 have virtually the same provisions with respect to employee and employer coverage and with respect to what constitutes creditable compensation. A detailed statement, based on decisions on specific questions which have arisen relative to employers covered by the Railroad Retirement Act of 1937, which likewise apply to the Railroad Unemployment Insurance Act will be found in chapter X of this report. An analysis of creditable wages and months of service for the year 1937 for all employees covered by the Railroad Retirement Act is presented in chapter IX. This analysis has been valuable in planning the unemployment insurance system.
Similar analysis for later years will be important in the administration of both acts, and more immediately so for the system of unemployment insurance. Because both acts have so many features in common, the Board will not need to establish an entirely separate organization for the administration of unemployment insurance but will be able to utilize many of its existing services on a broadened basis. Such integration will make possible more efficient and economical operation than would be possible if an independent organization and separate procedures were established for the administration of the Unemployment Insurance Act.
‘The Railroad Retirement Board uses the term “employee annuitant” to describe persons on its rolls receiving annuities based on their own service and compensation in the railroad industry. For an explanation of the different types of benefits paid by the Board see chapter III.
Annual Report of the Railroad Retirement Board • 3
The Board has appointed a Director of Unemployment Insurance, from an open competitive examination given by the Civil Service Commission, and is establishing the administrative machinery necessary for the operations of railroad unemployment insurance. A brief summary of the unemployment act and its legislative background is given in chapter II.
Peak-Load of Work Under the Retirement Acts
The work of the Board during the fiscal year 1937-38 was concerned almost entirely with the administration of the retirement system. As stated in the last annual report, the Board faced a peak-load of work by reason of the terms of the railroad retirement system and the effect upon the age distribution in the industry of the relatively longterm decline in railroad employment starting with 1924 and accentuated by the general industrial depression after 1929.
Unemployment was most severe among employees of short service. As a result, the relative proportion of employees 65 years or more, with many years of service in the railroad industry, increased. Furthermore, the depression after 1929, the reduction in the amount of private pensions and the increasing uncertainty that they would continue, caused many old people to remain in service indefinitely. Under the terms of both the 1935 and 1937 acts, not only individuals who were 65 years of age, but also all employees above that age became eligible immediately for annuities. That necessarily meant that the number of applications for annuities in the first year would be greater than in the future. With the granting of annuities based on prior service credit, a relatively large number of older employees with long years of service could afford to retire.
The operations of the Board were further complicated by the order issued on June 30,1936, by the District Court of the United States for the District of Columbia. This order, by enjoining the Board from compelling employers to furnish the information on which eligibility for and amount of annuity would be determined, placed upon the Board the entire work of collecting these data, a task for which it had neither the funds nor the personnel. The uncertainty brought about by the court order also discouraged many applicants from relinquishing rights or otherwise taking the necessary steps to expedite the certification of their annuities. Certain ambiguities in the 1935 act, which were cleared up in the 1937 act, raised additional problems which temporarily hindered adjudication. As a result of these and other factors, the process of certification also slowed up, and claims in various stages of adjudication piled up until the enactment of the 1937 act. The Board’s task was rendered more difficult by the fact that its personnel was scattered in several buildings, and that it had to train a staff for the special type of work required by its operations.
4 • Annual Report of the Railroad Retirement Board
By June 24, 1937, the date of the enactment of the 1937 act, the Board had received about 52,000 annuity applications, but had, under the conditions existing up to that time, been able to grant only about 7,000 annuities. About 7,500 applicants had been tentatively held ineligible; about 2,500 claims had been suspended by the action of applicants who were uncertain about the future of the retirement system; and about 10,390 claims were awaiting report of service and compensation from records of employers under the act. Most of the railroads did not begin to furnish records at their own expense until after the enactment of the 1937 act. About 24,000 remaining applications consisted of disability claims awaiting proof of disability; applications of individuals who, largely because of their uncertainty over the final outcome of the litigation concerning the constitutionality of the Railroad Retirement Act of 1935 and proposals for amendment, had not yet relinquished their rights to return to service and, therefore, could not yet be granted an annuity; claims resting upon the establishment of an employment relation on or after August 29, 1935, as provided for under the 1935 act; and claims awaiting the establishment of other facts necessary to determine the eligibility of applicants.
Obstacles Removed by Retirement Act of 1937
The enactment of the 1937 act removed the cause for anxiety felt by many thousands of employees. Underlying the act of June 24, 1937, was an agreement between the railway labor organizations and the principal carriers under which the carriers agreed to refrain from challenging the constitutionality of the new legislation. As a result, employees in large numbers filed applications for annuities and many who previously had filed applications but had not retired from active service immediately did so. During July and August of 1937, additional claims came in at the rate of nearly 300 a day. Many suspended claims were reinstated at the request of applicants, and claims previously held ineligible had to be reexamined in the light of the changed provisions in the 1937 act.
During the fiscal year 1937-38 the Board received 53,255 new applications for annuities which when added to the 52,699 it had received by July 1, 1937, made a total of 105,954 claims for applications received by the Board by June 30, 1938. By June 30, 1938, the Board had certified 67,030 claims for annuities, of which all but 7,386 were certified during 1937-38, and had held ineligible 4,716. In chapter III of this report the operation of the Board with respect to certification of annuities and death benefits is presented in considerable detail.
The claims adjudicated by the Board during the first months of the fiscal year 1937—38 consisted principally of those for which the railroads quickly returned reports of compensation and service and
Annual Report of the Railroad Retirement Board • 5
which did not involve special problems of adjudication. Such problems were raised by claims based on the determination of the existence of an employment relation; the establishment of total and permanent disability for regular employment for hire; and claims where service in the base period 1924 to 1931 was nonexistent or insufficient, or where records covering this period were missing.
Final adjudication of these special types of cases, a large fraction of the total claims, would have taken considerable time. In order to make immediate payment to as many applicants as possible, the Board established a special unit for the partial and temporary adjudication of these and other cases on the basis of a short report by the employer. By the end of the fiscal year 1937-38 about 11,000 such temporary and partial certifications had been made by the Board and the special unit handling these cases had practically ceased operations.
Special Adjudication Units
As rapidly as conditions permitted, the Board set up specialized units to handle cases involving particular problems of adjudication. This plan of organization made it possible to consider each special point in proper relation to all the facts bearing upon it. It also eliminated the transfer of cases from special units to regular units, and thus assured the continuous flow of claims through the adjudicating process.
Disability claims.—Under the 1935 act an employee otherwise eligible is entitled to a disability annuity if he is “retired by a carrier on account of mental or physical disability.” Under the 1937 act an employee may receive a disability annuity only if he is totally and permanently disabled for regular employment for hire, and is otherwise eligible. This change in the definition of disability required the Board to determine the existence or nonexistence of total and permanent disability for regular employment for hire wherever an annuity was claimed on the basis of such disability. In addition, the 1937 act increased the number of persons eligible for disability annuities by extending eligibility to individuals between 60 and 65 years of age, even though they had not completed 30 years of service, provided they were otherwise eligible.
On October 19, 1937, the Board set up a disability rating board to handle problems related to the establishment of a disability. The increasing load of work of this unit is shown by the fact that at the end of October 1937, a total of only 953 disability annuities were in force, but that during the next 12 months the disability rating board handled 14,133 disability claims of which 12,148 were granted annuities and 1,985 were ruled ineligible. In chapter III, the work of the Disability Claims Division of the Claims Service is discussed in detail.
6 • An nual Report of the Railroad Retirement Board
Employment relation claims.—The 1935 act allowed credit for service prior to its enactment date to individuals, otherwise eligible, who were in the compensated service of or in an employment relation to, an employer under the act on or after August 29, 1935. The 1937 act limited credit for service prior to January 1, 1937, to individuals who were in compensated service or in an employment relation on August 29, 1935. Thus the 1937 act made it impossible for employees whose claims were to be adjudicated under that act, to establish their right to prior service credit by showing that they had appeared on the pay roll after August 29, 1935. For such individuals, therefore, credit for as much as 30 years’ service might depend upon whether or not the individual had, on that date, an employment relation as defined in the act. As a result of this provision in the 1937 act, determination of employment relation as of a particular date became necessary in many additional cases. Another working problem was created by the increase in the number of employees covered by the act as a result of the change in the definition of “employment relation” which was expanded to include individuals who were absent from work on account of sickness or disability (in accordance with the established rules and practices of the employer).
On April 11, 1938, there was organized as a part of the Annuity Claims Division of the Claims Service an employment relation unit. This unit, in cooperation with the Office of the General Counsel and the Bureau of Economics, has assembled needed data, defined and interpreted established rules and practices and prepared findings of fact in cases involving employment relation. The results of the operations of this unit are given in chapter IV of this report.
Special treatment of base period.—The 1937 act expressly provides, as the 1935 act did not, that where service in the period 1924— 31, is, in the judgment of the Board, insufficient to constitute a fair and equitable basis for determining the monthly compensation for service prior to January 1, 1937, the Board shall determine the monthly compensation for such service in such manner as in its judgment shall be just and equitable. An employee may not have worked at all or worked at infrequent intervals during the base period on account of sickness or disability, or may have been employed on an irregular or part-time basis during such period. It is necessary to develop rules and procedures, as general as equitable treatment permits, for the determination of what cases fall within the scope of this provision, and on what basis they may be determined in accordance therewith.
On October 14,1937, a special unit was set up in the Claims Service which, in cooperation with the Bureau of Economics, and on the basis of economic and statistical standards developed by that Bureau,
Annual Report of the Railroad Retirement Board • 7
handled cases of this kind and also cases where necessary records of service and compensation were missing.
Transfer of private pensioners.—The 1937 act contained provisions for administration by the Board of two additional types of payments, pensions, and lump-sum death benefits. Transfer of private railroad pensioners under section 6 of the 1937 act to the rolls of the Railroad Retirement Board, which is described in detail in section 4 of the last annual report, had to be made virtually overnight. The transfer of about 54,000 pensioners was practically completed on a temporary basis during the single month of July 1937. The further task, provided in the act, of certifying annuities, in place of pensions, for those pensioners entitled to an annuity under the Railroad Retirement Act, was substantially completed within the next 3 months. In chapter VIII of this report there is given an analysis of pension payments and the characteristics of the individuals receiving them for the fiscal year 1937-38.
Death benefits.—Under the 1937 act a death benefit was provided which differed in three important respects from that provided under the 1935 act. Under the 1937 act a death benefit is payable with respect to the death of any individual who rendered compensated service after December 31,1936, for an employer under the act. Under the 1935 act it is payable only with respect to the death of an individual who was receiving or was entitled to receive an annuity at the time of his death. Under the 1937 act the death benefit is a single payment, equal to 4 percent of the compensation earned as an employee after December 31, 1936 (excluding compensation in excess of $300 in any 1 month), less the aggregate amounts of any single life or joint and survivor annuities that may have been paid or payable. Under the 1935 act it is an annuity, payable for 1 year after the first day of the month in which the employee annuitant’s death occurred, equal to one-half the annuity which he was receiving or entitled to receive at the time of his death. Under the 1937 act the death benefit is payable to the person or persons designated by the employee on a form filed with the Board prior to his death or, if there be no surviving designated beneficiary, to his legal representative. Under the 1935 act it is payable to the surviving spouse of the deceased employee, or, if there be no surviving spouse, to his dependent next of kin.
The 1937 act will greatly increase the work of the Board with respect to the payment of death benefits. Not only did all employees under the act who were in compensated service after December 31, 1936, already numbering more than 2,100,000, acquire credits upon which benefits will be payable, but the Board had to give all of them an opportunity to file with the Board a designation of a death beneficiary. In order to handle these increased duties the Board on February 25, 1938, authorized the organization of a separate division as a
8 • Annual Report of the Railroad Retirement Board
part of the Claims Service, to handle survivor annuity claims under the 1935 and 1937 acts, death benefit annuity claims under the 1935 act, lump-sum death benefit claims under the 1937 act, and claims involving annuity amounts accruing to the legal representative of applicants whose annuity had not yet been certified at the time of his death. The Board early in 1938 prepared and distributed to all employees, through their employers, forms for the designation of death beneficiaries. More than a half million completed forms have been returned to the Board. An analysis of approximately 12,000 of these forms is given in chapter VI.
Records and Reports
Some of the most important of the added duties placed upon the Board by the 1937 act were specification and extension of its recordkeeping functions, the establishment of the railroad retirement account, and the requirement of periodic actuarial valuations.
The 1937 act required that employers file with the Board returns of monthly compensation of employees. These returns, showing the compensation of each employee for each month of compensated service, are made quarterly in accordance with the procedure established by the Board. The process of adjudicating annuity claims will thus, insofar as compensation and service after December 31, 1936, are concerned, be based upon records maintained by its Bureau of Accounts. These records likewise provide the Board with all the compensation data needed for computing the death benefit under the 1937 act.
The 1937 act contemplates that each employee be notified of the amount of monthly compensation reported for him to the Board by his employer, and provides that these returns shall be conclusive unless objected to within 4 years after the last date on which they are required to be made. The first annual statement, covering the compensation and months of service in 1937 of the more than 2,000,000 employees for whom compensation was reported to the Board for that year, will be transmitted to the employees through their employers.
For many years, the Board will have to certify large numbers of annuities based on years of service prior to January 1937. At present, these records are obtained from employers after the employee has applied for an annuity. Because many of the necessary records have not been in use for years and have been misplaced, much time is required to locate them. Applicants frequently cannot recollect exact dates and places of employment. Records are sometimes lost and destroyed by natural causes; roads are from time to time abandoned, and their records made unavailable. Locating individual
Annual Report of the Railroad Retirement Board • 9 names, often listed in no particular order, among thousands on pay rolls, is a time-consuming task and has resulted in delays in the payment of annuities to persons entitled to and badly in need of them. It is very desirable from the point of view of the effective functioning of the Board as a social insurance institution that priorservice records be collected as soon as possible. These records would expedite the certification of future claims and would guard against the possibility that records now existing would be lost or destroyed. The collection of prior-service records would also provide a better basis for the valuation of the retirement system’s obligations with respect to prior-service credit. For these reasons, the Board has arranged with the Works Progress Administration to establish projects in all States where employer records are kept, to transcribe the records of service and compensation prior to January 1, 1937, of all employees covered by the Railroad Retirement Acts. A Bureau of Prior Service Records to direct and supervise this work was recently established by the Board.
Actuarial valuation of the retirement system.—The Board is charged by the 1937 act with the duty of making at intervals, not longer than 3 years, an actuarial valuation of the liabilities which the Government has undertaken in connection with the operation of the railroad retirement system. The act also provides for the establishment of an actuarial advisory committee to examine the actuarial methods employed by the Board. One member of this committee is to be selected by the Board on the basis of recommendations made by railroads, another on recommendations by the employees, while a third representing the Government interests, is to be named by the Secretary of the Treasury.
The major factors involved in the cost of a retirement system are the age distribution of employees, the ages at which they will retire, the rate of withdrawal from the industry before retirement, the rate of disability, the change in the level of compensation by age, the rate of mortality both among active employees and among annuitants, and the ages at which new employees begin in service. Underlying all of these are basic economic conditions which will determine the level of employment and pay rolls in the whole industry.
The bases for the cost estimates underlying the Railroad Retirement Act of 1937 were described in some detail in the last annual report. These estimates were based primarily upon reports by the former Federal Coordinator of Transportation, resulting from sample studies made possible by Civil Works Administration funds. They were made about 5 years ago, when railroad employment was at a low point and did not cover all the contingencies which successive retirement acts have involved. It is hoped that more recent and
TO • Annual Report of the Railroad Retirement Board
complete figures on the extent of prior-service credit and on the age distribution of employees under the act will be provided by the prior-service project.
When the cost estimates underlying the 1937 act were made, it was recognized that the conditions on which they were based would change. Changes have occurred in the year and a half that has elapsed since the act was under discussion, and further changes will no doubt occur as time goes on.
The Railroad Retirement Act of 1937 establishes a railroad retirement account to which there is authorized to be appropriated “for each fiscal year, beginning with the fiscal year ending June 30, 1937, as an annual premium an amount sufficient, with a reasonable m a rgi n for contingencies, to provide for the payment of all annuities, pensions, and death benefits in accordance with the provisions of this act and the Railroad Retirement Act of 1935.” It is the duty of the Secretary of the Treasury, at the request and direction of the Board, to invest such amounts credited to the account as are not immediately required for the payment of annuities, pensions, and death benefits in interestbearing obligations of the United States or in obligations guaranteed as to both interest and principal by the United States. A summary of the operations of the railroad retirement account, as provided in section 15 (d) of the 1937 act, is presented in Chapter V of this report.
Chart I describes the functional organization of the Railroad Retirement Board as of June 30, 1938. It is expected that the administration of the Railroad Unemployment Insurance Act will bring organizational changes.
Functional Organization of The Railroad Retirement Board
AS OF JUNE 30, 1938
RAILROAD RETIREMENT BOARD
J.. Formulate general policy.
2. Fix organizational structure.
3. Promulgate rules and regulations.
?4. Determine coverage.’
5. Certify annuities and other benefits for payment.
6. Estimate.appropriations to the Railroad Retirement Account.
7. Determine portions-of. appropriations to be invested.
8. Conduct hearings on appeals from the decisions of the appeals Council and on questions involving coverage.
APPEALS COUNCIL
1. Review evidence, and, if requested Dy the claimant, hold hearings and receive testimony in Washington or in the field, on claims for annuity or other benefits where the decision of the Claims Service is contested, and render a decision thereon;
2. If directed by the Board, make investigations, hold hearings and receive testimony with respect to situations involving special problems, or conflicts in evidence.
CLAIMS SERVICE
1. Examine claims for annuities and other benefits upon receipt;
2. Condqct correspondence with applicants to secure correct statements of fact and documentary '-evidence, where necessary;
3. Conduct correspondence and maintain contacts with employers (except labor organizations) to secure data necessary to verify and supplement claims of applicants;
4. Conduct correspondence and maintain contacts with surgeons employed by employers, medical officers of the Veterans Administration and private physicians to secure records of medical examinations of applicants for annuity;
5. Pass on the legal validity of documents submitted by applicants and other legal questions where precedents have been laid down by the General Counsel;
6. Conduct field investigations of applications for annuity and pther benefits, carrier records, etc.' in connection with passing on claims; ।
7. Formulate findings of fact and conclusions of law on which annuities andTother benefits are awarded and claims denied.
BUREAU OF ECONOMICS
1. Make continuing studies of the operations of the Railroad Retirement Act;
2. In the light of the financial requirements of -the Act, study the problems involved in accumulation of reserves, and various methods of raising revenues;
3. Work-out, for Board approval, bases and standards for equitable certification of claims where relevant , records of compensation are missing, where there is no service in the base period, or where service in the base period is insufficient to produce a just compensation basis for service prior to January 1, 1937;
4. Develop for Board approval facts as to established rules and practices of employers affecting employment relation.
5. Aid in preparation of forms for administrative purposes;
6. Prepare historical, statistical and analytical materials for the. Annual Report of the Board;
7. Analyze, from an economic point of view, proposals for amendments to the Railroad Retirement Act;
8. Cooperate with other agencies of the Federal Government in studies of the railroad industry in aspects involving employees, employment and social security.
BUREAU OF ACCOUNTS
1. Maintain cumulative records showing for each employee subject to the Retirement Act, creditable compensation in each month after December 31, 1936;
2. Distribute annually to each employee creditable compensation records for the preceding calendar year;
3. Certify to Claims Service creditable ’ compensation as recorded for employees applying for annuity or with respect to* whose death a claim for a death benefit is filed;
4. Maintain a record of payments of annuities and other benefit payments by indivitjuals;
5. Maintain actuarial and statistical record of each person receiving annuities and other benefits under the Act;
6. Prepare tabulations for Economics and Actuarial Bureaus, for the Annual Report, and for special purposes from time to time;
7. Assign social security account numbers in 700 series to railroad employees to whom no number assignment has previously been made;
8. Maintain alphabetic and numerical indexes of employees earning creditable compensation since December 31, 1936;
9. Audit transcript o£ continuing annuity payments each month;
10. Check tax returns to the Bureau of Internal Revenue against the creditable compensation returns to the Board.
BUREAU OF ADMINISTRATION
1. Maintain a complete file of the minutes of the Board and of documents supporting those minutes;
2. Aid heads of Bureaus in recruiting personnel under the Civil Service Rules and Regulations, and administer all personnel matters within policy determined by the Board;
3. Prepare the Board's budget, and represent the Board with the Bureau of the Budget;
4. Maintain a system of budgetary control over expenditures;
5. Make all audits except monthly transcript vouchers;
6, Make certifications of annuities and other benefits to the Treasury on the basis of findings of fact and conclusions of law made by Claims Service, and check of transcripts by the Bureau of Accounts;.
7. Prepare all vouchers covering pay •rolls and other expenses of administration;
8. Conduct investigations in cases involving coverage, and special matters as directed by the Board;
9. Service the Board and its Bureaus find Offices by:
a. Providing space;
b. Providing supplies and equipment;
c. Providing duplicating facilities;
d. Providing telephone facilities;
e. Providing first aid and emergency room facilities;
f. Receiving, distributing and forwarding mail, telegrams and other communications;
g. Providing central filing and indexing for applications for annuities and other benefits, correspondence, documents, interoffice memoranda, Board employee records, beneficiary designations and other Board records;
h. Providing library facilities;
i. Providing central stenographic .and typing facilities;
j. Providing travel orders and advances ;
k. Formulating and conducting training programs for employees;
1. Conduct general correspondence.
LABOR RELATIONS SERVICE
1. Secure information from labor organization employers relating to service and compensation of organization employees who file applications for annuity;
2. Clear with a through Labor Reporting Officers all matters concerning status of employees of General Committees, Legislative Committees, lodges and divisions; also verification of service and compensation claimed by annuity applicants;
3. Maintain a register of employee representatives, collect reports of compensation for recording by the Bureau of Accounts, certify service and compensation of applicants where rendered as representative and conduct investigations o’f matters pertaining to representatives;
4. Assist the Board by developing information regarding labor organizations when questions of whether the organization is one which is national in scope or is a railroad organization are involved
OFFICE OF GENERAL COUNSEL
1. Act as legal adviser to the Board on .all matters under its-jurisdiction, preparing opinions when necessary;
2. Fhss on legality of proposed rules and regulations;
3. Prepare recommendations for Board decisions as to coverage;
4. When directed by the Board, act as examiner and hold hearings on questions involving coverage;
5. Prepare precedent opinions on points involved in adjudication of claims for approval by the Board and the ' guidance of the Board's staff;
6. Represent the Board in hearings, before tbe Interstate Commerce Commission in cases involving the status of electric lines;
7. Represent the Board before the courts in litigation;
8. Represent the Board in relationships with other Federal departments when legal questions are involved.
ACTUARIAL BUREAU
1. Prepare for submission to the Board annual estimates for appropriation to the Railroad Retirement Account;
2. Make continuing studies of the operations of the Railroad Retirement Act from an acturial point of view;
3. Prepare tables showing rates of mortality, permanent and total disability, salary change, withdrawal and other factors having A bearing on cost;
4. Estimate, in advance, disbursements from the Railroad Retirement Account and probable changes in appropriation requirements;
5. Estimate costs of proposed amendments to the Railroad Retirement Act;
6. Make complete revaluation of the liabilities created by the Railroad Retirement Acts at intervals not longer than three'years.
ORGANIZATION, REGULATIONS AND PROCEDURE DIVISION
1. Coordinate all proposed regulations, procedure, instructions, bulletins, secure agreement or recommendations thereon from interested bureaus, and present them to the .Board with recommendations as to action to be taken;
2. Coordinate all proposed forms, secure agreement or recommendations thereon from interested Bureaus, and present them to the Board with recommendations as to action to be taken;
3. Act as liaison officer with the Federal Register;
4. Approve requisitions for duplicating copies of procedures, instructions, announcements and forms;
5. When directed by the Board, study the organization and operation of a Bureau, division, section or unit, and make recommendations for change.
UNEMPLOYMENT INSURANCE FOR
RAILROAD WORKERS
UNDER the Railroad Unemployment Insurance Act approved on June 25, 1938, the Railroad Retirement Board is charged with the task of setting up and administering a national pooled-fund system of unemployment insurance for railroad workers. This system differs in many respects from the unemployment compensation systems established in this country under the Social Security Act of 1935 and State unemployment compensation laws. The outstanding differences lie in the fact that the Railroad Unemployment Insurance Act creates a national system limited to a single industry as contrasted with a Federal-State system covering most industries.
The coverage of employers and employees is practically identical with that of the Carriers Taxing and the Railroad Retirement Acts of 1937.
The system is financed by contributions, collected by the Board, from employers, at the rate of 3 percent of wages excluding any amount in excess of $300 per month payable to any employee. The wage base is the same as in the Carriers Taxing Act. Benefits are payable to employees for each day of unemployment in excess of seven during any period of 15 consecutive days. The daily rate of benefits depends upon the employee’s total earnings from covered employment in a preceding calendar year, and the maximum amount of benefits in the course of 1 year is 80 times the daily benefit rate. To be eligible for benefits the employee must (1) have earned at least $150 from covered employment within the appropriate preceding calendar year and (2) have had, within 6 months preceding the beginning of a benefit year and after June 15, 1939, a waiting period of 15 consecutive days of unemployment, or two half months in each of which there were at least 8 days of unemployment. Employees are disqualified from the receipt of benefits for varying periods for such reasons as refusal to accept suitable work, voluntarily quitting work without good cause, and discharge for misconduct.
Contributions and benefits are payable from and after July 1, 1939, as of which date the employers and employees under the act are exempted from title IX of the Social Security Act and State unemploy-
11
. II.
12 • Annual Report of the Railroad Retirement Board
ment compensation laws. Transitional provisions in the act are designed to facilitate the transfer of employees from State systems to the national system. The act also provides for the transfer to a “railroad unemployment insurance account” in the Treasury of a proportion of the contributions collected by the States from railroad employers and employees with respect to employment prior to July 1, 1939. The provisions of the act are summarized in appendix A to this report, titled “Summary of the Railroad Unemployment Insurance Act.”
This act is the culmination of a movement, in the interests of the economic security of railroad workers, that started several years ago. A brief history of this movement since 1933 should be a matter of record and is, therefore, presented in the following paragraphs.
Early Proposals
First legislative proposal.—In January 1933, the Railway Labor Executives Association adopted as part of its legislative program the proposal to enact a Federal law requiring railroads to create payroll reserves ear-marked for the purpose of stabilizing employment and the payment of wages to the unemployed. Because of the clearly interstate character of the railroad industry and also because of the history of railroad legislation which has singled out the industry for special treatment, it was decided that there was ample justification for a Federal act. The plan developed by the association provided that those employed in the industry for more than a specified period, say 3 years, would be assured continuous employment which would be guaranteed by a reserve fund set aside by the railroads under agreements with labor organizations. Those employed in the industry for less than 3 years would have been covered by another fund set aside by the railroads under mandate of Congress. Benefits would have been less than full wages and paid for a limited period. The plan, it was held, would have served as an incentive to stabilization of employment.
Proposal of the Federal Coordinator of Transportation.—The Federal Coordinator of Transportation, appointed under the Emergency Railroad Transportation Act of 1933, found that one of the biggest problems in devising consolidation plans for the railroads was That of providing adequate protection of railroad labor. To assist him m considering means for the promotion of economic security in railroad employment and particularly in devising methods for dealing with the problems of unemployment involved in proposals for consolidations, pooling of traffic, and other methods of increasing efficiency , the Coordinator appointed an advisory committee on railroad employment. The committee proposed the creation of a Federal system of contributory unemployment insurance together with a
Annual Report of the Railroad Retirement Board • 13
specialized placement service for the railroads, which might be integrated with the United States Employment Service.
In the Report of the Federal Coordinator of Transportation, 1934, he stated several principles which he thought should govern the operation of any system of unemployment insurance for the transportation industry. These can be summarized as follows: The system should be administered by the Federal Government, should not be confined to the railroads but should include all agencies engaged in interstate transportation, and should be administered by the agency administering old-age insurance for transportation workers.
In 1935 a draft bill incorporating the Coordinator’s proposals was submitted to representatives of employers and employees of the transportation industry. After revision, this bill was incorporated in a report by the Coordinator to the Interstate Commerce Commission, entitled “Unemployment Compensation for Transportation Employees.” The report was transmitted to the President and to Congress.
The bill provided for a national system of unemployment compensation for transportation employees, to be administered by a Transportation Unemployment Compensation Division under the Social Security Board. The coverage of this bill extended to employees of railroads, express, and sleeping-car companies, water carriers, motor carriers, air lines, and pipe lines. The bill called for no contributions either from employers or from employees, but provided for annual appropriations by Congress for the payment of benefits. In this connection it should be noted that the bill was drafted after passage of the Social Security Act, title IX of which imposes a tax on employers and allows credit against this tax for contributions paid to approved State unemployment compensation funds. Since the bill proposed a nationally administered system, it assumed that State laws would exempt transportation employers from contributions to State funds, with the result that the entire amount of tax under title IX would have accrued to the Federal Treasury.
The benefit amount for any half month was to be equal to five-eighths of the amount by which the loss of earnings due to involuntary unemployment exceeded 10 percent of the average monthly earnings for the preceding 12 months. The amount of semimonthly benefit plus earnings, however, was to be not less than $12.50 or three-eighths of average monthly earnings, whichever was lower. Benefits were to be payable in any 1 year, after a waiting period during which the loss of earnings amounted to one-half of average monthly earnings. Aggregate benefits in any 1 year were not to exceed one-twelfth of earnings in the preceding 2 years. Earnings 108818—39--------2
14 • Annual Report of the Railroad Retirement Board
were defined so as to exclude the excess over $150 in any month. Average monthly earnings were to be computed as the average of the highest monthly earnings in each quarter of the preceding year, or as 80 percent of the average of earnings in each month, whichever was higher.
Recent Background
Report of the Committee on Economic Security.—Meanwhile in 1934, the President had appointed a committee to study the problems of economic insecurity. In its report to the President submitted early in 1935, the committee stated that it favored “the establishment of a separate nationally administered system of unemployment compensation for railroad employees and maritime workers.” The Social Security Act based in large part upon the studies made by this committee did not, however, provide for a national system of unemployment compensation for interstate transportation. All State unemployment compensation laws, except those of Alabama and Wisconsin, cover railroad employees. In Wisconsin, however, these workers may be covered by election of their employers’
History of the present act.—Mtex the publication of the report on Unemployment Compensation for Transportation Employees by the Federal Coordinator of Transportation, the Railway Labor Executives’ Association began discussions with the Association of American Railroads with a view to drafting an unemployment insurance bill that would be satisfactory to both railway labor and management It was not until early in 1938 that the Railway Labor Executives’ Association finally completed a bill, which, on April 1, 1938 Congressman Grosser, of Ohio, introduced in the House (H. R. 10127) and Senators Wheeler, of Montana, and Wagner, of New York in the Senate (S. 3772). The bills were referred to the House Committee on Interstate and Foreign Commerce and the Senate Committee on Interstate Commerce respectively. Committee hearings were held from May 26 to June 3 and from June 3 to June 9.
The House bill was favorably reported out of committee on June 9- On June 13 the bill came up for consideration and was passed without objection. On this same day the Senate committee made its report, favorably recommended the bill submitted to it, but substituted for it the identical House bill as passed. On June 15 the Senate passed it without objection, and on June 25 it was signed bv the President. J
. Ill.
CLAIMS OPERATIONS AND PAYMENTS DURING 193 7-3 8
UNDER the Railroad Retirement Acts of 1935 and 1937 the Board administers five classes of payments. These are: (1) Employee annuities, both disability and old age, paid to eligible individuals after retirement; (2) survivor annuities, paid under joint and survivor elections to the surviving spouse of a deceased employee annuitant; (3) death benefit annuities, paid only under the 1935 act to the surviving spouse or dependent next of kin of a deceased annuitant or employee entitled to an annuity under that act; (4) lump-sum death benefits, payable only under the 1937 act, with respect to the death of any employee who earned compensation under the act after December 31, 1936, to a designated beneficiary or to the deceased employee’s legal representative; (5) pensions paid under the provisions of section 6 of the 1937 act to individuals who were on the pension or gratuity rolls of employers under the act, both on March 1, and July 1, 1937. Up to and including October 1, 1937, there were also on the pension rolls of the Railroad Retirement Board a group of “temporary pensioners;” that is, pensioners who were eligible on July 1, 1937, for annuities under either the 1935 act or the 1937 act, and who were paid pensions under section 6 until their annuities were awarded and certified but not later than October 1, 1937.
General Statistics of Operations
Total payments.—Table I shows total payments authorized by the Railroad Retirement Board during the period from August 29, 1935, to July 30, 1937, and during the fiscal year 1937-38. Up to July 1, 1938, the Board had certified payments totaling $87,598,519.05, of which all but $4,604,232.83 was paid out in the fiscal year 1937-38; thus practically all of the payments made under the railroad retirement acts were certified by the Board in the first year of its operations under the Railroad Retirement Act of 1937. Prior to July 1, 1937, the payments certified by the Board consisted of 97.5 percent employee annuities, 1.0 percent survivor annuities, and 1.5 percent death benefit annuities. During the fiscal year 1937-38, the percentages were 55.5 percent employee annuities, 43.2 percent pensions, 0.5 of 1.0
15
16 • Annual Report of the Railroad Retirement Board
percent survivor annuities, 0.8 of 1.0 percent death benefit annuities, and a negligible percentage of lump sum death benefits.
Changes in the monthly payments presented in table I reflect certain important features of the Board’s operations during 1937-38. These monthly figures, however, should not be used to analyze trends and rates of change, since they are affected by changes in the number of certifications, and by the fact that first payments after certification of individual claims include payments for all months between the accrual date of the annuity and the date of certification. Insofar as analysis of trends and rates of change is now possible, it should be based on the figures of annuities, pensions, and other payments in force as of the end of each month, given later in this section.
TABLE 1. Monthly amount of annuity and pension payments, by classes of payments, July 1937 to October 1938 1
Month Total payments Employee annuities Survivor annuities Death benefit annuities Lump sum death payments Permanent pensions 1 Temporary pensions
Prior to July 1,1937 1937 July.. August September.... October November.... December 1938 January February March April May June July 1,1937- June 30, 1938 July.. August September.... October $4, 604,232.83 $4,487,496.45 $47,490.64 $69,245. 74
36,949,567.44 4,551,474.76 4,621, 983.08 4,885,833.52 7,217,573.95 8,626,156.62 6, 793,328.01 6,457,029. 59 8,358,695. 99 8,380,826. 77 7,805, 605.68 8,346,210.81 682,762.49 1,444,367.25 1,653,005.57 2,134,042.20 4,468,177.70 5,820,113.53 4,044,884.64 3,767,390.06 5,677,665. 83 5,576,417.90 5,139,457.35 5, 689, 707. 44 8, 782.44 22,050. 60 19,169.05 13,612. 70 20,952.33 34,797.47 34,776.37 24,496. 43 29,389.11 80,049. 71 46,361.41 46,799. 99 16,304.32 44,808.39 34,805. 73 27,465. 77 36,018. 36 70,256. 29 55,671.97 34,446.46 46,969. 78 123,398.66 70,667.51 64, 293.48 $302. 72 1,597.80 2,174. 29 12,609.46 10,457.31 11,813.11 ’$5,526,136.16 2,750, 706. 21 2,736,585. 36 2,710,712.85 2,692,425. 56 2, 700,989.33 2,657,692.31 2,629,098.84 2,602,496.98 2,588,351.04 2,538,662.10 2, 533, 596. 79 $715,582.03 289, 542.31 178,417.37
82,994,286.22 8,408,325.87 8, 554,061. 76 8,545,649. 78 8,920,443. 77 46,097,991.96 5,725,976. 96 5,899, 260.34 5,906,594.58 6,326,128.34 381,237. 61 52,321.30 61,258.18 66,114. 32 60, 714.04 625,106. 72 64,558.36 68,040.13 64,035. 78 51,349.38 38,954. 69 27, 539.27 35,059. 15 37, 269. 96 26,483. 72 34.667,453. 53 2,537,929.98 2,490,443. 96 2,471,635.14 2,455,768.29 1,183, 541.71
?re net en®UI71branees in each month, or total amount of vouchers certified to the Treasury for J1110!1? canc®lat'1,ons- The figures differ somewhat from those presented in the last Annual Report, which did not include all subsequent adjustments.
. ’ Total monthly payments on pensions are frequently less than the designated monthly amounts payable Decause of the large number of terminations due to deaths among pensioners. The total monthly payments are adjusted for cancelations. (See footnote 1.)
Vouchers for both the July 1.1937, and Aug. 1,1937, payments to pensioners were certified to the Treasury and encumbered on the books of the Railroad Retirement Board in July 1937.
The relatively high total of payments during July 1937, is almost entirely due to the taking over of the private pensions during that month and the certification of payments to these pensioners covering both July 1 and August 1, 1937. Pension payments constituted the major portion of total payments until November 1937, at which time the increasing rate of certification of employee annuities caused total payments for employee annuities to exceed pension payments. The
Annual Report of the Railroad Retirement Board • 17
Chart II
Total Adjusted Amount of Annuity And Pension Vouchers Certified to Treasury For Payment In Each Month
July 1936 - Oct. 1938
MILLIONS By CLASSES OF PAYMENT £°LlL,Sns
10
9
8
7
6
5
4
3
2
I
. 0
iu
9
8
7
6
5
4
3
2 -
I -
0„
TOTAL
MPLOYEE NNUITIES
PERMANENT PENSIONS
SURVIVOR ANNUITIES, DEATH BENEFIT — ANNUITIES, AND LUMP SUM
DEATH PAYMENTS
_TEMPORARY* PENSIONS
JULY OCT. JAN. APR. JULY OCT. JAN. APR. JULY OCT 1936 1937 1938
* AFTER SEPTEMBER 1937 TEMPORARY PENSIONS ARE INCLUDED WITH EMPLOYEE ANNUITIES AS TEMPORARY ANNUITIES
18 • Annual Report of the Railroad Retirement Board largest monthly payment to employee annuitants was made during December 1937, and wras due to the large number of initial payments made during that month.
The Board began to certify payment of lump-sum death benefits under the provisions of the 1937 act in January 1938. Up to June 30, 1938, such payments totaled only $38,954.69. Payments of this type will in the near future in all probability exceed the amount of death benefit annuities, which during the fiscal year 1937-38 amounted to $625,106.72. This follows since they are payable on account of the death of every employee under the act whether an annuitant or not, and earnings subsequent to December 31, 1936, on which these payments are based will increase with the passage of time. The largest payments for both survivor annuities and death benefit annuities were made in April 1938, shortly after the establishment of a separate division in the Claims Service to handle such cases.
Claims in Force and Monthly Amounts Payable
As already stated, the total amount payable per month rather than the total amount of payments made during the month is more properly used to reflect trends and rates of change in the different classes of payments made under the Railroad Retirement Act. In the figures presented m table 2, the amounts payable per month refer only to payments for that month, and do not include payments made for any other month as a result of retroactive payments or adjustments for other reasons. However, they do not include amounts which may be payable with respect to a particular month to individuals whose annuities were certified, or recertified at a higher rate, after the end of that month. These amounts are “in force” figures; that is, they are the total of amounts payable to all individuals who were at the end of the month still on the pension or annuity rolls, and do not include payments made on account of lump-sum death benefits, lump-sum annuity settlements, or annuities terminated by a single payment where an applicant has died prior to certification of his annuity. Table 2 also shows the number of annuitants and pensioners to whom the in-force amounts were payable at the end of each month.
On June 30, 1937, there were 7,223 annuitants, who were entitled to receive $446,614.46 per month. By the end of the fiscal year 1937-38, the number of annuities and pensions in force was 108,240, and the monthly amount payable $6,708,316.96.
Every month during this period shows an increase in the combined total number of in-force pensioners and annuitants and the monthly amounts payable to them. It is too early in the history of the system to base any estimates for the future on changes in these in-force figures. Terminations by death are bound to increase as the system
Annual Report of the Railroad Retirement Board • 19
Chart III
Number of Pensions & Annuities in Force At End of Each Month July 1936 - Oct. 1938
TOTAL PENSIONS & ANNUITIES*
' 125
- 100
75
50
25
O
JULY OCT. JAN. APR. JULY OCT. JAN. APR. JULY OCT
1936 1937 1938
* INCLUDES DEATH BENEFIT 1 SURVIVOR ANNUITIES
EMPLOYEE ANNUITIES (REGULAR BASIS)
— PERMANENT _ PENSIONS
i nui 12!
IOC
75
50
25
0.
.• TEMPORARY ' , PENSIONS /l ANNUITIES
EMPLOYEE ANNUITIES (TEMPORARY PARTIAL BASIS)
20 • Annual Report of the Railroad Retirement Board
TABLE 2.—Number and amount of annuities and pensions in force on last day of month, by classes of payments^ June 1937 to October 1938
i Monthly amount payable :sss ! : : §88 i 1i -1"/ Illlllllll IIIIHII1I
s, Number 8§S J H : : : : : : : : : : : ! ; HIM Hill
i fif E'g'Sggf sggsgg sssfs d d d d d d d d d d
I Number §§§§§§
eneflt annuities ’ Monthly Amount payable 8SSSSS8 § So"n
gm
2
or annuities Monthly amount payable S SoONoSS s’ ssssss ssss i¥¥§¥¥ °¥¥s’
T -2
2
Employee annuities ’ Monthly amount payable 8 2SS355S5 § PS hW efdwrfwV
Number » ^ddc^d ssssgs ssVs:
i 1 Monthly amount payable g ggggjg j SlWa 22ggg io to us co co” O co N b-” r>T
3 Number - sW8W sggjgs gggg sss’s-sg gssa
Month 1937 June ► 2 August September October November December 1938 January February March April May June July August September October
Report^ca^sVffi^ecessarv^ffinst^en^^n^'hp ann?ities for October and November 1937, difier slightly from those presented in last year’s Annual
xvepori Decause oi necessary adjustments in the figures for the group of temporary pensioners and annuitants NovemberdlT37)nnUitieS SUbjeCt t0 recertification’ temporary annuities to former carrier pensioners (beginning with October 1937), and temporary partial annuities (beginning with itemsThere are a feW CaSeS in WhiCh payments are made t0 more than one P^3011 due t0 the death of a single individual. Beginning with June 1938 such cases are counted as single
Annual Report of the Railroad Retirement Board • 21
matures. Furthermore, the number of persons eligible for annuities has to date been abnormally large. In addition, the change in the in-force figures from end of month to end of month has been affected by abnormal fluctuations in new certifications. However, for many years to come new certifications will exceed terminations by death, and the in-force figures will rise as a result.
The number of pensions in force and the total amounts payable to these pensioners steadily declined from month to month during 1937-38. The monthly amount payable to pensioners, as of July 31, 1937, was $3,131,381.78. By June 30, 1938, the monthly amount payable was $2,554,978.88. The number of pensioners and amounts payable monthly to them will continue to decrease steadily, since practically all individuals who can become eligible under section 6 of the 1937 act have already been transferred to the Railroad Retirement rolls, and their number is gradually being reduced by death. The decline was accentuated in the first months of the fiscal year 1937-38 by the fact that in the months from July to October pensioners eligible for annuities were being transferred to the annuity rolls of the Railroad Retirement Board at a rapid rate.
Table 3 shows the declining importance of pensions in the total amounts payable per month. As of September 30, 1937, they constituted 77.0 percent of the total amount payable per month for all classes of payments; as of June 30, 1938, they represented only 38.0 percent of the corresponding amount. Conversely, monthly amounts payable with respect to employee annuities represented 22.4 percent of the total amount payable as of September 30,1937, and 61.1 percent as of June 30, 1938.
TABLE 3.—Percentage distribution of total number of pensioners and annuitants on rolls of Railroad Retirement Board and the amounts
payable to them at the end of Each quarter/ June 30, 1937, to June 30, 1938, by class of payment
Class of payment 1937 1938
June 30 Sept. 30 Dec. 31 Mar. 30 June 30
NUMBER Employee annuities 95.1 19.8 45.4 52.5 58.1
Survivor annuities 1.6 .4 .4 .6 .7
Death benefit annuities 3.3 .6 .7 .6 . 6
Pensions . >79.2 53.5 46.3 40.6
All annuities and pensions 100.0 100.0 100.0 100.0 100.0
AMOUNTS PAYABLE PER MONTH
Employee annuities 97.0 22. 4 47.7 55.0 61.1
Survivor annuities 1.0 .2 .3 .4 .5
Death benefit annuities 2.0 .4 .4 . 4 . 4
Pensions >77.0 51.6 44.2 38.0
All annuities and pensions 100.0 100.0 100.0 100.0 100.0
1 Includes temporary pensioners.
22 • Annual Report of the Railroad Retirement Board
DEATH BENEFIT ANNUITIES AND SURVIVOR ANNUITIES
EMPLOYEE ANNUITIES
DEATH BENEFIT X
ANNUITIES /
AND >-
SURVIVOR \
ANNUITIES /
1 8
- 7
6
5
4
3
2
I
_0
8
7
6
5
4
3
2
I
0..
Chart IV
Amounts Payable Per Month
For Different Classes of Annuities and Pensions In Force As of July 30. 1937 & June 30, 1938
MHLLL|ONSq DOLLARS
M11LL9NS________________ MILLIONS
'ZZZZZZ EMPLOYEE ANNUITIES'
\TEMPORARY7,386 7,386
7,355 787 787
7, 542 2,499 2,499
6,572 3,013 3,013
5,149 4,426 4,426
4,169 12,615 9,510 3,105 446
4, 679 11, 689 7,129 4, 560 1,385
3,346 3,574 2, 335 1,239 71
2,973 3,146 2,395 751 512
3,259 5,719 5, 246 473 418
3,041 4,901 4, 477 424 665
2, 947 3,508 3, 266 242 544
3, 223 3,767 3, 578 189 675
53,255 59,644 48,661 10,983 4, 716
2,330 3,733 3,562 171 886
2,846 3, 771 3, 575 196 1, 255
2,655 2,939 2,826 113 705
2,684 3,716 3, 539 177 716
1 Not including carrier pensioners whose applications for employee annuities were cancelled because they were found to be eligible only for a permanent pension.
1 This figure is lower than that given for June 24, 1937, in the Annual Report for 1936-37, which included death benefit annuities. Certifications of such annuities are excluded from the above table.
The number of initial certifications of employee annuities was much less for the last 6 months of 1937-38 compared to the peak attained in November and December of 1937. Toward the end of December, a shortage of funds for administration made it necessary for the Board to reduce the number of persons engaged in the adjudication of claims. The number of claims which could be handled on the basis of short-form adjudication decreased. Finally, the cases remaining to be adjudicated increasingly represented special types which raised certain problems of adjudication such as proof of disability, establishment of employment relation, and a determination of an equitable basis for compensation during the base period where records for that period were missing or where service during the base period was insufficient or nonexistent. (The problem of establishment of employment relation is dealt with in chapter IV.)
Where claims are awarded initially on the basis of an adjudication of incomplete service and compensation reports, or on the basis of service records and rates of pay not verified from month-to-month compensation records, recertification of the amount of annuity is necessary when more complete reports of service and compensation have been received. Pressure of pending claims made it difficult for
26 • Annual Report of the Railroad Retirement Board
Chaet V
APR. JULY OCT. JAN. APR. JULY OCT. JAN. APR. JULY OCT.
1936 1937 1938
~ 15
— 14
— 13
— 12
— 11
— 10
— 9
— 8
— 7
— 6
— s
— 2
— I
n
15
14
13
12
II
10
9
8
7
6
5
4
3
2
I
0.
Employee Annuities-.
Applications Received, Certifications Made And Claims Declared Ineligible
By Months
THOUSANDS______APRIL 1936 - O C T. 1938__THOUSANDS
CERTIFICATIONS
I
APPLICATIONS
CLAIMS
. DECLARED _ INELIGIBLE
Annual Report of the Railroad Retirement Board • 27
the Board to devote much attention to such recertifications until the initial burden of claims that could be rapidly certified had been taken care of. In January 1938, however, as shown in table 6, the number of claims recertified rose to 1,244, as compared to 306 in December 1937, and continued to increase rapidly thereafter, reaching a peak of 2,897 in March 1938. Thus, the number of recertifications increased during the period when the number of initial certifications was low. In January 1938, the number of recertifications was approximately one-third as large as the number of initial certifications; in the following month it was more than half as large. In the remaining months of the fiscal year the number of recertifications remained at approximately half the number of initial certifications.
TABLE 6.—Number of employee annuities recertified, July 1937 to June 1938
Month Number of cases Month Number of cases
Total to July 1, 1937 1937 July.. August. September October. .... November December. 411 95 132 81 72 131 306 1938 January February March April May June Total, July 1937-June 1938 1,244 1,839 2,897 2, 242 1, 680 1,787 12,915
The extent to which annuities originally certified on a temporary partial basis have been recertified is indicated by the rapid decline in the number of annuities in force on the basis of temporary partial certification after January 1938. (See table 7.) To some extent this decline has resulted from deaths among this group of annuitants. By far the largest part of the decline, however, has resulted from recertification of the claims on the basis of more complete reports. Of the total of 10,983 annuities certified on a temporary partial basis during the fiscal year, 3,285 were in force on this basis at the end of the fiscal year.
TABLE 7.—Number of annuities and total amounts payable monthly under temporary partial certifications, as of end of each month,
November 1937 to October 1938
Month Number of annuities Total amount payable monthly Month Number of annuities Total amount payable monthly
1937 November 988 6,292 7,639 7, 576 6, 371 $52,406. 91 280,099. 26 334,485. 22 324, 513. 42 262,908. 56 1938 April. . . 4,906 4,055 3, 285 2,917 2, 675 2,474 2,262 $195.191.89 157, 585. 40 124, 298.46 109, 776. 89 99,791. 73 92,046.00 82, 985.07
December May
1938 January February.. March June July August September October
28 • Annual Report of the Railroad Retirement Board
At the time of the passage of the Railroad Retirement Act of 1937, approximately 7,500 claims for employee annuities had been tentatively held invalid. Since the passage of the 1937 act, these cases have been reexamined with a view to determining whether they might be eligible under the less stringent employment relation definition of the 1937 act. During the fiscal year 1937-38 a total of 4,716 applicants for employee annuities under the Railroad Retirement Acts of 1935 and 1937 were declared ineligible and their claims denied by the Claims Service. The claims included some tentatively held ineligible before the enactment of the 1937 act and some filed thereafter. In column 5 of table 5 the number declared ineligible month by month is presented. Applications for employee annuities are denied principally because the applicant has not met the age, service, or disability requirements of the particular act by which he is covered. In addition, applicants may not have had an employment relationship on or after August 29, 1935, or their last service may have been with an employer who was not an employer under the act on or since August 29, 1935. The Board has hesitated to declare applicants finally ineligible until the applicant has been given every opportunity to establish his right to an annuity, and this is a substantial element in the number of cases pending.
At the beginning of the fiscal year 1937-38, there were 45,313 applications for employee annuities pending. The increasing number of applications received after the enactment of the Railroad Retirement Act of 1937 was reflected in an increase in the number of applications pending, which reached a peak in October 1937. November 1937 was the first month in which the cases certified exceeded the number of new applications. This excess continued to hold throughout the balance of the fiscal year, so that the number of applications pending decreased steadily after October. At the end of the fiscal year 1937-38, a total of about 33,000 claims for employee annuities were pending in various stages of investigation, adjudication, and certification. The majority of these consisted of approximately 9,000 involving questions of employment relation still to be settled, some 7,000 involving proof of disability, about 8,000 awaiting reports of service and compensation from employers, and approximately 4,000 claims of employees who had filed applications but had not yet ceased service and relinquished their rights to return to service.
Death is the chief cause of termination of employee annuities. With the increase of the number of employee annuitants, there has been an increase in the number of terminations resulting from death, as shown in table 8. Between July 1, 1937, and June 30, 1938, a total of 2,813 employee annuities3 were terminated for this reason. There
3 Not Including 96 deaths among temporary annuitants.
Annual Report of the Railroad Retirement Board • 29
were few terminations for other reasons. As of June 30, 1938, 130 annuities were suspended for various reasons.
TABLE 8.—Number of employee annuities terminated by death, June 1937 to October 1938 1
Month Number of deaths Month Number of deaths Month Number of deaths
1937 July August September October November December 66 115 100 108 164 224 1938 January February March April May.. June 338 265 309 386 397 341 1938 July August September October 494 476 622 575
1 Not including 96 deaths among temporary annuitants.
Survivor annuities.—Certification of survivor annuities to a surviving spouse in accordance with a joint and survivor election is made after adjudication of a claim duly filed by the individual claiming the survivor annuity. Up to July 1, 1938, the number of survivor annuity claims certified totaled 821, of which 605 were under the 1935 act and 216 under the 1937 act. At the end of the fiscal year a total of 232 claims were pending for survivor annuities under both acts. Up to the end of the fiscal year 1937-38, 14 survivor annuities had been terminated by death.
Section 4 of the 1937 act requires that a joint and survivor election, in order to be valid, must be filed prior to January 1, 1938; or, if filed after that date, it must be made at least 5 years before the date on which the annuity begins to accrue, unless the applicant at the time of making the election furnishes proof of health satisfactory to the Board. In order to afford employees an opportunity to file elections before January 1, 1938, the Board in October 1937 distributed a form on which to elect such an annuity, and an explanation of the effect of such an election, to approximately 175,000 employees who were 59 years of age or over at that time. Prior to January 1, 1938, a total of 1,920 completed election forms were filed. In January 1938, 2,071 forms were received; by June 30, 1938, the total number received was 4,285. Employee annuities incorporating joint and survivor elections constituted the following percentages of all employee annuities certified during the last 3 months of the fiscal year 1937-38: April, 8.6 percent; May, 7.8 percent; June, 5.1 percent. An analysis of the characteristics of employee annuitants electing joint and survivor annuities is presented in chapter VII.
As of June 30, 1938, 807 survivor annuities were in force in amounts totaling $31,489.37 monthly. Table 9 below, which gives the distribution of survivor annuities according to amount of monthly payment, shows that more than half (56.4 percent) of the survivor 108818—39---------3
30 • Annual Report of the Railroad Retirement Board
annuitants were receiving less than $40 a month. Table 9 also shows the distribution of survivor annuities according to the option under which they were received. Such annuities may be elected under any one of three options. On June 30, 1938, 395 of the 807 survivor annuitants, or 48.9 percent, were receiving Option A annuities under which the same monthly amount is paid to the survivor as was received by the deceased; 159, or 19.7 percent, were receiving Option B annuities under which three-fourths of the reduced annuity of the deceased spouse is paid to the survivor; and 253, or 31.4 percent, were receiving Option C annuities under which one-half of the reduced annuity received by the deceased is paid to the survivor.
By the end of the fiscal year, 14 annuities, amounting to $498.47 monthly, had been terminated because of the death of the survivor annuitant. The monthly amount payable ranged, on seven annuities under Option A, from $10 to $69.99, and on seven annuities under Option C from less than $10 to $49.99.
TABLE 9.—Number of survivor annuities in force as of June 30, 1938, by monthly amount payable, classified by type of option elected
1935 and 1937 acts combined
Monthly amount payable
Option A
Option B
Option C
No. Percent number of Aggregate monthly No. Percent number of Aggregate monthly No. Percent number of Aggregate monthly
claims amount claims amount claims amount
of total payable of total payable of total payable
$0-$ 9.99.. $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-$99.99._
Total...
Average annuity.........
2 47 45 60 79 75 44 29
11
3
395
0.5 11.9 11.4 15.2 20.0 19.0 11.1
7.3 2.8
.8
100.0 17,899. 73
$15.67
723.31
1,147. 58
2,126. 50
3, 576. 52
4,114.61
2,855.14
2,146.92
919.03
274.45
1 0.6 $8.19 8 3.2 $67.06
10 6.3 165.40 46 18.2 724.79
27 17.0 670.23 85 33.6 2,155. 65
32 20.1 1,118.47 92 36.3 3,138. 78
43 27.0 1,929.82 21 8.3 924. 65
34 10 21.4 6.3 1,853. 52 640. 27 1 .4 51.70
2 1.3 141.11
159 100.0 6, 527.01
45.32 ............ 41.05 ................ 27.92
Total
253 100.0 7,062.63
No. Percent number of claims of total Aggregate monthly amount payable
11 1.4 $90.92
103 12.8 1, 613. 50
157 19.5 3,973.46
184 22.7 6, 383.75
143 17.7 6,430.99
110 13.6 6,019.83
54 6.7 3, 495.41
31 3.8 2,288.03
11 1.4 919.03
3 .4 274.45
807 100.0 31,489.37 39.02
Death benefit annuities.—A total of 2,167 claims for death benefit annuities under the 1935 act were received by the Board up to the close of the last fiscal year, including claims received prior to July 1, 1937. Certifications of death benefit annuities were first made November 6, 1936. After the passage of the 1937 act when the number of certifications of employee annuities under both acts increased sharply, the number of certifications of death benefit annuities rose. The maximum number of death benefit annuity certifications in any 1 month, 257, was made in April 1938. By June 30, 1938, 1,681
Annual Report of the Railroad Retirement Board • 31
death benefit annuity claims had been certified. On that date 649 death benefit annuities were still in force, the rest having been terminated through completion of the 12 monthly payments, or the death of beneficiaries. Table 10 shows the number of death benefit annuities up to June 30, 1938, according to the amount of monthly payments, and the status of annuities. The median value of the annuities in force amounted to $38.16. By October 31, 1938, 2,276 death annuities had been certified, of -which 1,621 had been terminated by completion of payments, or death.
TABLE 10.—Disposition of death benefit annuities up to June 30, 1938, classified by monthly amount payable
Total number of annuities Terminations
Monthly amount payable Payments in force Payments completed1 Payments ended by death
3 1, 681 3 649 1,015 16
$0—$9.99. 32 11 21
$10.00 to $19.99 159 69 89 1
$20.00 to $29.99 228 94 132 2
$30.00 to $39.99 503 185 314 4
$40.00 to $49.99 459 159 295 4
$50.00 to $59.99 282 118 159 5
$60.00 18 13 5
1 Death benefit annuities, under the 1935 act, terminate after 12 months.
! One annuity payable at $49.89 was suspended.
3 Payments were being made to 650 separate individuals, 1 death benefit annuity of $35.96 being shared eonallv bv 2 beneficiaries.
Lump-sum death benefits.—The first claims for lump-sum death benefit payments under the 1937 act were received in October 1937, and by June 30, 1938, a total of 6,941 claims for such benefits had been received. An analysis of lump-sum death benefit payments is contained in chapter VI which deals with death-benefit beneficiaries.
Lump-sum annuity payments.—The 1935 act provides that an employee entitled to an annuity with a commuted value determined by the Board to be less than $300, shall be paid such value in a lump sum. The 1937 act provides that if an annuity is less than $2.50, it may, in the discretion of the Board, be paid quarterly or in a lump sum equal to its commuted value as determined by the Board. The Board has as yet made no annuity payments on a quarterly basis. However, beginning in July 1937, occasional lump-sum payments have been made in settlement of annuity rights. To the end of the fiscal year, 25 such lump-sum payments were made, totalling $3,646.20,. or an average of $145.85 for this type of settlement.
Special Aspects of Adjudication
Disability rating.—The 1937 act defined disability more stringently than the 1935 act. Under the 1935 act an employee otherwise eligible
32 • Annual Report of the Railroad Retirement Board
could qualify for a disability annuity if it could be shown that he had been retired by a carrier because of physical or mental disability. Under the 1937 act it is necessary to establish that he is “permanently and totally disabled for regular employment for hire.” This definition of disability differs in some respects from that used by the railroads. In many cases railroads find it necessary to disqualify persons for particular occupations for disabilities which are not disabling for all work. Railroad surgeons frequently examine a man only to determine whether the disability is sufficiently serious to disqualify him for railroad work, without inquiring further if he is able to follow any substantial, gainful occupation. For example, a person who is color-blind, though otherwise in perfect physical condition, ordinarily cannot be a locomotive engineer or fireman. Such an employee would not be eligible for an annuity based on disability because he could not be considered permanently and totally disabled for regular employment for hire.
For this reason, the Board has found it necessary, in connection with a great many disability claims, to make extended inquiries of its own into the extent of the individual’s disability. The determination of disability within the meaning of the act requires personnel qualified by experience and training to evaluate disabilities and establish norms and schedules for rating disabilities. It was evident that satisfactory progress in completing the adjudication of claims of this type could not be had until a specialized unit of organization, including medical and legal members qualified to interpret and evaluate reports and medical examinations was established. In many cases there was no report of recent examinations available, and in other cases medical reports furnished were not sufficiently detailed to be acceptable.
On October 19, 1937, a Disability Rating Board composed of one legal and two medical members was established. This formed the nucleus of the Disability Claims Division, which developed later due to the added functions and broadened scope of this part of the Claims Service. As of June 30, 1938, the Disability Claims Division comprised a chief of division; four rating boards or units, each composed of one legal and two medical members; four adjudication units, each composed of four adjudicators and one reviewer; a section supervisor; and the necessary secretarial, clerical, and stenographic personnel.
To expedite the handling of disability claims and to insure uni-formity m adjudications, the following disability norms have been adopted as a basis for determining the existence of a disability under the Railroad Retirement Act of 1937;
(a) Loss of or permanent loss of use of both feet.
(5) Loss of or permanent loss of use of both hands.
(o) Loss of or permanent loss of use of one hand and foot.
Annual Report of the Railroad Retirement Board • 33
(d) Permanent industrial blindness (corrected vision of 20 two-hundredths or less in both eyes).
(e) Permanent loss of hearing in both ears unless offset or capable of being offset by some practical mechanical device.
(/) Permanently helpless or permanently bedridden.
(ff) Aphonia or complete loss of vocalization from organic, or nonfunctional cause.
(A) Any other condition which in the judgment of the Board causes an individual to be totally and permanently disabled for regular employment for hire.
Upon satisfactory proof of the presence of one or of a combination of these disabilities, a determination is made that disability exists within the meaning of the 1937 act.
On October 31, 1937, a total of 953 disability annuities were in force. In the course of the year following, the Disability Rating Board handled 14,133 disability claims of which 12,148 were granted and 1,985 were denied (table 11). Of the 1,985 cases denied in this period, 870 were found ineligible for any benefits under the act by virtue of the fact that the claimants were less than 60 years of age, or had less than 30 years of service.
TABLE 11.—Disability claims handled monthly by the Disability Rating Board, November 1, 1937, to October 31,1938
Month Claims granted Claims denied Total claims handled Month Claims granted Claims denied Total claims handled
1937 November. 352 475 413 387 656 1,341 50 38 15 36 69 158 402 513 428 423 725 1,499 1938 M ay 1,896 1,662 1,579 1,374 959 1.054 183 213 411 336 208 268 2,079 1,875 1,990 1,710 1,167 1,322
December
1938 January... July...
August
September
February
October...
March
Total
April 12,148 1,985 14,133
The number of cases adjudicated has fluctuated considerably from month to month, largely due to variations in the receipt of information from applicants. As a result, a backlog of several thousand “pending” cases has accumulated. The number of pending cases at the close of each of the 3 months, August, September, and October 1938, was as follows:
Claims rated for disability.
Unrated claims...........
Total.
Aug. 31 Sept. 30 Oct. 31
1,676 5, 762 1,995 5. 343 2, 344 5,109
7,438 7,338 7,453
34 • Annual Report of the Railroad Retirement Board
Claims rated for disability are cases which have been found by the Rating Board to be valid disability claims, but lack one or several of the other prerequisites to final certification. The others were still in the process of being rated on the presence of disability within the meaning of the act.
The reason why final adjudication was being held up on 7,453 cases pending as of October 31, 1938, is presented in the following table under seven major causes which appeared individually or in com-
bination.
Reason for delay in certification Numbsr
o f claims
Awaiting receipt from applicant of permission to employer to supply medical information on file---------------------------------------------3,036
Employment relation not established______________________________________ 605
Report of service and compensation from last carrier not received________2,177
Additional claimed service to be verified________________________________1, 741
Additional medical data required----------------------------------------- 976
Confirmation of option required__________________________________________ 405
Rights not yet relinquished 1____________________________________________ 911
Miscellaneous____________________________________________________________ 2, 227
1 Includes applicants under 1935 act and disability annuitants, attaining age 65, under the 1937 act.
On the basis of the experience in the past year, it is estimated that more than 14 percent of these cases will not qualify for an annuity either because no disability exists within the meaning of the act or because the claimant is otherwise ineligible.
The Railroad Retirement Act of 1937 requires that applicants receiving annuities based on disabilities must furnish satisfactory proof of the continuance of permanent, total disability from time to time until they reach the age of 65. In order to carry out this provision of the law, the Board directs such annuitants whose disability is not static to report periodically for medical reexamination. In approximately one-half of all cases handled under the 1937 act, reexaminations are considered necessary. Ordinarily such reexaminations will be required yearly.
Missing records.—Under the terms of the Railroad Retirement Acts of 1935 and 1937, the average monthly compensation during the period 1924 to 1931 is the compensation factor imputed to prior service in the process of calculating the final average compensation on which the annuity is based. In an appreciable number of instances (though small relative to the total), employer records for part or all of the service performed by applicants in the period 1924 to 1931 have been lost or destroyed. In another group of cases, applicants entitled to credit for prior service have performed no service during the base period. Under the 1937 act, it also becomes
Annual Report of the Railroad Retirement Board • 35
necessary for the Board to provide a fair and equitable basis for computing average monthly compensation for prior service where in its opinion the applicant’s service during the base period is insufficient for this purpose.
In order to deal with claims involving these problems, the Claims Service set up a special adjudication unit on October 14, 1937. The Bureau of Economics prepared the rules on the basis of which these types of cases were initially certified, and assisted the Claims Service in organizing and supervising the work of this unit. By June 30, 1938, this unit had received about 1,750 cases. Of these, 899 had been certified or recertified by the unit as of that date. The remaining 851 still pending with the unit of June 30, 1938, consisted of 350 which were awaiting initial certification by the unit, and 501 which had been initially certified by the regular units and had been sent to the special unit for possible recertification.
The report of the Board for the year ended June 30, 1937, pointed out the difficulties that have been encountered in securing data necessary for adjudicating claims, under both the 1935 and 1937 acts, where employer records of compensation in the period 1924 to 1931 had been lost or destroyed. Certain claims are handled by the regular adjudication units, rather than by the special unit, even though records for part of the base period are missing. Where the applicant’s occupation did not change during the base period and where carrier records were available for at least one half of the applicant’s service in this period, the average monthly compensation is obtained on the basis of the compensation reported by the employer for the period for which records are available, provided the applicant has performed service for at least 48 months in the base period. Where the applicant’s occupation changed in the period 1924 to 1931, the claim is adjudicated in the regular manner, provided the Board is able to obtain employer records of compensation covering seven-eighths of the applicant’s service in the base period and one-sixth of his service for each year in the base period during which he performed service. All other missing record cases are sent to the special unit for determination of average monthly compensation.
Such claims are handled in two ways: (a) Where substitute records acceptable to the Board are available for the entire period of missing records, the compensation based on these records has been accepted as final for the months not covered by employer records, provided that employer records are available for at least 2 years covered by the substitute records, and that the compensation figures obtained from the two sources for these 2 years vary by no more than 2 percent. Records that have been given favorable consideration include income tax slips
36 • Annual Report of the Railroad Retirement Board
furnished the applicant by the carrier, diaries and other personal records and accounts furnished by the applicant, time books, and statements from the income tax division of the Bureau of Internal Revenue.
(&) In determining compensation for periods of missing records for which acceptable substitute compensation records are not available, a rule has been applied which is primarily based on the use of Interstate Commerce Commission averages for the period of missing records. An average annual wage in the occupation in which the applicant was reported as working is computed by dividing the total compensation for the year, as reported to the Interstate Commerce Commission by the applicant’s employer for that occupation, by the average number of employees reported by the employer in that occupation as of the middle of the month. Total compensation for the period of missing records is then computed from such annual averages and is compared with the compensation claimed by the applicant for the period of missing records. The lower of these two amounts, minus 10 percent to allow for possible absences, is used as the compensation for the months for which records are missing.
In a few instances, applicants received compensation from a carrier and an express company at the same time during the period 1924-31, but compensation records for the express company cannot be located. Unless some acceptable evidence of the amount of express company earnings is available, the amount of annuity in such cases is calculated upon the basis of carrier records only.
Insufficient service.—In connection with the provision under the 1937 act requiring the Board to determine a fair and equitable basis of compensation for applicants whose service in the period 1924-31 was insufficient for such a determination, the Board has tentatively ruled that service in 48 months or more in the base period will be deemed sufficient to determine a fair and equitable average monthly compensation.
Claims of applicants who performed some, but less than 48 months of service in the period 1924-31, have been initially certified by the special unit on the basis of the monthly average of earnings as reported by the employer. These cases are subject to recertification after the adoption by the Board of a final rule applicable to insufficient service. Many such applicants worked intermittently during the 192U-31 period. Unless the beginning and ending dates of their periods of service coincide with the first and last days of the month, the beginning and ending months of periods of service between absences are months of relatively low earnings. Tests on a large number of cases of insufficient service show that this factor is the primary cause of low average monthly compensation when calculated
Annual Report of the Railroad Retirement Board • 37
from total service and total compensation in the base period. The rule for final certification will probably require the elimination of such months of low earnings.
Applicants who first entered the service of any employer under the act after January 1, 1924, are not treated as insufficient service cases, but the amount of their monthly compensation for prior service is computed from the compensation reported in the period 1924-31.
No service in base period.—Under the 1935 act, as interpreted by the Board, average monthly compensation is based upon the employee’s entire period of service when no service has been performed in the base period. In a few cases under the 1935 act the applicant performed no service in the base period and records were not available for the entire period of service. For these cases, it was necessary to estimate the compensation for the years of missing records upon the basis of index numbers of railroad wages for those years.
Under the 1937 act such claims are essentially cases of insufficient service, and the Board must therefore determine average monthly compensation for prior service on a fair and equitable basis. Under the 1937 act cases of no service during the base period have been initially certified through the use of a percentage of average monthly earnings derived from the wage statistics of the Interstate Commerce Commission, calculated in the manner described in connection with the handling of missing records. These cases are subject to recertification after the adoption by the Board of a final rule. The applicant’s occupation and employer at the time of his last service prior to the base period determine the selection of the Interstate Commerce Commission average for the base period used. The percentage used depends on the length of time between the date last worked by the applicant and the beginning of the base period. In a few cases applicants performed service prior to January 1, 1924, and subsequent to December 31, 1931. When compensation records could be obtained for the months of service subsequent to December 31, 1931, the average monthly compensation in these months of subsequent service was sometimes used to determine the amount of annuity awarded.
Prior service records.—On July 1, 1937, there were on hand in the Field Division and in the possession of employers 53,174 statements requiring completion from monthly or semimonthly pay rolls or other detailed compensation records for the purpose of verifying claimed service. By June 30, 1938, the number of incompleted statements of compensation on hand in the Field Division and in the possession of employers had been reduced to 12,141. A total of approximately 160,000 compensation and service statements forwarded to employers
38 • Annual Report of the Railroad Retirement Board
by the Field Division were completed and returned during the 12-month period ending June 30, 1938.4
Inasmuch as the pay roll and personnel records of employers are records of original entry, they constitute the most reliable source of evidence as to service and earnings claimed. In order to avoid, insofar as possible, the difficulties resulting from destroyed or missing records, the Field Division endeavors to locate and secure possession of basic compensation records of carriers which have ceased operation. During the period covered by this report such records were obtained from 18 abandoned railroads.
Although during the fiscal year 1937-38 there was a marked decrease in the average time required by employers to verify and return reports of compensation and service, this operation in many cases still results in considerable delay in the adjudication of the claims. The Board has for some time recognized the advisability of collecting the prior service records of all employees under the act in advance of their applying for an annuity. This would expedite the certification of claims based on prior service credit, and would more effectively provide against the danger of lost or destroyed records. Arrangements are being made with the Works Progress Administration to establish, at various points where railroad records exist, projects for the collection of prior service records. The projects will be supervised by qualified personnel with railroad experience, and the clerical work involved will be done by former railroad employees familiar with the records which they will use. It is expected that the project will afford employment at security wages to a considerable body of furloughed railroad employees, without reducing the number of railroad workers at present employed in the compilation of such records for current retirements. The project will seek to secure, for each employee entitled to prior service credit under the act, a record of service and compensation, and a statement of the existence of an employment relation where necessary, together with any other forms and papers which might eventually be needed for the adjudication of the claim.
Appeals Council.—An Appeals Council was organized by the Board on November 16, 1937, to pass upon appeals by applicants from decisions of the Claims Service with respect to eligibility for benefits, or the amount or type of benefit awarded. Such appeals must be filed within 1 year after the applicant is notified of the decision of the Claims Service. If, upon initial review of the claim, the Appeals Council feels that an appeal is not well founded, it attempts to satisfy the
* Due to the fact that many applicants have served with more than one employer, it requires an average of one and one-half such statements for each finally certified annuity.
Annual Report of the Railroad Retirement Board • 39 applicant either by correspondence or conference that the initial decision of the Claims Service is proper under the law. If the applicant still wishes to enter a final appeal, or if the Appeals Council feels upon initial review that the appeal has merit, it advises the applicant with respect to the proper appeal procedure and furnishes him with the proper forms upon which to enter his appeal. Upon receipt of a formal appeal, each member of the Council reviews the entire file in the case. If all the pertinent obtainable facts are evidenced in the file, the Council renders its decision at once but the applicant is given an opportunity to appear before the Council either in person or by representative, if he so desires. If additional evidence is needed, or if the applicant desires to present additional evidence, such evidence is obtained either through correspondence or field investigation, or at an open hearing before the Appeals Council. At such a hearing the applicant may appear in person or by representative to offer testimony and argument in support of his claim. An applicant may, under the Board’s regulations, appeal from a decision of the Appeals Council to the Board itself, provided such appeal is filed within 4 months after the applicant is notified of the decision of the Appeals Council. The Board does not receive further evidence, but if the applicant has further material evidence which for any reason he was unable to present to the Appeals Council the claim is referred back to the Council.
Shortly after its establishment, the Appeals Council was requested by the Board to make recommendations with respect to some 1,400 applicants who claimed an employment relation with a certain carrier. This problem involved an investigation into the rules and practices in effect on this carrier which were pertinent to the “employment relation” of these applicants, the manner in which the carrier had kept its personnel records, and the significance of the lack of uniformity in the personnel records which developed during the investigation. The findings of fact and conclusions of law which were made as a result of the investigation were approved by the Board for the guidance of the Claims Service in adjudicating the claims of the individuals involved.
Although the Appeals Council was organized in November 1937, the Board did not adopt formal appeal regulations until February 1, 1938. During the period February 1, 1938, to June 30, 1938, 107 protests from individual applicants had been received by the Appeals Council. After preliminary correspondence with the Appeals Council, 71 of these 107 applicants filed formal appeals. By June 30, 1938, the Appeals Council had rendered 32 decisions. By the same date, two of these decisions had been appealed to the Board. The time limit
40 • Annual Report of the Railroad Retirement Board
for appealing from these decisions to the Board had not expired in all cases. The number of appeal cases filed each month has steadily increased, as has the number of decisions rendered by the Council.
The expense involved in a trip to Washington, especially where the applicant wishes to introduce testimony of witnesses other than himself, has in some instances prevented the applicant from obtaining a hearing before the Council. In some cases the lack of trained investigators has prevented the Council from securing a thorough development of the evidence. For these reasons, it may be desirable for the Appeals Council to develop a method of obtaining testimony under oath in the field, through hearings to be held either by its own members or examiners.
. IV.
THE ADJUDICATION OF EMPLOYMENT RELATION ANNUITY CLAIMS
THE Railroad Retirement Act of 1934 which was declared unconstitutional by the United States Supreme Court in May 1935 defined employees to include, in addition to those persons in active service, individuals who had performed service for an employer within 1 year prior to the enactment date. To this provision the Court raised particular objection. According to the majority opinion, “It is arbitrary in the last degree to place upon the carriers the burden of gratuities to thousands who have been unfaithful and for that cause have been separated from the service, or who have elected to pursue some other calling, or who have retired from the business, or have been for other reasons, lawfully dismissed”.1 The minority opinion which upheld the constitutionality of the 1934 act agreed nevertheless that the 1 year provision was arbitrary and therefore void.
The employment relation provisions of the acts of 1935 and 1937 were designed to meet these objections of the Court. Under the act of 1935, an applicant may be eligible for an annuity by reason of an employment relation, existing on or after August 29,1935, even though he was not in compensated service on or after that date. An employee was considered to have an employment relation to an employer, according to the provisions of this act, if he was “furloughed or on leave of absence and subject to call for service and ready and willing to serve, all in accordance with the established rules and practices usually in effect on railroads.”
The employment relation provision was broadened in the 1937 act to include absence on account of sickness or disability, but the employment relation must have been in existence on August 29, 1935, or credit for prior service could not be obtained. Under the 1937 act, “an individual is in the employment relation to an employer if he is on furlough, subject to call for service within or outside the United States and ready and willing to serve, or on leave of absence or absent on account of sickness or disability; all in accordance with the established rules and practices in effect on the employer.” By
*293 U. S. 552, Supreme Court of the United States, No. 566, October Term, 1934. Railroad Retirement Board et al., Petitioners, vs. The Alton Railroad Co. et al. May 6. 1935.
41
42 • Annual Report of the Railroad Retirement Board
this change in the definition of employment relation, a large number of employees who were not entitled to receive annuities under the 1935 act, because they were unable by reason of sickness or disability to respond to a call to return to service, became eligible for annuities based upon prior service.
The Administrative Problem
Attorneys for the Railroad Retirement Board in presenting the case in favor of the constitutionality of the 1 year provision in the 1934 act argued that it was designed to provide annuities to those who, generally speaking, still maintained an employment relation to an employer. At the same time it was argued that such a provision would avoid the difficulty of interpretation and inequality of operation of a rule pointed specifically at the conditions which determine employment relation. Irrespective of the constitutional argument, the warning given in 1934 as to the difficulties necessarily attending the administration of a specific employment relation provision has been eminently justified. No administrative problem confronting the Board has proved more complex.
The adjudication of annuity claims of applicants under the employment relation provisions of either act requires, first, a determination as to the existence on the carrier or other employer of established rules or practices covering furlough, leave of absence or absence on account of sickness or disability, and second, a determination as to whether the particular applicant claiming an employment relation was on furlough or otherwise absent in accordance with such rules or practices.
The Board realized from the beginning that the determination as to the existence and terms of established rules and practices would be a long and tedious task. In an effort to avoid these complexities and speed up adjudication, the Board experimented briefly with having employers report as to whether an applicant for an annuity, who was not in compensated service on August 29, 1935, was then on furlough, leave of absence, or absent on account of sickness or disability, and whether or not he was subject to call for service and ready and willing to serve. The employers were directed to answer these questions in the light of their own rules and practices. It was soon discovered, however, that there were serious inconsistencies in •employer reports. All carriers did not have the same understanding as to what constitutes furlough, leave of absence, or absence on account of sickness or disability, even after taking into account differences in rules and practices as between roads. In a surprisingly large number of cases it was found that even on the same carrier, some individuals were reported as on a furlough, for example, while
Annual Report of the Railroad Retirement Board • 43 others who should have been covered by the same rules or practices were not so reported. Inequities of this sort developed so frequently that it was found impossible to depend solely upon the carrier in determining the applicability to particular situations of their own rules and practices. As a second step the Board tried more elaborate questions which would bring out facts as to whether or not the applicant’s name was on a roster on August 29, 1935, what the roster was, and what the basis or rights were if the applicant’s name was not on a roster; and the basis of the answers to the questions relating to readiness and willingness to serve. This second experiment, while yielding more satisfactory results than the first, proved inadequate in that discrepancies still occurred in employers’ reports in what appeared to be identical situations; and identical results were secured in what appeared to be differing situations. As a result of these two experiments the Board concluded that the development of detailed rules and practices, craft by craft and railroad by railroad, was unavoidable; and that the reporting of facts concerning every crucial point at which rules and practices touched individual cases was necessary for accurate and equitable adjudication.
The necessity for determining that an established rule or practice existed made the problem of adjudicating employment relation claims far more difficult than the claims of applicants who were in active compensated service on the dates required by the two acts. Even though documents, submitted by applicants in support of annuity claims of the former type, were in order in all other respects, and reports from the carrier on service and compensation were complete, certifications could not be made until the established rules or practices of the employer were known. The amount of additional work in employment relation cases made it necessary and desirable that the Board should first concentrate attention on the much larger volume of cases not involving employment relation. When most of the claims of the latter type had been settled or were in the course of settlement, it was possible to give special attention to employment relation claims. The certification of many of them had been delayed for relatively long periods of time. Hardship to individual applicants necessarily resulted. The Board then instituted special procedures, and set up separate staff units to handle the problem.
These procedures involved three main steps: In the first place, with the aid of its legal and claims staff, the Board prepared a detailed series of regulations based primarily upon section 1 (d) of the Railroad Retirement Act of 1937, setting forth the rules governing the adjudication of employment relation cases. Secondly, a special unit was set up, directed by a staff assigned from the Bureau of Economics, to determine the established rules and practices of employers. In the
44 • Annual Report of the Railroad Retirement Board
third place, a unit was organized in the Claims Service, for the purpose of applying the established rules and practices to the individual claims.
Regulations Regarding Employment Relation
The regulations adopted by the Board setting forth the rules governing employment relation, were published in the Federal Register (Vol. Ill, No. 122), of June 23, 1938, and need not be repeated here. However, there are certain major principles clarified by these regulations which should be emphasized.
In the first place it is provided that “the existence or nonexistence of an employment relation, as defined in section 1 (d) of the Railroad Retirement Act of 1937, is a conclusion which must be reached by the Board or its authorized representatives, upon the basis of the evidence before it; the burden of formulating the conclusion may not be delegated to the employer or to the individual, or to any representative of either.” Furlough, leave of absence, or absence on account of sickness or disability are defined as necessarily contemplating a return to active service “upon the occurrence of definite and ascertainable events or conditions.” The regulations define an established rule as an “authoritative and binding declaration definitely and specifically formulated and of general application to employees within the same class,” and an established practice as a “custom not expressed in the form of a rule but followed with such frequency or uniformity as to give a reasonable assurance that it would be followed in the individual’s case, and as to permit ascertainment of the practice with such precision as to render it capable of statement in the form of a rule.”
Other important principles emphasized in the regulations provide that a mere promise of employment not in accordance with an established rule or practice of the employer, could not operate to maintain an employment relation and that “abandonment of line or facility involving abandonment of all jobs to which the individual’s preference or seniority attaches under the established rules or practices in effect on the employer terminates the employment relation, unless, by agreement between the employer and the individuals affected, the latter acquire seniority on some other line or facility of the employer.”
Determination of Established Rules or Practices
The principal difficulty encountered by the Board in adjudicating employment relation claims arose from the necessity of determining in advance of adjudication the existence of employer rules or practices governing furlough, leave of absence, and absence on account of sickness or disability. The chief source of evidence as to rules was
Annual Report of the Railroad Retirement Board • 45
found in labor contracts. Many of these contracts had been secured by the Board in connection with individual cases. Attempts had likewise been made to secure statements of practices as they affected individual cases.
This method of procedure, however, was not satisfactory. A general inquiry was, therefore, addressed to all employers under the Railroad Retirement Act, under date of March 24, 1938, asking them to submit copies of all labor agreements in effect on August 29, 1935, copies of any regulations other than in labor contracts and not inconsistent therewith, governing furlough, leave of absence or absence on account of sickness or disability, and statements as to existing practices. The unit directed by members of the staff of the Bureau of Economics, mentioned previously, was then set up to review the agreements, regulations, and statements of practices submitted by employers, to make findings as to the existence of established rules or practices, and to summarize these findings for the use of Claims Service. The findings and conclusions of this unit were subject to review by the office of the general counsel, based on the submission to that office of all precedent-making decisions for approval, modification, or rejection.
A knowledge of retirement plans, particularly of those which provided for compulsory retirement at a given attained age, was often necessary in making a determination as to the existence or nonexistence of an employment relation. Pension rules and practices were largely determined from data previously furnished by employers to the Board in connection with the transfer of private pensioners to the Federal Government under section 6 of the act of 1937.
It was not possible to complete the task of examining and reviewing the rules and practices data submitted by employers within a short period because of the great number of documents that had to be analyzed. As of October 31, employers had submitted over 2,000 separate labor agreements and nearly 1,000 statements of practice. Additional correspondence with most of the employers who responded to the March 24th inquiry was necessary before all doubtful points could be cleared up. The establishment of rules based upon labor contracts was in many cases found to be relatively easy. Rules arising out of the regulations issued by management and appearing in the form of circulars, letters of instructions, etc., likewise did not cause much difficulty.
There were some labor agreements, usually other than those concluded with standard railway labor organizations, in which the rules were not clear and which involved difficult problems of interpretation. In some of these agreements furlough rules were lacking or not specific as to the protection of seniority rights. In many of these 108818—39--------4
46 • Annual Report of the Railroad Retirement Board
cases, it was necessary, therefore, to establish a practice apart from a rule. When there was no rule and no practice could be established, an employment relation could not, of course, be held to exist.
Determination of established practices.—In the determination of established practices, the attempt was first made to obtain from the carrier a complete statement describing the governing practice. This attempt was not ordinarily successful because carrier officials themselves often found it difficult to make a comprehensive statement which would show definitely the practices which had been followed. Evidence in such cases was usually inadequate.
To meet these difficulties a series of forms was prepared designed to bring out an adequate statement of the principal facts surrounding the claimed practice rather than a direct statement of the practice itself. These forms covered the following practices: (1) absence on account of sickness or disability, when no leave of absence had been granted; (2) furlough for employees included under labor agreements, when the labor agreement contained no governing rule; (3) furlough for employees not covered by agreements; (4) leave of absence.
The establishing of practices where no rules govern was and still remains an extremely difficult problem, even though carriers have been very cooperative in submitting evidence upon which findings could be based. In some cases employers had voluntarily assumed obligations somewhat similar to those contained in agreements. In others, the absence of an agreement, and complete reliance upon the discretion of management, did not result in the uniformity of action necessary to a determination that an established practice was in existence.
The Nature of Carrier Rules and Practices
The work of the Employment Relation Rules Unit has disclosed that in spite of the widespread existence of labor agreements in the xailroad industry, rules and practices relating to furlough, leave of absence, and absence on account of sickness or disability not covered by leave, are far from uniform. Occasionally rather important differences were found even in the agreements covering employees in the same craft on different divisions of the same carrier.
It is true that there is a certain pattern of similarity among many agreements. A standard labor agreement contains seniority rules in accordance with which employees subject to the agreement are laid off, when reductions in force occur, in reverse order of seniority, and are recalled to service in seniority order when employment increases. The employee is usually required to indicate his availability for service by filing his name and address with his employing officer at stated intervals, and he must, furthermore, return to service within a reason
Annual Report of the Railroad Retirement Board • 47
able length of time after he is recalled. Failure to observe these two requirements normally results in forfeiture of seniority rights.
While the majority of furlough rules do not limit the length of time following furlough during which seniority rights are protected, a great many place time limitations on the existence of these rights. Employees who are not recalled to service within the designated period of time following furlough ordinarily lose their rights to future calls.
Most agreements likewise contain rules providing for leave of absence. In general, the rule states the conditions under which an employee may be entitled to leave and the length of time for which leave may be granted. It also provides that failure to return to service at the expiration of leave forfeits seniority rights unless a proper extension has been obtained, and that employees who are sick or disabled shall be given preferential treatment in respect to leave of absence.
Absence on account of sickness or disability, when no leave of absence has been granted, is in most cases not directly provided for in labor agreements but exists, if at all, in the practices of the employer.
As of October 31,1938, an analysis was made of the rules and practices which had been examined and summarized by the Employment Relation Rules Unit. Rules summaries had been completed by October 31, 1938, for all the larger carriers although they had not been completed for all crafts. In the interest of speedy handling of the work, rule or practice summaries were not issued for crafts represented by a small number of employees among the employment relation cases. Cases of this type were often adjudicated directly from the rules without the formal issuance of a summary. Too much importance should not be attached, therefore, to the relative number of summaries as between the various crafts. The lack of summaries in some crafts may merely mean that there were few or no employment relation cases involving those crafts among the pending annuity applications.
Furlough rules and practices.—The analysis gives some indication, however, of the variation in existing rules. Thus, nearly 1,000 furlough rules and practices had been summarized by October 31, 1938, covering 21 occupational groups. These have been tabulated in table 12. Furlough rules in labor agreements or practices which covered more than one craft, were counted once in this tabulation for each craft. Of the 828 furlough rules analyzed in this table, 668 or 81 percent were found to provide no time limitation upon rights to return to service following furlough. In the absence of any time limitations, the furlough rules are thus uniformly interpreted to provide rights to return to service for an indefinite period, provided the obligations placed upon employees by these rules had been complied with.
48 • An nual Report of the Railroad Retirement Board
TABLE 12.—Number of furlough rules as of August 29, 1935, according to length of time seniority rights
are maintained by occupational groups1
Length of time seniority rights are maintained
Num- m Indefinite 2 to 5 years 1 to 2 years 6 months to 1 year Less than 6 months No rights Cra,t S K -------------------------------------------------------------------------------------------------
&■»”' S’ L’f ?,• T«- T- T»-
rules tires 1 1 rules tfees rules tires rules U1 rules ?raC' tal ruU ?rac’ tal
* lives vices vices
Engineers. ----------------- 73 5 78 73 3 76 0 2 2 ____
Firemen and hostlers-------- 64 6 70 64 4 68 0 2 2 ------------------------------------------
Conductors..................... fil 10 61 46 8 54 0 1 1 ”......’ .....*5---7----§----------------------...
Trammen................... 67 15 82 58 11 69 0 1 1 1 ”"o 1' 8 3 11 ------------------------'
Yardmen ....................... 60 15 75 49 12 61 0 1 1 1 0 1 9 2 1 ---6---1-------------
Yardmasters............... ... 213213.. ------------
Clerks. ..----------------- 62 8 70 44 8 52 2 6 2 7 0 7 8 6' "e 7 n------i
Sgffit-::::::::::::::::::::::::: § " g S ’ §..J 3 i i 5 j. J « }
Train dispatchers........................... 538437 101 ---------------------------------------------
Maintenance of way, skilled- 64 4 68 50 2 52 '2 6 2~ fine ---------7---n....k---n---5---o----7---A----:
Maintenance of way, laborers... 61 3 64 46 3 49 2 0 2 5 0 5 7 n 7 ° 2 2 J 2 J
Shop craft, skilled...... 94 9 103 73 7 80 5 0 5 6 0 6 8 0 8 —-7-—7- 0 1
Shop laborers.............. 45 8 53 30 6 36 30360fi?n^l?oi? 2
Stationary engineers, etc------ 28 0 28 16 0 16 20270720210121 3
Telegraph linemen.......................... 707707 u z 1 u 1 ---------------------- I
Dining-car waiters_____________ 0 110 11 -------- ---------------------------------------------------------- 1
Crossing watchmen.............. 44 2 46 33 1 34 ""2 6 2 5 6 5---3---6----3---6---1---1----i---6----i !
Roundhouse laborers........ 42 2 44 28 1 29 3 0 3 6 0 6 3 0 3 0 1 1 2 n 9 '
Marine employees___________ 213213 oudull20 2
Miscellaneous employees........ 4 26 30 4 11 15 ""6 i i -----------------------W —77---77
------ ------ ------ ------ ------ ------ - ------ U 14 14 Total.................. 828 131 959 668 92 760 21_9 30_58 1 59 67 6 73 5-5--10 9~ 18 27
of OetT31S K rinr™™Sin^= aDd Practices by crafts in effect on Aug- 29, 1935> ^r which summaries had been prepared by the Employment Relation Rules Unit as
ofOct. 31, 1938. In some instances the rule or practice summaries covered more than 1 craft. When this occurred the rule Qr practice was counted in the above table onre in each
Annual Report of the Railroad Retirement Board • 49
There were 151 instances in which rights to return to service following furlough lapsed after a stipulated period of time. In one case this period was 5 years, in 20 cases 2 to 3 years, in 58 cases 1 to 2 years, in 67 cases 6 months to 1 year and in 5 cases less than 6 months. In nine cases the labor agreements examined did not provide for rights to return to service following furlough, nor did practices exist establishing such rights. Time limitations in seniority rights following furlough are not confined to any one craft, though they are rare in train and engine service. No agreements were found in which the rights of engineers and firemen were thus limited. Out of 51 furlough rules for conductors only 5 limited the duration of furlough rights, and of 67 trainmen furlough rules, only 9 limited seniority rights in this manner. Most of the time limitations in furlough rules were found in agreements covering clerks, telegraphers, maintenance of way and shop employees, stationary engineers, crossing watchmen and roundhouse laborers. More than two-fifths of the agreements covering stationary engineers and about one-third of those covering shop laborers, telegraphers, and roundhouse laborers contained furlough limitations. No other crafts showed such a large proportion of rules of this type.
There were a fairly large number of agreements which contained no reference to rights to return to service following furlough. Normally, such agreements, however, did contain a rule providing for layoff in reverse order of seniority when forces were reduced. In the majority of cases rights to return to service following furlough were found to exist by practice rather than by rule. It was usually found that when the rule in the agreement itself provided for layoffs in reverse order of seniority, the employer, by practice, recalled men to service in order of seniority when forces were increased.
Of the 131 instances of furlough practices summarized, 92, or 70 percent, provided for indefinite rights to return to service following furlough. A few instances of furlough practices supplementing rules or existing in the absence of rules occurred in almost every craft. Of the 27 furlough rules and practices in which there were no recall rights following furlough, 14 involved miscellaneous forces and 6 shop crafts.
The existence of time limitations in the furlough rules was responsible for a good deal of misunderstanding among applicants in regard to employment relation. Many, whose seniority had been lost because they had performed no service within the time limitations laid down in the rule, claimed an employment relation on the ground that by practice they were subject to recall even though their contract rights had lapsed. This contention was usually not borne out when the facts were examined. Some carriers, at their discretion, did recall men to service whose seniority rights had lapsed because of
50 • Annual Report of the Railroad Retirement Board
time limitations, but such men were returned as new employees. Furthermore, they were not called in order of seniority, and management had imposed upon itself no obligation to recall them when forces were increased. There existed merely a promise to recall to service employees -who had lost their seniority rights, a promise that was not uniformly understood nor uniformly followed. The Board could not, in such cases, make a legal finding to the effect that an established practice existed.
Leave of absence rules and practices.—Most of the labor agreements contain leave of absence rules. A determination to the effect that an established rule covering leave of absence existed was usually not difficult. Such a rule is generally fairly explicit and not easily subject to misinterpretation. The application of leave of absence rules to sickness or disability, however, was frequently found to be ambiguous. Many agreements provide for time limitations upon leave of absence except when due to sickness or disability. Both carrier and employees have usually interpreted this to mean that leave of absence can and should be granted, in case of sickness or disability, for indefinite periods. In many instances carriers and employees have not firmly adhered to leave of absence rules where sickness or disability is concerned. Some carriers reported that such employees were considered to be on indefinite leave of absence; others, that they were absent on account of sickness or disability not covered by leave of absence and that their absence was, therefore, governed by a practice rather than by a rule. In some cases, neither the applicant nor the employer was certain as to whether a leave of absence rule or a sickness and disability practice should cover the case. On many large carriers, officials dealing with personnel were varyingly strict or lax in requiring employees to secure leave of absence under the rules in cases of sickness or disability.
In table 13 is shown a tabulation of leave of absence rules and practices similar to that already discussed for furlough rules and practices. Of 770 instances of leave rules, 716, or 93 percent permitted leave of absence due to sickness or disability for an indefinite period of time. In 136 cases where sick leave was provided for by practice, 111, or 82 percent placed no time limit on the duration of leave.
Sickness or disability absence not covered by leave.—The lack of uniformity in the application of leave of absence rules to sickness and disability cases did not, however, bar the possibility of proof of an employment relation if the carrier could show that it had uniformly regarded itself as under obligation to return sick or disabled employees to service following recovery. A great many
Annual Report of the Railroad Retirement Board • 51
carriers have followed a practice of this sort. As a result of this situation, it was found that in most instances absence due to sickness or disability not covered by leave, was governed by a practice rather than by a rule. In the great majority of agreements the rights of sick or disabled employees not on leave of absence are not explicitly protected.
TABLE 13.—Number of leave of absence rules and practices relating to sickness or disability as of August 29, 1935, by occupational groups 1
Occupational group Total With no time limitations With time limitations
Rules Practices Both Rules Practices Both Rules Practices Both
Engineers 50 23 73 43 22 65 7 1 8
Firemen and hostlers 48 17 65 44 16 60 4 1 5
Conductors 48 10 58 44 9 53 4 1 5
Trainmen 68 11 79 64 9 73 4 2 <5
Yardmen 60 13 73 56 11 67 4 2 6
Yardmasters 2 2 4 0 1 1 2 1 3
Clerks 58 7 65 56 7 63 2 0 2
Telegraphers 39 5 44 32 5 37 7 0 7
Signalmen.. . 21 2 23 19 2 21 2 0 2
Train dispatchers . 4 2 6 2 2 4 2 0 2
Maintenance of way, skilled 61 12 73 59 4 63 2 8 10
Maintenance of way, laborers 59 5 64 56 3 59 3 2 5
Shop craft, skilled ... 91 5 96 87 4 91 4 1 5
Shop laborers 44 4 48 43 3 46 1 1 2
Stationary engineers 24 4 28 22 3 25 2 1 3
Telegraph linemen 6 1 7 6 1 7
Dining-car waiters
Crossing watchmen . 43 3 46 41 1 42 2 2 4
Roundhouse laborers 38 3 41 37 2 39 1 1 2
Marine employees . 2 0 2 1 0 1 1 0 1
Miscellaneous employees 4 7 11 4 6 10 0 1 1
Total 770 136 906 716 111 827 54 25 79
1 This table represents the number of rules and practices, by crafts, in effect on Aug. 29, 1935, for which summaries had been prepared by the Employment Relation Rules Unit as of Oct. 31, 1938. In some instances the rule or practice summaries covered more than 1 craft. When this occurred the rule or practice was counted in the above table once for each craft.
As of October 31, 1938, 261 statements had been submitted covering employers’ practices with respect to absence on account of sickness or disability not covered by leave of absence. In a few cases an employer filed more than one such statement. Of the 261 statements, 168 had been accepted by the Board as establishing a practice. Most of these practices provided that sick and disabled employees were returned to service upon recovery no matter how extended the duration of the sickness or disability. In 72 cases service relation was terminated by reason of a finding by the carrier that the employee was permanently and totally disabled and could never return to service. In many instances, however, permanent and total disability, in and of itself, is not a bar to the existence of an employment relation. In these instances carriers could point to employees who had been declared permanently and totally disabled and who had subsequently recovered sufficiently to resume carrier service as proof of the existence of an established practice.
52 • Annual Report of the Railroad Retirement Board
In 30 cases employers reported that they did not permit absence on account of sickness or disability unless leave of absence had been obtained. In 11 cases, such absences were permitted for a limited period, sometimes as short as 30 days, without the necessity of obtaining leave. At the end of this period, leave of absence was required or the service relationship terminated.
The Adjudication of Employment Relation
Shortly after the work of determining the nature of employment relation rules and practices began, a special unit was set up in Claims Service (April 1938). The function of this unit was to adjudicate the employment relation feature of the claims of applicants who had not been in active compensated service on or after August 29, 1935, under the 1935 act and on August 29, 1935, under the 1937 act. Prior to this time, a revised employment relation form had been prepared. This form made provision for securing the basic information necessary from the employer. It constituted an elaboration of the information requirements of the employment relation forms previously used. The work of the adjudicator ordinarily required a determination first, as to whether the employee was on furlough, on leave of absence or absent on account of sickness or disability • and secondly, whether such furlough or absence was in accordance with the rules and practices of the employer as shown by the summaries of established rules and practices. In the case of applicants with seniority rights it was also necessary to determine their roster standing. Furthermore in furlough and leave cases under the 1935 act and in furlough cases under the 1937 act it was necessary to determine whether the applicant was ready and willing to serve on the dates required.
Obstacles to rapid handling of claims.—The task of determining the cause of absence of applicants claiming an employment relation status was often somewhat difficult. Terminology in this respect is far from standardized among the various carriers throughout the country. AVhile to many carriers a furlough means layoff on account of reduction in force with rights to return to service, there are others where the use of the term furlough in this way is unknown. Sometimes the term furlough is used for leave of absence and occasionally leave of absence is applied to furlough. Frequently, carriers recorded employees as absent on account of sickness or disability who actually were on leave of absence because of sickness or disability. Therefore these cases had to be adjudicated under the leave of absence rule or practice rather than under the sickness or disability rule or practice. In many cases, the evidence in the file was conflicting, and the Employment Relation Unit was frequently forced to conduct extensive correspondence in order to clear up difficulties of this nature.
Annual Report of the Railroad Retirement Board • 53
In many instances after the existence of an established rule or practice had been determined, it was found that in certain cases under examination, the rule or practice had not been followed and yet both the applicant and carrier claimed an employment relation. All such cases were held for further investigation and occasionally when informed of the situation, the carrier materially changed the statements of practice previously returned. Mistakes of this sort were almost never intentional but resulted from the uncertainty of carrier officials themselves as to the exact nature of the practice or interpretation that had been followed.
For the large carriers it was possible to dispose of many cases on the basis of a comparatively few summaries of established rules and practices. For example, half of the cases were included among employees of only five carriers. On the other hand, of the total of 379 employers represented by the cases on hand as of April 11, 1938, 279 were represented among the employment relation cases by less than 10 cases each, and, of these 279 employers, a great many were represented by only 1 or 2 employment relation cases each. Whether one or many employees were involved, it was necessary to establish the practice governing the cause of absence before the existence or nonexistence of an employment relation could be determined.
There have been many cases of long delay between the filing of an application and a declaration of ineligibility or eligibility by Claims Service where employment relation was involved. Consideration for the applicant frequently dictated the delay. It often happened in these cases that, on the basis of available evidence, no immediate finding was justified other than to declare the applicant ineligible for prior service credit. At the same time, many of these files contained documents which indicated that if all the facts were at hand an employment relationship might, nevertheless, be proved. Much of the extensive correspondence originating in the Employment Relation Unit arose from the necessity of making no final determination until all doubtful points had been cleared up.
Number of claims adjudicated.—As of October 31, 1938, 16,945 annuity application files had been referred to the Employment Relation Unit. In 9,898 of these cases, the claim of the applicant to an employment relation was sustained and in 3,080 it was disallowed. Of applicants in the latter class, only 82 were eligible to receive an annuity based on service subsequent to December 31, 1936.
In 564 cases submitted to the Employment Relation Unit, it was ruled that the question of employment relation was not involved. As of October 31, 1938, the unit had made a determination in 13,542 cases, leaving 3,403 cases still pending. In practically all the pending cases an investigation of the validity of the employment relation
54 • Annual Report of the Railroad Retirement Board
claim had been begun either in respect of the reported status of the applicant or in respect of the governing rule or practice.
In tables 14 and 15 the 12,978 employment relation claims handled, in respect to which a determination had been made as of October 31, 1938, are analyzed according to the employment relation decision made, the type of rule or practice under which employment relation was established, and the last date worked by the applicant. The year last worked is not available for 179 of these claims. Of the remainder 784, or 6 percent, have not worked for an employer covered by the Railroad Retirement Act since 1925; 1,893, or 15 percent, performed their last service between 1926 and 1930, inclusive; 2,515, or 20 percent, performed their last service in 1931 and 1932; 3,253, or 25 percent, in 1933 and 1934; and 2,547, or 20 percent, in 1935. The claims of annuitants who last worked in 1935 are not broken down to show whether they were in service subsequent to August 29, 1935. There were 1,807 cases, or 14 percent of the total, who were in service subsequent to 1935.
TABLE 14.—Cumulative number of applicants ruled on by employment relation unit by year last worked 1
Year last worked prior to— Claims ruled on, number Claims allowed Claims ruled on, percent Claims allowed, percent
Total Disallowed Allowed Disability 2 Others Total Disallowed Allowed Disability 2 Others
1921 274 156 118 144 106 130 12 2.1 2.7 5.3 6.9 1.2 1.5 1.9 2.3 0.3 .3
1922 348 204
1923
468 287 337 181 225 158 195 23 30 3.7 4.4 9.7 11.4 1.8 2.3 2.8 3.5 .5 . 7
1924 . 562
1925
655 383 272 235 5.1 13.0 2.8 4.2 .9
1926
784 464 320 274 6.1 15.8 3.2 4.9 1.1
1927
959 537 422 537 345 425 7.5 9.2 18.2 21.9 4.3 5.4 6.1 7. 6 1.8 2.7
1928 1,183 646
1929 1,448 755 693 538 11.3 25.6 7.0 9. 6 3.7
1930 242
1,879 905 974 732 14.7 30.7 9.9 13.0 5.7
1931
2,677 1,185 1,492 1,033 459 20.9 40.3 15.1 18.4 10.9
1932
3,893 1. 608 2,285 1,486 799 30.4 54.6 23.2 26.4 18.9
1933
5,192 1,984 3,208 2,061 1,147 40.6 67.4 32.6 36. 6 27.1
1934
6, 381 2,294 4,087 2,657 1,430 49.9 77.9 41.5 47.2 33.8
1935
8,445 2,593 5, 852 3,882 1,970 66.0 88.1 59.4 69.0 46.6
1936
10, 992 2, 875 8,117 5,142 2,975 85.9 97.7 82.4 91.3 70.4
1937
11,332 2, 880 8,452 5,242 3, 210 88.5 97.8 85.8 93. 1 76.0
1938
12,300 2,923 9, 377 5, 484 3, 893 96.1 99.3 95.1 97.4 92.1
1939 .
12, 799 3 2,944 3 9, 855 3 5, 629 3 4, 226 3100. 0 3100. 0 3100.0 3 100.0 3 100.0
1
i As of Oct. 31, 1938.
1 Percentages in this column represent the proportion of applicants held in employment relation because of leave of absence on account of sickness or disability or because of absence on account of sickness or disability not covered by leave.
5 Excludes 179 claims not available for this study, and includes 82 still working.
It will be noted that a much larger proportion of the employment relation claims of applicants, who had not performed service for an employer under the act for many years, were disallowed than of the claims of those who had performed service within a shorter period prior to August 29, 1935. Of the applicants who last worked prior to 1926, 59 percent were held not to be in an employment relation. Of
Annual Report of the Railroad Retirement Board • 55
those who last worked between 1926 and 1930, 38 percent were held not to be in an employment relation. Of the employment relation claims of those who last worked from 1931 to 1935, only 20 percent were disallowed.
TABLE 15.—Number of applicants ruled on by employment relation unit, by year last worked 1
Year last worked Claims ruled on Claims allowed
Number Percent allowed Percent disallowed Total Percent disability 2 Percent, other
Total 12,978 76.3 23.7 9,898 57.0 43.0
Not available 179 24.0 76.0 43 20.9 79.1
Prior to 1921 274 43.1 56.9 118 89.8 10.2
1921 74 35.1 64.9 26 92.3
1922 120 30.8 69.2 37 75.7 24.3
1923 94 46.8 53.2 44 84.1 15.9
1924 93 50.5 49.5 47 85.1 14.9
1925 129 37.2 62.8 48 81.2 18.8
1926 175 58.3 41.7 102 69.6 30.4
1927 224 51.3 48.7 115 69.6 30.4
1928 265 58.9 41.1 156 72.4 27.6
1929 431 65.2 34.8 281 69.0 31.0
1930 798 64.9 35. 1 518 58.1 41.9
1931 1,216 65.2 34.8 793 57.1 42.9
1932 1,299 71.1 28.9 923 62.3 37.7
1933 1,189 73.9 26.1 879 67.8 32.2
1934 2, 064 85. 5 14.5 1,765 69.4 30.6
1935 2,547 88.9 11. 1 2,265 55.6 44.4
1936 340 98.5 1.5 335 29.9 70.1
1937 968 95.6 4.4 925 26.2 73.8
1938 417 95.7 4.3 399 29.3 70.7
Still working 82 96.3 3.7 79 35.4 64.6
i As of Oct. 31, 1938.
2 Percentages in this column represent the proportion of applicants held in employment relation because of leave of absence on account of sickness or disability or because of absence on account of sickness or disability not covered by leave.
Sickness or disability of some sort was indicated in 5,638 or 57 percent of the 9,898 employment relation claims allowed. This means that the applicants in question were held to be in an employment relation because of sickness or disability whether or not covered by leave of absence and does not mean that they were necessarily eligible for a disability annuity. Many of the applicants who had not performed service for many years prior to August 29, 1935, were sick or disabled in the above sense. Of the 320 cases of applicants whose employment relation was allowed and who last worked prior to 1926, 574 or 86 percent were sick or disabled; of 1,172 who last worked from 1926 to 1930, 759 or 65 percent, and of the 6,625 who last worked from 1931 to 1935, 4,109 or 62 percent were sick or disabled. Twentyeight percent of those who performed service subsequent to 1935 were absent or on leave of absence because of sickness or disability.
Only a small portion of the employment relation claims were settled under the 1935 act. Of the 9,898 allowed claims, only 393, or 4 percent were 1935 act cases. In 576 of the remaining cases the Employment Relation Unit did not determine whether the 1935 or the
56 • Annual Report of the Railroad Retirement Board
1937 act applied since that relationship existed on August 29,1935, and they were, therefore, in an employment relation under either act.
On table 16 is shown an occupational classification of the employment relation claims on which final determination had been made as of October 31, 1938. Of the 9,898 claims ruled to be in employment relation, 3,254 represented skilled workmen in shop craft occupations and 523 were shop laborers. Thus 38 percent of these cases represented maintenance of equipment employees. The next largest > number were employees engaged in maintenance of way work. Of these, 553 were skilled maintenance of way employees and 840 were maintenance of way laborers. These two occupations combined con-stitute 14 percent of the total. Clerks were represented by 1,010 cases, or 10 percent of the total, engineers by 597 cases, trainmen by 528 cases, yardmen by 447 cases, conductors by 445 cases, telegraphers L by 431 cases, and crossing watchmen by 396 cases. It should be noted that the occupations shown in this table represent the last occupation held by the applicant prior to August 29, 1935, rather than the last occupation in which the applicant performed service. A large proportion of the applicants in all crafts whose employment relation claims were allowed were absent or on leave of absence due to sickness or disability. The only crafts shown in table 16 in which I less than 50 percent of the cases involved sickness or disability were skilled workers in shop crafts and stationary engineers.
TABLE 16. Number of applicants held in employment relation by employment relation unit1 by occupational group
Last occupation prior to Aug. 29, 1935
A1J occupations____________
Engineers..._______________’
Firemen and hostlers_______
Conductors_________________
Trainmen..........—2222222
Yardmen...............2—21
Yardmasters___________22
Clerks_________________222
Telegraphers........ 2222222
Signalmen....___________2.
Train dispatchers.....2222
Maintenance of wav, skilled
Maintenance of way, laborers
Shop crafts, skilled_______
Shop laborers______________
Stationary engineers__2222
Telegraph linemen........"
Dining-car waiters______22
Crossing watchmen__________
Roundhouse laborers........
Marine employees.......2.222
Miscellaneous employees....22
Claims allowed
Total Percent disability ’ Percent, other
9,898 57.0 43.0
597 70.5 29.5
229 65. 1 34.9
445 74.4 25.6
528 69.9 30.1
447 68.2 31.8
28 78.6 21.4
1,010 56.7 43.3
431 60.3 39.7
80 61.2 38.8
26 69.2 30.8
553 63. 5 36.5
840 69.0 31.0
3, 254 40.9 59.1
523 57.7 42.3
69 44.9 55.1
5 60.0 40.0
5 80.0 20.0
396 67.7 32.3
171 62.0 38.0
28 57. 1 42.9
233 63.5 36.5
« As of Oct. 31,1938.
of’lXv’e o^absenceM^mmt of QinVnoc?116 Ji)-TOKr-Von °[aPPlicants held employment relation because bility not covered by teave 1 f sickness or dlsablllty or because of absence on account of sickness or disa-
Annual Report of the Railroad Retirement Board • 57
The 3,080 applicants ruled not in an employment relation on August 29, 1935 (or after August 29, under the 1935 act), are analyzed in table 17 according to the cause of termination of rights. The largest number, 703 or 23 percent of the total, were dismissed. Of this number the cause of discharge is known in 254 cases. The next important cause of termination of rights was disqualification
TABLE 17.—Number of applicants held not in employment relation by employment relation unit1 classified by cause of termination of rights
Cause of termination of rights Total No service subsequent to Dec 31, 1936 Service subsequent to Dec. 31, 1936
Total 3,080 2,998 82
Dismissed 703 688 15
Resigned 423 415 3
Disqualified by furlough rules and practices 392 371 21
Job abolished . 220 217 3
Disqualified by leave of absence rules and practices 74 72 2
Physically or mentally disqualified for further service, record closed 440 434 6
Retired on account of age, did not qualify for carrier pension 374 373 1
Pensioned ... 173 171 2
Employee lost rights by participation in a strike 60 60 o
Not in service long enough to obtain seniority rights ... 31 28 3
Data not available 190 169 21
i As of Oct. 31, 1938.
for further service on account of disability. A fairly large group of employers terminate the service rights of employees as of the date such employees are found to be permanently and totally disabled. More often, however, carriers protect by practice the seniority rights of permanently disabled employees, where the permanent disability is not accompanied by pension. Occasionally union organizations have been successful in obtaining an understanding of existing rules to give similar protection. In 374 instances in which an employment relation was disallowed, the applicant had been retired on account of age without pension, and in 173 cases with pension. Thus, 18 percent of the total number of employment relation claims disallowed were due to termination of rights by reason of retirement. In 423 cases, or 14 percent of the total, service rights were terminated by resignation, in 392 cases rights were terminated because applicants had not fulfilled requirements of furlough rules or practices, and in 74 cases because they had not fulfilled requirements of leave of absence rules or practices. Thus, only 466 claims or 15 percent of the total number of disallowed claims were disallowed by reason of absences contrary to existing furlough or leave rules and practices.
In 220 instances applicants were held not to be in an employment relation because their jobs had been abolished. This meant that there were no positions to which seniority rights attached, and, therefore,
58 • Annual Report of the Railroad Retirement Board
that rights to recall to service did not exist. Decisions of the Board in cases of this sort have frequently given rise to misunderstanding. There have been a good many instances in which applicants for annuities claiming employment relation have been reported as furloughed by an employer due to the abolition of all jobs of the same class at a seniority point or within a seniority district. Their names have been often continued on seniority rosters, but no position existed to which they could be recalled. Therefore, the fundamental requirement that an employment relation must contemplate return to actual service, was not fulfilled. While a few of the applicants whose employment relation claims under the 1937 act were denied, 82, or about three percent of the disallowed claims, were able to obtain small annuities by reason of service subsequent to August 29, 1935; these were a negligible proportion of the total.
Since comparatively few employment relation cases came within the provisions of the 1935 act, most applicants not in employment relation on August 29, 1935, were ineligible to receive annuities.
THE RAILROAD RETIREMENT ACCOUNT
THE Railroad Retirement Account was created in the Treasury of the United States by the Railroad Retirement Act of 1937. The act also authorized appropriations to the account “to provide for the payment of all annuities, pensions, and death benefits in accordance with the provisions of this act and the Railroad Retirement Act of 1935.” The context makes it clear that the appropriations for each fiscal year are to be made on a reserve basis. The Railroad Retirement Board is required by the act to include in each annual report a statement of the operations of the Railroad Retirement Account during the preceding fiscal year and of the status of the account at the end of the year.
The creation of the Railroad Retirement Account by the 1937 act is one of the principal differences between this act and the acts of 1934 and 1935. Although this policy is explicit only in the 1934 act, all three acts are in fact based on a policy of financing the retirement system substantially from revenue raised by levying taxes on employers and employees. They differ, however, in the method provided for the handling of this revenue.
Under the 1934 act, contributions collected from employers and employees were to be earmarked for the purpose for which they were collected. Such moneys were to be set aside in the Treasury in a special fund called the Railroad Retirement Fund which was to be operated by the Railroad Retirement Board. The Board was authorized to change the rates of contribution to provide for disbursements for benefits and for expenses of administration, together with a reasonable margin for contingencies. Disbursements for benefits were to be made entirely from this fund. The act also provided for the investment of surpluses not immediately required for disbursement in the fund in interest-bearing bonds, notes, or other obligations of the United States. Terms upon which such obligations could be acquired were not specified. The investments were authorized to be made at the request and direction of the Railroad Retirement Board by the Treasurer of the United States with the approval of the Secretary of the Treasury. The Board had authority to direct the
59
.V.
60 • Annual Report of the Railroad Retirement Board
liquidation of its investments when in the judgment of the Board it was to the interest of the fund to do so.
While the 1935 Retirement Act contained no revenue provision, a separate act levied taxes on railroads and their employees. Moneys collected from these taxpayers were not to be earmarked or deposited in a special fund, but were to be paid into the general fund of the Treasury of the United States. This Retirement Act provided that such amounts as were needed from time to time to carry the act into effect were to be appropriated by Congress out of the Treasury.
The 1937 legislation is similar to that of 1935 in two respects. The retirement and revenue measures were incorporated in two separate acts and the tax provided by the Carriers Taxing Act of 1937 is to be paid, without earmarking, into the general fund of the Treasury. The Retirement Act of 1937, as distinguished from the 1935 act, provides for appropriations on a reserve basis. The appropriations for the earlier years of the operation of the retirement system are to be in excess of current needs in order to provide a reserve which when invested at 3 percent would cover in part the requirements for benefits in the later years of the system’s operation. At the same time it is intended that appropriations to the Railroad Retirement Account should roughly correspond in amount to the revenue received under the taxing act. This intent is not specified in the Retirement Act, but is evident from a comparison of testimony before the Ways and Means Committee on the Carriers Taxing Act, and before the House Committee on Interstate and Foreign Commerce on the Retirement Act.
The 1937 Retirement Act authorizes the investment of surplus funds in United States obligations and also the sale and disposal of obligations held in the account. Investments are to be made at the request and direction of the Board, and the act is specific in providing that obligations may be acquired only on such terms as to yield at least 3 percent per annum. Original issues are to be acquired at par, and outstanding obligations at the market price. There may also be issued to the Account special obligations bearing interest at the rate of 3 percent per annum. Any obligations acquired by the Account may be sold at the market price, except special obligations issued exclusively to the Account which are to be redeemed by the Treasury at par, plus accrued interest when requested by the Board.
The annual appropriations to the Railroad Retirement Account are made, on the basis of estimates prepared by the Board, before the beginning of the fiscal year. The transfer from the general fund of the Treasury to the Railroad Retirement Trust Fund, however,
Annual Report of the Railroad Retirement Board • 61
has been made in installments spread over the fiscal year. Upon such transfer the money, except for a relatively small cash reserve, has been put to immediate use either for the purchase of United States obligations or for the payment of benefits currently due.
The Railroad Retirement Account for 1937-38
The first appropriation to the Railroad Retirement Account was made for the fiscal year 1937-38 by the special appropriation act approved July 1, 1937. The appropriation consisted of two parts. One was the unexpended balance of the appropriation of $46,620,000 for the year 1936-37 included in the Independent Offices Appropriation Act, approved March 19, 1936, for the payment of benefits under the 1935 Retirement Act. There was in addition an appropriation for the year 1937-38 of $99,880,000. The special appropriation act approved July 1, 1937, provides also that all payments made from the $46,620,000 prior to July 1, 1937, under sections 3, 4, and 5 of the Retirement Act of 1935 be considered as having been made from the Railroad Retirement Account. In effect, therefore, the appropriation to the Railroad Retirement Account for the fiscal year 1937-38 amounted to $146,500,000. Of this amount, $146,406,307.87 had been transferred to the Railroad Retirement Trust Fund by the end of the fiscal year. Of the amount appropriated $93,692.13 had not been transferred to the trust fund before the end of the fiscal year, but this amount remains appropriated to the Railroad Retirement Account because appropriations to the Account once made are permanently available and do not lapse.
The dates of transfer of moneys from the general fund of the Treasury to the Railroad Retirement Trust Fund, the amount of such transfers, and the disposition of the funds are shown in the table below:
Date of transfer Amount transferred Disposition
July 3 $10,000,000 00 Cash
Aug. 5... 10, 000, 000 00 Do
Aug. 10 10,000,000 00 Tn vested
Sept. 1.. 10,000, 000 00 Do
Sept. 9. 4 000 000 00 Cash
Oct. 1 10 000 000 00 Invested
Oct 30 4, 000 000 00 Cash
Nov. 1. 10 000 000 00 Invested
Nov. 10... 4, 000, 000 00 Cash
Dec. 1 10 000 000 00 Tn vested
Dec. 8. 10, 000 000 00 Cash
Jan.3 10, 000 000 00 Invested
Jan.14.. 000, 000 00 Cash
Feb.1.. 10,000 000 00 Invested
Feb.9 5,000 000 00 Cash
Mar. 1.... 10 000,000 00 Invested
Mar. 16.. 5, 000 000 00 Cash
Apr. 4 4,000 000 00 Do.
Apr. 30 4, 606, 307 87 Do
June 20. . 800,000 00 Do
146, 406, 307.87
108818—39——5
62 • Annual Report of the Railroad Retirement Board
The table shows that of the amount transferred $80,000,000 was used for immediate investment and the balance amounting to $66,406,-807.87 was set aside in cash for the payment of benefits. In addition, the fund received during the year $1,410,821.92 in interest on investments, of which $1,200,000 was reinvested, leaving $210,821.92 in cash for benefit payments. Before the end of the year $15,000,000 in investments was liquidated in order to meet benefit obligations.
The total amount set aside for the payment of benefits was therefore $81,617,129.79, and net disbursements for annuities and other benefits amounted to $80,461,438.24. The latter figure includes payments made prior to the beginning of the fiscal year 1937-38 under the Retirement Act of 1935 and charged against the account after July 1, 1937.
The total amount invested at the end of the year was $66,200,000. It was impossible to acquire eligible securities in the open market on terms which would yield 3 percent per annum. Consequently all investments were made in special 3 percent Treasury notes issued exclusively to the Railroad Retirement Account and designated as the Railroad Retirement Account series.
A summary statement of the income, expenditures, and assets of the Railroad Retirement Account follows:
Income and expenditures to June 30, 1938
Income:
Appropriation by Congress------------------------------$146,500,000.00
Interest on investments________________________________ 1( 410, 821. 92
147, 910, 821.92 Expenditures:
Total benefit payments_________________________________ 80, 461, 438.24
Balance in account___________________________________ 37, 449, 333. 33
Assets at the end of June 30, 1938
Investments------------------------------------------------ $66, 200, 999. 99
Special 3 percent Treasury notes, Railroad
Retirement Account series:
Maturing June 30, 1942_______________$65,000,000.00
Maturing June 30, 1943_______________ 1, 200, 000. 00
Cash----------------A-------------------------------------- 1( 3^3 33
Treasury cash---------------------------- $233,719.65
Railroad Retirement Ac-count appropriation balance---------------- $93, 392.13
Railroad Retirement
Trust Fund----------- 140, 027. 52
Disbursing officer’s cash________________ i, 915, 334, 93
Disbursing account_____$1,014,899.23
Collection account_____ 764.80
Total assets------------------------------------- 37, 449,333.33
Annual Report of the Railroad Retirement Board • 63
Summary of Financial Results of the Railroad Retirement and Carriers* Taxing Acts to June 30,1938
While the Carriers Taxing Act is administered by the Bureau of Internal Revenue, the legislative history of the Retirement Act indicates an intention to appropriate for the Railroad Retirement Account and for expenses of administration amounts equal to the collections under the Taxing Act. It is of interest, therefore, to compare tax collections with appropriations for the account and administrative expenses of the Railroad Retirement Board.
Collections under the Taxing Act during the fiscal year 1937-38 amounted to $150,040,900.85. If there were any delinquent taxes at the end of the year, the amount was probably insignificant. It is possible, however, that certain decisions in respect to the liability of employers and employees under the act, which are now in process of formulation, may result in some additional tax collections. Treasury statements show receipts month by month as follows:
October_________________________________________ $19,040.17
November________________________________________ 23,465,353. 79
December________________________________________ 68, 913, 769. 24
January_________________________________________ 658,843.42:
February---------------------------------------- 30, 071, 933. 26
March___________________________________________ —10, 484. 75-
April___________________________________________ 584,114. 67
May_______________________________________________ 26,331,470. 68
June______________________________________________ 6, 860. 37
Total.
150, 040, 900. 85
Appropriations to the Railroad Retirement Account can be used solely for the payment of annuities and other benefits and for investment in the obligations of the United States, or obligations guaranteed as to both principal and interest by the United States. Separate appropriations are made for expenses of administration of the Railroad Retirement Act. These appropriations, together with expenditures to the end of the fiscal year 1938, were as follows:
Appropriations
Fiscal year 1935-36_________________________________ $600, 000
Fiscal year 1936-37_________________________________ 1, 305, 000
Fiscal year 1937-38_________________________________ 2, 825, 000
Expenditures $599, 344. 95
1, 300,142. 39
2, 822, 273. 43
Total_____________________________________ 4, 730, 000 4, 721, 760. 77
On the basis of the above figures it appears that to the end of the fiscal year 1937-38 the policy of financing the retirement system from taxes paid by employers and employees has been followed closely. Collections under the Taxing Act amounted to $150,040,-900.85. For the same period appropriations to the Railroad Retirement Account, together with expenditures for administration,
64 • Annual Report of the Railroad Retirement Board amounted to $151,221,760.77. The latter figure exceeds tax collections by $1,180,859.92, or less than 0.8 percent.
Considerations With Respect to the Railroad Retirement Account
As indicated in the preceding section, an amount equal to all the revenue collected from employers and employees under the Carriers Taxing Act has been either appropriated to the Railroad Retirement Account or used for paying expenses of administration of the Retirement Act. A question, however, has arisen in the public mind as to whether the entire proceeds of the tax under the Taxing Act have been used for the purposes for which they were intended. It is said, for example, that the surpluses in the Railroad Retirement Account which are invested in Treasury notes are actually expended for purposes entirely unrelated to the railroad retirement system.
As previously shown, not all of the amount appropriated to the Railroad Retirement Account thus far has been required for the payment of annuities and other benefits currently due, as will be true for some years to come. A reserve was created in the fiscal year 1937-38 consisting of $66,200,000, invested in 3 percent Treasury notes, and of over $1,000,000 in cash. The creation of this reserve is in line with the reserve method of financing the retirement system as provided by section 15 (a) of the Retirement Act of 1937. The reserve method was accepted in order that the total tax on employers and employees shall at no time exceed 7y2 percent of the payroll. On the pay-as-you-go basis benefit payments during the early years of the operation of the act could have been met from a total tax of 4 percent, which when levied on an annual pay roll of about $2,-200,000,000 would have yielded approximately $88,000,000. The annual benefit payments will increase, however, in the subsequent years of the operation of the act. It is estimated, for example, that within 25 years annual benefit payments will reach the level of $200,000,000, which would call for a tax rate of about 10 percent if the annual pay roll is still in the neighborhood of $2,200,000,000. In order to avoid the necessity of levying so high a tax, it was provided that the tax in the earlier years be sufficient to leave a surplus over and above the amount needed for current benefit payments. The tax was imposed at the combined rate of 5^ percent for the first 3 years, with the rate increasing by one-half of 1 percent every 3 years thereafter until it reaches 7i/<> percent for 1949 and subsequent years. The interest earned from investing the reserve accumulated from the excesses of appropriations over benefit payments, if amounts equal to tax receipts are appropriated, would be drawn upon for benefit payments in later years when current tax yields would be insufficient to meet current benefit requirements.
Annual Report of the Railroad Retirement Board • 65
Investment of the reserve in interest-bearing securities is a method of handling funds which is fully in accord with sound business practice. When individuals or corporations have large amounts of money which they do not need immediately for their use, they do not hoard it nor do they deposit it in a bank, but invest it in income yielding assets. It is no less good business for the government to put to use such funds as are not immediately needed for the payment of benefits. The amount by which the funds in the account may be augmented in this way is considerable. As shown in the statistics already presented, the funds in the account were increased by $1,410,821.92 in less than a year, through the interest yielded on the investments up to July 1, 1938. Had funds in the Railroad Retirement Account been maintained in the form of cash in the United States Treasury or in the form of bank deposits, the beneficiaries of the account would have been deprived of this amount to date and of much larger amounts in the future.
Investment of the reserve in obligations of the United States at a minimum rate of 3 percent per annum is the most profitable form of investment consistent with the utmost safety of the funds. It is in order to make such investment possible at all times that the Retirement Act authorizes the issue at par of special obligations exclusively to the account. The special obligations are to bear interest at the rate of 3 percent, even though other obligations of the United States available in the open market have a considerably lower yield. To date, the reserve has been invested entirely in special obligations of the United States issued to the Railroad Retirement Account.
Investment of the reserve in special obligations of the United States amounts to a loan of the surplus funds to the Government. Funds loaned by the account are used by the Government instead of other funds which would have been loaned by the general public. The transaction results, therefore, in a shift of the ownership of a part of the public debt from the general public to the Railroad Retirement Account and a corresponding transfer to the account of a part of the interest payments on the public debt. The funds thus used by the Government for general purposes are not the proceeds of the tax under the Carriers Taxing Act or the surpluses in the Railroad Retirement Account, but the proceeds of a loan or loans contracted by the Government and evidenced by special obligations issued to the account.
.VI.
DEATH BENEFITS AND BENEFICIARY DESIGNATIONS
UNDER the 1937 act, a death benefit may be payable with respect to the death of any employee who renders compensated service under the Act after December 31, 1936. The amount of death benefit payable with respect to persons who do not qualify for an annuity is 4 percent of the total compensation credited after December 31, 1936. The amount of death benefit payable with respect to persons who qualify for an annuity is 4 percent of the total compensation credited after December 31, 1936, less the total amount of annuity paid or accrued, including survivor annuities, if any.
The 1937 act provides that death benefits be paid to a beneficiary or beneficiaries named by the employee in a written designation filed before his death with the Board. Where such designations are not made, benefits are payable to the legal representative of the deceased. Death benefits are also payable to the legal representative if the designation is not properly executed or received by the Railroad Retirement Board before death, or if all of the designated beneficiaries die before the deatn benefits become payable. Death benefits in cases of joint and survivor annuity are payable only after the death of the spouse. If an annuitant with a joint and survivor election had designated only his wife as beneficiary, any death benefit payable would go to his legal representative.
Administration of Death Benefits
The first claims for lump sum death benefit payments under the 1937 act were received by the Board in October 1937, and the first certifications were made in April 1938. By June 30, 1938, 665 claims totaling $35,017.81 had been paid. The average benefit paid was $52.66, and 52.0 percent of the payments amounted to less than $50. By October 31, 1938, between 12,000 and 13,000 applications for death benefits had been received, of which 2,784 claims, totaling $162,628.73, had been paid. The average amount of payment had increased to $58.42, and payments of less than $50 had declined to 46.2 percent of the total.
66
Annual Report of the Railroad Retirement Board • 67
One of the principal problems connected with the administration of death benefit claims arises from the fact that the Board does not receive notice of the death of all employees under the act. The Board learns of the death of annuitants and applicants for annuities in the regular course of administering claims. It learns, also, of the deaths of employees in the active service of employers subject to the act. Under a Board regulation it is “the duty of every employer coming within the purview of the act to notify the Railroad Retirement Board of the death of any employee in active employment, and when known, of the death of any employee in an employment relation, within 30 days following receipt by the employer of notice of such death.” There is no regular procedure, however, whereby the Board is notified of the death of employees under the act, who at the time of death are not working for employers under the act. The unions may learn of the death of such individuals in connection with insurance or mutual benefit functions, and notify the Board.1
It is estimated that in 1937 approximately 18,000 individuals died who were credited with compensation under the act after December 31, 1936; and that an additional 9,000 died in the first 6 months of 1938. The number of claims received relative to the number of estimated deaths indicates that the Board has not received death notices for many deceased employees or deceased former employees. Moreover, whether because of lack of knowledge of the benefit or for some other cause, all the persons entitled to claim death benefits do not file applications. Some may not file a claim because the amount of money involved is small. Others may not know that they have been designated as beneficiaries.
Where no beneficiary designations have been made, and where no executor or administrator has been charged with the collection of assets, those legally entitled to the death benefits may be unaware of the procedures for collection. In cases of death benefits amounting to $500 or less, where no beneficiaries have been designated, no executor or administrator has been or is expected to be appointed, and where a surviving spouse or next of kin is entitled to such an amount under the laws of the State, the Board will pay the benefits to the surviving spouse or next of kin without requiring formal administration of the estate, if there is no legal problem of creditors with superior rights.
Employers cooperate with the Board in distributing claim forms to persons entitled to the death benefits with respect to employees who
1 The Board plans to send annual statements to employees in active service showing the amount of creditable compensation they have received during the preceding calendar year. From these statements the approximate amount of death benefit which would be payable prior to retirement can be quickly calculated. If all persons who receive these statements would file them among their valuable papers together with the duplicate death beneficiary designation forms, the probability is that the Board would be more certain to receive notices of death.
68 • Annual Report of the Railroad Retirement Board
die in their service, and the unions often can help in distributing such forms to persons entitled to death benefits by reason of the death of deceased members.
Designation of Beneficiaries
The designation of death-benefit beneficiaries eliminates the necessity of determining who the legal representatives of the deceased arc, and makes it easier to pay benefits when the Board is notified of the death of employees. Also, such designation allows the payment of death benefits without expense of administration and without deductions for possible creditors of the deceased employee.
The number of employees who were in compensated service of employers under the act at some time after December 31,1936, and before July 1, 1938, was more than 2,100,000. Every one of these employees is entitled to make a designation of death-benefit beneficiaries. To facilitate proper designation, the Board has prepared a form for employees to fill out. This form provides space for the designation as death-benefit beneficiaries of one or more persons as first choice and for one or more persons as second choice. The relationship of the designee to the employee is shown also. If more than one person is designated as first choice, all of them who survive the employee share equally, unless he has specified a different division. If none of the first choice designees is alive at the time the death benefits become payable, the death benefit is payable to his legal representative unless a second choice of designees is made on the form. A second choice, if made, becomes effective only if all the designees of the first choice should die before the death benefits become payable.
The Board began sending out death beneficiary designation forms in June 1938. By October 31, 1938, about 650,000 designations had been returned by persons other than annuitants or applicants for annuities. These forms are still being received but the Board will probably never obtain designations from all employees entitled to make them. The Board has distributed the forms mainly through employers, since the expense involved and the difficulty of maintaining accurate current addresses for all active employees make it impracticable generally to send these forms directly to employees. This means that many employees who are not now in the service of employers subject to the act will fail to get death benefit designation forms, unless they write directly to the Board or return to the service of an employer under the act.
. Some employees who have received forms have not made designations. There may be some reluctance among individuals, especially among younger persons, to worry about contingencies related to death, and this is accentuated by the realization on the part of many that changes in their marital and economic conditions will affect their
Annual Report of the Railroad Retirement Board • 69
choice of death-benefit beneficiaries. Other workers may not make designations under the impression that death benefits going to legal representatives would have much the same effect as the designation of a beneficiary.
As has already been pointed out, the designation of death-benefit beneficiaries simplifies the administration of the death-benefit claims. Since, however, under the regulations of the Board, an employee who has designated a death-benefit beneficiary may at any time revoke, change, or make new designations, the duties of the Board in connection with the administration of obtaining, filing, and changing designations of death-benefit beneficiaries are bound to increase. New designations will be made not because of the whims of individuals but largely because of changes in their economic and marital condition. For example, a person who designates his parents or his brothers and sisters before marriage will probably wish to change the designation to his wife and children after marriage.
Analysis of Designations
Primarily to provide a basis for estimating the amount of work likely to be required in filing and keeping up to date changes in designations, the Board undertook a sample analysis of death-benefit designations from the 649,910 persons (not including returns from applicants for annuity and annuitants) who had made such designations before November 1, 1938. A sample of 12,646 individuals, or 1.95 percent of the total, was obtained for analysis by taking the designations of individuals with Social Security account numbers ending in 25 and 75.
Occupation.—Table 18 below compares the occupational distribution for the individuals in the sample, with similar distributions for per-
TABLE 18.—Occupational distribution of individuals in sample,1 of employees during 1937,2 and of employees during June 1938
(class I railroads)3
Occupational group Individuals who returned designations Employees with compensation credited during 1937 Employees on pay roll during June 1938
Total 4 100.0 100.0 100.0
Executive, officials, and staff assistants 1.6 .8 1.2
Professional, clerical, and general 20.8 12.7 16.6
Maintenance of way and structures 20.0 34.7 22.1
Maintenance of equipment and stores 25.0 22.6 24.1
Transportation (other than train, engine, and yard) 13.5 12.1 13.9
Transportation (yardmasters, switch tenders, hostlers) 1.1 1.0 1.4
Transportation (train and engine) 17.9 16.1 20.7
1 Sample of individuals who returned death-benefit designations to the Board before Nov. 1, 1938.
’ Based on preliminary tabulation of reports of class I railroads to the Railroad Retirement Board; excludes employees whose occupation was not accurately reported.
• Based on a total of 1,011,976 employees, as reported to the Interstate Commerce Commission.
4 Based on a total of 12,422, excluding individuals in unknown and noncarrier occupations.
70 • Annual Report of the Railroad Retirement Board
sons credited with compensation under the Railroad Retirement Act during 1937, and for employees of class I railroads during the month of June, as reported to the Interstate Commerce Commission. The distribution of occupations in the sample more closely resembles the I. C. C. distribution for June than the occupational distribution for persons credited with compensation under the Railroad Retirement Act during 1937. The proportion of individuals in the sample in the “maintenance of way and structures” group was smaller, for example, and the proportion of those in the “professional, clerical, and general” group was larger, than their corresponding proportion in the total of employees with credited compensation during 1937. The closer resemblance of the occupational distribution of the sample to that of the I. C. C. for June is due to the fact that both distributions refer to employees in service during a relatively similar period of time, the designation forms having been distributed in June and those included in the sample returned before November 1, 1938. If all the persons who rendered compensated service between December 31, 1936, and November 1, 1938, had filed designations, the occupational distribution of the sample would have more closely resembled that for the persons who were employees under the Railroad Retirement Act during the year 1937. In the future, the occupational distribution of persons filing beneficiary designations with the Board will tend to be more like that for all the individuals who come under the Railroad Retirement Act, and less like the occupational distribution of employees in active service during any comparatively short period of time.
—Below there is shown the percentage distribution by age of the 12,646 individuals in the sample with a corresponding distribution of the 1,468,882 registrants under the Railroad Retirement Act
up to June 1937. The age of the individuals in the sample is obtained as of December 31,1938, and for the registrants as of January 1, 1937. Individuals under 35 years of age are in smaller proportion, and older individuals tend to be in larger proportion in the sample than among the registrants. This is to be expected on the grounds that the older the employee the greater his interest in contingencies aris
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Annual Report of the Railroad Retirement Board • 71
ing out of death and the greater the likelihood of his having been in active service at the time the designation forms were distributed. These differences may also in part be due to the size of the sample and to a change in the age composition of those employed during 1937 and those employed in the period June to November 1938. In the age group 65 and over, the percentage of employees included in the sample is somewhat smaller than the percentage of registrants. This is probably due primarily to the fact that annuitants and applicants for annuities are not included in the sample.
Marital status.—The choice of death-benefit beneficiaries largely depends on whether or not the person making the designation is married. The designation form does not call for a statement of marital status, but such status can be inferred from the beneficiary choice actually made. In all the tables that follow, an individual has been classified as “known to have been married” if he has chosen either as first or second choice his wife (or if a woman, her husband), children, or grandchildren; if not, he is classified as “not known to have been married.” “Not known to have been married” may include widows or widowers and divorced persons with no children or grandchildren, and some persons who may have wives, children, or grandchildren but did not choose them as beneficiaries. As shown in table 19, of the 12,151 men included in the sample, 85.3 percent fall in the classification “known to have been married.” There are only 495 women in the sample and of these 28.9 percent are in the class “known to have been married.”
TABLE 19.—Number of men and women in sample 1 by agez classified by inferred marital status 1
Age as of Dec. 31,1938 Men Women
Total Known to have been married Total Known to have been married
Number Percent Number Percent
All ages. 12,151 10,369 85.3 495 143 28.9
Under 25 598 163 27.3 49 3 6.1
25-34 1,937 1,439 74.3 112 28 25.0
35-44 .. 3i 375 3,003 89.0 198 60 30. J
45-54 3j 537 3,263 92.3 100 35 35.0
55-64. 2; 290 2,119 92.5 34 16 47.1
65 and over '414 382 92.3 2 1 50.0
•Sample of individuals who returned death-benefit designations to the Board before Nov. 1, 1938.
’Individuals who designated wife (husband), children, or grandchildren either as first or second choice are considered to be “known to have been married,” although they may have been widowed or divorced, at the time of making the designation. All other individuals making designations are considered to be “not known to have been married.”
A further subdivision of the sample by age group is given in the same table. For men the percentage “known to have been married’1 changes sharply from the age group “under 25” to the age group
72 • Annual Report of the Railroad Retirement Board
“25-34,” and quite markedly from the latter age group to the age group “35-44.” There is virtually no change in percentage from the latter age group on.2 Less marked variations of the same kind hold for the women of the sample who constitute a small fraction of railroad employees likely to come under the Railroad Retirement Act.
As already pointed out, the present sample tends to include only employees in active service under the act between June and November 1938. Since younger employees in the railroad industry are likely to be in and out of active service, the sample probably understates the proportion of persons who will ultimately make designations at an early age.
Whether or not the marital status of individuals making designations changes, conditions that affect choice of beneficiaries are likely to develop for any of them. Unless the choice of beneficiary is made to conform to changed conditions, thereby increasing the work of the Board, the designation will not reflect the true desires of the individual. The nature of the changes that are likely to arise with increasing age and the extent of such changes if individuals try to keep their choice of beneficiaries current with their wishes is shown for men by age group in tables 20 and 21. Since the distributions in these tables refer only to original designations, the failure of individuals to change their designations in conformity with changes in their condition is not reflected. Although the present analysis of differences in choice of beneficiaries by age groups refers only to different individuals at a given time, it reflects the likely variation for a group of the same individuals over a period of time.
First choices of men.—The men classified as “known to have been married,” constituting 85.3 percent of all men in the sample, have chosen their wives as first choice beneficiary in 94 percent of the cases, and children in practically all other instances. Children may have been chosen because the wife was dead. The percentage of men designating their wife as first choice declines gradually beginning with the youngest age group, and is compensated for by a gradual increase in the percentage of those designating children as first choice. The sharpest decline in percentage designating wives and the sharpest increase in percentage designating children occurs from the age group “55-64” to the age group “65 and over.” This is to be expected, since younger men are less likely to have children and older men less likely to have wives who are living.
Second choices of men.—The second choice beneficiaries of men classified as “known to have been married” are children in the large
* It is to be noted, however, that for the oldest age groups the classification “known to have been married” is likely to include a larger proportion of widowers who chose children or grandchildren as first or second choice beneficiaries. In the Report of the Railroad Retirement Board for the period 1934—35 (p. 64), it was shown that after age 65, the percentage of applicants for annuities who had wives declined. At 65, the percentage with wives was 85, and at ages 66 and 67, 81.
Annual Report of the Railroad Retirement Board • 73
TABLE 20.—Percentage distribution for each age group of men in sample 1 classified by relationship of first-choice beneficiary
Relationship of beneficiary to individual making designation All ages Age as of December 31,1938
Under 25 25-34 35-44 45-54 55-64 65 and over
Known to have been married 1 Wife» 94.0 5.4 .4 .1 .1 (*) (*) (*) 96.4 1.8 .6 95.8 3.0 1.1 . 1 95.4 4.0 .5 .1 93.9 5.7 .2 .1 91.8 7.9 O (*) .2 87.4 11.8
Children
Parents
Sisters and brothers
Grandchildren .8
Grandparents .6 .6 (*)
Uncles, aunts, and cousins (*) (*) (*)
Nephews and nieces ... (*)
In-laws
Any other relations (*) (*) (*) (*) (*) (*) (*) .1 (*)
Any combination of relatives (‘) .1
Nonrelatives
Institutions (*) (*)
Estate
Relationship unknown C)
Any combination of preceding
Total 100.0 57.4 26.7 .3 2.2 2.7 .5 .1 3.1 3.8 .3 2.2 .4 .3 100.0 87.2 6.9 100.0 74.3 16.9 .8 2.0 .8 .2 100.0 54.7 29.6 .3 3.0 1.9 .5 100.0 21.1 48.5 100.0 7.0 60.2 100.0
Not known to have been married 1 Parents
Sisters and brothers ....
46.9
Grandparents
Uncles, aunts, and cousins.. .9 2.2 8.0 1.5 4.1 7.6 .6 .6 2.9 10.5 3.1 6.3. 3.1
Nephews and nieces
In-laws
Any other relations
Any combination of relatives 3.9 .2 3.0 .8 .2 .6 .4 1.9 4.3 .5 3.0 2.9 8.4 .4 5.5 1. 1 .4 12.5. 18.8 3.1 3.1 3.1
Nonrelatives
Institutions .
Estate .2 5.3 1.2
Relationship unknown
Any combination of preceding .7 .3
Total
100.0 100.0 100.0 100.0 100.0 100.0 100.0
• Less than 0.05 percent.
’ Sample of individuals who returned death-benefit designations to the Board before Nov. 1,1938.
1 Individuals who designated wife, children, or grandchildren either as first- or second-choice beneficiaries-are considered to be “known to have been married”; individuals making other designations are considered to be “not known to have been married.”
* Includes men designating “wife and children” and “wife and others."
majority of cases. The number who made no second choice is about as large as the number who selected close relatives, other than children. Only “sisters and brothers,” “parents” and “nephews and nieces,” “in-laws” and “estate” constitute an appreciable fraction of the total for any age group. Very few designate nonrelatives even as second choice. Parents are designated by about one-third of the total in the lowest age group and dwindle steadily in importance, until, in the age group 55-65, practically none of the individuals designate parents. Designations of sisters and brothers, too, gradually decline from age group to age group, whereas designations of nieces and nephews, uncles and aunts increase.
In the age group “under 25,” among those classified as “not known to have been married,” parents constitute 87.2 percent of the first choices and brothers and sisters 6.9 percent. For the age group 55-64, the choice “parents” declines to 7 percent and the choice “sisters and brothers” increases to 60.2 percent. These two groups constitute
74 • Annual Report of the Railroad Retirement Board
TABLE 21.—Percentage distribution for each age group of men in sample/ classified by relationship of second choice beneficiary
Relationship of beneficiary to individual making designation All . ages Age as of Dec. 31,1938
Under 25 25-34 35-44 45-54 55-64 65 and over
Known to have been married 1 Wife’ 0.6 62. 1 4.7 6.9 .9 O .4 1.9 1.0 (*) 2.0 . 1 . 1 4.0 (*) .1 15.2 1.2 33.7 36.2 9.2 1.0 52.9 14.0 6.9 0.7 62.1 5.4 7.2 .1 (*) .5 1.6 .8 (*) 2.4 (*) (*) 4.0 0.5 66.0 1.8 7.0 .8 0.2 64.4 .2 6.6 2.5 0.5 58.6
Children
Parents
Sisters and brothers 4.2 3.9
Grandchildren
■Grandparents .6
Uncles, aunts, and cousins .8 .7 .8 .4 2.2 .8 .2 2.8 1.3 (») 1.5 .3 .1 4. 1 . 1 . 1 15.6 .3 2.9 2.6
Nephews and nieces
In-laws 1.2
Any other relation
Any combination of relatives 2.5 3.9 .1 1.3 .2 (*) 4.2 . 1 .1 14.6 2.1 .3 1.0 6.3
Nonrelatives
Institutions
Estate - 3.1 2.6
(Relationship unknown
Any combination of preceding . 1 16.2 . 1 15.1 .3 17.0
No'second choice....". J. 12.3
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Not known to have been married ’ Parents _ - 9.7 41.6 . 1 2.9 7.8 .8 .2 2.4 2.7 .2 3.3 .2 .2 27.9 21.1 45.9 .5 3.7 2.8 .5 12.0 50.7 4.8 41.9 1.1 32.1
Sisters and brothers - 25.0 9.4
Grand parents
Uncles, aunts, and cousins 1.8 2.4 3.5 8.3 2.2 13.1 1.1 4.1 22.8 1.2 1.2 1.8 4.7 3.1 28.2
Nephews and nieces
In-laws __ .8 1.1
Any other relations - 3.1
Any combination of relatives 3.2 .5 2.2 2.2 2.4 3.8 .5 3.8 2.2 3.3 .4 5.5 .7
Nonrelatives 15.6
Institutions
Estate 1.6 2.4 4.1 9.4 3.1
Relationship unknown.
Any combination of preceding .2 20.0 .2 25.3 .3 29.6
No second choice 38.3 35.1 28.1
Total
100.0 100.0 100.0 100.0 100.0 100.0 100.0
•Less than 0.05 percent.
t Sample of individuals who returned death benefit designations to the Board before Nov. 1, 1938.
> Individuals who designated wife, children, or grandchildren either as first or second choice beneficiaries are considered to be “known to have been married”; individuals making other designations are considered to be “not known to have been married.”
’Includes men designating “wife and children” and “wife and others.”
over two-thirds of the second choice beneficiaries of the men in the age group “55—64.” By age 55-64, the percentage of nonrelatives rises to 10.5 and for the age group “65 years and over” reaches almost one-fifth of the total.
More than one-quarter of the men “not known to have been married” make no second choice; for the age group 45-54, the proportion of these is as high as 38.3 percent. Thereafter the choice of nonrelatives cuts down this percentage. Parents, brothers and sisters, and nephews and nieces constitute the great majority of the second choices of those making such choices, with the first two steadily declining with the increasing age of the individual making the designation. No individuals above the age of 54 designated parents as second choice. Designation of nephews and nieces rises steadily as age of the person making the choice increases, and for age 65 and over is larger than any
Annual Report of the Railroad Retirement Board • 75
other group of beneficiaries among second choices. The choice of nonrelatives also increases steadily with age, and for those over age 64 who make second choices, this group is second in importance.
Choices of women.—The following table shows the beneficiary choices made by the 495 women included in the sample. Those “not
TABLE 22.—Number of women in sample 1 classified by relationship of first- and second-choice beneficiaries and by inferred marital status 1
Known to have been married ’
Not known to have been married *
Relationship of beneficiary to individual making designation First choice Second choice First choice Second choice
Number Percent Number Percent Number Percent Number Percent
Total 143 100.0 143 100.0 352 100.0 352 100.0
Husband *
82 56 5 57.3 39.2 3.5 4 36 16 30 11 2.8 25.1 11.2 21.0 7.7
■Children.
Parents 203 104 57.7 29.5 26 174 7.4 49.4
Sisters and brothers
Grandchildren
Grandparents 1 7 8 .3 2.0 2.3
Uncles, aunts, and cousins. . 1 6 .7 4.2 17 54 2 16 6 2 3 52 4.8 15.3 .6 4.5 1.7 .6 .9 14.8
Nephews and nieces
In-laws ..
Any combination of relatives. Nonrelatives 13 1 1 4 20 9.1 .7 .7 2.8 14.0 18 5 5.1 1.4
Institutions
Estate 6 1.7
No second choice ..
1 Sample of individuals who returned death benefit designations to the Board before Nov. 1, 1938.
1 Women who designated husband, children, or grandchildren either as first- or second-choice beneficiaries are considered to be “known to have been married;” individuals making other designations are considered to be “not known to have been married.”
* Includes women designating “husband and children” and “husband and others.”
known to have been married” made selections very similar to those made by the men of that classification; 57.7 percent selected their parents as first choice and 29.5 percent their sisters and brothers, as compared with 57.4 percent and 26.7 percent respectively for the men. A much smaller proportion of the women “known to have been married” selected their husbands as first choice than the proportion of men “known to have been married” who selected their wives, and a larger proportion of women designated their children as first choice.
Summary of choices for men.—The last table shown combines the choices of all men who filed designations with the Board before November, 1938, irrespective of their age or inferred marital status. Both first and second choices are heavily concentrated on the nearest of kin. “Wife” as first choice constitutes 77.0 percent of the total, and with “children,” “parents,” and “sisters and brothers” nearly 98 percent of the first choices. “Children” account for more than one-half of the second choices, and with “sisters and brothers” and “parents” almost 85 percent of the second choices of men who make a second choice. In interpreting these figures, however, note should be taken of the fact that the designations as given do not necessarily indicate that all of
76 • Annual Report of the Railroad Retirement Board
the particular kin are included. A man may designate only one of his parents, or only some of his children or of his sisters or his brothers.
TABLE S3.—Number of men in sample 1 classified by relationship of beneficiary
Relationship of beneficiary First choice Second choice
Number Percent Number Percent
Total ... 12,151 100.0 12,151 100.0
Wife....
9,351 348 34 563 1,063 7 7 484 42 50 9 2 59 71 6 41 9 5 77.0 2.9 .3 4.6 8.7 .1 .1 4.0 .3 .4 .1 O .5 .6 (•) .3 .1 O 55 2 1 6,422 660 98 4 1,456 96 339 116 5 254 64 12 469 8 14 2,076 .5 O (•) 52.8 5.4 .8 (*) 12.0 .8 2.8 1.0 (•) 2.1 .5 .1 3.9 .1 .1 17.1
Wife and children
Wife and all others....
Children
Parents
O randchildren
Grandparents
Sisters and brothers Uncle, aunts, and cousins.... Nephews and nieces In-laws ..
Any other relatives
Any comoination of relatives Nonrelatives
Institutions
Estate
Relationsnip unknown Any como nation oi preceding No second choice
•Less than 0.05 percent.
* Sample of employees who returned death-benefit designations to the Board before Nov. 1, 1938.
VII
ANALYSIS OF EMPLOYEE ANNUITANTS
THE statistical tabulations contained in this section refer to the 65,813 employee annuities certified before July 1, 1938.1 Of this total 62,586 annuities were in force as of June 30, 1938 and the remainder consists of 3,097 annuities terminated by the death of the annuitant and 130 annuities suspended for various reasons.1 2 Annuities certified, or recertified at a higher rate, after June 30, 1938, with payments retroactive to dates prior to June 30, 1938, are not included in the present tabulations. The terminated cases constitute only a small proportion of the total of employee annuities and will be later summarized separately for purposes of comparison.
Of the 62,586 employee annuities in force as of June 30, 1938, 51,273 were final certifications and 11,313 were not. The annuities not finally certified consisted of 8,028 annuities “subject to recertification,” and 3,285 “temporary partial certifications,” the majority of which are likely to be increased in amount before final certification. “Annuities subject to recertification” are claims awarded initially on the basis of an adjudication of incomplete service and compensation reports. “Temporary partial certifications” are awarded initially, only to persons aged 65 or over, on the basis of service records and rates of pay not verified from month to month compensation records.
The analysis of the finally certified annuities is separated from those not finally certified to provide summarizations of the characteristics of annuitants uninfluenced by the variable factors which may temporarily prevent final adjudication. The analysis of the finally certified annuities may, however, be taken as substantially that of all annuities in force because of the preponderance of the finally certified cases.3
1 “Temporary annuitants,’’ or pensioners taken over from the carrier rolls but eligible for annuities under the Railroad Retirement Act of 1937, and assigned temporary annuities equal to the amount of their pensions until such time as the amount of the annuity to which they were entitled could be determined, are excluded entirely from the analysis in this chapter, since the amount of their temporary annuity is based entirely on what they were receiving under the pension plan before transfer.
« This represents the situation as it was known to the Board on June 30, 1938. Deaths occurring prior to June 30, 1938, but reported to the Board after that date are not included among the terminated cases.
3 The effect of the exclusion of annuities not finally certified is considered later in this chapter.
108818—39-----6 77
78 • Annual Report of the Railroad Retirement Board
Of the 51,273 finally certified annuities in force as of June 30, 1938,4 46,444 or 90.6 percent were age annuitants, and 4,829 or 9.4 percent were disability annuitants. The age and the disability annuitants each fall into two groups, according to whether or not the amount of the annuity (based on credited service and average monthly compensation) is subject to a reduction other than for a joint and survivor election. Thus age annuitants at 65 years of age or over5 and disability annuitants with 30 years of service are not subject to such reduction, while age annuitants below 65 and disability annuitants with less than 30 years of service are subject to a reduction of i/180 for each month that the annuitant is under age 65 at the time the annuity begins to accrue. The 46,444 age annuitants consisted of 45,290 who were age 65 6 and over when their annuity began, and 1,154 who were less than age 65. Of the 4,829 disability annuitants, 4,301 were receiving full annuities based on 30 years of service, and 528 had less than 30 years of service.
Amount of Single Life Annuity
Finally certified annuitants.—Table 24 shows the number of annuitants finally certified by the amount of single life annuity for each of the four groups of annuitants. The annuity on a single life basis is the amount to which the individual is entitled, on the basis of his years of credited service and average monthly compensation, after deductions other than for joint and survivor election. The single life annuity is not in all cases the amount of annuity actually received by the annuitant. Some annuitants elect a reduced annuity to provide an annuity for the surviving spouse. Such annuities are discussed in a later section.
The average single life annuity for all annuitants was $70.37 as of June 30, 1938. Nearly 45 percent of the annuitants had a single life annuity between $60 and $90. The next largest group, 11.7 percent, had annuities ranging from $40 to $50. The relatively large number of cases in this class is a result of the operation of the minimum annuity provision in the 1937 act.7 Since the minimum provision can
4 17,028 of these were certified under the 1935 act and 34,245 under the 1937 act.
•Under the 1935 act but not under the 1937 act a deduction of Vi80 is made for each month an individual continued in the service of an employer under the act after age 65, except during any period between ages 65 and 70 if a continuance in service agreement was filed with the Board. This applies only to age annuitants, since all disability annuities must begin before age 65. There were 1,763 such cases under the 1935 act as of June 30, 1938. The deductions for such annuities were very small, the average reduction being only $1.63. In the discussion which follows these 1,763 cases have been included with the age retirements at age 65 or over.
8 Since individuals retiring within one month of their 65th birthday are not subject to a reduction, such individuals were included with the age retirements at 65 and over, although they had not yet attained age 65. There were 290 such cases among the finally certified annuitants.
7 Under the 1937 act an individual who is an employee under the act at age 65 and has at least 20 years service can receive a minimum annuity as follows: If his average monthly compensation is $50 or more he will receive $40 unless his annuity computed in
Annual Report of the Railroad Retirement Board • 79
apply only to annuitants who were employees under the act at age 65, its effects, visible in the total, are confined to age annuities begun at age 65 or over. The distribution of this group shows 12.4 percent of the annuitants in the $40 to $50 class. This distribution constituting over 88 percent of all finally certified annuities, follows closely that for all annuities.
TABLE 24.—Number of finally certified annuities in force as of June 30, 1938, by amount of single life annuity, classified by type of annuity
Single life annuity All annuities Age annuities Disability annuities
Number Percent Age 65 and over Under age 65 30 years of credited service Less than 30 years of credited service
Number Percent Number Percent Number Percent Number Percent
$0-$9.99 147 0.3 135 0.3 6 0.5 6 1.1
$10.00-$19.99 1,112 2,304 2.2 1,045 2.3 8 .7 1 58 11.0
$20.00-$29.99 4.5 2,171 2,231 4.8 44 3.8 5 0.1 84 15.9
$30.00-$39.99_. 2,480 4.8 4.9 62 5.4 67 1.6 120 22.7
$40.00-$49.99 5,999 11.7 5,619 12.4 136 11.8 142 3.3 102 19.3
$50.00-$59.99 4,515 8.8 3,977 8.8 228 19.7 222 5.2 88 16.7
$60.00-$69.99 7,442 14.5 6,596 14.6 250 21.6 550 12.8 46 8.7
$70.00-$79.99 8, 440 16.5 7,334 16.2 193 16.7 893 20.8 20 3.8
$80.00-$89.99 6,909 13. 5 5.887 13.0 98 8.5 921 21.3 3 .6
$90.00-$99.99_ 4,933 9.6 4,199 9.3 77 6.7 656 15.3 1 .2
$100.00-$ 109.99. 4, 172 8. 1 3, 587 7.9 41 3.6 544 12.6
$110.00-$ll9.99 2,236 4. 4 1,964 4.3 11 1.0 261 6.1
$120.00 584 1.1 545 1. 2 39 .9
Total 51, 273 100.0 45,290 100.0 1,154 100.0 4, 301 100.0 528 100.0
Average single life annuity... $70. 37 $69. 68 $64.16 $82.94 $40. 69
Average normal annuity $70. 83 $69. 75 $77.97 $82. 94 $49. 85
Amount of reduction $0.46 $0.07 $13.81 $9.16
Percent reduction 0.6 — 0.1 — 17.7 — 18.4 —
• Less than 0.05 percent.
The distributions for the other three groups show considerable differences from the distribution of the total, and from the age annuitants 65 or over. The average single life annuity for age annuities below age 65 was $64.16 compared to $69.68 for those 65 or over. Of the age annuitants under 65, 58.1 percent had a single life annuity of more than $60, compared to 66.5 percent of those 65 and over. The average single life annuity for disability annuitants with 30 years of service was $82.94, and for those with less than 30 years of service, $40.69. Only 13.3 percent of the disability annuitants with less than 30 years of service received an annuity of more than $60 compared to 89.8 percent of those with 30 years of credited service.
The amount of single life annuity is affected by reductions (other than for joint and survivor election) which do not apply to all types
the regular way is more, in which case he will receive the regular amount; if his average compensation is at least $25 but less than $50, he will receive 80 percent of his average monthly compensation; if his average compensation is at least $20, but less than $25, he will receive $20; if his average compensation is less than $20, he will receive the full amount of his average compensation.
80 • Annual Report of the Railroad Retirement Board
of annuities or equally where they do apply. For age annuities, on a single life basis, the average reduction for the annuitants above 65 was insignificant, amounting to only seven cents when distributed among all such annuitants, while for those below 65, it was $13.81.8 For the disability annuitants there was no reduction for those with 30 years of service, while for those with less than 30 years of service, it amounted to $9.16. Because of the unequal effect of such reductions on the amount of single life annuity, comparisons based on such annuities do not clearly reflect the effect of credited service and average monthly compensation on the different groups of annuitants. The effect of these factors on the amount of annuity is more clearly reflected in the normal annuity. By normal annuity is meant what the individual would have received on the basis of his actual years of credited service and average monthly compensation if his annuity had begun at age 65. Although the average single life annuity for age annuitants under age 65 was less than for age annuitants 65 and over, the average normal annuity for the former was $77.97 or more than $8 higher than the average normal annuity for older age annuitants. The difference between the average single life annuity for disability annuitants with 30 years of service and those with less than 30 years of service is $42.25 compared to a difference of $33.09 between their average normal annuities.
Annuitants not finally certified.—The annuities “subject to recertification” and the “temporary partial certifications” in force as of June 30, 1938, were lower in general than the finally certified annuities. The average single life annuity for the 8,028 annuities “subject to recertification” was $52.64, or $17.73 less than corresponding average for finally certified annuities; for the “temporary partial certifications” the average single life annuity was $40.11, or $30.26 less. Recertification practically always results in an increase in the annuity. As of November 30,1938, the average increase in annuity resulting from recertification of over 8,000 annuities initially paid “subject to recertification” was $11.53, and the average increase resulting from recertification of about 9,000 “temporary partial certifications” was $23.39. If these average increases hold for annuities not finally certified as of June 30, 1938, the average single life annuity for the
’ Every age annuitant retiring below age 65 was subject to a reduction of %8o for each month during which he was less than 65 at the time his annuity began. This reduction was provided to offset the increased duration of his annuity due to early retirement. Under the 1937 act the maximum amount of reduction for age annuitants less than 65 was about one-third of that possible under the 1935 act. The lowest retirement age for age annuitants with 30 years of service under the 1937 act was 60 while there was no such limit under the 1935 act. There were 346 age annuitants less than 65 under the 1935 act with an average reduction of $22.28, while the 805 such cases under the 1937 act showed an average reduction of $10.18. Of those age annuitants above 65 only 3.9 percent (see footnote 5) were subject to reduction for continuation in service after age 65. Since there will be no such reductions in the future, the effect of these relatively few cases already of little significance will become entirely negligible.
Annual Report of the Railroad Retirement Board • 81
whole group of not finally certified annuities would be approximately $6 lower than the average for the finally certified annuities as of June 30, 1938. Since the annuities finally certified constitute 82 percent of all annuities in force, the effect of excluding annuities not finally certified from the analysis is to exaggerate the amount of single life annuity by about $1.
Amount of Actual Annuity
Table 25 presents the number of annuitants finally certified by amount of actual annuity received by the various groups of annuitants. The actual annuity received by the employee annuitant is the same as the single life annuity except under a joint and survivor election.8 Under such an election the actual annuity is less than the single life annuity, the difference depending upon the option selected and the relative age of the annuitant and his wife. The average actual annuity for all annuitants was $69.20, a reduction of 1.7 percent from the average single life annuity.
TABLE 25.—Number of finally certified annuities in force as of June 30, 1938, by amount of actual annuity, classified by type of annuity
The slight difference between average actual and average single life annuity for all annuitants is due to the relatively small number of
• Under both acts an employee may accept a reduced annuity during his lifetime in order to provide an annuity for his surviving spouse, to begin after his death and to continue until her death. The 1937 act requires that on and after January 1, 1938, no individual can make an election of a joint and survivor annuity unless he furnishes proof of health satisfactory to the Board, or unless he makes his election at least 5 years before the date on which his annuity begins to accrue. Any such election made under the 1937 act is inoperative if the annuity is based on total and permanent disability and 30 years of service.
Actual annuity All annuities Age annuities Disability annuities
Number Percent Age 65 and over Under age 65 30 years of credited service Less than 30 years of credited service
Number Percent Number Percent Number Percent Number Percent
$O-$9.99. 163 0.3 151 0.3 6 0.5 6 1 1
$10—$19.09 1,216 2.4 1,146 2. 5 9 8 2 59 2
$20-$29.99 2,484 4.8 2.325 5.1 52 4 5 18 4 89 16 9
$30-$39.99 2^814 5.5 2,564 5.7 64 5 5 66 1 5 120 22 6
$40-$49.99_ 6.182 12.1 5.785 12 8 141 12 2 158 3 7 98 18 6
$50-$59.99 4,804 9. 4 4,224 9.3 224 19 4 269 6 3 87 16 5
$6O-$69.99 ... 7,418 14.5 6, 532 14.4 246 21 4 595 13 8 45 8 5
$70-$79.99 8^ 242 16.0 7.139 15.8 193 16 7 890 20 7 20 3 8
$80-$89.99 6, 620 12 9 5,640 12. 5 96 8 3 881 20 5 3 t ft
$90-$99.99 4^689 9.1 3.988 8. ,8 76 6 6 624 14 5 1 2
$100-$109.99 3,952 7.7 3,400 7.5 36 3.1 516 12.0
$110-8119.99 2,129 4.2 1,874 4.1 11 1.0 244 5.7
$120 560 1.1 '522 1.2 38 .9
Total 51,273 100.0 45,290 100.0 1,154 100.0 4 301 100.0 528 100.0
Average actual annuity 869. 20 $68.49 $63. 51 $81. 76 $40.43
•Less than 0.05 percent.
82 • Annual Report of the Railroad Retirement Board annuitants electing joint and survivor annuities in each group. Ast of June 30, 1938, there were 3,051 finally certified joint and survivor annuities in force, or 6.0 percent of the total number of finally certified annuities.10 11
Joint and Survivor Annuities
Joint and survivor annuities constitute 8.8 percent of all finally certified employee annuities under the 1935 act, and only 5.6 percent under the 1937 act. The reduced percentage under the 1937 act results primarily from the amended provisions relating to the election of joint and survivor annuities in the latter act. The 1935 act does not include any provisions which would prohibit or prevent the election of a joint and survivor annuity by an individual having less than the average life expectancy for his age group. The 1937 act,, however, provides that on and after January 1, 1938, no individual can elect a joint and survivor annuity unless he furnishes proof of health satisfactory to the Board, or unless he makes his election at least 5 years before the date on which his annuity begins to accrue. For disability cases under the 1937 act there are further restrictions. A joint and survivor election is inoperative for an individual granted a disability annuity based on 30 years of credited service without reduction. If an individual eligible for the full disability annuity accepts an annuity with a reduction at the rate of y180 for each month that he is less than 65 years of age at the time his annuity begins, the option need not become inoperative, if otherwise valid. Options elected by applicants granted disability annuities based on less than 30 years service, do not become inoperative if otherwise valid.11
Amount of annuity.—The effect of the election of a joint and survivor annuity is more evident if annuities with joint and survivor elections are considered separately. Table 26 shows the distribution of joint and survivor annuities by single life and actual annuity. Of the 3,051 joint and survivor cases, 2,710 were age annuitants, 65 years and over; 53 were age annuitants under 65; 280 were disability annuitants with 30 years of service; and 8 disability annuitants with less than 30 years of service. The 280 disability annuitants with 30 years of service were all certified under the 1935 act, and the 8 with
10 Among annuitants not finally certified, the proportion electing joint and survivor annuities was higher. There were 1,138 joint and survivor annuities not finally certified in force as of June 30, 1938, or 10.1 percent of annuities not finally certified. Because of this higher proportion electing joint and survivor annuities the average percent reduction in the single life annuity is 2.4 percent for annuities subject to recertification, and 5.7 percent for temporary partial certifications.
11 In determining the amounts of annuities payable to the employee and spouse respectively, the Board uses the Combined Annuity Table for healthy lives; for cases where the employee is disabled when the annuity begins to accrue, the Board uses Hunter’s Analyzed Table of Mortality Among Disabled Lives, modified by the mortality experience among persons retired for disability under voluntary railroad plans for the employee, and the Combined Annuity Table for the spouse.
Annual Report of the Railroad Retirement Board • 83
less than 30 years of service, under the 1937 act. The average actual annuity for all joint and survivor annuities was $50.29, an average reduction of $19.65 or 28.1 percent from the single life annuity. The percent reduction is somewhat less for age annuitants under 65 and also for disability annuitants with 30 years of service.
TABLE 26.—Annuities in force under joint and survivor elections as of June 30, 1938, by amount of single life and of actual annuity, classified by type of annuity
Single life annuity
$0-$9.99________
$10,00-$19.99... $20.00-$29.99... $30.00-839.99... $40.00-$49.99... $50,00-$59.99._. $60.00-$69.99... $70.00-.$79.99... $80.00-889.99... $90.00-$99.99... $100.00-$109.99. $110.00—$119.99. $120.00__________
Total
Average single life annuity...
Actual annuity
$O-$0.99________ $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-$99.99... $100.00-$109.99_ $110.00-$119.99.
$120.00_______
Total,
Average actual annuity.
Age annuities Disability annuities
All an Number 4 40 110 138 379 318 508 503 426 273 221 107 24 3,051 $69.94 nuities Percent 0.1 1.3 3.6 4.5 12.4 10.4 16.8 16.5 14.0 8.9 7.2 3.5 .8 100.0 65 an Number 4 40 108 117 357 293 468 441 352 230 187 90 23 2,710 $69.04 d over Percent 0.1 1.5 4.0 4.3 13.2 10.8 17.3 16.3 13.0 8.5 6.9 3.3 .8 100.0 Und Number er 65 Per- cent 30 j ser Number '■ears vice Percent Less ye Number han SO ars Per- cent
1 9 9 12 7 4 5 I 5 1.9 17.0 17.0 22.6 13.2 7.6 9.4 1.9 9.4 1 10 9 12 32 58 69 42 29 17 1 280 $81. 26 0.4 3.6 3.2 4.3 11.4 20.7 24.5 15.0 10.4 6.1 .4 100.0
2 4 1 1 25.0 50.0 12.5 12.5
53 $60. 45 100.0 8 $43.86 100.0
All annuities Age annuities Disability annuities
65 and over Under 65 30 years service Less than 30 years
Number 20 144 290 472 562 607 484 305 137 29 1 Percent 0.7 4.7 9.5 15.5 18.4 19.8 15.9 10.0 4.5 1.0 (*) Number 20 141 262 450 523 540 404 246 105 19 Percent 0.7 5.2 9.7 16.6 19.3 19.9 14.9 9. 1 3.9 .7 Number Percent Number Percent Number Percent
1 9 11 14 8 3 4 3 1.9 17.0 20.7 26.4 15.1 5.7 7.5 5.7 1 14 9 25 59 77 55 29 10 1 0.4 5.0 3.2 8.9 21.1 27.4 19.6 10.4 3.6 .4 1 5 2 12.5 62.5 25.0
3,051 $50.29 100.0 2,710 $49.09 100.0 53 $46.24 100.0 280 $63. 25 100.0 8 $26. 52 100.0
*Less than 0.05 percent.
Effect of options elected.—Table 27 shows the number of all finally certified joint and survivor annuities in force as of June 30, 1938, classified by the type of option elected, with the average annuity
84 • Annual Report of the Railroad Retirement Board
and the average attained ages of the annuitants and their spouses. One of three options may be elected, depending on whether the survivor is to receive as much (option A), three fourths as much (option B), or half as much (option C) per month as the annuitant received before his death. Joint and survivor annuitants with smaller annuities, figured on a single life basis, tended to elect option A, while those with higher annuities tended to elect option B or C, with most favoring C.12 The average reduction in the monthly amount to these annuitants is 37.9 percent under option A, 30.9 under option B, and 23.9 under option C.
TABLE 27.—Number of finally certified annuities in force as of June 30, 1938, by type of option, with average annuity and average attained age at time annuity began, of annuitants and their spouses
Option Number Average annuity Average percent reduction Average age at time annuity began
Single life Actual Annuitant Spouse
A 737 $63. 69 72. 00 $39. 54 37.9 68.9 62.1
B 470 49. 72 30.9 68.5 62.3
C 1,844 71.92 54.72 23.9 68.7 61.5
All annuities with joint and survivor elec-
tion 3,051 69.94 50.29 28.1 68.7 61.8
All annuities without joint and survivor
election 48, 222 51, 273 70.40 70.40 68.4
All annuities 70.37 69.20 1.7 68.4
The average age at which the annuity began is slightly higher for finally certified annuities under each of the options than the average age of all finally certified employee annuities. The average joint and survivor annuity, on a single life basis, is only slightly lower than the average for all employee annuitants, with the average for both options B and C slightly higher, and for option A much lower than the average for all employee annuitants.
Years of Credited Service
Table 28 shows the number of finally certified annuities in force as of June 30, 1938, classified by the years of credited service on which the annuities were based. More than three-fourths of all the annuitants had 30 years of credited service.13 These included not only persons receiving disability annuities without reductions, and all age annuitants less than 65 years of age when their annuities
13 This is also true for joint and survivor annuities not finally certified. The proportion electing option A, however, is somewhat higher, and the proportion electing option C somewhat lower among annuitants not finally certified than among the finally certified annuitants.
13 Under the act an ultimate fraction of 6 months or more counts as a year.
Annual Report of the Railroad Retirement Board • 85 began, who must have 30 years of credited service under the provisions of the act, but also 73.8 percent of annuitants who retired at age 65 or over. The average credited service for all annuitants was 27.8 years,14 and for age annuitants 65 and over 27.6 years. The disability annuitants with less than 30 years of service had an average credited service of 23 years. For these annuitants the percent of annuitants in the various credited service classes increases with increasing years of service. Over a third of these annuitants had over 27 years of service.
TABLE 28.—Number of finally certified annuities in force as of June 30, 1938, by years of credited service on which annuity is based, classified by type of annuity
Credited service (years) * 2 All annuities Age annuities Disability annuities
Number 1 3 7 15 21 55 79 94 153 200 290 347 467 558 485 701 726 848 780 645 612 632 686 751 787 785 794 932 38,819 Percent (*) O (*) (*) (*) 0.1 .2 .2 .3 .4 .6 .7 .9 1.1 .9 1.4 1.4 1.7 1.5 1.3 1.2 1.2 1.3 1.5 1.5 1.5 1.5 1.8 75.8 65 and over Less than 65 30 years service Less than 30 years
Number 1 3 7 14 20 55 76 91 150 196 284 337 455 546 477 677 704 826 755 620 589 605 656 710 741 726 738 867 33,364 Percent O 8 (*) (•) 0.1 .2 .2 .3 .4 .6 .7 1.0 1.2 1.1 1.5 1.6 1.8 1.7 1.4 1.3 1.3 1.4 1.6 1.6 1.6 1.6 1.9 73.8 Number Percent Number Percent Number Percent
3
4
5 1 1 0.2 .2
6
7..
8 3 3 3 4 6 10 12 12 8 24 22 22 25 25 23 27 30 41 46 59 56 65 .6 .6 .6 .8 1.1 1.9 2.3 2.3 1.5 4.5 4.2 4.2 4.7 4.7 4.4 5.1 5.7 7.8 8.7 11.1 10.6 12.2
9
10
11
12
13
14
15... .
16
17
18
19
20
21
22
23
24
25
26.
27
28
29
30 1,154 100.0 4,301 100.0
Total.. Average months of service *......
51,273 333.4 100.0 45,290 330.9 100.0 1,154 359.8 100.0 4,301 359.7 100.0 528 276.2 100.0
* Les? 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.
. 1 Ihe?e avera^es ar.e computed on the basis of the actual months of credited service, without allowance for the fact that fractions of 6 months or more are credited as a full year of service. 11
11 These averages are computed on the basis of the actual months of credited service, without allowance for the fact that fractions of 6 months or more are credited as a full year of service.
86 • Annual Report of the Railroad Retirement Board
Average Monthly Compensation
In table 29 are presented the number of annuities finally certified by the amount of monthly compensation on which the annuity is based. The annuity formula in the Railroad Retirement Act is based upon the average monthly compensation, excluding all compensation in excess of $300 in any 1 month, as well as upon years of service. The average monthly compensation earned from 1924 to 1931 practically determines the average monthly compensation used in computing the present annuities, since these 8 years are used as the base in calculating the monthly compensation for all years prior to Janu-ary 1, 1937, and such prior service at present constitutes most of the credited service.
TABLE 29.—Number of finally certified annuities in force as of June 30, 1938, by amount of average monthly compensation on which annuity is based, classified by type of annuity
Average monthly compensation on which annuity is based
$0~$9.99........ $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-$99.99... $100.00-$109.99. $110.00-$119.99. $120.00-$129.99. $130.00-$139.99. $140.00-$149.99. $150.00-$! 59.99. $160.00-$169.99. $170.00-$179.99. $180.00-$189.99. $190.00-$199.99. $200.00-$209.99. $210.00-$219.99. $220.00-$229.99. $230.00-$239.99. $240.00-8249.99. $250.00-8259.99. $260.00-8269.99. $270.00-8279.99. $280.00-8289.99. $290.00-8299.99. $300...........
Total.
Average compensation.
All annuities Age annuities
65 and over Less than 65
Number Percent Number Percent Number Percent
4 (*) 4 C)
11 (*) 11 (*)
33 0.1 31 0.1 0.4
83 .2 76 .2 5
276 .5 264 .6 4 .3
640 1.2 597 1.3 6 .5
1,335 2.6 1,257 2.8 14 1.2
2, 062 4.0 1,948 1,968 4.3 19 1.6
2,090 4.1 4.3 16 1.4
2, 203 4.3 2, 088 4.6 24 2.1
2,187 4.3 2,028 4.5 36 3.1
3,298 6.4 3, 008 6.6 82 7. 1
4,072 8.0 3,665 8.1 110 9.6
4, 053 7.9 3, 627 8.0 98 8.6
3,798 7.4 3, 339 7.4 99 8.6
3,298 6.4 2,820 6.2 81 7.0
3,041 5.9 2,627 5.8 90 7.8
2, 524 4.9 2,141 4.7 80 6.9
2,082 4.1 1,746 3.9 53 4.6
1,887 3.7 1,567 3.5 44 3.8
1,746 3.4 1,477 3.3 40 3.5
1,529 3.0 1,259 2.8 37 3.2
1,371 2.7 1,184 2.6 38 3.3
1,402 2.7 1,196 2.6 33 2.9
1,395 2.7 1,196 2.6 29 2.5
1,228 2.4 1,034 2.3 35 3.0
991 1.9 832 1.8 20 1.7
818 1.6 705 1.6 17 1.5
563 1.1 490 1.1 11 1.0
652 1.3 555 1.2 19 1.6
601 1.2 550 1.2 14 1.2
51,273 100.0 45,290 100.0 1,154 100.0
$158. 07 — $156.05 — $166. 73
Disability annuities
30 years of service
Less than 30 years
Number
Percent
Number
Percent
5
22
37
48
77
63
76
168
241
281
320
347
299
285
269
262
220
230
147
173
167
156
136
96
62
77
36
0.1 .5 .9
1.8
1.5
1.8
3.9
5.6
6.5
7.4
8.2
7.0
6.6
6.3
6. 1
5.1
5.3
3.4 4.0
3.9
3.6
3.2
2.2
1.8
.8
4, 301
100.0
$180. £8
2
3
15
27
47
29
28
47
40
56
47
40
50
25 18
14
14
9 3
2
2
5
8
5
5
8
7
10
8
7
9
4
3
2
2
628
100
$125.63
1
3
3
3
1
*Less than 0.05 percent.
The disability annuitants with 30 years of service had the highest average monthly compensation; and the age annuitants less than
Annual Report of the Railroad Retirement Board • 87
65, all of whom also had 30 years of service, had the next highest. The disability annuitants with less than 30 years of service, who had the lowest average credited service, also had the lowest average monthly compensation, about 30 percent less than that of disability annuitants with 30 years of service. These differences may be largely explained by the fact that individuals having 30 years of service at a relatively early age are more likely to be found in occupations characterized by greater stability and continuity of employment which, in general, carry with them higher rates of compensation.
Age annuitants whose annuity began before age 65, have longer average credited service and higher average compensation than age annuitants whose annuities began at 65 or over. The group of disability annuitants with 30 years of credited service, which was the group with the highest average monthly compensation, was also the one with the lowest attained age at the time their annuity began. The disability annuitants with less than 30 years of service, however, who had an average credited service of but 23 years and were all over 60 when their annuities began, had the lowest compensation.
Age of Annuitants
The number of finally certified annuities in force, as of June 30, 1938, arranged according to the age of the annuitant when the annuity began to accrue is shown in table 30. The average age for all these annuitants was 68.4 years.15 For all annuities in force as of October 31, 1937, analyzed in last year’s annual report, the average age was 69.5. This decrease in the average age is mainly due to the fact that at the time the Railroad Retirement System was established, there were relatively large numbers of employees in active service who were considerably above age 65. The initial applicants, therefore, tended to be older, on the average, than the later applicants. This is borne out by a comparison of table 30 with the distribution of annuitants with respect to age as given in the last annual report. As of October 31,1937, for 18.7 percent of the annuitants, the annuity began at age 70 compared to 12.4 percent as of June 30, 1938. On the other hand, the annuity began at age 65 for 14.0 percent of the annuitants as of June 30, 1938, compared to 8.2 percent as of October 31, 1937. Again for 30.1 percent of the earlier group, the annuity began at age 71 and over while for the present group only 22.0 percent are found in this class.
16 The average age would be the same if annuities subject to recertification and temporary partial certifications in force as of June 30, 1938, were included.
88 • Annual Report of the Railroad Retirement Board
TABLE 30.—Number of finally certified annuities in force as of June 30, 1938, by age at time annuity began, classified by type of annuity
All annuities Age annuities Disability annuities
Age at time annuity began Number Percent Age 65 and over Under age 65 30 years of credited service Less than 30 years of credited service
Number Percent Number Percent Number Percent Number Percent
46............................ 6 (*) R 6 0.1
47 12 12 .3
48 15 15 . 3
49 23 a 23 .5
50 41 1 0.1 40 .9
51 64 .i 4 .3 60 1.4
52 90 .2 1 . 1 89 2.1
53 119 .2 8 ,7 111 2.6
54 142 .3 9 .8 133 3.1
55. 209 . 4 12 1.0 197 4. 6
56 219 .4 20 1.7 1.0 199 256 4.6 6 0
57... 268 .5 12
58 324 .6 23 2 0 301 334 7.0 7.8
59 364 .7 30 2. 6
60 642 1.3 125 10 8 390 476 9.1 11 1 127 24.0 18.4
61 708 1.4 135 11.7 97
62.... 771 1.5 168 14 6 497 589 11.6 13.6 13.3 106 20.1
63 ....... 965 1.9 268 338 23.2 29.4 108 90 20.5 17.0
64 1 1,001 ‘ 7,185 5.384 5,392 4,781 4,897 6,363 3,446 1,918 1,380 1,106 2.0 573
65.. 14.0 7,185 5,384 5,392 4, 781 4,897 6,363 3,446 1,918 1,380 1,106 16.0
66. 10. 5 11.9
67 10.5 11.9
68. 9. 3 10.6
69 9.6 10. 8
70.. 12.5 14 1
71... 6.7 7.6
72 3.7 4.2
73 2.7 3. 0
74 2.2 2 4
75 '914 1.8 914 716 2.0 1 6
76 716 1.4
77 521 1.0 521 1.2
78 375 .7 375 .8
79 306 .6 306 188 7
80. 188 .4 . 4
81 140 .3 140 . 3
82 98 .2 98 . 2
83 68 . 1 68 44 . 2
84 44 . 1 . 1
85 16 (*) O (*) (*) (*) (*) (*) (*) (*) (*) 16 (•) (•) (*) (•) (*) (*) (*) (•) (*) (•)
86 19 19
87 16 16
88 4 4
89 4 4
90 3 3
91 1 1
92 1 1
93 2 2
96 2 2
Total 51,273 68.4 100.0 45,290 69.5 100.0 1,154 62.4 100.0 4, 301 60.1 100.0 528 100.0
Average age 62.4
* Less than 0.05 percent.
1 290 age annuities which began within 1 month of attaining age 65 and therefore were not subject to reduction are included with the age 65 class.
Occupation of Annuitants
Table 31 shows that the proportions of individuals receiving finally certified annuities in force as of June 30,1938, in the various occupa
Annual Report of the Railroad Retirement Board • 89
tions differ considerably in many instances from the proportions of the employees in the same occupations who were credited with any compensated service during 1937. For example, “road engineers” with 5,085 or 9.9 percent of all finally certified annuities in force as of June 30, 1938, represent but 2.0 percent of all employees in 1937; for “carmen” the corresponding percentages are 8.9 and 4.2, and for “road conductors” 7.0 and 1.6. On the other hand, “track and roadway and section labor,” with 5.8 percent of the present annuitants, represent 26.2 percent of all employees credited with compensated service in 1937. The present annuitants consist almost entirely of individuals who were in active service at the time they retired and the occupations that show the largest proportion of annuitants are those in which the employee is most likely to attain age 65 in the active service of an employer under the act. An employee is most likely to remain in active service up to age of retirement in occupations that are characterized by greater stability and continuity of employment, and by higher compensation.16
18 A rough measure of relative stability and continuity of employment may be obtained by considering the ratio of individuals who worked in each of the 12 months during 1937 to the total number employed in each occupation. For “road engineers” 70 percent of the total were credited with 12 months of compensated employment; for “carmen” 69 percent; and for “conductors” 78 percent. On the other hand, for “extra gang and section men,” only 18 percent were in this class. In general, occupations with a low percentage of employees with 12 months of credited service during the year 1937 are a much smaller proportion of the present annuitants than they are of the employees under the Railroad Retirement Act during 1937. See chapter IX.
90 • Annual Report of the Railroad Retirement Board
TABLE 31.—Number of all finally certified annuities in force as of June 30, 1938, by last railroad occupation, with averages of credited service, monthly compensation, age at time annuity began, and single-life annuity
Average
I.C.C. Number Jereen* ofSloy- a£vaWp ^v^age “mpensL Average
OCCUpatl0D numberof Tn^ ^gle-llfe
annuities w"fJ^d37 began (months) annulty
computed
1 Executives, general officers, and assistants.............. 356 0.7 ------- 70.2 356.4 $289.87 $114.62
2 Division officers, assistants, and staff assistants____ 342 . 7 _______ 68. 7 355 7 281 06 112 55
3 Professional and subprofessional assistants..----------- 101 .2 69.0 352.3 246 46 100 25
4 Superintendents or chief clerks and assistants and superintendent cashiers_ 324 .6 67.7 357 3 216 01 92 42
6 Clerks and clerical specialists...................................... 2,600 5.1 5.9 68.5 342.0 150’73 69^42
8 Mechanical device operators (office)....................................... 3 (*) .4 69.2 288.0 105.17 43.98
9 Stenographers, secretaries, and typists..................................... 76 .1 1.1 66.5 342.4 140.63 65.61
11...Storekeepers, sales agents, and buyers............................................................. 62 .1 .. 69.0 343.2 191.40 83 49
12 Ticket agents and assistant ticket agents................ 73 .1 .1 69.9 351.3 172 91 77 78
13..................................Traveling auditors or accountants.. 49 .1 . 68.7 354.0 229.19 9A39
14___________________________________________________________Telephone switchboard operators and office assistants__________ 11 (*) .. 70.0 325 9 123 59 58 13
15 Messenger and office boys 42 .1 68.3 319.1 1U.74 5% 40
16 Elevator operators and other office attendants........... 64 .1 68.8 314.4 101 78 48 42
17 Lieutenants and sergeants of police................................................................. 38 .1 68.4 318.5 191.08 75.91
18 Patrolmen and watchmen------------------------------ 486 . 9 ........... 70.2 289.0 126.50 51.72
19--------------------------------------------------------------------------------------------------------------------------------------Traffic and other agents, inspectors, and investigators------------------------------------------------------------------------------- 415 .8 .6 69.9 354.2 238.76 99 26
20 Claim agents or investigators......................................................................... 50 .1 68.9 354.9 211.34 90.30
22.....................................Chief claim agents or investigators............................. 5 (*) __ 65.7 356. 4 273 90 96 18
23..................................................Miscellaneous trade workers (other than plumbers)...... 23 (*) .. 69.6 324.1 143 37 63 62
24......................................Motor-vehicle and motorcar operators............... 20 (*) __ 67.4 322.6 138^35 62^00
25..........................Teamsters and stablemen.—.—........ 2 (♦) . 69.0 258.0 91.50 36.20
26------------------------Janitors and cleaners -- ... ...................................... 396 .8 ---------------- 70.3 292.7 92.79 41.43
27_____________________________________________Roadmasters. general foremen, and assistants__ 257 .5 68.3 358 5 244 30 102 15
28 Maintenance-of-way and scale inspectors----------------- 47 .1 .1 69.4 350.1 18Z35 82’61
29 Bridge and building gang foremen (skilled labor).................. 356 . 7 . 2 68.7 348.2 172.06 78.15
30 Bridge and building carpenters............................... 787 1.5 . 8 68.8 307.4 127.15 55 33
31............................Bridge and building ironworkers........................ 21 (*) .1 68.0 320.9 137.74 61.64
32 Bridge and building painters-------------------------------------------------------------------------—. 45 .1 .2 68.8 312.5 136.39 60.12
33 Masons, bricklayers, plasterers, and plumbers--------------------------------------------- 95 .2 .1 68.2 336.4 149.75 68 76
34 Maintenance-of-way and structures helpers and apprentices.....^... 138 . 3 . 6 68.3 287.5 119.14 49.12
35...........................Portable steam equipment operators....................... 50 .1 _____________________________________________________________________________________ 68.5 341.6 160 52 72 43
36..................................................................Portable steam equipment operator helpers........................................................... 5 (*) _ 71.7 311.0 133.10 59.22
37-------------------------------------------Pumping equipment operators------------------,--------------------------------------------- 248 .5 . 69.9 303.6 86.67 41.22
39__________________________________________________________________Gang foremen (bridge and building, signal and telegraph laborers)___ 88 .2 __ 68.3 351.0 117.13 70 13
40...........................................................Gang or section foremen (track and roadway, section labor).—... 2,587 5.0 1.5 67.8 354.2 129.45 64 ol
42 Track and roadway and section labor----------------------- 2,971 5.8 20.2 68.1 288.5 79.40 37.02
43 Mamtenance-of-way laborers (other than track and roadway)_ 381 .7 .7 68.9 304.4 91.08 42.41
44 General and assistant general foremen, and inspectors_______31 .1 ........... 67.1 358. 9 237.15 100 51
45 Gang foremen (signal and telegraph, skilled labor)..................... 23 (*) ___ 68.0 344.6 198.93 86.00
46 Signalmen and signal maintainers__...................... _... 232 .5 .4 66.9 351.8 169.16 78.26
47 Linemen and groundmen.................................... 50 .1 .1 67.1 335.0 158.80 70.79
48 Assistant signalmen and assistant signal maintainers (and helpers)..... 101 .2 .3 66.9 336.2 142.78 66.15
50 General, assistant general foremen and department foremen (shops)................................................ 309 .6 . 67.9 357.1 258.16 106.40
51 General and assistant general foremen (stores)_________________________ 11 (*) .. 70.6 351.3 213 32 91 92
52 Equipment, shop, electric, material and supplies inspectors__„_________ 122 .2 ________________________________________________ 68.7 343.3 189.06 82-. 22
53 Gang foremen and gang leaders (skilled labor)-------------- 548 1.1 .4 67.9 355.2 226.74 96.47
54 Blacksmiths............................................................ 465 .9 .3 68.7 336.0 149.45 68.24
55 Boilermakers............................................ 666 1.3 . 8 67.7 345.9 160.06 73.22
56 Carmen----------------------------------------------- 4,525 8.9 4.2 68.5 322.7 146.69 64.89
58 Electrical workers........................................................................................... 147 .3 .5 68.4 317.3 157.25 66.88
61 Machinists................................................ 2,013 3.9 2.6 68.1 344.6 155.27 71.69
62 Molders............................................... 77 .2 .1 67.7 334.3 141.72 65.11
63 Sheet-metalworkers-- ------------------------------------------------------------------------------------------- 385 .8 .6 68 0 331.8 151.52 68.43
64 Skilled trades helpers (maintenance of equipment and stores)____________________________________________________ 2,066 4.0 4.6 68.8 298.3 116.19 50.05
65 Apprentices—----------------------------------------------------------- 2 (*) .5 69.0 237.0 115.50 39.00
67 Coach cleaners ---.... ------------------------------------------------ 363 .7 .6 69.2 296.9 101.20 45.12
68 Gang foremen (shops, engine houses, and power plants)__________________ 53 .1 ______________________________________________ 69.3 335.9 141.54 65.20
69 Gang foremen (stores and ice, reclamation, etc., plants)_______________ 27 .1 _ 68 5 330.4 137 24 62 07
70 Laborers (shops, engine houses, and power plants)---------------------- 1,829 3.6 3.4 69.3 291.4 101.31 44.49
72 Laborers (stores and ice, reclamation, etc., plants)...... 382 .7 1.1 69.7 270.8 93.82 38.51
73 Stationary engineers------------------------------------------ 142 .3 .1 69.5 313.1 162.18 67.25
74 Stationary firemen, oilers, coal passers, water tenders.... 175 .3 .2 68.5 299.8 127.33 53 58
75 Chief train dispatchers.................................... 34 .1 ............................................... 67.3 359.9 286. 24 115* 86
76 Train dispatchers.................................. 248 . 5 . 2 67.3 358.1 248.14 103.07
77 Train directors......................................... 21 (*) (*) 68.0 360.0 206.10 91.71
78 Station agents. 1,263 2.5 1.4 69.4 354.8 166.45 77.46
81 Chief telegraphers and telephoners or wire chiefs..____________________ 38 .1 (*) 68.1 353.1 203 08 88 67
82 Clerk-telegraphers and clerk-telephoners-------------------------------------------------------------------------- 87 .2 .5 66.9 357.3 148.93 71.39
83 Telegraphers, telephoners, and towermen_______________________________________________________________________ 1,103 2.2 1.0 67.5 354.3 152.36 72.99
84 Station masters and assistants----------------------------------------- 66 .1 69.5 353.3 205.86 89.82
85 Supervising baggage agents--------------------------------------------- 7 (*) ---------------------------------------------- 68.2 354.0 157.93 75.57
86 Baggage agents and assistants------------------------------------------ 98 .2 69.7 342.5 151.30 70.41
87 Baggage, parcel room, and station attendants_________________ 437 .9 .5 69.1 316.4 113 85 52 83
88 General and assistant general foremen (freight station, etc.)______________________________________________________ 32 .1 68.3 355.8 209 38 90 93
90 Gang foremen (freight station, warehouse, etc.)__________ 178 .3 69.6 344.0 149.04 69.25
91 Callers, loaders, scalers, sealers, and food inspectors..... 176 .3 .5 68.8 314.2 109.76 50.21
92 Truckers (stations, warehouses, and platforms)___________________________________________________________________ 523 1.0 2.7 69.2 289.2 100.17 43.57
93________________________________________________________Laborers (dock, elevator, station, warehouse, platform)_ __. 477 .9 ___ 69.2 302 5 101 07 45 63
95 Stewards, restaurant managers, and dining-car superintendents.. 30 .1 _ 69.1 323.2 182.47 76.73
96 Chefs and cooks Restaurants or dining cars)......................................................................... 39 .1 ... 67.4 314.2 123.04 56.17
Footnotes at end of table.
91
Annual Report of the Railroad Retirement Board •
92 • Annual Report of the Railroad Retirement Board
TABLE 31.—Number of all finally certified annuities in force as of June 30, 1938, by last railroad occupation, with averages of credited service, monthly compensation, age at time annuity began, and single-life annuity—Continued
Parent Percent A „„„ <7,0 Ayrnracro mODtffiy
I. C. C. Number {nlLi of employ- oAvo^r?^a compensa- Average
code Occupation of an- ees with a!eat„.“e c5oedI^d tion on single-life
N°- Z™b'tta -"w Z"
w wages 1937 I'cgau \muumoy nulty is
computed
97 Waiters, camp cooks, kitchen helpers, etc.................. 62 0.1 0.9 68.5 296.0 84.31 37.49
98 Officers and workers on barges, boats, etc., and shore workers...... 273 .5 .5 69.6 315.9 167.24 70.33
99 Transportation and dining-service inspectors-______________ 51 .1 69.6 346.5 189.34 83.43
100 Parlor-and sleeping-car conductors........................... 92 . 2 ............ 67.7 340.7 186.95 80.89
101 Train attendants__________________________________________ 201 .4 68.4 343.6 93.77 47.65
102 Bridge operators and helpers............................... 87 .2 70.3 322.8 113.97 53.51
103 Crossing and bridge flagmen and gatemen................... 2,460 4.8 1.1 70.4 304.9 99.45 46.27
104 Laundry foremen and laundry workers...................... 10 (*) ......... 67.9 301.2 100.10 41.96
105 Yardmasters____________________________________________ 178 .3 68.0 359.8 248.87 104.39
106 Assistant yardmasters---------------------------------------- 52 .1 66.6 359.8 246.21 103.84
107 Switch tenders.......................................... 211 .4 . 2 68.6 346.9 143.07 68.53
108 Hostlers.._____________________________________________ 396 .8 68.1 351.9 160.03 75.29
110 Hostler helpers_____________________________________________ 19 (*) _________ 68.1 323.7 136.29 60.17
111 Road conductors and assistants..____________________________ 3,605 7.0 1.6 67.9 359.2 216.74 94.34
115 Road passenger baggagemen................................... 162 . 3 . 2 68.8 357.6 189.99 85.97
116 Road brakemen and flagmen_________________________________ 1,602 3.1 3.6 67.2 356.0 173.48 80.30
119 Yard conductors and foremen.._______________________________ 446 .9 .9 67.4 358.8 188.72 85.51
120 Yard brakemen and helpers—___________________________________ 1,387 2.7 2.5 67.4 357.1 175.05 81.03
121 Road engineers and motormen..____________________________ 5,085 9.9 2.0 68.1 359.3 232.10 99.07
124 Yard engineers and motormen............................... 188 .4 .8 68.3 358.4 201.26 89.65
125 Road firemen and helpers................................... 501 1.0 2.4 67.2 356.3 181.44 82.75
128 Yard firemen and helpers__________________________________ 39 .1 1.0 67.1 350.1 156.60 73.25
Full-time employees of employee organizations—............... 40 .1 _________ 69.2 358.0 237.00 100.05
Part-time employees of employee organizations_................_ 32 .1 ________ 67.2 354.4 209.28 91.16
All occupations—express companies.............................. 879 1.7 ________ 68.3 328.0 161.50 71.04
Total............................................... 51,273 100.0 (’) 68.4 333.4 158.07 70.37
* 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. Included in the ICC codes are all annuitants except those last employed by the Pullman Co. and by employee ’ Percentages are computed only for 54 selected occupations. Only employees of class I railroads are included.
Annual Report o( the Railroad Retirement Board • 93
Annuities Terminated by Death
On June 30, 1938, there were 3,097 employee annuities, 2,616 finally certified, and 481 others, which had been terminated by the death of the annuitant. These terminated cases constituted 4.7 percent of all annuities certified by the Board up to the close of the fiscal year. The percentages of terminated annuities are much higher for disability than for age annuitants. The higher percentages for disability cases relative to nondisability cases are basically due to higher mortality rates for disabled persons, reflected here despite the considerably lower average attained age of disability annuitants.
Table 32 gives a summary comparison of the principal characteristics of the finally certified annuities in force on June 30, 1938, and those terminated. Without exception, the average single life annuity is greater in the case of terminations than for annuities in force. However, the average credited service is approximately the same in the two groups. The higher average annuities for terminated cases is therefore almost entirely due to their higher average monthly compensation. The average age at retirement of terminated cases was higher than for in-force cases, except for disability annuitants with 30 years of service. Because the differences between the in-force and terminated cases were relatively slight and the number of terminated cases small, the characteristics of all annuitants finally certified to June 30, 1938, would not differ from those presented here for the finally certified annuities in force as of that date.
TABLE 32.—Comparison of characteristics of finally certified in-force and terminated annuities as of June 30, 1938, by type of annuity
All annuities Age annuities Disability annuities
65 and over Under 65 30 years service Less than 30 years service
In force Terminated In force Terminated In force Terminated In force Terminated In force Terminated
Number 51,273 2, 616 45, 290 2,141 1,154 32 4,301 420 528 23
Average single life annuity... $70. 37 $72. 66 $69.68 $70.02 $64.16 $72. 59 $82.94 $87. 80 $40. 69 $42.51
Average actual annuity Average credited service $69.20 $66.29 $68.49 $64.35 $63.51 $64.53 $81.76 $78.00 $40.43 $35.16
(months) 1 333.4 334.2 330.9 329.4 359.8 359. 8 359.7 359.7 276.2 281.2
Average compensation $158.07 $164.59 $156.05 $158.59 $166. 73 $182. 63 $180.98 $195. 70 $125. 63 $129. 80
Average attained age 2 68.4 68.5 69.5 70.4 62.4 63.2 60.1 59.7 62.4 62.3
1 Averages are computed without allowance for the fact that, under the act, ultimate fractions of 6 month or more are credited as a full year.
* At time annuity began to accrue.
Date Last Worked
An approximate statement of retirements from the railroad industry since August 29, 1935, the enactment date of the 1935 act, can be obtained from the Board’s records of employee annuitants and 108818—39------7
94 • Annual Report of the Railroad Retirement Board
from applications for employee annuities. The great majority of the present annuitants, and of the applicants who have ceased working, are relatively advanced in age, have had long years of service in the railroad industry, and have last worked in the industry since August 29, 1935. The Board’s records also include some eligible individuals with short service in the railroad industry, but they do not include all individuals of advanced age, whether with long or short years of service, who have ceased working in the railroad industry, since August 29, 1935. This latter group consists of eligible individuals who have not yet applied or who died before making application, individuals who are now working outside the railroad industry and individuals, as yet ineligible, who have ceased all work.
TABLE 33.—Number of employee annuitants certified up to June 30,1938,1 by period of last compensated service for an employer under the act, classified by cause of retirement
Period last worked
All annuitants
Age annuitants
Disability annuitants
Period last worked
All annuitants
Age annuitants
Disability annuitants
1923................
1924................
1925________________
1926................
1927________________
1928________________
1929________________
1930.............
1931................
1932________________
1933................
1934________________
1935________________
1936________________
1937________________
First half of 1938...
7
18
38
40
78
137
282
501
620
652 1,491 5,349
12, 525
39, 481
4,463
1
7
13
31
36
62
118
249
454
529
557
1,240
4,585
10,823
36, 886
4,323
5
7
4
16
19
33
47
91
95
251
764
1,702
2,595
140
1936 January.........
February________
March___________
April___________
May_____________
June____________
July............
August..........
September_______
October.........
November________
December....____
Total........
65,683 59,914
5,769
849
819
796
834
1,175
888
1,112
1,076
928
1,131
1,285
1,632
715
693
652
988
950
808
984
1,129
1,422
134
126
144
134
148
133
124
126
120
147
156
210
1935 January.........
February________
March___________
April...........
May_____________
June............
July............
August..........
September_______
October_________
November________
December......
230
166
200
231
231
298
276
523
790
750
729
925
198
141
177
197
189
255
227
462
687
648
613
791
32
25
23
34
42
43
49
61
103
102
116
134
1937
January__________
February.........
March............
April............
May..............
June_____________
July..........
August...........
September........
October..........
November........
December.........
1,340 1,143
1,588 1,898 2,473 5,946
7,376 4,883 4,095 3,113 2,388 3, 238
1,126
979
1,359 1,690
2, 234 5,688
6,982
4, 620 3,876 2,936
2,255
3,141
214
164
229
208
239
258
394
263
219
177
133
97
1938 January.... February... March......
April_____
May_______
June.....
1,427 1,066 1,218
699 53
1,371
1,028
1,191
684
49
56
38
27
15
4
1 Includes employee annuitants receiving annuities in force and terminated by death, finally certified or subject to recertification, as of June 30, 1938.
Table 33 gives the period last worked for an employer under the act of annuitants certified by the Board up to June 30, 1938, but not for applicants who had not yet received an annuity as of that date. The figures for the annuitants are presented since annuitants who last worked since August 29, 1935—about 60,000 in number—constitute a
Annual Report of the Railroad Retirement Board • 95 majority of the retirements from the railroad industry since that date. The number of annuitants who last worked in August 1935 is higher than in any preceding month, since the figures for the preceding months include only individuals who last worked for an employer* under the act prior to August 29,1935, and continued in an employment relation until that date. The number who last worked for an employer under the act is considerably higher in every succeeding month than in August 1935. The peak was attained during June and July 1937, the month in which the amendatory Railroad Retirement Act of 1937 was passed, and the month following. There were 22,300 annuitants as of June 30,1938, who last worked in the railroad industry between June 1, and September 30, 1937, and nearly 40,000 during the whole of 1937.17 The figures presented for the last several months are more incomplete, since the tabulation given here is based on annuitant records only, and a larger proportion of the claims for the last half of the fiscal year had not yet been certified by June 30, 1938. However, the figures show that the major effect of the establishment of a new system has already passed.
17 The reasons for this large concentration are discussed on pages 72 and 73 of the last annual report.
.VIII .
ANALYSIS OF PERMANENT PENSIONERS
UP to June 30, 1938, the Board had transferred a total of 48,643 previous private pensioners to its pension rolls under the terms of section 6 of the 1937 act. Less than 350 of these were taken over after October 31, 1937, the date for which a limited analysis of pensioners was presented in the last annual report. For all practical purposes the transfer has been completed, and the pensioners on the rolls of the Board form a closed group which will gradually be reduced by death. Additional data on the characteristics of all pensioners have been summarized since the publication of the last annual report, and are presented in this chapter.
Amount of Pension Adjustment
Pension payments under section 6 of the 1937 act are equal in amount to the individual pensions or gratuities granted by employers, without diminution by reason of any general reduction or readjustment after December 31, 1930, and cannot exceed $120 per month. At time of transfer to the Government rolls, the average pension payment, for pensions less than $120 prior to transfer, was increased from $50.45 to $55.59, or 10.2 percent, in order to compensate for such general reduction or adjustments. The percentage increase, as shown in table 34, varies considerably, ranging from 0.2 percent for those with adjusted pensions of less than $10 to 12.9 percent for those with adjusted pensions between $110 and $119.99.1 The percentage increase is much less for small than for large pensions since, under most private plans, pensions below a specified minimum were not decreased at time of general reductions, and, under some plans, higher pensions were subject to greater percentage reductions than smaller pensions.
Cause of Retirement
In furnishing the Board with data on which the transfer of pensioners to the government rolls was to be based, the employers were requested to give the type of provision under which the pensioner
\The percentage for the group receiving $120 is affected by the fact that this maximum limited the amount of the increase.
96
Annual Report of the Railroad Retirement Board • 97
was retired. Of the 48,570 pensions,2 27,376, or 56.4 percent were reported as having been granted under disability provisions, and 20,375, or 41.9 percent under age provisions. The other 819, or 1.7 percent, consisted predominantly of “service” pensions granted, under two important plans, to persons who attained a specified long service at or after age 65.
TABLE 34.—Number of permanent pensioners1 by adjusted amount of pension
Adjusted amount of pension
Number
Percent
Percent increase of average adjusted pension over average pension before
transfer
$0-$9.99_____
$10-$19.99... $29-$29.99... $30-$39.99__. $40-$49.99._. $50-$59.99-_. $69-$69.99... $70—$79.99._. $89 $89.99... $90-$99.99._. $109 $109.99. $U0-$119.99. $120_________
Total.
75 1,875 7, 658 6,846 6, 221 5,835 4,914 4,011 2, 803 2,364 1,932 1,297 2,739
0.2
3.9
15.7
14.0
12.8
12.0
10.1
8.3
5.8
4.9
4.0
2.7
5.6
1 48, 570
100.0
0.2
2.5
5.8
7.5
7.9
10.0
11.4
11.0
12.6
12.4
12.5
12.9
’ 10.0
» 10.2
1 Including all pensioners transferred to the Railroad Retirement Board rolls up to June 30, 1938, except 73 pensioners not on the rolls as of June 30, 1938, because of suspension.
’In computing these percents, 1,738 pensioners who were receiving $120 prior to their transfer, were excluded. If they were included, the percentage for the $120 class would be 3.4; for the total, 9.4.
There is indication that many persons reported retired for disability were in fact retired because they had become too old to perform their regular duties. In some plans disability pensions were used to effect age retirements at earlier ages than the age retirement provisions of the plans allowed. Other plans provided for disability retirements only, and all retirements under such plans were necessarily reported as due to disability. The differences between the characteristics of pensioners retired under age provisions and those retired under disability provisions would probably have been greater if no pensioners actually retired because of age had been reported in the disability group.
Pensioners Not Included in Analysis
The tables which follow include only pensioners for whom complete data were available. They do not include 2,329 pensioners for whom age at retirement, year of birth, amount of credited service, or average amount of compensation were missing. Of these, 1,272 were reported as retired on account of age, 953 on account of disability,
’Excluding 73 cases not in force as of June 30, 1938, because of suspension.
98 • Annual Report of the Railroad Retirement Board
and 104 for other reasons. On the average the pensions received by pensioners for whom data are missing were relatively low and must have been based on relatively short service or low compensation, or both. The analysis of pensioners for whom data are not missing, therefore, tends somewhat to overstate8 * * * * * * the service and compensation characteristics of all pensioners.
Age at Retirement
The average age at retirement was 66.7 years for all pensioners, 70.1 for age pensioners, and 64.2 for disability pensioners (table 35). For the age pensioners, 69.0 percent retired at age 70 and less than 1 percent before age 65, contrasted with only 2.3 percent of the disability retirements at age 70, and 39.2 percent before age 65. Retirement at age 65 was 6.7 percent for age pensioners and 18.2 percent for disability pensioners. Other contrasts were 11.3 percent for age pensioners and 34.2 percent for disability pensioners between the ages 66 to 69, and 12.1 percent for age pensioners and 6.1 percent for disability pensioners at age 71 and over. More than three-quarters of the “other pensioners” retired between the ages of 65 and 69.
The age at retirement of the pensioners reflects the provisions of the private pension plans. Age retirements are very heavily concentrated at age 70, since under most plans retirement for age was compulsory at age 70, and was not possible before. Age at retirement for disability pensioners is characterized by a lower average age and a wider and less concentrated distribution than for age pensioners, and by a minor concentration at age 65. Most of the private pension plans set no absolute age for disability retirement, and the several important roads which had a minimum set it at age 65. Other pensioners,” consisting principally of nondisabled persons permitted to retire between 65 and 70 for exceptionally long service, had an age at retirement concentrated between those ages.
A discussion of the differences in average age at retirement for all pensioners retired under the private plans, as reported to the former Federal Coordinator of Transportation, for the pensioners transferred to the Board rolls, and for annuitants under the Railroad Retirement Act is contained on pages 50-51 of the last annual report.
8 The increase in average adjusted amount of pension resulting from the exclusion of
^LW1?h l~TPlete data iS as follows : A11 Pensioners, $57.90 to $58.49 ; age pensioners,
^J59’34’’ dIsabllity Pensioners, $56.83 to $57.17; other pensioners, $79.99 to
$»4.o9. The percentage of increase is thus relatively greatest among the other-pensioners
group, which likewise has the largest proportion of incomplete cases. Both the percentage
o change and the proportion of incomplete cases are larger for age than for disability
pensioners.
Annual Report of the Railroad Retirement Board • 99
TABLE 35.—Number of permanent pensioners 1 by age at retirement, classified by cause of retirement
Age at retirement All pensioners
Number Percent
34 1 (*)
35 5 (*)
36 15 (*)
37 4 (*)
38 10 (♦)
39 24 0 1
40 . 32 1
41 30 1
42 35 . 1
43 57 1
44 70 .2
45 94 . 2
46 105 2
47 142 3
48 132 3
49 . 186 4
50 207 4
51 270 6
52 278 . 6
53 311 . 7
54 362 .8
55 422 9
56 470 1 0
57 531 1 1
58 585 1 3
59 693 1 5
60 . 877 1 9
61 . 1 004 2. 2
62.... 1' 093 2 4
63 1’ 245 2 7
64 1 291 2.8
65 6 265 13 6
66 3 553 7 7
67 3’ 063 6 7
68 2 588 5 6
69 2’ 367 5 1
70 13 823 29 9
71 1’ 279 2 8
72 807 1 7
73 575 1 2
74 388 Is
75 299 6
76 196 _ 4
77 151 3
78 109 .2
79 76 ,2
80 53
81 25
82 16 (♦I
83 15 (♦)
84 6
85.... 3 (♦)
86 1
87 1
88 1
89
Total... 1 46, 241 100.0
Age pensioners Disability pensioners Other pensioners
Number Percent Number Percent Number Percent
1 5 15 4 10 24 32 30 35 57 70 94 105 140 132 185 206 267 275 310 359 418 465 525 574 685 849 967 1,047 1,208 1, 211 4,816 2,795 2.438 2,025 1,783 603 381 293 274 185 172 102 73 61 49 32 13 6 7 5 3 1 8 0.1 (*) (*) .1 .1 .1 .1 .2 .3 .4 .4 .5 .5 .7 .8 1.0 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.6 3.2 3.7 4.0 4.6 4.6 18.2 10.6 9.2 7.7 6.7 2.3 1.4 1.1 1.0 .7 .7 .4 .3 .2 .2 .1 (») (*) (*) (*) (*) (*)
2 (*)
1 1 1 3 1 3 4 5 5 10 8 15 20 29 26 58 1,276 666 531 466 490 13,186 884 508 294 196 126 88 74 48 26 20 12 10 8 1 (*) c> r! 8 <*) ci (*> 0.1 <*) .1 . 1 .2 .1 .3 6.7 3.5 2.8 2.4 2.6 69.0 4.6 2.7 1.5 1.0 .7 .5 .4 .3 .1 .1 .1 .1 (*) (*)
2 0.3
1 1 .1 .1
13 17 17 11 22 173 92 94 97 94 34 14 6 7 7 1 6 4 1.8 2.4 2.4 1.5 3.1 24.3 12.9 13.1 13.6 13.1 4.8 2.0 .8 1.0 1.0 .1 .8 .6
1 1 .1 .1
1 (*)
1 (*)
19,103 100.0 26,423 100.0 715 100.0
* Less than 0.05 percent.
‘ Including all pensioners transferred to the Railroad Retirement Board rolls up to June 30, 1938, except
li cases not in force as of June 30, 1938, because of suspension, and 2,329 for whom data were incomplete.
Period of Retirement
Nearly 70 percent of all the pensioners transferred to the Board’s rolls were retired in the 7 years 1929 to 1935, and the largest num-
100 • Annual Report of the Railroad Retirement Board
ber in 1932. As shown in table 36, few individuals were retired under the private plans after the passage of the Railroad Retirement Act of 1935, when many railroads suspended compulsory retirement provisions and refrained from granting new pensions. The few who first received private pensions in these 2 years were practically all disability cases. A smaller proportion of those who retired in the earlier years were transferred to the rolls of the Board than of those retired more recently, principally because of the larger accumulation of deaths among the pensioners retired in the earlier years.
TABLE 36.—Number of permanent pensioners1 by period of retirement
Period of retirement All pensioners Period of retirement All pensioners
Number Percent Number Percent
1901-05 1906-10 1911-15 1916-20 1921-25 3 47 346 1.143 5, 272 0.1 .7 2.5 11.4 1926-30 1931-35 1936-37 Total 15, 654 23, 580 196 33.9 50.9 .5
i 46, 241 100.0
1 Including all pensioners transferred to the Railroad Retirement Board rolls up to June 30, 1938, except 73 cases not in force as of June 30, 1938, because of suspension and 2,329 for whom data were incomplete.
TABLE 37.—Number of permanent pensioners 1 by adjusted amount of pension, classified by cause of retirement
Adjusted amount of pension All pensioners Age pensioners Disability pensioners Other pensioners
Number Percent Number Percent Number Percent Number Percent
$0-89.99 75 0.2 44 0.2 31 0.1
$10.00-819.99 1,875 3.9 939 4.6 929 3.4 7 0.9
$20.00-829.99 7,658 15.7 3,321 16.4 4,302 15. 7 35 4.3
$30.00-839.99 6,846 14.0 3^001 14.7 3,800 13.9 45 5.5
$40.00-849.99 6' 221 12.8 2^292 11.2 3’880 14.2 49 6.0
$50.00-859.99 5,835 12.0 2,211 10.9 3'547 13.0 77 9.4
$60.00-869.99 4, 914 10.1 1’874 9.2 2,963 10.8 77 9.4
$70.00-879.99 4' 011 8.3 1, 652 8. 1 2,251 8.2 108 13.2
$80.00-889.99 2^803 5. 8 L 122 5. 5 t 581 5.8 100 12.2
$90.00-899.99 2^364 4.9 1’048 5.1 1’227 4.5 89 10.9
$100.00-8109.99 1'932 4.0 834 4.1 1037 3.8 61 7.4
$110.00-8119.99 L 297 2.7 611 3.0 ' 638 2.3 48 5.9
$120.00.. 2,739 5.6 1,426 7.0 1,190 4.3 123 14.9
Total. > 48, 570 100.0 20, 375 100.0 27, 376 100.0 819 100.0
i Including all pensioners transferred to the Railroad Retirement Board rolls up to June 30, 1938, except 73 cases not in force as of June 30, 1938, because of suspension.
Amount of Adjusted Pension
As shown in table 37, the average pension, after adjustment at time of transfer to the rolls of the Board, was $58.44 for age pensioners, $56.83 for disability pensioners and $57.90 for all pensioners. The largest proportion of both age and disability pensioners had pensions between $20 and $30. Seven percent of age pensioners received the maximum of $120, compared to only 4.3 percent of the
Annual Report of the Railroad Retirement Board • 101
disability pensioners. The average monthly pension of other pensioners was $79.99, more than a third higher than the average for disability and age pensioners; almost 15 percent of them received $120 per month. This group, principally of persons with long service who were able to retire between 65 and 70, comprises a much larger proportion of the more highly paid occupations than do the other two groups.
Average Monthly Compensation and Years of Service
The common method of determining the amount of pension under private pension plans was to take “1 percent for each year of continuous service of the average monthly pay received for the 10 years preceding retirement.” The average monthly pay or compensation was in general obtained by dividing total wages in the 10 years preceding retirement by the number of months actually worked in that period. Some plans, however, used the term “average regular monthly compensation,” to mean a given occupational wage rate times a standard number of hours or days per month. The term “average monthly compensation” is used here for both bases of computation.
For all permanent pensioners, the average monthly compensation on which the pension was based was $161.21. This average includes some salaries as high as $900 a month.3a The amount of average monthly compensation which half the pensioners exceeded and the other half did not attain (the median) is perhaps a more accurate measure because it reduces the effect of such high monthly compensation. This amount was $148.63. The average compensation was about the same for age and disability pensioners as for the entire body of pensioners. The “other pensioner” group had an average compensation nearly 25 percent above that for the pensioners as a whole.
The term “years of service,” as used under the private railroad pension plans in determining eligibility for a pension and in computing the amount of pension, referred in most instances to a period of continuous service with a given employer from the last date of entry into service to the date of retirement, less time out of service. However, the meaning of continuous service varies, because of differences in what is considered to constitute a break in continuity of service. In addition under certain plans, involuntary absences due to injury or illness have been credited for actual service.* 4 Average credited service, as shown in table 39, was 35.7 years for all pensioners. The average
3a Among those for whom complete data were not available, there were undoubtedly officials with average compensation considerably in excess of this amount.
4 Years of service as used here differs essentially from service credited under the Railroad Retirement Act, which includes all months during which any compensated service was rendered for employers under the act, irrespective of whether such service was continuous. In addition, service after age 65 was credited under the private pension plans but is not under the Railroad Retirement Act.
102 • Annual Report of the Railroad Retirement Board
for disability pensioners was 35.2 years, as compared with 36.3 years for age pensioners, and 43.2 years for “other pensioners.” More than seventy percent (70.7) of all pensioners were credited with 30 or more years of service.
TABLE 38.—Number of permanent pensioners 1 by average monthly compensation on which pension was based
Average monthly compensation Number Percent Percent average adjusted pension to adjusted compensation Average service (years)
$0-$9.99 3 7 29 136 296 669 1,187 1,865 2,022 2,029 2,419 2,975 3,331 3,317 3,286 2,880 2,486 2,153 1,931 1,680 1,569 1,495 1,406 1,203 1,184 963 812 625 441 379 842 253 368 (*) (*) 0.1 .3 .6 1.4 2.6 4.0 4.4 4.4 5.2 6.4 7.2 7.2 7.1 6.2 5.4 4.7 4.2 3.6 3.4 3.2 3.0 2.6 2.6 2.1 1.8 1.4 1.0 .8 1.8 .5 .8 210.5 79.2 81.6 47.3 40.9 37.1 34.1 33.5 33.6 32.9 33.7 34.3 34.5 35.3 35.9 36.6 36.7 37.0 37.6 38.4 38.6 39.1 39.3 39.4 39.1 39.3 38.7 38.3 38.2 37.2 35.4 30.2 21.4 43.7 36.5 32.2 28.9 29.7 28.8 29.4 30.4 31.5 31.4 32.8 33.6 34.1 34.9 35.7 36.3 36.7 37.0 37.7 38.5 38.8 39.4 39.7 39.8 39.9 40.5 40.6 40.9 41.6 40.9 41.1 39.8 38.9
$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
$90.00-899.99
$100.00-$109.99
$110.00-$119.99 .
$120.00-$129.99
$130.00-$139.99
$140.00-$149.99
$150.00-$159.99 . .
$160.00-$169.99
$170.00-$179.99 .
$180.00-$189.99
$190.00-$199.99
$200.00-8209.99
8210.00-8219.99
$220.00-8229.99
8230.00-8239.99
$240.00-8249.99.... .
$250.00-8259.99
$260.00-8269.99
$270.00-8279.99
$280.00-8289.99 .
$290.00-8299.99
$300.00-8349.99....
$350.00-8399.99
$400.00 and over
Total
i 46,241 100.0 36.3 35.7
* Less than 0.05 percent.
> Including all pensioners transferred to the Railroad Retirement Board rolls up to June 30,1938, except 73 pensions not in force as of June 30,1938, because of suspension and 2,329 for whom data were incomplete.
Except for the very low and the very high compensation groups, the greater the average monthly compensation, the greater the average years of service, as shown in table 38. But even for individuals whose pensions were based on very low compensation the average years of service is almost 30. For pensioners with relatively high compensation the average years of service in some instances exceeds 40 years.
The ratio of average amount of pension to the average monthly compensation would have been approximately the same for the different compensation groups, if years of service on which the amount of private pension was based had been on the average the same for all
Annual Report of the Railroad Retirement Board • 103 of them, since, under the formula on which most private pensions were calculated, a uniform percentage of average monthly compensation for the 10 years preceding retirement was taken. Higher years of service, however, tend to accompany higher monthly compensation. The result is that the ratio of amount of pension to average monthly compensation definitely increases with higher monthly compensation, except for the compensation groups at the lower and higher extremes. For the lowest groups, which include large numbers of minimum pensions, the ratio becomes larger the smaller the compensation; and for the highest groups, which include large numbers of pensions limited to $120.00 under section 6 of the Railroad Retirement Act of 1937, the ratio becomes smaller the greater the compensation.
TABLE 39.—Number of permanent pensioners 1 by years of credited service classified by cause of retirement
Years of service All pensioners Age pensioners Disability pensioners Other pensioners
Number Percent Number Percent Number Percent Number Percent
9- 4.... 3 (*) 2 (•) 1 (*)
5- 9 63 0.1 41 0.2 22 0.1
10-14 588 1.3 220 1.2 366 1 4 2 0.3
15-19 1,876 4.1 1,039 5.4 834 3 2 3 4
20-24 4,509 9.8 1,873 9.8 2, 625 9 9 11 1 5
25-29 6, 513 14.1 2,507 13.1 3,978 15.1 28 3 9
30-34 7 J16 15.4 2,352 12.3 4,743 17 9 21 2^9
35-39 7,198 15.6 2,844 14.9 4 337 16 4 17 2 4
40-44 9.379 20. 2 3, 590 18.9 5 452 20 5 337 47.2
45-49 6, 283 13.6 3' 002 15.7 3,060 11. 6 221 30 9
50-54 2,381 5.1 L 428 7.5 886 3 4 67 9 4
55-59 '290 .6 180 .9 102 ' 4 8 1.1
60-64.... 37 .1 23 .1 14 i
65-69 5 O 2 (*) 3 (•)
Total 1 46,241 100.0 19,103 100.0 26,423 100.0 715 100.0
•Less than 0.05 percent.
1 Including all pensioners transferred to the Railroad Retirement Board rolls up to June 30,1938, except 73 cases not in force as of June 30, 1938, because of suspension and 2,329 for whom data were incomplete.
Occupation of Pensioners
The number and proportions of pensioners in 22 occupational groups is given in table 39? The occupation is the last one in which the pensioner worked before retirement. “Engineers and conductors” comprise the largest single group, followed in order by “skilled workers in maintenance of equipment and stores,” “gang and section foremen,” “firemen and brakemen,” “clerical employees,” and “agents, telegra-
• Of these groups, 21 are based on the 21 groups used by the Federal Coordinator of Transportation. These are a combination, on the basis of duties, seniority relationships, responsibilities, and wage levels, of the 128 occupational divisions employed by the Interstate Commerce Commission. The I. C. C. divisions included in each group are indicated In appendix D. All express company occupations have been combined into a separate group (22).
104 • Annual Report of the Railroad Retirement Board
phers, and towermen.” These groups account for 63.7 percent of all pensioners. The three “laborer” groups together comprise 12.2 percent of the pensioners. As already reflected in table 38 showing the same averages by compensation groups as those shown in table 40 by occupation, the higher the average years of service in an occupational group, the greater the average monthly compensation, and the greater the average amount of pension, and this holds practically without exception. Each occupational group had an average service of more than 30 years, except laborers in maintenance of equipment and maintenance of way, and miscellaneous workers.
TABLE 40.—Number of permanent pensioners 1 by occupational groups 2 with averages of adjusted pension years of service, compensation, and age at retirement
F. C. T. group Title Number Percent Average adjusted pension Average service (years) Average compensation Average age at retirement
1 Executives and officials 981 2.1 $109.05 39.6 $381. 74 66.8
2 Subordinate officers 2,710 5.9 83.26 38.4 226. 78 66.8
3 Gang foremen 4,434 9.6 53. 66 35.9 148. 96 66.8
4 Professional assistants 159 .3 83. 69 33.0 286.87 65.9
5 Clerical employees.. 2,798 6.0 51.28 35.6 141. 31 66.8
6 Office attendants 98 .2 34. 47 33.0 99. 43 67.6
7 Agents, telegraphers, and tower-men 2,748 5.9 56. 74 37.5 149. 69 66.6
8 Train dispatchers 253 .5 89.12 39.0 236.64 65.8
9 Skilled workers (maintenance of equipment and stores) 5,521 11.9 50.96 34.3 146. 61 67.1
10 Skilled workers (maintenance of way and structures) 1,121 2.4 42. 89 32.0 132.85 67.3
11 Semi-skilled workers (maintenance of equipment and stores).. 1, 299 2.8 38.17 32.1 115. 34 67.2
12 Semi-skilled workers (maintenance of way and structures) 586 1.3 34.25 32.2 100. 83 67.8
13 Laborers (maintenance of equipment and stores) 1,748 3.8 30.35 29.7 94. 05 67.8
14 Laborers (maintenance of way and structures) 2,380 5.1 25.79 29.7 76. 83 66.7
15 Laborers (station platform, etc.)... 1.505 3.3 33. 61 31.8 100. 27 68.2
16 Engineers and conductors 10,129 22.1 83.15 39.5 213. 36 660
17 Firemen and brakemen 3,785 8.2 57.41 36.4 157. 81 65.6
18 Floating equipment service 278 .6 56.87 34.9 161. 09 67.7
19 Train attendants 343 .7 31. 71 31.7 89. 66 65.5
20 Patrolmen and watchmen 1,988 4.3 31.19 32.5 91.83 69.2
21 Miscellaneous 53 .1 25. 09 28.5 76. 57 64.2
22 Express employees 1,324 2.9 62.74 36.1 148. 97 65.5
Total 146, 241 100.0 58. 49 35.7 161.21 66.7
i Including all permanent pensioners transferred to the Railroad Retirement Board rolls up to June 30, 1938, except 73 cases not in force as of June 30,1938 because of suspension and 2,329 for which complete data were not available.
2 Based on 21 occupational groupings used by the Federal Coordinator of Transportation, with 1 additional grouping for express company employees. Former pensioners of the Pullman Co. are included in the 21 groups.
Pensions Terminated by Death
There were 4,656 pensions6 terminated by death of the pensioners in the fiscal year 1937-38, of which 43.6 percent were age pensions,
6 Deaths occurring before the end of the fiscal year, but reported after the end of the fiscal year, are included among the pensions in force, and not among the terminated cases.
Annual Report of the Railroad Retirement Board • 105
54.7 percent disability pensions, and 1.7 percent “other” pensions. These proportions for terminated cases by cause of retirement are practically the same as the proportions by cause of retirement for all pensions taken over by the Board up to June 30, 1938. In general the relationships and characteristics of pensions already discussed are applicable to the pensioners who died during the fiscal year 1937-38. The average pension for the terminated group, however, was $55.22, or nearly 5 percent less than for all pensioners. Age pensioners who died were receiving an average pension of $54.42, or about 7 percent less than all age pensioners. The average disability pension terminated by death was $55.27, or about 3 percent less than for all disability pensioners. The somewhat lower average pension of the pensioners who died is probably due to the fact that pensioners who were retired in earlier years and who were in general receiving somewhat smaller pensions than those retired in later years, as shown in the last annual report (p. 48), constituted a larger proportion of the terminated cases than of all the pensioners taken over.
TABLE 41.—Number of pensions terminated by death July 1, 1937 to June 30,1938, by adjusted amount of pension, classified by cause of retirement
Adjusted amount All pensioners Age pensioners Disability pensioners Other pensioners
Number Percent Number Percent Number Percent Number Percent
$0—$9.99 $10.00—$19.99 11 238 0.2 5.1 9 129 0.4 6.4 2 108 0.1 4.2 1 1.3
$20.00-829.99 775 16.6 374 18.5 400 15.6 1 1.3
$30.00-839.99 690 14.8 327 16.1 352 13.8 11 14.1
$40.00-849.99 624 13.4 230 11.3 387 15.2 7 9.0
$50.00-859.99 580 12.5 229 11.3 345 13.5 6 7.7
$60.00-869.99 423 9.1 149 7.3 267 10.5 7 9.0
$70.00-879.99 382 8.2 160 7.9 209 8.2 13 16.7
$80.00-889.99 252 5.4 91 4.5 152 6.0 9 11.5
$90.00-899.99 208 4.5 95 4.7 106 4.2 7 9.0
$100.00-$109.99.... 156 3.4 72 3.5 81 3.2 3 3.8
$110.00-8119.99 103 2.2 49 2.4 51 2.0 3 3.8
$120.00 214 4.6 115 5.7 89 3.5 10 12.8
Total 4,656 100.0 2,029 100.0 2,549 100.0 78 100.0
The average attained age as of December 31, 1937,7 of the pensioners who died was 76.0 years. One quarter of the pensioners who died were over 80.9 years old and three-quarters were over 72.7 years old. Disability pensioners who died in the fiscal year 1937-38 had an average attained age of 73.6 years, which was 5.3 years less than the average for age pensioners who died, and 4.3 years less than the average for “other pensioners.” —___________ d
7 All attained ages are computed as of this date, although some deaths may have occurred as much as 6 months earlier. The attained ages of the terminated pensioners are thus not ages at death. Eight cases are excluded because year of birth was not known.
106 • Annual Report of the Railroad Retirement Board
TABLE 42.—Number of pensions 1 terminated by death, July 1,1937, to June 30, 1938, by attained age as of Dec. 31, 1937, classified by cause of retirement
Attained age All pensioners Age pensioners Disability pensioners Other pensioners
Number Percent Number Percent Number Percent Number Percent
39 and under
40-44 2 11 24 62 144 435 1,162 1,444 903 378 83 (*) 0.2 .5 1.3 3.1 9.4 25.0 31.2 19.1 8.1 1.8 2 11 24 62 139 416 759 613 366 118 34 0.1 .4 .9 2.4 5.5 16.4 29.9 24.1 14.4 4.6 1.3
45-49
50-54
55-59
60-64 5 17 380 804 522 254 45 0.2 .8 18.7 39.8 25.8 12.5 2.2
65-69 2 23 27 15 6 4 2.6 29.9 35.0 19.5 7.8 5.2
70-74
75-79
80-84
85-89..
90 and over
Total
4,648 100.0 2,027 100.0 2, 544 100.0 77 100.0
•Less than 0.05 percent.
i 8 pensioners for whom age was not known are not included in table. Of these, 2 were age cases, 5 disability, and 1 “other.”
Pensions in Force on June 30,1938
As a result of the termination by death of a group of pensioners with somewhat smaller pensions, the average amount of the pensions in force as of June 30, 1938, shown in table 43, is somewhat higher than the average for all pensioners who were transferred. The change, however, is relatively small, since the pensioners who died constituted only 10 percent of the total. The average amount of all pensions in force as of June 30, 1938, was $58.18, or 28 cents higher than the average for all pensioners transferred. For age pensioners, the average pension in force was $58.89, as compared with $58.44 for the entire group; for disability pensioners the corresponding figures were $56.99 and $56.83; and for other pensioners $80.59 and $79.99.
TABLE 43.—Number of pensions in force as of June 30,1938, by adjusted amount of pension classified by cause of retirement
Adjusted amount All pensioners Age pensioners Disability pensioners Other pensioners
Number Percent Number Percent Number Percent Number Percent
$0-$9.99 64 0.1 35 0.2 29 0.1
$10.00-819.99 1,637 3 7 810 44 821 3 3 6 0 8
$20.00-829.99 6^883 15 9 2 947 16 1 3 902 15 6 34 4 6
$30.00-839.99... 6,156 14.0 2’ 674 14 6 3’ 448 13 9 34 4 6
$40.00-849.99 5, 597 12. 7 2 062 11 2 3 493 14 1 42 5 7
$50.00-859.99 5,255 12 0 1 982 10 8 3’ 202 12 9 71 9 6
$60.00-869.99... 4,491 10 2 1 725 9 4 2’ 696 10 9 70 9 4
$70.00-879.99 3,629 8 3 1,492 8 1 2 042 8 2 95 12 8
$80.00-889.99 2, 551 5.8 14)31 5 6 1 ’ 429 5 8 91 12 3
$90.00-899.99 2,156 4 9 ’ 953 5 2 l’ 121 4 5 82 11 1
$100.00-8109.99 . 1,776 4 0 762 4 2 956 3 9 58 7 8
$110.00-8119.99 L 194 2. 7 562 3 1 587 2 4 45 6 1
$120.00 2,525 5.7 1,311 7.1 1,101 4.4 113 15.2
Total 43,914 100.0 18,346 100.0 24,827 100.0 741 100.0
Annual Report of the Railroad Retirement Board • 107
The average attained age as of December 31, 1937, of the individuals whose pensions were in force as of June 30, 1938, was 73.7 years (table 44).8 Three-quarters of the pensioners were over 71.0, and one-quarter over 78.2 years. Disability pensioners were on the average 5.4 years younger than age pensioners. The middle half of the distribution by attained age ranges between 74.1 and 79.8 years for age pensioners, compared with a range of between 68.5 and 76.3 for disability pensioners. The higher concentration in attained age among the age pensioners than among the disability pensioners reflects the heavy concentration of age retirements at age 70. Only 2.9 percent of the age pensioners were less than 70 years old on December 31, 1937, as compared with 33.6 percent of the disability pensioners.
TABLE 44.—Number of pensions 1 in force June 30, 1938, by attained age as of Dec. 31, 1937, classified by cause of retirement
Attained age
39 and under.
40-44........
45-49________
60-54.......
55-59........
60-64........
65-69........
70-74........
75-79......
80-84........
85-89________
90 and over..
Total—
All pensioners Age pensioners Disability pensioners Other pensioners
Number Percent Number Percent Number Percent Number Percent
5 (*) 5 (•)
23 0.1 23 0.1
160 .4 1 (*) 159 .6
494 1.1 7 C) 486 2.0 1 0.1
1,014 2.3 13 0.1 1,000 4.0 1 .1
1,855 4.2 31 .2 1,820 7.3 4 .5
5, 336 12.2 476 2.6 4,833 19.5 27 3.7
14,441 32.9 5, 727 31.3 8,418 34. 1 296 40.4
13, 569 31.0 7,742 42.2 5,526 22.3 301 41.2
5,246 12.0 3, 232 17.6 1,935 7.8 79 10.8
1,457 3.3 934 5.1 507 2.0 16 2.2
239 .5 159 .9 73 .3 7 1.0
‘ 43,839 100.0 18,322 100.0 24, 785 100.0 732 100.0
•Less than 0.05 percent.
1 75 pensioners whose age was unknown are not included in table. Of these 24 were age cases, 42 disability, and 9 “other.”
Ten percent of all age pensioners died during the year, as compared with 9.3 percent of all disability pensioners and 9.5 percent of other pensioners. The higher mortality rate which might be expected for disability than for age pensioners tends to be offset by the lower attained age of the disability pensioners. In this connection, too, it must be remembered that the distinction between disability and age pensioners under the different private pension plans was often quite indefinite.
8 Year of birth was not known in 75 cases.
. IX .
WAGES AND MONTHS OF SERVICE CREDITED UNDER THE RAILROAD RETIREMENT ACT, 1937
ONE of the functions of the Board under the Railroad Retirement Act of 1937 is to maintain for each employee a record of monthly compensation received from employers under the act, for employment subsequent to December 31, 1936. This record will provide the Board with the data needed for calculating that portion of the employee’s annuity based on service subsequent to December 31, 1936, and for computing the amount of death benefit under the 1937 act. To obtain such a record, the Board has established the procedure of having employers report quarterly the wages paid to each employee for each month during that quarter.
In order to facilitate the handling of employee compensation records, each employee under the act is given an account number. Account numbers were first assigned in November 1936, when a general registration of the gainfully occupied population was carried out under the Social Security Act. At that time a separate block of numbers in the Social Security Board system of account numbers was reserved for employees under the Railroad Retirement Act. Since July 1,1937, assignment of account numbers within the reserved block has been made by employers from series of numbers assigned to them by the Railroad Retirement Board. By July 1, 1938, the Railroad Retirement Board had records for approximately 2,100,000 individual employees. Of these, about 1,900,000 had account numbers within the block reserved for employees under the Railroad Retirement Act, while the remainder had obtained Social Security account numbers outside this block before entering or reentering compensated service for an employer under the Railroad Retirement Act.1
On the basis of reports from employers, the Board has established for about 2,000,000 individual employees accounts showing the amount of wages credited under the Railroad Retirement Act for each month of the calendar year 1937. These accounts show wages from all p.m-
1 Employees who obtained Social Security account numbers outside the block reserved for employees under the Railroad Retirement Act are not assigned an account number within that block upon entering or reentering compensated railroad service. They are, however, requested to furnish the Railroad Retirement Board with the same identifying information, including sex, race, date of birth, and occupation, as employees first applying for a number within the reserved block of account numbers.
108
Annual Report of the Railroad Retirement Board • 109
ployers under the act, but the excess over $300 in any 1 month for any employee, whether received from one or more employers, is excluded. The total amount of credited wages for each month during 1937 was as follows:
January--------------------------------------------------- $173, 469,175. 88
February--------------------------------------------------- 168, 084, 569. 08
March------------------------------------------------------ 184, 687, 911. 49
April-----------------------------■_---------------------- 187, 313, 755. 59
May------------------------------------------------------- 190,198, 889.83
June------------------------------------------------------ 192, 276, 759. 04
July------------------------------------------------------ 189, 729, 228.19
August---------------------------------------------------- 196, 709, 243. 54
September------------------------------------------------- 191,194, 831. 68
October--------------------------------------------------- 193, 339, 631.10
November-------------------------------------------------- 179, 759, 933.12
December-------------------------------------------------- 177, 923, 269. 97
Total for year------------------------------------------- 2, 224, 687,248. 51
Tabulation of Employee Accounts
At the time of the preparation of this annual report, statistical tabulations of credited wages and months of service during 1937 had been prepared covering employees of all classes of employers under the act except railroads in Alaska and Hawaii, railroad associations and railway labor organizations. These have been published under the title Railroad "Wages and Months of Service: 1937 (Vols. I and II, October 1938; Vol. Ill, December 1938). The tables which follow present a condensation and rearrangement for analytical purposes of the materials in these three volumes. The tabulations cover 1,956,820 individual employee accounts.2 The accounts included have been classified by type of major employer, amount of wages and the number of months of service credited for 1937. In addition, the accounts for employees of class I railroads have been classified by occupation (for 76 selected occupations only) and by region. The accounts for employees of express companies have also been classified by occupation.
The classifications by type of employer were based upon the source of the largest portion of the credited earnings of the employees during the year. In the regional tables for class I railroads the employees were allocated to the same region as their major employer according to the Interstate Commerce Commission classification. The assignment of employees to particular occupations was based mainly on the occupation reported by the employer as of the end of the second quarter of 1937. In cases for which this information was not available, the occupation reported by the employer for the earliest date in 1937 was used. If no occupation was reported by the employer,
9 There were 27,834 accounts for employees of class I railroads which were excluded from the tabulations because they included earnings of two or more employees erroneously reported under the same account number.
108818—39------8
110 • Annual Report of the Railroad Retirement Board
the employee was classified according to the occupation given by him either when he applied for an account number or when he entered or reentered the railroad industry with an account number outside the block of reserved numbers mentioned previously. About 65,000 employees of class I railroads for whom no occupational designation was available in any records, and about 75,000 employees of two large carriers, for whom occupations were reported on the basis of an old classification, were not assigned to any occupation.
The accounts of individual employees, on which these tables are based, show wages3 up to the amount credited under the Railroad Retirement Act from one or more employers under the act. Each employee has only one account regardless of the number of employers for whom he performed compensated service during the year.4 As a result, the material contained in these tables differs from the wage and employment series hitherto available for the railroad industry. Previous wage data have been based on monthly or annual totals of compensation paid to employees. It was not possible, therefore, to derive from them any figures on earnings other than monthly averages for occupational divisions. Likewise the employment figures available were applicable only to specific calendar months. They furnished no means of determining the total number of individuals who were actually employed during the year.
Distribution of Employees by Wage Groups
Table 45 shows the distribution, by the amount of wages credited for the year, of all employees whose accounts for 1937 had been tabulated by the time of the preparation of the annual report. Of 1,956,820 accounts included in the table, 1,720,558, or about 88 percent, are for employees whose major employment during the year was with class I railroads. More than half of the balance are accounts of employees of switching and terminal companies and of express companies. The employees are distributed in wage groups of $100 intervals for amounts under $2,400 and of $200 intervals for amounts of $2,400 or more. The cumulative percent columns show for each class of employer the proportion of the total number of employees in the corresponding wage group and all the wage groups below it.
3 Wages include back pay, commissions, and payment for time lost as an employee. However, at the time these tabulations were made the commissions paid by the express company to agents had not yet been reported. In addition to money payments, compensation includes commodities, services, or privileges, whose money equivalent has been agreed upon in advance. Tips, payments solely in settlement of personal injury and the amount of a voluntary payment by the employer of any tax imposed on the compensation of the employee without an equal deduction from wages, are not creditable as compensation. Compensation is creditable to the month in which it was earned rather than to the month in which it was received.
4 Due to misunderstanding or other causes a small number of individuals have two or more account numbers. The errors thus introduced cannot be checked and corrected until information is obtained as to the account numbers they have used.
Annual Report of the Railroad Retirement Board • 111
ABLE 45. Number and cumulative percent of employees classified by amount of wages credited in 1937 under the Railroad Retirement Act and by class of employer
Car loan companies Cumulative percent 27.1 35.2 40.5 43.9 46.9 49.6 52.3 54.8 58.0 60.9 63.9 67.4 70.9 74.4 77.9 81.6 86.1 90.0 92.3 93 9 94.9 96.1 96.7 96.9 97.7 98.2 98.5 98.8 99.0 99.2 100.0 • 1 I 1 1 i « 1
Number 4,382 1,311 851 549 488 438 434 408 520 467 484 567 567 567 566 599 734 620 378 251 170 195 97 37 127 81 37 51 35 32 132 16,175
Express companies Cumulative percent 21.2 25.4 27.9 29.9 31.7 33.3 34.9 36.7 38.4 40.1 41.7 43.5 45.5 48.2 52.1 58.1 65.2 72.6 79.1 84.0 87.7 90.9 94.3 96.0 97.7 98.5 99.0 99.3 99.5 99.6 100.0 I I 1 1 1 1 1 1 t •
Number 13,916 2,794 1,637 1,323 1,143 1,062 1,038 1,183 1,113 1, 102 1,082 1,160 1,314 1,769 2.618 3,880 4,722 4,864 4,221 3, 262 2,414 2, 118 2,198 1,153 1.114 489 352 209 98 71 270 65,689
Pullman Co. Cumulative percent 7.9 12.1 15.9 19.1 22.2 25.7 29.7 35. 1 42.3 50.9 58.9 67.7 73.6 77.5 79.4 81.8 85.4 88.8 90.1 91.4 92.4 93.3 94.1 95.8 98.1 98.7 99.1 99.3 99.5 99.6 100.0 i 1 1 1 I 1 1 • 1 •
Number 2,418 1,267 1,163 981 964 1,062 1,232 1,632 2,217 2,632 2,431 2,719 1,801 1,188 588 706 1,128 1,014 418 380 325 259 257 523 703 180 119 56 61 47 113 30,584 |
Electric railroads Cumulative percent 20.3 25.9 29.9 33.1 36.6 39.5 42.6 46.9 507 53.7 57.1 60.5 64.1 68.5 72.6 76.7 80.8 85.0 88.3 90.3 92.0 93.3 94.4 95.4 97.0 97.9 98.4 98.8 99.0 99.2 100.0 1 • 1 1 « 1 1 I 1 1
Number 3,349 921 661 529 564 480 511 720 620 487 563 561 598 719 683 675 676 684 545 330 279 215 182 171 256 154 78 67 35 27 137 »—<
Switching and terminal companies Cumulative percent 21.4 25.1 27.7 29.9 32.0 34.1 36.3 38.7 41.6 44.9 48.2 51.1 54.2 57.9 61.7 65.2 68.7 72.1 75.8 79.3 82.8 85.9 88.6 90.9 94.5 96.5 97.6 98.5 99.0 99.2 100.0 • 1 I • 1 I 1 •
Number 15,141 2,603 1,902 1,559 1,475 1,458 1,575 1,712 2,017 2.332 2,389 2,003 2,246 2, 552 2,734 2,490 2,464 2,403 2,626 2,474 2,492 2,213 1,865 1, 665 2,545 1,409 767 620 348 193 546 70,818
Class II and III railroads Cumulative percent 30.5 39.1 44.5 49.5 54.2 58.1 61.8 64.8 67.7 70.8 73.4 75.8 78.2 80.4 82.5 84.7 86.7 88.2 89.8 91.3 92.4 93.5 94.4 95.2 96.6 97.5 98.0 98.6 98.9 99.1 100.0 1 1 « •
Number 11,139 3,129 1,982 1,816 1,710 1,451 1,341 1,097 1,048 1,125 978 863 873 822 762 807 705 567 593 528 402 389 341 300 508 336 187 203 126 69 322 36,519
Class I railroads Cumulative percent 21.5 26.8 30.3 33.0 35.5 37.9 40.4 43.2 46.3 49.6 52.6 55.5 58.3 61.3 64.5 67.9 71.4 74.9 78.3 81.4 84.2 86.6 88.6 90.3 93. 1 95.0 96.4 97.6 98.5 99.1 100.0 1 • 1 • • 1
Number 369,060 92, 638 59,420 46,768 43, 217 41,102 43,332 48,023 53,295 56, 513 52, 105 48,928 49,293 51,015 54,998 59,455 60,268 59,115 58,448 53,068 49,161 40, 851 34,154 30,179 47,092 33,136 23,980 20, 728 14,933 10,543 15,740 1,720,558 |
Amount of wages credited in 1937 0-$99.99 $100.00 to $199.99 $200.00 to $299.99 $300.00 to $399.99 $400.00 to $499.99 $600.00 to $599.99 $600.00 to $699.99.. $700.00 to $799.99 $800.00 to $899.99 $900.00 to $999.99 $1,000.00 to $1,099.99 $1,100.00 to $1,199.99 $1,200.00 to $1,299.99 $1,300.00 to $1,399.99 $1,400.00 to $1,499.99 $1,500.00 to $1,599.99 $1,600.00 to $1,699.99... $1,700.00 to $1,799.99 $1,800.00 to $1,899.99 $1,900.00 to $1,999.99.. to ^,uyy.yy $2,100.00 to $2,199.99 $2,200.00 to $2,299.99.. $2,300.00 to $2,399.99. $2,400.00 to $2,599.99 $2,000.00 10 $2,799.99. $2,800.00 to $2,999.99 $3,000.00 to $3,199.99. $3,200.00 to $3,399.99... $3,400.00 to $3,599.99. $3,600.00 Total
112 • Annual Report of the Railroad Retirement Board
The cumulative percent columns in table 45 permit the comparison of the limits of earnings for various groups of employees. Thus, it is seen that from 9 to 10 percent of the employees of class I railroads and of switching and terminal companies have credited wages of $2,400 or more, while only 3 to 5 percent of employees of other classes of employers fall within these wage groups. These distributions, with the exception of the one for the Pullman Co., show a heavy concentration of employees in the lowest wage group. Thus, about 20 percent of the employees of class I railroads, switching and terminal companies, electric railroads and express companies, and about 30 percent of the employees of class II and III railroads and car-loan companies have credited wages of less than $100 for the year. For Pullman Co. employees, only about 8 percent are in this group.
The heavy concentration in the lowest wage group is due primarily to the large proportion of employees having but few months of credited service during the year. For example, the Pullman Co. had only 18.5 percent of employees with 5 months or less of credited service, whereas class I railroads, switching and terminal companies, electric railroads and express companies all had approximately 30 percent, and class II and III railroads and car-loan companies had about 43 percent in this group.5 Moreover, in wage distributions which exclude employees with short length of service no such concentration in the lowest wage group is found. From this standpoint it is instructive to compare the distribution shown on chart VI by wage groups with $200 intervals of all employees of class I railroads, with a similar distribution of employees with 12 months of service.
Another general characteristic of these distributions is that the employees are spread more or less evenly over most of the wage groups other than the lowest. On this point the wage distributions presented in table 45 are strikingly different from many other distributions which are normally characterized by concentration in the middle groups. One measure of this scatter by groups is shown in table 46 which presents for employees of each class of employer the wage limits within which the middle half of the employees are to be found. It is seen that the range of wages for this middle group is rather wide. The narrowest range, $581 to $1,335, is that of Pullman Co. employees.
If the distributions covered only employees engaged in performing similar operations and working full time, it would be expected that the range in earnings would be comparatively narrow. The wide range in average annual earnings evident here is largely attributable to the fact that each distribution includes individuals with
8 See table 51 for the distribution of employees by number of months of credited service for the various employers.
Annual Report of the Railroad Retirement Board • 113
widely varying amounts of employment during the year, and also to the fact that among the many occupations included the rate of pay for full-time employment varies from less than $50 per month to the maximum creditable earnings of $300 per month. That the length of service is definitely related to the wide range of earnings becomes evident when the range of wages for the middle half of employees with 12 months of service is compared with the wage range observed for the middle half of total employees. As can be seen from table 46 the range of wages for the middle half of the employees is greatly contracted in almost every case when employees with less than 12 months of credited services are excluded. Chart VI illustrates quite clearly the effect of differences in the number of credited months of service or in employment opportunities. In the distribution limited to employees with relatively equal employment opportunities there is a marked concentration in the middle wage groups, a concentration which is scarcely evident when all employees employed during the year are considered.
Because the distributions in table 45 include large groups of individuals with such varying amounts of actual service and such widely divergent rates of pay, any average can have relatively little value in describing them. Average figures are significant, however, as a general measure of the extent to which the entire body of employees who worked in the various branches of the railroad industry at some time during the year were able to or did receive income from the industry. Thus the medians given in table 46 show the levels of wages for 1937 below which, as a result of the effect of varying rates of pay and amounts of employment, half the individuals in each distribution are found. The median wage is lowest for employees of class II and III railroads and of car-loan companies, the classes of employers showing the heaviest concentration of employees with but few months of credited service. It is highest for express company employees 6 where the median is over three times that of class II and III railroads.
TABLE 46.—Median wage and the wage range for the middle half of employees, by class of employer
Class of employer All employees Employees with 12 months of service
Median Wage range for middle half Median Wage range for middle half
Class I railroads Class II and III railroads Switching and terminal companies Electric railroads Pullman Co Express companies Car-loan companies $1,013 412 1,162 879 988 1,446 616 $160-$l, 803 61- 1,165 198- 1,878 180- 1,558 581- 1,335 188- 1,837 82- 1, 417 $1,732 1,328 1,779 1,508 1,180 1, 752 1, 586 $1.259-$2,194 839- 1,899 1,326- 2,206 1,129- 1,849 969- 1,659 1,519- 2,015 1,254- 1,830
* See footnote 3.
114 • Annual Report of the Railroad Retirement Board
Chart VI
All Employees and Employees With 12 Months of Service Classified by Amount of Wages
Credited Under The Railroad Retirement Act During I937 (CLASSI RAILROADS EXCLUDING SW ITCH I NG & TE RMINAL COMPANIES)
LESS THAN 12 MONTHS OF SERVICE
I2 MONTHS OF SERVICE:
400
THOUSANDS 500
THOUSANDS
500
THAN t°O° %0 l0T0O° ,2t°0° 'tg° '?g° »Tg° 2?g° 2T2o°° 2tT 2?g° 2?g° “g° "00 MOO
200 400 *00 600 1000 1200 MOO 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600
AMOUNT OF WAGES CREDITED FOR 1937 (DOLLARS)
Annual Report of the Railroad Retirement Board • 115
Relation of Wages to Months of Service for Class I Railroads
The effect of months of service on the amount of total wages credited for the year can be seen more clearly from an examination of table 47, which presents a distribution by months of service and by detailed wage groups of the employees of class I railroads, the largest class of employers under the Railroad Retirement Act. A distribution by service month groups and wage groups for employees of other classes of employers is shown in table 51.
Table 47 shows that while the average wage per employee of class I railroads is $1,108 when all employees are taken together, the average per employee with 12 months of service is $1,779, or about 60 percent greater, and the average per employee with 1 month of service is only $20. The table reveals also how different in terms of months of service is the composition of the employees in the lowest and highest wage groups. It was mentioned above that about 20 percent of the employees of class I railroads have wages of less than $100. From table 47 it can be seen that the employees in this wage group almost uniformly have few credited months of service. In fact, employees with less than 4 months of service account for about 96 percent of the total number with wages less than $100. On the other hand, fewer than 1 percent of the employees with 9 to 12 months of service earned less than $100 in the industry during the year. It is also seen that the employees in the high wage groups consist almost entirely of persons with 12 months of service. Thus, among employees with wages of $2,400 or over, all but 2.5 percent have 12 months of service. For this reason the proportion of employees with 12 months of service who have wages of $2,400 or more is nearly 18 percent while for all employees the comparable percentage is less than 10.
Only a little over half of the total number of employees of class I railroads have 12 months of service, while over 25 percent have 3 or fewer months of service, and over 13 percent have but 1 month of service. The other employees are distributed more or less evenly among the remaining months of service groups. Because so large a proportion of employees have only a few months of service, the total number of employees is considerably in excess of average employment during the year. Such an average, calculated from table 47 as one-twelfth of the total man-months, is 1,204,214, or 43 percent lower than the total number of employees.
According to the wage statistics published by the Interstate Commerce Commission, the number of employees of class I railroads who received pay during the month increased from January to July 1937, and then decreased to the end of the year, the decline being particularly marked from October to December. It appears, however,
116 • Annual Report of the Railroad Retirement Board
TABLE 47.—Number of employees classified by amount of wages credited under the Railroad Retirement Act and by number ofmonths in which they performed some railroad service—class I railroads in continental United States, excluding switching and terminal companies
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Amount of wages credited for 1937 i $10.00 to $19.99 $20.00 to $39.99 040.00 to $59.99 $60.00 to $79.99 $80.00 to $99.99 $100.00 to $149.99 $150.00 to $199.99 $200.00 to $249.99 $250.00 to $299.99 ii‘ii ■■Hi hhi HUI i H i i i!!5f 22222 BSSSg WH1 : : : : : Hill H HI : : i j i : : : : : II1H ■ ■ • : ■ ||ggg 22222 Illi. $750.00 to $799.99 $800.00 to $849.99 $850.00 to $899.99 $900.00 to $949.99 . ' ' $950.00 to $999.99 : i : i gg || 22 : i : i i i i i i i ' : 888 IS 222 III $1,200.00 to $1,299.99 $1,300.00 to $1,399.99 $1,400.00 to $1,499.99 01,500.00 to $1,599.99 $1,600.00 to $1,699.99 $1,700.00 to $1,799.99 $1,800.00 to $1,899.99 1
Annual Report of the Railroad Retirement Board • 117
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118 • Annual Report of the Railroad Retirement Board
TABLE 48.—Percent of employees with specified number of months of service in 1937 for selected occupations in class I railroads
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CO 0.7 1.5 1.4 2.6 1.5 2.3 1.2 ,9 2.6 7 5 5.9 1.1 10.0 7.0 7.9 □ NiONiC —4 CO * r-4 r-4 2.3 1.5 1.6 1.2 1.7 1.9 2.9 2.7 3.8
■) Electrical workers (A)... Machinists Sheet-metal workers bKiiiea trades helpers (maintenance of equipment and stores) _ Regular apprentices (maintenance of equipment and stores) Coach cleaners Classified laborers (shops, enginehouses, and power plants)
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Annual Report of the Railroad Retirement Board • 119
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120 • Annual Report of the Railroad Retirement Board
that in December, the lowest point for the year, employment was only 14 percent below July. Thus the large excess of total employment over average employment cannot be explained solely by net fluctuations in employment during the year.
Table 47 shows that with one exception the percent decline in average annual wages from one service month group to the next is greater than the percent reduction in the number of months of service. For example, the average wage for employees with 11 months of service is over 30 percent less than that of employees with 12 months of service. Similarly the average for the 2-month-service group is over three and a half times as large as for the 1-month-service group. That wages for the year do not change in the same proportion as the number of months of service may be explained to some extent by the fact that a credited month of service does not necessarily imply a full month of service and that individuals with more months of service tend to work more steadily than those with fewer months of service. Another factor which may explain the disproportion between wages and months of service is the occupational composition of the various groups. If the employees in the more highly paid occupations tend to have a greater length of service than the employees in the lower paid occupations, then the wages for the higher service month groups will tend to reflect not only longer service but also higher wage rates.
Information on the latter point can be gathered from table 48 in which a percent distribution by credited months of service is presented for employees in 62 selected occupations on class I railroads. The occupations selected for this analysis are those which include} 3,000 or more employees and for which individual employee accounts have been tabulated by occupations. This table shows that the clerical and general office occupations and the train and engine service occupations stand out as having the highest proportion of employees in the 9- to 12-service-month groups and that the maintenance of way and structures occupations tend to have the lowest proportion of employees in these service month groups. Such distribution by service months is related to the nature of work and employment conditions of these occupational groups. Clerical and general office employees, for example, are employed fairly steadily throughout the year; on the other hand, a great many of the maintenance of way operations are seasonal in character, resulting in a heavy concentration of employees in the groups with less than 12 service months. In this connection, the figures on the number of persons receiving pay during the month, compiled by the Interstate Commerce Commission, also show small fluctuations during the year in clerical and train and engine service occupations and much wider fluctuations for the maintenance of way group.
Annual Report of the Railroad Retirement Board • 121
The distribution by credited months of service within these large occupational groups shows that on the whole the higher paid occupations are more greatly concentrated in the groups with the large number of service months than are the lower paid occupations. Compare, for example, stenographers and secretaries (A) with stenographers and typists (B) in the clerical group; or the signalmen and signal maintainers with their helpers in the maintenance of way group; or the shop crafts with common labor in the maintenance of equipment group. The individual occupations which show a particularly low proportion of employees in the 9- to 12-service-months groups and a correspondingly high proportion in the other service-months groups are the track workers and laborers among the maintenance of way employees (occupations 41, 42, and 43); station, warehouse, and platform truckers and common laborers (92 and 94); and waiters, camp cooks, kitchen helpers, etc. (97). These occupations combined account for 72 percent of the employees with 1 service month, for 65 percent of the employees with 2 service months, and for 55 percent of the employees with 3 service months. Since these occupations are also among the lowest paid, it is not surprising that the average of wages in the 1-, 2-, or 3-service-month groups is much lower than the average of wages in the 9-, 10-, 11-, and 12-service-month groups than could be accounted for entirely by variations in the number of months of service.
As indicated above, the differences in the occupational composition and in the apparent length of employment of various service-month groups cannot entirely account for the differences in the average of wages for the various service-month groups. This can be seen more clearly from table 49 in which the average of wages for the 12-, 11-, 3-, and 1-service-month groups are presented for a number of occupations. The figures shown are the average of wages per service month rather than for the year; this is done in order to make the averages for the different service month groups comparable by eliminating the differences in the apparent length of service. The occupations selected are those which show the highest and the lowest proportions of employees in the 9- to 12-service-month groups and still comprise a number of employees in other service-month groups sufficient to safeguard the reliability of the averages.
Even with the occupational and credited months of service differences apparently eliminated as is done in table 49, wages still tend to vary by service-month groups. The average per month for the 11-service-months group is in every case lower than the comparable average for the 12-service-months group, the difference for three of the occupations being over 26 percent. This difference becomes larger as the 12 service-month groups is compared with 10, 9, etc., service-months groups with the result that the average for the 12 service-
122 • Annual Report of the Railroad Retirement Board
month group is at least three times as large as the comparable average for the group with 1 month of service.
TABLE 49.—Average credited wages per month of service in selected service month groups and selected occupations of class I railroads
Occupation Average wages per service month for employees with specified number of months of service
12 11 3 1
7. Clerks (B and C).... $143 134 74 71 80 160 149 153 90 82 70 201 $115 121 63 62 69 144 131 126 68 59 58 159 $76 103 40 38 45 110 94 83 30 25 35 105 $37 42 18 16 19 54 34 34 11 9 15 40
40. Gang or section foremen.
41. Extra gang men
42. Section men
43. Maintenance of way laborers 61. Machinists
80. Station agents (telegraphers and telephones) 83. Telegraphers, telephoners and towermen 92. Truckers (stations, warehouses and platforms) 94. Common laborers (station warehouses, platform and grain elevators)
97. Waiters, camp cooks, kitchen helpers, etc 125. Road passenger firemen and helpers
It is probable that just as the better paid occupations are more heavily represented in the groups with the large number of credited service months, so the higher grades within each occupation have larger proportions in these service-month groups. This, however, would not be sufficient to explain the large differences shown in table 49. It is likely, as pointed out above, that the difference in the amount of employment cannot be measured merely by the number of service months. Employees in the higher months of service groups probably comprise a much larger proportion of steadily employed persons than those in the lower months of service groups.
Regional Differences in Earnings
In the tabulation of the individual employee accounts, results have been obtained which make possible an analysis by regions of the wages credited to employees of class I railroads. In order to eliminate as much as possible the effect of instability of employment from the regional differences in wages, the analysis is confined to the individuals with 12 months of service, a group which undoubtedly includes the largest proportion of persons with steady employment. Table 50 presents averages of wages credited for the year 1937 to employees with 12 months of service for the same occupations in class I railroads as those included in table 48. The averages are shown for continental United States, and separately for each of the eight regions. In examining the regional averages, it should be borne in mind that the figures for New England are not entirely comparable with those for the the other regions because they include data for employees of the Canadian National and Canadian Pacific
Annual Report of the Railroad Retirement Board • 123
Railways which cover only the service of such employees within the United States. This qualification is obviously most important for the train and engine service occupations. It is to be remembered, also, that the averages for the Central Eastern and Northwestern regions exclude data for employees of two large carriers; the effect of such exclusion, however, is probably not significant, since the employees for whom averages have been obtained constitute about 85 percent of the total in the two regions.
Table 50 reveals considerable regional differences in the annual credited wages for the 12-month-service group. The regional variation is relatively narrow for the higher paid trades in maintenance of equipment, for train dispatchers and telegraphers, and for train and engine service employees in yards. On the other hand, the variations are rather wide for the lower paid workers among the maintenance force and among station and platform employees. For these occupations the differences between the highest and lowest regional annual wage range from 25 to 45 percent of the corresponding averages for the country. For one of them, common laborers in stations, warehouses, platforms, and grain elevators, the annual wage in the Great Lakes region is more than twice as large as in the Southern region.
In most of the occupations of the groups other than train and engine service, the average annual credited wage for the 12-month-service group tends to be highest in the Central Eastern region, and lowest in the Southern region. In a few instances, the Great Lakes or the Pocahontas regions show the highest average annual wages. The tendency for the annual credited wage to be lowest in the Southern region is particularly marked for the lower paid occupations in the maintenance and in the station and platform service groups. The regional differences in the average annual wages of the train and engine service group (excluding yard employees) are quite distinct from those of other occupations. Considerable uniformity is observed in that the highest average annual wage for most of the occupations is recorded in the Central Western region and the lowest in the Central Eastern and New England regions. The other regions appear in the following order from high to low: Southwestern, Pocahontas, Southern, Great Lakes, Northwestern.
The regional variations in the average annual credited wages for the 12-month-service group in the different occupations may be explained in part on the basis of differences in average hourly or daily earnings. Such averages by occupation and by region have been derived by dividing the compensation for “straight time actually worked” by the number of hours or days of “straight time actually worked” obtained from unpublished records of the Interstate Commerce Commission. In general these average hourly or daily earn-
124 • Annual Report of the Railroad Retirement Board
TABLE 50. Average amount of wages credited for 1937 under the Railroad Retirement Act for employees with 12 months of service—selected occupations in class I railroads by region
Occupation
' All re- New Great Central Poca- South- North- Central South-
I. C. C. _gions England Lakes Eastern hontas ern western western western
No. Tltle
5 Chief clerks (minor departments) and assistant chief clerks and supervising cashiers ....-------- -------------------------------- $2,390 $2,294 $2,356 $2,496 $2,593 $2,321 $2,239 $2,460 $2,384
6 Clerks and clerical specialists (A)---------------- 2,162 2,034 2,266 2,173 2,243 2 089 2 030 2 257 2 124
7 Clerks (B and C)- 1,720 1,683 1,667 1,838 1,726 1,686 1 605 1 737 1 727
8 Mechanical device operators (office)--------------- 1,482 1,399 1,521 1,571 1,574 1,491 1 415 1 449 1 394
---’— Stenographers and secretaries (A)- 2,008 2,043 2,063 1,955 2.276 1,962 1,849 2,077 1 947 m Stenographers and typists (B) .----- ..... ---------- 1,591-1,471 1,594 1,662 1,716 1,573’ WT 57623“ 1^533
in Traffic and various other agents, inspectors, and investigators- 2,801 2,745 2,894 2,872 2,875 2,711 2 782 2 799 2 710
Qn Bridge and budding gang foremen (skilled labor)------------- 2,061 1,971 2,237 2.186 1.903 1,925 1 967 2 081 1’928
30 Bridge and budding carpenters-------------------------------- 1,467 1,433 1,511 1,542 1,394 1,328 1 459 1 530 L397
—— Bridge and building painters----------------------------------- 1,414 1,356 1,494 1,483 1,321 1, 285 1,489 1’ 462 7 330
34 Maintenance of way and structures helpers and apprentices- 1,214 1,217’ 1,238 1,300 1,181 1,085 17251 L284 7135
40 Gang or section foremen--------------------------- 1,605 1,479 1,639 1,718 1,676 1,628 1,528 1,621 1*489
’i Extra gang men------------------------------------------- 889 991 953 1,025 863 637 989 928 628
42 Section men..-- ----•----------------------------------- 850 886 956 990 828 635 978 880 742
43 Maintenance of way laborers (other than track and roadway) and garden-_____ ers and farmers ----------------.-------- 964 1.052 1.095 1,174 961 805 1,062 1,189 884 46___Signalmen and signal maintainers--- 2,025 1,913 1.900 2,146 2,022 2,028 7047 57987 Z056
49 Signalmen and signal maintainer helpers ------- 1,429 1,305 1,353 1,554 1,486 1,420 1,340 1,316 1,262
53 Gang foremen and gang leaders (skilled labor)------------------ 2,527 2,464 2,523 2,643 2,633 2,470 2,412 2,484 2 334
54 Blacksmiths---------------------------------------- 1,818 1,720 1,802 1,927 1,670 1,779 1,791 1,848 1,785
__22_ Boilermakers-------------------------------------- 1,926 1,853 1,891 1,928 1,952 1,893 1,915 1,975 1,991 56___Carmen (A and B)--------------- 1,830 " 1,745 1,823 1,876 1,845 1,819 1,768 1,876 L779
57 Carmen (C and D) -------------------------------------- 1.803 1,783 1,795 1,831 1,862 1.771 1,744 1,800 1 857
Electrical workers (A)---------------------------- 2,019 1,967 1,975 1,994 2,139 2,076 2,019 2,054 2,101
61 Machinists -------------------------------------- 1,923 1.875 1,850 1,942 1,988 1,904 1,880 1,977 1,978
_ 63 Sheet-metalworkers--------------------------------- 1,912 L.811 L842 1,955 1,909 1,892 1,888 1.955 p 982
64 Skilled trades helpers (maintenance of equipment and stores)_ 1,391 1,382 1,356 1,458 1,441 1,292 1 361 1 422 1 375
66 Regular apprentices (maintenance of equipment and stores)_ 1,005 891 1,134 1,018 1,029 954 943 1 011 ’973
Coach cleaners.... -... ----- ---------- --------- 1,107 1,123 1,174 1,131 1,169 885 1,191 1,149 991
70 Classified laborers (shops, enginehouses, and power plants)---- 1,131 1,166 1,201 1,247 1,159 921 1,182 1,177 996
71 General laborers (shops, enginehouses, and power plants)________ 993 1,033 1,057 1,128 1,050 778 1,054 1,026 912
72 General laborers (stores and ice, reclamation, and timber-treating plants).. 1,109 1,119 1,116' 1,208 984 868 1,234 1,183 962
74 Stationary firemen, oilers, coal passers, and water tenders..__ 1,506 1,470 1,506 1,656 1,442 1,237 1,539 1,610 1 482
76 Train dispatchers------------------------------------------ 3,037 2,897 2,947 3,148 3,090 3,016 2,962 3,097 3 049
79 Station agents (smaller stations, nontelegraphers)- 1,831 1,883 1,973 1,965 1,696 1,621 1,770 2,024 1 592
80 Station agents (telegraphers and telephoners)--- 1,784 1,805 1,749 1, 777 1,815 1,794 1,702 1,861 1 802
Annual Report of the Railroad Retirement Board • 125
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126 • Annual Report of the Railroad Retirement Board
ings follow, in order of magnitude, the regional order of the annual wages shown in table 50. It is to be noted, however, that in certain occupations, average wage rates in the Great Lakes region are higher than in the Central Eastern region, and the rates in the Southwestern region are lower than in the Southern region. In occupation 94 (station, warehouse, and platform common laborers), the average hourly earnings in the Central Eastern and Great Lakes regions are 55 and 54 cents per hour respectively, while in the Southern region, the comparable figure is 26 cents per hour. In occupations 41 and 42 (extra gang and section men), the average in the Central Eastern and the Great Lakes region is 47 cents, and in the Southern region 31 cents per hour. For the train and engine service group (excluding yard employees), the relations between the regional averages of hourly earnings are somewhat different from those of the annual wages. The range of regional variation is, with a few exceptions, markedly narrower for hourly earnings than for annual wages. Moreover, the highest hourly earnings are found more frequently in the Pocahontas than in the Central Western region. On the other hand the low position of the New England region in reference to annual wages is confirmed by the data on average hourly earnings. For more than half of the occupations in this group the lowest regional hourly earnings are those for New England. This suggests that the inclusion in this region of the incomplete wages figures for the employees of the Canadian National and the Canadian Pacific Railways does not fully explain the fact that the New England averages of annual wages tend to be the lowest for the country.
The variations thus evident in average hourly and daily earnings account for only a part of the regional differences in the average credited wages for the 12-month-service group. It has already been pointed out that even for the 12-month-service group there may be considerable differences in the amount of time worked. Practices of shortening the work week and otherwise spreading the work and the prevalence of part-time work may differ in different occupations and different regions, and may affect the regional position in regard to annual wages per worker. The differences in the regional average annual credited wages may also be influenced by the amount of overtime worked and, for certain classes of train and engine service employees, by the factors which enter into “mileage” rates of pay.
Unemployment Insurance Benefit Rates
The material made available in the tabulation of individual employee accounts for 1937 may be used also to anticipate in some measure the effect of the Railroad Unemployment Insurance Act, which
Annual Report of the Railroad Retirement Board • 127
provides for the payment after July 1, 1939, of unemployment insurance benefits to railroad workers.7 The act stipulates that the daily rate of benefits is to be calculated from the total credited wages in a preceding calendar year as follows:
Daily
Total credited wage: benefit rate
$150. 00 to $199. 99________________________________________________$1. 75
200.00 “ 474.99_________________________________________________ 2.00
475.00 “ 749.99_________________________________________________ 2.25
750.00 “ 1,024.99_________________________________________________ 2.50
1,025.00 “ 1,299.99_________________________________________________ 2.75
1,300. 00 and over____________________________________________________ 3. 00
Employees whose total credited wages during such year were less than $150 are not qualified for benefits. In table 51 the number of employees of each class of employer is shown by wage groups corresponding to the different daily benefit rates of the unemployment insurance law. The employees are also classified by service-month groups.
Table 51 indicates that the employees of all classes of employers, except class II and III railroads and car-loan companies, are found in largest number in the wage group for which the highest daily benefit has been provided. It is questionable, however, whether this rate will hold for employees qualifying for unemployment insurance benefits because among them the proportion of employees with 12 months of service will probably be considerably lower than in the total employee population. The distribution of daily benefit rates of employees with less than 12 service months, as calculated from table 51, is as follows:
Daily benefit rate Number Percent
$1.75 . 43 872 9 8
$2.00 . 149, 596 33 4
$2.25 . 92 207 20 6
$2.50 . 60 779 13 6
$2.75 . 41 644 9 3
$3.00 59 613 13 3
Total 447, 711 100.0
More than half of the employees with less than 12 months of service will have a daily benefit rate of $2.00 or $2.25. For employees with a small number of service months the proportion with daily benefit rates of $2.00 and $2.25 is even larger than among all employees with less than 12 service months. Since the duration of unemployment benefits for employees with a small number of service months is likely to be longer than for persons who have more employment in the course of the year, the preponderance at any one time of beneficiaries with rates of $2 and $2.25 per day of compen-
7 For a discussion of this act see chapter II and appendix.
128 • Annual Report of the Railroad Retirement Board
TABLE 51.—Number of employees classified by type of employer, number of months of service and total amount of wages credited for 1937
Type of employer Number of months of service Total number of employees Number of employees with specified amount of wages credited for 1937
Less than $150 $150-$199.99 $200-$474.99 $475-$749.99 $750-$1,024.99 $1,025-$1,299.99 $1,300 and over
Class I railroads Total 1,720,558 422,106 39, 592 138,750 118,466 147, 506 137,274 716,864
12 months of service 9-11 months of service.. 6-8 months of service... 1-5 months of service—
904,636 154,453 126, 535 534,934 1, 364 1, 269 5, 326 414,147 948 774 3,956 33,914 7,274 13,029 46,406 72,041 37,396 33, 698 35, 649 11,723 94,095 31,265 19,709 2,437 100, 376 27,032 9,351 515 663,183 47,386 6,138 157
Class II and III railroads Total 36,519 12,925 1,343 5,100 3,772 2,947 2,465 7,967
12 months of service 9-11 months of service.. 6-8 months of service... 1-5 months of service...
14, 289 3,176 3,431 15,623 97 55 299 12,474 41 43 314 945 956 790 1,460 1,894 1,925 762 826 259 1,975 607 328 37 1,956 381 120 8 7,339 538 84 6
Switching and terminal companies Total 70,818 16, 552 1,192 4, 588 4,174 5,876 6,030 32,406
12 months of service 9-11 months of service.. 6-8 months of service... 1-5 months of service. —
38,792 6,618 4,886 20,522 122 64 272 16,094 25 38 148 981 232 417 1,254 2,685 1,059 966 1,496 653 3,455 1,273 1,053 95 4,277 1,268 476 9 29,622 2,592 187 5
Electric railroads Total 16,477 3,887 383 1,614 1,460 1,629 1,591 5,913
12 months of service 9-11 months of service.. 6-8 months of service... 1-5 months of service...
8,555 1,469 1,294 5,159 25 17 52 3,793 10 7 23 343 91 144 515 864 483 406 432 139 1,074 346 192 17 1,277 261 53 5,595 288 27 3
Pullman Co. Total 30,584 3,024 661 2,888 3,274 5,993 6,679 8,065
12 months of service 9-11 months of service.. 6-8 months of service. — 1-5 months of service...
19,379 3,126 2,432 5, 647 1 7 21 632 80 170 849 1.789 993 1,070 994 217 4,619 935 435 4 6,048 528 102 1 7,638 413 14
3 17 3,004
Express companies Total 65,689 15,525 1,185 3,830 2,998 3.009 3,320 35,822
12 months of service.... 9-11 months of service.. 6-8 months of service... 1-5 months of service...
39,998 4,356 2,964 18,371 41 73 238 15,173 16 39 172 958 262 635 1,093 1. 840 1,127 831 693 347 1,775 677 510 47 2,320 814 181 5 34,457 1,287 77 1
Car-loan companies Total 16,175 5,131 562 1,778 1,193 1.297 1.505 4,709
12 months of service 9-11 months of service.. 6-8 months of service... 1-5 months of service...
5,970 1,974 1,321 6,910 12 12 58 5,049 5 11 30 516 56 104 445 1,173 148 371 512 162 485 566 236 10 966 508 31 4,298 402 9
sable unemployment is likely to be even greater than is indicated in the table above.
Table 51 suggests also that about half of the employees with less than 12 months of service for all classes of employers, except the Pullman Co., will not qualify for benefits because of insufficient earnings in a preceding calendar year. Virtually all of the employees who lack qualifying earnings, however, are found in the group with less than 6 months of service. Table 47, which presents detailed
Annual Report of the Railroad Retirement Board • 129
TABLE 52.—Number of employees in selected groups of occupations of class I railroads and express companies, classified by the number of months of service and the amount of wages credited for 1937
Occupational group and number of— Total number of employees Number of employees with specified amount of wages credited for 1937
Less than $150 $150-$199.99 $200-$474.99 $475-$749.99 $750-$1,024.99 $1,025-$1,299.99 $1,300 and over
Class I railroads
Clerks (B and C):
12 months of service_____________
0-11 months of service___________
6-8 months of service____________
1-5 months of service____________
Total---------------------------
Stenographers and typists (B) and operators of mechanical office devices:
12 months of service_____________
9-11 months of service___________
6-8 months of service____________
1-5 months of service____________
Total---------------------------
Maintenance of way: Foremen and skilled trades:
12 months of service_____________
9-11 months of service___________
6-8 months of service____________
1-5 months of service------------
Total___________________________
Extra gang men:
12 months of service_____________
9-11 months of service___________
6-8 months of service____________
1-5 months of service____________
Total—--------------------------
Section men:
12 months of service_____________
9-11 months of service___________
6-8 months of service____________
1-5 months of service____________
Total___________________________
Signalmen and linemen (including assistants and helpers):
12 months of service_____________
9-11 months of service___________
6-8 months of service____________
1-5 months of service____________
Total___________________________
Maintenance of equipment: Skilled trades:
12 months of service_____________
9-11 months of service___________
6-8 months of service____________
1-5 months of service____________
Total___________________________
Maintenance of equipment and stores: Skilled trades, helpers, and apprentices:
12 months of service.____________
9-11 months of service___________
6-8 months of service............
1-5 months of service____________
Total..........................
75,069 5,591 3,680 6,223 119 34 122 3, 229 44 23 64 513 158 202 637 1,891
90, 563 3, 504 644 2,888
16, 529 5 4 43
1, 586 2 32
L 333 8 13 199
2,972 1,563 249 920
22,420 1,578 266 1,194
36,184 3 1 15
5,131 3 32
3, 459 12 5 271
4,728 1,776 389 1,847
49, 502 1,791 398 2,165
8,748 6 1 515
7,397 12 42 1,841
15, 281 380 779 10, 623
146,069 125, 297 8, 553 12,108
177,495 125,695 9,375 25,087
74,454 73 59 2,631
22, 044 132 160 5,077
22,975 1,172 1,437 15, 095
153,675 132,981 8,586 11,951
273,148 134,358 10, 242 34, 754
10,067 1 3
1', 651 2 1 7
1,280 3 1 107
2,345 1,033 195 888
15,343 1,038 198 1,005
121,924 4 3 52
19, 389 11 7 113
10, 879 38 39 483
11,889 4,144 973 4,228
164,081 4,197 1,022 4,876
59,061 1 46
13,123 6 11 216
7,120 17 20 1,590
8,030 3, 028 982 3, 500
87, 334 3, 051 1,014 5,352
366 532 1,189 534 1,456 1,025 1,175 53 4,939 1,868 383 2 67,987 1,907 110 1
2, 621 3,709 7,192 70, 005
167 419 1,864 14,027
153 410 618 371
574 455 77 7
227 11 1 1
1.121 1,295 2, 560 14,406
114 707 2,960 32,384
190 953 2,136 1,817
1, 287 1,510 315 59
674 41 1 —
2,265 3, 211 5,412 34, 260
1,930 4,201 1, 621 474
3, 980 1,377 106 39
3,375 111 11 2
103 8 —
9,388 5, 697 1,738 515
20,125 38,432 11,755 1,379
12, 063 4,253 288 71
5,096 148 21 6
146 8 — 3
37,430 42,841 12,064 1,459
5 67 584 9,407
73 370 432 766
479 396 210 84
200 27 2
757 860 1,228 10, 257
101 531 2,498 118,735
338 1,665 5, 747 11, 508
2, 531 4,993 2, 383 412
2,246 277 19 2
5,216 7,466 10, 647 130,657
738 4,577 17, 922 35,777
1,858 5,053 4, 601 1,378
3,894 1,465 125 9
506 11 2 1
6,996 11,106 22, 650 37,165
130 • Annual Report of the Railroad Retirement Board
TABLE 52.—Number of employees in selected groups of occupations of class I railroads and express companies, classified by the number of months of service and the amount of wages credited for 1937—Continued
Number of employees with specified amount of wages credited for 1937
Occupational group and number of— of employees Less than $150 $150-$199.99 $200-$474.99 $475-$749.99 $750-$1,024.99 $1,025-$1,299.99 $1,300 and over
Maintenance of equipment and stores: Unskilled labor: 12 months of service.. 48,006 12, 761 9,498 19, 791 20 46 201 12,165 17 39 195 2,034 341 996 4,127 5, 396 3,592 4,858 4,430 181 14, 783 5, 361 498 15 21,757 1, 202 40 7,496 259 7
9-11 months of service
6-8 months of service ...
1-5 months of service
Total
90,056 12,432 2,285 10, 860 13,061 20, 657 22,999 7,762
Telegraphers and nonsupervisory station agents: 12 months of service
37,478 3,878 2,602 3,686 94 43 117 1,919 61 20 56 287 233 194 399 980 279 296 585 441 694 474 887 56 1,413 840 442 3 34,704 2,011 116
9-11 months of service
6-8 months of service
1-5 months of service
Total
47, 644 2,173 424 1,806 1,601 2,111 2,698 36,831
Station and warehouse truckers, loaders, laborers, and attendants: 12 months of service..
30, 696 6,390 5,470 31, 520 319 327 1,187 28,171 324 186 375 1,125 1,157 1,330 2,209 2,092 3,131 1,826 1,310 123 5, 481 1,654 333 6 9,714 849 47 2 10,570 218 9 1
9-11 months of service
6-8 months of service
1-5 months of service
Total...
74,076 30,004 2,010 6,788 6, 390 7,474 10, 612 10,798
Waiters, camp cooks, kitchen helpers, etc.: 12 months of service
5, 798 1,366 1,623 6,220 8 13 127 4,924 4 18 102 495 227 463 1,055 791 1,402 655 310 10 3,267 169 25 583 39 3 307 9 1
9-11 months of service
6-8 months of service
1-5 months of service
Total ...
15.007 5,072 619 2,536 2,377 3, 461 625 317
Crossing and bridge^flagmen and gatemen: 12 months of service
11, 415 2,030 2,124 3, 762 6 30 112 2. 504 5 12 58 322 104 206 1,151 917 1.059 1,110 776 19 7,688 598 26 2,241 63 1 312 11
9-11 months of service
6-8 months of service
1-5 months of service....
Total
19. 331 2,652 397 2, 378 2, 964 8, 312 2. 305 323
Road'conductors: 12 months of service
22, 723 2,535 1,439 1,146 17 18 18 316 1 2 2 47 22 16 37 245 12 16 51 259 53 46 172 189 47 81 327 81 22. 571 2,356 832 9
9-11 months of service
6-8 months of service
1-5 months of service
Total
27,843 369 52 320 338 460 536 25, 768
Brakemen, flagmen, and yard conductors: 12 months of service
89.133 14, 755 8,076 11, 063 63 72 216 5, 320 11 44 144 888 139 433 1, 166 3,191 318 970 1,976 1,289 802 1,906 2,151 351 2,239 2, 787 1,632 20 85.561 8,543 791 4
9-11 months of service
6-8 months of service
1-5 months of service
Total..
123,027 5, 671 1,087 4,929 4, 553 5,210 6.678 94,899
Annual Report of the Railroad Retirement Board • 131
TABLE 52.—Number of employees in selected groups of occupations of class I railroads and express companies, classified by the number of months of service and the amount of wages credited for 1937—Continued
Occupational group and number of— Total number of employees Number of employees with specified amount of wages credited for 1937
Less than $150 $150-$199.99 $200-$474.99 $475-$749.99 $750-$1,024.99 $1,025-$1,299.99 $1,300 and over
Road engineers and motormen: 12 months of service 27,967 3,140 1,691 1,315 5 23 38 353 1 6 5 49 17 30 38 284 22 34 66 257 18 48 139 222 31 85 308 120 27,873 2,914 1,907 30
9-11 months of service.
6-8 months of service..
1-5 months of service
Total
34,113 419 61 369 379 427 544 31,914
Firemen and yard engineers: 12 months of service.
50, 462 8,699 4,957 7,340 12 63 260 3,636 6 32 100 542 53 246 694 1,979 128 527 1,142 913 367 993 1,252 234 960 1,480 863 34 48,936 5, 358 646 2
9-11 months of service
6-8 months of service
1-5 months of service
Total
71,458 3.971 680 2,972 2, 710 2, 846 3, 337 54,942
Express companies Warehouse and platform laborers: 12 months of service
8,050 1, 591 1,145 5,536 9 27 120 4,785 4 18 106 300 143 374 579 411 799 513 223 40 1,142 270 103 1,114 227 14 4,839 162
9-11 months of service
6-8 months of service
1-5 months of service
Total
16,322 4.941 428 1,507 1, 575 1, 515 1,355 5,001
Vehicle employees: 12 months of service
11, 548 1,144 690 2,101 5 10 41 1,627 3 11 31 131 50 144 233 269 150 172 186 64 307 203 157 10 564 263 39 10,469 341 3
9-11 months of service
6-8 months of service
1-5 months of service
Total
15, 483 1,683 176 696 572 677 866 10,813
Note—In this table are shown figures for single occupations as well as for occupational groups. A more detailed description of the occupational groups follows. “Stenographers and typists (B), and operators of mechanical office devices” includes: Mechanical device operators (office) (occupation No. 8), and Stenographers and typists (B) (occupation No. 10). “Maintenance of way: foremen and skilled trades” includes: Bridge and building gang foremen (skilled labor) (No. 29); Bridge and building carpenters (No. 30); Bridge and building ironworkers (No. 31); Bridge and building painters (No. 32); Masons, bricklayers-plasterers, and plumbers (No. 33); and Gang or section foremen (No. 40). “Signalmen and linemen (including assistants and helpers)” includes: Signalmen and signal maintainers (No. 46); Linemen and groundmen (No. 47); Assistant signalmen and assistant signal maintainers (No. 48); and Signalman and signal maintainer helpers (No. 49). “Maintenance of equipment: skilled trades” includes: Gang foremen and gang leaders (skilled labor) (No. 53); Blacksmiths (No. 54); Boilermakers (No. 55); Carmen (A and B) (No. 56): Carmen (C and D) (No. 57); Electrical workers (A) (No. 58); Electrical workers (B) (No. 59); Electrical workers (C) (No. 60); Machinists (No. 61); Molders (No. 62); and Sheet-metal workers (No. 63). “Maintenance of equipment and stores: skilled trades helpers and apprentices” includes: Skilled trades helpers (Maintenance of equipment and stores) (No. 64); and Regular apprentices (maintenance of equipment and stores) (No. 66). “Maintenance of equipment and stores: unskilled labor” includes: Coach cleaners (No. 67); Classified laborers (shops, enginehouses, and power plants) (No. 70); General laborers (shops, enginehouses, and power plants) (No. 71); and General laborers (stores and ice, reclamation, and timber treating plants). “Telegraphers and non-supervisory station agents” includes: “Station agmts (smaller stations— non telegraphers) (No. 79); Station agents (telegraphers and telephoners) (No. 80); Clerk-telegraphers and clerk-telephoners (No. 82); and Telegraphers, telephoners, and towermen (No. 83). “Station and warehouse truckers, loaders, laborers, and attendants” includes: Baggage, parcel room, and station attendants (No. 87); Callers, loaders, scalers, sealers, and perishable-freight inspectors (No. 91); Truckers (stations, warehouses, and platforms) (No. 92); and Common laborers (stations, warehouses, platforms, and grain elevators) (94). “Road conductors” includes: Road passenger conductors (No. Ill); Road freight conductors (through freight) (No. 113); and Road freight conductors (local and way freight) (No. 114). “Brakemen, flagmen, and yard conductors” includes: Assistant road passenger conductors and ticket collectors (No. 112); Road passenger baggagemen (No. 115); Road passenger brakemen and flagmen (No. 116); Road freight brakemen and flagmen (through freight) (No. 117); Road freight brakemen and flagmen (local and way freight) (No. 118); Yard conductors and yard foremen (No. 119); and Yard brakemen and yard helpers (No. 120). “Road engineers and motormen” includes: Road passenger engineers and motormen (No. 121); Road freight engineers and motormen (through freight) (No. 122); and Road freight engineers and motormen (local and way freight) (No. 123). “Firemen and yard engineers” includes: Yard engineers and motormen (No 124); Road passenger firemen and helpers (No. 125); Road freight firemen and helpers (through freight) (No. 126); Road freight firemen and helpers (local and way freight) (No. 127); and Yard firemen and helpers (No. 128).
132 • Ann ual Report of the Railroad Retirement Board
figures for employees of the largest class of employers, shows that nearly 93 percent of the employees of class I railroads who will not qualify for benefits are persons who have had only 1, 2, or 3 months of compensated service in the course of the year.
In table 52 information similar to that of table 51 is shown for selected occupations and occupational groups of class I railroads and express companies. An examination of table 52 indicates that among the employees with less than 12 months of service a heavy concentration for the better-paid occupations is found in the class with daily benefit rates of $3.00, whereas in the other occupations the largest proportion of employees have a daily benefit rate of $2.00. Such differences between occupations stand out more clearly in table 53 below, which presents the percentage distribution by daily benefit rates of employees with less than 12 months of service who have sufficient earnings to qualify for benefits. This table is calculated from the figures shown in table 52.
TABLE 53.—Percent of employees in selected occupations and occupational groups classified by daily benefit rates
Occupation or occupational group Percent with specified daily benefit rate
$1.75 $2.00 $2.25 $2.50 $2.75 $3.00
Class I railroads
Clerks (B and C) 5.0 22.5 18.6 18.6 18.6 16.7
Stenographers and typists 6.1 26.6 22.1 20.3 16.1 8.8
Foremen and skilled trades, maintenance of way 3.4 18.6 18.7 21.7 21.3 16.3
Extra gang men 21 8 57. 1 49.9 17.3 26.9 3.5 6.8 , 3
Section men _ . . 15.8 .5 .1
Signalmen and linemen . 4.6 23.7 17.7 18.7 15.2 20.1
Skilled trades, maintenance of equipment and stores.. Helpers and apprentices, maintenance of equipment 2.7 12.7 13.5 18.3 21.4 31.4
and stores . 4.0 21.0 24.8 25.9 18.8 5.5
Unskilled labor, maintenance of equipment and stores. 7.7 35.5 31.9 19.8 4 2 .9
Telegraphers and station agents 4.5 19.5 16.3 17.5 15.9 26.3
Truckers, loaders, laborers, etc 12.3 41.1 23.8 14.5 6.6 1.7
Waiters, camp cooks, etc . 14.9 55.7 23.5 4.7 1.0 .2
Crossing and bridge flagmen .... 7.4 43.2 36.2 11.8 1.2 .2
Road conductors 1.1 6.3 6.8 8.5 10.3 67.0
Brakemen, flagmen, etc 3.8 16.9 15.0 15.6 15.7 33.0
Road engineers 1.0 6.2 6.2 7.1 9.0 70.5
Firemen and yard engineers... Express companies 4.0 17.1 15.1 14.6 14.0 35.2
Warehouse and platform laborers 12.7 40.8 23.2 11.2 7.2 4.9
Vehicle employees 7.7 28.6 18.7 16.4 13.4 15.2
The figures in table 52 reflect also a wide variation between occupations in the proportion of employees whose wages for the year are below $150 and who would not therefore qualify for benefits under the Railroad Unemployment Insurance Act. Among employees with less than 12 months of service in the better paid occupations, the proportion who lack qualifying earnings is of course much lower than in the other occupations. Thus among engineers and conductors this proportion is about 7 percent. It is between 10 and 20 percent for
Annual Report of the Railroad Retirement Board • 133
the other train and engine service occupations, station agents and. telegraphers, and skilled trades in the maintenance of way and the maintenance of equipment. In the lower paid occupations, on the other hand, this proportion is very high. For extra gang men, section men and the less skilled occupations on stations and platforms, from 68 to 74 percent of employees with less than 12 months of service have wages below $150. From 86 to 97 percent of those without qualifying earnings in these occupations are persons who have had only 1 to 3 months of compensated service.
The conclusions drawn from tables 51 and 52 are subject to an important limitation. These tables show wages credited for the calendar year 1937, whereas most of the workers who will qualify for benefits in the first year of operation of the Railroad Unemployment Insurance Act will have their benefits based on wages credited for the calendar year 1938. At present sufficient information is not at hand to indicate in what manner the inferences drawn from wage data for 1937 will be modified by the employment and wage conditions which prevailed during 1938.
X
EMPLOYERS COVERED BY THE RAILROAD RETIREMENT ACT
THE Retirement Act establishes a system of retirement insurance predicated upon service in the national railroad transportation system. With the exception of the so-called “employee representative” service, which will be briefly discussed later, the service covered is described in terms of the employers to whom the service is rendered. In other words, the process of identifying covered service is predominantly a process of identifying the several employers constituting the national system of railroad transportation.
The concept of the national system of railroad transportation, which was largely crystalized in the period following the war-time assumption of Federal control, is the joint product of a century of physical and mechanical development and a half century of Federal regulation. Despite the deep historical roots of the concept, railroad retirement insurance legislation for the first time brought about the necessity for ascertaining and identifying its content concretely and with the precision that the term insurance necessarily implies. Regulation in the interest of shippers, the policing of safety legislation, and, even more, the assumption of Federal control, all served to give rise to the concept and to give it content. However, the content derived from these sources is largely embodied in the somewhat narrower conception of “a common carrier by railroad engaged in interstate commerce.” Nevertheless, for certain regulatory purposes, such as, for example, the acquisition of information and the control of securities issues provided for in sections 20 and 20a of the Interstate Commerce Act, it has long been recognized that the term “common carrier by railroad engaged in interstate commerce” is not wholly adequate to cover the field.
The inadequacy of the term was more strikingly revealed in the regulation of employer-employee relationships which culminated in the Railway Labor Act. It became apparent that if employer obligations were attributed merely to those entities which are responsible for the discharge of the obligations to the public for carriage, that is, common carriers, it might well prove convenient for employers to avoid the obligations in substantial parts of the transportation industry by providing for the performance of closely re-
134
Annual Report of the Railroad Retirement Board • 135 lated services through entities legally separate yet effectively controlled. Accordingly, the introduction into railway labor legislation of language descriptive of controlled companies performing services related to transportation was a natural step in the historical process by which the conception of the national system of railroad transportation was given definitive expression.
Terms descriptive both of common carriers by railroad engaged in interstate commerce and of controlled companies performing services related to transportation were utilized in defining the employers covered by the Railroad Retirement Act. As might be expected, the former is by far the most important. Table 54, based on figures for the first quarter of 1938, shows that of the total number of em-
TABLE 54.—Number of employers and estimated number of employees,* 1 as of first quarter, 1938, determined to be covered by Railroad Retirement Act, classified by type of function and provision under which they came under act
* Less than 0.05 percent.
1 Based on approximate number of individual reports submitted by the various employers for the first quarter 1938. No allowance is made for persons reported by more than 1 employer, or more than once by the same employer.
1 Reports covering 1 express company employer, doing the principal part of its business outside of the United States and having only a few employees in the United States, had not been received at this time.
3 This includes 11 employers in fact engaged in switching and terminal operations but not separately identified as switching and terminal companies by the Interstate Commerce Commission in its 1936 Railway statistics, and hence not included in the analysis in table 55 of this report. Of these 11 employers, 7 were found by the Board to be employers under the carrier subsidiary.coverage provision and 4 under the carrier association coverage provision.
4 “Railway labor organizations, national in scope.”
• This does not include a number of employees, principally part-time, of local lodges for whom reports had not yet been received.
• The number of employers is based on the number of separate reports filed with the Bureau of Accounts of the Railroad Retirement Board. The grand total and the totals for each category given here do not in-
clude companies which have been permitted to file consolidated reports with other employers and companies which had ceased to operate by January 1, 1937. They, therefore, differ somewhat from the figures given in other tables in this report.
714 employers had been held covered by this provision after the reports covered by this analysis were due.
• 1 employer had been held covered by this type of coverage after the reports covered by this analysis were due.
Number of employers covered Estimated number of employees covered under various provisions under various provisions
All pro- E? .2 o All provi- E? .2 8
m , visions -S -g sions u
Type of function S ’5 2 o 2 ’5 ° 9
_________ m g -9.2 ------------- ‘S g ^.2
fO C/1 -S rO C/1
K. S * *, K ^.S
,Sa8fe§£ Other Total baity« Other Unknown______________________ 179 136 3 133 43 9 34 3 ....— 3 33 9 24 7 _____ 7
Prior to 1921________________ 274 156 1 155 118 106 12 1 ........ 1 113 104 9 4 2 2
1921_________________________ 74 48 _____ 48 26 24 2 _________________ 25 23 2 1 1 _____
1922_________________________ 120 83 _____ 83 37 28 9 _________________ 37 28 9 _________________
1923 ________________________ 94 50 1 49 44 37 7 _________________ 42 36 6 2 1 1
1924_________________________ 93 46 1 45 47 40 7 _________________ 44 38 6 3 2 1
1925_________________________ 129 81 _____ 81 48 39 9 1 _____ 1 46 38 8 1 1 _____
1926_________________________ 175 73 _____ 73 102 71 31 2 _____ 2 96 71 25 4 _____ 4
1927__________’______________ 224 109 _____ 109 115 80 35 3 1 2 109 78 31 3 1 2
1928_________________________ 265 109 2 107 156 113 43 3 ......... 3 147 113 34 6 ....... 6
1929_________________________ 431 150 1 149 281 194 87 5 _____ 5 262 189 73 14 5 9
1930__________________________ 798 280 3 277 518 301 217 12 2 10 480 289 191 26 10 16
1931________________________ 1,216 423 12 411 793 453 340 31 2 29 721 444 277 41 7 34
1932________________________ 1,299 376 6 370 923 575 348 21 2 19 845 558 287 57 15 42
1933________________________ 1,189 310 1 309 879 596 283 18 1 17 827 583 244 34 12 22
1934________________________ 2,064 299 2 297 1,765 1,225 540 41 4 37 1,649 1,187 462 75 34 41
1935________________________ 2,547 282 2 280 2,265 1,260 1,005 98 6 92 2,025 1,214 811 142 40 102
1936__________________________ 340 5 1 4 335 100 235 88 14 74 168 60 108 79 26 53
1937__________________________ 968 43 31 12 925 242 683 66 9 57 795 220 575 64 13 51
1938 ________________________ 417 18 13 5 399 117 282 ______________ 391 114 277 8 3 5
Still working________________ 82 3 2 1 79 28 51 _________________ 74 28 46 5 _____ 5
Total____________________ 12,978 3,080 82 2,998 9,898 5,638 4,260 393 41 352 8,929 5,424 3,505 576 173 403
i This column represents applicants ruled to be in employment relation because of leave of absence on account of sickness or disabUity or because of absence on account of sickness or disability not covered by leave.
APPENDIX B-3
Interstate Commerce Commission occupational reporting divisions included in each Federal Coordinator of transportation occupational group, as used in chapter VIII
F. C. T. group No. Title I. C. C. Division No.
1. Executives and supervisory officials________________________________ 1,2
2. Subordinate officers and supervisory staff_____________________4, 5, 11, 13,
17, 19, 20, 21, 22, 27, 28, 44, 50, 51, 52, 84, 85, 88, 89, 99, 105, 106
3. Gang foremen, all departments_______________ 29, 38, 39, 40, 45, 53, 68, 69, 90
4. Professional, sub-professional, and technical_____________________ 3
5. Clerical and office----------------------------------------6, 7, 8, 9, 10, 14
6. Office attendants___________________________________________________ 15, 16
7. Station and ticket agents, telegraphers, and towermen______ 12, 78-83, 86
8. Train dispatchers---------------------------------------------- 75, 76, 77
9. Skilled workers (maintenance of equipment and stores)__________ 54-63, 73
10. Skilled workers (maintenance of way and structures)___ 23, 30-33, 35, 46, 47
11. Semi-skilled workers, helpers, and learners (maintenance of equipment and stores)--------------------------------------------------------- 64-66, 74
12. Semi-skilled workers, helpers, and learners (maintenance of way and structures)______________________________________________ 24, 34, 36, 37, 48, 49, 102
13. Laborers (maintenance of equipment and stores)---------------- 67, 70, 71, 72
14. Laborers (maintenance of way and structures)-----------------------41-43
15. Laborers (station platform, warehouse, and dock)__________ 25, 26, 87, 91-94
16. Engineers, conductors, and yard foremen---- 95, 100, 111-114, 119, 121-124
17. Firemen, brakemen, switchmen, and baggagemen----------------------- 107,
108, 109, 110, 115-118, 120, 125-128
18. Floating equipment service employees-------------------------- 98
19. Train attendants_______________________________________________96, 101
20. Patrolmen and watchmen---------------------------------------- 18, 103
21. Miscellaneous__________________________________________________97, 104
156
APPENDIX B-4
157
Allocation of Interstate Commerce Commission occupa' tional reporting divisions to Federal Coordinator of transportation occupational groups, as used in chapter VIII
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APPENDIX B-5
Distribution of finally certified annuitants terminated by death as of June 30,1938, by amount of single life annuity classified by cause of retirement
Amount of single life annuity All annuitants Age annuitants Disability annuitants
65 and over Below 65 30 years service Less than 30 years service
Number Percent Number Percent Number Percent Number Percent Number Percent
$0-$9.99 7 0.3 7 0.3
$10.00-$19.99 58 2.2 56 2.6 2 8.7
$20.00-$29.99 122 4.7 116 5.4 6 26.1
$30.00-$39.99 140 5.4 129 6.0 2 6.3 4 1.0 1.9 4.5 7.6 17.4 5 21.7 17.4 8.7 4.3 4.3 4.3
$40.00-$49.99 239 9.1 224 10.5 3 9.4 8 4
$50.00-$59.99„ 218 8.3 194 9.1 3 9.4 19 2
$60.00-$69.99 341 13.0 302 14.1 6 18.8 32 1
$70.00-$79.99 396 15.1 314 14.7 8 25. 0 73 1
$80.00-$89.99 379 14.5 281 13.1 4 12.5 93 22.1 1
$90.00-$99.99 277 10.6 207 9.7 2 6.3 68 16.2
$100.00-$109.99 257 9.8 183 8.5 3 9.4 70 16. 7 1 4,3
$110.00-$119.99 155 5.9 104 4.9 1 3.1 50 11.9
$120.00.. 27 1.0 24 1.1 3 .7
Total.. 2,616 $72. 66 99.9 2,141 $70.02 100.0 32 100.2 420 100.0 23 99.8
Average single life annuity $72. 59 $87.80 $42.51
158
APPENDIX B-6
Distribution of finally certified annuitants terminated by death as of June 30, 1938, by amount of actual annuity classified by cause of retirement
Amount of actual annuity All annuities Age annuities Disability annuities
65 and over Below 65 30 years service Less than 30 years service
Number Percent Number Percent Number Percent Number Percent Number Percent
$0-$9.99 10 0.4 10 0.5
$10.00-$19.99 96 3.7 86 4.0 10 43.5
$20.00-$29.99 155 5.9 149 7.0 2 6.3 2 0.5 2 8.7
$30.00-$39.99 199 7.6 180 8.4 4 12.5 10 2.4 5 21.7
$40.00-$49.99 302 11.5 274 12.8 4 12.5 23 5.5 1 4.3
$50.00-$59.99 318 12.2 255 11.9 4 12.5 58 13.8 1 4.3
$60.00-$69.99 356 13.6 287 13.4 6 18.8 62 14.8 1 4.3
$70.00-$79.99 356 13.6 278 13.0 4 12.5 73 17.4 1 4.3
$SO.OO-$89.99 290 11.1 225 10.5 3 9.4 61 14.5 1 4.3
$90.00-$99.99 210 8.0 151 7.1 2 6.3 57 13.6
$100.00-$109.99 188 7.2 142 6.6 3 9.4 42 10.0 1 4.3
$110.00-$119.99 113 4.3 83 3.9 30 7.1
$120.00 23 .9 21 1.0 2 .5
Total 2,616 $66.29 100.0 2,141 100.1 32 100.2 420 100.1 23 99.7
Average actual annuity $64.35 $64. 53 $78. 00 $35.13
159
LIST OF TABLES AND CHARTS
Table Page
1. Monthly amount of annuity and pension payments, by classes of payments, July 1937 to October 1938_______________________________________ 16
2. Number and amount of annuities and pensions in force on last day of month, by classes of payments, June 1937 to October 1938_______________ 20
3. Percentage distribution of total number of pensioners and annuitants on rolls of Railroad Retirement Board and the amounts payable to them at the end of each quarter, June 30, 1937, to June 30, 1938, by class of payment____________________________________________________ 21
4. Number of permanent pensioners terminated by death, July 1937 to October 1938____________________________________________________________ 24
5. Disposition of applications for employee annuities, July 1937 to October 1938____________________________________________________________ 25
6. Number of employee annuities recertified, July 1937 to June 1938_____ 27
7. Number of annuities and total amounts payable monthly under temporary partial certifications, as of end of each month, November
1937 to October 1938_______________________________________________ 27
8. Number of employee annuities terminated by death, June 1937 to October 1938____________________________________________________________ 29
9, Number of survivor annuities in force as of June 30, 1938, by monthly amount payable, classified by type of option elected____________________ 30
10. Disposition of death benefit annuities up to June 30, 1938, classified by monthly amount payable________________________________________________ 31
11. Disability claims handled monthly by the Disability Rating Board, November 1, 1937, to October 31, 1938____________________________________ 33
12. Number of furlough rules as of August 29, 1935, according to length of time seniority rights are maintained by occupational groups______________ 48
13. Number of leave of absence rules and practices relating to sickness or disability as of August 29, 1935, by occupational groups_______„_________ 51
14. Cumulative number of applicants ruled on by Employment Relation Unit by year last worked_________________________________________________ 54
15. Number of applicants ruled on by Employment Relation Unit, by year last worked______________________________________________________________ 55
16. Number of applicants held in employment relation by Employment Relation Unit, classified by occupational group__________________________ 56
17. Number of applicants held not in employment relation by Employment Relation Unit, classified by cause of termination of rights______________ 57
18. Occupational distribution of individuals in sample, of employees during
1937, and of employees on pay roll during June 1938 (class I railroads) -----------l________________________________________________ 69
160
Annual Report of the Railroad Retirement Board • 161
Table Page
19. Number of men and women in sample, classified by inferred marital status and age________________________________________________________________ 71
20. Percentage distribution for each age group of men in sample classified by relationship of first choice beneficiary------------------------------ 72
21. Percentage distribution for each age group of men in sample classified by relationship of second choice beneficiary______________________________ 73
22. Number of women in sample classified by relationship to first and second choice beneficiaries and by inferred marital status----------------- 75
23. Number of men in sample classified by relationship of beneficiary------ 76
24. Number of finally certified annuities in force as of June 30, 1938, by amount of single life annuity, classified by type of annuity--------------- 79
25. Number of finally certified annuities in force as of June 30, 1938, by amount of actual annuity, classified by type of annuity____________________ 81
26. Annuities in force under joint and survivor elections as of June 30, 1938, by amount of single life and of actual annuity, classified by type of annuity____________________________________________________________ 83
27. Number of finally certified annuities in force as of June 30, 1938, by type of option, with average annuity and average attained age at time annuity began, of annuitants and their spouses________________________ 84
28. Number of finally certified annuities in force as of June 30, 1938, by years of credited service on which annuity is based, classified by type of annuity____________________________________________________________ 85
29. Number of finally certified annuities in force as of June 30, 1938, by amount of average monthly compensation on which annuity is based, classified by type of annuity_______________________________________ 86
30. Number of finally certified annuities in force as of June 30, 1938, by age at time annuity began, classified by type of annuity_______________________ 88
31. Number of all finally certified annuities in force as of June 30, 1938, by last railroad occupation with averages of credited service, monthly compensation, age at time annuity began, and single-life annuity— 90-92
32. Comparison of characteristics of finally certified in force and terminated annuities as of June 30, 1938, by type of annuity__________________________ 93
33. Number of employee annuitants certified up to June 30, 1938, by period of last compensated service for an employer under the act classified by cause of retirement_____________________________________________________ 94
34. Number of permanent pensioners by adjusted amount of pension___________ 97
35. Number of permanent pensioners by age at retirement classified by cause of retirement________________________________________________________ 99
36. Number of permanent pensioners classified by period of retirement______ 100
37. Number of permanent pensioners by adjusted amount of pension classified by cause of retirement__________________________________________ 100
38. Number of permanent pensioners by average monthly compensation on which pension was based_________________________________________________ 102
39. Number of permanent pensioners by years of credited service classified by cause of retirement_____________________________________________________ 103
40. Number of permanent pensioners by occupational groups with averages of adjusted pension, years of service, compensation, and age at retirement_________________________________________________________________ 104
162 • Annual Report of the Railroad Retirement Board
Table Page
41. Number of pensions terminated by death, July 1, 1937, to June 30, 1938, by adjusted amount of pension classified by cause of retirement--------------------------------------------------------------------- 105
42. Number of pensions terminated by death, July 1, 1937, to June 30, 1938, by attained age as of December 31, 1937, classified by cause of retirement____________________________________________________________ 106
43. Number of pensions in force as of June 30, 1938, by adjusted amount of pension classified by cause of retirement_____________________________ 106
44. Number of pensions in force as of June 30, 1938, by attained age as of December 31, 1937, classified by cause of retirement_____________________ 107
45. Number and cumulative percent of employees classified by amount of wages credited in 1937 under the Railroad Retirement Act and by class of employer________________________________________________________ 111
46. Median wage and the wage range for the middle half of employees, by class of employer________________________________________________________ 113
47. Number of employees classified by amount of wages credited under the Railroad Retirement Act and by number of months in which they performed some railroad service—class I railroads in continental United States, excluding switching and terminal companies_____________116-117
48. Percent of employees with specified number of months of service in 1937 for selected occupations in class I railroads and express companies---------------------------------------------------------------- 118-119
49. Average credited wages per month of service in selected service month groups and selected occupations of class I railroads_____________________ 122
50. Average amount of wages credited for 1937 under the Railroad Retirement Act for employees with 12 months of service—selected occupations in class I railroads by region________________________________ 124-125
51. Number of employees classified by type of employer, number of months of service and total amount of wages credited for 1937____________ 128
52. Number of employees in selected groups of occupations of class I railroads and express companies, classified by the number of months of service and the amount of wages credited for 1937__________________ 129-131
53. Percent of employees in selected occupations and occupational groups classified by daily benefit rates________________________________________ 132
54. Number of employers and estimated number of employees, as of first quarter, 1938, determined to be covered by Railroad Retirement Act, classified by type of function and provision under which they came under act___________________________________________________________ 135
55. Coverage status as of September 12, 1938, under the Railroad Retirement Act of companies that reported or filed circulars with the Interstate Commerce Commission for the year 1936_________________________ 137
Charts
Chart
I. Functional organization of the Railroad Retirement Board as of
June 30, 1938---------------------------------------------(facing) 10
II. Total adjusted amount of annuity and pension vouchers certified to treasury for payment in each month July 1936-October 1938 by classes of payment_______________________________________________________ 17
Annual Report of the Railroad Retirement Board • 163
Chart Page
III. Number of pensions and annuities in force at end of each month, July 1936-October 1938__________________________________________________________ 19
IV. Amounts payable per month for different classes of annuities and pensions in force as of July 30, 1937, and June 30, 1938------------------- 22
V. Employee annuities: applications received, certifications made and claims declared ineligible by months, April 1936-October 1938------------- 26
VI. All employees and employees with 12 months of service classified by
amount of wages credited under the Railroad Retirement Act during 1937 (class I railroads excluding switching and terminal compan ies)_________________________________________________ 114
INDEX
Page
Accounts, employee (see also Wages credited in
1937)...............................— 8,108-110
Actuarial Advisory Committee...................... 9
Actuarial valuation..........................9,10
Adjudication, special aspects of:
Base period, insufficient service... 6,34,35,36,37
Base period, no service...................34,37
Employment relation. (See Employment
relation.)
Missing records..................... 8,9,34,35,36
Prior service......................... 6,9,37,38
Prior service project....................... 9,38
Special adjudication units............5,6,7,32,35
Age of annuitants-............................ 87
Age of pensioners_________________________ 98,105,107
Annuitants. (See Employee annuities.)
Appeals Council........................... 38-40
Applications—........................ 4,24,28,67
Beneficiaries, death benefit, under 1937 act.
(See Designations, death benefit beneficiaries.) Carriers Taxing Act................. 60,63,64,151
Certifications-................ 23,24,25,30,31,34,77
Coverage of Railroad Retirement Acts (see also
Employers under Railroad Retirement Acts). 1,
34,153
Death benefits under both acts:
Administration............................ 66,67,69
Annuities under 1935 act..................7,23,31
Applications................................ 67
Beneficiaries (see also Designations)_7,8,66-76
Certifications-...........................30,31
Lump-sum payments under 1937 act— 7,18,31,66
Notification of death....................... 67
Payments................................. 18,31
Designations, death benefit beneficiary:
Age of designators-.......................70,71
Death benefit provisions of 1937 act__________ 66
Designations, number of_______________________ 7,68
Female designators, relationship to beneficiaries....................................... 75
First choices of designators!...............72,75
Forms, distribution of______________ 8,67,68,69
Male designators, relationship of 1st choice— 72,75
Male designators, relationship of 2d choice.__72,
73,74,75
Male and female choice of beneficiaries......... 75
Marital status of designators.............71,72
Occupation of designators.................69,70
Second choices of designators........... 72,73,74,75
Disability annuities (see also Employee annuities).............................. 78,80,86,87
Employee annuities:
Actual annuity..............................81,82
Age of annuitants............................. 87
Employee annuities—Continued. Page
Age annuitants........................ 78,80,87
Annuities, not finally certified_____ 77,80,81,82
Applications_______________________ 4,24,25,28
Calculation of annuity...................... 82,86
Certifications................... 24,25,34,77
Claims denied............................ 28,33,34
Compensation, average monthly........... 86,87
Date last worked_________________________ 93-95
Differences between 1935 and 1937 acts... 31,32,82
Disability, determination of______________31,32
Disability medical examinations_____________ 34
Disability norms...................... 32,33
Disability Rating Board.................. 5,32
Disability annuitants________________ 78,80,86,87
Joint and survivor annuities_________ 29,81,82-84
Minimum annuities________________________78,79
Normal annuity........................... 80
Occupations of annuitants________________88,89
Options, joint and survivor.......... 30,83,84
Payments, monthly and total.. 15,18,21,29,30, 31
Pending cases.______________________ 28,33,34
Recertifications-______________________ 25,27
Reductions in amount of annuity_______ 78,80,81
Service, credited_______________________ 84,85
Single life annuity.................... 78-81
Subject to recertification............... 80,81
Temporary annuities.......................... 23,77
Temporary partial annuities.............. 24,27,80
Terminations....................... 28,29,93
Employers under Railroad Retirement Acts:
Carrier affiliates___________________ 140-143
Carriers by rail__________________ 136,137-139
Coordination with other agencies.................145
Coverage, determination of............ 136,144,145
Electric railways........................139,140
Employee representatives................134,144
Interstate Commerce Commission, cooperation of......................... 134-136,140
Motor carriers..........................138,141
Railway labor organizations______________143,144
Railroad associations..................... 143
Separable enterprises.__________________145,146
Social Security Act, comparison with....... 145
Employment relation:
Adjudication............................6,52,53
Administration, problems of_________________ 42
Claims disallowed.................... 54,57,58
Claims handled........................ 53-55
Decisions, analysis of....................41,42
Differences between 1935 and 1937 acts......41,
42,55, 56
Disability, absence on account of. 47,50-52,55
Employment Relation Unit........... 6,43,44,46,47
165
166 • Annual Report of the Railroad Retirement Board
Employment relation—Continued. Page
Furlough............................ 47-50,52
Labor agreements------------------------- 45
Leave of absence-------------------------47,50
Occupational classification of cases handled—. 56
Regulations_____________________________ 44
Rules and practices, determination of. 42-46,52,53
Seniority..........................-.....46,47
Sickness, absence on account of.... 47,50-52,55
Financing of retirement system:
Administrative expenditures--------------63,64
Appropriations by Congress............ 59,61,63
Benefits, expenditures for---------■----- 62
Carriers Taxing Act of 1937________ 60,63,64,151
Investments____________________________ 60,62,65
Provisions under 1934,1935, and 1937 acts... 59,60
Railroad Retirement Account............10,59-65
Railroad Retirement Trust Fund------------- 61
Reserve-....................-........... 60,64
Statement of account to June 30,1938—...... 62
Tax collections-------------------------- 63
Transfer of funds from Treasury----------60,61
Joint and survivor annuities (see also Employee annuities)_____________________________ 29,81,82-84
Lump sum death benefits (see also Death benefits).—.......-....................- 7,18,31,66
Missing records.................. 8,9,34,35,36
Payments: Classes of.—............................. 15
Death benefit annuity................ 18,31
Employee annuity___________________15,18,21,29
Lump sum death benefit...................18,31
Monthly amounts payable......... 18,21,29,30,31
Permanent pensions........................ 21
Survivor annuity.......................— 29,30
Total payments.................... 15,16,18,21
Pensions:
Adjustment at time of transfer----- 96,100,101
Age of pensioners-................. 98,105,107
Age pensioners........................... 107
Average amount..................... 102,103,106
Calculation of pension................... 101
Cause of retirement......................96,97
Certifications............................ 23
Compensation, average monthly—.............101
Disability pensioners-................... 107
Occupation of pensioners_______________103,104
Payments, monthly and total............... 21
Period of retirement.....................99,100
Relationship between compensation and service................................ 102,103
Service, years of................... 101,102
Temporary pensions.......................23,77
Terminations....................... 23,24,104,105
Transfer of private pensioners.........7,23,96
Page
Railroad Retirement Account (see also Financing of Retirement System)................10,59-65
Railroad Retirement Acts:
Initial difficulties.................... 3,4,6,25
1937 act, summary________________________________ 1
Relation between 1935 and 1937 acts..............2,3
Railroad Unemployment Insurance Act:
Administration________________________________11,150
Benefits (see also Wages credited in 1937)_11,
148,149,150
Committee on Economic Security.............. 14
Contributions________________________________ 11,151
Coverage____________________________________ 2,11
Disqualification for benefits. ..........149,150
Earlier legislative proposals_________________ 12-14
Eligibility________________________________ 11,148
Employment offices_________________________ 150,151
Federal Coordinator of Transportation... 9,12,13
History of act............................... 14
Railroad Retirement Act, relation to..... 2
Social Security Act, relation to....2,14,152,153
State unemployment compensation systems,
relation to.................. 150,151,152,153
Summary.................................. 2,148-153
Transfer of State funds..................... 12,152
Unemployment Insurance Account___________ 12,151
Unemployment Insurance Administration
Fund..................................... 151
Records and reports............................ 8,9
Service, years of: Annuitants................................. 84,85
Insufficient service in base period... 6,34,35,36,37
Missing records....................... 8,9,34,35,36
No service in base period.................... 34,37
Pensioners_______________________________101,102
Prior service.......................6,9,37,38
Wages...................................... 115-122
Social Security Act.............. 2,108,145,152,153
Survivor annuities:
Applications.................................. 29
Certifications-......................... 23,29
Elections...................................... 29
Payments, monthly and total_________... 29,30
Survivors Claims Unit....................... 7,8
Unemployment Insurance Act. (See Railroad
Unemployment Insurance.)
Wages credited in 1937:
Credited wages, definition of................... 110
Employee accounts...................8,108-110
Employers, variations by_________________109,112
Occupational variations.......... 109,110,120,121
Regional variations_________________________ 122-126
Service, relation to..................... 115-122
Unemployment insurance, relation to_________ 126-133
Wage groups, distribution of................ 110-113
o