extend the child-labor provisions to employers engaged "in commerce" as distinguished from those producing goods for commerce, and would establish a 5-year statute of limitations affecting employee suits for alleged underpayments.

CHILD LABOR PROVISIONS

The proposal to amend the child-labor provisions does not appear to directly affect many manufacturers in their operations since they are now prohibited by law from engaging children under 16 in connection with manufacturing, or children under 18 in hazardous occupations.

The child-labor provision of the act affecting manufacturers does not differentiate between boys and girls. However, the Walsh-Healey Public Contracts Act establishes that additional standard by prohibiting the employment of boys under 16 and girls under 18 on Government contracts for supplies. Serious penalties are invoked for the employment of girls over 16 but under 18 on Government work even though their employment would be permissible on the same work performed for other customers.

I understand that the present Wage-Hour Administrator, when serving as Administrator of the Public Contracts Division, urged the Congress to amend the Walsh-Healey Act so its child-labor terms would conform with the child-labor provisions of the wage-hour law. Had those recommendations been adopted, much unnecessary confusion might have been avoided during the war. I do not believe there is any real excuse for continuing that confusion and I urge you to repeal the child-labor provisions of the Walsh-Healy Act at this time.

PROPOSED EXPANSIONS

It is not clear to me what changes have occurred since 1938 warranting the proposals in the bill to expand coverage of the law to many employees now exempted from the wage or hour provisions or both. If one can judge from the types of work presently exempted, it could be presumed that existing exemp tions were either designed to facilitate (a) the processing and marketing of perishable foodstuffs as in the case of the overtime exemption relating to the first processing of milk; (b) the distribution of farm products illustrated by the seasonal exemption for agricultural commodity processors within an "area of production"; or (c) to permit the continued employment of workers whose hours of work could not be definitely controlled. These latter-type exemptions include those exempting outside salesmen and seamen.

These exemptions apparently were incorporated in the act to meet real problems. Some of those I have mentioned and others not mentioned vitally affect farmers who must sell their crops when they are harvested. If a perishable commodity is not processed when ready, the result is a loss to the producer and to the prospective consumer as well. Even the so-called nonperishable products, such as ripened grains, must be marketed immediately by most farmers because they do not have facilities for keeping such products for any prolonged period. Since the proposal to expand coverage of the act would seem to affect a far larger segment of our economy than the employers and employees who would be directly affected, I recommend that your committee consider all reasons for the present exemptions before acting in this matter.

WAGE PROVISIONS

S. 1349 is popularly referred to as the minimum-wage bill. Its officially printed title is more correctly descriptive. It is "a bill to amend the Fair Labor Standards Act of 1938 and for other purposes."

It makes two major proposals regarding wages:

1. To raise the minimum hourly wage with the proviso that it cannot be paid for work requiring previous training or experience.

2. To set a minimum hourly wage structure for all other jobs, according to the skill and experience required.

First, take the proposed rise in unskilled wages, from the 40-cent hourly minimum now required by law, to 65 cents at once, 70 cents the next year, and 75 cents the following year

br a job does require previous training or experience In the very least; might easily cause unnecessary ice an added burden on employers in their efforts The Government in its efforts to enforce the law.

, therefore, seriously question the justification for defining the job for which he minimum statutory rate would be payable.

The next practical question involved is: How much would this bill add to he pay rolls of this country?

Adding up the labor force which it seems the bill will attempt to cover in nterstate traffic, the annual cost of raising those now below 65 cents an hour would be $4,000,000,000.

The further annual cost of adjusting the higher wage brackets upward from This base would be $5,000,000,000.

That means a total added annual load on the pay rolls of this country of 59.000,000,000 at once.

When the minimum arises to 75 cents an hour as provided in the bill, within 2 years, the further cost of wage rises would be $5,600,000,000.

That means the total annual load which this bill proposes to put on the pay rolls of this country is of the order of $14,600,000,000.

Now who is going to pay this $14,600,000,000 of increased wages?

The answer of the supporters of the bill is that the productivity of labor has increased so much that the increase in goods per worker will balance the increase in his pay.

That isn't so.

In a great section of American economy, the services and trades, which I understand furnish more than half of the total employment, the opportunities for greater efficiency are slight. Higher wages mean higher costs and higher prices. In manufacturing, the average output per man-hour has increased approximately 3.5 percent per year during the past 20 years. But, it should be noted that this is an average. Averages do not tell the whole story; for instance, the average productivity increase since 1939 has been 15 percent, but in cement there has been a decrease in producticity of 15.5 percent, and in flour and grain mills 16 percent. This illustrates that there can be no averages on productivity increases which have general application. The problem should be considered from an individual company standpoint or at most from an industry standpoint.

But even if averages should be regarded as controlling, since 1939 unit costs of labor have increased about 40 percent, while productivity has increased 15 percent according to BLS data. This means that wages now are years ahead of the growth in output per man. The real problem is to get productivity to catch up with the increase in unit labor costs.

The wages to be added to the national pay rolls by this bill would remain, in whole or in part, an additional charge on operations. They must either be taken out of net earnings or passed along to the public.

Those who can take the added wages out of net earnings and still survive, will obviously be under pressure to use less labor, either by mechanizing the job or by doing away with it. In either way, the legislated rise in wages is a contribution to unemployment.

It is my judgment, however, that the bulk of private enterprise will soon be operating on such competitive profit margins in this country that it cannot absorb an additional annual pay-roll load of $14,600,000,000. Most of that additional wage load must be added to prices.

Now it is evident that higher prices sell less goods. And that means less employment.

For the consuming public as a whole, higher prices would be the signal for inflation. They mean the OPA would continue on the scene to stop the rise but retreating with ceiling prices and rationing, unable to stop the rise but retreating slowly before the necessity of keeping the economy going by permitting some semblance of profit.

The rise in prices would tend to cancel the benefit of the bill even to such workers as are included in the proposed rise in wages.

I hope I have made plain the reasons why I think the proposed jump from the present hourly minimum of 40 cents to 65 cents at once and 75 cents within 2 years, is too violent a break with orderly progress. The economy could sustain it only by a violent upheaval which would almost automatically defeat it.

I should like to remind you that the Congress, in passing the act which it is now proposed to amend, set a 25-cent hourly minimum in 1938 and allowed 7 years, up to the present, for the economy to digest a mandatory rise of 15 cents additional. And during that time, bear in mind, the wage scale was helped upward by a war.

Now it is proposed to jump 25 cents at once and 10 cents additional within 2 years, without a war to push wages up, and with all the confusion and uncertainty of economic reconversion under such circumstances.

INDUSTRY WAGE FIXING

The second major wage proposal of the bill has nothing to do with substandard conditions or their relief. It proposes to fix a wage structure of minimum hourly rates for all jobs above the unskilled level, according to the skill and experieme required.

The bill will require its governmental Administrator to order and mainta "reasonable wage differentials" between skilled job levels when unskilled labr at the base of the structure is legislated into its immediate minimum hourly rate of 65 cents. Next year, the structure will have to be recalculated "reasoDably" higher, when the unskilled minimum goes to 70 cents. And the following year, recalculation will set in again when the unskilled worker reaches his mandatory 75 cents an hour.

Recognizing the complications of the task, the bill permits different rates to be set for the same job classification in different subdivisions of the same industry and in different localities according to competitive conditions and the variations in going wages for that sort of job.

Practically, any sort of job is impossible to define for use in such wage fixing The same job titles have a different job content in each plant. A tight definition of any job won't fit anywhere. A loose definition will be no guide, but would only promote disputes as to who should be paid how much. The only way o would be to reorganize the job contents of the entire enterprise system to fit the wage definitions which the governmental Administrator is directed to promulgate under this bill.

In connection with such mandatory fixing of a wage structure, I should like to underscore the relevant parts of the testimony which your committee heard only last week from L. Metcalfe Walling. He has been seasoned in this struggle from the Government side, as Administrator of the existing Fair Labor Standards Act which you are now proposing to amend in this fashion.

Mr. Walling said the present proposal to have the Government fix higher was brackets as well as the minimum wage would be (I quote him) "extremely costly and difficult to administer."

During the gradual mandatory rise of the minimum under the present act from 25 cents in 1938 to 40 cents at present, I trust you will note that Mr. Walling said there were corresponding substantial increases granted in the higher brackets without governmental intervention.

Finally, as a veteran in the battle of the definitions of jobs, he observed tha if differentials were nevertheless to be attempted, they should be based (I quote him) "on the differentials commonly found in the industries prior to minimum wage action."

These differentials, you will recognize, were the result of the free interplay of incentive pay and collective bargaining.

I close my quotations from Mr. Walling, with his observation that "the estab lishment of wages above the minimum level goes beyond the basic purpose of minimum wage legislation and requires serious consideration."

To that I add my own question: Doesn't the Government any longer trust collective bargaining?

It seems plain on the above analysis, that this section of the so-called minimum wage bill makes it really a wage control bill.

In this connection, it is worth underscoring also that William Green, president of the American Federation of Labor, told your committee last week, that (I quote him) "detailed Government regulation of wages above the minimum constitutes an invasion by the Government of the domain of free and voluntary collective bargaining between labor and management."

In my judgment it is more than that. It involves the Government in dispensing different wage rates among organized skills, industrial groups, localities, which must always be suspected as privileges by those at lower wage levels. The cry of privilege begets a demand for compensating privilege, and further privilege. and that is already the curse of our political system. Why launch it at full amplitude into our economic system-whereby all of us earn a living?

Finally, as the Government struggles to set up a wage structure for the higher civilian brackets which will satisfy all the job holders, the Government must also rake steps to protect that structure from being made obsolete by a rise in the st of living even before it becomes effective. We will have to contemplate not oly the war control proposed in this bill, but also a price control to continne Horst ladinitely. With that goes our free enterprise.

To summarize, I think the proposed jump from an hourly minimum of 40 cents 65 cents at once and 70 and 75 cents in the following years, is a reckless jolt the economic system.

The proposal to fix wages also in the higher brackets is a departure which is jected by your competent Government Administrator of the present act, by the FL, and by the NAM-all acting on their practical judgment that it is unworkole.

STATUTE OF LIMITATIONS

A statute of limitations to fix the time within which employee suits under the age-and-hour law must be brought is vitally needed. There are now pending a the House and Senate bills to amend the Judicial Code and establish a 1-year ederal statute of limitations affecting private rights of action founded upon ederal law.

After extensive hearings before a subcommittee, the House Judiciary Committee eported favorably on the bill before it on October 9, 1945.

Although I have not had an opportunity to study the hearings on H. R. 2788, have been assured by persons who have that those hearings contain complete nformation (from government, labor, and industry) regarding the need for a hort statute of limitations affecting employee suits under the wage-hour law. f it is not contrary to your practices, I urge you to incorporate the record of earings on H. R. 2788 in your hearings on S. 1349. In any event, all facts presented at those hearings should be considered before you act to amend the wage-hour law to fix a statute of limitations affecting employee suits.

If it is not possible for you to incorporate in your hearings the record made before the House Judiciary Subcommittee, I would like to have the opportunity of supplying a statement outlining the position of NAM in this matter.

The National Association of Manufacturers believes that Congress should enact a short statute either as a direct amendment to the wage-and-hour law, or as an amendment to the Judicial Code which would result from congressional enactment of H. R. 2788 or S. 1013.

We are firmly convinced that, in all fairness, employers should have some reasonable certainty in determining their contingent liabilities that might be provided by a statute of limitations not exceeding 1 year.

SUGGESTED ACTION

S. 1349 contains no provision clarifying many ambiguous terms of the wagehour law which have resulted in needless litigation and continuing uncertainty. I sincerely recommend that you examine the many undefined terms used in the law which according to the wage-hour administrator have presented "difficulties not only to employers but to the Division itself." The meaning of those terms should be clarified.

Operating under the Fair Labor Standards Act is not simple. By far the greatest majority of employers seek to comply with the law. The meaning of the law, therefore, should be made clear by Congress and not left to an unguided administrative agency.

WALSH-HEALEY REPEAL

Earlier in my testimony, I referred to the differences in the child-labor standards of the Walsh-Healey Act and the wage-and-hour law. I then suggested that there did not appear to be any real justification for those differences and recommended that the Walsh-Healey standard be eliminated.

The other variances between the two laws appear to be equally without justification. I believe the time has come when Congress should examine with care the various provisions in conflict, and to take immediate action to eliminate those conflicts.

I ask you to consider whether the added restrictions imposed upon industry because of the Walsh-Healey Act are necessary in any material respect in the light of the coverage and applicability of the wage-hour law. I feel sure you will not; thus, I submit, the Walsh-Healey Act should be repealed immediately, and I so recommend.

EXHIBIT 14

STATEMENT OF NATIONAL COTTONSEED PRODUCTS ASSOCIATION, RE AMENDMENTS TO FAIR LABOR STANDARDS ACT, S. 1282 AND S. 1349

The National Cottonseed Products Association is a trade association representing the cottonseed crushing industry of the United States. It is composed of 371 out of the 394 cottonseed crushing mills in this country. These mills are located in all of the cotton-producing States, from North Carolina to California. They are engaged in the purchase of cottonseed and in the production and sale of eottonseed products: namely, oil, cake or meal, hulls, and linters. During recent years the value of cottonseed products produced by the mills has averaged about $290,000,000. Average annual employment is approximately 16,000 persons. The association also has as members 57 refiners of cottonseed oil, and a number of chemists, brokers, and dealers, all of whom perform important functions in the marketing of cottonseed products.

We wish to express to your committee our opposition to the proposed amendments (S. 1282 and S. 1349) to the Fair Labor Standards Act, which amendments would increase the legal minimum wage to 75 cents an hour (ultimately) and would eliminate the present exemption from overtime penalty rates afforded the agricultural processing industries by section 7 (c) of the act. We wish to state at the outset that the cottonseed crushing industry is not opposed to high wages. On the contrary, we favor the highest wage level that the economy of the industry and the environment in which it operates can sustain.

We oppose the proposed amendments for the following reasons:

1. They conflict directly with the conditions under which the cottonseed crushing industry (and other industries) is required to operate under other legislation enacted by Congress. All cottonseed products are at present under price ceilings set by the Office of Price Administration. In addition, the United States Department of Agriculture, through Commodity Credit Corporation, has established a minimum price that mills must pay for their raw material: cottonseed. In other words, the industry is operating on a gross spread, the upper and lower limits of which are already fixed by the Federal Government. This spread is not sufficient to absorb anything like the increase in costs that would result from these amendments. Enactment of this legislation would result in bankruptcy for many mills or would require substantial modification of the existing support price and price ceiling structure. We assume that your committee does not desire to increase the cost of food to the consumer or to reduce the income of the farmer. 2. Our second reason for opposing the proposed amendments is that they would eliminate section 7 (c) of the act which at present exempts most of the agricultural processing industries from penalty payments for work in excess of 40 hours per week. This proposal fails completely to recognize some of the fundamental features of agriculture and of the agricultural processing industries. Farm commodities are neither produced nor marketed on a 40-hour week. The farmer's schedule of production and marketing is determined by the weather. When crops are mature, they must be harvested and marketed with the greatest possible speed. Delay means serious losses from weather damage. The farmer does not pick cotton or combine grain on a 40-hour basis. He usually works from sunup to sundown and frequently into the night. The processing industries must operate on a comparable schedule or commodities will back up on the farm with consequent losses.

On cotton, 80 to 85 percent of the crop is ginned between September 1 and December 1. About 70 percent of the cottonseed crop moves to the crushing mills during the same 3 months. This means roughly 3,000,000 tons or 187,000,000 bushels. In order to keep this tremendous volume moving, most mills must operate 24 hours a day and 6 or 7 days a week.