Mr. KAPLAN. Before you can get the production you have to have a demand exerted for that production or it will not be produced.

Senator SMITH. That brings up the old philosophy-which came first, the hen or the egg? It is the same old story, and there is the same difference of opinion as to how we can bring that about. We all want to raise production and raise the return to the worker. We do not want high prices, because we want to spread everything among our people. There is no difference between us, but just a matter of method which is the first step and which is the second.

Mr. KAPLAN. Yes; and I would rely on history to prove that the first step is getting adequate wages and sufficient purchasing power; guaranteeing sufficient purchasing power will guarantee production. As far as the war is concerned, what happened? The Government went to these concerns and said, "We are going to pay you for so much production."

What did they do?

They accelerated the demand.

Senator SMITH. The Government was the market there.

Mr. KAPLAN. That is correct.

Senator SMITH. I am not questioning your testimony, and I am very much impressed with it, but we do have to consider very carefully whether we should raise the wage and hope production will follow.

Other witnesses say you have to get your production going; and as you reduce unit cost, you can raise wages.

To my mind, it is a matter in which order it will come.

Mr. KAPLAN. I think as far as these low-standard workers are concerned, the benefit of the doubt should be given to them.

Senator SMITH. And if industry cannot pay it- we do not want to throw them out of employment.

Mr. KAPLAN. That is what the opponents of the original act said in 1938.

Senator SMITH. Of course, the war permitted that.

Mr. KAPLAN. Even before the war, employment levels went up after this act was passed.

Senator ELLENDER. That was because of the great demand from England and Russia, as pointed out here in previous testimony. Senator SMITH. I do not think it is fair to take war figures.

Mr. KAPLAN. Let us go back to 1933 to 1937. We did not have the war demand on at that time. The New Deal came in and raised wages, and we began to get an upward trend in our employment. Senator SMITH. I am not sure I agree with you on that. I think we had a desperate employment situation until the war began. Senator TUNNELL. We did in 1929.

Senator SMITH. Yes.

Mr. KAPLAN. We had a rise in the level of employment.

Senator TUNNELL. After the passage of this act, in the remainder of 1938, 1939, and '40, and nearly all of 1941, before we were in the war?

Mr. KAPLAN. That is correct.

Senator SMITH. We had the foreign demand.

Senator TUNNELL. We have the foreign demand now.
Senator SMITH. I am not negativing the suggestion.

Mr. KAPLAN. May I make the point that certainly we should not base wage rates on what any marginal firm could pay, because otherwise we would be on a dangerous level all of the time and we would really have to dub economics as the dismal science.

Senator TUNNELL. Thank you.

We will adjourn until tomorrow morning at 10 o'clock in the same place.

(Whereupon, at 12 m., the committee was adjourned until 10 a. m., tomorrow morning, Friday, October 19, 1945.)

AMENDMENT TO THE FAIR LABOR STANDARDS ACT

FRIDAY, OCTOBER 19, 1945

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE

ON EDUCATION AND LABOR,

Washington, D. C.

The subcommittee met, pursuant to adjournment, at 10 a. m., in room 424, Senate Office Building, Senator James M. Tunnell (chairman) presiding.

Present: Senators Tunnell, Ellender, and Smith..

Also present: Charles Kramer, consultant to the committee.

Senator TUNNELL. The hearing will come to order. Is Mr. Lane here?

Give your name and position to the reporter.

TESTIMONY OF HAROLD LANE, SECRETARY-TREASURER, FOOD, TOBACCO, AGRICULTURAL, AND ALLIED WORKERS UNION OF AMERICA (CIO)

Mr. LANE. My name is Harold J. Lane, international secretarytreasurer, Food, Tobacco, Agricultural, and Allied Workers Union of America (CIO).

Senator TUNNELL. Now, proceed in your own way, Mr. Lane.
Mr. LANE. Thank you, sir.

Mr. Chairman and members of the committee, the organization for which I am speaking represents directly some 80,000 workers under union contract in the food, tobacco, and fiber processing industries.

Our members come from canneries, fruit and vegetable packing houses, tobacco factories, cotton compresses and warehouses, cottonseed oil mills, and similar types of establishments. The workers employed in these industries total close to a million.

Hundreds of thousands of these workers are not earning enough money at the present time to provide them and their families with even a bare minimum standard of living. These have historically been low-wage industries. We find, moreover, that during the war hourly earnings of food and fiber processing workers have lagged behind those of higher-paid industries; that is, that gap between their hourly earnings and those of other industries has widened during the last 5 years.

More than 400,000 workers in these industries now are paid less than 65 cents an hour.

Senator TUNNELL. Let's get what you mean by that. You say you represent 80,000, and then you refer to 400,000.

Mr. LANE. We refer to a total figure of 1,000,000 employed in the industry.

Senator TUNNELL. You don't represent all of the million?

Mr. LANE. No, sir; not in our organization.

Large numbers are not paid time and one-half after 40 hours, as the result of exemptions in the present Fair Labor Standards Act. I have with me workers from several of our plants, who can give you first-hand information on wages and overtime in some of these industries.

Passage of the Pepper bill will, of course, directly benefit hundreds of thousands of food and fiber processing workers by guaranteeing them a bare $26 a week for a 40-hour week and by bringing them closer to the minimum American standard of time and one-half after 40 hours a week. That is good. But the interest of the entire Nation, also, is at stake.

Raising of minimum wages and removal of exemptions is urgent in order to help prevent collapse of buying power, unemployment, decreasing farm and factory production, and all the other evils of depression.

While discussing particular cases we must, at the same time, keep the major objective of full employment in mind. We must maintain full production and employment or else face national disaster.

I have here a brief which covers in detail economic conditions in the food, tobacco, and fiber processing industries, the present wage levels, the effect of the establishment of a 65-cent minimum on costs and profits, and the ability of these industries to pay higher minimum wages. These industries can easily pay the proposed increased costs out of profits.

For example, cost of the 65-cent minimum would be only 6.4 percent of the 1944 profits of the food and beverage industry and only 9.1 percent of the tobacco industry profits. These and other facts showing how the increased costs will be absorbed by these industries are fully set forth in the brief which I should like to submit for the committee's consideration.

(The statement referred to appears in the appendix.)

Mr. LANE. In the time at my disposal here, I would like to discuss briefly two special aspects of the bill before the committee: First, the matter of coverage of agricultural processing workers under the Fair Labor Standards Act; and second, the question of the effect which passage of this bill will have on farmers.

Briefly, S. 1349 will bring within the coverage of the act the following groups of workers in our industries who are now denied its benefits:

1. Workers employed within the area of production, engaged in specified operations on agricultural or horticultural commodites, and workers in fish canneries, all of whom now are not covered by either the minimum-wages or maximum-hours provisions of the law.

2. It will make eligible for overtime payments workers engaged in the first processing of dairy products, cotton and cottonseed, and sugar, who now may be made to work unlimited hours the year round without any overtime pay.

3. It will remove the 14-week exemption from the overtime provisions for workers engaged in first processing and canning of fruits and vegetables and in the first processing of other agricultural commodities within the area of production.

The bill does not remove an additional exemption from the overtime provisions which applies to seasonal industries for 14 weeks of the year. It also does not bring agricultural workers under the act. The effect of these exemptions has been to make class B workers out of the employees in the industries affected. There is no economic or other reason which justifies denying to these workers the benefits which are enjoyed by employees covered by the law. To the contrary, these are the workers most subject to the substandard living conditions which the law was expressly designed to correct, and therefore they are the ones most in need of its benefits. The operations they perform are industrial in character, and they are subject to the same working conditions and hazards as other industrial workers who are covered by the minimum wage and hour benefits.

Senator TUNNELL. Do you represent the farmers?
Mr. LANE. No, sir.

Senator TUNNELL. You are just discussing them?
Mr. LANE. Yes.

Senator SMITH. Do you represent the fish people?

Mr. LANE. We have fish people in our organization; yes.
Senator SMITH. In New England, in Massachusetts?

Mr. LANE. Not in Massachusetts.

I have here a picture of a typical citrus-fruit packing house in Texas which shows clearly that we are talking about industrial, or factory, workers.

I would like to give each member of the committee one of these pictures, Mr. Chairman. [Pictures distributed to committee.]

I would like to add that you will note the similarity between the production methods in this packing shed and those you will see in an automobile factory.

Senator SMITH. One question has come to me from some of the agricultural workers in New Jersey.

In some areas the people who work on farms, straight agricultural work, now go in and do the processing. Your proposal would give them two classifications.

The minimum wage would not apply to them as agricultural workers but it would apply as soon as they step over the white line and go into part of the day in processing. Is that right?

Mr. LANE. Our experience is that that applies pretty much throughout the country, in any of the packing industries. Wives of the farmers and children of the growers go into the cannery and work during the packing season.

We feel that farm workers should also come under the act, although we are not proposing such a step at this time.

Senator SMITH. You have to face the fact that you have a difficulty from the standpoint of adjusting it. If agricultural workers are exempted, as soon as they go in and do some packing for part of the day, you put them into another classification.

I am discussing the administration problem without discussing the main merits of the point.

Mr. LANE. I don't believe that would be a new problem. Any work performed on the farm-even packing and processing provided it is confined to the farmer's own crops exclusively is exempt under the act and also under this bill. Coverage applies only in commercial packing plants.

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