I think any figure you are going to take is going to cause some inconveniences somewhere; but it seems to me that the principle is right, to get the money in these people's hands at the low end of the scale. Beyond that, you have got more or less of a necessity. We aren't getting textile production now. The textile workers in the plants are down about 20 percent from 1942; they are coming back very slowly; they just don't want those jobs at those wages any more. The same thing is true in lumber, down South. The labor market is so short down there that we are having a terrible time. The pressure comes on us to raise the price of something. Well, we raise the price, all right. It seems proper. They say they can't get labor. So they get labor in that area and get it away from some other vital area, and then that area comes back and says "raise our price." And we raise that price, and a few of the workers go back, leaving the other area where it was. There are just not enough people down there. I don't know much about your southern labor situation, but not enough workers are willing to work at those wages, and we are caught over and over again

Senator TAFT (interposing). Or willing to work at all, I am not sure which.

Mr. BOWLES. Well, that is a social problem that is going to take a long time.

Senator TAFT. You are at the moment in an extraordinary situation

Mr. BOWLES (interposing). That is right. But doesn't a lot of that get back to educational and health problems, and all the things that give people some zip and steam to want to get ahead in the world?

Senator ELLENDER. One of the difficulties down South at the moment is that hundreds of the workers received big wages during the war as welders, as workers in shipyards, amounting to $1.25 to $1.50 an hour. They are reluctant to come back to a 55-cent-perhour job.

Mr. BOWLES. Surely.

Senator ELLENDER. But I fancy that it won't be long before they will come back.

Senator AIKEN. Wasn't the whole country more prosperous when they were getting high wages?

Senator ELLENDER. But that is not the question. It is the inability of some industries to afford it.

Senator AIKEN. I agree they can't change all at once.

Senator ELLENDER. Take the lumber business, for instance. I read an article the other day where from one tree in California 11 cars of lumber were manufactured; whereas in the South, where most of the lumber is obtained from cut-over lands, it would take maybe 10 acres to get that number of carloads. And it is mostly hand work, as everyone knows.

Senator AIKEN. There has been such a cutthroat competition in the lumber industry when there was plenty of lumber that they have got the habit of paying less than other industries.

Senator TAFT. Would you advocate this same application of 75 cents in 2 years to all agricultural labor in the United States? Mr. BOWLES. I think that is a hard one to answer.

Senator TAFT. Well, if it is right for the others, why not for agricultural labor?

Mr. BOWLES. I think it is a very proper question that has got to get answered, and I think it is a hard one. I personally feel that if the farm income is high enough, they are going to find it easier to pay good wages on farms; and one way to keep the farm income high enough is to get enough purchasing power in people's pockets to buy the things the farmers grow.

There are no really adequate estimates of the total increase in wages that would result under this bill. For manufacturing industries, our best estimate is that it would amount to about one-half billion dollars without allowance for increases above the 65-cent level. The indications from very rough data for an earlier period are that the wage bill in all industries--including transportation, public utilities, trade, finance, and service-would rise in the neighborhood of $3,000,000,000. Senator TAFT (interposing). Assuming it doesn't put anyone out of work.

Mr. BOWLES. Now about a quarter of that is pretty sure to go to the farmer. The way you get at that is that in your low-income groups, 50 percent-the figures all come back to that goes for food. Senator ELLENDER. Prices don't work that way, Mr. Bowles. Supply and demand come in.

Mr. BOWLES. The figures show that a man making $1,000 a year usually spends $500 for food.

Senator ELLENDER. I have seen potatoes sell for 70 cents a hundred because there was an excess amount of them on the market.

Mr. BOWLES. That is right, on some given item.

Senator ELLENDER. In order to carry your theory through, you would have to, in a measure, tell farmers that they are to plant so much of this and so much of that, in other words, you would have to regiment them.

Mr. BOWLES. Well, historically they have certainly not been in the past, and you have had 50 cents of every dollar from a low-income group going to food at retail, and the farmer is getting right now about half the retail food dollar, and so you have got roughly three-quarters of a billion dollars going directly to the farmer.

Senator TAFT. The general idea of raising wages will be to raise prices and the wage-earner pays more for everything he buys, and he is just where he started from. I don't believe that is going to bring the farmer any more income.

Mr. BOWLES. We are moving toward greater mechanization on farms, more modern farming, more scientific farming, all those things, to bring costs down. Also, I think, lower distribution costs on food. I don't think that necessarily you can't increase your income to the farmer without passing all that through to the consumer.

Senator TAFT. I am only suggesting this, that if we can't say that agricultural labor should get 75 cents in the United States, I doubt if we ought to make a limit of 75 cents in small towns, either. We exempt agricultural labor, but nevertheless we set their standard; and it seems to me that logically we have got to set a wage which is a proper minimum wage for the entire country for everybody, and what is that figure? That is my only question, whether 75 cents isn't too high.

Senator PEPPER. How many industries are there in the ordinary small town which would be affected by this? It only affects interstate commerce or production for interstate commerce.

Senator TAFT. The Wage and Hour Division is constantly extending it, and they have got the Supreme Court to go with them until pretty near anything is interstate. Office buildings are interstate if they have got railroad offices in them. They have just pressed, pressed, pressed until they have got nearly everything except what we specifically exempt in the law.

In a way that is right. We are declaring a national policy, and I think we ought to say what is the right figure and encourage States to do the same for agricultural labor.

Senator PEPPER. Would you allow Mr. Walling, right at this point, to tell us this: Mr. Walling, how many workers, compared to the whole number of workers in the country, are affected by the Wage and Hour law at the present time?

Mr. WALLING. We think that there are between twenty and twentyone million subject to the Wage and Hour Law.

Senator PEPPER. Out of how many?

Mr. WALLING. Forty-odd million.

Senator PEPPER. About half of the workers of the country are affected?

Mr. WALLING. Yes.

Senator LA FOLLETTE. Mr. Chairman, may I suggest that the time will come when we are going to have to debate this bill, and it would seem to me that as far as Mr. Bowles' testimony is concerned, the principal thing we would like to know is what effect, if any, this bill is going to have on the inflationary situation and the price picture and the timing of it; and what industries, if any, are going to have to have price increases, and if so, how much.

Mr. BOWLES. Let's take tobacco, the biggest crop. I think about two-thirds of all the workers in the tobacco industry-cigarettes, cigars, and smoking tobacco--are under 65 cents. You affect a great number of them. However, labor is not a very big proportion of the retail price of those products. I think it is roughly $14,000,000 that would be the result of raising wages in that field to 65 cents-14 million dollars.

Senator ELLENDER. Are you taking into consideration the raising of wages in the higher brackets if you raise the lower?

Mr. BOWLES. That would raise it somewhat higher than that. It would get up to 18 million, or something like that. It would probably put it up as high as 18 million, the compensatory changes in grading you would have to make beyond that point.

Senator ELLENDER. In other words, you do admit that by raising those in the lower brackets, it is bound to follow that those in the higher brackets

Mr. BowLES (interposing). Definitely you will have some regrading on up. Obviously if one man is at 65 cents, and another at 55, and you raise the man from 55 to 65, you have got to do something for the fellow that is getting 65.

Senator ELLENDER. Have you any figures to demonstrate to us the extent to which we can expect a rise in the upper brackets, assuming, let's say

Mr. BOWLES (interposing). No. There have been figures on it. We have none, we are not in that field. But the best guesses we could get-and they are guesses, because they will vary from industry to industry depending upon how many workers they have just above

that point-the guess in the tobacco industry is that directly affected would be $14,000,000; indirectly would be another 4 million for that other factor. But that is purely a guess, and nobody will try to give you an accurate figure, because he can't. That is a matter of bargaining it out in each plant.

Senator BALL. Does this $3,000,000,000 figure for the total wage increase apply only to those who would be raised? It doesn't take into account the increases that would come from preserving the differentials?

Mr. BOWLES. That is right.

Senator AIKEN. Can we have the approximate retail volume, in dollars, of the tobacco industry?

Mr. BowLES. I haven't got that. It is well over a billion dollars. Their profits were 154 million in 1944, against this 14 million. However, that is not wholly fair, because it is rather scattered through the industry. In cigars, for instance, we had to move them up, we had to move those prices up recently in order to get production on lowpriced cigars.

This increase would mean way under a cent a package on cigarettes, for instance-a tenth of a cent per package. You have got the Federal Government tax that runs 7 cents a package. But if you can't raise cigarette prices, it seems to me you ought to readjust your tax situation and not take it out of the pockets of the tobacco workers. You have got a very big tax there.

Senator TAFT. These figures are for 65 cents. It seems to me we ought to have the figures for 75 cents on everything, because that is only 2 years, after all, and we are dealing with a situation where there would be no price control so that it will respond not to what can be done but what economically is likely to happen.

Mr. BOWLES. I think I can get them for you, and I would be glad to try to do that.

But if you pass through that increase on tobacco products-and I don't think there is any particular increase to pass through-but if you did, right to the consumer, you couldn't find it in the consumer's bill.

Senator BALL. Isn't the tendency of any increase on a basic cost like that, to pyramid?

Mr. BowLES. Yes, it is. Your margins are pyramided on up. But even at that, your tenth of a cent a package disappears in there, it really does in that case. It wouldn't disappear on lumber. We figure that you would get something like a 5-percent increase in lumber prices at retail, probably, which are already too high. Lumber prices are up too much. I don't think we have done the best job in the world on lumber, and there have been lots of problems in there. Stumpage-we have never gotten control of that, and don't know how to do it yet, and it often happens that price increases in there go right back into stumpage and don't help anybody. But here you have a 5-percent increase in lumber. I wouldn't want to see that.

Senator ELLENDER. Do you make the same assumption that that is based on 65 cents, and you don't take into account the rise in the upper brackets?

Mr. BowLES. That does not take the upper brackets into consideration, that 5 percent. The increase up to the 65-cent level would

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come to something like 67 million and would run somewhat higher if the factor you are talking about were included in the estimate. Senator ELLENDER. You say you don't like this 5-percent riseMr. BOWLES (interposing). Here is what I would do.

I think that in this present effort we are making to get low-cost housing, that I would hate to face a 5-percent increase in lumber, and I think what you can do is either delay it, as they did in New York State-which in many ways I would hate to see you do or you can delegate the power to the President, in any area where there will be inflationary price raising consequences, to delay the beginning of this up to a year, let's say, or the duration of the Price Control Act, whatever that is.

Senator PEPPER. Could you summarize for us the situation in the lumber industry the way you did in the tobacco industry?

Mr. BOWLES. Yes.

The CHAIRMAN. I think it would be well if we could have, at one place in the record, the various industries that would be affected. Mr. BowLES. I have a table here which I think you will find interesting, and I can leave it here for your record.

The CHAIRMAN. We will put that into the record, then. (The table referred to is as follows:)

TABLES SUBMITTED BY CHESTER BOWLES, ADMINISTRATOR, OFFICE OF PRICE ADMINISTRATION, TO A SUBCOMMITTEE OF THE SENATE COMMITTEE ON EDUCATION AND LABOR DURING HEARINGS ON S. 1349, A BILL TO INCREASE THE MINIMUM WAGE TO 65 CENTS AND EXTEND COVERAGE OF THE FAIR LABOR STANDARDS ACT

LIST OF TABLES

Table 1. Effect of the 65-cent minimum wage on pay rolls, profits, and return on net worth in manufacturing industries.

Table 2.

Basic data on workers in manufacturing below 65-cent minimum and effect of 65-cent minimum.

Table 3. Net sales and profits before and after taxes, 1936-39 average and 1944 1,743 large industrial corporations, by major and minor industry groups.

Table 4. Returns on sales and net worth before and after taxes, 1936-39 average and 1944 1,743 large industrial corporations, by major and minor industry groups.