AMENDMENT OF THE FAIR LABOR STANDARDS ACT

FRIDAY, OCTOBER 26, 1945

UNITED STATES SENATE,
SUBCOMMITTEE OF THE COMMITTEE

EDUCATION AND LABOR,
Washington, D. C.

The subcommittee met, pursuant to adjournment, at 10 a. m., in room 424-B, Senate Office Building, Senator James Tunnell presiding. Present: Senators Tunnell (presiding), and Ellender.

Also present: Senator Guffey; Charles Kramer, consultant to the committee.

Senator TUNNELL. The hearing will please come to order.
Mr. Hillman.

TESTIMONY OF SIDNEY HILLMAN, PRESIDENT, AMALGAMATED CLOTHING WORKERS OF AMERICA, CIO

Senator TUNNELL. If you will give the reporter your name and your representation, Mr. Hillman, please?

Mr. HILLMAN. Sidney Hillman. I am president of the Amalgamated Clothing Workers of America, whose headquarters are at 15 Union Square, New York City. I am testifying for that organization. I understand that a great deal of testimony has been given before you. I am here to give you my views on this matter, in the light of my experience.

I have been connected in an official capacity with industry on the labor end since 1910. I was a member of the National Recovery Board and from 1933 was a member of the Office of Production Management and the National Defense Advisory Commission.

Senator TUNNELL. I might say to you, Mr. Hillman, one of the principal things that has been put up as an objection to the bill has been the belief on the part of some employers that they could not stand the extra expense. Anything you can say on that line might help us.

Mr. HILLMAN. It is not what I have in my statement, and it probably hasn't been covered by most of the others, but I will say, from my experience in the clothing industry and in the textile industry, and from my contacts as a member of the National Recovery Board, where they first put in the minimum wages in writing the codes, that I have yet to find that any employer was put out of business because of the minimum wage.

I have yet to find any substantial number of employers who were not rather happy after the introduction of the minimum wage. The minimum wage has made the average employer happier in his rela

tionship to labor, being protected thereby from unfair competition from the rest of the people in the industry. The general effect of the minimum wage was always beneficial to the industry. I have yet to find a single instance where an industry has complained after the effectuation of a minimum wage.

I was one of the few who had brought to the attention of President Roosevelt and his administration in 1936 and 1937 the need for a minimum wage after the NRA went out of existence because of the decision of the Supreme Court. There was considerable opposition at that time. Of course, it was a time when business was in a rather depressed state and there was considerable concern amongst people in business whether they could take at that time the very low minimum wage suggested, from 25 to 40 cents an hour. Well, again looking back at my experience, I find that there was less opposition when we tried to revise it up from 25 to 55 cents an hour. In other words, most of the employers were convinced that the introduction of the minimum wage benefited them as employers and benefited the industry.

Your records are there, and you will find dire predictions that were made by members of the industry and by people of the Government as to what would happen. But of course the results have been, in my judgment, beneficial to all industry.

I understand there is very little opposition from industry on this

measure.

Now I would like to discuss the 65-cent minimum wage. In most industries that is practically the minimum wage right now. What we are asking you to do is to give Government sanction against reductions, because almost all industry today has a minimum wage of 65 cents an hour, or close to it.

There is no question that the rise in the cost of production will not amount to anything that would be reflected in a price increase due to the 65-cent minimum wage. From figures given to me, it must mean less than 2-percent increase in labor cost. Translated, the average labor cost is about 25 percent of the unit cost. And what does that give you? Just one-half of 1 percent.

Those of us who know the problems that enter into labor cost and unit cost in industry know that the real factor in making the cost prohibitive occurs when there is lack of production or lack of employment, because a major part of general cost is overhead, rent-the constant overhead, the overhead that is going on whether the plant is at work or idle. The general managerial overhead is usually on a fulltime basis, as you know, regardless of whether the plant is in operation or not. Then there is investment, equipment, interest charges, and so forth.

Now the problem facing the Nation today is: How are we going to maintain full production and full employment? Given full production and full employment, obviously the cost per unit is bound to go down. The more the cost per unit is regulated, the more we have steady business, demand for production, demand for the kind of things we produce. Now, this, of course, is determined by the purchasing power of the country.

The greatest single factor in purchasing power is the wage level, because from fifty to sixty million people derive their income through the payment of wages. If we keep up a decent wage level, then ob

viously that, by itself, reduces the production cost, and we will have a constant lowering of the price level.

What is it that makes it possible for us to keep increasing our standard of living? It is the cheapening of the cost of production through mass production.

We have reached new high levels in national production and in national income. Production has gone up to almost $200,000,000,000; and national income, $160,000,000,000.

Therefore, it is inconceivable to me how there can be any opposition to a proposal that cannot possibly affect the cost of living and that will give us a floor against the kind of destructive competition that we had in 1929, 1930, 1931, and 1932.

I was a member at that time of the National Recovery Board, and I know what it has meant. I know how chiseling by sweatshop employers broke down the very structure of our standard of living and because of that, our production.

I believe that the introduction of the 65-cent minimum, bringing it up to 75 cents, and the permissive clause in the industry to peg, if they want to, the different levels against unfair competition, is in the interest of industry as a whole, in the interest of labor, and in the interest of the country.

Senator ELLENDER. What do you mean by "pegging the different levels"?

Mr. HILLMAN. Making some minimum pegging for qualified groups to give them a higher standard. I mean that you make it permissive, if the industry wants it.

Senator ELLENDER. Isn't it obligatory?

Mr. HILLMAN. The bill reads "obligatory," but I would rather that it read "permissive." I think when you come to a higher wage than the general minimum wage, there ought to be an agreement by the industry that it will be in the best interest of the industry. If, as the bill reads, it makes it "obligatory," then I would personally favor changing it to "permissive."

Senator ELLENDER. Don't you think if the bill remains as it is-and I understand it is "obligatory"-that it would run head-on with collective bargaining?

Mr. HILLMAN. No, Senator.

I have heard talk about collective bargaining hurting the labor movement for years, but that has not been the case.

Senator ELLENDER. You have been the strongest advocate of collective bargaining.

Mr. HILLMAN. Collective bargaining can always be done on the higher levels.

Be that as it may, Senator, I agree with you that it should read "permissive," and not "obligatory," so we are just arguing on something that has no substance.

I think there is a general consensus in the industry-not unanimous, but a general consensus-that it will benefit the industry if you put in a general minimum wage.

I have had my experience on this question of minimum wages, especially in the sweatshop industries. I took office in 1910, and, gentlemen, in 1911, when I signed the first agreement with the firm of Hart Schaffner & Marx in Chicago, wages were so low that employer were

ashamed to tell their own associates that they were members of that industry, because it was just a sweatshop industry. The community had to support the people that the employers employed.

Since that time, through collective bargaining, through the minimum wage provision in the NRA codes, it is an industry that pays a fair compensation to its employees, and the industry is better off in

every way.

Senator ELLENDER. What is the minimum wage that is paid now in the industry?

Mr. HILLMAN. In general industry, Senator, that is very hard to say. I would say there are very few industries where the minimum wage is much below 65 cents now.

Senator ELLENDER. I am talking about the one you represent, the garment workers.

Mr. HILLMAN. We are a piecework industry, we are not a weekwork industry. The obligation is only 40 cents, but we have no such thing as 40 cents now. Our industry is primarily a piecework indus try, and the only thing that protection is given in is if a person does not make enough so that he would fall down below 40 cents. That would be where your law comes in.

Senator ELLENDER. Are there any who make below the 65 cents? Mr. HILLMAN. Some. It would not amount to anything, Senator. It would not affect the cost. It is so little that it is insignificant.

What we really want right now is to be sure that we do not permit some employers-very few of them-to start reducing rates because of the unemployment, which I hope is temporary, that is bound to happen in the next 6 or 7 months because of reconversion.

I have been through the NRA and the OPM and I saw that the bulk of employers liked to cooperate with a liberal fair-wage policy. and I would like to see them protected against unfair competition from unscrupulous employers. The number of those unscrupulous employers can be reduced to a very small number. But if they are permitted to do so, they will undermine our whole structure.

I think I testified as to the minimum wage, Senator Ellender, the last time you were chairman of a committee. Is that right?

Senator ELLENDER. That is right. That was in 1938.

Mr. HILLMAN. If you go over the record you will find less opposition now than there was at that time. I challenge anybody to show us a dozen cases where people have gone out of business because of the Fair Labor Standards Act.

Senator ELLENDER. There were two in New Orleans that I know of. Mr. HILLMAN. Well, Senator, here is Miss Dickason, the director of our research department, who will tell you about what happened in New Orleans. I think, Senator, you are misinformed about it.

Senator ELLENDER. I got telegrams from the people there.

Mr. HILLMAN. It is so simple to send a telegram, but we will give you the facts, and we will be glad, Senator, if you care to, to have a special investigation of those facts. In our industry we are credited with knowing the facts, and we will give you the facts in connection with these two employers that you have reference to.

Senator ELLENDER. You would not argue to this committee, in the face of the war, that the Fair Labor Standards Act had a fair trial? Mr. HILLMAN. First of all, I will go down to 1933, when I was a member of the National Recovery Board and sat through the proceed

ings when we established the minimum-wage provisions in the code for this industry, and while there was opposition-although not too much opposition-the industry did not complain about the minimum wages, nor was there public complaint about NRA on the wage proposition. The complaint was on an entirely different thing. It was on the fair business practices that were put into some of the codes.

So I have had my experience in sitting through most of the garmentindustry proceedings, especially in textiles and wearing apparel. I was giving my full time in the service of NRA, first working under General Johnson in an advisory capacity to him, and then as a member of the National Recovery Administration. So, as I say, this is not merely an experience during the NRA. I am speaking also from experience during 1937 and 1938, at which time the war did not affect us.

Senator ELLENDER. But the prices fixed then, Mr. Hillman, were nothing as compared to the prices fixed in recent years. There is no comparison.

Mr. HILLMAN. I found when we talked of the 25-cent minimum wage we had a great deal of objection, but people got to know how it would affect their industry, and when it was raised to 30 cents there was less opposition because the people had the background of the favorable effect on their business. There was hardly any objection when we had the 40-cent minimum. Now, Senator, that 40 cents is 55 cents, or more than 55 cents today.

Senator ELLENDER. That is what the War Labor Board set. I think it is 55 cents.

Mr. HILLMAN. As a matter of fact, it is almost 65 cents, as far as the worker is concerned.

You know these fancy statistics on the cost of living. It all depends on what kind of living one makes and on what one has to buy.

Senator ELLENDER. I am talking about the Department of Labor statistics which caused the War Labor Board to fix 55 cents as of February 1945.

Mr. HILLMAN. During wartime I supported the War Labor Board just as a matter of patriotism, but some of their statements would not hold up. The question of the freezing of the wage level at 15 percent was most unfair to labor. But there are lots of things that people have to put up with in wartime, and that was the least of it, as far as making a contribution is concerned.

I say that today, with the cost of living as it is, the 40 cents will come closer to between 55 and 60 cents. Now, if you do not raise it, it means we are going back from 40 cents to somewhere in the neighborhood of 25 cents again.

Senator ELLENDER. I certainly do not want to propose that, Mr. Hillman. I have contended here that if labor as a whole can retain the basic hourly wage gains that it has made during this war, it would be a big victory for it.

Don't you agree with me?

Mr. HILLMAN. Senator, that is another field. I believe our wage structure is not tied up so much with labor alone. Whether we are going to have full employment or full production in the country depends, in my judgment, on whether we are going to maintain a high purchasing power. But that is neither here nor there.