We find that all other employees of the companies including field scalers, pump tenders, shoeing blacksmiths, employees engaged in the operation of transportation facilities including railroads, trucks, flumes, sleds, portable tracks and portable flumes, employees engaged in repair, maintenance, and new construction including road construction and repair, employees engaged in and about the processing mills, camp cleaners, store employees, general office employees, medical department and personnel department employees perform nonagricultural duties, and hence are covered by the act.

The evidence indicates that some of the employees divide their time between strictly agricultural pursuits and those that are not agricultural. For example, the railroad section gang on one plantation spend two-thirds of their time repairing and maintaining the railroad lines, and the other one-third in harvesting work. In another case, employees on a dairy ranch spend half of their time in the plantation slaughterhouse assisting the butcher foreman, and the other half as cowboys or farm hands on the ranch. The companies in their supplemental brief have raised the question as to the proper classification of such employees. Insofar as an employee is engaged in operations which have been defined herein as agricultural, he is an "agricultural laborer" and hence excluded from operation of the act. However, when such an employee works at nonagricultural employment, he is an "employee" within the meaning of the act and therefore entitled to its benefits. As an “agricultural laborer" he is, of course, excluded from any unit herein found appropriate, but as an ordinary employee performing nonagricultural duties he is included in such unit and may be represented by a union with respect to that part of his work which is not agricultural in character. Accordingly, all employees dividing their time between agricultural and nonagricultural employment are deemed to be included within the appropriate units and either union, if successful, is authorized to bargain for such employees with respect to that part of their activities which are not agricultural in character."

ILWU EXHIBIT 28

The Hawaiian factors and their control of the sugar industry—A tabulation of 35 Hawaiian plantations by factors, 1945

Source: Honolulu Stock Excharge, Manual of Hawaiian Securities, June 1945, originally by Spreckels Cos, corrected January 1940 by C. Brewer & Co., Ltd., and revised to June 1945 by Honolulu Stock Exchange.

19 Matter of Newday Seeds, Inc. (55 N. L. R. B. 1049); Matter of H. J. Heinz Company (49 N. L. R. B. 573).

DECEMBER 1, 1945.

(Before the Committee on Labor of the U. S. House of Representatives)

STATEMENT OF ERNEST W. GREENE, VICE PRESIDENT, HAWAIIAN SUGAR PLANTERS' ASSOCIATION, WITH RESPECT TO H. R. 3914

This statement is made on behalf of the sugar producers of the Territory of Hawaii who supply, in normal years, about 14 percent of all of the sugar consumed in the United States.

We believe that the enactment of H. R. 3914 would work grave injury to the sugar industry in Hawaii, which is an important part of the domestic sugar industry. We believe it would result in a decrease in production of this essential commodity, whereas the Government has stressed importance of the maximum possible production. We believe it would result in a decrease in employment, as it would unquestionably force some Hawaiian producers out of business.

When contracts between the sugar producers and the unions representing both mill and agricultural employees were announced on August 5, 1945, the union and employers issued a joint statement saying, in part:

“Only maximum cooperative effort and favorable prices will enable the industry to maintain and improve the wage schedules.”

The wage schedules referred to provided, effective as of July 1, 1945, a flat increase of 7 cents per hour to all employees, making the present basic minimum virtually 47 cents per hour. They provided further (sec. 7 of contract) for a classification-wage structure with a basic minimum rate of 43%1⁄2 cents per straighttime hour or 41 cents per straight-time hour, as the case may be, but without down grading of any present employee, as follows:

"The classification-wage structure will be submitted to the union with the rate of 43 cents per straight-time hour (inclusive of bonuses) on all islands except the island of Hawaii, where it shall be 41 cents (inclusive of bonuses), as the applicable rate for the basic labor grade under said classification-rate structure and the union agrees that it will not attempt to change nor will it object to such basic labor-grade rate for the duration of the within contract. It is also understood and agreed that said minima need not be the absolute minima. Where jobs exist that are in job content and requirements below the standard of the basic labor grade, rates for. such jobs will be considered apart from the classification structure as subbasic jobs."

When the uniform contracts between the sugar producers and locals of the International Longshoremen's and Warehousemen's Union, effective as of July 1, 1945, were signed, union officials joined with the employers in issuing a statement which said, in part:

"The scope of this agreement, affecting 34 plantations and 20,000 plantation employees, including agricultural workers, is territory-wide and upon its embodiment in individual contracts between the several plantations and their employees, at an added cost to the industry of about $5,000,000 a year, will present serious financial problems to some plantations.

"It will be one of the first and most extensive organization coverages ever accomplished for the employees of an agricultural industry.

"The conditions accepted and set forth in the contract form were arrived at through voluntary collective agreement after prolonged conferences between the committees represening management and the union wtih James P. Blaisdell, president of the Hawaii Employers' Council, conducting the negotiations on behalf of the industry and Montgomery E. Winn appearing as legal adviser to the council.

*

"With the execution of the present proposals, there is an agreement to proceed at once with plantation job-classification studies for the purpose of discovering any inequalities that may exist in wage rates of comparable positions so that equalizing adjustments can be decided on while production proceeds without interruption.

"Provision is made so that workers whose jobs rate higher classification will be given pay increases accordingly, and that in instances of lower classifications there will be no reduction of pay for the workers presently employed in these jobs. "Immediate benefits to follow the execution of the contracts will be added wages and services to employees amounting to a total of about $5,000,000 a year.

"All workers affected will receive an over-all wage increase, including bonus, of 7 cents an hour.

"The terms include vacations with pay, recognition of seniority, extended coverage of hospital and medical perquisites and machinery for the expeditious and amicable settlement of grievances.

"Parties to the negotiations recognize the responsibilities that rest upon both management and labor for the successful operation of contracts made under the terms agreed upon and that strict observance of these conditions is an understood pledge in their acceptance.

"Only maximum cooperative effort and favorable prices will enable the industry to maintain and improve the wage schedules.

"Thus it becomes the concern of labor equally with management to establish and preserve production conditions that will be beneficial to both."

(See exhibit I on p. 806.)

Sugar is produced in Hawaii on plantation farms located in rural districts where each farm must be a complete operating entity, often with costly sources of supply of irrigation water, and must contain the means of growing sugarcane, harvesting it, transporting it to a sugar mill conveniently located on the farm, and there processing the sugarcane into raw sugar. The Fair Labor Standards Act classifies the employees of such a plantation farm who work in the mill as industrial and covered, and those who work in the fields as agricultural and noncovered; but, as a matter of fact, the employees of such a plantation farm in Hawaii do not themselves recognize any such distinction. This applies especially to employees whose work is such that they are paid at or about the minimum rate, and any minimum rate or change therein applied to employees in the sugar mill has to be applied also to all other employees, including the agricultural employees in the cane fields. Proportionate increases have to be given to all wage earners. This has been the case in the past and it will undoubtedly be the case with any future changes.

Therefore, any change in the minimum wage required by the Fair Labor Standards Act will affect, in our case, a much larger group of employees than the act contemplates. It is mutually recognized by the employers and the unions that increases, other than increases due to the reclassification now in progress in conformity with the union agreement, are not warranted under present conditions unless the price of sugar is sufficiently increased. The ceiling price of sugar, determined by the Office of Price Administration, has remained practically unchanged since early in the year 1942. Costs of producing and marketing sugar have radically increased during that period and are continuing to rise. The economic situation is worse now than it was last summer when the statement above referred to was made.

Production of sugar in Hawaii has decreased during the war years due to shortages of labor and farm machinery. Workers have left their employment in growing sugarcane and manufacturing sugar to enter war work and it has been impossible to obtain enough farm machinery to offset the loss of manpower by increased mechanization of operations. Meanwhile, all costs, including total payments to employees, have increased rapidly.

In the year 1939, 994,173 tons of raw sugar (96° equivalent) were produced, with a total area of 216,072 acres in sugar cane, a total of 22 543 men employed in the industry as an average for the entire year, and 10,731,770 man-days worked during the year by such employees, with a total payroll for such employees of $27,075,521.

In the year 1944, 874,947 tons of raw sugar (96° equivalent) were produced, with a total area of 216,072 acres in sugar can, a total of 22,543 men employed in the industry as an average for the entire year, and 7,062,227 man-days worked during the year by such employees, and a total pay-roll of $34,469,025 for such employees.

The number of employees decreased by 40 percent and the total pay roll increased by 27 percent respectively, for the year 1944 as compared with the year 1939. A further increase in total pay rolls, estimated by both the managements and the union at not less than $5,000,000, will occur in the year 1945 due to the provisions of the union contract above referred to. The total pay roll for 1945 will be approximately $40,000,000, an increase of 48 percent over the year 1939.

In terms of labor cost per ton of raw sugar, the foregoing figures indicate:

The labor cost increased 72.8 percent but the price increased only 25 percent. Other costs have shown a marked increase. Hawaiian sugar producers and all other domestic sugar producers have survived during the war solely because of the help received from the price support and production incentive programs of Commodity Credit Corporation. The program of CCC for producers of raw sugar in the Territory of Hawaii for the year 1945 (see exhibit II, attached hereto) provides payments at the rate of 55 cents per 100 pounds of raw sugar delivered ($11 per ton), subject to certain conditions, one of which requires that the proceeds of the program be treated as though they were part of the price or proceeds of sugar for purposes of payments to labor under the longestablished and published bonus system in effect on all sugar plantation farms in Hawaii. This means that employees will receive an extra 5% percent of earnings during the year 1945 in accordance with the provisions of the CCC program. The conditional compliance payments made to sugar producers under the terms of the Sugar Act of 1937 are actually a part of the system of control over producers which was set up by that act. The sugar program is a self-financing arrangement under which the excise tax is taken out of the normal gross proceeds of the sale of sugar, and principally reduces the income of the raw sugar producer, who then, upon compliance with certain conditions, receives the remainder of his normal proceeds in the form of the conditional compliance payment (see exhibit III, attached thereto). The conditional payments are not gratuities as they are sometimes misrepresented to be. For the year 1944 the conditional compliance payments to Hawaiian producers pursuant to the Sugar Act amounted to an average of $9.37 per ton of raw sugar (46 85 cents per 100 pounds). (See exhibit IV attached hereto.)

The territorial legislature in 1945 enacted the Hawaii wage-and-hour law (ch. 75, Revised Laws of Hawaii, as amended), effective July 1, 1945. It is among the very few State wage-and-hour acts covering agricultural workers, for whom it establishes a minimum wage (for employees of employers of 20 or more persons) of 40 cents per hour, an amount equal to the minimum wage under the Fair Labor Standards Act.

Further protection is given agricultural workers engaged in the production of sugarcane by the Sugar Act of 1937, as amended, which provides that the wages paid to such employees shall be not less than minimum wages determined by the Secretary of Agriculture to be fair and reasonable after investigation and publie hearing. Workers on sugar plantation farms are thus amply protected as to minimum wage standards under Federal and territorial laws.

Sugar producers in Hawaii, in common with all other domestic producers, face a period of reconversion and adjustment to peacetime conditions and the resumption of a free market and free prices. It seems to be the consensus of opinion that sugar will continue in short supply for some time, and therefore may be the last, or at least one of the last, commodities to be released from Government controls. It is doubtful whether anyone can now foresee the cost and price conditions under which sugar will be produced during the impending period of adjustment, but it seems safe to predict that it will be an extremely difficult time. We believe that wartime conditions have caused all the problems incident to increased costs with which sugar producers can hope to deal, and that the enactment of H. R. 3914 or similar legislation should be deferred until the adjustment to peacetime conditions has indicated the conditions under which the domestic sugar industry will have to operate during the next few years. The extra labor costs which would be imposed upon sugar producers by the enactment of H. R. 3914 for the first year when the minimum wage would be 65 cents per hour have been conservatively estimated at an aggregate increase in pay roll amounting to more than $12,000,000, or $14.12 per ton of raw sugar (70.6

cents per 100 pounds). The increase in cost might amount to as much as $17 per ton of sugar (85 cents per 100 pounds). The foregoing estimates are made on the assumption that approximately the amount of the increase in minimum wage required by legislation for employees covered by the Fair Labor Standards Act would have to be applied as a straight time hourly increase to all employees, including employees engaged in agriculture. (See exhibit V attached hereto.) Sugar producers in Hawaii cannot survive under such an increase in costs as would be the consequence of the enactment of H. R. 3914 unless the price of sugar is correspondingly increased with assurance that such higher prices will continue. The quantity of sugar produced in Hawaii in the year 1944 was only 12 percent less than in the year 1939 notwithstanding a loss of 40 percent in numbers of employees. Production was maintained by the unremitting work and ingenuity devoted by plantation managements to the maximum adaptation of such field machinery as was available to mechanization of the production, cultivation, and harvesting of sugarcane, and also by the loyalty and hard work of the employees who remained in the work of sugar production. Under the conditions of extreme labor shortage there is created, temporarily, a greatly increased output of sugar per man-day worked. This is not permanent because only part of the most essential tasks have been performed. Many things necessary to continued high pro

ductivity in cane fields have been omitted.

A tremendous backlog of unperformed maintenance and reconditioning work has been built up. It is impossible to maintain or increase production under such conditions. More manpower is urgently needed, and must be employed as soon as available.

Therefore, it impossible to foresee accurately at this time the situation with respect to wages, man-days, and labor cost per ton of sugar when it is possible to operate normally with adequate working forces and the benefit of steady progress in mechanization of field operations. Production will increase when such conditions come into being and many elements of cost will be changed thereby. It would be well to await that time before enacting legislation on the lines of H. R. 3914.

The elimination of the exemptions with respect to the hours provisions of the act, now contained in section 7 (c), would throw a further burden of increased cost upon processors of sugarcane into raw sugar. The exemptions for the first processing of sugar beets and sugarcane were included in the Fair Labor Standards Act after a thorough study by the Congress, and the necessities of processing plant operating schedules for dealing with such agricultural commodities have not changed since the act was passed.

Sugar is produced on 35 plantation farms in the Territory of Hawaii, located on four of the islands of the group; namely, Hawaii, Maui, Oahu, and Kauai. The production of sugar in Hawaii can only be carried on successfully by largescale farming enterprises. Sugarcane in Hawaii requires about 2 years to mature, thus tying up large amounts of working capital for long periods of time in growing crops. Two-thirds of the crop is grown under irrigation and the plantation farms have had to develop and operate at their own expense large and costly water systems for irrigation.

Sugar is produced in rural areas.

The sugarcane must be processed in the area of production. Each of the plantation farms has its own transportation system and its own sugar mill to process its sugarcane, with the exception of two which are so located that their sugarcane can be transported economically to neighboring sugar mills.

Plantation farms vary in size, the smallest producing about 3,000 tons and the largest about 80,000 tons of sugar a year. In the year 1939 there were more than 37,000 employees on plantation farms. Wartime labor shortage has reduced the number to less than 23,000, as mentioned elsewhere in this statement, but it is hoped that a normal working force will again be available. All of these workers are assured of year-round employment, both in growing and processing sugarcane. Their earnings are high for the rural employment in which they are engaged, and compare favorably with workers in siimlar lines under similar conditions anywhere in the United States.

Health and living conditions on plantation farms are excellent. Each employee receives, as free perquisites of employment, house, domestic water and fuel, community services, and complete medical service and hospitalization for himself and the members of his immediate family.

More than 3,000 small growers work jointly with certain of the plantation farms, principally in areas where sugarcane is grown under natural rainfall, in