EXHIBIT 54

STATEMENT OF THE INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION IN SUPPORT OF PROPOSED AMENDMENTS TO THE FAIR LABOR STANDARDS ACT OF 1938 (S. 1349)

(For the International Longshoremen's and Warehousemen's Union, CIO: Harry Bridges, president; J. R. Robertson, first vice president; M. P. Johnson, second vice president; Louis Goldblatt, secretary-treasurer)

INTRODUCTION

The International Longshoremen's and Warehousemen's Union, CIO, welcomes the opportunity to submit a written statement to the Senate Committee on Education and Labor in support of the proposed amendments to the Fair Labor Standards Act of 1938, incorporated in S. 1349.

The union, on behalf of its 65,000 members employed in continental United States, Hawaii, Alaska, and Puerto Rico, primarily engaged in the warehousing, longshore, and sugar industries, joins the Congress of Industrial Organizations, to which it is affiliated, in supporting the increase in statutory minimum wages, and the extension of coverage incorporated in S. 1349.

The economic condition facing our country today, in many respects, parallels the condition prevailing when the FLSA was first adopted. We face problems of employment and jobs, rather than last year's problems of manpower and workers to fill jobs. We face the necessity of stabilizing and directing the economic structure of our country so that the people who comprise the United States and as servicemen and workers fought and won a war for freedom can live in health and decency.

The Fair Labor Standards Act by limiting hours does two things-it places a limit upon the hours constituting a healthy and normal workweek, and it provides a penalty for employment of workers in excess of the stated hours ceiling. It is the opinion of the ILWU, to be brought out in oral testimony by President Harry Bridges, that the present act is inadequate in its control of hours and that amendments other than those incorporated in S. 1349 are essential.

In the matter of wages the act set a statutory floor of 40 cents an hour, predicated upon pay rolls and prices prevailing when the act was adopted in 1938. Time and inflation have shown that minimum to be inadequate. It was inadequate at 1938 prices because it permitted a less than maintenance living standard. It is totally inadequate in the face of inflated prices and new tax burdens on low income groups. The 75-cent minimum would be a distinct boon to the millions of workers at substandard wage rates. It can be achieved without undue burden on the national economy and should be approved.

The extension of coverage of the hours and wage provisions of the act provided by S. 1349 will do much to tighten the gaps in the present structure of wage-hour control and will remedy the injustices which have resulted from overliberal statutory exemption and accordingly overgenerous administrative exemptions under the existing law's language.

The ILWU supports the bill, but urges that serious consideration be given its proposed amendments on hours and coverage. We believe the passage of the bill is essential to gear our national economy to the pressing tasks of reconversion and peace.

S. 1349 AND THE WAREHOUSING, WHOLESALING, and DISTRIBUTION INDUSTRIES

I. THE INDUSTRY

The warehousing, wholesaling, and distribution industries lie between the boundaries of the manufacturing establishments which store and warehouse commodities in raw and finished form incidental to the manufacturing process, and the retailing establishments which store and ship incidental to such retailing. It forms an economic unit, and constitutes a distinct branch of American industry. (See exhibit 1, concept of the industry as developed by the Bureau of the Census, U. S. Department of Labor.)

The chief functions of the warehouse, wholesale, and distribution industry are the following:

(1) Receiving and shipping of goods.

(2) Maintaining inventories.

(3) Physically storing, assembling, and grading goods in large lots, breaking bulk and repackaging for redistribution in smaller lots.

(4) Other services incidental to storage and distribution, for example, refrigeration and minor processing, such as coffee roasting.

These functions are performed by all sections of the warehouse industry, regardless of their commercial classification into the categories of wholesale warehouse, retail chain store warehouse, or public warehouse.

Distribution within the boundaries of the warehouse, wholesale and distribution field may take the form of single commodity distribution, sales line distribution (such as grocery warehousers and wholesalers and drug warehousers and wholesalers) or a general merchandising distribution as exemplified by companies such as Butler Bros., or the mail-order houses of Montgomery Ward and Sears, Roebuck. These warehousing, wholesaling, and distributing firms serve the general market or may warehouse for one specific company. In any case, they are part of the industry as a whole.

According to the United States Census of Business, 1939, there were approximately 200,000 establishments engaged in wholesale distribution with a total sales volume of $62,500,000,000. The latest available figure (1935) of the number of warehouse employees in the United States shows a total of approximately a quarter of a million workers. Of these the largest number, 187,424, or 76 percent, were employed in the wholesale field; 32,785, or 13.2 percent, were employed in public warehouses; and 26,322 or 10.8 percent were employed in warehouses of chain-store organizations.

II. COMPETITION IN THE INDUSTRY

The warehousing and wholesaling field is a highly competitive one both as between different industry groups and regions of the country.

Within a given area, various forms of storage warehousing and distribution are in direct competition with one another. For example, if the rates of terminal storage and distribution are unusually cheap it pays the wholesale market to handle its distribution directly from such terminal which is the first place of rest for many commodities after leaving the factory. If, however, terminal rates are high, or if storage is for a long period of time, the wholesaler will then consider use of space in a public warehouse. The public warehouse rents space and handles distribution of commodities for the wholesaler so as to meet his daily requirements.

Further, the nature of wholesaling or the rates charged to wholesalers by the terminal or public warehouse will determine the advisability of establishing a private warehouse. This is true both of warehouses who distribute to the market at large and of warehouses maintained by retail outlets. (See exhibits 2 and 3.)

It has been the experience of the ILWU in the organization of those workers that the rates of pay in terminals, in public warehouses and in private warehouses are directly connected with each other. In many cases our organizational work began in terminals and public warehouses. We discovered, however, that in the event wages were raised to a certain level in terminals and public warehouses, the wholesalers would then move their storage out of the terminals and public warehouses and into private warehouses where they could secure workers at lower pay. In order to protect wage scales in public warehouses, it was then necessary to move into organization of private warehouses, inasmuch as the rates of all these workers were geared one to the other.

In

To demonstrate further: A grocery might maintain a warehouse to service its own stores. Its rates of storage, warehousing, and distribution are in direct competition with the rates charged by grocery warehouses distributing to the market at large (such as independent stores, restaurants, hotels, etc.). the event rates in the public storage warehouses or general grocery warehouses were out of line with those in the private warehouses, commodity distribution would move away from such public or general grocery warehouses to the private grocery warehouses. The history of collective bargaining has substantiated this process in every detail. (See exhibit 4.)

When proper collective bargaining contracts are secured they must by their very nature provide for identical wages and conditions of work for the employees of public warehouses, general wholesalers and private warehouses. Any other method of organization or collective bargaining results in the union becoming the instrument for shifting employment away from the organized workers to the unorganized workers, or away from the establishment paying a higher rate of pay to that paying a lower rate.

The identical principle should be applied in considering the propriety of minimum wage legislation, and it is evident that only by an adequate minimum wage can we avoid shifting of employment away from the higher paying sec tions of the industry to the lower paying sections of the industry, thereby giving unfair competitive advantage to the employers whose low wage standards "perpetuate those labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of the workers."

The warehousing industry is highly competitive, not only within given localities but also between various regions of the country. Warehousing and wholesaling are also in competition with direct distribution. Where warehousing and wholesaling call for a fair rate of pay in one community but because of lack of union organization or inadequate minimum wage legislation there is a lower rate at another community, it will in many cases be profitable for the em ployer to do his distributing from the cheaper point of operation. When we take into account other forms of transportation, such as overnight truck drivers within a radius of 500 miles, we recognize the full significance of the need for an adequate minimum wage over the widest possible field. (See exhibits 5, 6, and 7.)

In the wholesaling field this high degree of competition exists within, and sometimes between, various regions of the country in spite of uniform price structures in major commodity lines. (See exhibit 8.)

In the public warehousing field there is also, at least within States, a uniform tariff structure. In California, for example, there is in existence a trade association known as the California Warehouse Tariff Bureau, to which most of the large public warehousing companies are party. This bureau establishes rate structures for the handling and storage of commodities which are to he charged by all member firms, thereby establishing a fixed rate structure which exists not only for the member companies in a particular city but which, in California, is almost identical between major cities in the State. Here then is an example of fixed prices at the top with no adequate minimum wage at the bottom, defeating the purposes for which the Fair Labor Standards Act was first passed.

III. THE NEED FOR AN ADEQUATE MINIMUM WAGE IN THE WAREHOUSING INDUSTRY

We have pointed out above how competition exists between various industry groups in the warehousing field on an area basis and also how competition exists between different regions of the country. We have also shown how this competition drives distribution from channels where higher wages are paid into channels where lower wages are paid.

Exhibit 9 shows average hourly earnings for employees in various commodity groups of the warehousing and distribution industry on a national wide scale. These range from a minimum of approximately 60 cents an hour to a maximum of more than 96 cents per hour.

Practical experience in the field of collective bargaining has demonstrated that this variation is not necessary in order for warehouses in these different commodity groups to operate at a reasonable profit. Warehouse Union Local 6 of the International Longshoremen's and Warehousemen's Union, for example, has collective bargaining agreements covering approximately 10,000 warehouse workers in the San Francisco Bay area and surrounding communities whose basic terms covering wages and conditions are identical. The basic minimum wage paid the warehouse, classification-that is freight handlers, stock men, car loaders, and the like-is 922 cents per hour and has been since June 1942. The minimum wage paid to so-called light warehouse labor-production work such as packaging, filling, etc., associated with warehouse work and performed by women workers-is 75 cents per hour and has been since June 1944. This rate was raised from 70 to 75 cents at that time as the result of a voluntary agreement between the union and the Association of San Francisco Distributors.

There is wide variation between average wages paid to warehouse employees in different regions of the country, as well as in different commodity groups Exhibits 10 and 11 show, for example, the wage brackets established by the War Labor Board for three major distribution centers-San Francisco, Chicago, and New York. These wage rate brackets represent the minimum prevailing rate for warehouse jobs in these three areas. It will be noted that San Francisco, in

spite of higher operating costs due to freight charges, and in the face of a fairly uniform price structure in national commodities, is able to pay the higher rate and operate its warehouses successfully. Therefore, no valid claim can be made

that a Nation-wide minimum rate of 75 cents an hour is prohibitive for the warehouse industry.

A similar degree of variation can be noted in the case of chain stores who do their own storing and warehousing, and wholesalers who operate on a national basis. An example of the former is Safeway Stores (groceries). Exhibit 12 shows comparable wage rates in the Safeway Stores for the San Francisco Bay Area, Salt Lake City, and Denver. An example of a nation-wide wholesaler is McKesson Robbins, Inc., distributors of drugs, drug sundries, and liquors. Exhibit 13 shows comparable wage rates for this company for the cities of Los Angeles, San Francisco, and Chicago.

It is clear that such national variations in wage rates are not determined primarily by the factors of profitability or competition. They are the result of differences in collective bargaining history and degree of union organization. Because of these differences, some employees of national firms in various regions are working for clearly substandard wages.

The foregoing exhibits and discussion demonstrate that the proposed wage amendment to the Fair Labor Standards Act is not only feasible, but will further the purposes of the act by elimination of a condition which "(1) causes commerce and the channels and instrumentalites of commerce to be used to spread and perpetuate such labor conditions among the workers of the several states; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce."

IV. THE NEED FOR SHORTER HOURS IN THE WAREHOUSE INDUSTRY

When the Congress first considered the passage of the Fair Labor Standards Act, one of its prime motivations was the urgent necessity to reduce hours of work, not only to relieve an onerous burden upon the workers but to eliminate the mass unemployment which existed at that time.

Again, after a long period of full employment and overtime hours to meet the necessities of war production, we are faced with the possibility of an unemployed army of millions of men and women. We must take prompt and bold steps on a national level to forestall such a development. One such step should be the reduction of the maximum working hours provisions of the Fair Labor Standards Act.

This reduction is completely feasible for most industries, and particularly for warehousing and distribution. Possibly in no other industry have the techniques and methods developed in the course of the war to meet the tremendous supply requirements of the armed services seen such a spectacular advance. Mechanization developed during the war period will be carried into the postwar period, thereby reducing the number of man-hours necessary to maintain prewar productive levels and reducing the labor cost per unit of production. Numerous illustrations in support of this are found in the trade literature of the warehouse and distribution industry. For example, the following statement is made in a bulletin of the Industrial Truck Statistical Association on the subject of unit loads and their handling and shipment and storage;

"An important element in American manufacturing efficiency has been the practice of handling materials in unit loads of 2 to 5 tons on skids, pallets, or other means by which they can in the course of their movement through the plant be picked up, carried, and stacked mechanically. But the transportation of materials from their original source to the manufacturing plant and from the end of processing there to the point of ultimate consumption has not kept pace with developments in plant transportation. The advent of the war and the urgent necessity of moving products and supplies from the production front to the fighting front quickly and in large volume has resulted in a trial of the unit-load method and it has been proven that this method can be readily applied to the distribution of raw materials, semifinished and finished goods, as well as to movements through manufacturing processes. For some time to come it is therefore entirely possible that for every chance to reduce manufacturing costs a few cents there will be opportunities to save dollars in the cost of distribution." Exhibit 14, reproduced from the same bulletin, shows the economies of the unit-load system as compared with manual methods. This exhibit shows for the fictitious ABC manufacturing companies the elimination of six manual pieceby-piece handlings of goods through full use of a unit-load system in receivi

shipping, and warehousing operations alone. The XYZ wholesalers eliminated all four manual piece-by-piece handlings by maximum use of the system. Among other advantages the employment of such modern methods of material handling results in (1) substantially reducing handling costs; (2) rapid move ment of goods; (3) modern packing methods, fundamental to applying a unitload system, usually reduce costs; (4) maximum utilization of storage space: (5) reduction in product damages; (6) reduced time and cost of taking physica inventory; (7) reduced time for loading and unloading railroad cars, motor trucks, and ships.

A concrete example of the savings in man-hours and costs is that of pallet handling of cars as developed by the United States Navy to speed handling to points of storage and transshipment, as reported in the bulletin of the Industrial Truck Statistical Association referred to above. The standard unit consists of 22 cartons of assorted items. Thirty-two such unit loads can be stowed in a boxcar by one man and a fork truck in approximately one-fifth the time that used to be required when cartons were loaded one at a time by hand. In other words in this operation one man and a fork truck can do the work that formerly required five men. The cost for the pallet and strapping of such a unit load is more than offset by savings of mechanical handling, direct labor cost being 80 percent less than in the manual operation.

Exhibit 15 consists of statements from trade journals and some individual employers, testifying to savings in manpower and costs by using of mechanical handling devices.

Exhibits 16 through 21 show in deail the spectacular results of modern mechanical methods applying to specific problems in storage and distribution. The foregoing exhibits and discussion demonstrates, as related to the warehouse and distribution industry, the necessity, equity, and feasibility of shortening maximum hours of work under the Fair Labor Standards Act. In view of the ever-increasing rate of mechanization of the industry with resultant increase in productivity per man-hour worked, and in view of the manpower surplus which is already part of the industrial scene, only a national program of shorter working hours, along with adequate minimum wages, can prevent the mass unemployment, and its concomitant dangers, which threaten the country.

ILWU EXHibit 1

CENSUS CONCEPT OF WHOLESALE

For census purposes the term "wholesaling" or "wholesale distribution" is confined to the operations of wholesale establishments, as hereinafter defined. It does not include wholesale sales made by manufacturers directly from their plants, but does include those made from separate sales establishments of manufacturers, such as sales branches and offices especially maintained for that purpose; nor does the term include wholesale sales made by farmers or by operators of mines, quarries, or oil wells, except from establishments maintained primarily for marketing purposes. Obviously, it was impossible to make the term all-inclusive, that is, to use it in the broadest aspects, since the census was taken on an establishment basis. Had the scope of the Wholesale Census been broadened to include such sales, it would have been necessary to secure a separate distribution report from every producing establishment and from every farmer and nurseryman, in addition to the reports which they submit on production activities to the Census of Manufacturers, Census of Mines and Quarries, and Census of Agriculture, respectively. It has been equally im practicable to confine the term to service wholesalers or to any other limited type of wholesalers, inasmuch as a clear-cut functional division as between different types of wholesale organizations is practically impossible. Much of the wholesale business, even in the sense in which service wholesalers operate, is being done by bulk tank stations, by manufacturers' sales branches and by other types of wholesale establishments.

Source: U. S. Department of Commerce, Bureau of Census, Census of Business: 1935 Wholesale Distribution, vol. 1, United States Summary, p. 4.