PROPOSED AMENDMENTS TO THE FAIR LABOR STANDARDS ACT THURSDAY, OCTOBER 18, 1945 HOUSE OF REPRESENTATIVES, The committee met at 10:30 a. m., the Honorable Robert Ramspeck (Georgia) presiding. Mr. RAMSPECK. The committee will come to order, please. We have with us this morning Mr. David J. McDonald, secretarytreasurer of the United Steelworkers of America, speaking for Mr. Philip Murray, president of the Congress of Industrial Organizations. Mr. McDonald. STATEMENT OF PHILIP MURRAY, PRESIDENT OF THE CONGRESS OF INDUSTRIAL ORGANIZATIONS, PRESENTED BY DAVID J. McDONALD, SECRETARY-TREASURER, UNITED STEELWORKERS OF AMERICA (CIO) Mr. McDONALD. The Congress of Industrial Organizations urges prompt revision of the Fair Labor Standards Act. The President of the United States has characterized the present act as obsolete. It no longer serves its original function of advancing sound minimum conditions of employment to promote "health, efficiency, and the general well-being of workers." A wage rate of 40 cents an hour is far too low to fulfill these goals. We know that the Members of Congress are greatly concerned about speeding the return of the members of the armed services. Is it not equally important to make sure that they do not have to work for 50 to 60 cents an hour when they do come back? They have every right to ask what Congress has done to assure them jobs at good wages. They know, from the flow of military goods we produced and from our conquest of atomic power, that we have tremendous capacity to produce. They do not want to work for wage rates under 75 cents an hour. Nor will those who enter business for themselves want to reap profits by employing others for less than 75 cents an hour. They want to return to a situation where there is room for everyone to make a decent living without grinding down his fellow man. The people know we have the men, the machines, the resources, and the technological skills for continuing prosperity, if adequate purchasing power and markets can be assured. This bill, by raising the floor of wage rates to 65 cents and later to 75 cents an hour, would provide an underpinning for purchasing power. Many other benefits would flow from this measure. It would bring great joy to tens of thousands of homes which have been struggling at substandard levels. By giving them more adequate purchasing power, it would aid the small storekeeper and the small business in the towns where the workers live. Let us not forget that the Government has already slashed $40,000,000,000 from its prospective annual expenditures. Already income payments are plunging down. Unemployment and shorter hours have slashed pay rolls. Farmers, like small businessmen, need assurance of markets for their products. What better customers can they have than these American families who have not had enough for proper nutrition? A Government study showed some years ago that families with incomes of $1,500 to $1,999 spend $1 more per person per week for food than families with incomes of $500 to $1,499. An adequate floor under wages would likewise help overcome the shortages that still.plague us and are holding back reconversion at several points. We can produce more of these goods promptly if workers attracted by decent pay and decent conditions will return to industries which they left, either to enter the armed forces or to take jobs in better paying war plants. The war experience proved to the hilt that the worst manpower shortages, the ones that resisted all efforts at correction, were in the low wage industries. Men and women can be driven to accept substandard jobs only by bitter poverty and suffering. You have a golden opportunity to wipe out these conditions at a time when demand is at a high level. By eliminating substandard wage rates we would be helping to fulfill our responsibilities as the most powerful democratic Nation in the world. In the areas liberated from Nazi and Japanese dictators, the people are groping toward rebuilding not only their homes but new ways of living. We hope they will build democratic institutions in the Western pattern. But let us not forget that other institutions are competing with ours. We cannot assume that our democratic methods will seem best. There are many who will be glad to pick upon the defects of which we are not proud. The future place of our Nation in the world depends in no small measure on the success of our democratic ideals in this country. We must demonstrate conclusively that democracy not only permits greater individual liberties but can produce an ever better living for all our people. We have all of us seen the outward signs of substandard wages in city slums and country shacks. Surely all of you and all the Members of Congress have been horrified at some time to see the conditions under which many of our people must live-dilapidated and overcrowded buildings, insanitary water and plumbing facilities, ragged clothing and improper play places for the children. We have all been shocked by stories of children unable to study properly in schools because they lacked enough food. We were all ashamed to have 40 percent of our young people turned down by the military authorities as unfit for service, with the largest percent of rejections in the areas with the lowest per capita income. Illness, juvenile delinquency, crime, and many another evil have been shown to be directly correlated with inadequate family incomes. It is of great importance in enacting legislation to correct these evils that you raise the minimum to an adequate figure. Since the enactment of the present 40-cent rate in 1938, living costs for low-income groups have risen to the point where a 65-cent rate would be needed to maintain approximately the same level of living. In the recent hearing on this measure before the Senate committee, statistics were presented from the Department of Labor which no doubt will be presented before this committee which showed that a family cannot attain a reasonably adequate minimum standard of living even with $1,500 at the present time. For a family to attain a minimum standard of adequacy a worker must therefore earn more than 75 cents an hour or must work many hours at overtime rates or else two or more persons in the family must have jobs. To permit a lower wage rate is to condemn children to poverty and suffering, to force mothers to neglect their homes in order to add to inadequate family incomes and to have the entire community pay a heavy toll through charity, doles, and, still worse, in the lowered efficiency and value of thousands of our young people who are the Nation's greatest resource. At this point, I would like to speak out as strongly as I can in protest against a reported compromise on this measure. We have read in the press a number of recent stories to the effect that the compromise looks to a settlement of this issue on the basis of raising the present minimum from 40 cents an hour to 55 cents. Such a compromise would be no compromise at all. It would merely be a retreat. As the Members of Congress know, the War Labor Board some months ago set 55 cents an hour as the minimum wage which they would approve without question or review. To offer this accepted-and thoroughly inadequate-wage minimum as a compromise is to make a mockery of progress on the whole issue. It has been our experience in collective bargaining that you make no progress whatever yhen you start from the premise that your minimum needs must be scaled down in advance. We submit that the minimum needs in this case are modest enough-a mere 65 cents an hour for a 40-hour week-that no compromise is admissible. During the same period that saw such market increases in the cost of living, felt with special severity by the low-income groups, the productivity of labor has also increased. This, in turn, has brought a further reduction in total income for these workers and a decrease in labor costs to the employer. The United States Department of Commerce reports a rise in productivity of 50 percent between the years 1923 and 1929. (Survey of Current Business, September 1945.) From 1929 to 1941, the Committee for Economic Development reported a further rise of productivity of 42 percent (American Industry Looks Ahead). From 1941 to 1945 the War Production Board reported an increase of productivity of 25 percent (American Industry in World War II). This indicates that there has been a 40-percent rise in productivity from 1938 to the present at the rate of 5 percent a year. Roughly, four workers are now able to produce the work that required six workers in 1938 when the Fair Labor Standards Act was enacted. Mr. Barkin, who will follow me, will give detailed information on the estimated costs of these higher wage rates. According to the 1940 Federal Trade Commission Report, labor costs are computed to be about 25 percent of the cost of the finished product. A small rise in wages such as these bills contemplate cannot add in any appreciable manner to the final cost of the product. It indicates the relative 80014-46-9 insignificance of increased labor costs as compared with the huge profits that industry has been reaping. The total increase in the wage bill resulting from these amondments would be far less than the 22 billion which corporations would, as a minimum, gain from repeal of the excess-profits tax. The entire Nation, and not just certain regions, would benefit from the elimination of substandard rates. The excuse cannot be made that the substandard problem is one confined just to traditionally lowwage industries. Less than half of the members of one of our big unions, the United Steelworkers of America, working in substandard wage plants, are found in the South, and only 38 percent of these plants are located in the South. Perhaps the members of this committee would like to learn some of the more important details of steel industry substandard wages. The extensive operations of the Tennessee. Coal, Iron & Railroad Co. in the Birmingham area in Alabama constitute the single most profitable operation of the United States Steel Corp. These works, involving a network of plants employing 16,000 people, have a base rate of 602 cents an hour. This rate is not only paid to labor but many semiskilled and skilled workers have a 6012-cent guaranteed rate. These operations are the most profitable in the entire steel industry. Even if the labor rates were equal to those in the North, the production costs would still be the lowest in the country. These plants enjoy every advantage, including the most complete integration in the Nation; ore, fuel, and transportation are all ideally located and productivity is very high. Yet, at this very moment the United Steel workers of America is struggling against company opposition to raise the substandard rates in that plant-and so far we have not been successful. In the same general area, we find a large Republic Steel Corp. plant-some 60 miles away. This plant employs 3,300 people and also has a base rate of 602 cents an hour. A large number of fabricating plants in the area have base rates ranging from 50 cents an hour to 6012 cents. The large Aluminum Co. refining plant in Mobile, Ala., has a base rate of 63 cents an hour, even though it is modern, highly efficient, and ideally located from the point of view of transportation. In the Memphis, Tenn., area more than a thousand of our members are employed in plants whose base rate is less than 65 cents. More than 1,400 of our members are employed in below 65-cent plants in the Lynchburg, Va., area. Some 1,200 are found in the Chattanooga area. We have 3,500 in substandard wage plants in the Atlanta district. Some of the employees of the Aluminum Co. of America in Alcoa, Tenn., the largest, most profitable aluminum plant in the world, are paid less than 65 cents an hour. All the extensive aluminum operations in the State of Arkansasfrom mining to final ingot production—are in plants and mines whose base rate is 60 cents an hour. The big Hughes Tool Co. operations in Houston, Tex., operate on a wage scale with a 60-cent base rate. Some 4,000 people are employed there. |