Senator ELLENDER. I would like you to give for the record the price farmers would have to sell five of our basic crops, corn, wheat, cotton, tobacco, and rice-per bushel or per pound in order to give them the same yearly return you are now trying to allow to industrial workers.

Mr. KAPLAN. I say at no matter what price he would have to sell it, he is entitled to that, and the point I want to make is you cannot help the farmer by keeping low standard wages and you cannot help the farmer by depressing wages.

Wages have actually been depressed in this country as far as real wages are concerned for this particular group of wage earners. That does not help anybody, Senator, and it seems to me, least of all the farmer.

Senator SMITH. Mr. Kaplan, if you approve Senator Ellender's suggestion, that you would like to raise the standards of the farmer on cotton, hogs, wheat, and so forth, that would mean you would have to raise the prices of those products and increase the cost of living?

Mr. KAPLAN. I do not concede that.

Senator SMITH. That is what I want you to address yourself tohow you would maintain the prices and still raise the standards.

Mr. KAPLAN. That brings me to the second point. Some of the opponents of this bill claim that all this bill will be doing will be to increase the cost of living so that in the end the wage rate will really not benefit those it was intended to benefit but will just require them to pay more for the goods they buy and will leave him no better off than he is now.

Senator SMITH. What they call the inflationary spiral?

Mr. KAPLAN. Yes. There are quire a number of factors involved in costs.

For example, the amount of labor it takes to go into any certain product is one factor. Another factor involved in cost is the question of how much any concern can produce, and that brings us down to the matter of demand. A lot of manufacturers sometimes have their pricing policies geared on a production level which is very far from capacity production.

My firm conviction is that if we are able to get full employment and we are able to get capacity production, that raising the minimum to 65 or 75 cents will not increase costs.

Senator SMITH. Of course, that is the big debate. Every witness has a different view on that point.

Mr. KAPLAN. That is my conviction on that entire matter.

Senator SMITH. I am glad to get your judgment. Does that go Nation-wide in every industry?

Mr. KAPLAN. I would not say in every industry but the general level of the commodities that go into the cost of living. I will state that as my firm conviction.

Senator SMITH. You think the general wage raise which would come from raising the minimum can come before we steam up production?

Does it not have to come out of the very production before you can guarantee it?

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 Áct. 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.