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a somewhat unique position-one that differs markedly from the typical manufacturing operation.

One of the principal differences is that we are subject to the strictest and most comprehensive kind of governmental regulation. The price which we may charge for our service is under the exclusive control of the Interstate Commerce Commission and the several State utility or public service commissions. No increases in revenues, therefore, are possible without the approval of those bodies. But more important even than the matter of regulation, is the fact that our fares are subject to an economic price ceiling growing out of competition, above which we could not go even if the regulatory agencies should give their approval.

In 1941, for example, the last normal year before wartime restrictions on gas, tires, and automobile manufacture, approximately 86 percent of all intercity passenger travel was by privately owned and operated passenger cars. The balance was divided up between the railroads and the buses, with a small fraction of 1 percent going by air. With the elimination of wartime restrictions on private passenger travel, intercity travel by passenger car will undoubtedly jump back to or beyond its prewar levels. In addition to this, the motorbus industry will undoubtedly face greatly intensified competition from railroads and airplanes.

As a consequence it is impossible for us to raise our fares in order to obtain revenues necessary to meet added costs or for any other reason, if we expect to continue to attract traffic and to remain in business. We are faced with greatly decreased revenues without any doubt. Our present average operating costs per bus mile are greater in most instances than our total revenues per bus mile before the war. Even if there are no increases in labor costs, by reason of the bills your are now considering or of labor's demands, we will be hard put to it to continue performance of this highly important transportation service and to provide employment for the industry's 70,000 workers.

Our industry is opposed to several of the provisions contained in one or more of the bills which are before you for consideration. Our objections fall principally into four categories. They are (1) The proposals to modify or eliminate the partial exemption applicable to motor-carrier employees; (2) the establishment of a 5-year statute of limitations for the institution of employee actions under the act; (3) the proposed increases in hourly minimum wage rates; and (4) the proposal to establish job rates above the minimum for maintaining or establishing wage differentials.

MODIFICATION OF EXISTING EXEMPTION PROVISIONS

The Fair Labor Standards Act, as it was enacted in 1938, contained a provision exempting from section 7 those employees "with respect to whom the ICC has power to establish qualifications and maximum hours of service pursuant to the provisions of section 204 of the Motor Carrier Act, 1935." Section 204 vested in the Commission power to "establish reasonable requirements with respect to qualifications and maximum hours of service of employees." There was nothing said or intimated in the statute that this provision covered less than all of the employees of motor carriers. Nevertheless, for reasons which seemed sufficient to a majority of the Commission, it was held that the provision applied only to those employees whose duties involved considerations of safety. This ruling was upheld by the Supreme Court by a 5-to-4 decision. From that decision has flowed the gravest kind of inequities and uncertainties which have led to much litigation and expense, the total result of which has been obvious unfairness to motor carriers. In the first place, there can be no sound reason advanced for the discrimination against motor carriers in favor of their competitors. The railroad exemption from section 7 applies to all railroad employees. It reads: "any employee of an employer subject to the provisions of part I of the Interstate Commerce Act." All employees of all local trolley or motor bus carriers are exempted from the application of both the minimum wage and overtime provisions regardless of the interstate character of their business. The latter is true also of air carrier employees. The motor carriers, who could least afford it, were singled out and made to carry a financial burden which was not imposed upon those with whom they must compete. No reasonable or satisfactory explanation of this has ever been given to us by anyone.

In the light of that background, it would seem unjust, to make even weaker the already inadequate motor carrier exemption now contained in the Fair Labor Standards Act, or to eliminate the partial exemption entirely, which one of the bills proposes. On the contrary, justice and equal treatment would seem to require an amendment which would place motor carriers in a position of equality

with other transportation agencies. We recommend and strongly urge that section 13 (b) be amended to read as follows:

"(b) The provisions of section 7 shall not apply with respect to (1) any employee of a common or contract carrier subject to any of the provisions of part II of the Interstate Commerce Act; (2) any employee of a private carrier subject to part II of the Interstate Commerce Act with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service pursuant to the provisions of section 204 (a) (3) of said act; and (3) any employee of an employer subject to the provisions of part I of the Interstate Commerce Act."

There are compelling reasons other than the one of unfair and uneven treatment why the provision in some of the pending bills modifying or removing tse present exemption should not receive approval.

The proposed application of the overtime provisions of the act to employees of motor carriers now exempt therefrom would also result in marked increases in labor costs over and above those arising from any increase in minimum wages and the consequent realinement of rates for other occupations. In this respect, the proposal merely adds emphasis to the conclusions which we have heretofore stated. There is, however, a special circumstance to be noted in connection with this proposal.

Prior to the war, the payment of premium rates for work in excess of 40 hours per week was not common among exempt employees in the intercity bus industry. This fact was due in part to the continuous nature of operations and to certain other peculiar characteristics of the work. Particularly in the case of drivers, but also to some extent among other classes of employees, continuous work, such as that performed by factory workers, is not involved. Drivers of busses spend substantial proportions of their on-duty time making out reports, waiting for departure times, and doing other work far less difficult than driving. A very large proportion of this nondriving duty time is paid for nevertheless.

It is generally recognized that the operations of few companies are such that the schedules could be adjusted to provide 40 hours of work per week per driver. Drivers must be relieved at terminal points, and it is obviously impossible to provide an adequate public service and, at the same time, so arrange schedules that busses arrive at a terminal when the drivers' 40 hours are up. This problem is, of course, further complicated by the safety regulations of the Interstate Commerce Commission regarding mandatory rest periods for drivers. Because of these circumstances, the wage structure for bus drivers has gradually taken on other types of premium payments as a substitute for overtime based on a standard number of hours. Thus, for example, drivers are commonly paid at the rate of time and one-half for work performed in addition to their regularly assigned runs, even when those regularly assigned runs involve fewer hours than 8. Again, many bus drivers are paid at time and one-half for extra work performed on their regularly assigned weekly day off irrespective of the number of hours worked during the preceding 6 days. Finally, it is a common practice for employers to agree that no regularly assigned run shall pay less than 8 hours per day. Because it is often impossible to fit operating schedules to this provision, many drivers receive 8 hours' pay every day for runs that involve less than 8 hours' work. It is estimated that, as a result of these various allowances, the typical bus driver's earnings are at least 15 to 20 percent more than they would be if he were paid straight-time rates for his work. The effect of applying the overtime provisions of the Fair Labor Standards Act to these employees would thus result in drastic pyramiding of premium payments. It would do this by adding another 8 to 12 percent in premium payments to those already in effect and now paid on the basis of procedures far better adapted to the peculiar characteristics of the industry than is the entirely unworkable device of a workweek of uniform length.

During the war, partly as a result of the tendency of the National War Labor Board to apply wage-payment procedures without sufficient regard for unique operating conditions in certain industries, there has been some trend toward the payment of premium rates to intercity bus company maintenance employees for work above 40 hours per week. The practice is by no means universal, however, and some further additions to labor costs would result from application of the overtime provisions to those maintenance workers who are currently exempt from them.

Estimates indicate that application of the act's overtime provisions throughout the industry would add a minimum of 5 to 10 percent to the wage bill, even though substantial increases in tariff rates are impossible, for reasons heretofore stated.

5-YEAR STATUTE OF LIMITATIONS

In my discussion of the first point I have spoken of the doubt and uncertainty which arose out of the conflict of jurisdiction between the Interstate Commerce Act and the Fair Labor Standards Act. That situation is and always has been a most difficult and confusing one. Immediately upon the enactment of the Fair Labor Standards Act the Wage and Hour Division took the position: (1) That the Commission's power was limited to those employees whose activities affected safety, and (2) that even as to the latter class of employees the provisions of the Fair Labor Standards Act applied until such time as the Commission had actually prescribed hours of service. In 1939 the Commission, in Ex parte No. MC-28 (13 M. C. C. 481), determined that its jurisdiction was limited to employees whose functions involved safety considerations. That ruling was appealed to the courts, was set aside by a three-judge district court, but was upheld in May 1940 by the Supreme Court in a 5-to-4 decision (United States v. American Trucking Associations, Inc., 310 U. S. 534). The question as to whether the Fair Labor Standards Act applied to those employees whose activities did affect safety, in the absence of the establishment of hours of service for them by the Commission, was not decided by the Supreme Court until May 1943, in Southland Gasoline Co. v. Bayley (319 U. S. 44), nearly 5 years after the Fair Labor Standards Act became effective. Before that there had been conflicting decisions on the point in separate circuit courts of appeals.

From October 1938 until the Commission's decision in March 1941 there had still been no determination as to what classes of employees, except drivers, were within the Commission's jurisdiction. Every carrier had to guess for himself at his peril. On the latter date, the Commission decided that (in addition to drivers) mechanics, loaders, and driver's helpers were subject to its jurisdiction. But even that did not settle the matter. We now have questions pending in the courts as to what particular kind of mechanics, for example, the Commission meant, whether those only who worked directly on motor vehicles, or all mechanics of every kind employed by them. We have instances of cases in which the courts have exercised their own judgment, independently of the Commission's decision, as to whether given employees were or were not engaged in work which affected safety.

All of these years of delay and doubt naturally gave rise to a veritable flood of litigation which still goes on. The carriers throughout the years have had to depend upon their best judgment, lacking any authoritative decisions, as to whether any given employee was or was not subject to the Fair Labor Standards Act. If his judgment were erroneous in the light of subsequent determinations, he was confronted with double penalties and attorneys' fees, and his good faith and high intentions were of no moment. If, in all good faith, he made a settlement with any of his employees as soon as he learned, or thought that he knew, of the employees' status, even though the settlement was then entirely satisfactory to the employees, he subsequently found that releases were of no efficacy and he was still liable for further outlays.

Under the circumstances, it seems only fair that there be a Federal statute of limitations applicable to employees' claims under the Fair Labor Standards Act, and that it be short enough to protect employers who in all good faith have tried in every possible way to determine their obligations and responsibilities and to live up to them.

Our people are and always have been earnest in their effort to comply with the Fair Labor Standards Act to the full extent it applied to them. If they have not complied in certain cases it has been because of lack of authoritative and definitive utterances as to the nature and extent of their liability. They have not been clairvoyant, but they have done the best they could under all of the circumstances. They should not now be continuously exposed to stale and vexatious claims, extending back as far as 5 years, under the circumstances I have related, and when, in addition, they are in most cases unable for lack of records and other evidence adequately to defend themselves.

For these reasons, we submit that a 5-year period is much too long to meet the standard of reasonableness. We urge a statute of 1 year, with a provision that actions on accrued claims be brought within 90 days after the enactment of the statute.

INCREASES IN MINIMUM HOURLY RATES

You have heretofore heard testimony to the effect that, as of the summer of 1945, approximately 20 percent of the 12.2 million factory workers received less than 65 cents per hour. It is estimated further that application of this minimum would increase average wage rates in manufacturing industries by 2 percent.

The intercity bus industry is, of course, subject to the minimum wage provisions of the Fair Labor Standards Act and, while extensive data are not available, preliminary estimates suggest that the proportion of its workers receiving less than 65 cents per hour is roughly the same as that for manufacturing, that is, about a fifth. It is probable that, as applied to the intercity bus industry, the estimate of a 2-percent increase in average wage rates if the 65-cent minimum were established is an understatement. Irrespective of the accuracy of this estimate, it constitutes, at least by implication, a conclusion that is quite misleading.

A 2-percent average increase in wage rates would constitute a serious burden to comparatively few industries. But it is clearly impossible to raise the wage rate for janitors who wash busses from 55 to 65 cents per hour without making corresponding readjustments in the wage rates of mechanics and other types of workers. In order to maintain a reasonable balance between compensation and job requirements, it would be necessary to raise the rates of at least twice the number of workers directly affected by the new minimum. The actual proportion of workers who would receive raises as a result is therefore not less than 40 percent of the total, and such data as are available indicate that it would be considerably higher. The end result would be an average increase in wage rates for the industry as a whole, far above the 2-percent figure based only on application of the proposed minimum.

Another important difference is found in the relative importance of labor costs. A total labor cost which amounts to as much as 25 percent of the total value added by a manufacturing industry is regarded as comparatively high. In many industries, labor costs are well under 20 percent of total product value. In the intercity bus industry, however, labor costs are estimated at more than 35 percent of total costs and almost 30 percent of gross revenues. Thus the effect of increasing wages by equal amounts would constitute a far heavier burden on this industry than would be the case typically in manufacturing. Further, labor costs in the intercity bus industry have risen by more than 40 percent during the last 4 years. The industry has been able to absorb these increases as a result of higher revenues resulting from the war emergency. As I have stated, with the end of hostilities, the increased use of private automobiles, and competition from other forms of public transportation have resulted in a decline in revenues which is expected to continue to a point where the industry's ability to meet labor costs, even at present wage levels, is subject to serious question.

It should not be inferred from the foregoing that this industry is opposed to any possible increase in the level of workers' earnings and in standards of living. This is not the case. The achievement of such a goal, however, depends upon the extent to which incomes can be raised without corresponding increases in the cost of living, and without destruction of the industry charged with the income increases. It is a demonstrable fact that the intercity bus industry cannot continue to render an adequate service essential to thousands of communities which have no other form of public transportation if labor costs increase appreciably and its revenues are limited to the predicted postwar level of bus passenger travel at existing rates.

It is possible that certain manufacturing industries can raise wages without involving corresponding increases in prices. One possible method is increased productivity. For all practical purposes, this potentiality is not available to the bus industry. It is not possible to operate a bus with less than one driver. Basic service must be maintained even if the number of passengers per bus, declines, and the cost of operating a half-loaded bus is not appreciably below that for a fully loaded vehicle. The cost and durability of equipment makes it impossible to substitute smaller busses for larger ones, or vice versa, at frequent intervals. In the interest of safety, and because of extensive regulation, subsantial economies in repair and maintenance work are not possible. Small savings in improved efficiency and fuel consumption may be realized, but will be more than offset by reductions in revenue passengers per vehicle-mile. In short, the trend of productivity, by comparison with the war period, will inevitably be downward in the bus industry.

Further, it is a foregone conclusion that the prices of some manufacturing commodities would be raised if the existing minimum wage is increased to 65 cents, especially since the increases in labor costs would be considerably above the estimated 2-percent rise in average wages resulting from the 65-cent minimum alone. It is not our contention, however, that this is a dominant consideration if the price increases are not sufficient to offset the rise in earnings. It must be noted, on the other hand, that the minimum wage provisions are applicable to less than a fourth of the country's gainfully occupied individuals. The remaining three-fourths or more would presumably be affected by any price

increases but would receive higher earnings only as a result of competition among employers for workers. In view of the likelihood that the supply of labor will exceed the demand for some time to come, wage increases granted through competition for workers ought not to be counted upon.

These facts have an important bearing on the intercity bus industry. A large proportion of its business is providing transportation to those who cannot afford automobiles or other more expenesive modes of travel. If the industry were permitted by regulatory bodies to raise its tariffs to cover increased labor costs, to do so would result in increasing the living costs of those in the lower income brackets, many of whom would not be affected by the 65-cent minimum wage rate. Included in these groups are millions of farm workers, domestics, and employees in laundries, hotels, tailor shops, and similar other industries, many of whom are among the lowest paid and who are exempt from the provisions of the Fair Labor Standards Act. As already noted, this industry favors increases in earnings and standards of living but only when they are made available to a majority of the Nation's workers and not if they apply to a minority at the expense of another important segment of the population.

ESTABLISHMENT OF WAGE DIFFERENTIALS

The provisions of the pending bills which provide for the establishment of wage differentials by the Administrator constitute a new departure in labor legislation. In effect it would take from the hands of labor and management the right to agree upon wages above the minimum and place that vast power in the hands of a Government official. The provisions in some of the bills concerning industry committees seems to us innocuous, and actually place final power in the Administrator to fix the diffierentials whether in accordance with recommendations from the industry or not. Thus there would be taken from management one of the main functions of management and from labor the right to bargain collectively, which has been established by statute and custom as national policy for many years. We can conceive of no greater blow to the democratic processes in industry and the system of American economy than that. We have heard of no demand for the granting of this arbitrary power to Government, and know of none. We are gratified at the information reported to us that the Secretary of Labor and the Wage-and-Hour Administrator have both expressed their opposition to this amendment.

If the present minimum of 40 cents per hour is raised, it will be necessary to make certain upward adjustments in the rates for other jobs in order to maintain reasonable differentials. The determination of these differentials, however, is a problem to be solved through the process of collective bargaining between management and labor. It is recognized that the administration of the wagestabilization program necessitated the adoption of some such technique as the War Labor Board's bracket principle during the war emergency. Management and labor alike renounced much of its freedom in the patriotic duty of adhering to these principles in the interest of preventing inflation. Nor can it be denied that some benefit was derived in the consequent development of more systematic wage structures. But this was a temporary expedient just as in the case of manufacturers who willingly shared with others the benefits of technological improvements and trade secrets often developed at considerable expense. Under peacetime conditions in a democratic and competitive economy, such regimentation has no place. Operating conditions, costs, potential demands for service and revenues, available labor supplies, job requirements, and many other factors vary from are to area, and no standard wage-structure pattern can possibly fit all circumstances. If the greatest benefits can be derived by the Nation-wide exchange of ideas, practices, and procedures with respect to wage structures within a given industry, the mechanics for making it possible will be developed voluntarily by employers and employees. The proper solution of such problems will thus come through the efforts of those directly concerned with the welfare of the industry working on the basis of an intimate knowledge of its peculiar characteristics.

STATEMENT OF GEORGE A. LEY, MANAGER, WESTERN PENNSYLVANIA MOTOR CARRIERS ASSOCIATION, INC., HOUSE LABOR COMMITTEE HEARINGS TO AMEND THE FAIR LABOR STANDARDS ACT, NOVEMBER 7, 1945

Mr. Chairman and members of the committee, my name is George A. Ley. I am the manager of the Western Pennsylvania Motor Carriers Association, Inc.,

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