shall recommend to the Administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in the industry, and which will maintain reasonable wage differentials between interrelated job classifications in such industry.

"(c) The industry committee for any industry shall recommend such reasonable subdivisions within any industry as it determines to be necessary for the purpose of fixing for each subdivision within such industry the highest minimum wage rate for unskilled job classifications (not in excess of 75 cents an hour) which (1) will not substantially curtail employment in such subdivision and (2) will not give a competitive advantage to any group in the industry, and shall recommend for each subdivision in the industry the highest minimum wage rate for unskilled job classifications which the committee determines will not substantially curtail employment in such subdivision. The industry committee shall further define such reasonable job classifications within such industry or subdivision thereof and shall recommend minimum wage rates for such job classifications (other than unskilled job classifications) at such levels as it determines to be necessary for the purpose of maintaining reasonable wage differentials between the minimum wage recommended by it for unskilled job classifications and the wage rates for interrelated job classifications in such industry or subdivision thereof. In determining whether subdivisions should be made in any industry, in making such subdivisions, in determining the minimum wage rates for such subdivisions, in defining job classifications and in determining minimum wage rates for job classifications, no classification or determination shall be made and no minimum wage rate shall be fixed, solely on a regional basis, but the industry committee and the Administrator shall consider among other relevant factors the following:

"(1) competitive conditions as affected by transportation, living, and production costs;

"(2) the wages established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing; and

"(3) the wages paid for work of like or comparable character by employers who voluntarily maintain minimum-wage standards in the industry. No classification shall be made under this section on the basis of age or sex. "(d) The industry committee shall file with the Administrator a report containing its recommendations with respect to the matters referred to it. Upon the filing of such report, the Administrator, after due notice to interested persons, and giving them an opportunity to be heard, shall by order approve and carry into effect the recommendations contained in such report, if he finds that the recommendations are made in accordance with law, are supported by the evidence adduced at the hearing, and taking into consideration the same factors as are required to be considered by the industry committee, will carry out the purposes of this section; otherwise he shall disapprove such recommendations. If the Administrator disapproves such recommendations, he shall again refer the matter to such committee, or to another industry committee for snch industry (which he may appoint for such purpose), for further consideration and recommendations.

"(e) No minimum wage rate for unskilled job classifications of less than 75 cents an hour, contained in an order issued under this section prior to the expiration of two years from the effective date of section 6, shall remain in effect after such expiration and no order fixing a minimum rate for unskilled job classifications of less than 75 cents an, hour shall be issued under this section with respect to any industry on or after such expiration.

"(f) Orders issued under this section shall define the industries, or subdivisions thereof and job classifications therein to which they are to apply, and shall contain such terms and conditions as the Administrator finds necessary to carry out the purposes of such orders, to prevent the circumvention or evasion thereof, and to safeguard the minimum wage rates established therein. No such order shall take effect until after due notice is given of the issuance thereof by publication in the Federal Register and by such other means as the Administrator deems reasonably calculated to give to interested persons general notice of such issuance.

"(g) Due notice of any hearing provided for in this section shall be given by publication in the Federal Register and by such other means as the Administrator deems reasonable calculated to give general notice to interested persons."

6. Section 12 of the Act shall be amended as follows:

"SEC. 12. (a) After the expiration of one hundred and twenty days from the date of enactment of this Act, no producer, manufacturer, or dealer shall ship or deliver for shipment in commerce any goods produced in an establishment situated in the United States in or about which within thirty days prior to the removal of such goods therefrom any oppressive child labor has been employed: Provided, That a prosecution and conviction of a defendant for the shipment or delivery for shipment of any goods under the conditions herein prohibited shall be a bar to any further prosecution against the same defendant for shipments or deliveries for shipment of any such goods before the beginning of said prosecution.

"(b) No employer engaged in commerce or in the production of goods for commerce shall employ any oppressive child labor in or about or in connection with any enterprise in which he is so engaged.

"(c) The Chief of the Children's Bureau in the Department of Labor, or any of his authorized representatives, shall make all investigations and inspections under section 11 (a) with respect to the employment of minors, and, subject to the direction and control of the Attorney General, shall bring all actions under section 17 to enjoin any act or practice which is unlawful by reason of the existence of oppressive child labor, and shall administer all other provisions of this Act relating to oppressive child labor."

7. Section 13 of the Act shall be amended to read as follows:

"SEC. 13. (a) The provisions of sections 6 and 7 shall not apply with respect to (1) any employee employed in a bona fide executive, administrative, professional, or local retailing capacity, or in the capacity of outside salesman (as such terms are defined and delimited by regulations of the Administrator); or (2) any employee engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce; or (3) any employee of a carrier by air subject to the provisions of title II of the Railway Labor Act; or (4) any employee employed in the catching, taking, harvesting, cultivating, or farming of any kind of fish, shellfish, crustacea, sponges, seaweeds, or other aquatic forms of animal and vegetable life, including the going to and returning from work; or (5) any employee employed in agriculture; or (6) any employee to the extent that such employee is exempted by regulations or orders of the Administrator issued under section 14; or (7) any employee employed in connection with the publication of any weekly or semiweekly newspaper with a circulation of less than three thousand the major part of which circulation is within the county where printed and published; or (8) any employee of a street, surburban, or interurban electric railway, or local trolley or motor bus carrier, not included in other exemptions contained in this section; (10) any switchboard operator employed in a public telephone exchange which has less than five hundred stations.

"(b) The provisions of section 7 shall not apply with respect to (1) any employee who during the greater part of any workweek is engaged in work with respect to which the Interstate Commerce Commission has established qualifications and maximum hours of service pursuant to the provisions of section 204 of the Motor Carrier Act, 1935; or (2) any employee of an employer subject to the provisions of part I of the Interstate Commerce Act.

"(c) The provisions of section 12 relating to child labor shall not apply with respect to any employee employed in agriculture while not legally required to attend school, or to any child employed as an actor in motion pictures or theatrical productions."

8. Section 16 of the Act shall be amended as follows:

"SEC. 16. (a) Any person who willfully violates any of the provisions of section 15 shall upon conviction thereof be subject to a fine of not more than $10,000 or to imprisonment for not more than six months, or both. No person shall be imprisoned under this subsection except for an offense committed after the conviction of such person for a prior offense under this subsection.

"(b) Any employer who violates the provisions of section 6 or section 7 of this Act shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. Action to recover such liability may be maintained at any time within five years from the accrual of such liability in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated, or such employee or employees may designate an agent or representative to maintain such action for and in behalf of all em

ployees similarly situated. The count in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action.

Senator TUNNELL. The first witness is Secretary Schwellenbach.

TESTIMONY OF HON. LEWIS B. SCHWELLENBACH, SECRETARY OF LABOR

Senator TUNNELL. You may proceed in your own way, Mr. Secretary.

Secretary SCHWELLENBACH. Mr. Chairman and gentlemen of the committee, a bill such as the one before the committee today raises many questions of a technical nature. I shall give the committee my general thoughts on some of the proposed changes in the Fair Labor Standards Act, but I shall leave to Mr. Walling and to Mr. Hinrichs the task of elaborating upon the statistical and economic data which the committee desires for its consideration of the measure.

Congress in 1938 did not intend that a 40-cent minimum should represent the final goal in Federal minimum wage policy. That minimum represented, rather, a reasonable beginning toward the ultimate goal: "A minimum standard of living necessary for health, efficiency, and well being of workers." That language is taken from the original act. It was recognized in 1938 that an annual income of $800, which full employment at a 40-cent rate would bring, did not achieve the objective of a minimum American standard of living. Since 1938 the country has proved its capacity to produce a national income far beyond prewar levels. The productivity per man-hour in manufacturing has greatly increased. Now is the time to take a further step in achieving for each worker a minimum wage that will more adequately assure his health, efficiency, and general well-being.

I favor the minimum wage provisions of S. 1349: I believe that 65 cents an hour is necessary in justice to that large group of low paid wage earners who have never received sufficient income to maintain their American standard of living. The enactment of such a law in my opinion will prove beneficial to other economic groups in the Nation.

In judging the question of the proper hourly wage rate which should be established as the legal minimum, a number of factors must be taken into account. Among these factors are the cost of living, the capacity of business to pay the wage and whether there will be inflationary effects.

We all know that the cost of living has risen since the enactment of the Fair Labor Standards Act. This has an important bearing on the minimum wage question. It means that in terms of real wages even the inadequate goal of 40 cents an hour has not been achieved. At present the increase in prices and the cost of living have canceled out one of the objectives sought in the enactment of the 40 cents minimum in 1938, in that it will not purchase the same goods and services that it would purchase in 1938.

A substantial part of the proposed increase in the minimum wage is required, therefore, merely to reestablish the congressional objective of 1938.

The remainder of the increase represents what I have described as an advance toward the goal of a minimum American standard of living.

The committee will probably receive detailed testimony on the question of the money amount required for a minimum budget. I doubt whether any of that testimony will show that 65 cents an hour, representing $26 for a standard workweek, and $1,300 for a year of work, will be sufficient to meet the minimum budget of the average working

man.

A minimum standard of living supported by a guaranteed wage at the suggested level will strengthen our economy by maintaining national purchasing power.

We have learned that wages must be viewed not only as labor costs but also as an index of our purchasing power.

The money received by wage earners through the operation of the minimum wage law will in the main be expended on such items as food and clothing. At low income levels, a greater proportion of the budget is allocated to these necessary items of living. There will be numerous business enterprises, which will be affected by these expenditures. Retail stores and other agencies of distribution will be called upon to sell goods which would not otherwise have been bought; factories and other processing establishments will be required to manufacture these goods; and ultimately, the farms will have a larger demand for their cotton, wheat, and other products. These are the activities that make for a sound economy. They are the backbone of our American principle of free enterprise. No one questions that. I believe that our experience with the present act justifies the assertion that a minimum wage law is a vital factor in their achievement.

An increased minimum wage should also assist our system of free competitive enterprise in working out its true functions. We will not secure the most efficient production of goods and services by permitting competitors to outrival each other in wage cutting. Just as our law makes monopoly an illegal means of stifling competition, so should the law rule out the payment of substandard wages which cause unfair competition. Our high wage economy has shown that it can outproduce low wage economies by maintaining a higher degree of productive efficiency. Placing a floor under wages means that wage cutting must be replaced by a search for greater efficiency. The direction of our economic effort along these lines should produce more and better goods and services and stabilize our economy.

I believe that we can take action to eliminate substandard wage conditions and to preserve purchasing power without destroying business or causing inflation.

There are many industries which pay the bulk of their workers above 55 cents an hour. These industries will not be substantially affected by an increase in the legal minimum to 65 cents an hour.

Only a small percentage of substandard wage earners receive less than 50 cents an hour. For all practical purposes, therefore, the 65 cents minimum will increase actual compensation of employees of the low-wage group by 1 to 15 cents depending on their rate of pay.

These wage increases will not register a directly proportionate effect on costs of production or prices. In the first place labor is only a part of the total cost of production. In many industries the

cost of materials, overhead, and other factors represents a greater portion of the total cost of production than labor. Secondly, improvement of technical processes and increases in efficiency of production will tend to absorb the increase in the hourly rate of pay.

The sections of the bill providing for the maintenance of reasonable wage differentials between interrelated job classifications, through use of the industry-committee procedure, raise a number of questions. One which occurs to me, for example, is whether the kind of industry. committee which has been functioning under the Fair Labor Standards Act is properly qualified to handle the technical work of job analysis and classification. Another problem is the possible effect of the proposal upon established labor relations in well-organized plants and industries where collective bargaining is the method used for handling wage differentials. I am sure that this committee will wish to study these and other related questions.

I will say to the committee that Mr. Walling, the Administrator, is prepared to present in detail a discussion of these two problems which I simply point out.

The bill proposes to delete sections 13 (a) (10) and 7 (c) of the Fair Labor Standards Act which provide for the exemption of certain agricultural processing industries from minimum wage and overtime pay requirements.

I am in favor of this proposal.

The extension of the minimum-wage requirements of the law to employees in agricultural processing industries is necessary for the reasons I have given with respect to the need for raising the minimum wage to 65 cents an hour. This segment of our wage earning population is entitled, equally with all others, to attain a minimum American standard of living. Full production and employment cannot be attained if this group does not receive the protection of an adequate wage floor. Furthermore, the business enterprises in these industries should also be provided with a uniform basis of competition with regard to the minimum wage.

I believe that extension of minimum-wage coverage in the agricultural processing industries is more feasible at this time than when the Fair Labor Standards Act was enacted because there has been an upward revision in the wage structure.

I am also of the view that this is a favorable time to narrow the overtime exemption for agricultural processing industries. During the reconversion period, there will be temporary unemployment in those industries which require time to change over to peacetime production. Agricultural processing industries for the most part are not subject to this difficulty, however, since they produce the same goods in war and peace. It is, therefore, reasonable to provide these industries with an incentive to employ more people in their regular operations.

I do not believe that the application of the overtime provisions will result in undue hardship. Agricultural processing industries which are of a truly seasonal character and cannot expand their labor forces during periods of peak production are eligible for a partial overtime pay exemption under section 7 (b) (3) of the act. This section provides that employers in industries found by the Administrator of the Wage and Hour Division to be of a seasonal nature