the necessity of a high degree of technical education as well as skill. No education is required in the training of spinners, weavers, or carders in textiles, and with the exception of loom fixers most of the textile operations can be learned within the course of a few months. The textile worker therefore does not have to make an extensive investment in preparation for his profession.

UPSETTING THE ECONOMY OF THE REGION

Another factor influencing the wage structure is the economy of the region. If the establishment of an unusually high minimum wage upsets the economy of the region it may do more harm than good. If, for instance, the farmers are unable to pay a minimum wage competitive with the minimum wage of the textile industry which is located in the farming regions, it means that ther will have great difficulty in the harvesting and replanting of their crops. In the case of southern textiles the chief competition from a labor standpoint is farm labor. Wages of the farm worker are unusually small in comparison with the textile worker. The competitive handicap is already there. A future increase in textile minima may throw the economy of this region still further out of balance.

According to the Bureau of Agricultural Economics, United States Department of Agriculture, average monthly wages of hired farm workers in the South Atlantic States in January 1942 with board was $22.34 and without board was $32.90.

COMPETITIVE INDUSTRY WAGES

An influence which directly touches the wage structure of a given industry is the influence of competitive industry wages in the area. To hold its own in the picture an industry should pay a wage rate commensurate with its position in the area in which it operates. It is interesting, therefore, to note the conparison of the wages paid in the manufacture of cotton goods in North Carolina as compared with other industries in that State. In June 1944 according to the North Carolina Department of Labor the average hourly earnings of workers in plants manufacturing cotton goods was 62.6 cents. In amount per hour this is the tenth highest among all North Carolina industries, and below it are listed 13 classifications. A similar comparison made in the State of South Carolina in 1941 showed workers in the textile plants in ninth place compared with all industries in South Carolina, and below textiles were listed 21 other classifications of industry.

With such a large list of industrial classifications paying wage schedules below the wage schedule of textiles, and with the chief source of labor on farms paying much lower schedules, it is well to recognize the vulnerability of the southern textile industry as far as the source of supply of labor is concerned for this fact has a direct bearing upon the wage schedule.

FOREIGN COMPETITION

Another comparison of importance is a comparison of the wage schedule in America with foreign countries.

While American industry occupies a position of relative security in comparison with the balance of the world, there are industrial fields where complicated operations and patented processes afford protection, such as automobiles, electrical apparatus, etc. In the case of textile, due to the simple methods of oper ation, any one can make cloth in any nation and many of our foreign competitors up until the beginning of the recent war were making cotton textiles in increasing quantities, particularly Japan, China, India, Brazil, and some of the European countries. Glance, therefore, at the competitive wage schedules of these foreign countries, for if the Government continues its publicly announced policy of low tariffs it will be difficult to protect the textile workers of America against the low-price labor of the Japanese, Chinese, Brazilians, the Europeans, and many other nationalities.

We have previously quoted the hourly earnings of the southern textile worker in America. They were before the war more than twice as high as the textile wages in Great Britain, four times as high as the wages in Japan and almost 10 times as great as the wages in China. The war has changed conditions considerably and the same ratios may not exist today but the situation is dangerous enough to indicate the vulnerability of the wage structure of the American textile worker as compared with foreign competitors.

There are other factors influencing the wage structure which have a direct and important bearing such as the job content, the work load, the nature of the work. These are highly complicated factors which involve considerable technical knowledge and all these factors combined to further emphasize the fact that a determination of a wage schedule is a function far beyond the normal purview of a lawmaking body.

PROBABLE EFFECT OF S. 1349

The currently proposed legislation providing for increases in minima upon such a high basis, combined with the legislative suggestions for federal determination of differentials between wage classifications is tantamount to the fixing of a wage structure. Such an undertaking would inevitably cause many embarrassments for the United States Congress, and unless the Congress is assisted by unusually competent technical advice, might result in great harm to the workers, as well as to the industry which they serve. There is a very definite question as to whether the setting of a wage structure is really the function of government.

The provisions in the proposed S. 1349 which call for an extension of the statute of limitations on payment of claims for minimum wages and overtime compensation, do not seem to have any justification. In fact, from experience there does not seem to be any real reason for the extension of the statute of limitations. There are no records of hardships caused by the 1-year limitation which is already in force and a 5-year extension would undoubtedly cause an increase in grievances and serve as a disturbing factor which would perpetually upset employer-employee relations.

If the Fair Labor Standards act and similar legislation is to be amended Congress should seek the advice and assistance of the employers before making changes and be careful to see that no drastic changes are made which may seriously upset our American economy. The war is over now. The serious emergency has passed. We should face the long pull of the future with more stabilization and less bureaucratic regimentation.

WM. P. JACOBS,

President, American Cotton Manufacturers Association.

EXHIBIT 13

STATEMENT ON S. 1349, A BILL TO AMEND THE FAIR LABOR STANDARDS ACT OF 1938 AND FOR OTHER PURPOSES"-POPULARLY KNOWN AS THE MINIMUM WAGE BILL

By Ira Mosher, president of the National Association of Manufacturers

My name is Ira Mosher. I am president of the National Association of Manufacturers, an organization of 14,000 manufacturers whose members employ 4 out of every 5 manufacturing wage earners in the Nation. More than 70 percent of the members of NAM employ 500 or fewer workers. By far the greater number are small businesses.

Because your committee was unable to hear me on the date originally assigned to me last week, I am filing this statement in place of that appearance. Since I shall have no opportunity to reply to questions, I shall attempt to confine myself to a few fundamental observations.

These observations should raise serious question as to the economic soundness and timing of the legislation which you have invited me to discuss.

SCOPE OF THE BILL

The bill you have under consideration s of vital concern to NAM members. It not only proposes direct amendments to the wage-and-hour law to increase the statutory minimum from 40 to 65 cents an hour, with automatic increases to 75 cents an hour 2 years after enactment, but it proposes to require the Wage and Hour Administration to fix the entire wage-rate structure for each industry. I will discuss later the apparent effect of these proposals in some detail. I want to state at this point, however, that, in our opinion, the enactment of these provisions in their present form would tend to increase labor problems.

In addition to the wage features of the bill, it would materially expand coverages of the act by eliminating a number of existing exemptions, it would

extend the child-labor provisions to employers engaged "in commerce" as distinguished from those producing goods for commerce, and would establish a 5-year statute of limitations affecting employee suits for alleged underpayments.

CHILD LABOR PROVISIONS

The proposal to amend the child-labor provisions does not appear to directly affect many manufacturers in their operations since they are now prohibited by law from engaging children under 16 in connection with manufacturing, or children under 18 in hazardous occupations.

The child-labor provision of the act affecting manufacturers does not differentiate between boys and girls. However, the Walsh-Healey Public Contracts Act establishes that additional standard by prohibiting the employment of boys under 16 and girls under 18 on Government contracts for supplies. Serious penalties are invoked for the employment of girls over 16 but under 18 on Government work even though their employment would be permissible on the same work performed for other customers.

I understand that the present Wage-Hour Administrator, when serving as Administrator of the Public Contracts Division, urged the Congress to amend the Walsh-Healey Act so its child-labor terms would conform with the child-labor provisions of the wage-hour law. Had those recommendations been adopted, much unnecessary confusion might have been avoided during the war. I do not believe there is any real excuse for continuing that confusion and I urge you to repeal the child-labor provisions of the Walsh-Healy Act at this time.

PROPOSED EXPANSIONS

It is not clear to me what changes have occurred since 1938 warranting the proposals in the bill to expand coverage of the law to many employees now exempted from the wage or hour provisions or both. If one can judge from the types of work presently exempted, it could be presumed that existing exemp tions were either designed to facilitate (a) the processing and marketing of perishable foodstuffs as in the case of the overtime exemption relating to the first processing of milk; (b) the distribution of farm products illustrated by the seasonal exemption for agricultural commodity processors within an "area of production"; or (c) to permit the continued employment of workers whose hours of work could not be definitely controlled. These latter-type exemptions include those exempting outside salesmen and seamen.

These exemptions apparently were incorporated in the act to meet real problems. Some of those I have mentioned and others not mentioned vitally affet farmers who must sell their crops when they are harvested. If a perishable commodity is not processed when ready, the result is a loss to the producer and to the prospective consumer as well. Even the so-called nonperishable products, such as ripened grains, must be marketed immediately by most farmers because they do not have facilities for keeping such products for any prolonged period. Since the proposal to expand coverage of the act would seem to affect a far larger segment of our economy than the employers and employees who would be directly affected, I recommend that your committee consider all reasons for the present exemptions before acting in this matter.

WAGE PROVISIONS

S. 1349 is popularly referred to as the minimum-wage bill. Its officially printed title is more correctly descriptive. It is "a bill to amend the Fair Labor Standards Act of 1938 and for other purposes."

It makes two major proposals regarding wages:

1. To raise the minimum hourly wage with the proviso that it cannot be paid for work requiring previous training or experience.

2. To set a minimum hourly wage structure for all other jobs, according to the skill and experience required.

I shall take these proposals separately.

First, take the proposed rise in unskilled wages, from the 40-cent hourly minimum now required by law, to 65 cents at once, 70 cents the next year, and 75 cents the following year.

The question of whether a job does require previous training or experience would seem to be confusing in the very least; might easily cause unnecessary Cmployee grievances, and place an added burden on employers in their efforts to comply with the law, and the Government in its efforts to enforce the law.

I, therefore, seriously question the justification for defining the job for which the minimum statutory rate would be payable.

The next practical question involved is: How much would this bill add to the pay rolls of this country?

Adding up the labor force which it seems the bill will attempt to cover in interstate traffic, the annual cost of raising those now below 65 cents an hour would be $4,000,000,000.

The further annual cost of adjusting the higher wage brackets upward from this base would be $5,000,000,000.

That means a total added annual load on the pay rolls of this country of $9.000,000,000 at once.

When the minimum arises to 75 cents an hour as provided in the bill, within 2 years, the further cost of wage rises would be $5,600,000,000.

That means the total annual load which this bill proposes to put on the pay rolls of this country is of the order of $14,600,000,000.

Now who is going to pay this $14,600,000,000 of increased wages?

The answer of the supporters of the bill is that the productivity of labor has increased so much that the increase in goods per worker will balance the increase in his pay.

That isn't so.

In a great section of American economy, the services and trades, which I understand furnish more than half of the total employment, the opportunities for greater efficiency are slight. Higher wages mean higher costs and higher prices. In manufacturing, the average output per man-hour has increased approximately 3.5 percent per year during the past 20 years. But, it should be noted that this is an average. Averages do not tell the whole story; for instance, the average productivity increase since 1939 has been 15 percent, but in cement there has been a decrease in producticity of 15.5 percent, and in flour and grain mills 16 percent. This illustrates that there can be no averages on productivity increases which have general application. The problem should be considered from an individual company standpoint or at most from an industry standpoint.

But even if averages should be regarded as controlling, since 1939 unit costs of labor have increased about 40 percent, while productivity has increased 15 percent according to BLS data. This means that wages now are years ahead of the growth in output per man. The real problem is to get productivity to catch up with the increase in unit labor costs.

The wages to be added to the national pay rolls by this bill would remain, in whole or in part, an additional charge on operations. They must either be taken out of net earnings or passed along to the public.

Those who can take the added wages out of net earnings and still survive, will obviously be under pressure to use less labor, either by mechanizing the job or by doing away with it. In either way, the legislated rise in wages is a contribution to unemployment.

It is my judgment, however, that the bulk of private enterprise will soon be operating on such competitive profit margins in this country that it cannot absorb an additional annual pay-roll load of $14,600,000,000. Most of that additional wage load must be added to prices.

Now it is evident that higher prices sell less goods. And that means less employment.

For the consuming public as a whole, higher prices would be the signal for inflation. They mean the OPA would continue on the scene to stop the rise but retreating with ceiling prices and rationing, unable to stop the rise but retreating slowly before the necessity of keeping the economy going by permitting some semblance of profit.

The rise in prices would tend to cancel the benefit of the bill even to such workers as are included in the proposed rise in wages.

I hope I have made plain the reasons why I think the proposed jump from the present hourly minimum of 40 cents to 65 cents at once and 75 cents within 2 years, is too violent a break with orderly progress. The economy could sustain it only by a violent upheaval which would almost automatically defeat it.

I should like to remind you that the Congress, in passing the act which it is now proposed to amend, set a 25-cent hourly minimum in 1938 and allowed 7 years, up to the present, for the economy to digest a mandatory rise of 15 cents additional. And during that time, bear in mind, the wage scale was helped upward by a war.

Now it is proposed to jump 25 cents at once and 10 cents additional within 2 years, without a war to push wages up, and with all the confusion and uncertainty of economic reconversion under such circumstances.

INDUSTRY WAGE FIXING

The second major wage proposal of the bill has nothing to do with substandard conditions or their relief. It proposes to fix a wage structure of minimum hourly rates for all jobs above the unskilled level, according to the skill and experience required.

The bill will require its governmental Administrator to order and maintain "reasonable wage differentials" between skilled job levels when unskilled labor at the base of the structure is legislated into its immediate minimum hourly rate of 65 cents. Next year, the structure will have to be recalculated "reasonably" higher, when the unskilled minimum goes to 70 cents. And the following year, recalculation will set in again when the unskilled worker reaches his mandatory 75 cents an hour.

Recognizing the complications of the task, the bill permits different rates to be set for the same job classification in different subdivisions of the same industry. and in different localities according to competitive conditions and the variations in going wages for that sort of job.

Practically, any sort of job is impossible to define for use in such wage fixing The same job titles have a different job content in each plant. A tight definition of any job won't fit anywhere. A loose definition will be no guide, but would only promote disputes as to who should be paid how much. The only way out would be to reorganize the job contents of the entire enterprise system to fit the wage definitions which the governmental Administrator is directed to promulgate under this bill.

In connection with such mandatory fixing of a wage structure, I should like to underscore the relevant parts of the testimony which your committee heard only last week from L. Metcalfe Walling. He has been seasoned in this struggle from the Government side, as Administrator of the existing Fair Labor Standards Act which you are now proposing to amend in this fashion.

Mr. Walling said the present proposal to have the Government fix higher wage brackets as well as the minimum wage would be (I quote him) "extremely costly and difficult to administer."

During the gradual mandatory rise of the minimum under the present act from 25 cents in 1938 to 40 cents at present, I trust you will note that Mr. Walling said there were corresponding substantial increases granted in the higher brackets without governmental intervention.

Finally, as a veteran in the battle of the definitions of jobs, he observed that if differentials were nevertheless to be attempted, they should be based (I quote him) "on the differentials commonly found in the industries prior to minimum wage action."

These differentials, you will recognize, were the result of the free interplay of incentive pay and collective bargaining.

I close my quotations from Mr. Walling, with his observation that "the estab lishment of wages above the minimum level goes beyond the basic purpose of minimum wage legislation and requires serious consideration."

To that I add my own question: Doesn't the Government any longer trust collective bargaining?

It seems plain on the above analysis, that this section of the so-called minimum wage bill makes it really a wage control bill.

In this connection, it is worth underscoring also that William Green, president of the American Federation of Labor, told your committee last week, that (I quote him) "detailed Government regulation of wages above the minimum constitutes an invasion by the Government of the domain of free and voluntary collective bargaining between labor and management.”

In my judgment it is more than that. It involves the Government in dispensing different wage rates among organized skills, industrial groups, localities, which must always be suspected as privileges by those at lower wage levels. The ery of privilege begets a demand for compensating privilege, and further privilege, and that is already the curse of our political system. Why launch it at full amplitude into our economic system-whereby all of us earn a living?

Finally, as the Government struggles to set up a wage structure for the higher civilian brackets which will satisfy all the job holders, the Government must also take steps to protect that structure from being made obsolete by a rise in the cost of living even before it becomes effective. We will have to contemplate not only the wage control proposed in this bill, but also a price control to continue alongside it indefinitely. With that goes our free enterprise.