Food work at good wages, they spend more money for practically everything. is no exception to this general rule, and especially the high-priced, nutritionally needed foods. As I have just indicated, agricultural production in the year ahead is potentially so great that farmers will need every possible increase i market outlets if they are to move their products into consumption at reasonabl prices. The proposed amendments to the Fair Labor Standards Act will, believe, aid materially in widening the farmer's market for the things he ha to sell. These amendments propose four important changes to the present law First, they would increase the minimum wage of those unskilled workers cov ered by the act from the present legal minimum of 40 cents per hour to 6 cents, in the first year after the effective date of the amendments. During the second year the minimum would go to 70 cents per hour, and then to 75 cent in the third and subsequent years. Second, they propose to include two new groups of workers, namely, seamen and workers engaged in the processing storing, and handling of agricultural and fishery products. Third, they provid for the establishment of reasonable wage differentials throughout an industry for all jobs above the minimum level act for unskilled workers. Fourth, they strengthen the present law in the way of preventing the use of oppressive chil labor in nonagricultural enterprises. Agricultural employees are specifically ex empt, as well as several other classes of workers. The proposed amendments are not as far reaching as many people believe For instance, the increase in the legal minimum wage from 40 cents to 65 cent an hour will probably not directly affect more than 4 to 41⁄2 million workers which is a small percentage of the total. The maintenance of reasonable wag differentials above the minimum will, of course, raise the earnings of som additional workers. The inclusion of seamen and employees engaged in the processing, storing and handling of agricultural and fishery products does not involve more thar 1 to 2 million workers. Some of these workers have already been covered by the present act. I do not propose to try to tell this committee what all of the various ramifying effects of this legislation will be if it becomes law. I shall gladly leave that task to my friends in the Department of Labor, who are experts in the field Studies by the Department of Agriculture staff indicate, however, that for each increase of $1,000,000,000 in the annual earnings of low-income workers there will be a corresponding increase in food expenditures of at least $200,000,000 In addition, there will be increased purchases of cotton and tobacco. A modest increase in the earnings of low-paid workers will be a highly desir able type of insurance against a substantial decline in the demand for farm products resulting from the decreased purchases of farm products on the par of the armed forces plus the decline in lend-lease shipments, while, at the same time, reconversion unemployment is a problem. There are those who will argue that an increase in the minimum wages of nonfarm employees will mean that the prices of the things which the farmer buys will automatically increase. To me this argument has yet to be proved sound. I have not seen anything very convincing on the subject. Economists are not at all agreed that an increase in wages paid by manufacturers will neces sarily result in an increase in the price of manufactured products. Higher wage: may bring about, for instance, an increase in efficiency of production either through a rise in the productivity of individual workers or through better man agement practices. Right along this line I want to point out that in the years following the end of the First World War there was a tremendous rise in the production per worker. For instance, between 1919 and 1923 annual productivity per worker in manufacturing industries rose by about one-third, or 8 percen per year. If the experiences after the First World War should be repeated within the next few years-in other words, if production per worker increases rapidly-it is obviously true that there can be substantial increases in wages without any rise in prices. Whatever may be the real truth with respect to the influence of higher wages on prices, it is evident that the passage of the Fair Labor Standards Act of 1938 did not bring about any apparent increase in the prices of commodities pur chased by farmers. That act was passed near the end of June 1938 and became effective about October 1st of that year. The quarterly index of prices paid by farmers for items used in family living stood at 122 in June 1938. (The average of 1910-14 equals 100.) By September of that year it was down to 121; in Decem ber it had declined to 120; and in both March and June of 1939, it was 119. It was not until September 1939 that the index reached the level of 122, at which it stood in June 1938. Moreover, it declined slightly after June 1939, and a full year later, in the middle of 1940, the index was still below the level of mid 1938. The same general movements were apparent in the index of production itemsfarm machinery, fertilizer, building materials, seed, etc.-as in the family living items. There is no need to give the detailed figures. They tell the same general story as those I have just mentioned. No one would argue, of course, that raising the minimum wage will not create problems for certain industries and firms which have unusually low wage scales. The wage increases which the passage of these amendments would bring about would be of greatest significance in the textile, tobacco, fruit, and vegetable-canning, and southern lumber industries. However, the enactment of the proposed amendments would not seriously interfere with the general reconversion program. Moreover, the long-time advantages of increased market outlets for these and other industries will more than offset the temporary disruptions which may occur in a few lines of production. In summary, it appears evident that legislation of this character will increase the demand for farm products and that the production situation in agriculture is such that farmers need every assurance of the broadest possible market outlets. Moreover, there is little past evidence to indicate that prices paid by farmers will be increased by this proposed legislation. Therefore I conclude that amendments of this general nature should be enacted into law. Senator TUNNELL. Mr. Remele. All right, Mr. Remele; give your name, address, and present position. TESTIMONY OF A. C. REMELE, NORTHWEST COUNTRY ELEVATOR ASSOCIATION, MINNEAPOLIS, MINN. Mr. REMELE. My name is A. C. Remele, 713 Chambler of Commerce, Minneapolis. The Northwest Country Elevator Association is a voluntary organization, the member of which are engaged in the operation of country elevators in the States of Minnesota, North Dakota, South Dakota, and Montana. The F. H. Peavey & Co., of which I am general counsel, is a member of this association and operates at the present time about 225 country elevators. The total number of elevators operated by members of the association is approximately 1,000. In addition to the elevators included in the membership of the association, there are in the four States named approximately 3,000 elevators operated by independent owners and cooperatives. Nature of facilities: Country elevators are facilities located in the grain-growing areas of the States above named, as well as other areas in the United States, and are constructed for receiving, storing, and shipping of grain raised in the surrounding territory and hauled in by farmers in wagons or trucks. They constitute the primary markets for grain and seeds and are located in nearly all towns, villages, and sometimes at mere railroad sidings in the grain-growing area. In many instances, they take the place of storage facilities at the farm, as a great percentage of farmers haul their grain directly from the threshing machine to these storage facilities and have no facilities for storing their grain other than these country elevators. They are, for the most part, equipped with large platform dump scales, so that trucks and wagons can be weighed and dumped into a receiving pit from which the grain is elevated by power machinery to various bins in the elevator. As grain accumulates in the elevator, it is again transferred by machinery to cars for shipment to terminal grain markets. Employees: In a large percentage of the elevators in this area there is but 1 employee, known as the manager. For example, out of 136 elevators reporting in Minnesota, 100 had but 1 employee; out of 155 reporting in Montana, 117 had 1 employee; and in North Dakota, out of 559 reporting, 299 had 1 employee. The manager is in complete charge of the elevator, and his duties consist of weighing and taking into the elevator the grain hauled in from the farm and diverting it through mechanical devices to bins in the elevator, either buying the grain at the time of the receipt or issuing storage receipts therefor and subsequently shipping the same to terminal markets. He must have a specialized knowledge of all kinds of grain, including skill in the matter of determining grade and quality, usually fixes his own hours, on which there is no check, and his status is entirely different from the status of employees working in industrial plants or factories. He does very little physical work, since the grain is all handled by machinery, and his chief value lies in his ability to get business and to properly grade and price the grain offered for sale. Quite a large percentage of the elevators in the northwest area have what is known as a second man, who assists the elevator manager with his duties and is usually in line for a position as manager when he has become sufficiently competent to be advanced to such position. Where there are more than two employees it is usually because of the fact that the elevator is engaged in the handling of coal, twine, flour, and feed which are being sold at retail to farmers. Managers and second men are almost without exception paid on a monthly basis, are usually old employees; and the average monthly salary for managers is approximately $190, while second men receive a monthly salary averaging $140.80. Hours: The elevators in the four Northwestern States in which we are primarily interested are all operated under State licenses as public utilities and are supervised by regulatory bodies known as railroad and warehouse commission, public service commission, and so forth. They are required by law to receive grain tendered for storage and cannot be closed except with the consent of the regulatory body. The grain producers in this area have been accustomed during the threshing season to haul their grain to the elevator directly from the threshing machine; and since these machines work long hours, elevator employees have, during the time of heavy movement, kept their elevators open sometimes considerably in excess of 12 hours per day. It is a matter of extreme importance to the producers to take advantage of every available hour of good weather to harvest the grain and haul the same to the elevators, so as to take it out of the hazards of weather and other factors that may result in damage to the crop. The hours at these elevators have, therefore, been adjusted to meet these requirements. For a large part of the year the hours are much shorter; and while the elevators usually are kept open during business hours, there are many weeks during the year when the manager has very little to do and many days when he does not take in a single load of grain but keeps his plant under observation so that if some grain is offered he can take it in. There is no one present at his station to check his hours, and he uses his own judgment as to what time he ought to put in at his elevator. This is quite unlike the situation prevailing in factories and plants in other lines. Hours of employment are not a factor in these small towns and villages, and the employees in the stores, garages, and other little business usually found are not much concerned with the hours of work. Origin of the grain: The grain received at these elevators is hauled. from farms varying considerably in the matter of their distance from the elevator, depending upon the number of stations that are to be found in any given area. In more thickly populated sections of Minnesota, the distance may not exceed 15 to 20 miles, whereas in some sections of North Dakota, South Dakota, and Montana the nearest elevator to some of the grain farms would be as much as 50 to 100 miles. We are appearing here primarily in opposition to the proposed amendments of the Fair Labor Standards Act insofar as they eliminate the exemption provided by section 13 (a) (10), which provides: The provisions of sections 6 and 7 shall not apply with respect to (10) any individual employed within the area of production (as defined by the Administrator), engaged in handling, packing, storing, ginning, compressing, pasteurizing, drying, preparing in their raw or natural state, or canning of agricultural or horticultural commodities for market, or in making cheese or butter or other dairy products. Senator ELLENDER. Exactly, how would that affect your business? Mr. REMELE. If we are denied the exemption, we would have to keep hours in these country plants. A country elevator, of course, is located out in every little town and village throughout Minnesota and North Dakota and all the grain-growing area. The employees in these plants have to adjust their hours to the hours that are observed by the farmers in the locality. The farmers, of course, during the threshing season especially, work long hours; they have got to get the grain in before rain or some other thing deteriorates the crop; and we are the storage facility for many of these farmers. Most of the farmers do not have sufficient storage capacity on the farm to take care of it, and they haul the grain right from the thresher into the elevator. Senator ELLENDER. How much longer would an employee have to work unless the exemption that you are contending for is in the bill? Mr. REMELE. The employee in these elevators works overtime perhaps to the extent, in the busy season, of as much as 60 or 70 hours, and it would be a terrific burden on us as the employers to pay them. overtime for the hours over 8 per day. Senator ELLENDER. For how long a period does that last? Mr. REMELE. Of course, we don't know exactly what hours they observe, because they keep their own hours. Senator ELLENDER. I mean for how long a period of time; 2, 3 weeks or 2 months? Mr. REMELE. Well, in these last years they have been busy 3, 4 months of the year, especially busy, but they work 50 or 60 hours most of the year. I mean they put that much time in at the elevator. They do not work hard all the time; they do not do anything a lot of the time. Senator ELLENDER. Do they get overtime for such work as they do? Mr. REMELE. No; we pay them all on a monthly salary basis. The average pay is about $190. Senator ELLENDER. Have you any objection to the minimum rate of pay fixed in the bill? 78595-45-10 Mr. REMELE. Not if we get this exemption. Of course, we would not be interested in the rate if we got this exemption. Senator ELLENDER. What is the pay at the present time? Mr. REMELE. The pay averages in our area about $190 for the manager and about $145 to $150 for what they call the second man. He is an assistant. Senator ELLENDER. What does that mean on a per hour basis? Mr. REMELE. Well, we haven't reduced it to hours, but the average week would probably run between 50 and 60 hours. Senator ELLENDER. That would be around 55 cents an hour. Mr. REMELE. For the second man; yes. The managers, of course, get more. Senator ELLENDER. If you got this exemption, you would have no objection to the considerably increased rate of pay that is provided for in the bill? Mr. REMELE. If we get the exemption we of course would not be affected by the proposed increase in the hourly rate. Senator TUNNELL. If you are not under the law, you do not care? Mr. REMELE. That is right. There is one factor I want to call your attention to in the little time I have, and that is that these elevators are public utilities; they are licensed by State authority, and the charges that they can make for their services are fixed by law, such as the storage charge, the handling charge. If our overhead is increased by bringing us under the law, whereas before we have been exempt, why, we want to know where to make up this extra overhead involved in paying the extra wages. Senator AIKEN. Do you store this grain for so much per bushel? Mr. REMELE. Yes. Senator AIKEN. And you have to keep these long hours, so if a farmer comes in after supper there is someone there to take care of his grain? Mr. REMELE. Yes; someone must be there to take care of his grain. He may come in from 15 to 20 miles. Senator AIKEN. I suppose some days, probably when the harvest is at its height, when you have people waiting to unload and there is pretty steady work during the height of the season, the time of the men is fully employed. Mr. REMELE. Oh, yes. Senator AIKEN. And then as the harvest season tapers off the grain comes in slower and there are longer periods between the trips. Mr. REMELE. That is right. In these little towns the man would be at the elevator but on some days he might not have a load all day. Senator AIKEN. Who owns these elevators? Mr. REMELE. Speaking of elevators generally, they are owned by individuals or by what they call line companies which have a chain of elevators throughout the country, or by cooperatives. A good many cooperative elevators are owned by the farmers themselves. Senator AIKEN. Does the same law that applies to these elevators apply to the big elevators, we will say, in Duluth and Minneapolis? Mr. REMELE. No. Senator AIKEN. They come under the law? Mr. REMELE. They come under the law and always have; yes. |