UNCERTAINTY OF APPLICATION

The wage-and-hour law is limited in application to persons "engaged in commerce or in the production of goods for commerce." The extent to which various construction operations constitute engaging in interstate commerce, or producing goods for interstate commerce has not yet been determined, for the purpose of this act, although the law was enacted in 1938.

Decisions of courts alone can determine definite application of the law. There have not yet been sufficient cases decided to give a clear determination of application of the law to construction operations.

Should the courts this year, for example, decide that certain types of construction operations are covered by the act, many general contractors who acted in good faith would be subject to suits for recovery of overtime payment, plus double damages, attorney's fees and court costs, for cases going back over a period of years. It is obvious that some protection in the Federal Statute is necessary.

INTERPRETATIONS OF THE ADMINISTRATOR

The principal guides at the present time to application of the law to construction operations, are interpretations of the administrator. The principal one of these applying to construction is Interpretative Bulletin No. 5, issued originally in December 1938, and revised in 1939 and 1941.

Interpretative Bulletin No. 1 states, however:

"The statute does not confer upon the Administrator any general power to issue rulings including industries within the coverage of the act, or excluding them. * * * Interpretations announced by the Administrator serve, therefore, to indicate merely the construction of the law which will guide the Administrator in the performance of his administrative duties, unless and until he is directed otherwise by authoritative rulings of the courts."

In an explanation to Interpretative Bulletin No. 5 in 1941, the Administrator rendered the opinion that the original construction of buildings was not covered by the act, but that the repair, maintenance, and reconstruction of the buildings used to produce goods for commerce were covered. He then stated that the line of demarcation between new construction and reconstruction was difficult to determine. He stated:

"Of course, 'original construction' and 'reconstruction' are legal concepts which have no existence, so to speak, in the natural order of things. For our purpose 'original construction' on the one hand and 'reconstruction' on the other must be taken to mean our best prediction of what the courts, having due regard to the policy which Congress has expressed in Section 2 of the act, to the specific technical details of the operations in question, and to the effect of previous court decisions, will hold to be included in the respective terms."

On the construction of facilities for essential instrumentalities of commerce, in 1941 the Administrator wrote:

"The division does not take a definite position concerning the status under the act of employees engaged in the original construction of essential instrumentalities of interstate commerce."

The uncertainty which exists by reason of statements of the Administrator also relates to production of construction materials. In his explanation of 1941 the Administrator stated:

"Employees engaged in producing materials such as sand, gravel, asphalt. concrete, macadam, or railroad ties, to be used solely within the State in the construction, maintenance, repair, or reconstruction of essential instrumentalities of commerce do not become subject to the act merely by reason of the use to which such products are put."

In March 1945 he reversed this interpretation. He stated:

"Employees must be considered engaged in the production of goods for interstate commerce when engaged within a State in such activities as producing ice, electric energy, railroad ties, crushed rock, bituminous aggregate, readymixed concrete, telephone or telephone poles, or other similar items for use or consumption wholly within the same State by interstate railroads, telegraph or

telephone companies, etc., in carrying on interstate transportation or communications; or for use or consumption within the State in the maintenance, repair, or reconstruction of essential instrumentalities of interstate trade, commerce, transportation, transmission, or communication."

HIGHWAY CONSTRUCTION

A further example of uncertainty of application of the act to construction was provided in highway work. In March 1939 the Bureau of Public Roads, then in the Department of Agriculture, instructed State highway departments to insert a clause in all Federal-aid highway work requiring compliance with the Fair Labor Standards Act. This action was taken following advice by Elmer F. Andrews, Wage and Hour Administrator at that time.

In July 1940 the United States Comptroller General ruled that the Government had no legal authority to require compliance with the law as a matter of contract conditions. He wrote:

"You are informed that, aside from any consideration as to whether employees engaged, wholly within a State, in the construction, alteration, or repair of a road are covered by the Fair Labor Standards Act, as to which I express no opinion, and which appears from the correspondence to be somewhat an open question with the Wage and Hour Division, Department of Labor, there would appear to be no legal authority-as there would appear to be no need for the inclusion in government contracts of a requirement for compliance with the act, or of any other reference to the statute."

WAR WORK

One further example of the uncertainty faced by general contractors with respect to the act is in the case of wartime construction. Under cost-plus-a-fixed fee contracts the general contractor is for all practical purposes the agent of the Government. As such he is subject to the instructions of the Government agency for which he performs the work.

At the present time a great number of suits are pending against contractors for alleged failure to pay overtime pay to nonmanual employees whose status under the wage-and-hour law has not been clearly determined. These contractors were operating under orders of the War or Navy or other departments as to ovetime pay. These contracts are now closed. Should the suits be decided against the contractors, they would be required to pay from their small fees the damages, attorney's fees and court costs even though they had followed instructions of the federal agencies.

CONCLUSION

These examples have been cited to indicate the uncertainty which prevails as to application of the Fair Labor Standards Act to construction operations. General contractors, acting in good faith, in compliance with established practices of the industry, in accordance with union agreements, or under instructions of Federal agencies, are subject to suits brought for alleged failure to pay overtime required by the wage and hour law.

These suits in many cases could be brought long after the contract had been completed, and probably long after all records of the contract had been discarded.

In many instances it would be impossible for the contractor to locate now witnesses necessary for defense in suits, because of the nature of construction operations where a contractor works in one location on one project and may never work in that State again or with the same set of workers. Should a suit be decided against a contractor, it would be impossible for him to locate others who worked on the same project to make proper payments to them.

These examples suggest to this association the vital necessity for a statute of limitations which will require suits under the Fair Labor Standards Act, and others, to be brought within a reasonable time.

EXHIBIT 12

A STUDY OF TEXTILE WAGES IN THE SOUTH

Presented to the United States Senate Committee on Education and Labor by William P. Jacobs, President, American Cotton Manufacturers' Association, Washington, D. C.

In order to fully understand the textile wage structure in the South it is necessary to consider all major contributing factors which combine to influence the environment of a wage schedule.

The need of wage increases or decreases depends upon a wide variety of factors existing in the area, such as the cost of living, standards of living, living conditions, working conditions, available markets for the manufacturers products, the price which the market offers, length of apprenticeship, experience, education and skill required, job content, the nature of the work, the general economy of the region, wage schedule of the region and of competitive industries in the region and in the world. These and other similar factors combine to demand and justify a given wage standard.

Thus the determination of a wage is a most complicated undertaking and one which requires not only a wide range of information but also a type of specialized skill in its analysis and adaptation.

Such skills are seldom available to legislative bodies and rarely ever are lawmakers equipped with adequate experience in a specific industry to guide them safely to such important conclusions as influence the incomes of so many men and women or the permanence of the industries which offer such men and women employment.

WAGE STRUCTURE COMPLICATED

It is safe therefore to assume in the beginning of this study that the determination of wages or wage minima, or wage standards, or the adoption of permanent governmental machinery to set wage classifications, is at best a most difficult undertaking and one in which Congress can easily do more harm than good.

Since the past is often a helpful guide in determining the future it is sometimes also helpful in gaging the present. And so it may be worth while to glance at the trend of textile wages through the years passed and particularly through the upsetting period influenced by World War II and its preparatory period.

THE WAGE TREND

According to the Bureau of Labor Statistics of the United States Department of Labor the average hourly earnings of southern textile workers has been according to the following schedule:

Thus during the war period the average hourly earnings of the southern textile mill workers have increased from 45.8 cents in December 1941 to 68.6 in July 1945, an increase of 49.7 percent.

If the comparison is extended back to the time when Great Britain entered the war so as to cover the United States war preparatory period the figures would show an increase from 36.3 cents per hour in September 1939 to 686 in July 1945 or an increase of 88.9 percent. This comparison would appear to more fully reflect the abnormal increases which resulted from the war.

THE COST OF LIVING TREND

A comparison of the cost of living of wage earners by the National Industrial Conference Board at the time Great Britain declared war, September 1939, shows an index figure of 85.4 as compared with 1923 as 100. This figure compares with July 1945, 106.9 an increase for the entire war and war preparatory period of 21.5 index points or an increase of 25.2 percent. This compares with the wage increase figure of 88.9 percent.

If the shorter period covering the time when the United States was at war is used we have an index figure as of December 1941 of 93.2 to compare with the latest figure of July 1945 of 106.9 or an increase of 13.7 index points or 14.7 percent. This compares with the wage increase figure of 49.7 percent.

There is another interesting report of the National Industrial Conference Board hearing on this subject in the form of the increase in the cost of living of wage earners in 60 cities. These figures show an increase in index points from 100.6 in September 1939 to 128.0 in May 1945, an increase of 27.4 index points or 27.2 percent for the longer war period as compared with a wage increase figure of 88.9 percent.

For the shorter period this type of comparison shows an increase in index points from December 1941 to May 1945 of 110.5 to 128.0, an increase of 27.5 index points or 24 percent. This compares with the wage increase figure of 49.7 percent.

Of these 60 cities only three of them-Atlanta, Birmingham and Maconhave textile mills and only in Macon are textiles the major industry of the city. Nevertheless the percentage of increase in the cost of living of wage earners in these 3 cities is approximately the same as the average of the 60 cities. To be specific the increase is from an average of 112.2 in December 1941 to 128.4 in May 1945 or 14.4 percent.

However there are those who will say that the wage expressed in dollars and cents is misleading because the dollar meanwhile has decreased in value by virtue of the increase in the cost of living. And so it is well to consider the record of the National Industrial Conference Board on this phase of the subject.

PURCHASING VALUE OF THE DOLLAR

In their Economic Almanac of 1945-46 they show the purchasing value of a dollar based on changes in the cost of living to be 117.1 index points in September 1939 as compared with 93.5 in July 1945, a decrease of 23.6 index points or 20.1 percent. This decrease compares with the wage increase in the same period of 88.9 percent. Thus the worker's dollar is now worth about 20 cents less than when Britain went to war but he has just 12 cents less than twice as many of them.

The same comparison over the shorter period in which the United States was actually at war shows the index points of dollar value in December 1941 at 107.3 as compared with 93.5 in July 1945, a decrease of 13.8 index points or 12.8 percent. This compares with the wage increase in the period of 49.7 percent. Thus the worker's dollar today is worth about 13 cents less than it was pre-Pearl Harbor but the worker has about half again as many more of them.

These figures are in the main substantiated by the wage report of the National War Labor Board to the President on the wartime relationship of wages to the cost of living, dated February 22, 1945, which shows, among other things, that they calculate the cost of living showing an increase in January 1941 to October 1942 of 20.5 percent and from January 1941 to October 1944 of 29.5 percent. At the same time contrast these increases in the cost of living with a still greater increase in the average straight-time hourly earnings covering all types of manufacturing from January 1941 to October 1942 of 21.5 percent and from January 1941 to October 1944 of 36.7 percent.

All of the reliable figures available indicate that the wages of the textile worker in the South have increased considerably more than has the cost of living for these same workers. However, the figures available do not fully reflect the most recent increases in wages ordered by the War Labor Board in cases of cited mills and authorized by the War Labor Board in response to the voluntary applications of noncited mills. These increases, involving a minimum of 55 cents an hour, an increase of 5 cents across the board, that is to workers of all classifications, a third shift differential and a week's vacation with rav, have found general adoption throughout the southern textile industry. The first two provisions have been more uniformly adopted than the last two but the net result

of these adoptions have been an increase of from 8 percent to more than 17 perccent depending upon the number of these four provisions adopted by the individual mill.

These adoptions have occurred within recent weeks. Had the attending increases been reflected in the figures heretofore quoted the percentage increase in the average hourly earning of the southern textile workers would have been ever greater than the figures shown. Even now southern textile wages continue to increase. On the other hand, however, there are indications that within recent weeks the trend of the cost of living has been slightly downward. In their issue of September 1945 the Conference Board Business Record stated in an article by G. M. Graybill, Jr., Division of Labor Statistics, "Relatively little movement was exhibited by the July cost-of-living indexes in the 63 industrial cities surveyed. Twenty-three cities showed an increase, while in 26 cities the index declined: 14 cities showed no change. The changes all fell within comparatively narrow limits since the largest increase was 0.7 percent and the greatest decrease was 0.6 percent. Actually, less than one third of the city indexes rose or declined more than 0.2 percent."

October 8, 1945, the Wall Street Journal quoted the National Industrial Conference Board, as follows: "Living costs during August dropped slightly from the 24-year high of June and July, according to the National Industrial Conference Board. The NICB index, which charts the cost of living for the average family of wage earners and lower-salaried clerical workers in the United States. stood at 106.6 (1923-100), compared with 106.9 in June and July. The decline in the general index was due almost entirely to a drop of 0.9 percent in food costs."

Since the contemplated legislation on the worker's wage anticipates a future need, it is interesting to note the current developments in wages and in cost of living. There seem to be no factors on the horizon which would indicate a greater need to increase earnings than those which prevail today.

Thus the relative increase of the wage over the cost of living while not entirely trustworthy for comparison at least indicates strongly that the southern textile worker is better able to afford a higher standard of living today than he was before the war.

THE STANDARDS OF LIVING

Surveys made of the homes in textile mill communities before the war showed that some have electric refrigerators, many have automobiles, and practically all have radios. The nature and grade of furniture and other equipment in the southern mill home compares favorably with that owned by workers in most other major American industries.

There appear to be no competent studies which accurately portray the standards of living of the southern textile worker since the war. It is known, of course, that new automobiles, electric refrigerators, radios, and many other types of equipment were not available during the war. It may be assumed that some of the old equipment became useless as a result of long and continued use without replacement and adequate repair. For this reason therefore ownership of this type of equipment per person may appear to be reduced now as compared with the period when such items were new, plentiful, and purchasable. Such a circumstance however would not necessarily reflect a reduction in standards of living or a reduction in financial ability to afford such luxuries.

WHAT IS A SUBSTANDARD?

For several years efforts have been made by some inadequately informed economists to prove substandard conditions in the southern textile mill villages. but all such efforts have failed. The case has never been proven.

On the whole as compared with other American industries and as compared with the nonindustrial communities near them, the southern textile mill villages show most favorably. Clean streets, sewer, running water, electric lights, parks playgrounds, swimming pools, adequate hospital, school, and church facilities abound and are the rule rather than the exception in southern textile mill villages and these factors added to splendid climate, healthful altitude, trees. flowers, fresh gardens, cows and poultry with abundance of room, sunshine, and fresh air indicate that the living conditions of the southern textile workers are superior to other regions.