mended 1,000. If there was a justification for exempting the 1,000station exchange then, the justification is increased many fold now. The effect of this recommendation of ours, if Congress adopts it, would be to make possible at our smaller exchanges in the smaller communities in the country a continuation of telephone service as it is enjoyed today, and thus forestall inevitable and unavoidable rate increase applications at such exchanges. Adoption of this amendment would also insure a continuation for an indefinite period of jobs that would otherwise certainly go out of existence at a fast tempo as a result of service curtailments and conversions to dial operation. At the same time, we would like to urge the Congress to give serious consideration to the desirability of eliminating the liquidated damage provision of section 16 (b) of the present law. This is the provision which requires an award of double the amount when a suit is brought in court for wage arrearages. The inequity involved in the liquidated damage provision was commented upon by the House Appropriations Committee early last summer when reporting out the Labor Department appropriation bill. The House committee said: The liquidated-damage provision was, no doubt, intended to be helpful in establishing and maintaining the minimum wage and perhaps has had a salutary effect. It appears, however, in some instances that advantage has been taken of this mandatory provision to the detriment of innocent employers and in other cases violations have been permitted to continue in order to collect the increased amount provided in liquidated damages. In view of such situations, it is suggested that the proper legislative committee and I assume it is your committee, Mr. Chairman give consideration to whether or not an amendment to the statute is needed to the effect that before the mandatory provision of the statue becomes effective the employee shall give notice to the employer that he (the employee) is not receiving the minimum wage and expects to make claim for the legal amount, which would put the employer on notice that thereafter he might be subject to the liquidated-damage penalty. Wage-Hour Administrator Walling, himself, in his last annual report to Congress recommended that the act be amended in such manner as to enable the waiving of the double payment penalty "except in cases of willful and flagrant violations." Section 7 of the Celler bill, H. R. 4222, would amend section 16 (b) of the Fair Labor Standards Act by providing a 5-year statute of limitations for bringing suit for back wages. There is a real need for a period of limitation for bringing such suits, but in our opinion 5 years is far too long. We think the period should be not more than 2 years. Our association appeared last July at a hearing before a subcommittee of the House Judiciary Committee in support of the Gwynne bill, H. R. 2788, which would make the period of limitation 1 year. There is a separate bill now pending before the Senate, in the nature of a companion bill to the Gwynne bill, which would also make the limitation 1 year. This is Senator Butler's bill, S. 1013, introduced May 17. In view of the extended testimony which we offered before the House Judiciary Committee on this statute of limitations matter, we content ourselves with merely noting here that a reasonable period of limitation for bringing wage suits is not hostile to the interest of the employee but on the contrary may very well be to his advantage by causing him to bring his suit while his evidence is fresh and his witnesses are still available, and thus increase the chances of success in his litigation. (The following matter was submitted for the record:) UNITED STATES INDEPENDENT TELEPHONE ASSOCIATION, COMMITTEE ON LABOR, House of Representatives, Washington, D. C. GENTLEMEN: I desire to file with your committee the following statement to supplement the testimony which I gave orally on October 17 on the pending minimum wage bills. The statement is intended to provide certain information that was not available at the time of the hearing. Number of employees affected A member of the committee addressed certain questions to me concerning the number of employees in the independent telephone industry, and another member asked for information as to the number of employees who would be affected by the provisions of the pending bills, by size of exchanges. As indicated in my testimony, there are 72,000 employees in our branch of the industry. This is in part an estimated figure for the reason that many of our independent companies are so very small that it is exceedingly difficult to obtain information from them. A publication of the Bureau of the Census1 shows that in 1937, 8 years ago, total persons employed were 57,461. Increase to 72,000 in the number of employees is attributable principally to economic conditions created by the war. The number of telephone switchboard operators in the independent telephone industry in 1942 (last year for which figures are available) was 47,587. In my testimony I gave 55,000 as the current number. The difference between the two figures is accounted for by the same considerations as those referred to above. According to the same source as that referred to in footnote 2, the number of telephone switchboard operators in 1942 at exchanges with less than 500 stations was 32,846. The number of operators at exchanges with less than 1,000 stations was 37,412. Number of employees exempted by 1939 amendment As the committee knows, an amendment to the Fair Labor Standards Act in 1939 exempted from the wage and hour provisions "any switchboard operator employed in a public telephone exchange which has less than 500 stations." (Sec. 13 (a) (11).) According to the best figures we can obtain, the number of independent operators thus exempted was in the neighborhood of 25,000 in our 10,000 exchanges having less than 500 stations, or about two and one-half per town. According to the authority referred to in footnote 2 there were 32,846 operators at such exchanges in 1942. There were obviously less in 1938 when the war had not yet entered the picture, and we estimate the difference as in the neighborhood of 7,000 between 1942 and 1938. It should be remembered that all other employees at exchanges having less than 500 stations are entirely covered by the act. And, of course, all employees including switchboard operators at all other exchanges regardless of size are fully covered. Number of employees who would be affected by increasing the exemption from 500 station exchanges to 1000 exchanges At the hearing we made formal request that the exemption legislated by Congress in 1939 be increased to include switchboard operators at all exchanges having less than 1,000 stations. We estimate that the number of switchboard operators who would be affected by this proposed amendment would be in the neighborhood of 5,000 or 6,000 in approximately 700 locations, or an average of seven or eight operators per town. According to the authority referred to in footnote 2, in 1942 there were 4,566 operators at 686 exchanges having between 500 and 999 stations. 1 Census of Electrical Industries, 1937, Telephones and Telegraphs, p. 3 (the latest figures available from this source). 2 Computation made from Telephony's Directory of 1943; see exhibit No. 1 introduced by witness H. W. Pike at hearing before Wage and Hour Division, Department of Labor, November 30, 1943, p. 18. Number of telephones installed since 1937 A member of the committee asked for information as to the number of telephones which had been installed since 1937. In the independent telephone industry in 1937 there were 4,121,000 telephones.1 According to the best estimate we can make today, there are now 5,316,000 telephones, an increase since 1937 of 1,195,000 or 29 percent. How much greater the increase would have been but for increased costs of operation caused by the enactment of the Fair Labor Standards Act in 1938 and but for the effect on rates for subscriber service caused by that circumstance, is something no one can say. Similarly, it is impossible to say how much greater the increase would have been if there had been no restrictions on the use of critical materials during the war years. It is likewise impossible to estimate what the increase in the number of telephones would have been in the absence of accelerated business activity caused by the war, or whether there would have been anything more than a mere normal increase at best. In the Bell System the number of telephones in 1937 was 15,332,000. The number today is approximately 21,580,000, an increase of 6,248,000 or 40.8 percent. Thus it is apparent, as indicated in my oral testimony, that the companies operating in the larger cities are those which enjoyed the largest addition to the subscriber list. Increase in number of dial exchanges since 1937 Reference was made in my testimony to the stepped up tempo of conversions of manually operated switchboards to dial which would take place if the minimum wage is increased. The principal, reason a small telephone exchange converts to mechanization is to be found in increased costs of operation resulting from higher wage levels. As showing the extent to which conversions have taken place during the past 8 years the same source as that referred to in footnote 1 shows that in 1937 there were 655 dial exchanges in the independent telephone industry. By the end of 1942 the number had increased 56.8 percent to 1,027. In considering this increase it should be borne in mind that beginning in 1941 the war imposed certain restrictions on the use of critical materials for manufacturing all kinds of switchboards and that this operated to stop temporarily the trend toward telephone mechanization. But for this circumstance it is a certainty that the 1942 figure of 1,027 dial exchanges would have been even higher. We think it a conservative estimate that not less than 2,000 operators lost their jobs as a result of the foregoing conversion of manual exchanges to dial operation between 1937 and 1942. It should be borne in mind that these jobs are now gone forever, quite beyond recall. From reliable sources (manufacturers of dial equipment) we are informed that the number of independent dial telephones in 1937 was 620,100 and that the number in 1944 was 849,868, an increase of 37 percent. It should be obvious that an increase in wages will result in an accelerated program of dial conversions now that restrictions on the use of critical materials have been entirely removed. According to information which reaches us several hundred small exchanges have already made definite plans to convert to dial operation. The manufacturers are known to have on hand many orders for equipment. There are also many larger exchanges planning conversions. For example, we know of one company which in very recent months placed an order for a 15,000-line piece of dial equipment, to serve 25,000 telephones, which will displace telephone employees by an estimated number of 200. We know another still larger company that is soon to go to dial operation, with a displacement of operators estimated at 700. Many more examples could be given. Every move to increase wages hastens mechanization as the principal means of economic survival. Every exchange converted to dial means a loss of employment opportunities. What wages were independent employees receiving in 1938-39? A member of the committee during my oral statement asked for information as to wages paid employees in the independent telephone industry at the time the Wages and Hours Act was enacted in 1938. So far as we are aware, there are no figures available from official sources. It may be stated, however, that the wages 1 Census of Electrical Industries, 1937, Telephone and Telegraphs, p. 3 (the latest figures available from this source). paid varied from State to State, county to county, town to town, and exchange to exchange. The same is true today. In 1938, as now, the amount of wages paid was related to the size of the community, the size of the exchange, and general economic conditions in the community in which the employee worked including the going wage levels observed by other forms of business. In the larger communities in which some independent telephone companies operated in 1938, such as communities with a population of 25,000 or 50,000, the beginning rate for telephone operators ranged from 30 cents an hour to 35 cents. In smaller communities, those with a population under 2,000, the beginning wage ranged from 25 cents to 30 cents. At some of the still smaller exchanges there was a starting wage of 20 cents an hour. There are many exchanges in the very small communities where under available revenues telephone service could not be provided at all if it were necessary to employ an operator on the basis of hourly wage rates. At such exchanges there may be only a few calls in an entire 24-hour period. In many such cases the operator works as an independent contractor for a fixed monthly fee for operating the exchange. She has the switchboard in her home, takes care of her household responsibilities and answers such occasional calls as may come in from the few subscribers receiving telephone service. If it is necessary for her to leave her home temporarily she may have members of her family look out for the switchboard during her absence, or she may hire a local school girl or other person, paying her whatever may be necessary for the time she is on the job out of the monthly contract fee. But for arrangements of this kind, the particular place would be without any telephone service at all, as the economy of the community simply could not afford telephone service under conditions common in larger places. In many of these cases, in addition to a monthly cash contract fee, the company furnishes the operator living accommodations, including light, heat, and fuel, and she is allowed to have a vegetable garden in the back yard and to raise chickens. If the remuneration paid in cash to such a person were considered alone and without regard to the value of her living accommodations and the other advantages mentioned, the amount would seem small. But the reasonableness of her remuneration must obviously be viewed in the light of the compensation she receives in the other forms which have been described. The wages that were paid in the independent telephone industry in 1938 were generally well in line with wages paid other workers in other forms of activity in the same communities in which our exchanges are located. We believe the same is true today. Hom much would telephone-service rates have to be increased? A member of the committee during the hearing asked how much the subscriber rates for telephone service would have to be increased in order to meet the increased costs of operation caused by an increase in the minimum wage. There is pertinent information on this point in the statement filed for the record by Mr. J. C. Crowley, of St. Paul, secretary of the Minnesota Telephone Association. There would be no point in repeating here, and I respectively ask that you examine the record and note with care the significant figures for typical companies which Mr. Crowley has presented. Mr. Crowley was present at the hearing and prepared to submit his statement orally but was advised by the clerk that because of the large number of witnesses desiring to offer testimony was not practicable for the committee to hear orally more than the witness for an individual industry; and that because the undersigned had already made an oral statement Mr. Crowley would have to file his remarks with the committee for printing in the record without reading them. This has accordingly been done. Subscriber rates for telephone service in small towns A member of the committee during the hearing asked for information as to subscriber rates in small towns. In response to a specific question as to singleline, unlimited, residential service, I stated that the rates would vary from $1.75 to $2.75, depending upon the size of the town, the total number of subscribers, and other relevant factors. In the statement of Mr. J. C. Crowley, above referred to, will be found further information of this general character. Congress should exempt telephone exchanges having less than 1,000 stations For reasons which are set forth in my oral statement, as well as in the statement filed with the committee by Mr. J. C. Crowley, Congress should increase the present 500-station exemption to include all exchanges having less than 1,000 stations. It may be assumed that the State regulatory commissions of the country are well acquainted with the local economic and other conditions surrounding the operations of our small Independent telephone exchanges. For this reason their judgment as to where the exemption line should be drawn is worthy of particular respect. On page 10 of exhibit No. 1 of witness H. W. Pike, instroduced at a hearing before the Wage and Hour Division of the Department of Labor on November 30, 1943, appears the following statement. "On February 14, 1939, Mr. Carroll R. Daugherty, Chief Economist, Wage and Hour Division of the United States Department of Labor, directed a telegram to each State regulatory body having jurisdiction over telephone matters, asking each of those bodies to state whether any part of the industry ought to be exempt from the wage-and-hour provisions of the Fair Labor Standards Act, and if so, what should be the basis of such exemption. The telegram indicated three possibilities as follows: "Number of telephones: 250, 500, 750, 1,000. "Population of town in which exchange is located: 500, 1,000, 2,500, 5,000, 7,500, 10,000. "Annual exchange service $30,000." revenues: $7,500, $10,000, $15,000, $20,000, SUMMARY OF RECOMMENDATIONS "Replies from 36 State regulatory bodies submitting recommendations are classified herein following: "Each of these State regulatory bodies has had many years of experience in fixing rates and prescribing rules and regulations under which the telephone utilities of its State are operating. These regulatory commissions maintain staffs for the compilation of statistics and are thoroughly familiar with the social and economic condition of the territory in which the utilities under their respective jurisdictions operate. Above all else, these commissions have first-hand knowledge of the operations of the telephone utilities under their jurisdiction." As will be seen from the foregoing figures, 22 regulatory commissions out of 36 expressed the view that the exemption should be on a 1,000-station exchange basis. As indicated in my oral testimony, an increase in the present exemption to 1,000 statins is imperative if the drift toward mechanization and the consequent rapid destruction of employment opportunities are to be abated; if serious |