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The setting of a minimum wage by law can only be justified by an effort to correct substandards. No other circumstances will justify the entry of Congress into such a controversial field as wage fixing.

If the living conditions of southern textile workers were on such a low level as to resemble the cabins of the backwoods farm tenants, the hovels of the city Negro slums, the crowded filthy conditions of the Bowery in New York, or the unsightly, crowded, dirty slums of other industrial cities of the North and West, then southern textile living standards might well be called substandard. But such is not the case. For industrial communities the southern textile villages are well above the average and many of them stand at of near the top in aesthetics, sanitation, sobriety, security, and comfort. Normally food is plentiful, relatively inexpensive, fresh, and found usually in large varieties. Clothing and other necessities of life are reasonable and adequate for the mild climate. The houses are clean, comfortable, and not unattractive. The finest of medical care and educational facilities are available and the southern textile vilages are notably religious. The church is always prominent in the community life.

There is usually a splendid communiity spirit. Recreation is well organized Cultivation of home gardens is practiced. Sports abound in well organized leagues. There is ample time after the 8 hours of daily work to afford a full community life, some social contacts, the church, the movies, and other cultural influences.

By any comparable yardstick it is safe to say that living standards in the southern textile mill villages are far from substandard. Furthermore it is necessary before determining a substandard condition to first adopt the requisites of a standard. So far as it is known there is no such thing as standard living conditions in individual communities. What is standard for one section may be below or above standard for another. The requisites of a severe climate may be far more exacting than those of a milder climate. Personal tastes, inherited social tendencies, and many other factors all combine to set essentials of a living standard. No well informed person who recognizes the complexity of this subject would attempt to determine a standard and until such a standard is produced no one can accurately conclude what a substandard is.

Considering, therefore, the living conditions and the living standards of the southern textile worker and his community it is reasonable to make two observations:

1. Neither is substandard.

2. Wages adequately enable him to afford standards of living which are in keeping with the level of society which has has chosen and in which he lives happily.

EFFECT OF TEXTILE PRICES ON THE WAGE

The element in the industrial picture which more seriously affects the wage structure is the matter of the price obtained for the sale of the product manufactured. The lower the price and the narrower the margin the more difficult it is for the industry to afford a higher wage structure.

In the case of southern textiles the industry has operated in what is commonly known as a buyer's market for the greater portion of its history. The textile industry in America reached the zenith of its growth in the years 1920 to 1923, when the total spindles in operation amounted to 33,700,000. The production high point was reached during the years of the recent war due to the development of the third shift and overtime operations in emergency. However, with the exception of the emergency period during the current war and a brief period during and following World War I, practically all of the years since 1928 have been years in which the industry has sold its products at prices which were largely dictated by its customers. It is always difficult to tell what you might have gotten if you hadn't gotten what you did get, but realizing that the perennial buyers' market has made a narrow margin a normal condition for textile fabrics, it is reasonable to assume that had the products afforded the higher prices through the years southern textile wage schedules could have been higher. Wages represent a relatively large percentage of the cotton mill dollar, usually between 25 and 35 percent. An increase in other elements of cost in the cotton-mill dollar such as raw material, supplies, taxes, all have a definite effect upon the element of cost which is represented by wages and any decrease in the total revenue from sales of the product will obviously pinch all elements of cost.

EFFECT OF OTHER COST INCREASES

Thus, proper consideration of an adequate wage structure in the southern textile industry necessarily involves the consideration of the price of raw cotton

which has increased from 9 cents to 23 cents during the war period, taxes which also have greatly increased, supplies, another element of cost which has also increased, and also the consideration of the prices for the goods which the market will afford. Currently the prices are set by the OPA, and they are not set quickly enough to reflect the rising costs. The resulting pinch has been one of the problems which the industry has had to face. Now that the war is over, if past history is a dependable guide, it is necessary for the industry to recognize the approach of another long and hard period in which a buyers' market condition will prevail.

THE COTTON-MILL DOLLAR

Any abnormal increase in the cost of production due to wages will obviously, therefore, jeopardize the future of the industry as it passes through the lean periods which are inevitably ahead. Any step which jeopardizes the future of the industry, whether it be higher wages or other factors, simultaneously jeopardizes the permanency of the worker's employment. It is not difficult to say, therefore, that if the workers receive an increase in wages at the expense of the security of employment they jeopardize their own future. According to the Federal Trade Commision in their report of 1936 the cost of all materials in cotton textile manufacturing was 45.2 cents of a dollar, leaving a gross margin of 54.8 Out of this margin came the labor cost of 25.4, other expenses including taxes, power, supplies, etc., 20.9, leaving a net profit for interest on investment of 42 cents out of a dollar. An analysis of the same nature by the Journal of Commerce some time later showed that in 1940 the figures for cost of materials was 42.0, gross margin 54.8, labor cost 25.0, other expenses 19.6 and net profit 5.4. Since that time all the elements of cost have greatly increased at the expense of the net profit to the point where unless there is a striking increase in revenue from sales, the industry is not in a position to absorb any material increase in any of its elements of cost.

LIQUIDATION OF THE TEXTILE INDUSTRY

The cotton textile industry is in process of liquidation in America. Liquidation has been more drastically felt in New England than in the South, but even the Southern States have lost ground. The record is as follows:

U. S. Cotton Textile Industry (spindles active-4 year average, millions of

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It is interesting to note a steady decrease in total spindles since 1920-23 and a steady decrease in active southern spindles since 1929. It is also worthy to note that as the elements of cost have reached the highest points in the history of industry, there has been a steady decrease in the consumption of cotton sine 1942. The consumption of cotton daily for the first 6 months in 1942 was approxi mately 45,000 bales average. This average had decreased to approximately 32,000 in July 1945.

THE MANUFACTURING MARGIN OVER COTTON

The trend of textile fabric prices is perhaps clearly indicated in a representative way by the Survey of Current Business September 1945, Bureau of Foreign and Tostie Commerce, United States Department of Commerce, in a quotation of

print-cloth price trends. Print cloths are typical textile fabrics. The average margins for print cloths over and above cotton costs per pound were as follows:

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The net increase in margins for the 42-year period was 2 cents per pound. This means that the print-cloth manufacturer received 2 cents per pound for his goods more in the first half 1945 than he did in the first half 1941 and out of this increased margin of 2 cents it was necessary for him to absorb increases in all other elements of cost. We have already mentioned that during this same period in January 1941 to June 1945 there was a net increase in average hourly earnings of the textile industry as a whole of 26.8 cents, or an increase of 66.5 percent during that period. This compares with the increase of 2 cents per pound or 7.7 percent margin over the price of cotton. This would not indicate that the cotton manufacturer has any margin left within which to absorb a great increase in wages.

THE THIRD EXODUS

This trend should have a very distinct bearing upon any wage policies adopted for this industry, for any increases in wage cost which are too drastic will be immediately reflected in a future decrease in cotton consumption or further liquidation of spindles. As the liquidation of American spindles continues the industry is undergoing the third exodus of cotton textiles. The first exodus was from Old England to New England. The second exodus was and in a small way still is from New England to the South. The third exodus, retarded temporarily by the war, is from the South to the Orient and to South America. Already a number of southern mills have been sold to foreign interests and are awaiting official approval for dismantling and export. A resumption of this trend can be very serious.

VALUE ADDED BY MANUFACTURE

It is well to note here that from the standpoint of value added by manufacture, paid in wages, the southern textile industry is high on the list of manufacturers in America.

Proportionately the labor ratio in textiles is already higher than in most other industrial operations. For instance in South Carolina the study of the major industries in that State in 1938 shows that the percent of value-added-bymanufacture paid in wages in South Carolina was as follows:

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According to the United States Bureau of Census, July 1938, the percent of value added by manufacture paid in wages in all New England industries was 45 percent and all industries in United States 38 percent, in all industries in South Carolina 57 percent, in cotton manufacture in South Carolina 68 percent.

APPRENTICESHIP SKILL

Another factor which has an unusual influence on the wage of an industry is that of the degree of apprenticeship, experience, education and skill required. In this respect the exactions of textile manufacturing are comparatively low. A spinner can be trained effectively and satisfactorily in less than 6 months' time. A longer apprenticeship is required in many of the other industry operations such as automotive, electrical apparatus, watchmaking, etc. In many of these operations a technical background is necessary, for this usually involves

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the necessity of a high degree of technical education as well as skill. No education is required in the training of spinners, weavers, or carders in textiles, and with the exception of loom fixers most of the textile operations can be learned within the course of a few months. The textile worker therefore does not have to make an extensive investment in preparation for his profession.

UPSETTING THE ECONOMY OF THE REGION

Another factor influencing the wage structure is the economy of the region If the establishment of an unusually high minimum wage upsets the economy of the region it may do more harm than good. If, for instance, the farmers are unable to pay a minimum wage competitive with the minimum wage of the textile industry which is located in the farming regions, it means that they will have great difficulty in the harvesting and replanting of their crops. In the case of southern textiles the chief competition from a labor standpoint is farm labor. Wages of the farm worker are unusually small in comparison with the textile worker. The competitive handicap is already there. A future increase in textile minima may throw the economy of this region still further out of balance.

According to the Bureau of Agricultural Economics, United States Department of Agriculture, average monthly wages of hired farm workers in the South Atlantic States in January 1942 with board was $22.34 and without board was $32.90.

COMPETITIVE INDUSTRY WAGES

An influence which directly touches the wage structure of a given industry is the influence of competitive industry wages in the area. To hold its own in the picture an industry should pay a wage rate commensurate with its position in the area in which it operates. It is interesting, therefore, to note the com parison of the wages paid in the manufacture of cotton goods in North Carolina as compared with other industries in that State. In June 1944 according to the North Carolina Department of Labor the average hourly earnings of workers in plants manufacturing cotton goods was 62.6 cents. In amount per hour this is the tenth highest among all North Carolina industries, and below it are listed 13 classifications. A similar comparison made in the State of South Carolina in 1941 showed workers in the textile plants in ninth place compared with all industries in South Carolina, and below textiles were listed 21 other classifications of industry.

With such a large list of industrial classifications paying wage schedules below the wage schedule of textiles, and with the chief source of labor on farms paying much lower schedules, it is well to recognize the vulnerability of the southern textile industry as far as the source of supply of labor is concerned for this fact has a direct bearing upon the wage schedule.

FOREIGN COMPETITION

Another comparison of importance is a comparison of the wage schedule in America with foreign countries.

While American industry occupies a position of relative security in comparison with the balance of the world, there are industrial fields where complicated operations and patented processes afford protection, such as automobiles, elec trical apparatus, etc. In the case of textile, due to the simple methods of operation, any one can make cloth in any nation and many of our foreign competitors up until the beginning of the recent war were making cotton textiles in increasing quantities, particularly Japan, China, India, Brazil, and some of the European countries. Glance, therefore, at the competitive wage schedules of these foreign countries, for if the Government continues its publicly announced policy of low tariffs it will be difficult to protect the textile workers of America against the low-price labor of the Japanese, Chinese, Brazilians, the Europeans, and many other nationalities.

We have previously quoted the hourly earnings of the southern textile worker in America. They were before the war more than twice as high as the textile wages in Great Britain, four times as high as the wages in Japan and almost 10 times as great as the wages in China. The war has changed conditions considerably and the same ratios may not exist today but the situation is dangerous enough to indicate the vulnerability of the wage structure of the American textile worker as compared with foreign competitors.

There are other factors influencing the wage structure which have a direct nd important bearing such as the job content, the work load, the nature of he work. These are highly complicated factors which involve considerable echnical knowledge and all these factors combined to further emphasize the act that a determination of a wage schedule is a function far beyond the ormal purview of a lawmaking body.

ROBABLE EFFECT OF S. 1349

The currently proposed legislation providing for increases in minima upon uch a high basis, combined with the legislative suggestions for federal deternination of differentials between wage classifications is tantamount to the fixing f a wage structure. Such an undertaking would inevitably cause many embarassments for the United States Congress, and unless the Congress is assisted y unusually competent technical advice, might result in great harm to the workers, as well as to the industry which they serve. There is a very definite question as to whether the setting of a wage structure is really the function f government.

The provisions in the proposed S. 1349 which call for an extension of the statute of limitations on payment of claims for minimum wages and overtime compensation, do not seem to have any justification. In fact, from experience here does not seem to be any real reason for the extension of the statute of imitations. There are no records of hardships caused by the 1-year limitation which is already in force and a 5-year extension would undoubtedly cause an ncrease in grievances and serve as a disturbing factor which would perpetually pset employer-employee relations.

If the Fair Labor Standards act and similar legislation is to be amended Congress should seek the advice and assistance of the employers before making hanges and be careful to see that no drastic changes are made which may seriously upset our American economy. The war is over now. The serious mergency has passed. We should face the long pull of the future with more stabilization and less bureaucratic regimentation.

WM. P. JACOBS,

President, American Cotton Manufacturers Association.

EXHIBIT 13

STATEMENT ON S. 1349, A BILL TO AMEND THE FAIR LABOR STANDARDS ACT OF 1938 AND FOR OTHER PURPOSES"-POPULARLY KNOWN AS THE MINIMUM WAGE BILL

By Ira Mosher, president of the National Association of Manufacturers

My name is Ira Mosher. I am president of the National Association of Manufacturers, an organization of 14,000 manufacturers whose members employ 4 out of every 5 manufacturing wage earners in the Nation. More than 70 percent of the members of NAM employ 500 or fewer workers. By far the greater number are small businesses.

Because your committee was unable to hear me on the date originally assigned to me last week, I am filing this statement in place of that appearance. Since I shall have no opportunity to reply to questions, I shall attempt to confine myself to a few fundamental observations.

These observations should raise serious question as to the economic soundness and timing of the legislation which you have invited me to discuss.

SCOPE OF THE BILL

The bill you have under consideration s of vital concern to NAM members. It not only proposes direct amendments to the wage-and-hour law to increase the statutory minimum from 40 to 65 cents an hour, with automatic increases to 75 cents an hour 2 years after enactment, but it proposes to require the Wage and Hour Administration to fix the entire wage-rate structure for each industry. I will discuss later the apparent effect of these proposals in some detail. I want to state at this point, however, that, in our opinion, the enactment of these provisions in their present form would tend to increase labor problems.

In addition to the wage features of the bill, it would materially expand coverages of the act by eliminating a number of existing exemptions, it would

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