net reproduction ratio for the urban population was only 76 and for the country as a whole it was 96. Thus, the total population was slightly below the level of reproduction and the wage or salary population 36 percent below this leve'. It is, therefore apparent that wage or salary income families were not large enough to replace themselves.

On the basis of the projection of these trends into the future, it is predicted that, without allowing for the effect of war on population growth, the population of the United States will reach an almost stationary point about 1965 and will begin to decline sometime about 1980. Long before this time the effect of the slowing down of the population will make itself felt in the demand for goodsfirst in the articles particularly needed by children and the next in houses, fur niture, and other goods necessary for the equipment of new families. The only way in which the depressing effects of a stationary population on the economy can be offset is to increase the consuming power of the average family so that the same number of people will consume more goods. When manufacturers ard businessmen become more aware of the effects of a sluggish population increase, there will undoubtedly in the next 10 or 15 years be more insistent demands for positive population policies, one of the main bases of which will be greater family security and increased family purchasing power.

How much the decline in the size of the family is due to economic considerations is a debatable matter, but it is probably safe to state that if no chill were an economic burden, probably more children would be born and certainly more of those children which are born would have the advantages of good health and educational services, which would mean that more would survive to the productive age. Along this line it is interesting to note that the results of a survey conducted by the Ladies' Home Journal in 1938 showed that only 1 percer of the women questioned thought an ideal family consisted of one child, 25 percent thought two children, and 74 percent thought three or more.

If, however, a stationary population is inevitable, the situation need not necessarily cause depressing effects on the economy if purchasing power is we distributed and adequate. Isador Lubin, in his testimony before the Temporary National Economic Committee in 1938, submitted the following estimates of additional consumption which would result if a wage increase of $2.25 per day were effective for families then earning under $1,250 per year:

"They would buy $800,000,000 worth of food more than they buy now: they would increase their purchasing of clothing by $416,000,000; they would increase their purchase of housing or rents by $613,000,000; they would spend $213,000,00 more on fuel, light, and refrigeration; they would spend $385,000,000 more »t transportation, automobiles, etc.; they would spend $73,000,000 more on persona. care; they would spend $234,000,000 more on recreation; they would spend $20 000,000 more on medical care."

Thus, economic expansion can continue far beyond population increase, pro vided the system is so ordered that the vast potential expansion of production can be activated by the ability of the masses to satisfy existing wants.

Turning now to the second assumption that the average wage of a singe wage earner should be adequate to support the optimum size family, the following facts as to the situation in 1940 appear:

The average composition of all nonfarm wage or salary families was 2.3 adu's and 1.1 children. The median family income was $1,380, or, on a modified per capita basis, $474 per unit.

But these averages are deceptive. The responsibility for family support is very unevenly distributed throughout the population. Urban families are much smaller than rural families, averaging less than one child apiece as against on and six tenths in the farm population.

But within each region and residential class the widest differentials *** between those families which have children and those which do not. About ha'f the wage or salary families had no children at all, and one-seventh of the famhes (those with three or more children apiece) included half of all children. Whet the incomes of these types of families are compared on a modified per cap basis, it develops that couples without children have more than twice as mart to spend per person than the families with three or more children, which, as we have said, include half the children.

The $474 per capita income represented the earnings of all members of te family combined. Numerous family heads with substandard wages had earnings which were not sufficient to support the family at a level at which they wishe! to live. In 31 percent of the families the earnings were supplied by more than worker. The median earnings of the one-earner families were $1,213; fami

with two earners, $1,708; and families with three or more earners, $2,417. These re obviously undesirable social effects of the necessity for contribution to the amily budget by mothers of young children or by minor children. Of the total xperienced urban workers in the labor force in 1940, 9 percent were wives and .5 percent were children from 14 to 17 years of age. It is thus apparent that amily earnings are by no means produced by the sole effort of a single wage

arner.

The figures given so far have been in the terms of absolute dollars available for family living. The meaning of these amounts is clearer if they can be measured in terms of the level of living which they will support. The so-called naintenance budget provides a yardstick for such measurements. Since it is my understanding that this budget has been discussed by experts from the Department of Labor, it need only be said here that the maintenance budget is not a liberal budget but is designed, with careful shopping, to supply the basic ecessities for wage earning and "white collar" families. For instance, it does not provide for an automobile or many of the conveniences which are so desirable to facilitate housekeeping; nor does it make liberal allowances for recreation or cultural development.

This budget is usually priced in terms of a family consisting of a man and wife and two children. Its total cost may, however, be reduced to a modified per capita basis comparable to that used for estimating modified per capital incomes. This procedure, however, is only possible for the 33 cities in which this budget was priced in 1940.

In urban areas the median unit income was $533 as against the unit cost of the maintenance budget in the 33 cities of $427. Stated another way, 38 percent of the families in these cities were living at a level below that represented by the maintenance budget.

The variation between cities was extreme. In high-wage cities, such as Washington, D. C., and San Francisco, Calif., only about 25 percent of the families were living below the maintenance level, but in low-wage cities, such as Memphis, Tenn., and Mobile, Ala., two-thirds of the families were living below the maintenance level. It is probable that, if satisfactory measures of the cost of the maintenance budget in small towns and villages were available, the level of living afforded by the wages in these places would be even lower in most sections of the country that that indicated for the low-wage cities.

Under these circumstances, it is evident that few families which are below the average in income or above the average in size are able to accumulate savings for security. In fact, the extent of precarious living in times of depression is shown by the Consumer Purchase Study of 1935-36. In this Study all types of families with incomes below $1.000 and the larger families with incomes below $1,750 reported average expenditures in excess of income. These families were accumulating debts instead of reserves.

Any interruption of earnings in families which are living so close to the margin results in a period of reduced income during which the family is almost entirely dependent upon credit, assistance from relatives, social insurance, or public assistance.

The size of insurance benefits is, in turn, determined by the previous average earnings. It is especially noteworthy that the present Social Security measures do not include protection against income loss due to illness or abnormal expenditures for medical care.

With reference to unemployment compensation benefits, it is possible to infer certain facts from the benefit formula. This formula is such that an individual weekly benefit approximates 50 percent of recent wages up to a maximum. The imposition of this maximum reduces the percentage of higher wages which are compensated and causes the average proportion of compensated wages to fall considerably below 50 percent. The principal justification for fixing unemployment compensation below wages is that the benefits are extended to employable people who should be encouraged to return to private employment at the first opportunity. Granting the validity of this argument, the question still remains as to how far below previous wages it is necessary to fix benefit payments in order to accomplish this purpose. Is it necessary to reduce the families to from 30 to 50 percent of the previous wages, or would the same purpose be served by reduction to from 60 to 80 percent of the previous wages?

As long as benefits are to any extent scaled below previous wages, it stands

78595- 45-56

to reason that families which were above the average in size and below the average in wages will receive benefits which have little relationship to the needs of the family.

Old-age benefits and the benefits paid to survivors of insured workers are also dependent upon previous average wages. In 1940, old-age benefits averaged about $23 a month, or far below the wages which are earned by persons over 65 years of age who continue to work.

Survivors' benefits may be compared to private incomes on a unit basis. United States average unit value of family group survivors' benefits was $268, or about 50 percent of the national median family income. Thus, large families with low wages find it difficult to accumulate savings to meet the needs of the periods of unemployment, old age, sickness, or death of the wage earner and at the same time are at a disadvantage because the size of these benefits, when paid, is reduced because of previous low average earnings. Under these circumstances, the necessity for supplementing the insurance system with the system of public assistance payments is necessary to prevent actual distress.

Reviewing the facts in terms of the objectives assumed in the beginning, it is evident that the family incomes of 1939 did not satisfy any of the three conditions. First, the families of wage earners were not large enough to replace the population since the replacement ratio was only 76 percent. Second, even these small families were not in all cases supported by a single worker, as 30 percent depended also on earnings of other members of the family. Third, the level of living afforded by these family incomes was below the so-called maintenance standard in 38 percent of the urban families and a larger proportion of the village families. Fourth, the families which were below the average in income or above the average in size found it nearly impossible to accumulate savings to tide over periods of wage loss. They were, therefore, likely to be dependent upon inadequate social insurance benefits, since these benefits are also based on previous average earnings. It would, therefore, seem clear that, if the assumed objectives laid down at the beginning of this statement are agreed to, the attainment of these objectives would require a substantially higher scale of real wages than that which prevailed in 1939.

APPENDIX

Definitions

Net reproduction ratio.-If, at prevailing birth and death rates, a sufficient number of daughters are born to survive up to the age of their mothers, the ratio is 100. If this number of surviving daughters is insufficient to replace their mothers, the ratio is less than 100.

Family. A private family comprises a family head and all other persons in the home who are related to the head by blood, marriage, or adoption, and who live together and share common housekeeping arrangements. A person living alone is counted as a one-person private family. A family head sharing his living accommodations with one or more (but not more than 10) unrelated persons is counted as a one-person family. Under this definition, family members exclude persons in institutions, and lodgers, servants, guests, foster children, and wards living in the household.

Children. All persons in the family under age 18, except those who were heads of families or their wives. In 1940, 93 percent of the children in nonfarm families were children of the head; 5 percent were grandchildren, and 2 percent, other relatives.

Adults. Persons aged 18 years and over, and persons under age 18 who were heads of families or their wives.

compensation; (3) direct relief or charity; (4) income in kind; (5) sums received for travel and expenses incurred in travel.

Total family income.-The sum of the earnings from wages or salaries of all family members.

Family unit.-One adult or two children.

Family unit income.-The wage or salary income of a family divided by the number of family units, or the median income of a group of families divided by the average number of family units in the group.

EXHIBIT 8

STATEMENT OF AMERICAN MERCHANT MARINE INSTITUTE

IN THE SENATE OF THE UNITED STATES, COMMITTEE ON EDUCATION AND LABOR, IN THE MATTER OF S. 1349, A BILL TO PROVIDE FOR THE AMENDMENT OF THE FAIR LABOR STANDARDS ACT OF 1938, ETC.

The American Merchant Marine Institute, Inc., is an association numbering among its members the great majority of steamship companies owning and operating American-flag tonnage. These companies, acting as general agents of the War Shipping Administration, are today operating for account of the Government our greatly expanded merchant fleet. On behalf of its members, the Institute appears in opposition to those provisions of S. 1349 which would bring seagoing personnel on board merchant vesels within the coverage of the Fair Labor Standards Act of 1938.

Under section 13 of the 1938 act, persons employed as seamen are now exempt from the provisions (secs. 6 and 7) governing minimum wages and maximum hours. S. 1349 would terminate this exemption. It is submitted that such a step would force upon the shipping industry conditions that would make it impossible to operate successfully under the American flag.

The 1938 act properly recognized that employment at sea is irreconcilably different from employment on shore. A vessel must be continuously navigated, day and night. The work of her crew must go on without halt and cannot be limited to any given part of a day or week. Today the crew of an oceangoing vessel is divided into three watches, each watch consisting of the bare minimum required by law to assure the safe navigation of the vessel. It can be readily seen that reduction of the workweek to a maximum of 40 hours would require 40 percent additional personnel. Such an increase would go beyond the limits of the accommodations of our existing ships, all of which were built to carry the crews required by our present statutes. Far more important is the fact that the addition of so many new members of the crew with the resultant increase in the pay roll would make it absolutely impossible for the American operator to compete with foreign shipping or with other forms of domestic transportation.

If the crew of a vessel were to be retained at its present size and the seamen required to stand an 8-hour watch each day in the week, S. 1349 would require that they be paid at an overtime rate for 16 hours per week. This would be even more expensive than the carriage of 40 percent additional crew members, were this possible. Neither alternative would leave any hope of success in meeting foreign competition that is not handicapped by any such requirements.

At this very time the Senate Commerce Committee is holding hearings on S. 292, the Merchant Ship Sales Act of 1945. The declaration of policy in S. 292 reads as follows:

"SEC. 2. (a) It is necessary for the national defense and development of the foreign and domestic commerce of the United States that the United States have a merchant marine (1) sufficient to carry its domestic water-borne commerce and a substantial portion of its waterborne export and import foreign commerce and to provide shipping service on all routes essential for maintaining the flow of such domestic and foreign water-borne commerce at all times; (2) capable of serving as a naval and military auxiliary in time of war or national emergency; (3) owned and operated under the United States flag by citizens of the United States; (4) composed of the best-equipped, safest, and most suitable types of vessels, constructed in the United States and manned with a trained and efficient citizen personnel; and (5) supplemented by American-owned facilities for repairs, marine insurance, and other auxiliary services.

"(b) It is hereby declared to be the policy of this act to foster the development and encourage the maintenance of such a merchant marine, and to facilitate the adjustment of the merchant marine from war service to peacetime operations."

There would be little or no point in making vessels available to American citizens if, by the 40-hour week, Congress prevents their successful operation. A vessel cannot be operated on a 40-hour basis.

It would seem that the primary purpose of the Fair Labor Standards Act of 1938 is to insure that a man will not be required to work excessive hours. The nature of maritime employment is such that, within limits, a longer workweek at sea is appropriate. The fact that seamen stand watch every day at sea has been recognized by all parties to collective bargaining negotiations in the shipping industry and was one of the major considerations before the National War Labor Board in the recent maritime cases. In its decision of August 31, 1945, the Board ordered that "each classification shall have added to its present base wage the sum of $45 per month." In so doing, the Board established in the shipping industry a wage standard that makes unnecessary the coverage proposed by S. 1349 and in that very case the Board had before it a demand for a 40-hour week. The 40-hour week cannot be successfully applied to the operation of vessels and the wage scales established by the National War Labor Board adequately compensate seamen for their added service. A seaman spends both his working hours and his time off duty at sea within the confines of the vessel. Utilization of free time becomes a real problem even today where a man is on watch only eight hours out of every twenty-four. It must be realized that if the 40-hour week were to be applied to seamen they would have 128 hours per week during which they would be on the vessel but not on watch. Since a vessel must operate seven days a week, a man would then be permitted to work something less than six hours per day. For these reasons, the present exemption in the Fair Labor Standards Act of 1938 (sec. 13) for persons employed as seamen should be left undisturbed.

Two other provisions of S. 1349 require mention. Section 3 (m) of the present act provides that there shall be included within wages the reasonable cost to the employer of furnishing board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by such employer to his employee. S. 1349 would amend section 3 (m) so as to exclude from its provisions board, lodging, or facilities furnished to a member of the crew of a vessel. No reason can be found for thus excluding one industry from an otherwise reasonable provision. Of course, the effect of such change would be to increase the statutory minimum wage to seamen by the cost of such facilities furnished. The shipping industry should be exempt from this legislation but at the very least, it should be given the same treatment as other industries.

S. 1349 would amend section 16 of the 1938 act so as to limit to 5 years the time within which an action may be instituted against an employer who has violated the act. This is entirely too long-the period could be far shorter but still afford ample protection to the employee. Unless actions are started within such shorter period, the employer may be seriously prejudiced in his preparation of the case.

Your committee is urged to recommend continuation of the present provision exempting persons employed as seamen from the provisions of the Fair Labor Standards Act of 1938.

MY DEAR CHAIRMAN MURRAY: At the last meeting of the board of directors of the American Farm Bureau Federation, held in Chicago last August, it adopted a resolution favoring vigorous opposition to S. 1349.

The bill proposes to amend the Fair Labor Standards Act so as to increase theory when for all classes of labor except those which are specifically

Inw from the statutory minimum rate of 40 cents per hour to 65 oth the gear, 70 cents per hour the second year, and 75 cents per wh year thereafter.