EXHIBIT 21

STATEMENT OF THE UNITED PACKINGHOUSE WORKERS OF AMERICA, CIO, URGING LEGISLATIVE ACTION BY CONGRESS TO ESTABLISH A MINIMUM WAGE RATE OF 65 CENTS AN HOUR

The meat-packing industry is looked to by about 200,000 workers as the source of livelihood for themselves and their families. The great bulk of these workers--nearly 70 percent, according to the War Manpower Commission-is employed by the industry's bg four: Swift, Armour, Wilson, and Cudahy. In addition, the Morrell, Hormel, and Rath companies each employ more than 5,000 workers, and the Kingan and Hygrade companies are not far behind,

These familiar names are called attention to in order to establish at once what is sometimes almost forgotten: That the meat-packing industry is essentially a large-scale mass production industry in which a few firms account for most of the output and the employment.

The wage levels for common labor among the big four plants and larger independents are low when measured by the high profits prevailing in meat packing or by the wage rates paid other large-scale integrated manufacturing industries or by the income requirements of wage-earning families. Common labor rates, basic to the whole wage structure, start with 77%1⁄2 cents for male workers in west coast packing packing plants and go as low as 46% cents for women workers at a plant operated by one of the big four in Georgia. In this same plant the minimum for men is 52% cents.

Rates in the South, in fact, at all b'g four plants are less than 65 cents an hour for men. This includes such large plants as those located at Fort Worth and Oklahoma City-plants where the operations are so subdivided and scheduled as to entail the same work loads, job for job, as at the big companion plants operated by the same companies in such northern centers as Chicago, St. Louis, Kansas City, Omaha, and St. Paul. And in the North, outside of the west coast, the basic rate for women is everywhere below 65 cents an hour.

It is in order to emphasize here, before more closely examining the wage picture that the big four and larger independents in meat packing are in the nature of "chain" concerns which maintain networks of big slaughtering and processing plants and branch houses throughout the country-with the larger ones also heavily represented in South America and Canada.

In this country-with one possible exception-any one of these "chain" packers is in a position to shift a signficant part of its output-i. e., expand or curtailif the cost of production at any one plant makes it financially attractive to do so. While various factors are involved besides wage scales, it is obvious that in over lapping areas from which livestock is drawn there is a premium placed on maximizing slaughter at plants which have relatively low wage scales. This is in spite of the fact that plant labor in meat packing, as is typical with food-processing industries, accounts for only 6 to 7 percent of the total cost of production10 to 11 percent when salaries for the office and supervisory personnel are included. This differential situation in respect to labor costs means that efforts to raise the general wage level encounter a peculiar and pernicious kind of "competitive" drag throughout the industry. While, for example, from the standpoint of ownership and management, the Armour plant at Fort Worth does not compete in a basic sense with the company's plants at Omaha and Chicago, the workers at these plants in a real sense are competing, with a premium placed on production at the center where labor is cheapest. (At Fort Worth the basic common labor rate for males is 64 cents, while for females it is 53 cents; the corresponding rates are 70 and 59 at Omaha and 72% and 62 at Chicago.)

Demonstration of this is afforded by the record at Chicago where the total number of animals slaughtered fell off one-fourth from 1928 to 1944. When the more valid comparison is made with prewar 1939, before the great wartime expansion in livestock production had occurred, the much greater drop of 40 percent in slaughter at Chicago is disclosed. In the meanwhile, nearly all other centers expanded meat production substantially. The explanation? Undoubtedly a number of factors were involved, but it is certain that the higher basic wage scale at Chicago which was introduced in 1929, with the differential maintained thereafter, created a profit inducement to build up production elsewhere.

From the standpoint of social policy, the kind of insecurity and instability for wage earners to which the chain production set-up in meat packing lends

itself, when it is accompanied by differential wage scales, presents a powerful argument for uniform floors for wages. The case is strengthened when one considers that the minimum hourly rates (72% and 62 cents), now in effect at Chicago and other important "Metropolitan" rate centers, are themselves obviously much too low to yield weekly or annual earnings adequate for minimum family living requirements.

The low differential wage scales prevalent in packing are in sharp contrast to the industry's pricing policy. This policy is that any item, whether a side of beef or a pound of premium sliced bacon or of fat back, will sell at the same price, quality considered, in a given market-irrespective of the location of the packinghouse where it was prepared.

Significantly, there is no indication that any economies in labor cost which exist at the "chain" plants where submarginal wage scales prevail are passed on to the consumer in the form of lower average prices for meat. On the contrary, the differential wage structure in the meat-packing industry becomes a source of additional profit margin to the stockholders of the various companies. At this point it is appropriate to answer the question which naturally arises: How have the major meat-packing companies been doing, profit-wise, in recent years? The answer is portrayed by the following table, which summarizes data prepared by Donald Montgomery, chairman of the CIO's cost-of-living committee.

Net sales and profits before and after taxes-8 largest companies

1 Returns are calculated on the average of net worth at the beginning of each year. Net worth is the sum of the common and preferred stocks, surplus and surplus reserves.

Source: Moody's Industrials and Standard and Poor's Corporation Reports.

The figures above eloquently speak for themselves. But several features may deserve notice. First, the net sales figure is in terms of billions of dollarsa fact which reminds us that during prewar meat packing was one of the Nation's largest industries, ranking just below steel and above petroleum in sales volume.

Second, the index numbers show a wartime expansion in profits greater than sales-tremendously before taxes and significantly after taxes.

Third, even the percentage return on sales has been substantial-more than trebling before income taxes. This is worth observing because the packing companies are anxious to confine a consideration of their returns to those on dollar sales rather than to return on investment. Their preference is east derstand because the "small" profit per dollar of sales deflects attention ** frequency of turn-over of output and inventory in this industry.

Fourth, the return on net worth, which OPA and other disinterested authorities regard as the decisive test (rather than return on net sales), reveals that the rate of return before taxes has jumped to a level almost seven times as high as the prewar level; while, after taxes, the rate was nearly two and a half times as great.

It will not be surprising that the large meat-packing companies have been paying great amounts in excess-profits taxes. For example, the combined total of the two largest firms, Swift and Armour, for their fiscal year ending October 28, 1944, was over $66,000,000. This was accomplished at a time when price control was in effect, a central feature of which was hundreds of millions of subsidies that were paid in the first instance to the companies as a device to hold down meat prices.

While this subsidy technique was in effect-protecting the packers as well as the consumer-the packing companies were absolutely unwilling to agree to voluntary wage increases. Perhaps it will astonish this committee to learn that the big packing companies have utilized all of the time-consuming machinery of the National War Labor Board so successfully that they have managed to avoid any general wage increase since a few months before Pearl Harbor. This fact is not altered through recent "fringe" concessions obtained under NWLB procedure.

Certain consequences have flowed from the packing industry's wartime "victory" over labor on the wage issue. One is that the packing industry has had the unenviable record of ranking among the highest in the United States in the matter of labor turn-over. In many months, in fact, the rate was the very highest, adding up to even more than a complete replacement, on an annual basis, of the entire labor force. So many tens of thousands of key workers were driven out of this war industry for other war industries, because of the low wages in packing, that two results are particularly worthy of attention:

One result is that frequently acute labor shortages appeared which sometimes dammed up livestock in the yards and on the farms, causing farmers to lose money and to reduce hog breeding; procurement officers in the armed forces to tear their hair in worry over whether they would be able to fill their quotas and further intensifying the meat procurement problem of the housewife. (Incidentally, through all the war years not a single strike can be pointed to as contributing to the meat-shortage problem.)

The other result of the great exodus from this low-wage industry was extensive overtime in fact, often excessive overtime when the worker's health and morale are taken into account. But it was only through such overtime that the wartime increase of 30 percent in meat output was made possible. Moreover, it has only been through overtime earnings that numerous packinghouse workers have been able to "get by" as the squeeze from stationary wage rates and mounting living costs has tightened.

Fifty-hour weeks and up, however, are becoming increasingly scarce in packing. In fact, for many months-beginning in 1944-hog departments in the typical packing plant have had so few hogs and so little pork to work with that significant lay-offs have occurred and, even more, such short hours have prevailed that thousands and thousands of employees, after deductions, have been taking home pay of $17 and less per week. Furthermore, as unemployment develops in other war industries, workers who left packing are returning. As they do so, managements are enabled to reduce overtime; and this will be increasingly done as a means of avoiding the payment of higher overtime rates.

This brings us back to the low-paid worker. For the impact of short time and reduced overtime falls with special weight upon the employee at the common labor rates. In his case, reduced earnings cut still deeper into the fund required for bare essentials. Higher-paid workers in the hog departments, e. g., are likely to be temporarily transferred to other departments, because the management does not want these workers to quit in disgust over the low short-time earnings; their skill makes them hard to replace, once they escape from the blood and other disagreeable features of a packing plant. But managements tend to assume that in the "common labor" classification replacements will be easier. Higher wage rates would hold many of these workers. But managements, even during the labor-shortage period of wartime, calculate that heavy labor turn-over entails less expense than something more closely approximating a living wage. We think this is mistaken and short-sighted from management's point of view. But even if their method "saves money" it clearly saddles society with high human costs.

Since this committee is immediately concerned only with that part of the wage picture affecting workers who receive less than 65 cents an hour, attention will now be more narrowly directed to these workers. As previously stated, women employees' basic common labor rate except on the west coast, where "meat packing has not yet attained major proportions-is everywhere paid at the rate of 62 cents or less per hour.'

Women, according to the War Manpower Commission, constitute 25 percent of the labor force in meat packing. In many departments they provide the entire personnel. It might be assumed, however, that most of the women workers receive enough above the minimum rates to push them over the 65-cent line However, careful inquiry indicates that at least 80 percent of the women workers receive less than 65 cents an hour-and in the South, of course, the percentage is almost certainly 100.

Men workers below 65 cents an hour are limited, for the large companies, to the South. Small companies in the North as well as in the South frequently pay their less skilled workers less than 65 cents per hour. Nor is it to be overlooked that the South will undoubtedly grow as a meat-packing area, hand in hand with the growth of the livestock industry. Meanwhile, the present size and importance of the industry in the South is not to be minimized.

No doubt close estimates can be supplied to the committee by the United States Department of Labor as to the aggregate volume of employment in the meatpacking industry which is rated at 65 cents or less, with a break-down by sex if that is desired.

In appraising the previously mentioned "competitive drag" resulting from low wages in this industry, additional important considerations must be taken into account. One is the fact that workers in lower-paid classifications, at or very close to the basic common labor rate, comprise at least two-thirds of all employment. Another consideration is clearly revealed by the following state ment from a Swift & Co. source:

"The basic wage rate is the foundation upon which the entire wage structure is built." "

3

This quoted statement calls attention to a familiar fact: The common labor rate provides the foundation upon which differentials in respect to more skilled jobs are built. That is, if the foundation is low, the whole wage structure will be substandard. And the way to change this is to raise the foundation.

Foundation raising can be accomplished in various ways, including collective bargaining which has made great headway in the few short years since this union appeared upon the scene. But for the reasons set forth above-not the least of which is the functioning of the "chain" lay-out of plants in the industry which has been described-we would welcome a raising and an evening up of the industry's wage foundation through statutory enactment by Congress.

The Big Four companies in particular speak of themselves and are described in the industry as "national packers." They are by no means unique in being national concerns. But we hold that these giant nation-wide networks in our industry afford especially strong demonstration of the need for national minimum wage standards for the workers who are such a vital factor in the industry Little, except by implication, so far has been said here on the unmet living requirements of families of packing-house workers who receive less than 65 cents per hour. The committee has had much convincing evidence on this allimportant side of the subject. There is essentially little to add with respect to packing-house workers-except to point out that special living costs are imposed upon them in consequence of special health and accident hazards arising out of their work and that the lowest paid workers are largely concentrated in the most disagreeable and unhealthy sections of the packing plant.

We would, however, like to call the committee's attention to an analysis prepared concerning the cost-of-living situation confronting our large membership at the Big Four plants in Omaha. This analysis is a section in our brief favoring the elimination of the existing geographical wage rate differentials in meat packing. The brief was recently submitted to the National Meat Packing Com mission (acting under NWLB procedure) during the course of hearings at Chiengo

further exception is the Rath Packing Co., which pays 63 cents at its large plant te Bamsey Edminster, Meat Packing and Slaughtering, Encyclopaedia of Vol. 10, p. 248.

Yaining Courses, Training Division, Industrial Relations Department 1942. Series O. Employees' Earnings for Services. Lesson IIond Occupational Ratings.

Minimum rates in the Omaha plants are 70 cents for men and 59 cents for vomen. Wage and income computations contained in the quoted statement below are in terms of 70 cents per hour. In view of the bill being considered by this committee providing within 2 years for a 70-cent minimum hourly rate, this naterial may be of particular interest to the committee. Because the committee s considering the advisability of a minimum rate which would apply to women as well as men, it will not be overlooked that the present 70-cent-an-hour male worker n Omaha, a northern city, typically has a family to support-a condition of course also applying to more than a few women workers.

If there might be an inclination to believe that raising 59-cent women workers in Omaha to 65 cents has no relevance for 70-cent workers, it is in order to recall the previously quoted statement from Swift & Co. to the effect that the common labor wage rate is the basic foundation for the whole wage structure. In other words, raising the 59-cent foundation to 65 cents would result in changing the entire wage structure, including the 70-cent rate for men. (Parenthetically, it may be remarked that our contracts with the companies provide for paying women the same rates as men where the work is the same.) The reproduced material on Omaha follows:

"LOW INCOME WORKERS IN OMAHA-COUNCIL BLUFFS

"Prewar income and expenditure data for Omaha, Nebr.-Council Bluffs, Iowa, are of value in providing perspective with regard to the present cost-of-living situation and also for the light thrown on the prospect for the near future. This meat-packing center may be regarded as typical of most others in respect to the cost of living. The situation of low-paid packing-house workers in a few localities might be slightly better, while in others it is worse-in southern centers materially worse. The study of consumer, purchases" reveals that for wage earners averaging $638 income per year in 1935-36, expenditures averaged $844, leaving an average net deficit of $184 for the year.* Deficits continued to exist for family incomes up to and including those averaging $1,391, where the deficit averaged $27 and affecting 47 percent of all families receiving this income. Only for the group averaging $1.625 did a "net surplus" ($45) develop. This was the record when living costs were much lower than they are at present.

"Commenting on the effect of wartime living cost increases on the lowest paid group of Omaha-Council Bluffs workers just cited, A. F. Hinrichs, Acting Commissioner of Labor Statistics in the Bureau of Labor Statistics, under date of May 16, stated in a letter addressed to the research director for this union: 'A price increase of 20 percent has serious implications for these families and the community in which they live. If living standards are maintained, more of the families will spend in excess of the year's income and accumulate debts, some of which may never be paid. If the scale of living is further reduced, the health of the families is endangered. This group spent only $2.10 per week per person on food in 1935-36. At that time very few large city families spending this amount had adequate diets (U. S. Department of Agriculture, Miscellaneous Publication 42, Family Food Consumption and Dietary Levels, p. 58). Obviously, if the families have not increased their food expenditures, but altered their food choices, the higher prices have meant a larger number of low-income families with poor diets.'

"This statement of Mr. Hinrichs applies in large measure to a high percentage of the families whose incomes ranged up to $1,391, where a deficit was shown for the group as a whole. Here it is pertinent to note that 70-cents-per-hour workers— if they were employed the almost-unheard-of average of 50 full 40-hour weeks a year would gross $1,400. But pay-roll deductions would cut this down materially. The woman worker with dependents-a condition which holds for many women employees in meat packing-would be correspondingly worse off. "For a certain proportion of families during the war, in meat packing as in other industries, there has been more than one breadwinner. But for other families, loss of the main or sole breadwinner has worsened the family-income situation, making it more difficult to meet the much higher living costs which especially strike these families in wartime. Irrespective, however, of the net Family Expenditures in Six Urban Communities of the West Central Rocky Mountain Region, 1935-36. Bull. 646, Vol. II, U. S. Department of Labor, Bureau of Labor Statistics, in cooperation with Works Progress Administration (1940). Table 1. pp. 103 ff. Recording the difference as $184 rather than $206 was because of discrepancies in family records on receipts and disbursements. Therefore, a "net balance difference" is given; in this instance it is $22 (ibid., table, p. 103, and glossary, p. 279).