It can be assumed, on the basis of the rise in the cost of living during the period since these studies were made, that the proportion of workers' families who are unable to make ends meet is considerably higher now. The failure of income to cover expenditures, it is obvious, must sooner or later result in either an increase in the former or a decrease in the latter. During a period of rising wages, deficits in family income may be carried for a considerable period of time. If, as at present, wages tend to stabilize or even to drop, deficits among the lowest income groups and narrow margins of surplus among the middle-income groups may be expected not only to restrict expansion of purchasing power among these groups but actually to curtail it. The assurance of sufficient purchasing power to support full production and full employment would therefore call for a minimum wage which will be sufficient to wipe out at least the deficits among the lowest income groups. Obviously an increase in the minimum will not be sufficient boost to purchasing power to sustain a program of full production. It will serve to put a floor under wages and by placing additional earnings in the pocketbooks of those who most need it, thereby act as a floor under national purchasing power. An increase in substandard wage rates to 65 cents an hour will not produce sufficient income to permit presently underpaid workers to purchase even all the necessities of life. Numerous studies demonstrate that a decent family budget can only be established on the basis of an hourly wage in the range of from 70 to 90 cents an hour. The provision in H. R. 3914 for automatic progression to a minimum of 75 cents an hour after 2 years is devised as a reasonable approach to the goal of permitting all who work for a living to maintain a minimum standard of health and well-being for their families. The ability of American economy to support these proposed increases in minimum wages cannot be questioned. If the ability of industry to absorb the slight additional costs arising from the higher rates is doubted, then doubt must be expressed as to our national capacity to support a peacetime program of full production and employment. The history of industrial profits during the war, when the economy was geared to a full production schedule, negates any claim of inability to absorb the increased wage payments resulting from this proposed legislation. According to data published in the Survey of Current Business of July 1944, and June 1943 by the Bureau of Foreign and Domestic Commerce in the Department of Commerce, total corporate profits after taxes increased from $1,515,000,000 in 1938 and $4,088,800,000 in 1939 to $8,535,000,000 in 1942 and $8,963,000,000 in 1943; corporate profits before taxes went from $2,375,000,000 in 1938 and $5,320,000,000 in 1939 to $19,987,000,000 in 1942 and $22,817,000,000 in 1943. The Economics Branch of the Wage and Hour Division has compiled data showing the present returns on net worth of leading corporations in certain lowwages industries from 1937 to 1944. The percent return on net worth for all leading corporations increased from 3.8 in 1938 to 8.2 in 1944, in miscellaneous food industries from 9.8 to 11.1, in cotton goods from 2.6 to 7.1, in silk and rayon from 4.5 to 6.9, in knitted goods from 5.2 to 9.7, in miscellaneous textile products from 0.7 to 8.9, in clothing and apparel from 2.6 to 9.5, in shoes from 4.2 to 8.0, in lumber from 4.1 in 1939 to 9.2 in 1944, in trade from 8.6 in 1938 to 10.2 in 1944, in telephone and telegraph from 5.8 to 6.6, and in restaurants and hotels from 2.0 to 11.8. Thus, although the picture has not been uniform for all industries, industry as a whole and in nearly all of its low-wage divisions is now in a markedly more favorable position to absorb increased minimum wages than it was in 1938 to absorb the 25-cent minimum which became effective then, and the 30-cent minimum which became effective a year later. Furthermore, the increase in the minimum to 40 cents an hour in the last few years has clearly not acted as a restriction on the capacity of industry to operate on a profitable and expanding basis. Sections 13 (a) (10) and 7 (c)—Area of production-Overtime H. R. 3914 would, in addition to raising the minimum wage, delete from the Act the exemption from the wage and hour provisions which is now applicable under section 13 (a) (10) to persons employed in performing certain operations on agricultural or horticultural commodities, or in making cheese or butter or other dairy products, within the "area of production (as defined by the Administrator)," and the exemption from the overtime provisions which now applies under section 7 (c) to employees engaged in handling and processing agricultural and horticultural commodities, dairy products, poultry and eggs and livestock. The partial exemption from the overtime provisions for seasonal industries under section 7 (b) (3) would however, be retained. Estimates of the number of employees who would be brought within the scope of the act's minimum-wage provisions, by omitting the section 13 (a) (10) exemptions have been made by the Wage and Hour Division of the Department of Labor. Approximately 1,250,000 workers qualify at the present time for possible exemption under section 13 (a) (10). Bringing these employees under the minimum wage fixed by the act is an objective with which, I believe, there should be very little disagreement. There is no demonstrable economic reason to continue to permit employees, whether in manufacturing plants or in agricultural processing establishments or on farms, to work at wages which are below reasonable standards of living. We cannot achieve full production and full employment, and our efforts to assure them will come to nothing, if we continue to permit large segments of the earning population to be paid wages which will not let them buy the products of both farms and factories which they should have if sufficient purchasing power is to be maintained and if conditions of living of these workers, as of all others, is to be representative of the American way of life. The number of workers who are eligible at the present time for possible exemption from the overtime provisions of the act under section 13 (a) (10) also totals about 1,250,000. Many of these employees, however are also eligible for exemption from the overtime provisions throughout the year or for periods of as much as 28 workweeks in the aggregate under section 7 (c) and section 7 (b) (3). It is estimated that some 400,000 employees are eligible for the 13 (a) (10) but not for either of the 7 (c) or 7 (b) (3) exemptions. These workers are employed by establishments engaged in handling, processing or manu facturing dairy products, by dealers in cotton and fruits and vegetables, and by a variety of other concerns assembling, storing, and dealing in farm products. I think it is important to emphasize the figure of 400,000 as the number of em ployees who are covered by section 13 (a) (10) but not by section 7 (c) or section 7 (b) (3), for it means that for approximately 850,000 workers, or more than two-thirds of the total, the retention or elimination of section 13 (a) (10) is a problem solely of whether these employees shall be paid the minimum wage required by the act. These employees include approximately 130,000 engaged in the first processing of milk, whey, skimmed milk and cream into dairy products or in cotton ginning or compressing, 650,000 engaged in packing, canning or other first processing of fresh fruits and vegetables, and 80,000 employed by country grain elevators, seed assemblers and dealers, cotton warehouses, and tobacco auction warehouses. The Wage and Hour Division of the Department of Labor has estimated that some 175,000 workers are either exempted or are eligible for possible exemption from the overtime provisions under section 7 (c) in addition to the 1,250,000 who are eligible for possible exclusion from these provisions under section 13 (a) (10). It does not follow, however, that elimination of both section 13 (a) (10) and 8 (c) will bring a total of 1,525,000 workers not now fully covered by the act's overtime provisions fully within the scope of these provisions. More than a million are employed in industries which either may be or have been found by the Administrator under section 7 (b) (3) to be of a seasonal nature. These employees will continue to be eligible for the partial overtime exemption during a period of 14 workweeks in the aggregate each year provided by section 7 (b) (3) which permits employees to work up to 12 hours per day and 56 hours per week without overtime compensation during such period. The only groups which will not be eligible for the relief provided by this section will be those engaged in nonseasonal operations and will include principally the 400,000 workers employed by plants engaged in handling and manufacturing operations on dairy products, dealers in cotton and other fruits and vegetables, or other concerns assembling, storing and dealing in farm products; the 110,000 workers in cotton gins and establishments engaged in the first processing of milk, whey, skimmed milk, and cream into dairy products. Application of the act's overtime provisions to the great bulk of these 510,000 workers is, in the light of present economic conditions, entirely justified. The objective of these provisions is to discourage long hours of work by requiring payment of extra compensation for hours worked in excess of 40 in any week and thereby to enlarge employment opportunities. This objective has been obscured during the later years of the war when the premium compensation paid for overtime served as a means to supplement take-home pay while wage rates were held at stable levels. Not the least of the difficulties experienced by the agricultural processing industries in obtaining workers during this war was their long tradition of low wages and unregulated hours. At the present time, however, the problem is no longer the temporary wartime one of finding men for jobs but the permanent peace-time task of finding jobs for men. Present exemption under the act for workers in the fish processing and handling industries have lost such economic justification as they may have had. There is no valid reason why the some 90,000 workers in this industry should be discriminated against in the matter of wages. The same circumstances which call for the lifting of exemptions for workers in the processing of fresh fruits and vegetables apply with equal weight to the workers in the fishing industry, other than those strictly concerned with fishing itself. One of the bulwarks of American economy, and of international accord, in the years ahead will be a strong American merchant fleet. At present, there are some 320,000 seamen employed in deep-sea and inland water shipping. The nature of the work, its many undesirable features, and the vital part it plays in our whole economy would seem to call for a favorable differential for members of the merchant marine. The reverse is true. Even in war years, with an extensive bonus system, seamen were at a considerable wage disadvantage as compared with land workers. The recent decision of the War Labor Board granting a $45 a month increase will not correct this inequity. Even allowing for costs of room and board borne by the shipping industry, the present wage structure in the industry permits only a very low standard of living for seamen and their families. The Administrator for the Wage and Hour Division has recently estimated the cost of increasing the rate for seamen in deep-sea work at about 3 percent of the pay roll. Rates for key job classifications H. R. 3914 proposes to empower industry committees to recommend minimum rates above the statutory limit for key job classifications. This proposal is in line with and a result of experience during the war years. The National War Labor Board proposed in its report to the President of February 1945 that such legislation be adopted. "In the light of our experience, and of the changes in the economy since 1938, we raise the question whether it would not be appropriate to consider a statutory requirement that, in each industry, minimum rates for a limited number of key occupations above the minimum rate should be set with a view of more effectively correcting substandards of living and so far as possible, eliminate competitive advantages derived from the payment of inadequate differentials above the minimum starting rate. Peg points of this sort above the starting rate would not have to be identical for all areas or for all branches of a given industry and they could be established through industry committees and collective bargaining in the same way as has been provided for in the act with respect to rates. * * "These peg points would constitute a framework within which all intermediate rates would have to be set in accordance with proper job descriptions and evaluations, in balance with each other and the peg points This process of re-evaluation will impart more stability to wage structures and act as a deterrent against reductions in straight time hourly earnings in the reconversion period. A statutory requirement that peg points be established would therefore support the congressional purpose declared in the Stabilization Act of October 2, 1942, to avoid the deflation of wages. "We think that industry and labor might well consider this purpose whose achievement is so necessary to the continued stability of the economy, might not be still further advanced by a statutory enactment under which the industry committee procedure laid down in the present act would be extended to cover the establishment of minimum starting rates and of minimum peg points above them, not only in the industries with the lowest wages but in all industries. The establishment of these minima throughout industry generally and the consequent revision of ill-defined and unbalanced wage structures would provide a substantial degree of protection against deflation of straight-time hourly earnings in the reconversion period". Child labor I do not see there can be disagreement with the proposal to strengthen the child labor provisions of the Fair Labor Standards Act. One of the effects of the war has been to breakdown the prohibitions against the exploitation of children in industry. The rationale of the national war emergency now no longer can justify this practice. The act as it now stands refers with regard to oppressive child labor only to the shipment of goods, and not the production of goods. H. R. 3914 amends this to require that child labor shall not be employed in any enterprise in which the employer is engaged in commerce or in the production of goods for commerce. The whole national effort should now be directed to finding jobs for all adult workers. Aside from the humane objective of freeing children for normal healthy lives, the proposed amendment will aid in this effort to secure employment for men and women. Conclusion I have discussed those provisions of H. R. 3914 which are of greatest interest and import. The basic objective of the amendments I have proposed in my bill is to strengthen our national economy at this time of change from war to peace, to enable us to forge ahead into an era of full production and full employment. Substandard wages have been a drag on our war effort. They have fostered a cesspool of poverty, crime and disease. Now when we are looking ahead to the years of peace, this cesspool must be drained. It is a dangerous and expensive threat to our whole national well-being. We cannot achieve full employment; we cannot exist in peace and security. while millions of American citizens are denied the least of the benefits of democracy-a living wage. Mr. RAMSPECK. The committee will take a recess until 10:30 tomorrow morning. Secretary Wallace, the Secretary of Commerce, will be the witness. (Whereupon the committee recessed until 10:30 a. m. of the following day, Tuesday, October 16, 1945.) (The following was submitted for the record:) STATEMENT OF ELLIS PATTERSON ON H. R. 3719 On May 24, 1937, Franklin Delano Roosevelt made a recommendation that the Congress enact legislation further to help those who toil in factory and on farm. Urging Congress to pass a Fair Labor Standards Act, Roosevelt said: "The time has arrived for us to take further action to extend the frontiers of social progress. * * "The overwhelming majority of our population earns its daily bread in agriculture or in industry. One-third of our population, the overwhelming majority of which is in agriculture, is ill-nourished, ill-clad, and ill-housed. ** * "Today you and I are pledged to take further steps to reduce the lag in purchasing power of industrial workers, and to strengthen and stabilize world markets for the farmers' products. The two go hand in hand. Each depends for its effectiveness upon the other. Both working simultaneously will open new outlets for production capital. Our Nation, so richly endowed with natural resources and with a capable and industrious population, should be able to devise ways and means for insuring to all our able-bodied working men and women a fair day's pay for a fair day's work. A self-supporting and selfrespecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling workers' wages, or stretching workers' hours. * "Legislation can, I hope, be passed at this session of Congress further to help those who toil in factory and on the farm. We have promised it. We cannot stand still." Several of my colleagues on the Labor Committee were leaders in the long, arduous fight that ensued before a Fair Labor Standards Act was passed making 25 cents the statutory minimum wage for a restricted number of workers in the United States. They know this legislation, enacted in 1938, was branded sensational and was accompanied by dire predictions that American industry would collapse under such an unfair economic burden. The additional goal of the legislation, to bring the minimum wage up to 40 cents, was sneered at as utopian. Yet today, in the year of 1945, the Bureau of Labor Statistics in preparing a chart to show the estimated distribution of workers in manufacturing industries by hourly wage rates does not even bother to enumerate workers receiving under 40 cents, "since their numbers are too few to show separately." This does not mean that there are no workers in the United States receiving less than 40 cents an hour, for the Fair Labor Standards Act of 1938 failed to include in its coverage some 20,000,000 workers, nor could it have made provision for some 4,000,000 engaged solely in intrastate commerce. But it does mean that industry absorbed the 40-cent minimum without suffering any of the consequences predicted by the Cassandras of business in 1938. On the contrary, industry not only maintained its own, but expanded and increasingly prospered over the prewar years following the passage of the act. Having absorbed that minimum in 1945 the question can be asked "What does that minimum mean to the average worker?" The answer to that question is the 40-cent minimum has no meaning whatever in terms of the actual situation existing in 1945. According to Mr. L. Metcalfe Walling, Administrator of the act, "Since 1938 the dollar has sharply declined in purchasing power so that in real wages a 40-cent minimum represents markedly less than when the Fair Labor Standards Act became effective." And he goes further to point out that "Marginal indeed are the workers who are in any real sense protected by the present 40-cent minimum." Furthermore, it has been clearly understood by all who have studied the Federal minimum-wage policy that 40 cents was not to be the final resting place of a decent American minimum-wage policy. As Secretary of Labor, Lewis B. Schwellenbach has declared: "That minimum represented rather, a reasonable beginning towards the ultimate goal; a minimum standard of living necessary for health, efficiency and well-being of workers." What in light of existing conditions constitutes the minimum standard of living necessary for healthy and decently cared for American workers? Certainly not 40 cents, for an adequate family budget. Even in 1938 a relief budget planned by the WPA averaged $903 in 59 representative cities, or $103 more than an annual wage represented by 40 cents an hour. Certainly not 40 cents to maintain a prosperous economy or to increase the purchasing power of the average American. During the war a new high in In order to maintain this standard the American production was reached. consumer must play a major role. He must have adequate purchasing power and this can be done only if a minimum wage reflects something more than a substandard wage. The 40-cent minimum in meaningless. As stated by President Truman in his message to the Congress of September 6: "I believed that the goal of a 40-cent minimum was inadequate when established. It has now become obsolete." Thus, the American Congress is faced with the necessity of establishing a new minimum wage, one which will not only stabilize our economy during the reconversion period but will act as the beginning of a new era in American wages. In order to meet this challenge the Congress must be prepared to act bodly and with understanding of what constitutes a decent minimum wage. Because I believe this Congress in 1945 should have the courage to enact the kind of legislation Roosevelt called for in 1937-the principles of which we are all, Republican and Democrat alike, committed to the American people, I have introduced H. R. 3719, which provides: 1. An immediate 75-cent minimum wage. 2. A broadening of the definition of what constitutes interstate commerce. 5. A 5-year statute of limitations. 1. An immediate 75-cent minimum wage The need for a 75-cent minimum wage is predicated upon three assumptions. First, that despite the relatively high level of wartime wages, millions of American families still can be classed as the underprivileged one-third of our Nation. Second, that industry and agriculture not only can afford to pay a decent minimum wage, but in doing so the economic fibers of all business will be strengthened. Third, that during the period of reconversion our action on the question of wages, and particularly a minimum wage, will determine whether we go forward into an era of depression or of prosperity. (a) Substandard wages.-At this time, when the shadow of high wartime wages still darkens the actual situation, more than 2,000,000 of the 28,000,000 workers in private nonagricultural employment, exclusive of domestic servants |