coal. But, if we did that, we would not be in a competitive position with other mines that did not have our problems. Senator ELLENDER. That would mean you would have to close? Mr. Ross. We would have to close. There is no way that we can see-these men being their own bosses, in their own rooms, we cannot tell them they have got to work under this agreement. They can load as much as they want to load. Senator TUNNELL. How much did these 51 who did not earn 65 cents an hour, earn? Mr. Ross. Well, they earned 45, 48, 50, or thereabouts. Senator TUNNELL. How much would it have taken for your company to have made up the difference between what they did earn and the 65 cents? Mr. Ross. Well, I couldn't answer that. I don't know. I never figured that out, what it would take. Senator TUNNELL. How many tons of coal did you say you mined in a year? Mr. Ross. Six hundred thousand. Senator TUNNELL. Six hundred thousand. And how many men earned 65 cents or more? Mr. Ross. How many earned 65 cents or more? 395 diggers, and 51 did not earn that. Well, there were Senator TUNNELL. Three hundred and forty-four earned 65 cents and up. Mr. Ross. Three hundred and forty-four; yes. Senator TUNNELL. Three hundred and forty-four. Some of them earned very much more? Mr. Ross. Yes, sir. Senator TUNNELL. Than the 65 cents? Mr. Ross. That is right. Senator TUNNELL. So that it was a small fraction of your total that was mined at less than 65 cents? Mr. Ross. Well, of course, we are looking a little far ahead of the 65 cents. When the law gets up to the 75-cent minimum an hour, we will be in that much worse position. In that pay-roll period, we had 81 that had been earning 75 cents. Senator TUNNELL. You do not intend to mechanize? Mr. Ross. Our mines are old mines, and there is a lot of dirt in the coal. It is not economically sound to mechanize. Senator TUNNELL. What sort of vein do you work? Mr. Ross. Six feet. Senator TUNNELL. Six feet. That is a good vein, isn't it? Senator TUNNELL. A man can stand up, unless he is too tall. Senator TUNNELL. A 6-foot vein, in some sections, is considered very good? Mr. Ross. That is right. It all depends on the quality of the coal that you are mining. Senator TUNNELL. What are your impurities, sulfur? Mr. Ross. Sulfur, clay, slate, bone. Senator TUNNELL. You mine by rooms? Mr. Ross. By rooms. Each miner, of course, is supposed to pick out the impurities. He picks out the impurities in his own coal, in a hand-loaded coal mine, so that the coal produced by a hand-loaded coal mine is generally much better than a mechanized coal mine product, unless their coal is washed or repicked at the top. Senator TUNNELL. What were they paid by the ton? Mr. Ross. The loading rate, under the contract is $1.08 per ton, plus one-ninth that they were allowed for portal to portal, which means that the loading rate was brought up to $1.20. Senator ELLENDER. How about diggers? Mr. Ross. That is the same thing. It is all one operation. Senator TUNNELL. That is what I meant. Loading. Mr. Ross. The loaders, or diggers, if you want to call them that, make their own holes and the shots are fired at night and in the morning his coal is down and he loads it. Senator TUNNELL. It explodes while he is gone, you mean? Mr. Ross. Yes; they shoot it at night. Senator TUNNELL. The same man who mines it, puts in the explosive? Mr. Ross. He puts it in, but doesn't fire it. Mr. Ross. Now, these rates, the loading rates in Illinois always have been based on the comparable rate for the day men. There are 200 of these men, paid by the hour and the lowest rate out there is $1. Now, if you want to make the minimum, you would have to increase the loading rate to, say, $2 per ton. That would throw it out of balance with your other men, and they would say that they wanted a raise. Senator TUNNELL. But you have nobody you pay less than $1 per hour? Where you pay by the Mr. Ross. Not the ones that work on straight time. Senator TUNNELL. That is what I mean. hour, you pay nobody less than $1 an hour? Mr. Ross. That is right. Senator TUNNELL. That is all. Mr. Jobe is the next man on my list. TESTIMONY OF WILLIAM T. JOBE, GENERAL COUNSEL, NATIONAL ASSOCIATION OF ICE INDUSTRIES Mr. JOBE. Mr. Chairman, and members of the subcommittee, my name is William T. Jobe. I am general counsel of the National Association of Ice Industries, the only national organization representing the interests of the ice industry. In this capacity I am speaking for and in behalf of an organization of slightly more than 2,300 ice companies which produced and sold approximately 70 percent of the 48,500,000 tons of ice consumed in the United States in 1944. Senator TUNNELL. You say 70? Mr. JOBE. Seventy percent. Senator TUNNELL. I see. Mr. JOBE. These 2,300 companies own and operate approximately 5,200 separate plants or establishments, located in practically every city, town, or village, of any size, in the country, engaged in the commercial production, sale, and delivery of ice to the general public. The ice industry, for whom I am being permitted to speak only briefly this afternoon, is wholeheartedly opposed to at least three of the proposed amendments to the present wage-and-hour law as set 78595-45- -27 forth in S. 1349. Specifically, these three are (1) the proposed wage increases; (2) the power to fix wage differentials "between interrelated job classifications," through industry committees functioning in collaboration with the Wage and Hour Administrator; and (3) the 5-year statute of limitation for employees' suits. Not all of the above-mentioned 5,200 ice-manufacturing plants or establishments are affected by the Fair Labor Standards Act, either presently or by the proposed amendments thereto which you are now considering. There are, however, approximately 2,200 of these establishments that are affected by virtue of the fact that varying percentages of the ice produced by them enter the channels of interstate commerce. With this large number of our industry members in mind, the first objection we have to S. 1349 is that provision having to do with the proposed increases in the statutory minimum wage rates. To begin with, the greatest single cost factor in the manufacture of ice is labor. Of the total cost in manufacturing a ton of ice, approximately 44 percent is directly chargeable to labor. One of the peculiar characteristics of an ice plant is its nonflexibility of use. Once the equipment is installed, there is only one thing for which it can be used and that is to "freeze water." The plant cannot be converted to any other use. The tonnage production of a plant is governed and controlled by such variables as weather, customer demands, and so forth. With the exception of the initial outlay for the capital investment to construct the plant, the operating labor is the predominant factor in the ice business. For this very important reason the labor costs in the operation of an ice plant must be kept to a reasonable and equitable minimum, or else the returns on a large capital investment will be materially reduced, even to the extent of making the ice business nonprofitable. If the cost of labor is increased through statutory requirements as proposed in S. 1349, the only possible way that an ice company employer could meet these added financial burdens would be to increase the prices of his ice to the consuming public. Such an increase is impractical and, in fact, impossible for competitive reasons. By and large, the ice business in this country is a locally owned business. It is a highly competitive business, privately owned and operated at the local level. The competition which an ice company faces is of two kinds: (1) Competition within the industry itself, that is, between two or more ice manufacturers operating in the same town or even adjacent towns or cities; (2) competition from the mechanical-refrigeration industry, which, beginning in 1924 has, with increasing force, been cutting serious and heavy inroads into the ice industry's total business. Because of this inescapable problem of competition, both from within and from without the industry, the ultimate prices of ice to the consuming public are controlled to the same degree of exactness and, perhaps, even more so than they are today with the existing regulations of the OPA. There is another important element of competition affecting the ice industry which must be considered not only in connection with S. 1349, but with the present wage-and-hour law as well. It is the competition which one ice company, operating in a town or city and devoting itself entirely to intrastate business, can offer another company, operating in the same town or territory that engages only to a certain extent in interstate commerce. The company doing only intrastate business is not subject to the wage-and-hour law, whereas the second one doing some interstate business is subject to the coverage. I use the word "some" purposely because of its significance to our people. No other term has caused them greater fear and worry since they do not know how much ice they may be allowed to supply the channels of interstate commerce and still not subject their total establishment to coverage of the act. The Administrator has never taken a definite position on this question and the courts are miserably divided in their views. Some courts have held, under the so-called de minimus rule, that if a company engages in interstate commerce to the extent of a fraction of 1 percent, this is sufficient to subject its employees to coverage. Other courts have allowed a company to engage in interstate business to the extent of 7 percent without compelling it to comply with the act. The Supreme Court of the United States has agreed to hear at an early date the case of Southern California Freight Lines v. McKewon, involving this particular issue. It is obvious, therefore, that Congress should correct the mistakes it made in drafting the language of the present wage-and-hour law so as to eliminate this divergence of opinion among our judiciary as to just what they believe Congress really had in mind concerning this question of basic coverage. Considering further this type of competition as between the ice company doing only intrastate business and the one engaging in interstate business, even though in many instances the amount in total percentage is relatively small, these are a few additional basic facts to bear in mind. In the first place, the production cost of a ton of ice is virtually the same in both plants. The same general type of equipment and the same amount of labor are required. Secondly, the characteristics of the ice are, for the most part, identical. Both plants produce a block of hard, crystal ice, ready for whatever use it is put to. Up to this point, both types of operations are the same, but then the picture changes. The company doing only intrastate business has no minimum wage rates to worry about except as those are determined through collective bargaining, precedent, or otherwise. With the company doing interstate business, however, there is a statutory minimum wage, a statutory number of hours beyond which the employer dare not work his employees without paying them time and one-half for overtime. Both company employers are competing in the same labor market, producing the same identical commodity, yet the "take home" pay of one group of employees is considerable greater than the other, caused by this small and oftentimes, insignificant amount of interstate commerce business, which, nevertheless is sufficient to bring them under the act. In actuality, therefore, an ice company is heavily penalized by operating under the act. Another very important factor of the ice business which I would like to bring to your attention is the seasonal nature of the business. Approximately 50 percent of the total annual production of ice is produced and distributed in three peak months during the summer. Because of this heavy demand for ice during these 3 months, there necessarily must be continuous, round-the-clock operation. There can be no "pulling the switch" in the ice plant during the hot summer months. This situation alone requires long hours and much overtime. This heavy amount of business will only last 3 months with a gradual decline to almost no appreciable business during the winter months. In fact, most plants are shut down almost completely during a couple or three winter months to allow for the necessary maintenance and repair work to be done. Here again, the labor problem enters the picture as the employer must continue his pay roll throughout the year or else face the ensuing season with no experienced help. Permit me to say also that the price of ice has changed very little during the past 20 years. Moreover, the price received for the ice sold to railroads for car icing purposes or other media of interstate trade is lower than the price levels for any other classification of ice trade. At the present time ice companies are selling ice to railroads and to the shippers of perishable food products at a very narrow margin of profit, and indeed in many cases at no profit at all. Thus, the companies of our industry that find themselves subject to the minimum wage and overtime provisions of the Fair Labor Standards Act are in reality doubly penalized as compared to those companies not covered by the act. First, their total labor costs are much greater, due to the large amount of overtime required as a result of the very nature of the business. Secondly, the margin of profit on their interstate business is considerably less than domestic, commercial, or other types of trade. You might well ask, "Why do these ice companies engage in this interstate type of business if it isn't very profitable?" The question may be answered in two ways: (1) Few, if any, ice companies devote themselves exclusively to interstate trade. Instead, their domestic, commercial, and industrial customers, together with their usual multiple-type operations, such as fuel, both solid and liquid, et cetera, constitute the greater percentage of their total business. So, the interstate portion of their business merely enables them to maintain a higher and more stable local factor throughout the year. (2) The railroads, private carriers, and shippers of perishable food products operating transportation facilities throughout the entire United States, must of necessity depend upon the privately owned ice-producing plants to supply them with ice. They cannot, or at least they do not, provide their own facilities, except in a few instances where a transcontinental railroad has constructed an ice plant for railroad car icing purposes, exclusively, at points strategically located along the roads where other facilities are unavailable. Thus, it is from a deep sense of responsibility and obligation to the general public that the ice industry assumes the tremendous task of supplying this indispensable refrigeration, despite the fact that in a great many instances it is the least attractive of all its business. The ice industry does not wish to go on record before this or any other committee of Congress as wanting to impede the progress of improving the living standards and conditions of the American people, and particularly those of the non-white-collar men. To the contrary, we voice our desire in seeing our country, with all of its diversified ways of life continue its leadership in our many fields of endeavor, to the end that greater comforts and a more abundant life may be attained by everyone. |