unenforceable, difficult to administer, and insufficient to protect the weekly wage. They believed that wage schedules and basing points negotiated through collective bargaining met the objectives best of all, although they opposed extersive application of these methods in industries which are not effectively unionized. The administration accepted basing points and wage schedules for industries in which collective bargaining was practiced or in industries were labor and management could be induced to develop the terms of employment in this manner. As for industries which had not developed a collective-bargaining technique, NRA was still completely baffled as to the means of attaining its objectives. It was not able to develop a practical, precise, and definite equitable formula for the adjustment of wages to offset the reduction in weekly hours which could be enforced and would have the desired effects and still have management's assent and labor's approval. The wage adjustment principle, even though not strictly applied, did, however, serve a significant role in NRA wage policy. It proclaimed that the NRA did not favor a share-the-work movement, and that wage increases were required to compensate at least partially for the reduction in hours, Although the amount of increase in hourly rates was often not specifically declared, and thus caused wide variations in interpretations as to the required percentages of increase, the hourly rates of those receiving wages above the minimum did in general increase during the NRA period. The amount of increase differed greatly because of the varying pressures of code provisions, employee expectations, rising trends in prices and wages, and expanding labor organization. It may be said that, on the whole, the wider the spread in wages among employees before the NRA, the smaller was the rate of increase in houring rates to those receiving the higher hourly earnings. The greater wage increases were received by those below or close to the minimum. While the hourly earnings of employees above the minimum were generally raised, by no means all employees had their total earnings maintained despite the reduction in hours of work, while a very small percentage actually had their hourly rates reduced. The more definite the code provision was, the greater was the likelihood that the amount of increase would maintait weekly earnings. But even so, the range of adjustment was wide and varied There was consequently great employee dissatisfaction, as expectations were not realized and resentment against reduction of weekly earnings became widespread. Reports on these adjustments from various industries and from NRA State compliance offices indicate that there were many protests against the minimum becoming the maximum wage. Protests were also heard against reductions in weekly earnings and against the abuses and evasions brought about through such practices as changing jobs, discharging employees, or hiring new employees at the minimum or subminimum rate. The wage bill of most industries was raised, though hardly to the degree expected by NRA. The fair competition generally expected to develop from uniform wage standards was not fully achieved, since real stabilization of wage rates had not been attained. Individual industries increasingly sought by new provisions to stabilize wage rates at the new levels. The majority of the industries, however, particularly those industrially inactive, were still seriously opposed to any provision which might lead to governmental supervision of wages above the minimum and to increases in their total wage bill. The general formulae for wage adjustments were essentially transitional de vices intended to meet the problem of maintaining weekly wages in face of the reduction in weekly hours. They were meant to guide in the readjustment of wage rates in such a manner as to yield a greater total labor income, and a new level of wages for the various occupations was expected to result. Implicitly, it was hoped that the new wage standards would become the prevailing levels But the fact that these new wage rates were nowhere specifically defined left opportunity for evasion by hiring new employees at lower rates, or by discharg ing old employees to be replaced by new employees who might be so hired, or by setting up new establishments with lower wage levels. Such lack of definition also tended to produce an unstable wage scale and to strengthen such industrial trends as migration to lower wage areas. Much of the dilemma prevailing in NRA ranks resulted from the early failure to recognize that a more definite method of controlling wages above the minimum was required for a permanent system of regulation intended to increase labor income, to foster fair competitien and industrial stability, and to promote collective bargaining. Experience with wage basing points and schedules Essentially a provision for wage basing points and schedules assumed that there would be permanent governmental control and supervision of these wages for at least two major purposes: The stabilization of the wage structure to achieve greater uniformity of labor prices, and the protection and increase of the worker's wage income. In some cases there was a third purpose: The development and extension of collective bargaining within industry. Most of the basing point provisions were intended to establish wage minima for employees above the minimum at about the wage level that would result from the application of the code formula for upward adjustment of wages. In a study of wage changes in 101 industries between June 1933 and the average for the first 5 months of 1935, it was found that the average percentage increases in average hourly earnings were as follows: Industries, with wage-basing points and schedules, 44.4 percent; with maintenance of differentials, 25.8 percent; and industries with no mandatory formula for upward adjustment of wages, 25.2 percent. The study indicates that codes with wage-basing points and schedules provided the greatest increase in wages, and the more definite the formula the greater the increase in hourly earnings. The wage-basing-point plan proved a simpler administrative device than the wage-schedule plan, but it furnished less protection to the wage scale and did less to stabilize it. The greatest degree of stabilization of the wage scale was achieved in those instances where the basing point covered the preponderant proportion of skilled or semiskilled workers, or where an entire wage schedule was developed. Employees in the groups that received wages above the minimum were enabled by these plans to know exactly the rates to which they were entitled. Minimum rates were stabilized and standardized. Several techniques for the development of wage schedules were tried. The most outstanding were the piece-rate plan, the plant minimum average, and the complete enumeration of the wage minima. It was found that the first two were not satisfactory. The wage-schedule method, on the whole, met the problem of providing sufficient flexibility to allow for the varying productivity of individual employees. These wage-schedule plans were applied in NRA principally to industries largely employing specialized skilled workers. Where organization of labor and collective bargaining existed, the problem of developing an occupational classification, which otherwise appeared to be insurmountable, was found capable of solution. Experience showed that the Government could successfully undertake the enforcement of provisions for the protection of the wages of employees above the minimum, where the provisions were the result of the joint negotiations of employer and employee groups, where the terms were satisfactory to each, and where both groups undertook the enforcement of the provisions. The techniques employed in the motion-picture and construction industries provided valuable precedents for the development on a national scale of adequate methods of protection. Where occupations were not sufficiently standardized, the basing-point system provided a simple mechod of approach with which to begin a more farreaching structure of control. Definite provision for the protection of the wages of various occupational groups was shown to be necessary for a long-term program of stabilizing labor cost. Senator TUNNELL. We will reconvene tomorrow morning at 10 o'clock in room 424-B. (Whereupon, at 4: 35 p. m., the committee adjourned until 10 a. m., Friday, October 26, 1945.) 78595-45-51 AMENDMENT OF THE FAIR LABOR STANDARDS ACT FRIDAY, OCTOBER 26, 1945 UNITED STATES SENATE, EDUCATION AND LABOR, The subcommittee met, pursuant to adjournment, at 10 a. m., in room 424-B, Senate Office Building, Senator James Tunnell presiding. Present: Senators Tunnell (presiding), and Ellender. Also present: Senator Guffey; Charles Kramer, consultant to the committee. Senator TUNNELL. The hearing will please come to order. TESTIMONY OF SIDNEY HILLMAN, PRESIDENT, AMALGAMATED CLOTHING WORKERS OF AMERICA, CIO Senator TUNNELL. If you will give the reporter your name and your representation, Mr. Hillman, please? Mr. HILLMAN. Sidney Hillman. I am president of the Amalgamated Clothing Workers of America, whose headquarters are at 15 Union Square, New York City. I am testifying for that organization. I understand that a great deal of testimony has been given before you. I am here to give you my views on this matter, in the light of my experience. I have been connected in an official capacity with industry on the labor end since 1910. I was a member of the National Recovery Board and from 1933 was a member of the Office of Production Management and the National Defense Advisory Commission. Senator TUNNELL. I might say to you, Mr. Hillman, one of the principal things that has been put up as an objection to the bill has been the belief on the part of some employers that they could not stand the extra expense. Anything you can say on that line might help us. Mr. HILLMAN. It is not what I have in my statement, and it probably hasn't been covered by most of the others, but I will say, from my experience in the clothing industry and in the textile industry, and from my contacts as a member of the National Recovery Board, where they first put in the minimum wages in writing the codes, that I have yet to find that any employer was put out of business because of the minimum wage. I have yet to find any substantial number of employers who were not rather happy after the introduction of the minimum wage. The minimum wage has made the average employer happier in his rela tionship to labor, being protected thereby from unfair competition from the rest of the people in the industry. The general effect of the minimum wage was always beneficial to the industry. I have yet to find a single instance where an industry has complained after the effectuation of a minimum wage. I was one of the few who had brought to the attention of President Roosevelt and his administration in 1936 and 1937 the need for a minimum wage after the NRA went out of existence because of the decision of the Supreme Court. There was considerable opposition at that time. Of course, it was a time when business was in a rather depressed state and there was considerable concern amongst people in business whether they could take at that time the very low minimum wage suggested, from 25 to 40 cents an hour. Well, again looking back at my experience, I find that there was less opposition when we tried to revise it up from 25 to 55 cents an hour. In other words, most of the employers were convinced that the introduction of the minimum wage benefited them as employers and benefited the industry. Your records are there, and you will find dire predictions that were made by members of the industry and by people of the Government as to what would happen. But of course the results have been, in my judgment, beneficial to all industry. I understand there is very little opposition from industry on this measure. Now I would like to discuss the 65-cent minimum wage. industries that is practically the minimum wage right now. What we are asking you to do is to give Government sanction against reductions, because almost all industry today has a minimum wage of 65 cents an hour, or close to it. There is no question that the rise in the cost of production will not amount to anything that would be reflected in a price increase due to the 65-cent minimum wage. From figures given to me, it must mean less than 2-percent increase in labor cost. Translated, the average labor cost is about 25 percent of the unit cost. And what does that give you? Just one-half of 1 percent. Those of us who know the problems that enter into labor cost and unit cost in industry know that the real factor in making the cost prohibitive occurs when there is lack of production or lack of employment, because a major part of general cost is overhead, rent-the constant overhead, the overhead that is going on whether the plant is at work or idle. The general managerial overhead is usually on a fulltime basis, as you know, regardless of whether the plant is in operation or not. Then there is investment, equipment, interest charges, and so forth. Now the problem facing the Nation today is: How are we going to maintain full production and full employment? Given full production and full employment, obviously the cost per unit is bound to go down. The more the cost per unit is regulated, the more we have steady business, demand for production, demand for the kind of things we produce. Now, this, of course, is determined by the purchasing power of the country. The greatest single factor in purchasing power is the wage level, because from fisty million people derive their income through the payment If we keep up a decent wage level, then ob |