tial to good health are the so-called protective foods, such as milk, fruits, eggs, vegetables, and dairy products. These foods are relatively expensive. The poorer the family, the less protective foods they buy and the more cheap energy-yielding foods. Those in sedentary occupations require about 2,500 calories a day; those doing factory work, around 4,000. It would be a good investment for American industry to improve the health of its workers. The elimination of substandard wages for women in the electrical machinery industry would constitute a tremendous step forward in the attainment of this desirable objective.

Substandard rates in a plant, industry, or area tend to reduce wage scales everywhere. We in the UE know this to be a fact. Experience has taugh us that substandard rates depress wages within a plant. For example, in General Electric's Pittsfield and Erie branches, women's jobs are now being called "simple, light repetitive" jobs, and men's job are being called "heavy, complicated" jobs. The purpose of this change in names is to conceal the discriminatory nature of its rate structure for the so-called simple job requires as much skill as the so-called heavy jobs. The company has stated that it does not care who works on these erstwhile women's jobs. Apparently it expects that a man will be paid the same substandard job rate of 59 cents hereafter that women were paid formerly Westinghouse pursues a similar policy. By introducing jobs which it classifies as women's jobs, it lays the basis for lowering wages within its plants.

The rate structure in the electrical machinery industry, based, as it is, on substandard wages paid to women and sex wage differentials, represents a real threat to the 200,000 returning UE servicemen. There veterans will find many of the jobs they come back to reclassified as women's jobs at lower rates of pay. To a considerable number of our veterans, then, a return to civilian life will be accompanied by a lower standard of living for their families, since their earnings will be less than were their family allotments during service in the armed forces.

Substandard rates can also depress wage scales in an area and industry. Both General Electric and Westinghouse have already made plans and in some cases have actually begun to move departments and workers from high-wage to low-wage areas. During the past year General Electric has leased a plant at Scranton, Pa., has purchased the Ken-Rad Tube & Lamp Co. with plants in Indiana and Kentucky, and has bought land at Albion, Mich., and Waterford, N. Y. About 4 months ago General Electric was moving refrigeration from Schenectady, N. Y., to Erie, Pa., at a lower wage schedule. The establishment of a national minimum rate of 65 cents an hour, by limiting the depressed wages that could be paid in any area, would contribute much to stop the movement of plants from high-rate to low-rate regions.

Depressed substandard wages are to the disadvantage of American industry in general and of the electrical machinery industry in particular. They militate against the sale of electrical equipment by drastically reducing mass purchasing power. It is certain that men and women who are living on substandard or inadequate wages will not be in the market for costly refrigerators or washing machines. A study made some time ago by the Bureau of Labor Statistics points

out the retarding effect that low wages have upon the market. It showed that in 1935-36 only 15 out of 100 families having incomes of less than $1,500 reported ownership of electrical refrigerators, whereas 54 out of 100 facilies in the next higher income bracket and 80 out of 100 earning over $3,000 owned electrical refrigerators. The same relationship held here for other electrical appliances.

The electrical machinery industry is sufficiently prosperous to absorb the cost involved in the removal of substandard wages paid to women. In 1944 the industry as a whole showed a 434-percent increase in profits over prewar 1936-39 levels. Surely, it can afford the cost involved in bringing hourly rates up to 65 cents. A. F. Hinrichs, Acting Commissioner of Labor Statistics, recently estimated that the increase would come to only 2 percent. What is a 2-percent increase to companies like General Electric and Westinghouse who have always been profitable organizations, and whose profits were enhanced during the war years?

In 1944 General Electric reported profits before taxes of $219,000,000, almost four times larger than in the peacetime year 1939. Net profits after taxes amounted to $62.000,000 in 1944, as compared with $41,000,000 in 1939. Like General Electric, Westinghouse, has profited greatly during the war. Its profits before taxes increased from $17,000,000 in 1939 to $111,000,000 in 1944. Net profits after taxes came to $33,000,000 in 1944, $6,000,000 higher than that made in the boom year 1929.

Moreover, General Electric and Westinghouse expect to continue their profitable operations after the war. Both A. W. Robertson, chairman of the board of directors of Westinghouse, and Charles Wilson, president of General Electric, expect their companies to continue to operate at high levels of production.

Certainly at the present time both companies, and the industry as a whole, can take the step towards eliminating substandard wages at a comparatively small part of the reconversion costs.

The prevalence of wage differentials based on sex which result in substandard rates paid to women produces super profits for the electrical industry. Their contribution can be seen if we turn to the electric lamp division of the electrical machinery industry where the greatest portion of women are to be found. It is no accident that precisely in this division the value added by manufacture per worker is the highest. The 1939 census figures, the latest ones available in this connection, show that 77.3 percent of all those employed in the manufacture of electric lamps are women and that the value added by manufacture per worker is as high as $5.259. Contrast this with. the value added by manufacture per worker in the field of generating, distribution, and industrial apparatus where women comprise only 18.6 percent of the total labor force. Here the value added by manufacture per worker is only $3,784.

As a result of this exploitation of women, General Electric's net profits on incandescent lamps for the period 1935-39 were estimated at from 64 percent to 88 percent of total costs and from 33 percent to 47 percent of the net worth of the company's lamp-producing in

vestment.

When a company breaks down women's jobs, it registers a twofold gain in costs. In the first place, it saves not only through a

greater division of labor, but also through more automaticity of operations. Secondly, it saves by paying depressed wage rates on women's jobs. Thus, even if the company were to give women the same rate of pay as men-which, by the way, the company's own job evaluation system indicates it should-it would still profit greatly through increased efficiency.

Moreover, these companies have increased their productivity during the war. The War Production Board recently estimated a 25percent man-hour increase in productivity during the war. Its estimate included such products as generators, turbines, and the like, which will continue to be manufactured in the postwar period.

A handbook on wage incentive plans published by the Management Consultant Division of the War Production Board showed what happened to productivity in specific instances when wage incentive plans were introduced in 1944. In a plant producing electronic tubes, there was a 63-percent increase in productivity; in production of electric connectors, a 55-percent increase; a 54-percent increase for photographic equipment; a 41-percent increase for power transmission machinery, and a 35-percent increase for radio equipment.

How these increases in productivity affect an individual company can be seen in the case of the General Electric Co. This company, which had no reconversion problem for a large part of its products, was paying 40 cents as a wage salary cost per dollar sales in the prewar years 1936-39; in 1944 its wage salary costs per dollar sales stood at a low figure of 32 cents.

Further estimates of productivity are given in the first progress report of reconversion in 42 selected industries issued by the War Production Board on August 25, 1945. Companies making equipment such as refrigerators, vacuum cleaners, and the like expect to increase their base period production by 187 percent in June 1946, and their employment by only 133 percent. This reflects a net gain in productivity of 41 percent. Of course, such increases in productivity are accompanied by great savings in labor costs.

Today, the electrical machinery industry, like so many others, is faced with the very big question of an expanding market. The present time is particularly favorable for electrical companies to help their workers keep at least a minimum of purchasing power. Current profits are such as to absorb easily the costs involved in establishing a minimum rate of 65 cents an hour.

If all electrical companies were ordered to do this, none could claim a competitive advantage. Sound competition is not grounded on lower and lower wages. Business firms ought to compete on the basis of which one is most efficient, not on the basis of which one can sweat its labor the best.

For the electrical machinery industry the elimination of substandard wages means even more than protecting the living conditions, health, and prosperity of our country. It involves a matter of paying women what they are worth according to the value of their work as measured by the industry's own job evaluation systems. The removal of substandards would represent a real step forward in doing away with economic discrimination against women.

That is why the 700,000 workers whom the UE represents urge the immediate passage of the Pepper substandard wage bill.

Mr. RAMSPECK. Any questions?

Mr. KELLEY. I have no questions except I want to state that in my opinion that is a very good statement, well studied and well worked

out.

Mr. McAvoy. Thank you.

Mr. RAMSPECK. All right. The committee will take a recess until 10:30 tomorrow morning.

Mr. McAvoy. Thank you, Mr. Chairman, and gentlemen.

(Whereupon the committee stood in recess until 10: 30 a. m., Friday, November 2, 1945.)

(The following matter was submitted for the record:)

STATEMENT OF THE INTERNATIONAL ASSOCIATION OF MACHINISTS BEFORE THE COMMITTEE ON LABOR IN SUPPORT OF HOUSE RESOLUTION 3928; A BILL TO PROVIDE FOR THE AMENDMENT OF FAIR LABOR STANDARDS ACT OF 1938

The International Association of Machinists, representing 700,000 American citizens who are employed in all types of industries, are in accord with the principles proposed in House Resolution 3928.

Since the enactment of the Fair Labor Standards Act many changes have occurred in the economic pattern of our Nation. The cost of living has substantially increased. Wages also have been increased. During the war period take home pay has increased to such an extent that the return to the normal workweek at current straight-time earnings will not adequately support our peacetime economy. This means that we must follow one of two courses, either raise wages or lower prices. During the reconversion period lowering prices cannot be accomplished very readily. Many manufacturers have reconverted their plants on overtime schedules. They have invested the cost of this labor and they must now sell their goods at prices which will enable them to recover the investment. Furthermore, most of the available consumer goods have been produced with labor costs that are 64 percent higher today than they were in 1939. With the return to the 40 hour week industry would be well able to raise stragiht-time hourly wages at least 20 percent. The economies affected by the shorter workweek will more than offset this increase.

Authorities generally agree that the solution to the problem is to increase wages. There is no doubt but that the present economic problem facing labor will result in a general upward revision of wage rates.

These events have an important bearing on this bill. Since 1939 straight time average earnings have increased 44.3 percent, or a little over 26 cents an hour. The 1944 dollar has a purchasing value of 72 percent of our 1939 dollar when measured by the adjusted cost-of-living index. The cost of living according to the much disputed Bureau of Labor Statistics index has since 1939 increased from 100.8 to 129.0 using the period of 1935-39 as a base of 100. Labor has never agreed that this index reflects an accurate picture of the actual cost of living. We contend that the actual increase in the cost of living is somewhat nearer 140 using 1935-39 as a base of 100. In the latter part of 1943 a report submitted by the labor members of the President's Committee on the Cost of Living stated that a survey by the Labor members indicated that the cost of living had risen 43.5 percent from January 1941 to December 1943 whereas the Bureau of Labor Statistics index showed only a 23.4 percent increase. Since that report was submitted the Bureau of Labor Statistics has admitted its index is low by a few points. The Mitchell committee, an impartial committee requested by the Bureau of Labor Statistics to study its Cost of Living Index, and the majority of the President's Committee on the Cost of Living agreed that the Bureau of Labor Statistics index was low by approximately 4 points. In any event we all know that the cost of living has risen considerably since the Fair Labor Standards Act was passed. Moreover there is little likelihood of any appreciable decrease in the cost of living during the next few years. All indications are that prices will go still higher, and a higher cost of living makes it all the more necessary to raise the statutory minimum rates of the Fair Labor Standards Act.

President Truman in his last message to Congress recognized higher wages are necessary when he advised Congress to consider for itself an increase in salaries. The House has already provided an increase for its Members. Certainly if the Senators and Congressmen feel that the increased cost of living necessitates in

creasing salaries above $10,000 yearly the worker ekeing out an existence on 40 cents an hour should receive favorable consideration for an increase of his hourly rate to a minimum of 65 cents with provisions for increasing this minimum to 75 cents in 2 years. I want to make myself clear, gentlemen, that I am not opposed to Congress increasing salaries for its Members as I feel there is a need for adjustments in the upper brackets as well as in the lower ones.

The group of workers who will benefit by this measure suffer most by the upward rise of our cost of living. They represent a substantial portion of our economy and Congress should provide that they receive adequate pay to maintain a decent American standard of living. The need for increasing the minimums is greater today than was the need for the minimums of 1938. Today, however, we are fortunate in that the Nation is in a better financial position to pay the proposed increases advocated in this bill. Today only 34 percent of all workers are receiving less than 65 cents an hour, the minimum proposed by this bill, whereas in 1939, 300,000 workers were receiving less than the 25-cent minimum proposed by the act at that time. In April 1939, 650,000 employees covered by the Fair Labor Standards Act were receiving less than 30 cents an hour.

Corporate profits after taxes have increased 119 percent from 1939 to 1943, rising from over four billion in 1939 to eight billion nine hundred million in 1943. Estimates indicate that profits after taxes for 1944 will be slightly lower than they were in 1943 which was a banner year for all industry.

While there are no accurate statistics available as to the profits of the lowwage industries it appears that the minimums proposed by this bill can be put into effect without upsetting the economy of those industries. It may necessitate slight price increases but we contend price increases are justifiable when minimum living standards are endangered.

I know this committee has heard reams of testimony concerning minimum budget needs. I merely want to point out that at the time the act was passed a minimum budget of $1,020 was considered sufficient to provide basic maintenance for a family of four. Congress provided a minimum of $800 to meet this standard. Today it is estimated that it will take $1,752 to provide basic minimum budget for a family of four. The Heller committee estimates that a budget for a wage earner's family of four will need a $2,964 yearly salary. The Bureau of Labor Statistics estimates that it will take $1,673 for a maintenance budget for four people or an increase of about 64 percent over the 1939 budget.

We maintain that the Federal Government has a duty to maintain adequate statutory minimum wage rates which guarantee a decent American standard of living. If Congress fails to pass this bill the purpose of the minimum wage features of the Fair Labor Standards Act will in fact be a mockery and a mean ingless expression of Congress.

The minimums provided by this bill will restore to the Fair Labor Standards Act wage floors comparable to the minimums essential in 1938. It will add dignity to the act, lifting it from a mere statement of policy to a piece of social legislation worthy of the Congress of the United States.

Mr. Chairman, we believe the passage of this measure will go a long way toward fulfilling the administration's full-employment program. It will bring it about without the aid of Federal spending. Moreover, it will bring about an upward revision in the low-wages group on a noncompetitive basis. Generally when wage rates are revised upward by collective bargaining those firms increasing wages first do so at a decided competitive disadvantage with those employers who refuse to increase wages, and unless a substantial part of an industry is organized wages are not raised to the proper level.

We feel certain that if this measure fails enactment into law industrial unrest will result in the low-wage industries.

Finally, I want to point out that witnesses in supporting legislation of this type and economists appearing before committees must in a large measure draw on statistics, indices, and data all based on averages. I want to point out, gentlemen, that these averages mean that at least a substantial number of people who are represented receive wages far less than the averages indicate. There are over 1,200,000 employees in manufacturing, mining, construction, transportation, communications, and public utilities who still receive less than 50 cents an hour.

LIMITATION AMENDMENT

We are in accord with the section of the bill which provides that action by employees to recover claims under the act must be filed within 5 years. During the hearings on the Gwynne bill before the House Judiciary Committee we recom