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Senator TUNNELL. I was only trying to find out whether this was the next "repeat" you are now passing through in employment.

Mr. GITTINGS. I would say that it is, both in regard to employment and volume. I personally will be amazed if it stands up as it did during the war.

Senator TUNNELL. Thank you very much, Mr. Gittings.

TESTIMONY OF CLARENCE J. BOURG, VICE PRESIDENT, AMERICAN SUGAR CANE LEAGUE, NEW ORLEANS, LA.

Senator TUNNELL. Give your full name to the reporter, please. Mr. BOURG. Clarence J. Bourg, vice president of the American Sugar Cane League, New Orleans, La.

Mr. Chairman and members of the committee, the American Sugar Cane League is an organization of growers and processors of sugarcane in Louisiana. The processing operations are conducted in the fall of each year. beginning in October, and how far into January the operations continue depends each year upon the size of the crop. There are 66 processing plants where sugar cane is received, ground and made into sugar.

At the time of the original enactment of the Fair Labor Standards Act in 1938, the minimum wage being paid was 25 cents to 30 cents. The industry promptly went to the 30-cent minimum and later by action of the Labor Industry Advisory Committee, the minimum rate was increased to 40 cents.

This substantial increase in the minimum likewise carried with it proportionate increases in the rates paid to the many skilled and experienced workers necessary to sugar processing.

Because the processing operations are entirely seasonal and last from 75 to 120 days in each year, it has been very difficult to maintain experienced crews of workers with the proper skills. For the most part, the majority of members of the crew in a sugar plant follow other trades and work during the balance of the year, such as farmers, carpenters, and plumbers.

The sugar plants are all located in rural communities so that crews cannot be easily obtained or organized. These conditions made it absolutely necessary, in most instances, to have the men employed in the plants work longer hours than are normal in factories which operate throughout the year.

In fact, because the season is comparatively short, most of the men employed look forward to being able to work on long shifts, for the reason that they are able to improve their income at a time of the year when outdoor work is greatly reduced.

The exemption contained in section 7 (c) of the act with regard to maximum hours has made it possible to continue the sugar-cane processing operations during the war years when labor has been so scarce. It has permitted the industry in Louisiana to average 400,000 tons of sugar production during the war years, which represents increased production.

It is essential to the continuation of maximum production that the section 7 (c) exemption shall be continued. The purely seasonal exemption provided under section 7 (b) (3) would jeopardize the saving of a large crop, since the harvest would extend beyond 14 weeks. More important is the fact that a 56-hour limitation could not be complied with, due to the scarcity of experienced labor willing to work at a

purely seasonal job, and because of the stringent control over prices and income exercised both by the USDA under the Sugar Act, and the OPA under the Price Control Act.

As proof of the inability of sugar-cane processors to operate successfully under the squeeze between minimum labor rates and strict control over price and income, a survey was conducted by the Louisiana State University covering the processing operations of 1944, and out of 29 raw-sugar factories surveyed 19 lost an average of $15,914.50 during the 1944 crop season. The survey established the fact that a majority of the processors lost money and the industry averaged out a loss.

Senator ELLENDER. Those losses were on the basis of the minimum rate of 40 cents, as you have just indicated.

Mr. BOURG. Yes, sir.

The experience of Louisiana processors under the Fair Labor Standards Act of 1938, has demonstrated the complete necessity for continuing the section 7 (c) exemption. The experience has likewise demonstrated that any increase in the minimum-wage rate will have to be offset by a corresponding relinquishment of Government controls over the price of sugar and over the income of producers.

In view of the surveys conducted by the Louisiana State University since 1937 covering the cost and income of sugarcane processing in Louisiana, our organization has requested a projection of the effect of increases in minimum rates as provided in S. 1349.

We submit a statement and tables prepared by Dr. J. Normal Efferson, economist of the Louisiana Agricultural Experiment Station at Louisiana State University. The statement explains each table and graphically indicates the reasons for our appearing in opposition to the proposed amendments.

(The statement referred to appears on p. 646.)

Mr. BOURG. The cost studies show an average net loss in 1944 of $15,914.50 per mill, or 12 cents per 100 pounds of sugar.

Tables 4, 5, and 6 indicate continuation and increase of such losses should the minimum wages be increased to 65 cents, to 70 cents, and to 75 cents.

Table 7 indicates what the losses would be per mill and per 100 pounds of sugar for hours worked in excess of the 56-hour week should the minimum rates be increased as proposed and should the section 7 (c) exemption be eliminated.

Senator TUNNELL. You mean your business is losing money now? Mr. BOURG. Yes, sir; we actually lost money in 1944.

Senator TUNNELL. Have you any idea of keeping up

Mr. BOURG. We are hopeful there will be a change in Government control over the price of our product.

Senator TUNNELL. What kind of a change did you have in mind?
Mr. BOURG. An improvement of three-quarters of a cent on sugar.
Senator TUNNELL. Raising of the ceiling?

Mr. BOURG. Yes. And under the Sugar Act there is also a control over the distribution, and that has tended to lower the income possibilities.

I might say the Bureau of Labor Statistics shows the average cost of food is up around 49 percent and sugar is only up 28 percent, so we are well below the average cost.

Senator TUNNELL. Would an equalization of that percentage let you out of the red?

Mr. BOURG. Yes, sir.

Senator ELLENDER. You mean under the present price structure? Mr. BOURG. Yes, sir.

In view of this very real situation confronting processors of sugarcane in Louisiana, the American Sugar Cane League asks that the exemption in section 7 (c) as to maximum hours and the minimum wage rates in section 6 be continued.

Senator TUNNELL. That was all you care to discuss? You have a lot of figures here.

Mr. BOURG. That is the statement and the tables prepared are basic data supporting our argument.

Senator ELLENDER. Mr. Chairman, I suggest that the statement referred to be filed with the clerk and when the permanent record is made that it be incorporated following the testimony of the witness. Senator TUNNELL. Yes. Of course we will have to cut out a good deal of that that is filed because we would have a book bigger than Webster's dictionary.

Senator ELLENDER. This is for the whole industry.

Senator TUNNELL. It seems to me impossible to file all of the exhibits.

Thank you very much, Mr. Bourg.

(The statement submitted by Mr. Bourg is as follows:)

CHANGES IN THE COSTS OF PRODUCING RAW SUGAR UNDER CERTAIN ADJUSTMENTS IN MINIMUM WAGE RATES IN LOUISIANA

(J. Norman Efferson, Louisiana Agricultural Experiment Station) Detailed studies of the costs and returns from the operations of raw-sugar mills in Louisiana have been conducted by the Department of Agricultural Economics of the Louisiana Agricultural Experiment Station each year since 1937.1 The most recent year studied, the 1944 grinding season, has been used as the basis of estimating expected changes in costs and returns under certain adjustments in minimum wage rates. The 1944 season was used since it is the most recent one and more nearly represents current and expected future conditions as to costs and returns. The 29 mills included in the 1944 study represent about three-fourths of the total production of raw sugar in Louisiana in 1944.

The percentage distribution of the total labor bill paid out to different wage classes of labor for most of the mills studied in 1944 is shown in table 1. Under 1944 conditions, the industry operated under a 40-cent minimum wage rate. The 1944 results indicate that about 14 percent of the labor in overhead costs was paid at the 40- to 44-cent rate, 64 percent of the procurement of cane labor, 56 percent of the labor for direct manufacture of sugar, 46 percent of the mill maintenance, and 11 percent of the selling costs. To summarize, 46 percent of all labor costs were paid out to workers at the 40- to 44-cent rate and about 75 percent of all labor was paid at less than 75 cents per hour.

The actual labor costs for each wage rate class for the 29 mills studied in 1944 are shown in table 2. Of the total labor expense of about $91,000 per mill, $46,000 was paid at the 40- to 44-cent rate.

The percentage increase in wage rates in each wage-rate class which would be caused by certain adjustments in wage rates are shown in table 3. In this computation it is assumed that any increase in minimum wage rates would necessitate the same absolute change for each wage-rate class. The table indicates that workers paid at the rate of 40 cents in 1944 would receive an increase of 62.5 percent if the minimum rate were increased to 65 cents, would receive an increase of 75 percent if the minimum rate were increased to 70 cents, and would obtain an increase of 87.5 percent if the minimum rate was increased to 75 cents. Percentage increases for the other wage-rate classes are somewhat less than for the lowest group.

1 Louisiana Agricultural Experiment Station Bulletins Nos. 316 and 373 and Department of Agricultural Economics, Louisiana Agricultural Experiment Station Circulars Nos. 37 and 48.

Tables 4, 5, and 6 present an extension of these wage-rate increases into costs to be expected under the 65-, 70-, and 75-cent minimum wage-rate situations. In these tables, all costs other than labor are carried at the actual cost as determined from the 1944 cost study. Each table presents a comparison of results under 1944 actual cost conditions as compared to expected results under the wagerate adjustment.

In 1944 the 29 raw-sugar mills studied had an average net loss of about $16,000 per mill of $0.12 per hundred pounds of raw sugar produced. Under 1944 conditions with a 65-cent minimum wage rate, the net income can be expected to average a net loss of $52,000 per mill or $0.39 per hundred pounds of raw sugar. If the minimum wage rate is 70 cents, the loss will be $59,000 per mill or $0.45 per hundred pounds of sugar, and if the minimum wage rate is 75 cents, the loss will average $66,000 per mill or $0.50 per hundred pounds of sugar.

Table 7 presents a summary of the average costs and returns under each of the minimum wage situations if the complete overtime-pay exemptions now provided are eliminated. This table is computed on the basis of the usual method of operation of Louisiana raw-sugar mills of an 84-hour workweek composed of daily shifts of 12 hours each or four 6-hour shifts.

The facts indicate that the elimination of the overtime-pay exemption will increase average costs about $20,000 per mill in each minimum wage situation. Under both minimum wage-rate adjustments as listed and overtime pay of time and one-half for all work over 56 hours per week during the grinding season, the expected loss is $65,000 at the 65-cent minimum rate, $73,000 at the 70-cent rate, and $81,000 at the 75-cent rate.

A final summary of average costs and returns per hundred pounds of sugar, based on 1944 actual costs with adjustments for the six different wage-rate and overtime-pay situations, is shown in table 8. These data indicate an average net loss in 1944 of 12 cents per hundred pounds under a 40-cent minimum rate and no overtime pay, as compared with a loss of 62 cents per hundred pounds with a 75cent minimum wage rate and time and one-half for all work over 56 hours. TABLE 1.-Percentage distribution of total labor bill paid out to different classes of labor at 19 sugar mills, 1944 grinding season

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TABLE 2.-Proportionate labor costs in each wage rate class for 29 Louisiana raw sugar mills, 1944 grinding season 1

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'Total labor costs for each wage class allocated according to percentage break-down in table 1.

TABLE 3.-Proportionate change in labor costs in each wage class which would be caused by certain adjustments in wage rates 1

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1 Assuming that any increase in minimum wage rates would necessitate the same absolute change for each wage rate class.

TABLE 4.—Effect of a 25-cent increase on wage rates per hour for items of cost and return, in Louisiana sugar mills, 1944 grinding season

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