Senator VANDENBERG. Well, the payments are 9 percent, are they not?

Mr. SHINEMAN. That is right.

Senator VANDENBERG. How long have you been appropriating to the reserve?

Mr. SHINEMAN. Ever since 1913, gradually.

Senator HERRING. It would be helpful if you can give us an average case, an average employee, just about what he draws in salary and what he gets in his benefits.

Mr. SHINEMAN. Well, our oldest employee, as an example, will receive under the $3 per capita for years of service, $141 this year. That is for 47 years of employment. That party will also get his 2 weeks maximum of $100.

I would like to make this mention also, that we have employed in our office one man who is 81 years of age. We have one man employed in our plant who is 81 years of age. We consider that they are doing a fair task. Those parties, while they are not the highest type people, will draw out of this fund, one over $100 and one just under $100.

Senator VANDENBERG. Then, in addition, if any of these long-time employees are sick, they have the benefit of 100 percent of their wages up to 26 weeks?

Mr. SHINEMAN. Yes; in any 3-year period.

Senator VANDENBERG. In any 3-year period?

Mr. SHINEMAN. Yes.

Senator VANDENBERG. If they die they have the benefit of the $2,000 life insurance policy?

Mr. SHINEMAN. Yes, sir.

Senator HERRING. As to this average employee now, what, in addition, would he get?

Mr. SHINEMAN. The average employee?

Senator HERRING. The one you just mentioned.

Mr. SHINEMAN. Under both plans?

Senator HERRING. Yes; I was just wondering as to the relation of the benefits to the salary that he gets in the first instance.

Mr. SHINEMAN. That would have to be a guess. Your high man, as I gave you, would be about $240. The low girl would be around-well, of course, the newer employees engaged prior to July 1, 1938, would run down to $50 or $60.

Senator HERRING. Just give us a typical average of them all.
Mr. SHINEMAN. I think that would run well over $100.

Senator HERRING. And the base wage is equal at least to what is being paid in competitive plants?

Mr. SHINEMAN. Our starting wage in the plant is 44 cents an hour for women and 55 cents for men. In the office our starting wage is $14 for such as a high school girl and for a boy $16 per week, and as to others, it depends on their experience and depending on what kind of a job we have for them.

Senator VANDENBERG. Is there any collision between the benefits under your certificate and the benefits under the New Social Security Act?

Mr. SHINEMAN. I am just ready to give you that now.
Senator VANDENBERG. All right, go ahead.

Mr. SHINEMAN. On January 1, or in December, we issued a letter to be effective on January 1. The letter reads as follows:

Effective January 1, 1938, provisions under the Welfare Certificate Plan for "Old Age and Retirement from Service" and for "Natural Death Occurring While on Pay Roll" are terminated except as to benefits accumulated and created under these categories to December 31, 1937, for individual employees, which benefits the company hopes but does not guarantee to provide in accordance with the terms of the certificates. Provisions for all other benefits, where applicable, continue upon the terms as stated in the welfare certificate. The foregoing change is occasioned by the benefits provided in and the expenses resulting from the Federal Social Security Act and various State unemployment insurance laws.

Dated December 20, 1937. At the time we put this letter out we asked our employees to sign a receipt and an acceptance for that change.

Senator VANDENBERG. Now, what is the status of the employee relatively under the Social Security Act to which he must now look for these last two series of benefits, and his status under your original certificate plan? Is he better off under the Social Security Act, or worse?

Mr. SHINEMAN. I would hesitate to say.

Senator VANDENBERG. Well, it is a mathematical calculation, is it not? I mean mathematically is he better off?

Mr. SHINEMAN. You know our people appreciate this certificate. I am on the employers' side, so I cannot talk for the employees, but I firmly believe that the employees would rather receive that protection under this certificate right here.

Senator HERRING. Would they get more money under this certificate than under the new plan?

Mr. SHINEMAN. I could not tell you that. It depends on the employees' years of service under here and the years under the other plan.

Senator VANDENBERG. Have you ever made a calculation under the same given premises, as to which plan would give the more benefits? Mr. SHINEMAN. I would like to mention this, that under this welfare certificate many of our people already are getting the maximum, or would get the maximum under the old age and retirement. They have earned it already. We are not taking anything away from our people. Many of them have already earned their $1,500 insurance credit, and even the $1,750, and even some of them have earned the $2,000 credit. Nothing is being taken away from those people. They have the Social Security added, but the newer employee, he receives his protection under Social Security and not under here, excepting as to the $3 per capita for each year of service. Everybody gets it. Sickness everybody is entitled to it. These certificates are no longer passed out. Those that have them, have them. Those that have not, do not receive them, but they fare just the same under the two of these headings, whether they have the certificate or not.

Senator VANDENBERG. Well, have you made any calculation as to whether the Social Security Act will cost your company more or less than the cost under the last two categories in the certificate?

Mr. SHINEMAN. Well, I estimate that we will pay under Social Security, that is the company, this year, about $180,000.

Senator VANDENBERG. As compared with what figure, if you can give it, for the last two categories under this certificate?

Mr. SHINEMAN. Well, the actual cost in dollars under this certificate now is $100,000 a year.

Senator VANDENBERG. So the change is going to cost the company approximately $80,000 more a year?

Mr. SHINEMAN. I am talking cash under here as against cash under Social Security; I am not talking reserve.

Senator VANDENBERG. Yes. Well, if I understand you correctly, the transition from the certificate to social security will cost your company more and produce less for your employees?

Mr. SHINEMAN. Well, of course, if you take the reserve and add that in, why it is probably 50-50.

Senator VANDENBERG. Why do you need a reserve if you are canceling the last two categories?

Mr. SHINEMAN. We are not canceling them, we are only arresting them as of a certain date. We still have the obligation here, and in many instances with our employees we go beyond the certificate. Then, too, the investment of the reserve is not earmarked and the fund does not receive any credit from the investment, and because of that we are still reserving, adding to our reserve. We are also adding to the reserve because of the fact that some day we might want to turn it to an insurance company.

Senator VANDENBERG. Well, speaking generally from the standpoint of the company and standpoint of the employee, would you think you both were better off under the Federal Social Security Act, insofar as that has amended the certificate, or worse off?

Mr. SHINEMAN. We were both happy before the Social Security

went in.

Senator VANDENBERG. Well, I think I can interpret that answer. Senator HERRING. Unfortunately, we have a lot of employers where the employees were not so happy, that do not have this system.

Senator VANDENBERG. Let me put it this way: If the Social Security Act had carried an exemption, as many of us believe it should have, for existing systems of equality or greater advantage to the employee, in your judgment your system would have been exempt? Mr. SHINEMAN. What is your question again?

Senator VANDENBERG. If the Social Security Act had carried an exemption for private plans that produced an equivalent or better benefit to the employee, it is your judgment, is it not, that your plan would have been exempted?

Mr. SHINEMAN. Well, I do not know whether it would or whether it would not. It depends on what kind of a ruling would be made by your committee.

Senator VANDENBERG. I fully understand that, and that you would be at the mercy of the overlords down here who run the show, but on a basis of equity and logic, in your judgment your plan would have been exempted under that proviso, would it not?

Mr. SHINEMAN. I should hope that it would.

Senator HERRING. At least you think it should have been?

Mr. SHINEMAN. Yes, sir.

Senator VANDENBERG. All right. You are almost as cautious as the National Manufacturers Association.

Mr. SHINEMAN. In these days you have to be cautious.
Senator VANDENBERG. I suppose so.

Senator HERRING. Just proceed, Mr. Shineman, if you have anything else.

Mr. SHINEMAN. Well, I do not know that I have. That concludes the certificate information, unless you have some questions.

Senator HERRING. I do not think you gave me your estimate of the average salary of the average employee. Is it $1,000 a year, $1,500 a year, or what?

Mr. SHINEMAN. Now, you mean the plant employees?

Senator HERRING. Yes.

Mr. SHINEMAN. Well, I have given you the starting wage here. We feel that that is fair as compared with what other competitive concerns are paying.

Senator HERRING. I am only trying to get the comparison of the salary or base wage in your own plant and the salary or base wage which is the prevailing wage in similar industries, and then in addition the benefits which you give to the employees. I am trying to find out just about how much this plan means to each employee.

Mr. SHINEMAN. I would say of the factory workers, men and women together, the average might be somewhere around $24. That is the working people. It would run between $23 and $24, and that is a guess.

Senator HERRING. And the benefits are about $240 per year?

Mr. SHINEMAN. The benefits in cash are $240 for some of the longservice employees, but the average is less.

Senator HERRING. That is the relationship I was trying to get. Have you had any labor trouble?

Mr. SHINEMAN. We have had no labor trouble.

Senator HERRING. Are you employees organized at all?

Mr. SHINEMAN. In our Rochester plant the A. F. of L. approached our people about 2 years ago, and we were happy to allow the people to decide for themselves, and they had a meeting, and our people decided that they would prefer to have their own organization, the Beech-nut cooperative plan, in other words.

Senator HERRING. Under the present law it is wise to let them decide for themselves, is it not?

Mr. SHINEMAN. Yes, it is; but it is immaterial to us; we do not care; but they decided, I think, about 3 to 1 for the Beech-Nut cooperative plan.

Senator HERRING. These benefits, were they arrived at after any negotiation with the employees which might be termed collective bargaining?

Mr. SHINEMAN. You mean these benefits here that I mentioned? Senator HERRING. Yes.

Mr. SHINEMAN. No, sir; it was absolutely voluntary on the part of the company.

Senator HERRING. Did you call them in for discussion as to what the employees might think about it?

Mr. SHINEMAN. No, sir; we did not. We just felt that we wanted reward for our employees to a further extent.

Senator HERRING. I ask that question because one or two witnesses have testified that they believe this profit sharing and these other benefits are all right if arrived at through collective bargaining. I just wanted to get your idea on that.

Mr. SHINEMAN. No, sir.

Senator HERRING. Unless you have something else to suggest, Mr. Shineman, I think that is about all.

Mr. SHINEMAN. I do not have another thing.

Senator HERRING. Thank you very much.
Mr. SHINEMAN. Thank you.

Senator HERRING. Mr. Sharpe.

STATEMENT OF GUY W. SHARPE, SECRETARY, BEECH-NUT PACKING CO., CANAJOHARIE, N. Y.

Senator HERRING. Mr. Sharpe, you are secretary of the Beech-nut Packing Co.?

Mr. SHARPE. Yes, sir.

Senator HERRING. You may proceed.

Mr. SHARPE. I do not know that I can add anything. I first want to discuss, while it is fresh in my mind, the situation at Rochester. There was no feeling on the part of the employees that the conditions under which they worked were unsatisfactory. It developed from something which the management did not know, and I assume they should have known, and that was the unfortunate assignment of a foreman who was not at all popular, and the workers felt the only way they could get rid of him was to organize. As soon as that situation was corrected, everything cleared up, and everything has been fine ever since.

On the question of the termination of the old-age benefits, in view of the social-security legislation, I think, and I am quite sure of this because I have talked with some of them, the employees very much regretted the necessity for that taking place. They were better satisfied under the profit-sharing plan, so-called. There is, however, one advantage that I think, in all fairness, we should mention, and that is that in the event that an employee severs his connection with us, the social-security old-age plan provides for him a stop gap, because he does not lose the benefit of his experience, if I understand it, and it is continuous with his subsequent employment. However, so far as our operation is concerned, I do not think there is any advantage to the employee. To comment very, very generally, and it is my own opinion and not the opinion of the company because it has not been discussed, I think for our company, perhaps, that the incentive plan would be a desirable one. I think this might include also other companies with a set-up similar to ours, but I do see one or two disadvantages that might affect our company. One is, it seems to me that the company that would receive the greatest benefit would be the company that paid an ordinarily low-wage scale, thus permitting themselves to expand and elaborate a profit-sharing plan to a greater degree.

Then, too, there are concerns that may have taken the position that they prefer to pay a high wage and do so in preference to some profit-sharing plan. They might feel that they are discriminated against. This is purely something outside of our own category. Our minds are pretty much open on the subject. We have not come to any conclusion as to whether or not it is a desirable thing.

I feel that profit sharing, wherever a company is able to establish some sort of a plan, is very desirable and should be encouraged, and I also have a conviction that most concerns, if they have made any