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Joint Hearings
before the
Committee on Education and Labor, United States Senate
and the
Committee on Labor, House of Representatives
Seventy-Fifth Congress
First Session
on
S. 2475 and H.R. 7200
Bills to provide for the establishment of Fair Labor Standards in Employments in and affecting interstate commerce and for other purposes
June 2 to June 5, 1937
Printed for the use of the Committee on
Education and Labor
United States Senate, and the
Committee on Labor, House of Representatives
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASINGTON: 1937
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COMMITTEE ON EDUCATION AND LABOR
UNITED STATES SENATE
HUGO L. BLACK, Alabama, Chairman
ROYAL S. COPELAND, New York
DAVID I. WALSH, Massachusetts
ELBERT D. THOMAS, Utah
JAMES E. MURRAY, Montana
VIC DONAHEY, Ohio
RUSH D. HOLT, West Virginia
CLAUDE PEPPER, Florida
ALLEN I. ELLENDER, Louisiana
JOSH LEE, Oklahoma
WILLIAM E. BORAH, Idaho
ROBERT M. LA FOLLETTE, JR., Wisconsin
JAMES J. DAVIS, Pennsylvania
KENNETH E. HAIGLER, Clerk
COMMITTEE ON LABOR
HOUSE OF REPRESENTATIVES
WILLIAM P. CONNERY, JR., Chairman, Massachusetts
MARY T. NORTON, New Jersey
ROBERT RAMSPECK, Georgia
GLENN GRISWOLD, Indiana
KENT E. KELLER, Illinois
MATTHEW A. DUNN, Pennsylvania
REUBEN T. WOOD, Missouri
JENNINGS RANDOLPH, West Virginia
JOHN LESINSKI, Michigan
JAMES H. GILDEA, Pennsylvania
EDWARD W. CURLEY, New York
ALBERT THOMAS, Texas
JOSEPH A. DIXON, Ohio
WILLIAM J. FITZGERALD, Connecticut
WILLIAM F. ALLEN, Delaware
GEORGE S. SCHNEIDER, Wisconsin
SANTIAGO IGLESIAS, Puerto Rico
RICHARD J. WELCH, California
FRED A. HARTLEY, JR., New Jersey
W. P. LAMBERTSON, Kansas
CLYDE H. SMITIH, Maine
ARTHUR B. JENKS, New Hampshire
MARY B. CRONIN, Cler.:
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CONTENTS
Statement of
Clark, John D.-------------------------------------------------151
Green, William ----------------------------------------------- 211
Hanway, Paul S ----------------------------------------------- 146
Henderson, Leon ---------------------------------------------- 155
Jackson, Robert -------------------------------------------------1
Johnson, Robert ------------------------------------------------91
Kuldell, R. C -------------------------------------------------243
Paine, John G ------------------------------------------------ 126
Perkins, Hon. Frances ---------------------------------------- 173
Vincent, Merle D --------------------------------------------- 262
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[PAGE 1]
FAIR LABOR STANDARDS ACT OF 1937
WEDNESDAY, JUNE 2, 1937
UNITED STATES SENATE,
JOINT COMMITTEE OF THE SENATE COMMITTEE ON EDUCATION AND LABOR, AND HOUSE COMMITTEE ON LABOR,
Washington, D. C.
The joint committee met, pursuant to call, at 10 a. m., in the caucus room, Senate Office Building, Senator Hugo L. Black presiding.
Present: Senators: Hugo L. Black (chairman), David I. Walsh, Elbert D. Thomas, James E. Murray, Rush D. Holt, Claude Pepper, Allen J. Ellender, Josh Lee, William E. Borah, Robert M. La Follette, Jr., and James J. Davis.
Representatives: William P. Connery, Jr. (chairman), Robert Ramspeck, Glenn Griswold, Kent E. Keller, Matthew Dunn, Reuben T. Wood, James H. Gildea, Edward W. Curley, Albert Thomas, Joseph A. Dixon, William J. Fitzgerald, William F. Allen, George J. Schneider, Santiago Iglesias, Richard J. Welch, Fred A. Hartley, Jr., William P. Lambertson, Clyde H. Smith, and Arthur B. Jenks.
The CHAIRMAN. The committee will come to order. This is a joint hearing of the Committee on Labor of the House and Committee on Education and Labor of the Senate, on H. R. 7200 and S. 2475.
The CHAIRMAN. The first witness who will appear today is Mr. Robert H. Jackson. If it is satisfactory to the committee, Mr. Jackson has prepared statement which he suggests he can give to the committee and after that he suggests that he can go through the bill section by section for such questions as any members of the committee would want to ask him on the legal phases of the measure. If that is satisfactory to the committee I suggest that we follow that course.
All right, proceed, Mr. Jackson.
Mr. JACKSON. Mr. Chairman, the formal statement which I have prepared deals with the constitutional questions, and later we can point out how those particular constitutional theories are carried into the bill.
For years we have heard easy lip service "in principle to the commonplace that it is bad for America - economically as well as socially - to have child labor, sweated labor, low standards of living, inhumane and unhealthy working conditions."
Today we are considering something more than "approval in principle" of these ideas. We have an effort, in the specific and exact terms of a bill, to make this devotion to ideals statutory instead of merely rhetorical.
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Bringing principles down to statutory reality is a tough-minded process. It means making decisions - practical decisions on the balance of advantage and disadvantage - in the face of legal ambiguity, economic variation, and the human limitations of administration. It often means choosing the lesser evil - and making the choice work.
I have been asked by the chairman of both of these committees to discuss the constitutional problems suggested by the pending bill. I undertake this discussion in what I hope will be a realistic way, on the assumption that these committees are interested in finding a way to insure decent labor conditions for the submerged third of our population rather than in regretful excuses why nothing can be done.
At the outset there is a popular and widespread impression that Congress rightfully has nothing to do with labor standards or working conditions in industry and that any effort to improve them must be a subtle encroachment on local government and a subversion of constitutional limitations. This misunderstanding is laid at rest by the recent statement of Chief Justice Hughes writing for a unanimous Court that - "The Congress in exercising the powers confided to it by the Constitution is as free as the States to recognize the fundainental interests of free labor."
The power confided to Congress which this bill proposes to exercise, and in exercising, to recognize the fundamental interests of free labor, is the expressly given power to regulate commerce among the several States. The constitutional basis for the proposed legislation will appear from an examination of the scope of this power.
The Supreme Court has upheld various types of regulation of interstate commerce upon several distinct constitutional theories. The attempt is to consolidate in a single bill all hopeful approaches to constitutionality, each complete in itself, so that if one or more falls at the hands of the Court, we will not be left for an interval while a new bill is being adopted. The result is that there is some overlapping in its provisions but no inconsistency in its operation or its objectives.
Different judicial theories of the commerce power, which this bill invokes may be classified as follows:
1. There is the power directly to regulate or prohibit movement across State lines of goods deemed for any reason to offend against sound national policy. This power has been applied in many cases and denied in but one, the famous Child Labor case to be discussed later. This bill invokes that power to regulate and prohibit by directly forbidding transportation of the products of the labor of children under 16 years of age, which ought not to be accepted in any fair market, and products made under conditions where workers are denied the right of self-organization by fear of labor spies and where their right to strike and to enforce collective bargaining is rendered ineffective by the use of professional strikebreakers. Such use of espionage and of professional strikebreakers is both a provocation of violence and an excuse for it, and offends against our national policy.
2. Congress has the power to regulate competition in interstate commerce. It has exercised this power without question since the adoption of the Sherman Antitrust Act in 1890, and again through
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the Clayton Act and the Federal Trade Commission Act. In the exercise of this power Congress has prohibited certain practices deemed injurious to competition in interstate commerce. It has prohibited many acts, in themselves local, by employers engaged in productive industry, but which tended to monopoly or to destroy competition. Under this power Congress has prohibited, under certain circumstances, the acquisition of the stock of one corporation by another. It has defined and prohibited unfair methods of competition. What, then, may be said of the employer who cuts wages, employs children, and sweats labor, for the purpose of gaining a competitive advantage in marketing his product in an interstate market? As pointed out by Prof. Thomas Reed Powell of the Harvard Law School, and by other students of constitutional law, since Congress has the power to regulate conditions of competition as it has done through the antitrust acts, it may likewise prohibit the securing of a competitive advantage in interstate commerce through the adoption of oppressive and sweatshop labor conditions.
It will be noted that part IV of this bill proceeds upon this theory and its provisions may be sustained, without overruling the Child Labor case. The factual basis for thiis view is that by prohibiting the use of substandard labor conditions by those who compete with employers who use fair labor standards, the great majority of employers who really desire to treat labor fairly are thereby protected against the unfair methods of competition of those who utilize sweatshop methods to gain a competitive advantage.
And, since Congress may regulate the conditions of competition in interstate commerce, it may protect the fair employer shipping in interstate commerce against the unfair competition of even his inter-state competitor under the doctrine of the Shreveport Rate cases (234 U. S. 342), a case to which the Supreme Court had occasion to allude with approval in the recent Wagner Act decision.
3. The power to regulate commerce includes the power to eliminate labor conditions which lead to labor disputes which will directly burden or obstruct commeree (Nationat Labor Relations Board v. Jones Laughlin). This power is invoked in eliminating excessive hours, inadequate pay and child labor insofar as they tend to provoke such labor disputes.
4. The power to regulate commerce is held to include the power to prohibit transportation of goods into States in violation of the laws of such States and making such interstate goods subject to such State laws. This doctrine is supported by the decisions involving prison - made goods Kentucky Whip and Collar case, Jan. 4, 1937, and Whitfield v. Ohio, 299 U. S. 431. This bill invokes this constitutional power by prohibiting consignment of goods into a State if produced under conditions that would have been unlawful within that State.
5. The power to regulate commerce has been held to include power to eliminate a condition which affects the movement of goods, the price of goods, or which causes undue price fluctuations in interstate commerce. This doctrine is set forth in the cases relating to the regulations of stockyards and grain exchanges (Olsen case, 262 U. S. 1, Stafford case, 258 U. S. 495). This bill invokes this power by eliminating from interstate commerce goods produced by substandard labor conditions which affect interstate commerce in the manner stated.
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6. The power to regulate interstate commerce has been held to include the power to regulate conduct intended to divert or substantially affect the movement of goods in interstate commerce. This is the doctrine of the Coronado Coal case (268 U. S. 295). This bill invokes such power to regulate such substandard labor practices as are found to be the result of an intention to divert the movement of goods in interstate commerce.
It will be observed that these theories of the interstate commerce power, as laid down by the Court, are complicated and overlapping and that some could be directly and automatically applied while others could be applied only where circumstances were found to warrant. It was therefore inevitable that any bill which tried to use these available weapons to fortify itself against the constitutional attack which labor and commerce legislation always faces, should to a considerable extent sacrifice simplicity. For neither the subject-matter of the bill nor the legal theories underlying it can with practical safety be reduced to any one simple formula. But the bill is believed not to be conflicting within itself or self-defeating.
In addition to rigid and direct exclusion from the channels of interstate commerce of those products made under conditions deemed oppressive at any time and under any circumstances, such as labor of children under 16, spied-upon labor, or strikebreaker-brow-beaten labor, there is also included administrative proceedings before an independent board, similar to the National Labor Relations Board or the Federal Trade Commission.
As President Roosevelt has stated: Even in the treatment of national problems there are geographical and industrial diversities which practical statesmanship cannot wholly ignore. Portions of the bill relating to wages and hours would become operative as and when the Board created by the act orders their application. This bill does not plunge the Nation headlong into a rigid and widespread policy of regulating wages and hours. It permits the building up a body of experience and prevents the extension of regulation faster that ceapaetity pyopeyly tD admini~stey is revxxired. Tht iwvestigti~mis of the Board will also provide the evidence and the findings upon which the Government can rest its argument if the constitutionality of the act is assailed.
The proposed bill, therefore, is - except as to the Child Labor case to be dealt with later-backed by long established precedents defining Federal power to regulate interstate commerce. Congress may so use the power as to stop interference from State laws, and it can equally protect it against employer lawlessness. It can foster the legitimate and helpful trade as well as stop the unwholesome. To quote again from the Chief Justice in the Kentucky Whip case: The power to prohibit interstate transportation has been upheld by this Court in relation to diseased livestock, lottery tickets, commodities owned by the interstate carrier transporting them, except such as may be required in the condut of ABs business -m a vommon zayyic, awatc~atcd and ZAanla',teZe, under the Pure Foods and Drugs Act, women for immoral purposes, intoxicating liquors, diseased plants, stolen motor vehicles, and kidnaped persons.
A commerce clause broad enough to protect the children of the rich from kidnaping would seem not to be abused if it should also protect the children of the poor from exploitation. As Justice Holmes said, with the approval of Justices Brandeis, Clark, and McKenna, it was not intended to leave Congress free to prohibit traffic between States
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in lottery tickets and strong drink, but not to prohibit the interstate shipment of "the product of ruined lives."
The power of Congress to enact the bill is clear, under the decisions, both old and recent, except for the denial by the Supreme Court in the Child Labor case of the most simple and clear of all these theories. In 1918 by a 5-to-4 vote, the Supreme Court in Hammer v. Dagenhart (247 U. S. 251) held invalid an act of Congress prohibiting interstate transportation of goods manufactured in violation of certain child labor standards.
In view of the President's recommendation of legislation of the type proposed in the pending bill, and ofthe unique constitutional situation presented by that Supreme Court decision it has seemed appropriate for the Department of Justice to furnish these committees with the result of our studies of this bill, notwithstanding precedents against so doing.
The Court's decision sheltering child labor from Federal action could affect only a part of the bill at most. But if it were overruled it would permit a simple and more understandable dealing with the question.
The child labor decision was promulgated by a bare majority of numbers. They were Mr. Chief Justice White and Justices Van Devanter, Pitney, McReynolds, and Day who wrote the prevailing opinion. A ringing dissent was written by Mr. Justice Holmes and supported by Justices McKenna, Brandeis, and Clark, who could not be regarded as a minority in prestige.
Legal scholarship received the dlecision with indignation and derision which time has not softened. A leading authority on the Constitution has said: There is certainly nothing in the Constitution which requires the decision of the majority. It is wretchedly supported by the argument of the opinion. The assertion (which the majority made) that "the act in its effect does not regulate transportation among the States" is obviously unfounded (Thos. Reed Powell, 3 Southern Law Quarterly 175).
Others pointed out that if a State attempted to stop the shipping in or shipping out of child-labor-made goods it would be held to be interstate commerce and void while if the Nation prevented the shipment it was held not interstate commerce and void. (Gordon, 32 Harvard Law Review 45-51-52). The game so far as the children were concerned, seemed to be, heads they lost and tails they didn't win.
We owe it to our times to challenge the perversion of our Constitution injected into our law by the child-labor decision. This bill would challenge it. We should give the courts a chance to remove this blemish from our judicial history.
The doctrine of the majority in the Child Labor case belongs to the same dark era of legal thought as the decision holding that the minimum-wage law was unconstitutional (Adkins v. Children's Hospital, 267 U. S. 525, decided in 1923). The Court recently said that the importance of the minimum-wage question, the close division of the Court by which the former decision was reached, and "the economic conditions which have supervened" in the years since it was decided, made it "not only appropriate, but we think imperative" that the
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subject should receive "fresh consideration." Every condition that led to fresh consideration of the Minimum Wage case with equal force renders not only appropriate but imperative fresh consideration of the child-labor decision. Reconsidering the ninimum-wage case, which it had only a few months before followed as good law in striking down the New York statute, the Court held in the language of the Chief Justice that the 1923 case-and of course the 1936 case to the same effect-"was a departure from the true application of the principles" of law and frankly and courageously said "Our conclusion is that the case of Adkins v. Childrens' Hospital should be, and it is overruled."
And in the National Labor Relations Board v. Jones and Laughlin, the Court, without expressly overruling earlier cases, plainly receded from decisions such as Carter v. Carter Coal Company (298 U. S. 238), which had seemed to cramp the interstate commerce power into its lowest visible dimension.
The Court seems again to have been persuaded as Chief Justice Taney said that it is "the law of this Court that its opinion upon the construction of the Constitution is always open to discussion when it is supposed to have been f-auudeA in eriror, &nd tho t its jiadiciat authority should hereafter depend altogether upon the force of the reasoning by which it is supported" (Passenger cases, 7 Howard 283, 473).
In face of the willingness of the Supreme Court to decline to let obsolete precedent limit the exercise of its own reason, Congress may with propriety decline to let such decisions stall legislative reason. Had not the legislators persisted in challenging the minimum-wage cases, their inaction and acquiescence would have prevented the Court from amending its doctrine. Nothing but a challenge to the child-labor decision will enable the Court, even if it is so minded, to correct the old decision, now without support in scholarship, reason, or enlightened public sentiment. It is the distinguishing feature of judge-made law that it' is made only by the case method. The Court must await another case to correct an error. It has no technique for initiating reconsideration of closed cases. 11 old decisions are not challenged by law makers, judicial development is arrested and advancement of legal science stops.
Hence, I have no hesitation in urging that the time has come when the child labor decision should be challenged and reargued. We may reasonably entertain the hope that Hammer v. Dagenhart will be laid to a tardy and unmourned repose beside the lifeless remains of Adkins v. Children's Hospital.
In view of the frequent confusion on the subject it is due to those considering this bill to analyze the effect which it has upon the reserved powers of the States.
Let us assume each State as completely sovereign as a nation could be. No State would then have any right to send its goods into another State. Each State would have the right to stop all incoming goods at its borders, to exclude any goods unfairly competing in its own market, or to lay a tariff on those admitted to equalize any advantage that the incoming goods had over its own producers. The exercise of this right by the colonies threatened to disrupt commerce and to divide our people. The exercise by the several States of their own
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parochial and conflicting rules to protect their own markets was a powerful incentive to formation of our Government.
Each State, therefore, largely surrendered its sovereignty over incoming goods to the National Government. This was not intended to surrender the home market place to the under-cutting competitor States. The power was granted to the National Government that the rule of the mnarket place should be fixed by a national policy for the common good.
A State may wish to meet advancing wealth of production with advancing standards of life for those who work in production. But if its own market place, as well as outside markets, are overrun with goods cheapened by child labor or sweated labor it has lost its power over its own working conditions. Is it confined then to appeals to its competitors for protection from such unfair competition? Its appeal is in law, as it is in common sense, to the Nation to which was given power to establish the rule by which goods should move among the States.
Mr. Justice Holmes in his dissent in the Child Labor case demolished the whole argument that States' rights are impaired by such legislation as this, in the following language:
The act does not meddle with anything belonging to the States. They may regulate their internal affairs and their domestic commerce as they like. But when they seek to send their products across the State line they are no longer within their rights. If there were no Constitution and no Congress their power to cross the line would depend upon their neighbors. Under the Constitution such commerce belongs not to the States but to Congress to regulate. It may carry out its views of public policy whatever indirect effect they may have upon, the activities of the States. Instead of being encountered by a prohibitive tariff at her boundaries the State encounters the public policy of the United States which it is for Congress to express. The public policy of the United States is shaped with a view to the benefit of the Nation as a whole.
Care has been taken to hold the pending bill to a good faith regulation of interstate commerce, and nothing more. Any State may use child labor or sweated labor for products of home consumption as much as it pleases so long as it does not divert or affect interstate commerce in so doing. The State may exploit youth in its internal affairs as far as its own conscience will permit, but it cannot dump its children into the Nation's markets to demoralize our national standards.
It has been suggested that the child labor provisions should be embodied in separate legislation. It is not my function to advise as to policy but we believe it would be more difficult to sustain separately than in company with the other substandard labor provisions.
All of the labor practices attacked by this bill are related. All are types of oppression utilized for the purpose of gaining unfair advantage in interstate commerce. One employer cuts wages, while another employs child labor, and still another employs sweatshop conditions, and all of these practices are a part of the vicious competition used in forcing down labor standards which it is appropriate to treat together in the regulation of interstate commerce. One of the constitutional bases of the pending bill is the principle announced in reference to the National Labor Relations Act that prolific causes of strife which may have a serious effect upon interstate commerce may be prevented. It is obvious that this principle is applicable to wages, hours of employment, and the use of strikebreakers and spies, for those practices have been prolific causes of labor strife. It is not clear that child labor
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standing alone has been the cause of industrial strife, although it is clearly one of the elements of unfair labor competition.
One reason for the unfortunate decision of the Child Labor case was that the Court failed to perceive that the legislation was related to the regulation of interstate commerce but regarded it as merely a police regulation to accomplish a local social objective. The inclusion of child labor with the other prohibited practices in an undertaking to prohibit unfair interstate commerce and to foster American standards makes plain that the law in which it is included is a genuine exercise on a broad front of the power to regulate interstate commerce and gives the prohibition of child labor a strength that it would not have if standing alone.
Two recent decisions have aroused hope of a new method of Federal and State cooperation to enforce proper labor standards. In Kentucky Whip & Collar Co. v. Illinois Central Railroad Co., January 4, 1937, the Supreme Court upheld the Ashurst-Sumners Act making it unlawful knowingly to transport in interstate commerce goods made by convict labor into any State where they would be received, possessed, or sold in violation of the State laws, and requiring labeling of convict-made goods.
In Whitfield v. Ohio (297 U. S. 431) the Supreme Court sustained convictions, under a State law, forbidding sale within the State of convict-made goods, even in the original package. It accepted the Hawes-Cooper Act.
Even if the method is approved as to other labor standards, it is open to grave administrative difficulty. It would seem that if the Court is to sustain any Federal regulation of commerce in goods made under substandard labor conditions it would overrule the child-labor decision and permit direct, simple, and effective regulation instead of reaching the same result by going round Robin Hood's barn. If Congress can give national scope to the standards set up by a receiving State it would seem able to give force to standards of its own making. If the Court will give effect to 49 nonuniform State standards, operating like tariff laws and difficult to administer, it would seem able to sustain a single Federal standard for goods in movement between the States. But there is a lawyerly preference for a difficult way of doing a simple thing, and the Kentucky Whip method may commend itself to the Court when direct regulation does not. If so, this bill is designed to get the benefit of such approval. While the Court is not certain to apply the prison-made-goods precedents lately established to goods made by underaged or underpaid free labor, the constitutional experiment is worth trying. If easier administered provisions are sustained, resort to this less practicable plan will not be necessary.
Even if the subject matter is within Federal power constitutional controversialists claim that it violates the due-process-of-law clause or illegally delegates congressional power.
Regulations of both wages and hours does not of itself violate due process, and is not necessarily "unreasonable, arbitrary, or capricious", where "there is reasonable relation to an object within the
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governmental authority" (Wilson v. New, 243 U. S. 332; Bunting v.Oregon, 243 U. S. 426).
Standards for determination of fair wages and reasonable working hours contained in the present bill are drawn with fairness to the employer. The standards are based on the value of the service rendered and the reasonableness of the period of working time considering the nature of the employment. Furthermore, fairness to all parties concerned and reasonable treatment of special cases is assured by the provisions of the bill which require the Board to grant exemptions from the wage-and-hour regulations as the need appears.
It is hard to see how employers who wish to maintain decent labor standards, or those who wish to see a better level of purchasing power in the masses of the people, can feel aggrieved at the general purposes and effects of this bill. Advancement of those objections State by State, each exposed to the competition of States which tarry, has been the foundation of the employers' most legitimate objection to labor legislation. He is so far from being injured by this bill, that it may be his chief protection against undermining his market by methods which his own standards forbid.
Neither in its general scope nor in its special treatment of particular cases can the bill be pronounced arbitrary. For fair labor standards are required to be maintained only to the extent necessary in order to accomplish the interstate commerce purposes of the legislation - purposes which fall clearly under the regulatory power of the Congress under the commerce clause.
Due process is defined in respect of both Federal and State legislation in Nebbia v. New York (291 U. 5. 502, 525).
The fifth amendment, in the field of Federal activity, and the fourteenth, as respects State action, do not prohibit governmental regulation for the public welfare. They rarely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. It results that a regulation valid for one sort of business may be invalid for another sort, or for the same business under other circumstances, because the reasonableness of each regulation depends upon the relevant facts.
If regulation may be dependent on "relevant facts" there can be no objection to delegating power to an administrative or quasi-judicial board to investigate, hear evidence and decide those facts.
It must be borne in mind that there is nothing whatever in the Constitution that forbids Congress to make a delegation of its power. The prohibition is purely judge-made, not Constitution-made.
The Supreme Court rarely finds fault with a congressional deligation of power. There is nothing in the recent decisions of the Court which would justify the Congress in abandoning administrative handling of modern complexities too numerous and diverse to be subjected to a single and inflexible rule directly imposed by the Congress. There are, it should be remembered, only two cases where congressional
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delegation of power had bgeen adjudged invalid in 150 years of constitutional practice.
The proposed bill deals with difficult and complex industrial situations. The draftsmen have been painstaking to make the standards as definite as the conditions with which they have had to deal permit without imposing upon the diversities of American industry inflexible and unworkable rules.
Nearly every legislative proposal dealing with complex economic conditions is attacked as arbitrary by those who do not like it. If the bill includes detailed standards it is said to be arbitrary for want of discretion in enforcement. On the other hand if it gives discretion to an enforcement agency it is denounced for setting insufficient limits to "arbitary discretion." This bill has been attacked on both grounds. The very inconsistency of this attack suggests that the draftsmen of the bill have attempted a fair, equitable and constitutional balance between the legal requirements of a standard and the practical requirement of workable flexibility.
A separate memorandum of the law on the subject of delegation of power has been prepared and will be filed with the committees.
During this flash of liberalism that illuminates a judicial record, otherwise pretty black for labor, we may reasonably hope that after being balked a score of years, Congress will now be sustained inadding to the list of interstate contraband what Mr. Justice Holmes so aptly called "the product of ruined lives", and in estaqblishing commerce among the States on the basis of industrial justice to disadvantaged men.
I will file copies of the statement on the delegation of power.
(The statement referred to is as follows:)
Nearly every legislative proposal dealing with complex economic conditions involves problems of delegation. For such a legislative proposal must meet the charge that it entrusts arbitrary discretion to an administrative agency, or else it yuft resist the attack that it puts industrial enterprise into a straightiacket and imposes a rigid and inflexible rule without regard to industrial and geographical diversities. The proposed fair-labor-standards bill has at one and the same time been criticized on both of these grounds. The inconsistency of the attack suggests that the draftsmen of the bill have at least sought to achieve a fair and constitutional balance between the practical requirement of workable flexibility and the legal requirement of adequate standards.
The bill contemplates that the Congress should write into the statute some definite figures to be used as a guide by the administrative agency in establishing a floor below which wages shall not be cut and a ceiling beyond which hours should not be stretched. Let us assume, for the sake of an example, that the Congress fixes 40 cents an hour as the basic minimum nonoppressive wage and 40 hours a week as the basic maximum workweek. That would be $16 for a 40-hour week or $800 for a year of 50 weeks. It will scarcely be questioned that in most sections of the country a worker with $800 a year will have no more than is necessary to provide a minimum standard of living to maintain himself and his family.1
In the Washington Minimum Wage case (West Coast Hotel Co. v. Parrish, October Term, 1936, decided Mar. 29, 1937) the Supreme Court held that the cost of living was a sufficient standard for purposes of the fourteenth amendment, even though no approximate figure was inserted in the statute for the guidance of the administrative tigency. Under the proposed bill not only is an approximate figure given to the administrative agency as a guide in fixing a minimum nonoppressive wage, but that figure is not to be applied and may be revised downward, if the
1It is also to be noted that the board cannot fix even a minimum fair wage which yields an annual income in excess of $1,200. That means that the board cannot fix a wage in excess of 60 cents an hour for a worker employed 50 weeks a year. A higher hourly wage may be fixed in occupations which do not give the worker full employment, but such hourly wage can in no case be in excess of 50 cents. It is clear that the bill protects only poorly paid workers who are not in position to protect themselves.
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board finds it necessary to avoid unreasonably qurtailing the workers' opportunity for employment. The figure may be revised upward if the board findds it possible without unreasonably curtailing the opportunities for employment, but not above what may fairly be regarded as a minimum standard of living necessary for health and efficiency, i. e., substantially the same standard as was approved in the Washington Minimum Wage case.xxxx
I It is also to be noted that the board cannot fix even a minimum fair wage which yields an annual income in excess of $1,200. That means that the board cannot fix a wage in excess of 60 cents an hour for a worker employed 50 weeks a year. A higher hourly week may be fixed in occupations which do not give the worker full employment, but such hourly rate can in no case be in excess of 80 cents. It is clear that the bill protects only poorly paid workers who are not in position to protect themselves.
board finds it necessary to avoid unreasonably curtailing the workers' opportunity for employment. The figure may be revised upward if the board finds it possible without unreasonably curtailing the opportunities for employment, but not above what may fairly be regarded as a minimum standard of living necessary for health and efficiency, i. e., substantially the same standard as was approved in the Washington Minimum Wage case.
The situation is similar with regard to the number of hours which the Congress may write into the bill as the basic nonoppressive work week. Under the proposed bill not only is an approximate figure given to the board as a guide in establishing a nonoppressive maximum work week, but the basic number of hours specified is not to be applied and may be increased by the Board if the Board finds it necessary to avoid unreasonably curtailing the workers' earning power. The basic workweek may also be shortened by the Board if the Board finds it possible to do so without unreasonably curtailing the workers' earning power, but the Board may not so shorten the workweek beyond what it finds is required in the interest of the health, efficiency, and well-being of the workers. And in no event may a workweek be shortened below a fixed number of hours, say 30 or 35, which it is contemplated shall be specified in the bill.
The minimum fair wage standards and maximum workweek standards which the board may apply to industries where the facilities for collective bargaining are not adequate or effective are defined in section 5. These standards are patterned upon the standards used in the New York minimum fair wage statute. While a bare majority of the Supreme Court refused to enforce that statute in Morehead v. New York ex rel. Tipaldo (298 U. S. 587) on the ground that the Court was bound by its decision in Adkins v. Children's Hospital (261 U. S. 525), and on the further ground that the Court had not been asked to overrule the Adkins' decision, the Chief Justice and three of his colleagues, dissenting, were of the opinion that the New York Statute's "provisions for careful and deliberate procedure" made the New York statute constitutional even though the cost of living statute involved in the Adkins' case might be regarded as unconstitutional. And there can be no doubt that a majority of the Court, having expressly overruled the Adkins case in the Washington Minimum Wage case, would today view the more carefully drawn New York statute as constitutional. There can be no doubt that the opinion of the Chief Justice in the Morehead case may today be accepted as the law of the land.
The signposts to guide the Board in determining a nonoppressive minimum wage and nonoppressive maximum workweek, as well as a reasonable minimum wage and a reasonable maximum workweek in any particular occupation are much clearer and more distinct than those approved by the Court in the recent Washington Minimumum Wage case. It is significant that the Court in that case attempted to draw no subtle distinction between the Adkins case, which dealt with a congressional enactment, and the Washington case, which dealt with a State statute, but expressly overruled the Adkins case.
A number of the provisions of the present bill give the Board power to make exemptions and qualifications necessary to make the act workable and effective. The purposes of these provisions are plainly stated, and the standards to govern their application are defined as definitely as the practical exigencies will allow. "The industries of this country", as Mr. Justice Cardozo has stated, "are too many and diverse to make it possible for Congress in respect to matters such as these, to legislate directly with adequate appreciation of varying conditions" (Schechter Poultry Corp. v. United States, 295 U. S. 495, 552).
Although the power to exempt, to except, or to qualify may not be left to the arbitrary discretion of the Board to exercise for purposes bearing no relation to legislatively defined policy the Supreme Court has never nullified such administrative powers to relax the rigors of a rule of law when required to avoid injustice or unnecessary hardship. In invalidating the N.R.A. statute in the Schechter case, the Chief Justice was careful to point out that that statute did not "seek merely to endow * * * groups with privileges or immunities", but it involved "the coerci e exercise of the law-making power." Schechter Poultry Corp. v.United States (295, U. S. 495, 529). Both kinds of standards are employed in the act and both kinds of standards find their counterparts and analogies in State, as well as Federal, labor legislation. But a distinction must be drawn between those standards in the proposed bill which empower the Board to implement the general rules fixed by the Congress and those standards which permit the Board to relax the generality of the rules fixed by the Congress. A broader and wider discretion may be delegated in applying exemptions and exceptions than in applying the primary rule in regulation to be enforced. United States v. Shreveport Grain Co. (287 U. S. 77, 82, 85), delegation of power to allow exemptions and
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tolerances under the Pure Food Act; Intermountain Rate Cases (234 U. S. 476, 484, 486), delegation of power to allow exceptions from long and short haul; Chemical Foundation v. United States (272 U. S. 1, 12), delegation of power to except from public-sale requirement; Heiner v. Diamond Alkali Co. (288 U. S. 502), power to relax application of excess-profits tax; Hampton v. United States (276 U. S. 394, 407), delegation of power to make tariff provisions effective.
It is important to remember that the Supreme Court very rarely finds fault 'with a PongTessional deltgatiorn o p . Th. r is rothhg iv the ree 1esis of the Court which would justify the Congress in casting aside a half century of legislative experience in providing for the administrative handling of modern complexities too numerous and diverse to be subjected to a single and inflexible rule directly imposed by the Congress. There is, it should be remembered, no case where congressional delegation of power had been adjudged invalid where the delegation has been made to a permanent governmental, administrative commission, independent of the executive branch of the Government. Panama Refining Co. v. Ryan (293 U. S. 388) involved delegation directly to the Executive; the Schechter case involved not only theoretical delegation to the Executive but practical delegation to substantially private code authorities. Insofar as the decision in Carter v. Carter Coal Co. (298 U. S. 238, 310-311) rested on the grounds of faulty delegation, the vice lay in the delegation having been made not to an official or official body but "to private persons whose interests may be and often are adverse to the interests of others in the same business."
Indeed congressional delegations of power to official administrative agencies have been held invalid in only two cases: The Panama Refining Co. case and the Schechter case. In the Panama Refining Co. case, the subjet of the statutory prohibition, the transportation in interstate commerce of petroleum produced in violation of State law, was defined, but the delegation was held to be improper because the range of administrative discretion was not only unlimited, but wholly undefined. Panama Refining Co. v. Ryan (293 U. S. 388, 415) Schechter Poultry Corp. v. United States (295 U. S. 495, 530). In the Schechter case, on the other hand, the Court was not disturbed so much by the range of discretion granted with respect to any particular subject matter, as it was by the fact that it could find no "adequate definition of the subject to which the codes were addressed." As the Chief Justice stated: "Congress cannot delegate legislative power to the President to exercise an unfettered discretion to make whatever laws he thinks may be needed or advisable for the rehabilitation and expansion of trade and industry" (295 U. S. at 537-538). The National Industrial Recovery Act had authorized the President to approve codes of fair competition for trade and industry without attempting to limit or define the subject matter of the codes. As Mr. Justice Cardozo pointed out, such codes were not restricted, to "the elimination of business practices that would be characterized by general acceptance as oppressive or unfair" (295 U. S. at 552]. There is as a matter of fact nothing in either the opinion of Chief Justice Hughes or of that of Mr. Justice Cardozo which suggests that, if the Congress had restricted the subject matter of the codes to the labor provisions of the National Recovery Act instead of merely requiring that codes drafted for other undefined purposes should comply with such labor provisions, the Court would have considered the labor standards, vague as they were, fatally defective.
It must of course be borne in mind that the courts have never required the same definiteness of a standard which is set forth for the guidance of an administrative agency and which cannot be enforced against the individual before it has been specifically implemented by the orders or regulations of the administrative agehey, as the courts have required of a standard which operates directly upon the rights of the individual and to which the individual must conform at his peril. A standard too vague to support a self-operating provision enforced by criminal liability (United States v. Cohen Grocery Co., 255 U. S. 81), may well state a policy and purpose sufficiently definite to serve as an appropriate standard for the guidance of administrative action. Highland v. Russell Car & Snow Plow Co. (279 U. S.; Continental Baking Co. v. Woodring (286 U. S. 352, 368).
The Panama Refining Co. case and the Schechter case never purported to question the authority of numerous earlier cases which sustained congressional delegations of power to administrative agencies under extremely vague and general standards for the sole reason that the Court was convinced that in light of the nature and
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complexity of the subject-matter of the legislation the prescription of a more detailed standard would be difficult or impractical.1
The leading decisions reflect the importance of practical considerations and the necessity for delegation as a means of administering the law, in determining how definite a standard set by Congress for the guidance of an administrative agency must be. Beginning with Wayman v. Southard (10 Wheat. 1), the Supreme Court, speaking through Chief Justice Marshall, adverted (pp. 34-35, 46-47) to the need for flexibility in conforming the Federal practice to the judicial systems of the States in a statute delegating to the Federal judiciary power to alter the rules relating to process, as the courts "itn their discretion deem expedient" (p. 39). The statute uhpeld in Field v. Clark (143 U. S. 649) permitted the President to impose reciprocal duties on goods imported from countries which discriminated against American products, a function which could best be exercised by a governmental agency capable of prompt action after forming a judgment based upon changing conditions. The law sustained in Buttfeld v. Stranahan (192 U. S. 470) authorized the Secretary of the Treasury to fix standards of purity, quality and fitness for consumption with which imported tea must comply. The dourt declared: "Congress legislated on the subject as far as was reasonably practicable, and from the necessities of the case was compelled to leave to executive officials the duty of bringing about the result pointed out by the statute. To deny the power of Congress to delegate such a duty would, in effect, amount but to declaring that the plenary power vested in Congress to regulate foreign commerce could not be efficaciously exerted" (192 U. S. at 496).
In upholding the statute authorizing the Secretary of War to determine whether a bridge was an "unreasonable obstruction" to navigation, the Court in Union Bridge Co. v. United States (204 U. S. 364, 386) emphasized the fact: " investigations by Congress as to each particular bridge alleged to constitute an unreasonable obstruction to free navigation and direct legislation covering such case, separately, would be impracticable in view of the vast and varied interests which require national legislation from time to time." And the Court stated (204 U. S. at 387) that a denial of the rights of delegation "would be 'to stop the wheels of Government' and bring about confusion, if not paralysis, in the conduct of the public business."
Similarly, in United States v. Grimaud (220 U. S. 506) the impracticability of having Congress provide general regulations for each of the many different forest reservations was held to justify an authorization to the Secretary of Agriculture to "make such rules and regulations as will insure the objects of such reservations." The Court said: "In the nature of things it was impracticable for Congress to provide general regulations for these various and varying details of management. Each reservation had its peculiar and special features (220 U. S. at 516).
Again, in upholding the provision of the Interstate Commerce Act which authorizes the Interstate Commerce Commission to make rules in case of car shortage, the Court declared in Avent v. United States (266 U. S. 127, 130): the requirement that the rules shall be reasonable and in the interest of the public and of commerce fixes the only standard that is practicable or needed." See also Mutual Film Corporation v. Ohio Industrial Commission (236 U. S. 230, 245); Mahler v. Eby (264 U. S. 32, 40); United States v. Chemical Foundation (272 U. S. 1, 12).
The emphasis upon the practical need for the delegation is clear in Hampton Jr., & Co., v. United States (276 U. S. 394). In upholding the Flexible Tariff Act, which authorized the President to adjust tariff rates so that they would correspond to the differences in costs of production here and abroad, the Court took into account the inability of Congress to make the necessary adjustments (276 U. S. at 405), the need for readjustment because of everchanging conditions (276 U. S. at 406), and the uncertainty as to the time when the adjustments should be made (276 U. S. at 407). By way of analogy, it referred to the fixing of just and reasonable rates by the Interstate Commerce Commission, stating
1Cases in which the use of general expressions as a standard has been upheld as proper in view of the nature and character of the specific statute or provision involved, are Federal Radio Commission v. Nelson Bros. Bond and Mortgage Co. (289 U. S. 266, 385), public convenience, interest or necessity; Avent v. United States (266 U. S. 127) and United States v. Chemical Foundation (272 U. S. 1), in the public interest; Colorado v. United States (271 U. S. 153, 168) and Chesapeake & Ohio Ry. v. United States (283 U.S. 35, 42), certificates of public convenience and necessity; Tagg Bros.& Moorhead v. United States (280 U. S. 420), just and reasonable commissions; Wayman v. Southard (10 Wheat. 1), in their discretion deem expedient; Buttfield v. Stranahan (192 U. S. 470), purity, quality, and fitness for consumption; Union Bridge Co. v. United States (204 U. S. 364); Monongahela Bridge Co. v. United States (216 U. S. 177); Hannibal Bridge Co. v. United States (221 U. S. 194); Louisville Bridge Co. v. United States (242 U. S. 409), unreasonable obstruction to navigation; Mahler v. Eby (264 U. S. 32), undesirable resident; McKinley v. United States (249 U. S. 397), war powers; United States v. Grimaud (220 U. S. 506), regulation of forest reserves.
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that: "If Congress were to be required to fix every rate, it would be impossible to exercise the power at all" (276 U. S. at 407). In view of these considerations, it was held sufficient for Congress to establish a general rule declaring an "intelligible principle": "In determining what it may do in seeking assistance from another branch, the extent and character of that assistance must be fixed according to common sense and the inherent necessities of the governmental coordination" (276 U. S. at 406). Mr. Justice Sutherland, in United States v. Curtiss-Wright Corp. (2 N UJ. S. 3Q14, 315), suxggests that iii the tariff caeinvetVL1g foreign relation a broader discretion may be vested in the President than in matters relating solely to internal affairs, but the reasoning of the Court in the tariff cases there cited is based upon no such distinction.
There is nothing in the adjudicated cases which suggests that the constitutional rule against the delegation of essential legislative powers is violated by a bill, like the proposed bill which, dealing with many and diverse industries, not only defines the subject-matter to which an administrative agency may address its discretionary powers, but clearly states the purposes for which the administrative discretion may be exercised. Unlike the statute in the Schechter case, the proposed bill carefully defines the subject matter to which the administrative agency may address itself. Unlike the statute in the Panama Refining Co. case, the bill does not omit to state the range of the administrative discretion vested in the Board, but clearly states the purposes for which it may be exercised.
The extent to which the Supreme Court has gone in sustaining a delegation of power to an administrative agency where the subject matter of the delegation is defined, and the purpose for which such power is to be exercised is indicated in most general terms, is strikingly illustrated in the case of New York Central Securities Corporation v. United States (287 U. S. 12), sustaining the validity of the consolidation provisions of the Transportation Act of 1920. In that case Chief Justice Hughes stated (287 U. S. at 24-25):
"Appellant insists that the delegation of authority to the Commission is invalid because the stated criterion is uncertain. That criterion is the 'public interest.' It is a mistaken assumption that this is a mere general reference to public welfare without any standard to guide determinations. The purpose of the act, the requirements it imposes, and the context of the provision in question show the contrary. The provisions now before us were among the additional made by the Transportation Act, 1920, and the term 'public interest' as thus used is not a concept without ascertainable criteria, but has direct relation to adequacy of transportation service, to its essential conditions of economy and efficiency, and to appropriate provision and best use of transportation facilities, questions to which the Interstate Commerce Commission has constantly addressed itself in the exercise of the authority conferred. So far as constitutional delegation of authority is concerned, the question is not essentially different from that which is raised by p1rovisions with respect to reasonableness of rates, to discrimination, and to the issue of certificates of public convenience and necessity. (Intermountain Rate Case, 234 U. S. 476, 486; Railroad Commission v. Southern Pacific Co., 264 U. S. 331, 343, 344; Avent v. United States, 266 U. S. 127, 130; Colorado v.United States, 271 U, S. 153, 163; Chesapeake & Ohio Ry. Co. v. United States, 283 U. S. 35, 42" 287 U. S. at 24-25).
In Panama Refining Co. v. Ryan (293 U. S. 388), Chief Justice Hughes emphatically stated (293 U. S. at 421): "Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the National Legislature cannot deal directly. The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicability, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply. Without capacity to give authorizations of that sort we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility."
The Chief Justice subsequently employed virtually the same language in United States (295 U. S, 495).
The proposed bill deals with difficult and complex industrial situations. A careful and deliberate procedure has been provided; orders of the Board may be entered only after hearing. The draftsmen have been careful and painstaking to make the standards as definite and specific as the conditions with which they have had to deal permit, without imposing upon the diversities of American industry inflexible and unworkable rules provocative of serious industrial dislocations. These standards are well within constitutional limitations, assuming, of course,
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that constitutional limitations are to be construed to make a constitutional democracy workable and not to render it impotent.
Senator WALSH. I am very much impressed with your statement and with your opinion, for the reason that the court, in the past, finding so much of the labor legislation unconstitutional was due to the fact that it was inclined to look upon labor legislation as an interference with the police power of the several States, and that they gave little attention to the interpretation of labor legislation with relation to interstate commerce. I rather agree with you. That is a fair interpretation of the way the court has, in the past, looked upon that labor legislation.
Mr. JACKSON. I think that has been the great defect in the judicial treatment of labor legislation, the tendency to see in it only its local aspects and not to see its far-reaching aspects.
Senator WALSH. An attempt to prevent the Federal Government from interfering with what local social objectives a State may or may not desire for its own ends.
Mr. JACKSON. That is right.
The CHAIRMAN. Mr. Jackson, you made a statement about the added legal strength that would be given to a child-labor bill if it should be passed as a part of legislation defining unfair practices in other fields of labor. I want to see if I clearly get the idea that you advanced.
The original child-labor opinion in the Dagenhart case was decided by a majority of five to four. The majority took the position, did they not, that the regulation of the labor of children in States could not be in any manner connected with interstate commerce?
JACKSON. Yes; that is right.
The CHAIRMAN. The majority also took the position that it did not tend to burden interstate commerce?
Mr. JACKSON. Yes.
The CHAIRMAN. If I get the idea which you have advanced it is this, that while the labor of children might not be sufficient in the quantity of goods produced to create a burden on the free flow of interstate commerce by reason of maladjustments, that the cumulative effect of the product of child labor, or the evil result of long hours and sweatshop labor conditions might all, taken together, create a burden on interstate commerce, and that thereby even the majority opinion of the Supreme Court in the child-labor case cannot necessarily preclude the passage of this bill, which has gathered together other labor practices; in other words, that the amount of goods produced, the seriousness of the complete maladjustment on account of the cumulative effect of all other labor practices might affect interstate commerce even so as to reach the ideas of the majority in the Dagenhart case?
Mr. JACKSON. Yes. It affords a ground for distinction, a thing which lawyers are fond of, so that even if a court were not willing directly to overrule Hammer v. Dagenhart, as they overruled the minimum-wage case, the court might very well say, "We see a difference." In the child-labor case Congress was simply dealing with one small phase of a labor problem and plainly were interested in the local employment of a child rather than the interstate effect on commerce, while here we have before us a comprehensive effort to protect commerce against all unfair practices.
The CHAIRMAN. In other words, if the practice of child labor, if the practice of unnecessarily long hours, if the practice of sweatshop
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wages all contribute largely to reduce the purchasing power of the workers of the Nation that might, in itself, be considered to create a burden on interstate commerce?
Mr. JACKSON. Yes.
The CHAIRMAN. While one of those phases, taken alone, might, to some minds, not produce a sufficient effect in connection with bringing about a maladjustment of interstate commerce.
Mr. JACKSON. Yes.
The CHAIRMAN. What I wanted to get clearly in the record was that even if it was not wholly possible to conceive that those who stood for the majority opinion in the Dagenhart case would see a difference when we approach the subject by regulating a number of labor standards which, in the aggregate, would materially affect interstate commerce, so as to satisfy their demand as to the effect upon interstate commerce.
Mr. JACKSON. Yes. In the Dagenhart case the court said: "This act which we have before us does not affect interstate commerce materially, it affects local social conditions." And for that reason, focusing their view on the local conditions alone, they said it was void as a regulation of interstate commerce. Now, you cannot view this bill without seeing that its purpose is to regulate interstate commerce, where you have this variety of unfair practices included.
Senator WALSH. Is not the theory upon which this bill is based that a State may produce, under whatever labor conditions it chooses, any kind and all kinds of goods or profit without interference by the Federal Government so long as those goods never cross a State border, but the moment one box of hosiery, one hat, or one ton of coal passes a State border that moment the Federal Government has control over the working conditions in the establishment, or the place of production in the particular State?
Mr. JACKSON. Well, it does not go quite as far as that in one respect, and it goes a little further in another respect.
Senator WALSH. Let me have your views on that.
Mr. JACKSON. The movement of the box of hosiery atross the State line would not give the Federal Government control in the factory except to the extent of practices that affected interstate commerce, as hours of labor, amount of wages, and so forth.
Senator WALSH. Sweatshop conditions?
Mr. JACKSON. Yes. That is, there might be many things in the factory that would not be regulated.
Senator WALSH. it would regulate almost anything outside of sanitary conditions and working conditions, would it not?
Mr. JACKSON. Yes; those are purely local things. There would be one exception to the statement in this respect, that even though the goods did not cross the State line, if those goods came into competition to a substantial extent with interstate commerce the labor conditions attending their production would be subject to regulation under this bill.
Senator WALSH. Not only that the goods are moved from one State to another but that they come into competition with goods producedunder somewhat better or worse conditions in another State.
Mr. JACKSON. That is right.
The CHAIRMAN. You mean within the scope of the opinion in the Shreveport case.
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Mr. JACKSON. Yes.
The CHAIRMAN. It would not be all competition, but it must be of such a gubstantial nature as actually to affect the free flow of goods in interstate commerce.
Mr. JACKSON. Yes.
Senator WALSH. Of course, the wages are a very important factor affecting free competition.
Mr. JACKSON. Oh, yes; of course.
Senator PEPPER. Mr. Jackson, let us suppose that products in textile mills were being produced in an area where there was some contagious disease so that those goods might possibly transmit that contagious disease into the channels of interstate commerce, do you think there would be national power to prevent the contamination of the channels of interstate commerce by such products?
Mr. JACKSON. I do not think there is any question about it. In fact the court has held that to transmit diseased plants, diseased animals, or disease-bearing textiles could certainly be forbidden to enter the channels of interstate commerce.
Senator PEPPER. So that what really is sought as the purpose of this bill is to fortify ourselves against the objectionable contaqmination of the channels of interstate commerce?
Mr. Jackson. Yes.
Senator PEPPER. Now, I would like to have from you a sort of succinct statement about three things: First, teh general nature of this bill as if youe were explaining this legislation to a layman somewhere. State, in a short paragraph or sentence or two the general nature of the bill that we are now considering.
Mr. Jackson. Well, you have given me quite a large order Senator Pepper. To explain this bill to a layman I would say was quite a task.
Senator WALSH. We willknow it better after you explain it section by section.
Mr. JACKSON. Yes. You might say, in general, that this bill takes certain conduct which is considered bo be oppressive in teh production of goods for sale in interstate commerce, and which is oppressive under any circumstances, and outlaws that conduct; that is to say, child labor, spied-upon labor, strike-breaking labor.
Then it establishes certain minimums for waqges and maximums for hours. But the bill recognizes that you cannot take the entire industry of the United States, with all of its geographical diversities and diversities within industries and suddenly clamp on to it a standard that is uniform every place. Therefore, while it enacts a floor, you might say, below which wages should not go it requires the administrative Board to study these industries and apply the act to particular industries, localities, and employments as rapidly as it can without throwing people out of work or disrupting industry.
Senator WALSH. And without any further approval by Congress.
MR. Jackson. Yes.
Senator WALSH. We have delegated the power for them to fix these standards?
Mr. JACKSON. You have delegated the power to apply a minimum which is fixed by Congress.
Then the bill further attempts to protect interstate commerce from these labor practices which provoke violence and strikes and thereby stop or burden interstate commerce, so as to utilize the benefit of the Supreme Court decisions sustaining the Wagner Act.
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It also attempts, under the philosophy of the antitrust laws, to protect the man who is engaged in interstate commerce on a fair and lawful basis from the competition of those who would go into it on an unfair basis. I think, as we go through it, taking the principal key sections of the bill it will be more apparent just what has been attempted.
Senator PEPPER. You have answered practically the second and third inquiries I attempted to make. The second was the general situation to which it is applicable. The third was the means which are employed in this bill to achieve those purposes. Now, the last one involves the question of the delegatability of power, and in that regard, as I understand it, the bill itself lays down the principles. The applicability of those principles to varying situations rests upon questions of fact which are ascertained and determined by a quasi-judicial body, which is the Board.
Mr. JACKSON. Yes. If you read this bill, you may very reasonably say, "Well, that delegates a great deal of power", but if you go back and read the Interstate Commerce Act and could eliminate from your minds the way it has been applied you would see that there is delegated to that commission pretty nearly all the power in the world.
Senator PEPPER. Yes.
Mr. JACKSON. The attempt has been made in this bill to lay down as definite standards as it is possible to lay down, considering the subject matter. Now, when we are dealing with railroads iunder the Interstate Commerce Act you do not say, "The rates shall be so much", you say, "The rate shall be a just rate, a reasonable rate and a nondiscriminatory rate", and you delegate to somebody the power to fix that.
Senator PEPPER. And the Interstate Commerce Commission under that authority fixes the rates of all kinds of commodities, does it not?
Mr. JACKSON. That is right.
Senator PEPPER. In all sections of the country, under all kinds of conditions, by constantly applying these principles to various facts?
Mr. JACKSON. Yes.
Senator PEPPER. The Motor Carrier Act of 1935 provides that persons may engage in interstate commerce as the carriers of persons and property for hire by motor vehicles. The Congress does not name those people who may exercise that privilege.
Mr. JACKSON. No.
Senator PEPPER. It leaves that entirely to the Interstate Commerce Commission.
Mr. JACKSON. All of the utilities of both the State and Federal Governments are required to get certificates of public convenience and necessity. You leave it to an administrative Board to investigate the particular locality in which it is proposed to operate and determine whether it is for the public convenience and necessity that they shall have the right to operate there. There is no other way, as government becomes complex, in which the Congress can effectually function, and it seems to me that the Congress can use its powers most wisely in establishing general principles and delegating power to somebody in the application of the details.
Senator PEPPER. In other words, the only protection that any industry has against severe discrimination is this quality of flexibility that the law has?
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Mr. JACKSON. Yes. You have in all cases of legislation constitutional objections that come at you from two directions. If you enact a Nation-wide inflexible rule so definite that it binds everybody, the thing that will happen to you constitutionally is that the worst case of hardship that can be found in the United Statesill be seized upon by the lawyers and taken before the Supreme Court to show that your law violates due process by being unreasonable, arbitrary, and capricious. They will then say, "This is an arbitrary law." On the other hand, if you delegate some discretion to a board so that you will avoid those cases of hardship, as this bill attempts to do, the same lawyers then come back and say, "Oh, well, that is an unconstitutional delegation of power." You are going to face that argument one way or the other, no matter how you fix it, but if you fix a reasonble delegation accompanied by reasonable standards you have the best chance of having that law sustained, and not only that, but you have the best chance of having a fair, workable law. That has been the attempt here, to set down as reasonable and exact standards as the subject matter admits of. Of course, perhaps, after you have studied the matter you may find that more definite standards can be applied, or you may find that the delegation should be restricted in some respects, but the attempt here has been to follow a fair, middle-of-the-road course.
Senator PEPPER. Now, if the child-labor provisions of this act should come again before the courts for review it is entirely possible that the Government's position might be strengthened in these respects over what it was in Hammer v. Dagenhart, might it not? First, the general provisions of the bill applicable to a situation similar to that all over the country; second, the hearing that is being conducted now by the joint committee will build up the record, and, third, the evidence which will be taken in a sort of judicial manner by this Board which would eventually promulgate the regulations which would be subject to review by the court, in all probability.
Mr. JACKSON. Yes; the board would build up a substantial amount of evidence, I expect, that would be available.
Senator Pepper. And then since the Dagenhart case a vast amount of data has been accumulated which will be applicable to the situation
Mr. JACKSON. And then in addition to the Dagenhart case you have the approach to this problem through the question of restraining unfair competition, and you have also the benefit of the approach through the theory of the Kentucky Whip and Collar case, which was the case in which they excluded prison-made goods because of the laws of the State into which they went. This bill attempts to gather up every constitutional theory which can sustain this act and put every constitutional support that we can find back of it.
Senator PEPPER. Now, one last question. Proceeding on the matter from a legal point of view, the vast majority of the situations affected by this bill are admittedly within the exercise of national power, are they not, by virtue of all the decisions of the Supreme Court?
Mr. JACKSON. That is right
Senator PEPPER. It is only in the fringes of the circle, as it were, that there may be here and there questions of doubt?
Mr. JACKSON. Yes.
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Senator PEPPER. Those situations are at least doubtful, because, for instance, with respect to the child-labor provision there is at present one member of the Court, Mr. Justice Brandeis, who upheld the position that the Government would take now, and Mr. Justice McReynolds who was on the other side in the Dagenhart case. So the Justices now are equally divided, as far as that is concerned.
Mr. JACKSON. That is right.
Senator PEPPER. There is a probability that even those situations would be determined differently by the Court now, but if they would not be so determined the other provisions of the bill would authorize action by the Board and would not affect the general effectiveness of the act.
Mr. JACKSON. Yes; that is right.
Representative KELLER. Mr. Chairman, I would like to ask a question.
The CHAIRMAN. Mr. Keller, may I clarify one thing? I just want to inject this: You have talked a great deal about the provisions for delegation. You have, of course, read carefully the opinion in the Minimum Wage case.
Mr. JACKSON. Yes.
The CHAIRMAN. That the two States recently decided.
Mr. JACKSON. Yes.
The CHAIRMAN. Is it not true that the provision for powers to be given this Board with reference to determining the circumstances under which minimum wages should be put into effect is the same as that upheld by the Supreme Court in the Minimum Wage ease from the State of Washington?
Mr. JACKSON. Very much so.
Representative KELLER. I understood you to say that there might be such a thing as a basic minimum wage below which no one should be permitted to go.
Mr. JACKSON. Yes.
Representative KELLER. It would require very considerable time would it not, for this Board to set the different minimums fof the various divisions of our industries?
Mr. JACKSON. I suppose it would take some time. I wouid not know just what time it would take, but it would take time, of course.
Representative KELLER. Why not set some such minimum wage in this bill which would act as a minimum until a fair minimum wage could be established by the Board?
Mr. JACKSON. Well, if you did that you would run the risk of setting a minimum which would be in some particular case a great hardship, and of having your right to fix a minimum tested in the courts under its most unfavorable aspect as a violation of due process.
Representative KELLER. Nevertheless, if you empower your Board to determine that, before the courts have a right to take it under consideration, and permit the man who feels he wants to come and have a hearing before the Board, it precludes the power of the court to grant an injunction to prevent such action.
Mr. JACKSON. Perhaps I do not know what you mean. I thought you meant to enact a rigid minimum wage for the entire United States. If you meant to have it apply only as the Board saw the circumstances to warrant it, then you would have practically what this bill does.
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Representative KELLER. I got the impression, from the answers that you made, that there might be such a thing as an agreed basic wage below which no one would be permitted to go in any industry anywhere. If that can be done, it seems to me it would be very advantageous to include that in the bill, and then if anybody who felt himself aggrieved should have the power to come before-not before the court - but let the bill provide he may come before the Board show that he is injured and receive his proper reduction of the minimum.
Mr. JACKSON. Well, he can now come before the Board. In fact, the wage will not be made effective as to him until there is a hearing in which his particular circumstances of hardship, if he have any, can be heard.
Representative KELLER. I do not want to be insistent upon it, but will that not really tend, Mr. Jackson, to draw out to a very great extent the entire subject of the minimum wage?
Mr. JACKSON. There will probably be some delay in accomplishing it. Of course, in many industries you have pretty well agreed bases established where they have real collective bargaining. For example, in the bituminous coal industry you have agreements arrived at between the employer and the unions which establish differentials the different working conditions, so that when the Board begins to make these miuimum wages applicable they will be able, in many instances, to deal with entire sections, such as the bituminous section of western Pennsylvania, and with an industry which already has a standard set as against certain of what we may term chiselers, so that they will not have in all industries so big a problem as it may look upon its face. However, I grant you that it is a good deal of a problem to get this standard into effect in the entire United States.
Representative KELLER. Of course, I agree heartily with you on the point that where we have union labor they do, as a matter of fact, fix their own minimum, but where the labor is not unionized they do not fix their minimum. My understanding is that less than 10 percent of the labor in the country is unionized, And they tiore mirimums exist for less than 10 percent of the entire labor engageed in industry.
Mr. JACKSON. I suppose that is true.
Representative KELLER. In other words, it does seem to me that if we could start out with a basic minimum below which no one would be permitted to go it would be starting out in the right direction.
Senator ELLFNDER. Mr. Jackson, in the course of your talk just now you mentioned the Wagner Labor Act. Will not this act, measure, conflict with or supersede the Wagner Labor Act?
Mr. JACKSON. I do not think of any respect in which it would. I do not know just what you may have in mind.
Senator ELLINDER. Suppose the employer and employee should agree on a certain minimum wage, and various other things that related to this act, and that the Labor Board should not find that to be accord with proper practices, what would then happen?
Mr. JACKSON. I cannot conceive of it happening. You are considering a case where there was true bargaining between the employer and employees?
Senator ELLINDER. Suppose the employer and employees in a certain given industry should agree on minimum wages, on minimum hours, and be satisfied with them, and that they would be more than
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we will say, the wages and hours that were fixed by the Board, what would then happen?
Mr. JACKSON. Well, I think if they agreed on anything below the limitations which the Congress has fixed, they can be made applicable only where it is found that they have effective facilities for collective bargaining. You will note in section 5 that it starts off [reading]
Whenever the Board shall have reason to believe that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, wages lower than minimum fair wage are paid to employees in any occupation,
and so forth.
Senator ELLENDER. In that event this bill would supersede the Wagner Labor Act, would it not?
Mr. JACKSON. No, this gives effect to collective bargaining, as I understand it. I do not think you are in any danger of collective bargaining reaching a wage below the minimum.
Senator ELLENDER. No, but I would like to find out what act would govern should there be a conflict.
Mr. JACKSON. Well, I haven't studied that question. Perhaps Mr. Pope, who has worked on the actual draft of this bill, has studied the possible confliet between the two, otts. 1 so,, I wiowh bu ghi4 to have him give the information. I haven't studied the possible conflict, because I cannot see, in actual practice, the possibility of a conflict between the two.
Senator ELLENDER. You get the idea that I have in mind, do you not, Mr. Jackson?
Mr. JACKSON. The situation seems to be this, that the Board could if it found a collectively bargained agreement to be unfair, disregard it.
Senator ELLENDER. Well, how could they determine that it was unfair if both the employer and employees agree that it is fair? After all, this bill is to protect labor, is it not?
Mr. JACKSON. That is why I told you that I think it is a highly improbable thing that such a conflict will arise.
Senator ELLENDER. Suppose a given industry comes to the conclusion, as between employer and employees, that "We are satisfied with certain minimum wages, certain hours", in a given business? After all, if they are satisfied why should the Board have anything to say about it?
Mr. JACKSON. Well, it is conceivable, of course, that in collective bargaining the bargaining agents will, either through lack of zeal or less worthy motives, agree upon a wage that would be below a minimum, but as a matter of actual practice the minimum wages established by the Authority are usually almost invariably the very floor that any free labor will accept. Now, if wages agreed upon did not get up even to the established fair wages, then I can conceive of a conflict, but I think that is an improbable situation, but if it occurred, I think that the Labor Standards Board under this act, would have power to hold that the two sides had agreed upon what was not a fair wage.
Senator ELLENDER. No matter if it affected the whole industry and the employees would be satisfied and the employer would be satisfied?
Mr. JACKSON. I think that would make no difference.
Senator PEPPER. I think the paper said the other day that the woman who was pulling the plow in a certain State did not record any protests.
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Mr. JACKSON. No; and probably it was very unhealthy, as I read the statement.
Representative CONNEBY. Mr. Jackson, as I understand it, there are two points in regard to the child-labor provisions in this bill. I mean, there was the Hammer v. Dagenhart case, which was a direct proposition of saying that any goods, wares or merchandise manufactured within 90 days before its shipment would be barred from commerce if a child under 16 has been employed in the manufacture of it. Under the Wagner-Connery Act we held that a labor dispute was interference with the free flow of interstate commerce. Now, do you hold that oppressive wages and child labor are causes of a labor dispute which is interference with the free flow of interstate commerce?
Mr. JACKSON. They may be, yes; the Board may find that
Representative CONNERY. In other words, you have two bases.
Mr. JACKSON. More than two. If we go through the bill I think we will come to the different bases, as we take up those provisions, because the different provisions of this bill are framed under the constitutional theory of particular cases, as I pointed out earlier, and if we go throulgh the key provisions of this bill, I think we will quite quickly see the different approaches to the question that you have in mind.
Representative CONNERY. Now, along the line of what Mr. Keller said about minimum wages under the bill as it is drawn now, suppose you set in that bill a 40-hour maximum week and then said that the Board could not set lower than 30 hours a week, and then said that the wage should be 40 cents an hour or $16 a week, up or down, is there any danger there as to the delegation of power to the Board?
Mr. JACKSON. I filed a brief on that point.
Representative CONNERY. Referring again to what Mr. Keller said, suppose you set 40 cents an hour and a 30-hour week without it being revised up or down by the Board, what about that?
Mr. JACKSON. Then your due process problem would arise, if it were proved to be arbitrary and unfair in some particular case.
Representative CONNERY. Now, along the line of questions by Senator Walsh, if a garment factory in New York manufactures garments and they only sell those garments in New York City, they make them in New York City and sell them in New York City, if, because of competition, they pay lower wages, cheap wages, and work long hours, and that comes in competition with Indiana or New Jersey, or some place else, that will aflee't interstate commerce and the Board can regulate those works, can it not?
Mr. JACKSON. They can be reached, because the Congress has the power to foster interstate commerce as well as to regulate it, and if you find that commerce between Indiana and New York is based on labor standards that we like to consider American standards, and you find that that interstate commerce is being choked off and stopped by some local practice, you have the power to reach it under the doctrine of the Shreveport case, even though the competition is wholly within the State.
Now, let me tell you how far the courts have gone in that respect. The State of New York granted a charter to the New York Central Railroad that it could operate between two points and that it must not charge more than a certain rate of fare - I have forgotten what it
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was-2 cents, we will say, for example-and the Interstate Commerce Commission set a rate of more than that - 3 cents, we will say - though I am not sure what figure it was. The State of New York said, this is our State, this is our corporation, it is our baby. We told it that it could only charge 2 cents, and that is the condition of its charter. The Supreme Court said, No; the Federal Government may regulate your intrastate rate, because the charging of only 2 cents would be a discrimination and would affect the carrier's capacity to perform its interstate functions. So that if you have an industry in the city of New York that is, by its unfair labor practices, breaking up, choking or stifling fair interstate commerce, then you have a right to bring your powers to the protection of fair interstate commerce.
Representative CONNERY. Now, we also have a bill, haven't we, similar to the Hawes-Cooper Act on prison-made goods, that where goods are shipped into a State, where the goods are made under oppressive labor conditions, cheap wages, long hours, and that State has a law against it the case will be settled in the State?
Mr. JACKSON. You have such a bill pending, and there are other bills pending on the same theory.
Representative CONNERY. Then there are three approaches to the child-labor proposition: Under the Hammer v. Dagenhart case, if the court threw that out as they did under the 5-to-4 decision you would still be able to reach child labor through the interference with the free flow of interstate commerce and oppressive labor practices, or in this other way where we divest ourselves of that character of commerce going into the State.
Mr. JACKSON. That is right.
Senator ELLENDFR. Mr. Jackson, suppose in the case cited to you by Congressman Connery that the prices for the goods manufactured in Indiana should be the same as the prices of the goods offered in New York, what would then happen?
Mr. JACKSON. If they were the same price?
Senator ELLENDFR. If they were the same price.
Mr. JACKSON. The same quality?
Senator ELLENDFR. The same quality.
Mr. JACKSON. Well, it would depend upon whether there was unfair competition by reason of wage cutting.
Senator ELLENDIFR. Would prices be the governing factor in determining competition?
Mr. JACKSON. They might, although of course quality might enter into it or some factor of that kind, but you would have to establish substantially unfair competition before you could reach the New York business.
Representative HARTLEY. Mr. Jackson, in your opinion would the provisions of this bill apply to retail stores of the chain-store variety, that is, those stores that sell in the retail market but who move goods across State lines?
Mr. JACKSON. Well, you would have to establish first that they were engaged in interstate commerce to a substantial extent in themselves, or you would have to establish the competitive feature I have mentioned. It is hard to conceive of the latter situation arising whereby local businesses would be subject to this law.
Representative HARTLEY. Well, take for instance the A. P. grocery stores, or the National Grocery, or the Woolworth stores - during these recent labor disturbances we had one of the sitdown-strike
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demonstrations in the Woolworth stores-we will say that certainly they are in competition with stores that are engaged in interstate commerce; I would like to find out whether or not you consider the provisions of the bill to apply to such an organization?
Mr. JACKSON. Before you would be able to reach a situation of that kind you would have to find that the practices did, to a substantial degree, affect interstate commerce. If you do it does not make very much difference whether it is a chain store, a group of manufacturing plants, or an individual. You reach the practice rather than the type of business. I think it would be quite apparent as we go through this bill, if we take that up, the extent to which it goes.
Senator HOLT. Mr. Jackson, before you proceed with the bill I would like to ask you how this bill resembles the National Recovery Act in any of the provisions.
Mr. JACKSON. It is easy to see how it does not. It does not touch trade practices at all, which was the cause, of a large number of the ational Recovery Act administration's activities. This does not touch the trade practices at all. This does not have any element of delegation to private industry to establish its own code. I should say that the resemblance of this act to the National Recovery Act is very, very slight. About the only thing that they have in common is that they both try, to a certain extent, to reach labor practices, but this is distinctly not an N. R. A., nor anything like the N. R. A.
Representative KELLER. Before we leave this subject may I ask you a question? Mr. Connery was bringing out an idea that we have been discussing over in the textiles investigation for some time, and the bill at present existing, soon to be reported to the full committee, contains exactly what I am driving at, and that is that the board has the perfect right to pass upon these matters before the court can review the action, or before the court can interfere one way or the other, through injunction or otherwise. It does seem to me that we may be able to apply the same thing here.
Senator HOLT. I have one more question. Does this board do in a mandatory way what the N. R. A. tried to do in a voluntary way?
Mr. JACKSON. I could not answer that, Senator, for I do not know what the N. R. A. tried to do in a voluntary way.
Senator HOLT. I mean in the regulation of labor practices.
Mr. JACKSON. I suppose that they tried to reach some of these same objectives, but their procedure was entirely different. The procedure here is more to be compared to the procedure, I should say, under the Wagner Act, with hearings before the board to determine the particular industry and the particular circumstances. I do not see any parallel in workings between this and the N. R. A. at all. I know it is popularly called a new N. R. A.
The CHAIRMAN. You mean it is popularly called that by those who are against the regulation.
Mr. JACKSON. Those who are against both.
The CHAIRMAN. Those who are against the regulation to provide minimum wages and maximum hours, and the regulation of child labor.
Mr. JACKSON. Yes.
The CHAIRMAN. You know, do you not, that the Senator who offered the bill in the Senate voted against the N. R. A. each time it came up?
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Mr. JACKSON. Well, I would be glad to take his word as to that.
The CHAIRMAN. That is correct.
Mr. JACKSON. I have not examined the record.
The CHAIRMAN. The N. R. A. provided for voluntary action on the part of the employers without giving the Government the right to fix the minimum wage itself.
Mr. JACKSON. Yes.
The CHAIRMAN. And this is a bill which is intended to give the Government of the United States, represented by all of its people, the right to fix minimum wages and maximum hours, and not to delegate that to any group of employers, for any one group of American life.
Mr. JACKSON. There is certainly no comparison between this bill and N. R. A. in fact.
Representative CONNERY. Mr. Jackson, also there is no provision in this bill that provides that employers can reach wages and hours for their employees without the employees having anything to say about it, as they did in the N. R. A.
Mr. JACKSON. They certainly cannot. There is nothing of that kind in this bill. This is distinctly an effort to take into the control of the Nation the wage and hours standards in regard to goods which will move in interstate commerce, and is not an effort to give industry the control of its own standards in interstate commerce, or elsewhere.
Representative CONNERY. No opportunity for the cats to write the codes for the mice.
Representative WELCH. Mr. Jackson, could the board, under the provisions of this bill in its present form, establish a minimum wage and maximum hours in a given industry that would be different in the several States?
Mr. JACKSON. Yes; it may apply a particular minimum to a particular employment.
Representative WELCH. For instance, the shoe industry.
Mr. JACKSON. That is right.
Representative WELCH. Can they fix a mininmum wage in the State of Massachusetts in a given industry which is different from the minimum wage in the State of Indiana?
Mr. JACKSON. That is the whole purpose of the flexibility provision, so that you will not lay upon an industry an inflexible rule that disregards local conditions. You may have an employment in a city as against an employment in a section where living is cheaper.
Senator BORAH. Would that rule apply also to large cities, that they can fix different minimum wages in one large city than they would in another?
Mr. JACKSON. I see no reason why it could not be done under this
Representative WELCH. Why should it be done?
Mr. JACKSON. Living conditions are considerably different in different communities, and it is desired, as you will see when we get to the discussion of the standards set up in this act, that they are to consider the cost of living, the fair value of the services, and so forth. The prevailing rate of wage in the community may be different.
Representative RAMSPECK. Mr. Jackson, as I understood your previous statement, the whole theory of this bill is based, in effect, on commerce. It may not only be possible but necessary to fix different
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wages, might it not, because in some cases the higher wage under competitive conditions would be discriminatory?
Mr. JACKSON. Yes. The wages that are fixed by collective bargaining - take for example the bituminous coal industry - the schedule which they agree upon by collective bargaining takes into consideration different conditions within the industry. For example, pick mining and machine mining-there is a differential in wage. I do not recall what it is, but there is a differential whether they are working a thick vein or a thin vein, because if you did not make a differential, if the labor cost were bound to be fixed the same for both, you might completely close one type of mine and throw a lot of people out of work. That is why a good deal of flexibility has been given here in the application of these minimums, so that, as I said, a body of experience can be built up and you will not plunge headlong into a task that creates an injustice to the people.
Representative RAMSPECK. Without that flexibility there would be danger of the law being held unconstitutional also, would there not?
Mr. JACKSON. There would be danger of the law being held unconstitutional and danger of its doing a great injustic.
Representative CONNERY. Mr. Jackson, referring to Mr. Welch's question and Mr. Ramspeck's question, as a practical matter under this bill, with the advisory board set up, take the shoe industry that Mr. Welch is speaking of, a manufacturer from New England and a manufacturer from St. Louis, which are the two competing places, you might say, in the United States, they could get the union men from Massachusetts and the union men from St. Louis, and then somebody representing the public, and they would be permitted to go out and try to reach an agreement among themselves and then come before the board and practically work out an agreement on wage differentials and everything else in the industry, could they not?
Mr. JACKSON. They probably could, but the board is not bound by anything that this advisory committee brings up.
Representative CONNERY. They could fire them the second day. It is not like the code.
Mr. JACKSON. It is not like the code at all.
The CHAIRMAN. That is the provision that is in the New York minimum wage law which was sustained by the Supreme Court of the United States.
Mr. JACKSON. The advisory committee.
The CHAIRMAN. Yes.
Representative GRISWOLD. The sponsor of the bill in the House stated it was his opinion that the railroad employees and train service would not come under this bill. As I read the bill now it seems to me that the definition of the legislative intent would definitely bring them within the limits of the bill. What is your opinion as to that?
Mr. JACKSON. You are right.
Representative GRISWOLD. As to the legislative intent in the bill here you refer to occupations in interstate commerce.
Mr. JACKSON. You are right.
Representative GRISWOLD. And later on on page 43, and on different pages in your definition where you make it more specific than the employees in interstate commerce, you say anything that would affect the flow of commerce. Certainly these men in the railway train service would affect the flow of commerce between the States.
Mr. JACKSON. Yes.
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Representative GRISWOLD. That is my understanding of it, in contrast to the understanding to the sponsor of the bill in the House.
Mr. JACKSON. Well, you may be right.
Representative CONNERY. Mr. Jackson, if what Mr. Griswold said is so then is not the gasoline attendant in a filling station in interstate commerce, is not his occupation in interstate commerce, or is it in service?
Mr. JACKSON. I would not think that there was actually any interstate commerce in such a case.
Representative CONNERY. Because he is not traveling up and down the line like the railroad men.
Mr. JACKSON. If he were attending a gasoline filling station for bus line moving through he would get within the railroad cases, but I think that a local gasoline station man who serves those who come from out of the State as well as those within the State, and whose service was wholly local, would not be an interstate-commerce factor.
Representative CONNERY. Well, certainly under this, as Mr. Griswold suggested, we would affect the men who make engines and who make cars for the railroad, would we not, in production?
Mr. JACKSON. You would affect anything in production that moved in interstate commerce as a commodity.
Representative GRISWOLD. It would go further than the act of production limited it, as Mr. Connery suggested. If a man makes a repair and that engine is delayed in commerce under this bill, as I understand it, he would be affecting the flow of commerce.
Mr. JACKSON. That is true.
The CHAIRMAN. Under the bill as it is written, whether the enginemen, the trainmen, and the conductors, would ever be included in the operation of the law or not would depend upon whether or not the board later reached the conclusion that it was in the interest of the public service, to the men and to the business that they should be included.
Mr. JACKSON. That is right.
The CHAIRMAN. So under the bill as it is now written that committee may decide as to what shall be done, if there were groups of railroad employees who are compelled to work long hours and who desire a maximum beyond which they should not go, it would give the right to the board to include them, would it not?
Mr. JACKSON. There is no compulsion on the board to apply the wages and hours of any industry until they find that it is needful and find that it can be done without throwing people out of work. So it does not automatically apply to any particular kind of labor, but the definition of employer and employee is broad enough to include a railroad employer or a railway employee. Of course, it would not be affected by the law unless the Board saw fit to make it applicable after a hearing.
The CHAIRMAN. Of course, there is very little reason, so far as those features are concerned, why the employees who have the present arrangements, that is, the engineers, the conductors, and the others, there is very little reason why they would resent any benefit, if anybody would resent any benefit by bringing them within the scope of the law.
Mr. JACKSON. The minimum-wage provision is not applicable to them.
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The CHAIRMAN. But if there should happen to be employees, as I have reason to believe there are from letters I have in my files since the bill was offered, working for railroads who actually need the benefit of it, they could be brought under it?
Representative GRISWOLD. Will the Senator yield there? He speaks of the enginemen. We will assume, for instance, where they have some short line, under one section of this bill, I do not just recall just which one it is now, it provides that a man who is deprived of his tenure of employment can make his appeal. Under this bill, despite the collective bargaining of the organization, as I read it, one man can raise the question of his tenure of employment and wreck the whole collective bargaining proposition, because you give the definition of an individual in a way that the term shall be considered in the singular and plural.
Mr. JACKSON. Did you say "tender" or "tenure"?
Representative GRISWOLD. Tenure.
Mr. JACKSON. Deprived of his tenure?
Representative GRISWOLD. Yes. I do not know which section it is, but I just glanced at it since I came here.
MR. JACKSON. The employee, in this case an individual, whose work has ceased in consequence of labor disputes, or because of unlawful discharge, would have the right, while he was in that status, that any other employee would have.
Representative GRISWOLD. The section I refer to uses the word "tenure." You understand that all these enginemen, conductors, brakemen, and so forth, through their collective bargaining have certain bases of seniority and other things. Now, if we are going to make the singular and the plural tha same, according to the definition, this one man there could tie up the whole thing.
Mr. JACKSON. I do not see what he could tie up. I do not get what you mean.
Representative GRISWOLD. He may refer the matter to the Board.
Mr. JACKSON. He could ask the Board to give him a hearing. Of course, the provisions are very wide as to permitting hearings, but he could not tie anything up unless he got a favorable decision from the Board.
Representative GRISWOLD. But the Board, to that extent, would enter into it and hold the power over the collective bargaining of these men, would it not?
Mr. JACKSON. No; I do not see that that follows.
The CHAIRMAN. The bill does provide, does it not, that any person who thinks himself aggrieved, if his group comes within the scope of the act, shall have the right to make a complaint?
Mr. JACKSON. Of course, anybody can go to the labor board, or any of these boards with any complaint, but the rights of the employees are intended, by section 23, to be specifically protected for the purpose of collective bargaining. Section 23 of the act reads:
Nothing in this act, or in any regulation or order thereunder, shall be construed to interfere with or impede or diminish in any way the right of employees to self-organization; to form, join, or assist labor orgarnization; to bargain collectively through representatives of their own choosing; and to engage in all concerted activities allowed by the law of the land, and the act shall be construed and applied to encourage and protect the self-organization of employees for the purpose of collective bargaining and mutual aid.
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Now, it is inconceivable that under this act the Board would disregard collective bargaining, if it were fairly and representatively arrived at. There is a power, of course, to deal with some of these subjects that it is not likely the board will exercise. I think we are bound to assume that the appointment and confirmation powers will be exercised reasonably and that a reasonable board will administer this bill.
Representative DUNN. Mr. Jackson, is it not a fact that the intent of this bill is to wipe out the sweatshop, abolishing child labor, and increasing the standard of living for the working men?
Mr. JACKSON. That is true.
Representative DUNN. We do not have any bona fide guarantee that the Supreme Court is not going to declare all the measures in this wonderful bill unconstitutional.
Mr. JACKSON. No, sir.
Representative DUNN. Let us hope they do not. This kind of legislation should have been enacted into law since Adam and Eve came into the world.
Representative WOOD. Mr. Jackson, you mentioned a while ago minimum wages in a given industry in different localities. Take, for example, the garment workers. Suppose the garment workers in St. Louis, Mo., had established a wage of $6 a day through collective bargaining and the garment workers in Pittsburgh, a town of similar size had established a wage of $4 a day, or $3 a day, what mechanics would the Board use in establishing a minimum in those two towns? Do you think the board would establish a higher minimum in St. Louis than it would establish in Pittsburgh, or do you think they would use a yardstick of the cost of living in the different towns, taking into consideration all the wage scales in the two towns?
Mr. JACKSON. Your illustration is so far above the minimums which the Board is permitted to deal with that the situation would not be affected, because the purpose of the minimum-wage bill is not to help the man who already has been able, by collective bargaining, to establish a fair wage.
Representative DUNN. I understood you to say a while ago that the Board would establish different minimums in a given in different localities. Did you not say that?
Mr. JACKSON. That is right; but what I am pointing out to you is that your illustration would not be affected at all, because you will find on page 15 of the Senate bill the limitation "the Board shall not establish a minimum fair wage which in the judgment of the Board will give employees receiving not more than such minimum fair wage an annual wage income in excess of $1,200, or an hourly wage in excess of 80 cents except for overtime, night, or extra-shift work." In other words, the dealing with the minimum wages does not deal with the people getting wages in the higher brackets.
Representative WOOD. The wages received in St. Louis would, in effect, depend on the things that influenced the board in establishing a different minimum there than in the other town that had a $4 scale, is that the position?
Mr. JACKSON. In the first place, the minimum wage is established in the bill by Congress. That is the basis below which any payment will be deemed oppressive.
Representative WOOD. It does not prevent the board from establishing a higher wage than 40 up to 80 cents an hour?
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Mr. JACKSON. The Board may establish a fair wage. The bill provides just what it shall take into consideration. On page 14 of the Senate bill, commencing at line 11, it reads:
In determining and establishing a minimum fair wage for any service or class of service, the Board (I) shall take into account the cost of living and all other relevant circumstances affecting the value of the service or class of service rendered, (2) shall be guided by like considerations as would guide a court in a suit for the reasonable value of services rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid.
Representative WOOD. I read the section. Now is that applicable?
Mr. JACKSON. It is the same as if you sue a man for your services and you haven't any contract, the old rule of quantum meruit would apply, where the service is at the request of the employer with no contract as to the pay, where you call your witnesses to show what similar services receive in other employment. You try to find what a willing seller and a willing buyer will pay for the service. This section lays down the evidence that will be admissible.
Representative WOOD. I want to ask it in another way. Supposing the Board be called upon to establish a minimum for garment workers in St. Louis and Pittsburgh, the wages in St. Louis were $6 a day, or whatever it might be, the wages in Pittsburgh $4 a day, both being arrived at as the result of collective bargaining, what do you think the Board would do? Do you think the Board would establish a similar minimum wage for St. Louis as it did for Pittsburgh?
Mr. JACKSON. I think it would be very likely that there would be a differential between the two places, because the free bargaining agents on both sides had found $6 to be fair and $4 to be fair, presumably, as you went down the scale toward the minimum. Some differential up to the minimum would be fair.
Representative WOOD. You set the differential wage, establishing a minimum between $6 a day in St. Louis and $4 a day in Pittsburgh?
Mr. JACKSON. They have the power to fix the minimum.
Representative WOOD. You think the Board would not be influenced in establishing the minimum?
Mr. JACKSON. Both of those are above the minimum which the Board has the power to fix, so you understand the Board could not affect either of those wage scales.
Representative WOOD. St. Louis might have an organization of 1,000 or 1,500 members that may have a $6 wage and there might be 5,000 other garment workers in St. Louis that have a $2 wage, and similar conditions might exist in Pittsburgh. Now, in order to establish a minimum, if the same conditions, the same number of people were affected by the $4 wage as were affected in St. Louis by the $6 wage, how would they establish a minimum in St. Louis, establish a minimum wage for the 5,000 unorganized garment workers?
Mr. JACKSON. Well, the reasonable value of the services in that community would surely have some force, and the bill directly requires that in fixing the minimum fair wages the board "shall consider the wages established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing." So that the Board is expressly commanded, under this bill, that it should consider your $6 collective bargaining wage in one place and your $4 collective bargaining wage in the other place.
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Representative WOOD. If living conditions and everything were similar in Pittsburgh and St. Louis do you think they would establish the same minimum in St. Louis as in Pittsburgh?
Mr. JACKSON. What was the last part of your question?
Representative WOOD. If the people I am speaking of, affected by the decision of the Board, would ask for a minimmum wage to be established, under the same circumstances and conditions, the cost of living and everything included being the same in Pittsburgh as it is in St. Louis, do you think the Board would establish a minimum wage in each town that is similar?
Mr. JACKSON. If they had the same evidence before them in both places and the same conditions I should think that the same judgment would follow.
Representative WOOD. In other words, if the Pittsburgh people were not able to receive wages up to $6, due to the collective bargaining power, you give the board the power to set either that minimum or to lowering the minimum?
Mr. JACKSON. I understood you to say that the conditions were the same. Now, if you have the same conditions except that the collective-bargaining rate is different in one community than it is in the other, then the Board would have to take that into consideration under the law.
Representative WOOD. And establish the same minimum?
Mr. JACKSON. No; they would have the right to take into consideration and give such rate as they thought was fair. Due to the fact that those two rates were established by collective bargaining, they would have to take that into consideration.
Representative WOOD. If they did not take that into consideration - if the Board did not take that into consideration and established a similar wage in Pittsburgh as in St. Louis, it would work a hardship on the workers in St. Louis.
Mr. JACKSON. If they did not take it into consideration, as the statute has commanded them to do, an appeal can be taken to the court to set aside the order fixing the wage because they had failed to take it into consideration, because the statute directly commands them to take that into consideration.
Representative WOOD. Is there any mandatory provison about that?
Mr. JACKSON. Yes. It says: "In determining and establishing a minimum fair wage for any service or class of service, the Board shall take into account the cost of living", and these several things, among others the wages established by collective labor agreements negotiated between employer and employee. It is just as mandatory as you can make it.
Representative WOOD. We had a good deal of discussion about that, establishing a minimum wage in Pittsburgh of, say, $3.50 or $4 a day, and establishing the same wage in St. Louis where the workers got $6 a day. It would work a hardship on the workers in St. Louis.
Representative CURLEY. Mr. Chairman, there are some members on this committee that have not had an opportunity to read the provisions of this bill, inasmuch as there are 48 pages to it, although I have listened very carefully and attentively to Mr. Jackson in his original statement made to this committee. The thought has come to my mind, induced by the questions put by Mr. Wood from Missouri, as to whether or not the operation of this bill would affect or influence
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the prevailing rate of wages established throughout the various communities in the United States. Would this bill affect the rates as prescribed in the labor organizations by collective bargaining agreements?
Mr. JACKSON. Well, you will have to bear in mind my limitations. I am only a lawyer and not an economist, and the effect that it would have I do not feel competent to say.
Representative CURLEY. I am only a layman; I am not even a lawyer.
Mr. JACKSON. Then on many practical questions you probably have the advantage over a lawyer, because you mind is not littered up with a lot of precedents.
Senator WALSH. Mr. Jackson, does it not appear clearly in the bill that where the annual wage is over $1,200 there is no jurisdiction in this Board at all?
Mr. JACKSON. There is no jurisdiction to affect it at all.
Senator WALSH. So that when a group of employees are receiving a wage of less than $1,200 annually they can go to this Board and ask to have a minimum wage in that industry established?
Mr. JACKSON. Whether that would influence the wage levels I would not be able to say.
Representative CURLEY. I refer to some craft industries in New York, where the prevailing rate is different from that set down in Pennsylvania.
Senator WALSH. The trades that he speaks of, the well-paid craftsmen, would have no application. There is no question of wages at all unless the annual income to the worker is less than $1,200.
Mr. JACKSON. That is right.
Representative CURLEY. That satisfies my question.
Representative GRISWOLD. Mr. Jackson, going back to the garment industry, under the N. R. A., as I recall it, they established a line across the country, on a line with Wheeling, W. Va., and south of that line they had a differential in wages of a dollar less than north of the line, a dollar per week. In Indiana, for instance, a garment factory could move across the river and avail themselves of that differential of one dollar a week less, and some of them did that. Now, under this bill would the Board have authority to establish an arbitary line like that and establish a differential under that arbitrary line? Would they have that authority, whether they might exercise it or not?
Mr. JACKSON. There is a provision in the bill on classification.
Representative CONNERY. Mr. Chairman, I suggest when Mr. Griswold finishes questioning Mr. Jackson that we recess until 1:30 and we can fix the tables in the meantime so that the members can be heard and it will be easy for Mr. Jackson to answer the questions and then he can' go through the bill section by section.
The CHAIRMAN. Will that be satisfactory to the members of the committee, that when Mr. Griswold finishes his questioning we recess until 1: 30? During that time we will try to make a better arrangement of these tables so everybody can get closer to the witness. As soon as Mr. Griswold finishes his questions we will recess until 1: 30.
Mr. JACKSON. On page 26 of the Senate bill is the provision with reference to classifications, which authorizes the Board to classify employers, employees, and employment within an occupation to which
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such order relates, according to localities, the population of the communities in which such employment occurs, the number of employees employed, the nature and volume of the goods produced, and such other differentiating circumstances as the Board finds necessary or appropriate. Now, that gives the Board a considerable power in classification. There is no express power given there to draw a line across the country and call that a classification.
Representative GRISWOLD. Do the implied powers of this Board permit them to do that?
Mr. JACKSON. Let me read the next limitation there -
but it shall be the policy of the Board to avoid unnecessary or excessive classifications and to exercise its powers of classification only to the extent necessary or appropriate to accomplish the essential purposes of the act.
Representative GRISWOLD. Where is that?
Mr. JACKSON. That is at the bottom of page 26. The limitation I just read begins at line 25.
I do not see how a classification as broad as you have suggested could accomplish the purposes of this act where the classification is by employers, employees, and employment, and conditions within the industry.
Representative GRISWOLD. I hope your opinion is correct, but the very fact it says, "but it shall be the policy of the Board to avoid unnecessary or excessive classifications" would be a drawing of a line, an arbitrary line in itself tending to reduce excessive classifications.
Mr. JACKSON. No; I think it would be a classification in itself.
Representative GRISWOLD. Yes; but it would be one classification that would tend to eliminate more classifications which would be excessive classifications, if 1 understand the word "excessive" properly.
Mr. JACKSON. But you see this Board can only function by hearings, and I can hardly conceive of a question being before the Board upon which it could grant hearings that would involve as wide a classification as that. The purpose of the flexibility provisions here is so that classifications can be made in reference to the piirtitulma employment, not a general subdivision of the country.
Now, it should be borne in mind that so far as the oppressive wage is concerned, that is, the wage which is fixed by Congress, there is only one standard fixed for relaxing that wage, and that is where the application of it would tend to throw people out of employment. When you come to the fixing of a fair wage you have a different standard which is its value, and the value of services is something that the courts have been inquiring into for years, and the method of proving the value of services is well established. You prove the different elements which we have been discussing, including the collective bargaining agreements. So that the question of fixing the minimum fair wage is one that proceeds in accordance with very old and very well-established legal procedure.
Representative GRISWOLD. On your theory of quantum merit you would establish a wage the value of which, south of that line which was begun under the N. R. A., would be a dollar less than north of the line, and you would arrive at the same result, for instance, in enforcing the wage scale.
Mr. JACKSON. I do not think you could establish a wage scale for all industries, a differential for all industries by a line drawn across the country in that manner.
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Representative GRISWOLD. Did we not do that under the N. R. A.?
Senator WALSH. Have we concluded?
The CHAIRMAN. We will recess until 1:30.
(Whereupon, at the hour of 12 noon, a recess was taken until 1:30 p. m. of the same day.)
(The hearing was resumed at 1:30 p. m. pursuant to taking of recess.)
The CHAIRMAN. Mr. Jackson, you stated this morning that you would give to the committee an analysis of the bill by paragraphs, and I suggest that we do that. But before we do that, there was some question came up this morning about the regulation, for instance, of retail businesses under this bill, and I doubt if your statement was quite full on that subject. Would you explain under just what circumstances and under what circumstances only, it would be possible for the regulation of retail establishments and small business enterprises to come under this bill?
Mr. JACKSON. I will try to. It was not intended by this bill to apply generally to retailers or to apply to the service trades, such as the filling-station attendant, and the pants presser and small business generally. In fact, there is in it a provision which provides for the exemption of businesses which have a number of employees below some certain figure which the Congress of course may fix.
If it were 15, for example, it would not affect any retail or service trades business with a smaller number of employees under any circumstances.
But then, there are only two ways in which a retailer, for example, would be affected by this bill as it now stands, and disregarding that exemption. One would be the retailer who is located close to a State line and sold his goods by delivery across a State line, and the other would be the case of a local retailer, who by his labor practices and standards was able to affect the interstate movement of goods. In other words, if a merchant in interstate commerce such as Sears, Roebuck should be able to convince the Board that a local merchant's labor standards were enabling him to compete unfairly with Sears, Roebuck, then that local merchant might be required to adopt fair standards. Of course, while that is possible legally, it is very far-fetched as a practical proposition.
Practically, the situation in which a local merchant might be affected would be if he were moving his goods in the course of delivery across the State line to a substantial extent so that he were engaging in interstate commerce; but generally speaking, the policy of the bill is not to include the service trades and small businesses and the retailing enterprises.
The CHAIRMAN. You said something about State lines. Before the law would apply to retailers along State lines they would have to be drawn into it by an order of the Board?
Mr. JACKSON. Oh, yes.
The CHAIRMAN. It is not reasonable to assume that the Board would draw small retailers in because they happened to be in a locality within a few feet of the State line without including others too.
Mr. JACKSON. As a practical proposition, the bill does not affect the retail trades.
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The CHAIRMAN. And the bill shows on its face, does it not, from the beginning to the end, that it is intended to provide standards for those business units that are actually engaged in and substantially and materially affecting interstate commerce.
Mr. JACKSON. That is right.
The CHAIRMAN. Leaving to the States and the local communities themselves, the power of regulating the small business units that affect the local community only.
Mr. JACKSON. That is a correct statement of the purpose of the bill.
Representative GRISWOLD. You used the example there of the local merchant interfering With Sears, Roebuck or some mail-order house; that it might bring them - the possibility of it. What about Sears, Roebuck interfering with the local merchant?
Mr. JACKSON. I do not see how they could. As I said to you, Sears, Roebuck could come to the Board and complain that the local merchant was competing and was putting them out of business with its labor standards, if Sears, Roebuck could show an unfair competition, and in that way this bill would make a case, that is possibly but not practically.
Representative GRISWOLD (interposing). I understand that. But you only gave that as a possibility and not as a probability. But I want the reverse of it. What about the local merchant? Can he go and complain about Sears, Roebuck under the same practice and procedure?
The CHAIRMAN. If they are engaged in interstate commerce.
Mr. JACKSON. Sears, Roebuck being engaged in interstate commerce, and the regulations of commerce are applicable to interstate commerce.
Representative GRISWOLD. I do not know how it is with the rest of the United States, but practically every town and community of any size in my part of the country has a Sears, Roebuck and a Montgomery Ward store in that community. It is a chain proposition.
Mr. JACKCSON. But insofar as their mail-order business is concerned, it is interstate commerce, and is subject to the regulation by Congress. Sears, Roebuck, if it has a local store, that store does not necessarily follow to be in interstate commerce. It would depend on the set-up.
Representative GRISWOLD. The set-up is this. In some instances that I am familiar with, for instance, I want to go and buy an outboard motor at Sears, Roebuck. I go there and they telephone up to Chicago, and on the next bus it comes out.
Mr. JACKSON. Generally speaking, a store of that kind, which is an agency for taking orders to be transmitted, would be engaged in interstate commerce.
Representative GRISWOLD. And the local merchant can have the right to go in and complain?
Mr. JACKSON. Well, he would have to show the Board that there was -
Representative GRISWOLD (interposing). He would have the same right to go to the Board and complain against Sears, Roebuck, this local merchant who is doing strictly intrastate business, as Sears, Roebuck would have to come in and complain against him.
Mr. JACKSON. While your local merchant is not engaged in interstate commerce, and therefore he could not charge that his interstate business was being affected, he could complain about unfair interstate
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competition. Of course, Congress cannot ordinarily interfere to protect the purely local business any more than it can interfere to regulate him.
Representative GRISWOLD. It would seem to me that you leave the local merchant out on a limb on that kind of proposition.
Mr. JACKSON. No. He can file a complaint.
Representative GRISWOLD (interposing). You say that he is out of court because he is not in interstate commerce.
Mr. JACKSON. I do not say that he is out of court; I say that his local business is not subject to the regulation of Congress as such. He can go to the Board and complain of any unfair labor practice under this act.
Representative GRISWOLD. Then he would operate under a different set of rules of evidence than Sears, Roebuck, is that it?
Mr. JACKSON. No; he would operate under the restriction of Federal power. In other words if you cannot regulate his business, that business does not become the basis of Federal legislation. I do not know that I make that very clear what I mean.
The CHAIRMAN. You mean by that, do you not, Mr. Jackson, that a small local merchant.
Representative GRISWOLD (interposing). Pardon me. What I am interested in is this country merchant, and the mail-order house 'or Sears, Roebuck or Montgomery Ward-it seems to me that they would have an advantage of this man here. Suppose all of the country merchant's stock were received in interstate commerce, would that make any difference? He is constantly selling from that stock and replenishing it through interstate-commerce channels.
Mr. JACKSON. The complaint can be made by the country merchant; he can make his complaint just the same as he can be complained against, but the basis of his complaint is not his own business. It is the business that is moving in interstate commerce. The basis of his complaint has to be not merely the effect on his business, but the acts which are being done in interstate commerce by his competitor; but if he can show that this competitor by substandard labor conditions is unfairly interfering with his business, he can get relief under section 9 of the act which provides that:
(a) Whenever the Board shall determine that a substandard labor condition exists in the production of goods in one State and that such goods are sold or transported in interstate commerce and compete to a substantial extent in another State with other goods in the production of which such substandard labor condition does not exist, whether or not such other goods are sold in interstate commerce, the Board shall make an order requiring the elimination of such substandard labor condition * * *
But he could not proceed on the theory that his business was subject to Federal regulation. He has got to appeal to the power to regulate the other man's business.
Representative GRISWOLD. That is what I mean. He has a chance, in your opinion, under this bill, to get his aid on the ground that the other man's violation of the act is interfering with his business.
Representative FITZGERALD. What provision is there in the bill to aid the handicapped or the subnormal worker?
Mr. JACKSON. That is at page 19 of the Senate bill, where the regulations or orders of the Board may provide for -
the employment of learners and apprentices at such wages lower than the applicable wage and subject to such limitations as to time, number, proportion, and length of service as the Board shall prescribe; (2) the employment of persons
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whose earning capacity is impaired by age or physical or mental deficiency or injury, under special licenses to be issued by the Board, at such wages lower than the applicable wage and for such period as shall be fixed in such licenses; (3) deductions for board, lodging, and other facilities furnished by the employer if the nature of the work is such that the employer is obliged to furnish and the employee to accept such facilities; (4) overtime employment in periods of seasonal or peak activity or in maintenance, repair, or other emergency work and the wage rates to be paid for such overtime employment and (5) suitable treatment of other cases or classes of cases which, because of the nature and character of the employment, justify special treatment.
Representative FITZGERALD. Then this Board will have the power to grant exemptions to the aged, the handicapped, and the subnormal workers?
Mr. JACKSON. Yes, sir.
Representative FITZGERALD. Also apprentices.
Mr. JACKSON. Apprentices and learners.
Representative FITZGERALD. And regulate the time? What does it mean where it states on page 19, "subject to such limitations as to time, number, proportion, and length of service as the Board shall prescribe?" Does that mean the time of the apprentices or the number of apprentices?
Mr. JACKSON. I assume that the purpose of that is, if you came in and wanted an exemption for two or three apprentices, where you are employing 15 or 20 or 30 workmen, that might be reasonable. But if you had 2 or 3 workmen, and you were trying to ring in 30 or 40 apprentices, they would probably come to the conclusion that your application was not in good faith; so that it is to enable the Board to see that the applications for apprentices are actually good faith apprentices.
Representative FITZGERALD. But it does give the Board the power to increase or decrease the amount of apprentices?
Mr. JACKSON. Yes, sir.
Representative FITZGERALD. Would there not be some conflict there with organized trades that already limit the number of apprentices?
Mr. JACKSON. No; I think not. There is no such purpose here - in the first place, there could not be anything that would require the employer to hire apprentices. It would merely be a permission, and he would still have to deal with his union in the case of collective bargaining, and the provisions of the act which are intended to protect collective bargaining would prevent that as a practical matter.
Representative CONNERY. When you spoke this morning about the minimum wages, there seems to be a little tendency among labor to worry about the minimum wage becoming the maximum wage. Do you believe under this $1,200 provision, is it not the idea of the legislation to take care of the poorest paid workers in the United States, in fact those whom labor has not been able to reach or to organize? A man getting $6 a week and working 60 hours a week. Is not the idea of this legislation to bring them, up to something like $16 a week, and then come up to the maximum of $1,200 a year, and then leave it to labor to build up from $1,200 on?
Mr. JACKSON. That is the purpose, of course, to establish the fair wage, to establish the floor above which labor may build.
Now, as to the economic effect of the minimum wage on higher standards, Mr. Henderson or Mr. Lubin of the Labor Department who have studied that extensively, would be able to answer much more intelligently than I.
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Representative CONNERY. Do you feel that this minimum wage would be likely to become the maximum wage, the bringing of these poorly paid people up to a minimum wage? Do you think that it is dangerous to those receiving the higher wages, to bring them down to the minimum?
Mr. JACKSON. I do not see how that is possible with collective bargaining protected as it now is. Mr. Pope calls my attention to the provision of the act which you will find on page 27:
(6) In case of an order relating to wages, may contain such terms and conditions as the Board may consider necessary or appropriate to prevent the established minimum wage becoming the maximum wage and to prevent the discharge or reduction in wages of employees receiving more than the established minimum wage; and it shall be the policy of the Board to establish such minimum-wage standards as will affect only those employees in need of legislation protection without interfering with the voluntary establishment of appropriate differentials and higher standards for other employees in the occupation to which such standards relate; * * *.
Representative CONNERY. In other words, where you have the lowest paid, the laborer, you do not feel that any wage set by the Board would be below anything which organized labor might have brought them up to?
Mr. JACKSON. No; I do not see that there is the slightest possibility if this law is faithfully carried out, of the Board ever lowering any wages fixed by collective bargaining. If collective bargaining had resulted in an unfair minimum, it might result in raising the minimum, but I do not see any possibility of this bill being used to lower wages in any brackets.
Mr. Pope calls my attention to the provision of the act making that policy effective, at page 41:
(b) Nothing in this act, or in any regulation or order thereunder, shall be construed to invalidate any contract, understanding, or collective-bargaining agreement whereby an employer undertakes to pay a wage in excess of the applicable minimum wage under thi6 act or to require a shorter work week than the applicable maximum work week under this act or otherwise to confer benefits or advantages upon employees not required by this act.
The whole purpose of this bill is to elevate the floor, so to speak, below which wages must not go. Certainly there is no purpose here to nullify the effects of collective bargaining where that has resulted in a better than minimum fair wage for workmen.
Representative CONNERY. If you get filling stations in interstate commerce, it is well ruled that they were in interstate commerce under this bill, you would have to consider going away down to 1 or 2 employees, wouldn't you, because in filling stations they employ sometimes 2 and sometimes 3, and if you set your number of employees so that it would affect say 15 or 10 or 5, you would strike thousands of people in the Nation who would not be affected even though they were in interstate commerce?
Mr. JACKSON. Yes; I do not think the filling station is in interstate commerce, ordinarily.
Representative CONNERY. Is a clerk in a department store in interstate commerce?
Mr. JACKSON. Probably not, but there may be circumstances in the management of the business, if it were managed as a branch, there might be a situation which would bring them in; but, as I said at the outset, under Senator Black's question, it is not intended by this bill to affect the retail trades or the service trades. It is intended
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to catch the unfair labor practices at the point of production. The goods which those people handle are of course affected. They must be fair goods if they move across-the state line.
Representative RAMSPECK. What is interstate commerce depends upon the facts of each case.
Mr. JACKSON. Yes.
Representative RAMSPECK. Isn't it entirely possible that the N. R. A. might have been upheld in a different sort of a case?
Mr. JACKSON. Well, that is pretty speculative. I think if you will compare the Court's opinion in the Jones and Laughlin case with the Court's opinion in the Schechter case, you can reach your own conclusion as to the degree of definiteness with which the Court has defined its own limitations. It is difficult to predict.
Representative GRISWOLD. Speaking of collective, bargaining, if you establish a differential, would there not be a tendency through the mere establishment of a differential, to affect, in a way, collective bargaining, to the extent that even collective bargaining between the employee and the employer is governed somewhat by supply and demand, and if with a differential established in one part of the country making the value of the services lower than in another part of the country, that that in itself would affect the supply and demand sufficiently to reduce the prevailing wage? Is that not possible? I mean in the locality with the higher wage established by collective bargaining?
Mr. JACKSON. I do not see that possibility, but I am not an economist. The differential which the Board would embody in an order is not a differential which the Board establishes; it is the differential which already exists, but which it recognizes, because the Board is required to find the value of the services at the point which is under consideration. Now, if the Board fixes south of a certain line, a differential of a dollar, it is fixing that because, it finds that that is what the differential is before it fixes the differential. Its authority in each case is to find what the value is in that community, taking into consideration the costs of living, tho collective bargining prices, and all of the facts set forth in the act.
So that if you have in mind the possibility of differentials being established for purposes of sliding industry from one community to another, that is not what the Board is authorized to do. The Board is authorized to recognize in each community the factors in its life which produce a differential, and to fix that differential into its minimum as collective bargaining will be expected to fix it in its maximum.
Representative GRISWOLD. That is what I am talking about. When you fix that differential, it seems to me that from the standpoint of business, that business is automatically going to avail itself of that differential in pay, just as the garment industry did under the N. R. A.
Mr. JACKSON. No, I do not think, if your differential is fairly established in both cases, that that is so. I do not think so.
Representative GRISWOLD. The garment industry moved because of that differential.
Mr. JACKSON. I could not answer that because I do not know the facts under N. R. A., but Mr. Henderson is here, who does, and he can tell you about it. But the differential exists before the Board makes any order. If there is a differential between northern and
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southern labor, it is not because of the N. R. A.; the N. R. A. recognized it. Maybe they did not recognize it just right, and I am not prepared to say as to that, but there is a differential due to living conditions.
Representative GRISWOLD. I will agree with you that the differential is there.
Mr. JACKSON. Now, your man may cross the State line to get into a cheaper labor zone, and he did not need to wait for the N. R. A. or for this bill or for anything else. The differential was there and all that the Board did was, all that the N. R. A. did, I assume, was to recognize it.
Representative GRISWOLD. I agree with you that the differential was there and he did not need to wait, but we are not dealing with a hypothetical case; we are dealing with facts. They did wait and they did move.
Mr. JACKSON. When he said that he moved because of the N. R. A., he was not telling strictly the facts. He was moving because of a differential which existed, whether the N. R. A. existed or not.
Representative GRISWOLD. The letter which this one particular manufacturer gave me was that he was moning because it made a $2,500 a month difference in his pay roll.
Mr. JACKSON. All of us lawyers have written letters.
Representative CONNERY. Mr. Jackson, right there. That is a very pertinent question of Mr. Griswold, because you can see that it will undoubtedly come up when the committees go into discussion of this. Take your textile industry. Mr. Ramspeck has his mills in the South, and we have our mills in Massachusetts. Suppose there is a dollar differential, which they had under the N. R. A.; wouldn't it be to the advantage of the northern manufacturer to move into South Carolina to get that differential?
Mr. JACKSON. Not necessarily.
Representative CONNERY. Why not?
Mr. JACKSON. Because he might have other factors to consider. The efficiency of labor, or other factors that I am not competent to discuss because I am not a manufacturer, but I do not think that it follows that because you can hire one assistant for $2 a week less than another, that the cheap one is better. In fact, sometimes the reverse is true. I think that you have to take into consideration more factors than that to decide - the availability of the market, transportation costs, and other factors. It is very complex, the things that make people move from one community-to another, and of course the same man that is moving will tell one authority that he is moving because of the labor conditions, and he will tell the tax assessors that he is moving because of his taxes, and really the real reasons for the movement of industry is because of more complex factors and factors too complex for me to discuss because I am not an economist.
Representative CONNERY. When we come to the economists, we can ask these questions. Now, as to the general constitutionality of this bill, I would like to ask you, do you think it is constitutional in every respect? Do you think it is airtight as far as you can see?
Mr. JACKSON. I do; I think so. With the single exception of Hammer v. Daqenhart. There is one section of this bill which will either have to be distinguished, as Senator Black has pointed out it
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can be, because it is now embodied in a real interstate commerce regulation, or it will have to be overruled, and I would expect that in a bill like this, the Court would distinguish or overrule as may be necessary.
Representative CONNERY. What particular basis under the decisions under the Wagner-Connery Act of the Supreme Court do you find that would apply and made the Court overrule their decision in Hammer v. Dagenhart? The Jones and Laughlin case?
Mr. JACKSON. The Jones and Laughlin case is one of them. The reversal of the minimum wage case is very convincing that the Court has a different attitude-
Representative CONNERY (interposing). I mean, for the particular point of law? On the ground that manufacture is commerce when it affects commerce?
Mr. JACKSON. I think they take a broader view of the interstate commerce power in the Jones and Laughlin case; distinctly broader than was taken in the Hammer v. Dagenhart.
Representative CONNERY. Do you think they come pretty close to Justice Holmes' dissenting opinion in the case of Hammer v. Dagenhart?
Mr. JACKSON. I think if the Court had had Hammer v. Dagenhart before it on that day and it had to overrule Hammer v. Dagenhart to have gotten to its decision, it would have done it; but, of course, that is merely an opinion, and you cannot tell what a Court has in mind or will do.
Representative THOMAS. I think under the wording of the bill, the bill intends to include all common carriers, whether they be water carriers, rail, or trucking. And that view is strengthened by the exception made on page 41 as to carriers. That is the only exception that I can find. And here is a question that puzzles me: Suppose that a shipment of goods is transported in interstate commerce, and when it arrives in a particular State, a truckman has a large fleet of trucks and he continues to distribute those goods even though he operates wholly intrastate. Is he covered by the terms of this act?
Mr. JACKSON. He acts as a common carrier. Of course if he is a common carrier who has filed his schedules with the Interstate Commerce Commission-
Representative THOMAS (interposing): He is doing a purely intrastate business, though. The Government does not attempt to regulate it.
Mr. JACKSON. I would have to give that some study. I have not considered that case.
Representative THOMAS. There are really thousands and thousands of employees who would be vitally interested ia a ruling one way or the other in a case like that.
Mr. JACKSON. Mr. Pope, who did a large part of the detailed study of this for the Department of Justice, takes the view that under section 7-A, if the journey had been broken so that the carrier was acting purely intrastate, he would not be within the act.
Representative THOMAS. Where in the act is there any yardstick laid down that defines directly "affecting interstate commerce"?
Mr. JACKSON. That is a very difficult thing to define. The courts define it for themselves. They hold some types of railroad labor are in interstate commerce; and other types of railroad labor that are
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difficult for me to distinguish, the Court thinks are not in interstate commerce because of the effect of their work.
Representative THOMAS. The hypothetical question I put, I doubt if the journey has been ended. One carrier merely takes up the journey. The journey may be consummated in intrastate commerce.
Mr. JACKSON. That is what I say. If he has accepted a through billing of the goods and has accepted a tariff of other carriers, so that there is one rate from the point of consignment to the point of destination, he might be in interstate commerce, while he would not be if he did exactly the same physical acts but made a separate bargain for the haul. It is a very difficult thing to draw that line.
Representative THOMAS. Who is going to decide that very difficult question? Will it have to go to the courts, or will the Board decide this very baffling question?
Mr. JACKSON. The Board would decide it in the first instance in the matters before it. There is an appeal provided to the courts.
Senator PEPPER. Is it not a fact that that same question is already being decided by the courts now under existing law, where the States have attempted to regulate things which are in interstate commerce, and it is a question whether they come to rest within the State to such a degree that they become divested of their interstate character?
Mr. JACKSON. That is right. And it is also being decided in the Employers Liability cases and it is being decided in the Labor Act cases under the Wagner-Connery Act. It is being decided in all of these interstate commerce cases, and it is very perplexing to decide what the principle is.
Senator PEPPER. But this is no new problem? I mean, it is being dealt with all of the time by governmental agencies.
Mr. JACKSON. it is a problem that is inherent in interstate commerce regulation.
Representative CONNERY. Mr. Chairman, may I suggest that when Mr. Griswold finishes, if lie has any further questions to ask, that Mr. Jackson be permitted to go through the bill, section by section.
Representative GRISWOLD. Mr. Thomas was trying to convey the thought, and I think it is proper, that there are a lot of employees who come under this, that we are not perhaps even thinking about. This bill, under your interpretation of it, would bring in all of the taxi lines. Every taxi driver that has a terminal contract?
Mr. JACKSON. No, I would not think so.
Representative GRISWOLD. The Motor Carriers Act, it is now ruled that it applies - you buy a ticket to Chicago, a through ticket, and the taxi that has the terminal facilities at that station, that picks you up and take you from the Union Station over to the northwest station, comes under the Motor Carriers Act.
Mr. JACKSON. If they do it under your interstate railroad ticket, yes. But a taxi might do exactly the same physical act, pick me up at the station and take me to my hotel. One of them, because of having filed the tariff is under interstate commerce, and the other is intrastate.
Representative GRISWOLD. What I am trying to bring out is this. Over here, this Diamond Cab Line can come and under their contracts, every one of their drivers who is going to pick up a passenger there, every one hired by that Diamond Cab Co. would come under your act.
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Mr. JACKSON. I don't know about that. You make your own bargain with the taxi driver. He is under a local tariff, I take it.
Representative GRISWOLD. The taxi driver that is transporting you on a through ticket might be different?
Mr. JACKSON. If he takes me on the through ticket, that is a part of the railroad tariff, if that is so, then he has subjected himself to the act. But you will find it impossible in any legislation to solve the question of just who is and just who is not in interstate commerce. It is one of those things that has to be thrashed out in every single instance.
Representative GRISWOLD. You spoke a while ago of the difference in the efficiency of labor. In this bill in section 19 you mention learners and apprentices. Does the bill at any place define learners and apprentices, that you recall?
Mr. JACKSON. I do not recall any definition of learners or apprentices.
Representative GRISWOLD. The reason I ask that question is this. Under the N. R. A. in the garment industry, they employed girls, and in a number of factories with which I am familiar, they put them on one machine, and for a certain length of time they were learners. Then they learned that machine and they were transferred to another machine and they were still learners. And I have some affidavits in my office of girls that performed as much as 6 months, the operations in a factory, worked say 6 months in a factory on numerous machines, and they were always learners. They never even received the minimum pay because they were always learners.
Mr. JACKSON. That is exactly why the provisions are in here which your colleague pointed out which authorize the Board, when they give the authority to employ learners or apprentices, to fix the limitations as to the time, the number, the length of time, and the service, so that they cannot pull that kind of abuse under this act if it is effectively enforced.
The CHAIRMAN. Now, Mr. Jackson, if you will proceed with your analysis of the bill.
Mr. JACKSON. Well, I think a great many features of this bill do not need explanation because they are obvious in connection with other legislation with which you gentlemen have worked. The legislative declarations contained in section 1 need no explanation. Some of the definitions do. Some of the definitions are important if we are to understand the bill, and they are not usual definitions.
I call your attention on page 4 of the Senate bill, to definition 7-
Representative CONNERY (interposing). Mr. Jackson, these bills are exactly similar in every respect except two. One of these, I think, was an oversight. I intended to mention that to Senator Black when we were drawing the bills. One has reference to the plan of representation - I struck that out of my bill for fear that that might be considered as a company union and I forgot to take it up with the Senator. And one other spot where I leave out the words, "in any State" which applies, however, to foreign imports as well as State, but every line outside of that in the bills is exactly the same.
Mr. JACKSON. The paging is a little different, is it not? The lines and the paging?
Representative CONNERY. I do not think so. It might be, because of those two changes. But I want you to know that the Senate bill and mine are exactly the same except for those two changes.
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Mr. JACKSON. The definition of "employee", at page 4.
(7) "Employee" includes any individual employed and any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unlawful discharge, and who has not obtained any other regular and substantially equivalent employment, but shall not include any person employed in an executive, administrative, supervisory, or professional capacity or as an agricultural laborer as such terms are defined and delimited by regulations of the Board.
So that those groups are excluded from the operation of the bill.
The next definition which I think might be unusual is at page 5.
Representative RAMSPECK. Is it all right to question Mr. Jackson as we go along?
The CHAIRMAN. Mr. Jackson suggested that he be questioned on these paragraphs as he went through each paragraph.
Representative CONNERY. Might I suggest, Mr. Chairman, that I think it would be better, because you must have found from past experience, if we question as we go along, we never end with questioning. I would like to see Mr. Jackson go right through the bill and then have them come back for their questions.
The CHAIRMAN. Whatever the committee desires is satisfactory to me.
Mr. JACKSON. All right. On page 5 the tenth definition is important because it enters into many of the sections that follow.
Subsection (10) at page 5 is the definition of an oppressive wage, and reads:
(10) "Oppressive wage" means, with regard to any employment to which the provisions of this Act with respect to an oppressive wage shall have been made applicable by regulation or order of the Board under section 4 (a), a wage lower than the minimum wage standard of - cents per hour, unless and except insofar as another minimum wage standard is established for such employment by regulation or order of the Board under section 4 (c).
There are three definitions of wages in the act, and if you will turn to page 7, definition (14) then defines a fair wage:
(14) "A fair wage" means a wage fairly and reasonable commensurate with the value of the service or class or service rendered.
Section 5 (a) which we will come to a little later, prescribes the rule by which the Board shall find the fair wage, but the fair wage is the wage based on the value of the services.
Then definition 16 is of a substandard wage and reads:
(16) "Substandard wage" means a wage lower than a minimum fair wage established by an order of the Board applicable to the employment in which such wage is paid.
So we have three wage standards mentioned in the bill to keep in mind. The one is the minimum fixed by Congress, and anything below that, unless the Board has granted an exception, is an oppressive wage. An oppressive wage is below the level established by Congress. Then there is a fair wage, which is what the man ought to get, as the Board finds, taking into consideration all of the facts; and then the substandard wage is anything below that. The substandard wage may be higher than the oppressive wage fixed by Congress, but not up to the fair wage fixed by the Board.
That is to say, suppose you established a 40-cent minimum. The Board went in and found that a particular employment should pay
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60 cents, and it was actually paying 50 cents. You would have the oppressive wage as fixed by Congress, you would have them paying a wage between that and the fair wage which would be a substandard wage. It is important as we read these wage provisions to bear those things in mind.
Definition 11 defines the oppressive workweek, and anything is oppressive above the length of the week that Congress fixes; but it must be borne in mind that when you fix these two figures as to the minimum wage and the maximum week, that when the Board comes to apply it to any particular industry, it may vary the minimum wage if it finds that the application of the strict minimum is going to throw men out of work, and it may vary the workweek if it finds it is going to curtail their opportunity for employment.
Then "oppressive labor practice" is defined, which means -
any practice by an employer constituting (A) the employment of any person to act as a strikebreaker during a labor dispute, and for the purpose of this clause a strikebreaker means a person employed to do work wholly or in part theretofore done by a regular employee (who has stopped, or been excluded from, such work by reason of a labor dispute) where such person is known by the employer to be unqualified for, or to have no intention of accepting, regular employment, or where such person is paid for work done by him a higher wage than the wage paid to such regular employee (whether or not such person fulfills additional tasks or duties) but no person shall be deemed to be a strikebreaker if his employment is necessary to prevent irreparable damage to physical property or to maintain essential public services and is confined to the prevention of such irreparable damage or the maintenance of such essential public services; or (B) the employment of any person to engage in espionage over any employee or the immediate family of such employee for the purpose of securing information regarding the affiliation of such employee with a labor organization, the activities or plans of such employee with reference to self-organization, or the political or economic views or activities of such employee.
Oppressively the practices generally are those practices which are designed to destroy the effectiveness of collective bargaining which you have protected in other statutes.
Oppressive child labor is defined in no. 13 as the employment of any child under the age of 16 years in any occupation, and between 16 and 18 if he is employed in an occupation which the chief of the Children's Bureau finds to be hazardous, particularly hazardous for the employment of children of that age, or detrimental to their health or well-being. So that it applies absolutely to children under 16, and with qualifications to children between 16 and 18.
I have mentioned the fair wage, but it might be well at this point to turn to 5 (a) and to see how this fair wage is established, because this is one of the questions involving delegation:
SEC. 5 (a) Whenever the Board shall have reason to believe that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, wages lower than a minimum fair wage are paid to employees in any occupation in which such employees are engaged in interstate commerce or are engaged in the production of goods which are sold or shipped to a substantial extent in interstate commerce, the Board shall conduct an investigation of the wages paid in such occupation and the value of the services rendered therefore. If the Board shall determine that wages lower than a minimum fair wage are paid in such occupation to a substantial extent, or that the payment of such wages by one or more employers in such occupation threatens to undermine a fair labor standard maintained by others, and that the establishment of a minimum fair wage in such occupation will not unreasonably curtail opportunities for employment, the Board shall make an order establishing the minimum fair wage for employees in that occupation. In determining and establishing a minimum fair wage for any service or class of service, the l3oard (1) shall take into account the cost of living and all other relevant circumstances affecting the value of the service or class of service rendered.
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Representative KELLER. May I interrupt you there?
Mr. JACKSON. Yes.
Representative CONNERY. Will the gentleman yield? I thought we had understood by unanimous consent, that Mr. Jackson would go through the bill section by section, and then you can question afterward, for the sake of saving time.
Representative KELLER. All right; pardon me.
Mr. JACKSON. I will play the game either way.
Representative KELLER. I stick by the contract.
Mr. JACKSON. Continuing with section 5 (a) -
that (2) shall be guided by like considerations as would guide a court in a suit for the reasonable value of services rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid, (3) shall consider the wages established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing, and (4) shall consider the wages paid for work of like or comparable character by employers who voluntarily maintain fair wage standards in the occupation to be subject to the order establishing such minimum fair wage; but the Board shall not establish a minimum fair wage which in the judgment of the Board will give employees receiving not more than such minimum fair wage an annual wage income in excess of $1,200, or an hourly wage in excess of 80 cents except for overtime, night, or extra-shift work.
The first thing to notice about this in reference to the delegation of power is that the only power that is delegated there is the power to fix the fair value of services, and fair value is something that the courts have been fixing for many years, and it is not a new or a startling rule. If you go in and order some goods sent to your home and do not have any agreement as to the price, you must pay the fair value, which the court will fix. If you work for a man without a contract, the fair value is the test.
The other thing that should be noted is that the Board can only fix the minimum fair wages which would yield $1,200 per year, in the judgment of the Board in wage income, or such other figure as Congress may fix.
So that the purpose of this act is not to interfere with any wages fixed by collective bargaining, which presumably will be above the minimum levels, but is to reach that group who do not get, for one cause or another, the benefits of collective bargaining.
If collective bargaining is effective, the Government is probably not needed to work out the wage scale. They will work it out between themselves; but in the groups that cannot get the benefit, for one reason or another, of collective bargaining, those are the groups that chiefly can be helped by this act.
The 80 cents per hour is intended to apply where the work is causal or seasonal, and the annual basis cannot be computed.
With that limitation, the Board is empowered to fix the fair wage.
A reasonable workweek is fixed in much the same manner, and then the substandard wage, and the substandard workweeks are anything less than those fixed by the Board.
A substandard labor condition is referred to throughout the act, and that is defined in the eighteenth definition as -
a condition of employment under which (A) any employee is employed at an oppressive or substandard wage; or (B) any employee is employed for an oppressive or substandard workweek; or (C) oppressive child labor exists; or (D) any oppressive labor practice exists.
So that when the term "substandard labor condition" is used, it includes all of those things.
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The next definition that is perhaps new is the definition of "unfair goods", no. 22, on page 8:
(22) "Unfair goods" means goods in the production of which employees have been employed in any occupation under any substandard labor condition.
Note the definition of "produced" at section 24 on page 8:
(24) "Produced" means produced, manufactured, mined, handled, or in any other manner worked on in any State; and for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in the making of tools and dies used in the production of such goods in any State.
The last three words of section 24 "in any State" are omitted, as Mr. Connery has called to your attention, in the House bill.
The difference from the legal point of view is that the bill as introduced in the Senate would require the Board only to investigate the conditions in the United States. By leaving out the words "in any State", the Board might be required in fixing these standards to carry its investigations into conditions of production in foreign countries where some foreign goods were used.
I do not think it is necessary to review section 39, which establishes the Labor Standards Board, because it is not involved in legal problems, and is a conventional provision which explains itself.
Coming to page 12, part II of the bill, section 4, says:
Having regard to the policy of Congress to extend the applicability of the provisions of this act with respect to an oppressive wage to all employments within the scope of this act as rapidly as possible, the Board shall from time to time by regulation or order declare such provisions applicable to employments within the scope of this act as rapidly as the Board finds that such provision can be made applicable to such employments without unreasonably curtailing opportunities for employment.
I think that is a very important provision of the act, because from a constitutional point of view it means that the Board will investigate particular employments before it clamps the minimum wage upon it, and that it will thereby avoid applying the minimum to cases where particular employees might be denied work.
The question of the oppressive workweek is handled in much the same manner. The workweek above which any work shall be deemed oppressive is fixed by Congress, and then extended by the Board to particular maximums as fast as can be without curtailing the earning power of the employees.
The question may arise as to the constitutionality of fixing a standard and designating someone to alter the standard or to apply the standard according to the facts that might be developed. We think that a case in point which has been sustained by the Supreme Court is the flexible tariff, in which standards are fixed by Congress, and then the right to vary the rates, depending upon the effect upon commerce, is given. That theory was sustained in Hampton against the United States by the Supreme Court so that we consider that this delegation is within the rules laid down by the Supreme Court.
The next section, page 12, at the bottom of the page, authorizes variations in the workweek as to employees as to any class or classes of employees where a variation is necessary or appropriate to prevent the depression of general wage levels below those consistent with the maintenance of a minimum standard of living necessary for health and efficiency, without unreasonably curtailing opportunities for employment.
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Section 5 is the fixing of fair labor standards with respect to wages and hours, and we have just been over that. That is, the rules which the Board shall consider in fixing what is a fair wage. 5 (b) on page 15 is the same principle of procedure applied to the fixing of the reasonable workweek.
The standards in reference to the reasonable workweek are not quite so definite as the standards of reasonable value, but the standards which the Board shall apply in determining and establishing a reasonable and maximum workweek are set forth at page 16, beginning at line 7:
The Board (1) shall take into account the relation of the work to the physical and economic health, efficiency, and well-being of the employees and all other relevant circumstances affecting the reasonableness, of the period of working time for the work or class of work performed, (2) shall consider the number of persons available for employment in the occupation to be subject to the order establishing such maximum reasonable workweek, (3) shall consider the hours of employment established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing, and (4) shall consider the hours of employment for work of like or comparable character maintained by employers who voluntarily maintain a reasonable workweek in the occupation to be subject to the order establishing such maximum reasonable workweek; but the Board shall not establish a maximum reasonable workweek of less than (blank) hours.
Those standards are about as definite as can be laid down, it seems to us, although you may think of things that will be an improvement. Reasonable time is another somewhat indefinite term that the courts have repeatedly dealt with. If you make a contract to do some act and the contract does not say when, the court implies a reasonable time and it will from the evidence determine a reasonable time for performance.
So that reasonable time like "reasonable value" is not an unusual thing to delegate to a hearings tribunal to determine.
The question of exemptions from the labor standards is dealt with in section 6 at the top of page 17.
SEC. 6. (a) The Board by regulation or order shall provide that the payment of an oppressive or substandard wage or the maintenance of an oppressive or substandard workweek by any employer employing less than (blank) employees shall not be deemed to constitute a substandard labor condition, unless and except insofar as the Board finds that the maintenance of the appropriate fair labor standard by such class of employers is necessary or appropriate in order to carry out the provision of this Act.
The important feature of that section as it appears to us is that there are many employments in which the number of people engaged is too small to make it administratively practicable to get to them at this time with Government efforts to regulate. Small employers and home workers and things that perhaps it is best at the present moment not to attempt to regulate. The figure, of course, is something to be fixed by Congress as to the number that shall be exempt.
The legal power to exempt employers of a smaller number is very clearly established in the Social Security cases. One of the grounds of attack was that in one instance the employers of eight, or more, only were affected, and it was contended that it was invalid because Congress had no right, so it was claimed, to draw that line. The Supreme Court said it did have the right to draw the line and establish a limit below which they should not go.
The exception should be noted that even though a given employment obtained an exemption because it was so small in numbers that it was not practical to regulate it, it could be regulated if the Board
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found it necessary to prevent circumvention of the act. And the point to that, of course, is that if you say that employers of less than 10 would be exempt, some employers might try to split their business up to make 10 different employments, each employing 10, so as to avoid regulation; and so it is necessary to have some flexibility in that rule in order to avoid evasion of the act.
On page 17, provision 6 (b) refers to the substandard workweek, and in connection with that perhaps the most important thing to note is that an automatic check is provided of this substandard workweek in requiring time and a half for overtime. It is felt that experience demonstrates that if time and a half is required for overtime, overtime work will not be used except where it is reasonably necessary.
There are also other provisions about the fixing of the substandard workweek by the Board.
I think that you should note that in the Senate bill page 18, line 8, there is an error in printing, apparently. The words "substantial labor condition" appear and it should be "substandard labor condition."
Taking up the next, section 6 (c) we find the provision by which exemptions may be made, or qualifications for employees who do not meet the usual qualifications of employment, so that there may be a certain tolerance established for the unfortunates who, if they obtain work, have to obtain it under substandard conditions or for learners or apprentices. We have already discussed that, I think, sufficiently.
Page 20, part III entitled "Unfair Goods Barred from Interstate .Commerce", section 7 is the provision which is similar to the act in the case of Hammer v. Dangenhart:
Sec. 7. (a) It shall be unlawful for any person, directly or indirectly, to transport or cause to be transported in interstate commerce, or to aid or assist in transporting, or obtaining transportation in interstate commerce for, or to sell for shipment in interstate commerce, or with knowledge that shipment thereof in interstate commerce is intended, any unfair goods.
That is the application to all unfair goods, all goods produced under the unfair substandard conditions of exclusion from interstate commerce. That is the section that is based on the dissenting opinion in Hammer v. Dagenhart, and which we believe the Court will sustain. If it is not disposed to sustain it, we are confident that in this setting, in an act which does regulate competition in interstate commerce, that it will be distinguished and this act sustained. The second or the (b) subparagraph of section 7 is designed to get the benefit of the Kentucky Whip decision, which upheld the Ashurst-Sumners Act in reference to applying State standards:
(b) It shall be unlawful for any person, directly or indirectly, to transport or cause to be transported, or to aid or assist in transporting or obtaining transportation for, any unfair goods or any goods produced by employees under the age of 18 years into any State where such goods are intended by any person interested therein to be received, possessed, sold, or in any manner used, either in the original package or otherwise, in violation of any law of such State relating to the receipt, possession, sale, or use of goods produced in violation of labor standards or practices prescribed by such law.
We feel that that section will be sustained and should be sustained by the court under the decision in the Ashurst-Sumners Act case.
Section (c) is designed to get the benefit of still another constitutional theory. Section (c) provides that it is unlawful for "any person to employ under any substandard labor condition any employee
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engaged in interstate commerce or in the production of goods intended for transportation or sale in violation of subsection (a) or (b) of this section."
The right of the Federal Government to regulate somebody in his business or acts in business just because he is producing goods intended for transportation in interstate commerce, might sound a little farfetched if it had not been sustained by the Supreme Court in reference to labor unions. In the case of Coronado Coal Co. v. United Mine Workers, the Court upheld its jurisdiction to grant injunctions against labor unions upon the ground that their strike was intended to interfere with interstate commerce.
This is simply a reversal of that rule and an application of it to employer, on the quaint doctrine that what is sauce for the goose is sauce for the gander, and that if the union might be restrained under a Federal court from certain acts because of an intention to interfere with interstate commerce, that a competitor who employs substandard labor conditions with intent to affect interstate commerce can also be reached.
This provision is of considerable importance in enforcement, because if au effort were made to look into the affairs of a particular employer suspected of a violation, he might decline to submit until he had shipped his goods, on the theory that until he had actually engaged in interstate commerce, there was no Federal jurisdiction.
We feel, however, that under the doctrine of the Coronado Coal case, if it is sustained in reference to this act, which we think it must be, unless we have one rule for labor and another for capital in this country, then we have the right to expect where a man engaged in manufacture is systematically putting his goods into interstate commerce that whatever he does in his plant with reference to labor standards is intended to affect that commerce.
Section 8 (a), page 21, is entitled "Protection of Interstate Commerce from Effect of Substandard Labor Conditions." This proceeds under the Shreveport case and the New York Central case, to take advantage of the doctrine that even local matters may be regulated where they have the effect of introducing any unfair competition with interstate commerce.
The key to the section is that substandard labor conditions create an unfair competitive advantage over employers engaged in interstate commerce. Now, we consider that it is within the law as it has been declared by the court for Congress to determine the kind of a national traffic it will foster and support. You can support a traffic based on decent labor standards and in fostering that interstate commerce, you may protect it from competition of commerce whether intrastate or interstate where it seeks to destroy the commerce you are trying to foster. In other words, the power of Congress is not limited to regulating and holding down commerce. It may build up commerce which is helpful to the country's general economic life.
We think this provision is valid under the doctrine of the Shreveport and New York Central cases, where the Board finds that there is a competition which is tending to destroy the commerce that Congress is trying to foster.
The next provision, 8 (b), is designed to take advantage of the doctrine that was laid down by the Supreme Court in Dayton v. Goose Creek, relating to the capture of excess profits of the railroads,
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where the Court held that whore the proceeds of interstate and intrastate commerce were so confused and mingled that you could not tell which was which, that the Federal jurisdiction could attach to the entire proceeds.
Representative KELLER. What case was that?
Mr. JACKSON. The case of Dayton v. Goose Creek. I will file the actual citation with you later.
And this provision provides that where the Board shall determine that-
goods shipped or sold in interstate commerce are marketed so regularly and continuously in competition with unfair goods not shipped or sold in interstate commerce that fair and nondiscriminatory application of any provisions of section 7 requires the discontinuance of any substandard labor condition among all employees employed in any occupation or in connection with the production of such unfair goods, the Board shall make an order requiring the discontinuance of such substandard labor condition in such occupation.
Section 9 (a) is "Protection of Fair Labor Standards from Interstate Competition."
Section 9 (a) provides that-
Whenever the Board shall determine that a substandard labor condition exists in the production of goods in one State and that such goods are sold or transported in interstate commerce and compete to a substantial extent in another State with other goods in the production of which such substandard labor condition does not exist, whether or not such other goods are sold in interstate commerce, the Board shall make an order requiring the elimination of such substandard labor condition and the maintenance of the appropriate fair labor standard in the production of goods which so compete.
In other words, this is intended to prevent substandard goods from being shipped in interstate commerce to break down local labor standards that are maintained within the standards which are being sought to be encouraged. The Sherman Act and the Clayton Act and the Federal Trade Commission Act are all based upon this theory, the theory of the right to regulate competition in interstate commerce.
The next provision, section 9 (b), is reversing the rule so that the local unfair labor standard cannot compete with the interstate commerce; so that sections 9 (a) and 9 (b) are intended to be the two sides of the competition; (a) to stop the interstate from crushing the fair intrastate producer, and (b) intended to prevent the unfair intrastate producer from crushing the fair interstate commerce.
Then section 10, other labor-standard orders. This section is designed to get the benefit of the Court's ruling in sustaining the Wagner Act. The Wagner-Connery Act, as you know, provides for the elimination of conditions which may affect interstate commerce, and section 10 provides:
Whenever the Board shall determine that a substandard labor condition exists to a substantial extent in an occupation, the Board shall make an order requiring the elimination of such substandard labor condition and the maintenance of the appropriate fair labor standard in such occupation if the Board finds-
(1) That the maintenance of such substandard labor condition by any employer or class of employers leads or tends to lead to labor disputes directly burdening or obstructing interstate commerce or the free flow of interstate commerce;
that is the Wagner Act directly.
And continuing:
(2) that the maintenance of such substandard labor condition by any employer or class of employers directly affects the movement of goods or the performance
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of services in interstate commerce or the price of goods or services in interstate commerce or causes undue price fluctuations in interstate commerce or directly threatens or interferes with the stability of prices of goods or services in interstate commerce or the orderly marketing of goods or services in interstate commerce; or
That section is designed to get the benefit for this act of the theory of the Court in the Stock Yards cases and the Grain Exchange cases, in which it was held that although those exchanges were local, yet they affected the flow of interstate commerce and the price of goods moving in interstate commerce moving in such a way that they were within the regulatory power of Congress.
Then the next provision, section 3 [reading]:
(3) That such substandard labor condition is maintained by any employer or class of employers with the intent to divert or substantially affect the movement of goods or the performance of services in interstate Commerce or to control or directly affect the price of goods or services in interstate commerce. If the Board shall find that any employer or class of employers maintain a substandard labor condition in an occupation and that the employer or class of employers maintaining such substandard labor condition do in fact thereby divert or substantially affect the movement of goods or the performance of services in interstate commerce or tend to control or directly affect the price of goods or services in interstate commerce, the facts so found shall constitute prima-facie evidence that the employer or class of employers maintaining such substandard labor condition did so with the intent to produce such effect or effects in interstate commerce.
There again we are taking advantage of the Coronado Coal case, where labor was enjoined because of the intention. And in that section is also contained the presumption that if the substandard labor condition maintained does have the effect of diverting or substantially affecting the movement of goods, it shall constitute prima facie evidence that the employer did so with the intent to produce such effect in interstate commerce. That, of course, is the rule designed to make the proof possible, because all of the evidence will be in the control of the manufacturer, and unless the Government can rely upon a presumption to put him on the proof, labor is under a great handicap. It is not an unreasonable presumption. He can come in with his proof and, say that he did not so intend.
Section 11 on page 25 deals with the violation of labor-standard orders. Subsection (a) affects the person; subsection (b) the product; subsection (c) applies the technique of the Ashurst-Sumners Act.
Then we come to the general administrative provisions, and there are not many things in that section which need to be discussed particularly. All labor-standard labor orders shall be made only after a hearing held pursuant to section 13.
Subsection (5) relates to the classifications and I think it was read in the discussion heretofore. It authorizes classifications, but declares that it shall be the policy of the Board to avoid unnecessary or excessive classifications, to exercise its power of classification only to the extent necessary or proper to accomplish the essential purposes of the act.
The hearings are required to be held according to the usual rules of notice and fair hearing.
Advisory committees on fair labor standards are authorized by section 14. That has been discussed and their recommendations are advisory only.
Most of the remainder of the act is taken up with conventional provisions found in most acts. There is a provision on page 34, section 18, which applies to child-labor standards.
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The Board is required to make all investigations necessary through the Secretary of Labor and its duly authorized representatives, so far as practical, and the Chief of the Children's Bureau in the Department of Labor shall have power concurrently with the Board to enter and inspect places of employment, and to inspect records, and to bring action under section 16 to enjoin any act which is unlawful by reason of the existence of oppressive child labor. The Children's Bureau can also enforce the child labor provisions. That was deemed advantageous because of their special familiarity with the problems.
The usual provisions which are self-explanatory, I believe, follow.
On page 40, line 1, it is perhaps worth noting that this act does not prohibit any State from establishing a higher minimum wage or a shorter maximum workweek than is established by this act; in other words, it does not place a limitation on the power of a State if it sees fit to establish higher labor standards than can be established here. That is section 22 (a).
Unless something occurs to someone else, I do not think there is anything else in the act which requires special elucidation and which is not apparent on the face of it. As you have seen, this is a complicated bill, and its complication is due to the effort to get into one bill all of the avenues by which the bill can be held constitutional, so that if one or more of these precedents which we think should be applied to this act are held not to apply to it, it won't be necessary to wait 3 or 4 years more and then draw another section. This act combines everything, and is an effort to take advantage of whatever theories may prevail on the Court at the time that the case is heard. Of course, that results in a good deal of complication.
It would be a great mistake to say, as some people have, that this bill is hurriedly thrown together or not the result of study. The difficulty with the bill, perhaps, is quite the opposite. It is the result of too careful study, if anything. It results in some overlapping which is unavoidable.
Now, we will be glad to try to answer any questions that you have, and we propose to file with you two statements which have been prepared.
Representative CONNERY. If there is no objection on the part of the Senators, Senator Black suggested that I conduct the hearing in his absence. He will be back very shortly.
Senator La Follette. I think those additional statements which Mr. Jackson has jest referred to should be incorporated in the record.
Representative CONNERY. Without objection, those statements will be incorporated in the record.
Mr. Jackson. One is the general review of the act, stating its general purposes in more detail than dated in the opening. The other is a constitutional analysis of the bill which follows through section by section and points out the authorities which are relied upon and gives the citations, so that if you want to make a study of the law from cases, it will aid you is doing so.
(The statements referred to by the witness are as follows:)
Briefly stated without regard to qualifying detail, the bill proposes to bar from the channels of interstate commerce the products of child labor and of workers employed for unduly low wages, unduly long hours, or under conditions which violate the rights of labor by the use of strikebreakers or spies. The bill further
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authorizes administrative action to require the elimination of substandard wages and hours, child labor, and other oppressive labor practices which place goods produced under fair labor conditions at a competitive disadvantage in interstate markets, or which lead to labor disputes that burden interstate commerce or disrupt the orderly and fair marketing of goods in interstate markets.
The bill, therefore, calls for the exercise of the constitutional power of the Congress to regulate commerce among the States, for the purpose of putting a stop to traffic among the States in goods produced under substandard labor conditions and of giving protection to commerce among the States in goods produced under fair labor standards-standards which we should like to regard as American standards of labor.
The bill recognizes, however, the very practical exigencies which make it impossible to. prescribe for all goods which enter into interstate commerce any single minimum fair wage standard, or any single maximum reasonable work week standard. Even in the treatment of national problems there are geographic and industrial diversities which cannot be ignored. For that reason the bill makes a distinction between labor conditions which are clearly oppressive under any circumstances, and labor conditions which may be found unreasonable under circumstances prevailing in particular industries or in particular geographic areas. As to labor conditions which are clearly oppressive, the regulatory provisions of the bill are largely automatic; but as to labor conditions which depend for their unreasonableness upon particular circumstances, the regulations become effective only after appropriate administrative findings and orders. The administration of these provisions is placed in a Labor Standards Board of three members.
The bill proposes that as rapidly as possible the Board shall extend the automatic exclusion of goods from interstate commerce to goods which are produced under conditions so oppressive-according to any reasonable standard of social or economic justice-that little differentiation is required as between different industries or localities. These rudimentary standards demanded by the conditions of modern economic life are defined in the bill. The products of the labor of children under 16 years of age ought not to be accepted in any fair market. Workers ought not to be denied the right of self-organization by the fear of labor spies. The right to strike ought not to be rendered ineffective by use of strike-breakers. Allowing for appropriate qualifications and general classifications, the bill provides a floor below which the hourly wage ought not to fall and a limit beyond which the working week should not be stretched.
These are the rudimentary standards of human decency at which the relatively automatic provisions of the bill are directed. But even in the application of these rudimentary standards, a certain discretion is given to the enforcement agency so that it can protect the earning power of the workers and their opportunities for employment from unreasonable curtailment; and the Board is permitted to make necessary classifications and exemptions in appropriate circumstances. A degree of general flexibility is achieved by authorizing the Board to vary the minimum wage and hour standards upward or downward and by permitting work for longer hours without the necessity of a specific exemption if the incentive to abuse is removed by the payment of time and a half for the excess hours.
But the bill recognizes that it is not enough merely to outlaw from the channels of interstate commerce goods produced under these very low and oppressive labor conditions. The bill, therefore, further seeks to build up, through appropriate administrative machinery, standards of fairness and reasonableness, industry by industry, with due regard to local and geographical diversities-that, is to bring about in interstate industries the payment of a minimum "fair wage" and the maintenance of a maximum "reasonable work week." The bill carefully safeguards the rights of the workers to obtain by their own efforts, singly or collectively, a wage higher or a work week shorter than that required by the bill.
A fair wage is defined as a wage fairly and reasonably commensurate with the value of the service or class of service rendered; and a reasonable work week as a number of hours of employment in a week which is reasonably appropriate to the nature of the service or class of service rendered. The bill requires the Labor Standards Board to establish a minimum fair wage or a maximum reasonable work week for a particular occupation whenever the Board determines that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, the payment of lower wage or the maintenance of a longer work week prevails to a substantial extent in such occupation or threatens to undermine fair labor standards maintained by other employees. In establishing these standards, the Board would consider the needs and requirements of each industry and would give due regard to geographical and other diversities. Once a minimum fair wage or maximum reasonable hour standard is established by order of the Board, it is made unlawful
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to ship in interstate commerce any goods on which workers have been employed for less than such minimum fair wage or for more hours per week than such maximum reasonable work week. Similarly, when the Children's Bureau of the Department of Labor determines that the employment of children between the ages of 16 and 18 in any occupation is particularly hazardous or detrimental to the health or well-being of such children, the employment of such children in that occupation constitutes oppressive child labor and the products of that labor are barred from the channels of interstate commerce.
In addition to its regulation of conditions of employment by the prohibition against the interstate shipment of "unfair goods", the bill, by part IV, further regulates conditions of employment by requiring the maintenance of fair labor standards in particular situations directly affecting interstate commerce. Thus, when goods produced under substandard conditions compete to a substantial extent in interstate commerce with fair goods, the Board is authorized to require the elimination of such substandard labor conditions and the maintenance of a fair labor standard in the production of goods which so compete. Further, whenever the Board determines that substandard labor conditions will lead to labor disputes directly burdening or obstructing interstate commerce, or otherwise will directly affect the movement or price of goods in interstate commerce, the Board is similarly authorized to require by order the elimination of such substandard conditions. Finally, if the Board determines that such substandard labor conditions are maintained with an intent to divert or control the movement or price of goods in interstate commerce, the Board may by order require their elimination.
These provisions of part IV are designed to be supplementary to the provisions which bar intestate shipment of unfair goods. They also provide an alternative legal basis for regulation since they are based upon the theory that substandard labor conditions which directly affect interstate commerce may be controlled by Congress. While there is some overlapping between the provisions of part IV and those which bar the interstate shipment of unfair goods, there can be no inconsistency between the two in operation.
The administration of part IV may, it is true, present practical difficulties. It may not always be possible for the Board to make the administrative findings necessary, even though the industrial facts urgently require the establishment of fair labor standards. Standing alone, part IV would be of value in protecting existing standards but would be seriously deficient where the industrial need is to establish decent standards where none now exist.
Throughout the bill the standards for the determination of fair wages and reasonable working hours are drawn with the fullest consideration of fairness to the employer. The standards are based on the value of the service rendered and the reasonableness of the period of working time. considering the nature of employment. Furthermore, fairness to all parties concerned and reasonable treatment of special cases is assured by the provisions of the bill which require the Board to grant exemptions from the wage and hour regulations as the need appears. Neither in its general scope nor in its special treatment of particular cases can the bill be pronounced arbitrary, for fair labor standards are required to be maintained only to the extent necessary in order to accomplish the purpose of the legislation.
While the bill closes the channels of interstate commerce to goods produced under unfair-labor conditions, the bill does not attempt to cover purely local pursuits or intrastate service trades.
The bill is divided into five parts:
Part I contains the legislative declaration of purpose, the definition of terms used in the bill, and . section establishing the Labor Standards Board.
Section 1, the legislative declaration, recites the adverse effects upon interstate commerce of the employment of workers under substandard labor conditions in occupations in and affecting interstate commerce. It contains also a declaration-that the correction of such conditions affecting interstate commerce requires congressional action prohibiting the shipment in interstate commerce of goods produced under such substandard conditions, and providing for the elimination of substandard labor conditions in occupations in and directly affecting interstate commerce.
Section 2 contains a series of definitions. The terms defined which are of greatest importance for an understanding of the bill are the following:
"Employee" is defined to include all employees except executives and professional workers and agricultural laborers.
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"Oppressive wage" means a wage lower than the minimum wage standard of -- cents per hour in any employment to which the minimum-wage provisions of the bill are made applicable by regulation or order of the Board. This figure, set by the Congress, however, may be varied by order of the Board and when varied an "oppressive wage" is a wage lower than the minimum wage established by such a Board order.
"Oppressive workweek" means a workweek of more than - hours in any employment to which the maximum-hour provisions of the bill are made applicable by regulation or order of the Board; the figure set by the Congress may likewise be varied by the Board order establishing a different nonoppressive workweek.
"Oppressive labor practice" is defined to mean the employment of strike-breakers during labor disputes or the use of espionage by an employer among his employees or their families.
"Oppressive child labor" means the employment of children under the age of 16 years in an occupation within the scope of the act or the employment of children between the ages of 16 and 18 years in an occupation within the scope of the act which the Children's Bureau has determined to be particularly dangerous or detrimental to the health or well-being of such children.
A "fair wage" is defined as a wage established by order of the Board as "fairly and reasonably commensurate with the value of the service rendered", and a "reasonable workweek" as a workweek which is similarly established as "reasonably suitable to the nature of the service or class of service rendered." The factors which enter into the determination of these standards are specifically enumerated in section 5.
A "substandard wage" is defined as a wage lower than a minimum fair wage established by order of the Board, and a "substandard workweek" as a workweek longer than a maximum reasonable workweek established by an applicable order of the Board.
"Substandard labor conditions" is defined as a condition of employment under which any employee is employed at an oppressive or substandard wage or for an oppressive or substandard workweek, or in which oppressive child labor or any oppressive labor practice exists. Goods produced under any of these substandard labor conditions are designated "unfair goods." The definition of "produced" provides that goods shall be deemed to have been produced by an employee engaged in handling or working on such goods in any occupation in which he is employed. This definition is fortified by a presumption that an employee employed under any substandard labor condition was engaged in the production of particular goods if he was employed under that substandard labor condition within 90 days prior to the removal of such goods from the place of his employment.
Section 3 provides for the creation of a Labor Standards Board composed of five members appointed for staggered terms of 5 years each. The section contains the usual provisions regarding the filling of vacancies, the salary of board members, the appointment of employees, the maintenance of offices, and the filing of reports. It provides expressly that in the appointment and promotion of officers and employees of the Board no political test or qualification shall be permitted, but all appointments and promotions shall be made on the basis of merit and efficiency.
Part II of the bill provides for the establishment of fair labor standards with respect to wages and hours, the application of such standards to particular employments and classes of employments, and appropriate exemptions from such standards. This part deals only with the fixing of the standards; the consequences of noncompliance, and the powers of the Board to require compliance are defined in parts III and IV.
By section 4 (a) and (b) the Board is directed to declare the provisions with respect to oppressive wages and hours applicable to employments within the scope of the act as rapidly as the Board finds that such provisions can be made applicable without unreasonably curtailing opportunities for employment or the earning power of the employees. By subsections (c) and (d) of section 4, the Board is authorized to vary the minimum nonoppressive wage and hour standards established by the act with due consideration to the maintenance of the minimum standard of living, the health, efficiency, and well-being of the employees, and the avoidance of unreasonable curtailment of opportunities for employment and the earning power of the employees.
Section 5 provides for the establishment of fair wage and hour standards - standards representing the fair value of the services rendered and the reasonable period of working time for the occupation in question-as distinguished from barely nonoppressive standards. The Board is directed to conduct an investigation
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of wages or hours, or both, as the case may be, whenever it has reason to believe that owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, substandard wages or hours prevail in any occupation in which employees are engaged in interstate commerce or in the production of goods which are sold or shipped in interstate commerce. In establishing a minimum fair wage the Board is directed to take into account all relevant circumstances affecting the value of the service; the Board is to be guided by considerations like these which would guide a, court in an action for the reasonable value of services, and it is to give due consideration to wages paid under collective labor agreements and those paid by employers who voluntarily maintain fair wage standards. Similarly in establishing a maximum reasonable workweek, the Board is directed to take into account the relation of the work to the health, efficiency, and well-being of the employees, the number of persons available for employment, and the reasonable standards of working time maintained voluntarily or under collective labor agreements. Under this section, however, limits are set to the minimum standards which the Board may establish. No wage shall be established which in the judgment of the Board will give employees employed at that wage an annual wage income in excess of $1,200 or an hourly wage in excess of 80 cents except for overtime or night work. The lowest reasonable workweek which the Board may establish is one of -- hours.
Section 6 provides certain exemptions from the wage-and-hour standards established under the act. Subsection (a) directs the Board to provide by regulation or order that the maintenance of either an oppressive or substandard wage or workweek shall not be deemed to constitute a substandard labor condition in the case of an employer employing les than 15 employee, except where the Board finds that the maintenance of the appropriate wage-and-hour standards by such employers is necessary or appropriate in order to carry out any particular purpose of the act. Subsection (b) introduces flexibility in the regulation of hours by authorizing employment for more hours per week than the applicable maximum upon condition that payment for such overtime is made at one-and-one-half times the regular rate. In this case, too, the Board is authorized to remove or qualify this exemption if it finds that the maintenance of the appropriate workweek is necessary or appropriate in order to carry out the purpose or prevent the circumvention of any provision of the act. Subsection (c) authorizes the Board to make appropriate exceptions from the wage-and-hour standards for special cases such as learners and apprentices, disabled persons, to whom special licenses are to be issued, deductions for board and lodging necessitated by the nature of the work, overtime employment in seasonal or emergency work, and other similar situations.
With the standards thus established in part II, part III of the bill contains the regulatory provisions barring from interstate commerce goods which were produced under conditions which fail to comply with those standards.
Section 7 (a) makes it unlawful to ship in interstate commerce any unfair goods, i. e., goods on which any employee has been employed under any substandard labor condition. This provision is based directly on the constitutional theory of Mr. Justice Holmes' dissenting opinion in Hammer v. Dagenhart (the Child Labor ease), from which President quoted in his message. It proceeds from a conviction that the experience of the past 20 years has demonstrated the wisdom and soundness of Mr. Justice Holmes' view of the commerce clause and that that view will now prevail with a majority of the Supreme Court. Under this view of the Constitution, Congress has power to adopt the policy which the President described when he said in his message that "Goods produced under conditions which do not meet rudimentary standards of decency should be regarded as contraband and ought not to be allowed to pollute the channels of interstate trade."
To provide for the unlikely contingency that this constitutional theory may not be immediately adopted by the Supreme Court, section 7 (b) contains a further prohibition, making it unlawful to transport any unfair goods into any State where they are intended to be received or used in violation of any law of such State relating to the use of goods produced in violation of prescribed labor standards. This provision is modeled on the Ashurst-Sumners convict-made goods statute, which was recently upheld by the Supreme Court in Kentucky Whip and Collar Co. v. Illinois Central R. Co. (299 U. S. 334). In the event that the general prohibition against the interstate shipment of unfair goods should for any reason be ineffective, this provision will provide protection to States which have enlightened legislation against the possible breaking down of their standards by the influx of goods produced under conditions which do not meet the Federal Standards.
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Section 7 (c) makes it unlawful to employ under any substandard labor condition any employee engaged in interstate commerce or in the production of goods which are intended for transportation in interstate commerce in violation of the preceding subsections of this section. It is well established that conditions of employment of workers immediately engaged in interstate commerce, may be regulated by Federal law. Wilson v. New (243 U. S. 332); Virginian Railway Co. v. System Federation No. 40, October Term, 1936, decided March 29, 1937; Washington, Virginia and Maryland Coach Co. v. National Labor Relations Board, decided April 12, 1937. The regulation of employment conditions among workers engaged in producing goods intended to be shipped in interstate commerce is merely a device designed to make effective at an early stage the prohibition against the interstate shipment. Stafford v. Wallace (258 U. S. 495, 520); Coronado Coal Co. v. United States (268 U. S. 295).
While the main regulatory features of the bill are thus directly confined to interstate commerce, the bill recognizes the necessity for protecting employers who produce for interstate markets from the competition of overreaching employers engaged only in local trade. Within recognized constitutional precedents the. bill affords to those employers the protection necessary to prevent a discriminatory application of section 7. By Section 8 (a) the Board is authorized to issue orders requiring employers engaged in intrastate commerce to maintain particular fair labor standards whenever the Board determines that the failure of such employers to maintain such standards gives them an unfair competitive advantage over employers engaged in the production of goods for sale or shipment in interstate commerce or causes the provisions of section 7 to create discrimination against such interstate producers. This provision proceeds on the constitutional theory which was applied in upholding Federal regulation of local railroad rates to the extent that such regulation was found necessary to prevent discrimination against interstate commerce subject to such regulation. Shreveport Rate Cases (Houston E. and W. T. R. Co. v. United States) (234 U. S. 342), and Railroad Commission v. Chicago B. and G. Co. (257 U. S. 563).
Similarly, section 8 (b) directs the Board to make an order requiring the discontinuance of particular substandard labor conditions whenever the Board determines that goods sold in interstate commerce are marketed so regularly and continuously in competition with goods produced under such substandard labor conditions that a fair and non-discriminatory application of section 7 requires the maintenance of fair labor standards among all employees in that occupation in the production of such goods. This provision embodies the constitutional theory of the recapture clause of the Transportation Act which was upheld as to all railroads because of the impossibility of distributing excess income between interstate and intrastate traffic. Dayton-Goose Creek R. Co. v. United States (263 U. S. 456). Subsection (c) of section 8 makes it unlawful to employ any employee in violation of any provision or order made under the prior subsections of section 8.
A further method for the regulation of employment conditions is embodied in part IV of the bill. Instead of relying solely on prohibition of interstate shipment of unfair goods, part IV authorizes the Board to make orders requiring the maintenance of fair labor standards in particular situations directly affecting interstate commerce. But the provisions of this part do not operate until the Board has made a specific determination that substandard labor conditions have one or more specified effects upon interstate commerce. These provisions are thus supplementary to the provisions of part III, and provide an alternative legal basis for regulation based upon the theory that the Congress may require the elimination of substandard labor conditions directly affecting interstate commerce. It must be admitted that it may be extremely difficult to establish the facts necessary to support the administrative findings in part IV when the need for the establishment of fair labor standards is the greatest. Part IV may be of little value in building up a fair labor standard when none exists; but it should be of value in protecting existing standards in particular interstate industries. Constitutionally, the orders of the Board under part IV would seem to be clearly within the rule of the Wagner Act cases which recognized that employment conditions in the production of goods which are sold in interstate commerce may have "such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions." National Labor Relations Board v. Jones and Laughlin Steel Corporation, October term 1936, decided April 12, 1937.
Sections 9 and 10 specify the findings necessary to enable the Board to order the elimination of substandard labor conditions directly effecting interstate commerce. Section 0 (a) provides that the Board shall require the elimination of
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substandard conditions in the production of goods which are sold in interstate commerce and compete to a substantial extent with fair goods produced in another State. Enforcement of such an order is a means of protecting workers in one State from the use of interstate commerce as an agency to promote the spread of the evil of substandard labor conditions from one State to the injury of another State. Kentucky Whip and Collar Co. v. Illinois Central R. Co. (299 U. S. 334). It would seem immaterial from the constitutional point of view whether the Congress exercises its control over interstate commerce to Protect fair labor standards required by law to be maintained by employees in the State of destination or to protect fair labor standards voluntarily maintained by employers in the State of destination. In either case, the condition which impairs the fair labor standards is a condition which arises outside the State of destination and which cannot be corrected by any legislative power except that of the National Government (cf. Baldwin v. Seelig, 293 U. S. 522). Orders of the Board under this provision are also supported by cases upholding the power of Congress to eliminate unfair methods of competition in interstate commerce (Federal Trade Commission v. Winsted Hosiery Co., 258 U. S. 483; Federal Trade Commission v. Keppell and Bros., 291 U. S. 304).
Section 9 (b) deals with the converse of the situation covered by section 9 (a). It authorizes orders requiring elimination of substandard labor conditions existing in the production of goods which are not sold in interstate commerce but which compete to a substantial extent with fair goods brought in from another State. The elimination of such conditions is the removal of a burden, handicap, or obstruction upon interstate commerce (Stafford v. Wallace, 258 U. S. 495; Chicago Board of Trade v. Olsen, 262 U. S. 1).
Section 10 provides for the issuance of similar orders requiring the maintenance of fair labor standards in three other situations. In each case the Board must determine that a substandard labor condition exists to a substantial extent in an occupation. But it must also make an additional finding as the basis of its order. The first of these additional findings is that the maintenance of such substandard labor condition leads, or tends to lead, to labor disputes directly burdening or obstructing interstate commerce. Orders under this clause find full constitutional support in the Supreme Court's decisions sustaining the Wagner Act, which uphold the power of the Congress to employ regulatory measures calculated to prevent such labor disputes. Even before those decisions, the Supreme Court had decided, in cases under the antitrust laws, that labor disputes involving employees engaged in the production of goods may impose such a burden on interstate commerce that they come under the regulatory power of the Congress (Coronado Coal Co. v. United Mine Workers, 268 U. S. 295).
The second situation in which the Board is to make an order under section 10 is that in which it finds that the maintenance of a substandard labor condition directly affects the movement of goods or the performance of services in interstate commerce or the price of goods or services in interstate commerce or causes undue price fluctuations or directly interferes with the stability of prices or the orderly marketing of goods in interstate commerce. Constitutionally this provision proceeds on the basis of the decisions upholding Federal regulation of commodity exchanges (Stafford v. Wallace, supra: Chicago Board of Trade v. Olsen, supra.) The rule of those cases, recently reaffirmed in the Wagner Act cases, is that the Congress may regulate activities "usually lawful and affecting only intrastate commerce when considered alone" whenever such activities have a direct effect upon interstate commerce. Stafford v. Wallace (258, U. S, at 520-521)
Finally, section 10 directs the Board to make an order requiring the elimination of substandard labor conditions when the Board finds that such conditions are maintained by employers with the intent to divert or substantially affect the movement of goods or the performance of services in interstate commerce, or with the intent to control or directly affect the price of goods or services in interstate commerce. Because of the difficulty involved in technically proving such intent, the bill provides that if the Board finds that any employer maintains a substandard labor condition in any occupation and does in fact thereby divert or substantially affect the movement of goods or the performance of services in interstate commerce the facts so found shall constitute prima-facie evidence that the employer maintaining such substandard labor condition did so with the intent to produce such effect or effects upon interstate commerce. The power exercised by the Congress in situations of this character to combat intentional interference with interstate commerce is well recognized (Coronado Coal Co. v. United Mine Workers, 268 U. S. 295). The presumption embodied in this section may, of course, be rebutted by the employer, within whose possession and control all the evidence lies. Such a method of treating the burden of proof in order to prevent ready evasion of a statute or
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where the burden of proof would otherwise be too difficult, has been consistently recognized by the Supreme Court in analogous cases-even to the extent of upholding a conclusive presumption of fact where deemed necessary (cf. Jacob Ruppert v. Caffey, 251 U. S. 264; Purity Extract Co. v. Lynch, 226 U. S. 192; Everard's Breweries v. Day, 265 U. S. 545; United States v. Patten, 226 U. S. 525, 543).
Section 11 prescribes the consequences of violations of orders of the Board made under sections 9 and 10. By subsection (a) the employment of any person in violation of any such order is made unlawful. Subsection (b) makes it unlawful to ship in interstate commerce goods produced by employees employed in violation of any such order. This additional sanction is designed to reach any case in which direct enforcement of the order may be found to be too remotely related to interstate commerce, in that event the order may still be indirectly enforced by barring from the channels of interstate commerce goods produced in violation of its terms. Likewise under subsection (c) such goods may not be shipped into any State where they are intended to be received or used in violation of any law of such State relating to the use of goods produced in violation of labor standards prescribed by State law.. By this provision the method of the Ashurst-Sumners Act is again invoked to protect States maintaining fair standards from the depressing effect of goods produced in violation of the Board's orders.
The last part of the bill, part V, contains the general administrative, procedural, and enforcement provisions.
Section 12 contain provisions applicable to orders of the Board made under sections 4, 5, 6, 8, 9, and 10. It provides that such orders may be made only after a hearing, that they may be based upon more than one provision of the act, shall define the occupations to which they relate, may classify employers, employees, and employments, and make appropriate provisions for different classes, and may contain terms and conditions necessary to carry out their purposes. This section contains important directions to the Board as to the policy to be enforced in the administration of the act. The Board is directed to avoid unnecessary and excessive classifications. Provision is made for the inclusion in orders relating to wages of such terms and conditions as the Board may consider appropriate to prevent the minimum wage from becoming the maximum wage and to prevent the discharge, or reduction in wages, of employees receiving more than the established minimum wage. And the policy is declared that orders relating to wages shall affect only those employees who need legislative protection and shall not interfere with the processes by which higher wages are secured.
Section 13 contains provisions regarding the hearings which are to be held by the Board before orders are made. It requires, among other things, that notice be given and that the hearings be public.
Section 14 authorizes the Board to appoint advisory committees composed of representatives of employers, employees, and the public before making an order under section 5 establishing a minimum fair wage or a maximum reasonable workweek.
Section 15 contains the usual administrative provisions authorizing the Board to conduct investigations, subpoena witnesses, and compel testimony.
Section 16 provides for the enforcement of the act and the orders thereunder by authorizing the Board to institute suit in the United States district courts to enjoin violations.
Section 17 requires employers to keep such records to aid in the enforcement of the act as the Board shall prescribe; it also authorizes the Board to require that goods be labeled in order to facilitate enforcement.
Section 18 provides that the Board shall, so far as practicable, make its investigations and inspections through the Secretary of Labor and his representatives, and authorizes the Secretary of Labor to make such investigations and inspections. This section also gives to the Chief of the Children's Bureau in the Department of Labor power to conduct, inspections and to bring actions to enjoin violations of the child labor provisions of the act.
Section 19 confers upon the Board power to adopt regulations and orders which it deems necessary or appropriate to carry out the provisions of the act.
Section 20 declares void all contracts for the employment of any person in violation of the act or for the waiving of any provision of the act.
Section 21 provides for the payment of reparation to employees who have been paid lower wages or employed for longer hours than the applicable standards allow. In the case of wages this reparation amounts to the difference between
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the wage received and that which should have been paid. In the case of hours, additional compensation is required for the overtime at the rate of one and one-half times the regular wage. The right to this reparation is granted when the condition of employment in question is required to be maintained under the act as well as when goods are shipped in violation of the act, but in the latter case the employer is entitled to prove that he had no reasonable ground to believe that the goods would be transported in violation of the act. And the Board may exempt goods from the prohibition against interstate shipment if it is established to the satisfaction of the Board that every person having a substantial proprietary interest in the goods had no reason to believe that any substandard condition existed in the production of the goods, or that the exemption is necessary to prevent undue hardship or waste and is not detrimental to the public interest; but in order to secure such exemption, provision must be made for the payment of reparation by every employer having a proprietary interest in the goods who failed to maintain the required wage or hour standard.
Section 22 (a) provides that the act shall not justify noncompliance with any other Federal, State, or municipal regulation imposing higher standards. Subsection (b) provides that goods produced under substandard labor conditions in one State, when shipped into another State, become subject to the laws of such other State relating to the use of goods produced under such conditions. This subsection is like the Hawes-Cooper Act relating to convict-made goods, which has been upheld by the Supreme Court (Whitfield v. Ohio, 297 U. S. 431). It is designed as a further method of protecting labor standards built up by State laws.
Section 23 protects the rights of employees to self-organization, collective bargaining, and to engage in all concerted activities allowed by the law of the land. It also provides that the act shall not be construed to invalidate any contract for the maintenance of a higher wage or a shorter workweek than those established under the act.
Section 24 provides that common carriers shall not be liable under the act for the shipment of goods in the regular course of their business, and shall not be excused by the act from their obligations to accept goods for transportation. This provision is designed to place on the shipper responsibility for compliance, and to prevent the framing of unsatisfactory test cases through suits to compel carriers to accept goods.
Section 25 provides for review in the circuit court of appeals of the legal validity of orders of the Board.
Section 26 confers appropriate jurisdiction on the district courts over civil and criminal proceedings under the act.
Section 27 imposes a series of penalties for violation of provisions of the act. The penalties include fine and imprisonment, but no person is to be imprisoned for a first offense.
Section 28 is a separability clause.
Section 29 provides that the act shall take effect immediately but that its mandatory features and orders of the Board shall not become effective until 120 days after its passage.
Representative CONNERY. I think, when we were interrupted, that Mr. Keller was just about to question the witness, and then the Senator from Louisiana.
Representative KELLER. What has the cost to do with the value of the services rendered?
Mr. JACKSON. I think it would have a good deal. In the first place, it affects the market value; that is, what people are willing to take. In the second place, it seems to me that usually a workingman's wage is expected to keep him alive.
Representative KELLER. It ought to be expected to do more than that, should it not?
Mr. JACKSON. It ought to be expected to do a good deal more. The greater the cost for keeping him alive, the greater that wage has got to be, so that I would say that one of the very first considerations in fixing a fair wage was to find a point below which it could not go if the man was going to live in a decent way.
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Representative KELLER. Why should a given man working 8 hours a day in Alabama receive less than an equally good man working 8 hours a day in New York?
Mr. JACKSON. I do not know that there is any moral reason. As for the man in Alabama, it will cost him considerably less for his fuel, less for his clothing; he will live in a structure that is not adapted to 30 below zero, and his cost of living will be somewhat less, and I think that that accounts for some difference in labor standards. Whether it should or not is a question on which my judgment is no better than yours.
Representative KELLER. Is not the question of the cost of living largely a question of poor living, and higher cost, better living, in actuality?
Mr. JACKSON. There are others who could answer this question much better than I. I would say that the same wage in dollars would produce a higher standard of living in Alabama than it would in New York State, for the reasons that I have mentioned. Fuel and clothing and the necessities of life come under a little harder terms in the northern climate.
Representative KELLER. What do you do about the "graveyard" shift in this bill?
Mr. JACKSON. I don't think I could answer that.
Representative KELLER. Is there any provision in it about the "graveyard" or third shift?
Mr. JACKSON. Mr. Pope, who has worked on the detail of this bill, can tell you whether there is anything that applies to that.
Representative CONNERY. As I understand it, we are going to have economists come before the committee, and we are going to have representatives who were connected with the N. R. A. who went into all of that subject, and perhaps it would be better to wait, if the Congressman cared to, until these gentlemen come on the stand and then ask them the questions.
Representative KELLER. I am perfectly willing to do so, of course.
Mr. JACKSON. I am not an economist, and you would not get very reliable answers from me, but I will do the best I can.
Representative KELLER. Well, at least we know you are a good lawyer, anyway.
Mr. JACKSON. I doubt that at times when I read what the judges say to me.
Representative KELLER. If I can lay aside the economic questions and put them up to Mr. Henderson or some of the other witnesses, I am perfectly willing to do that; but before we leave this, I would like to talk to you about some of the provisions of the act.
Page 12 of the House bill concerns the effect of the employment of workers under substandard labor conditions. Does that mean that Congress, as a matter of legislative determination, finds that such effect is present whenever there is employment under substandard labor conditions, or is that a mere expression of opinion that in general such are the effects; and if it is the former, don't you think that such findings should be supported by extensive studies concerning the effect of employment under substandard labor conditions?
Mr. JACKSON. Well, in the first place, I hope that the investigations of this committee will produce a good deal of evidence bearing on those findings, because the evidence is helpful when the act is under
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attack. However, they are not findings that would enter into a particular labor order. There is no requirement in the Constitution that Congress make any findings. You could enact this bill without any findings whatever, and the bill is presumed to be constitutional.
However, a practice has grown up in late years of making findings and of supporting them with evidence, because it gives something tangible to present to the court when you come to argue constitutionality, but these are not findings on which orders would be made. hey may be untrue as applied to some particular situation, but generally, as applied to the industry of the country, they are designed to be fair portrayals of the problem that Congress is wrestling with.
Representative KELLER. Of course, you are more competent than I could possibly be on the effect of the decisions in the Guffey Coal case in which the Supreme Court brushed aside the findings of Congress and said that they were merely opinions.
It has been the attempt on the part of the subcommittee of the Committee on Labor, investigating the textile industry, to meet that entirely and lay in the lap of the Supreme Court a thoroughgoing statement of fact, and say, "Gentlemen, here it is."
Mr. JACKSON. That is good practice.
Representative KELLER. Thank you. And that is the reason I am bringing that subject up to you in this matter.
Mr. JACKSON. I hope there will be evidence brought here by the economists and others which will make these things so clear that no court can say that they are mere opinions.
Representative KELLER. Does the bill leave it to the Board to apply the provisions of this act in all conditions, or only in those industries or occupations where the effects are the same as set out in section 1 (a)?
Mr. JACKSON. I would not say that section 1 (a) was either a grant of that or a limitation of that by the Board. The Board would proceed on its own findings in the particular case.
Representative KELLER. If the Board need not make the similar findingswith. reference to each occupation, how do you reconcile that with the decision in. the Schechter case on the question of interstate commerce?
Mr. JACKSON. Well, to undertake to reconcile this with the Schechter case wuld require a detailed study of the Schechter case. The Court came to the conclusion in the Schechter case that the particular acts involved had no relation to interstate commerce. The chickens had come to rest, and it was out of the channels of interstate commerce and out of the effect of interstate commerce.
Representative WOOD. You talked about the particular act. Which act are you speaking of in the Schechter case that was out of interstate commerce?
Mr. JACKSON. The act of the sale of the chickens. That was not, the Court felt, within the flow of interstate commerce, because they had come to rest.
Representative WOOD. Do you think that that decision coincides with the Bedford Stone case, where the stone was on the ground and the stonecutters were prohibited from refusing to set the stone?
Mr. JACKSON. I have never felt that the Schechter case coincided with a number of the decisions of the Court on the scope of interstate ,commerce, but it is a decision of the Court.
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Representative KELLER. That is just what I am trying to get before us at the present time.
Mr. JACKSON. If we are going back to the Schechter case-if the Court is going back to the Schechter case reasoning - it will be most unfortunate.
Representative KELER. If the Board is to make such findings, why should it not be provided for in the act itself, specifically?
Mr. JACKSON. Well, the Board is to make findings in each case to sustain its order. Do you mean why should not the Board have to find on each one of these points in section 1?
Representative KELLER. No; I simply mean this: In reading the, bill, and I have read it to the best of my ability-which is not very large, perhaps, but the best I can-it seems to me that there is no specific direction for the Board to make these findings. If I am correct about that, it seems to me that that ought to be written in.
Mr. JACKSON. It would normally be the practice of the Board in issuing an order to make recitals of what it found; but personally I do not see any objection to having it stated that the Board should make findings on which its jurisdiction is based, if that is deemed desirable by Congress.
Representative KELLER. It seems to me so.
Mr. JACKSON. I would hope that they would do it.
Representative KELLER. But they ought to have the authority of Congress to do it, it seems to me, if you expect the Supreme Court to stand along and go with us in these things.
Mr. JACKSON. I think the provisions that they shall hold hearings and make orders —
Representative KELLER (interposing). Why not provide specifically that they shall make findings, so that there can be no question about that?
Mr. JACKSON. Mr. Pope thinks it is implied; on page 5. That implies there that they shall make a finding.
Representative KELLER. I do not want to be too technical.
Mr. JACKSON. I see no objection to making that more specifically, that they shall find and determine, instead of using just the word "determine."
Representative KELLER. It seems to me that section 2 (a) defines an employer as including any person acting directly or indirectly. Page 3, line 18, in the House bill -
Mr. JACKSON. (interposing). It is line 20 in the Senate bill and reads that an employer includes "any person acting directly or indirectly in the interest of an employer in relation to an employee."
Representative KELLER. Would that include such a person as an attorney who acts in the interest of the employer?
Mr. JACKSON. I think you would have to read that together. If he acts in the interest of an employer in relation to an employee. If the attorney were supervising the men and acting as the legal agent, it, would include an attorney, but only because he was representing the employer in the employment relationship. No, I do not think "representative" means representative in that sense.
Representative KELLER. I want the lawyers to get in on this, if we can.
Mr. JACKSON. They will, before this is over. [Laughter.]
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Representative KELLER. In section 2 (a), is it your understanding that Congress is to regard the conditions of the various industries or occupations to be taken into account or that the Congress leaves it to the Board to determine that a certain wage or workweek would be oppressive?
Mr. JACKSON. I do not know that I can answer what you have in mind, but the oppressive wage is fixed by filling in the blank in section 10, subdivision 10. That is not applied to any particular industry until the Board finds that it should be made applicable.
I think perhaps you have in mind what you were asking this morning, whether it would not be better to fix a fiat wage that would be oppressive under all conditions.
Representative KELLER. That is what I have in mind, in the ultimate; yes.
Mr. JACKSON. If you could fix a wage that you can say won't throw people out of work at any place, and at the same time is high enough so that it does anybody any good, then it would be well enough to adopt a flat wage for the United States. The difficulty with it is, from a legal point of view, that if you adopt one flat minimum wage which you say must apply in all conditions, you are apt to run into a situation where some man is thrown out of business as a result of it. He cannot meet that wage because of some condition. May be we cannot foresee just what the hardship is. Some employer will take that particular case and he will go to court and say that the act lacks due process, and say, "Here are men denied the right to work because of this law."
If you fix a wage that is so low that you are sure it won't do that any place in the United States, the chances are that it is so low that it won't do anybody any good.
That is the danger of it.
Therefore, there has been an effort in. this act to bring the two things together, establish what ought to be a fair wage in the United States
Representative KELLER (interposing): The subbase?
Mr. JACKSON. Yes. Apply it as fast as you can without doing the employees any damage and without throwing them out of work.
I agree with you that if you could fix a level that would be helpful and at the same time not be harmful to the employees, it would be simpler, but this seems to be the only way that the draftsman of the bill could work out by which you could establish a minimum wage and put it into effect and gradually building up your minimum without taking the chance of throwing people out of work.
Representative KELLER. I again suggest to the draftsman that I would be glad to turn over to him the last development of our bill on the National Textile Act, and that is so because we attempted and I think we attempted successfully, to write into the law the powers of the Commission in such a way that the court will have no right to intercede until and unless the Commission itself has passed fully on that subject, and therefore would prevent the granting of injunction by the Federal courts until the whole thing had been considered by the Commission, and if we have done that, I think it would be an important thing for this bill.
Mr. JACKSON. I am sure we will be very glad to get it. Mr. Pope will be very glad to get it whenever you can make it available to him, and I may say that the men who have worked on this bill have no pride of authorship. They know it is not perfect.
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Representative KELLER. We will try and help to make it as perfect as we can, because that will be difficult enough. But we have worked so long on our bill, and we may be able to improve it somewhat more, but I just want to submit to this committee, if I can, without intruding upon its own function, the work that we have done there to help along with this, so that if it is decided to lay that bill entirely aside ultimately and to go through with this, that we will have contributed our part to it.
Mr. JACKSON. We will be very glad to get it.
Representative IKELLER. I will be very glad to submit it in its new and different form, because I have written and rewritten notes and notes on it until I guess I had better rewrite them again in their complete and final form as developed up to date.
Representative KELLER. Yes.
Representative CONNERY. Senator Ellender, of Louisiana, has a few questions, Mr. Chairman.
Senator ELLENDER. Are there any provisions in the act to prevent an employee from engaging in any other gainful occupation?
Mr. JACKSON. Leaving one employment and going to another?
Senator ELLENDER. In other words, can an employee who is regularly engaged, say by a concern, is there anything in the act to prevent him from engaging in any other employment at the same time?
Mr. JACKSON. From occupying two positions at one time?
Senator ELLENDER. Right.
Mr. JACKSON. I don't recall anything.
Senator ELLENDER. Don't you think there ought to be something in that act to provide for that?
Mr. JACKSON. Well, that is a matter of policy, whether you want it. If Congress wants it in, there should be.
Senator ELLENDER. Would you mind preparing an amendment to the act to cover that situation?
Mr. JACKSON. Let us make sure that we understand each other.
What you want is an amendment which will provide in substance that any person who is getting the benefit of a minimum wage fixed by the act, shall not be permitted to engage in any other employment?
Senator ELLENDER. Right.
Mr. JACKSON. We will be glad to prepare it.
Senator ELLENDER. Suppose unfair goods are shipped from one State into another and are purchased by, let us say a department store doing intrastate business, which provisions in this act would prevent this department store from selling such goods?
Mr. JACKSON. Well, it could sell the goods which it had purchased if it purchased them in good faith, but as I recall it they would be subject to a penalty if they purchased it knowingly. Is that so, Mr. Pope? I am informed that the shipper would be subject to the penalty.
Senator ELLENDER. The shipper?
Mr. JACKSON. Yes.
Senator ELLENDER. So that there would be no penalty insofar as the seller of those goods is concerned, so long as that seller complies with such rules and regulations as may be established by the Board, is that right?
Mr. JACKSON. They tell me that is right. I have not given that point any thought.
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Senator ELLENDER. What other penalty is there to a manufacturer of unfair goods other than a fine or probable imprisonment?
Mr. JACKSON. I have not studied that provision. Mr. Pope can point it out to you. There is injunctive relief which can be obtained. The employee may sue the employer and obtain the wage that he would have been entitled to, and an injunction may be obtained by the Board and the penalties of the act may be enforced.
Senator ELLENDER. As I understand, one of the main purposes of this act is to prevent unfair goods from being transported in interstate commerce.
Mr. JACKSON. Yes.
Senator ELLENDER. And there is no other penalty attached to a producer of unfair goods except that he may be fined and imprisoned, in other words, his goods cannot be confiscated.
Mr. JACKSON. He may be enjoined and he could be proceeded against, if he is caught, to make up the wages.
Senator ELLENDER. Could he be prevented under this act from selling such goods in the State in which he is located or it is located?
Mr. JACKSON. If it is a wholly intrastate transaction and does not affect interstate commerce in one of the ways that we have pointed out, he can produce and sell in his own State.
Senator ELLENDER. I am only assuming now a lot of goods that the manufacturer has been caught up with as being unfair goods. Such goods as those could be sold by him within the State where they are manufactured?
Mr. JACKSON. That is subject to the same qualifications. If it was intended to go into interstate commerce -
Senator ELLENDER (interposing). Well, that is the point I am trying to bring out. In other words, if those goods are manufactured for the purpose of interstate commerce, and in the meantime something happens that they become unfair goods, that they cannot be shipped in interstate commerce, then as I understand it under this act those goods could be sold within the State?
Mr. JACKSON. Well, he would have to pay the wages that he had gotten out of, and he would have to make reparation to his employees.
Senator ELLENDER. And that is specifically provided for in the act?
Mr. JACKSON. Yes. Reparations are provided for on page 37.
Senator ELLENDER. I note that the Labor Board is to be composed of five persons, and that two can constitute a quorum for the transaction of any business. How is that figure of two reached, do you know, and why?
Mr. JACKSON. It has some possibilities of difficulty.
Senator ELLENDER. That is why I am asking you. I was just wondering if you could enlighten us.
Mr. JACKSON. If you have a Board of five, and two is a quorum, you might have two meetings of the Board running concurrently.
Senator ELLENDER. That is exactly the point I had in mind. Don't you think that would run into some difficulty?
Mr. JACKSON. However, the Board is given power to make its own rules, and I assume the Board would make rules which would provide for meetings on call.
Senator ELLENDER. Do you think it is wise to leave it at two?
Mr. JACKSON. I think it might be well reconsidered.
Senator ELLENDER. Will you kindly explain, on page 9, under (b) what is the meaning of that section?
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Mr. JACKSON. The difficulty, if you attempt to exclude unfair goods, and you find in the course of commerce a particular piece of goods, a bolt of cloth, and you have to trace that particular thing back to show who worked on it, and show all of the conditions of employment, then you have a burden of proof there which is impossible or impractical to meet. This section (b) is intended to make it possible to prove a case under this act. Section (b) reads:
(b) For the purposes of this Act, proof that any employee was employed under any substandard labor condition in any factory, mill, workshop, mine, quarry, or other place of employment where goods were produced, within ninety days prior to the removal of such goods therefrom, shall be prima-facie evidence that such goods were produced by such employee employed under such substandard labor condition.
That is a matter that would have a great deal of effect if you were to try a case against an employer under this act. You would be able to take the goods and show when they left the factory; show that within 90 days of that time some oppressive substandard condition existed in that factory, and you would not have to prove that the particular goods were produced under those conditions. The employer may come in and prove that those are goods that he has had on hand for 2 years, and that 2 years ago he was in better state of grace with reference to this act than he was in those particular 90 days; but those things are proof that he has in his possession, and the purpose is if you prove that within 90 days lie was using these substandard labor conditions, it is presumed that the goods were made under those conditions, unless he comes in and proves the contrary.
Senator ELLENDER. That they were made beyond the 90 days?
Mr. JACKSON. Under those conditions.
Senator ELLENDER. And beyond the 90 days?
Mr. JACKSON. No; not necessarily beyond the 90 days, but if within 90 days of that time he has had substandard conditions in his plant, it presumes that they had continued during the time that these particular goods were made.
Senator ELLENDER. Thank you.
Representative CONNERY. Mr. Thomas has some questions next.
Representative THOMAS. Mr. Jackson, turning to pages 37, 38, and 39 of the bill, we find a section there dealing with reparation and release of goods. The act, as I understand it, provides that where an employee is paid less than the minimum wage or a fair wage set by the board, or where there is an excess of the standard work week as set by the Board, that the employees can then more or less take these goods and recover for the excess time they spent in the production of the goods, and also to recover that amount of money that is due them for the lack of having been paid a fair wage. It also gives the right to the Board to accept an assignment from the employee for each one of these differences. It does not state in which court suit will be filed, but it is contemplated that the Board will bring the suit, and I presume that ultimately a question will he raised and all of these little suits ranging anywhere from $5 or $10 or $15 or up even to $100 will eventually find themselves in the Federal court, and the docket of that court, by virtue of the Federal question being involved will have to absorb those cases. It seems to me that it is going to put an undue burden on the dockets of the Federal court or even the State justices of the peace, all of these cases, and it looks to me like you would have to employ a corps of lawyers to file and prosecute
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these suits. I understand there is power to go into a man's place of business and procure the evidence to satisfactorily prosecute the case, but it seems to me that that is a bad provision. I may be in error. Do you think that that is a satisfactory provision and that it will work out satisfactorily in practice, or do you think that it might be better to give to the Commission a right to go in and seize and forfeit these goods wherever found, and by some proper provision, take care of the innocent purchaser or the innocent holder of the goods where he did not buy these goods that were produced under subnormal conditions knowingly. Of course, that feature of seizing the goods and forfeiting them to the United States may not help the employee, but then it could be arranged perhaps that the proceeds of the forfeiture may be distributed among the employees. It seems to me you will remove a large burden on the courts by such procedure.
Mr. JACKSON. Well, I do not think it is likely to result that way. If we find that it is when the law is enacted, then some other provision could be made; but it seems to me that as a practical proposition, if you had a hundred employees in one factory, and you take an assignment of all of their claims, the very purpose of this was to avoid a multiplicity of actions and to see that a single action was brought.
Representative THOMAS. It must be brought by a separate suit. This is a question of law. It is not an equitable relief. Of course, there is a rule of law in equity where you have a multiplicity of suits, they could be combined, but not in law.
Mr. JACKSON. As a practical proposition, if you had a hundred people all of whom had a claim, each of $10 or $15 each, and they went to court to get it and they found themselves up against a lawyer who had been employed by the employer, a lawyer employed by him by the year who said, "Fight them until you know what", the man would simply be up against it to get his remedy. So that in order to make it effective at all, the Government will have to apply his remedy for him. The fact that you bring these claims together in an assignment results in this. If the employer finds he is up against these reparation suits, if he has a legitimate question that he disagrees on, his lawyer and the Government lawyer will agree on one of the cases to be tried to test the whole thing. There is not any necessity to try a hundred cases which would be all exactly alike in their proof.
I think you avoid a multiplicity of cases by putting them under one head, if you are going to give them an effective remedy at all.
Then, too, the operation of this provision will probably be such that they will be willing to stipulate that one case shall settle them all, because recovery of attorneys' fees may be allowed by the court in each of the cases, and the employer may want rather to settle the matter in one test case, than to face 100 such fees, when he has a legitimate question.
As to forfeiture, there is some danger in that, from the point of view of constitutionality. Under the Customs Act and some other acts, forfeiture is applied and is quite effective.
Representative THOMAS. In the Food and Drug Act, for instance.
Mr. JACKSON. Yes; there are many examples. It is a remedy that could be used.
Representative THOMAS. Well, what is your guess as to the number of lawyers that the Board will have to employ to really enforce the provisions of this act? If you have 200 or 300 employees in one concern
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claiming a difference in pay, and you have a thousand different concerns all over the country, how many lawyers do you think the Government will have to employ? It is purely problematical, I know.
Mr. JACKSON. I could not give you much of an idea of that. My own notion is - and it is not any better than yours, because yours is as good as mine - but it is that this law is not going to be so difficult to enforce as it looks on the face of it, because I think when you get this thing started and it is found that the Federal Government means business - it will, of course, be fought until it is declared constitutional - but once that is done and a man knows that he can pay these wages without somebody undercutting him, then I think this law will enforce itself much faster than you might think. What will happen will undoubtedly be that there will be complaints by labor unions who will make a practice of looking after the welfare of their people, and there will be complaints from competitors who will point out that they are trying to do the right thing and somebody is undercutting them. You will get those two sources of complaints in a large way, but I do not think you are going to find as much difficulty in enforcement once you have overcome the handicap that now threatens a man who now has decent labor standards of competition. I may be wholly wrong about it. It will take experience to tell.
Representative THOMAS. I am through.
Representative CONNERY. At this time, in order to keep an even balance between the House and the Senate, Senator Holt would like to ask some questions.
Senator HOLT. I am interested in knowing just how far this bill goes. Will this bill cover the sale of newspapers in the street?
Mr. JACKSON. I don't think so.
Senator HOLT. Would that be in interstate commerce?
Mr. JACKSON. It is like everything else, when you come to draw a line between intrastate and interstate movement. The purpose of the law is to apply to it to the producer rather than to the seller, and it does not seem to me that the boy who takes the papers and sells them on the street can be held to be in interstate commerce, unless there is some unusual feature about it.
Senator HOLT. How would it affect the man in the transfer business taking goods, say, from Chicago to Richmond, Va., and delivering them to a store in Richmond, Va.; would that affect him?
Mr. JACKSON. We had a long discussion about that while, I think, you were absent, Senator Holt.
Senator HOLT. I am sorry.
Mr. JACKSON. The transfer might be an entirely new and independent transaction and within the State, or it may be the continuance of an interstate journey, and it is impossible without more detail as to the particular transaction, to say which side of the line it would fall in.
Senator HOLT. That would be determined entirely by the Board, would it not?
Mr. JACKSON. In the first instance, yes; with the right to appeal to the courts if the Board rendered a determination that it considered unfair.
Senator HOLT. Thank you, Mr. Jackson.
Representative CONNERY. Mr. Dunn.
Representative DUNN. You are not tired answering questions, are you, Mr. Jackson?
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Mr. JACKSON. No, sir; I will be glad to give you any help I can.
Representative DUNN. I noticed when I had this bill read to me that there was not anything in it about the number of hours and the days that the people should work. My question is this: Suppose the Congress inserts in the bill a 5-day and 6-hour working week, would this Board have the right under that provision of this bill if it becomes law, to change that act?
Mr. JACKSON. When they came to apply it to a particular industry, they could vary it if they found it was necessary. In the case of such a wage, that, if applied in full, would throw a man out of work, for example, then they could apply it in part; so that the wage fixed by Congress is subject to variation if the circumstances are such that they produce hardship to the workman.
Representative DUNN. In your opinion, would that not have to be in the bill? In other words, if we just insert in here that no person in the United States shall work more than 5 days of 6 hours, would the Board have the right if we inserted that, to change that?
Mr. JACKSON. Well, it can under the terms as written here, that is, if the blank which you refer to is filled in with a certain wage, the other provisons of the act in applying it authorize them to vary these in case it is necessary to prevent hardship.
Representative DUNN. In other words, if we took that out of that bill, that is giving the power to this Board, then that 5-day and 6-hour working week would be absolute?
Mr. JACKSON. Yes; then it would be absolute throughout the country.
Representative DUNN. You don't have to answer this question if you don't want to. It seems to me, if Congress would enact a law say, a 5-day of 6-hours-that is my working week-that it would relieve the Board of a great deal of responsibility and a lot of embarrassment.
Mr. JACKSON. It certainly would do that.
Representative DUNN. I do not see why we cannot do it.
Mr. JACKSON. The question that you have to consider there is whether you can fix a Nation-wide minimum wage that would be high enough so that it would do anybody any good and not throw some people out of work in various places.
Representative DUNN. Pardon me; I don't think I said anything about wages. I spoke only about hours. I know it would be almost impossible for Congress to establish a minimum wage, as you said to Mr. Keller a few minutes ago, because people in Alabama say it is much cheaper to live down there than it is up North and so forth. I was talking about the number of days and number of hours, the 5-day 6-hour working week. That is what I was talking about.
Mr. JACKSON. A 5-day 6-hour week could be established. It is provided here that it may be varied, and you will find in section 4 that they shall put this into effect as fast as they can, whatever workweek Congress establishes, without unreasonably curtailing the earning power of the employees in such employments. I think the economists who have studied the Nation-wide wage structure and the Nation-wide structure of industry as to working hours can better tell you the difficulties that you might meet in a Nation-wide effort of that kind, far better than I can. I can see difficulties in it, but I do not think I can define them as well as the economists.
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Representative DUNN. It seems to me it would be wise for Congress if they don't put a 5-day, 6-hour working week, to put a limit at least on the number of hours and the number of days that a man or a woman could be compelled to work. Of course, I don't doubt that the Board which will be established will be composed of men who are progressive in the main, but taking it for granted that we are all weak at times, and some of them may be approached by some of these big capitalists and they may change their ideas; whereas if we had it as a law, they could not do that. That is what I mean. I think it is up to Congress to do a lot of this work and have it done so that nobody can creep in there and tear to pieces something that we did.
Now, I am going to quit by saying this - I know that when the N. R. A. was in existence, it had done a good deal in my State and every other State, and more or less wiped out a lot of sweatshops and gave people more money and a more decent living than they had been enjoying before the N. R. A., and I was sorry to see it abolished. It is my opinion that this bill if enacted can be the means of also wiping out the sweatshops and child labor and give working people better conditions. If this bill was enacted into law, that slaughter out in Chicago last week would not have occurred, by those gunmen who slaughtered 5 people and wounded probably 100 more, and the sooner we can get a progressive piece of legislation like this on the books, the better off the people will be.
Representative WOOD. I was very much interested in Senator Ellender's request or suggestion that you draft an amendment providing that no employee who has had this minimum wage established in one industry, shall work for another employer at the same time. Don't you think it would be well to draw that amendment in view of the fact that it has also been suggested that Members of Congress, of the House and the Senate be not allowed to engage in any other business while a Member of Congress?
Mr. JACKSON. I have known of some legislation to be suggested along those lines but it did not get very far. I do not think they are having much chance now to engage in any other business; just now, anyway. [Laughter.]
Representative WOOD. A great deal has been said, and it was reiterated today, about the cost of living, the difference in the cost of living in Alabama or the South, and the North. Do you think there is any difference whatsoever in the cost of living of the people in the rural sections in the South as compared with those of the rural element in the North?
Mr. JACKSON. I just don't know.
Representative WOOD. Do you think there is any difference in the cost of living of a family living in a one-room shack in Alabama, and a family living in a one-room shack in Pennsylvania or New York?
Mr. JACKSON, Well, I don't know what either one would cost.
Representative WOOD. If you have ever traveled through some of those sections where they say the cost of living is so reasonable and so cheap -
Mr. JACKSON (interposing). Yes, sir; I have.
Representative WOOD. You notice that there are not many bungalows, and you will notice that the people are not as well dressed, and I think you will find if you make an investigation of it, that a suit of clothes or a garment of equal quality will cost very little different
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in Alabama from what it will in the North or the East. The very fact that the people in some of these sections live in squalid housing conditions and are on the edge of starvation is why they say that the cost of living is cheaper.
Mr. JACKSON. Well, I think you have to deal with temperature which makes a difference.
Representative WOOD. There were hearings in the House Labor Committee on the textile bill where a large textile manufacturer related that his employees, a number of them, had a cow, and they had a garden, and therefore their cost of living was cheaper than it was in the North where they could not maintain a cow and a garden and chickens and, of course, he contended that because the employee could live on his cows and chickens and his garden, that he should work for less wages, and his employers should get the advantage of it. I think you will find that this differential in the cost of living is infinitesimal when it comes to equal standards of living. Don't you think that is true?
Mr. JACKSON. Of course, if you consider a standard of living which just keeps you warm and just keeps body and soul together, you cannot say there is much difference in the standard of living. Yet it may cost more to just do that.
Representative CURLEY. Will the gentleman yield for a question? Did the gentleman in drawing his comparison in the cost of living between Alabama and New York, take into consideration the high cost of government, police, fire, and so forth, which runs into high sums annually, so that the cost to the city worker is on a higher plane than the worker in the rural sections of Alabama?
Representative WOOD. I am speaking of the cities in Alabama.
Representative CURLEY. So that it is necessary to maintain a higher wage to maintain a reasonable standard of living.
Representative WOOD. I am speaking of cities of comparable size.
Representative CURLEY. Where is a city comparable in size to New York?
Representative WOODs. I would like you to interpret that language at the top of page 15: but the Board shall not establish a minimum fair wage which in the judgment of the Board will give employees receiving not more than such minimum fair wage an annual wage income in excess of $1,200, or an hourly wage in excess of 80 cents except for overtime, night, or extra-shift work.
Mr. JACKSON. The purpose of that is to confine this board to the fixing of minimum wages. It is not the purpose of this to go into a general Government price fixing for labor. Where collective bargaining or other conditions enable labor to get an annual wage income in excess of $1,200, the Board does not function. The Board has that top limit — that it shall not establish a minimum fair wage which will yield more than a wage income of $1,200 per year. In other words, that is the point at which the minimum wage effort seeks. The 80 cents an hour is intended to operate in case the employee is employed for so short a time or in such circumstances that an annual wage cannot be computed.
Representative WOOD. I have been requested to ask you if an employer and a person who bought unfair goods in good faith could ship them in interstate commerce, a distributor.
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Mr. JACKSON. If a distributor bought them in good faith, can he ship them in interstate commerce? There is a provision covering that situation.
Representative WOOD. Could unfair goods be sold in interstate commerce by a distributor who buys the goods in good faith?
Mr. JACKSON. At the bottom of page 38:
(d) The Board shall, by order, exempt any goods from the operation of any provision of this Act prohibiting the sale or transportation of such goods in interstate commerce or into a State if the Board finds that every person having a substantial proprietary interest (as defined by the Board) in such goods had no reason to believe that any substandard labor condition existed in the production of such goods or that such exemption is necessary to prevent undue hardship or economic waste and is not detrimental to the public interest.
That requires that everybody, all of the partners if it were a partnership, should in good faith, have had no knowledge of the conditions of production.
Representative WOODS. That is all I have.
Representative JENKS. Mr. Jackson, isn't it fair to assume that under the bill that the standard of wages would be raised?
Mr. JACKSON. That is the purpose and that is the hope of the bill.
Representative JENKS. And that the maximum hours would also affect the cost of production? Those two items, hours of labor and wages, would naturally affect the cost of production. I bring that question up because since we have been in session here, I have been called on the phone from New York by the president of the National Boot and Shoe Manufacturers Association, who asked me this question:
What protection would the manufacturer have from foreign competition if the cost of production should be raised, because at the present time Czechoslovakia is giving this country a great deal of trouble in the production of boots and shoes, and I am wondering just what protection the manufacturers might have?
Mr. JACKSON. Well, he has a flexible tariff which is designed to protect him from competition from abroad, and it has not been my observation that it has ever been very oppressively handled. I should think that the competition which might be feared from abroad as the result of this act would be negligible — certainly it can be readjusted if it proves there is any serious competition from abroad.
Representative JENKS. I think there is some question there.
Mr. JACKSON. My attention is called to the fact that the flexible tariff is for the purpose of providing for differentials of this kind.
Representative JENKS. But in the present instance, it is not giving protection to the shoe industry of this country from the competition from Czechoslovakia by any means.
Mr. JACKSON. I am not in a position to answer that because I don't know the conditions in the boot and shoe industry well enough.
Representative CONNERY. If the gentleman from New Hampshire will yield, of course, that is something that I am intensely interested in, and we got through the tariff, the late Congressman Andrews and I put them in the tariff. Boots and shoes were on the free list, and we got a tariff put on them. As high as they can go is 30 percent and they are up to that 30 percent and they are not protected over and above the 30 percent. We bad 6,000,000 pairs of shoes a year coming in from Czechoslovakia, which was putting us out of business in the shoe centers of the country. That is one of the reasons that I made this bill provide as to foreign imports, because I do not see how we can go on a 30- or 40-hour week and pay high wages, and then
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allow Czechoslovakia to work 60 hours a week and pay $10 or $12 a week. I want that for the purposes of the record.
Mr. JACKSON. That is a matter that should be adjusted in the tariff rather than by this bill.
Representative JENKS. I was trying to bring out the fact that this bill naturally would raise the cost of production on all goods.
Mr. JACKSON. Of course, every rise in the wage levels does that, and it also enables some people to buy shoes, which the manufacturers should bear in mind.
Representative CONNERY. Suppose you did allow it to affect foreign imports as in my bill. It is not mandatory, is it? It is merely permissive. In other words, in the N. R. A. we had a proposition where when the President found that in the administration of the N. R. A., that the foreign imports were interfering with the administration of the N. R. A., he was permitted to tax them or embargo them or put a tax on them to equalize the cost of production with goods in the United States, or other remedies. We have nothing in this bill which would protect us like that, and this Board if they saw fit, if foreign imports were interfering with the proper administration of this act or became a penalty on the American manufacturers, or the American employers, would it not be wise to allow the Board permissive authority to regulate that as long as you are not saying it is mandatory for them to do it?
Mr. JACKSON. I think your greatest difficulty-there may be others that do not occur to me-but I think the greatest difficulty is the difficulty of applying this law to production in a foreign country, because while we may know or have good reason to believe what conditions are in a particular country, it might be very difficult for the Board to apply that to these particular goods, and I think that if you were going to apply the Board's procedure here to foreign-made goods, you might have to have a little different procedure provided in the bill for dealing with foreign goods.
Representative CONNERY. We have no trouble in finding out what the wages are or the hours, and you have your International Labor Office now over at Geneva trying to work out a 40-hour week. Wouldn't it be helpful for them to have a weapon on the part of the United States to tell them that if they do not put in a 40-hour week, for instance, that we will put into effect the provisions of this bill?
Mr. JACKSON. Yes; but it is questionable whether you have evidence down to the point where you could prove that specific goods to which you propose to apply an order were made under those conditions. You see, you would not only have to know a thing but you would have to prove it when you come into these legal proceedings.
Representative CONNERY. You could make them declare it on their invoices and take their affidavits on that.
Mr. JACKSON. That is a question of policy.
Representative CONNERY. I really feel there is a danger there. I am not set on this. If the House and the Senate wanted that out of the bill, I would not insist on that staying in the bill to the last or to the nth degree, but I do feel that there is a danger there to American employers unless we give them at least permissive protection and give that Board permissive authority to take that up as we did in the N. R. A. or some such provision to be retained in the bill.
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Representative CURLEY. Isn't the point that you have raised here taken care of in the Executive order relating to the reciprocal trade treaties?
Representative CONNERY. No; it has to be the treaty agreed to between the two countries. I am worried very much about those reciprocal trade treaties. I did not favor them in the House. If they go into a reciprocal trade treaty with Czechoslovakia, as they consider they might do here-Bata is over here now looking over the situation and may bring some more of his shoes in. I do not want to stay on that subject, because it is a long story to me.
Representative FITZGERALD. I would like to ask you just one question. Do the provisions of this bill take care of home work, which I claim is the biggest industrial cancer on the industrial life of America today?
Mr. JACKSON. Well, home work, of course, is not expressly included in any definition or provision. The home work would have to come within some of these definitions in order to be included.
Representative FITZGERALD. Isn't there a great danger if this bill should be passed, that these unfair manufacturers may do that, those who today have got a racket in home work, will extend the home work racket in this country by taking the work out of the factory and putting it into the homes at miserable wages, not sweatshop wages but miserable wages, away below sweatshop wages?
Mr. JACKSON. Of course, I did not refer to that particular kind of home work.
Representative FITZGERALD. I mean the work taken from the factory by the manufacturer and put into the home where women and children work.
Mr. JACKSON. I had in mind where the people knew how to make some little articles at home which they sell, and that of course is a different thing.
Representative FITZGERALD. Oh, no; not that.
Mr. JACKSON. Well, that would be caught in Section 6 (a) where the board by regulation or order shall provide that the payment of an oppressive or substandard wage or the maintenance of an oppressive or substandard workweek by any employer employing less than (blank) employees shall not be deemed to constitute a substandard labor condition, unless and except insofar as the Board finds that the maintenance of the appropriate fair labor standard by such class of employers is necessary or appropriate in order to carry out the purposes, or prevent the circumvention, of any provision of this act.
That provision, it is felt, can be used to reach the situation which you have described, because it continues:
The Board shall have power to define by regulation or order the method of computing and determining the number of employees employed by any employer to prevent the circumvention of the act or any of its provisions through the use of agents, independent contractors, subsidiary or controlled companies, or home or off-premise employees, or by any other means or device.
The family that engages in making some little commodity which is a homecraft as you might call it, on its own, would probably not be reached by the bill. That would be my judgment, but the factory which sends out and makes use of people in their homes are not exempted just because they are using premises they do not pay any rent for.
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Representative FITZGERALD. You believe they would have to come under the provisions of the minimum wage and the hours, the same as if their work was done in the factory?
Mr. JACKSON. Yes; I think the Board has power under this section to frame regulations which will catch any of them that are doing that sort of thing.
Representative DIXON. I am just thinking about under the N. R. A. At that time, the big department stores were ordered to make a minimum wage of $13. They had perhaps 10 or 12 wrappers who were making $7 or $8 or $9. They had about 400 or 500 young women, some of them had gotten up to the position of assistant buyer and making $25 and $30. Is there anything in this bill that will stop the reducing the salary and increasing the salary of somebody that is earning less, like it did under N. R. A?
Mr. JACKSON. Except as an order is in existence as to them, there would be nothing to prevent their making any changes in their wage structure. I don't know whether the people that you refer to would come within the class that would be affected by this bill, that is whether they are under the $1,200 limit.
Representative DIXON. Oh, yes; they are.
Mr. JACKSON. Then they are within the group as to which an order might be made if the other conditions are complied with, and I would think that the order could protect them.
Representative DIXON. I know that that was done throughout the United States where hundreds of people had their salaries reduced, and of course 8 or 10 wrappers from one department had their wages raised to the minimum wage, which was a hardship on most of those girls because they were trying to protect their homes.
Mr. JACKSON. The provisions of the orders of the board are broad and purposely so, to cover situations such as you mentioned. I think we have already called attention to it, but it is on page 27:
(6) in case of an order relating to wages, may contain such terms and conditions as the Board may consider necessary or appropriate to prevent the established minimum wage becoming the maximum wage and to prevent the discharge or reduction in wages of employers receiving more than the established minimum wage; and it shall be the policy of the Board to establish such minimum wage standards as will affect only those employees in need of legislative protection without interfering with the voluntary establishment of appropriate differentials and higher standards for other employees in the occupation to which such standards relate.
Representative CONNERY. I would like to ask Mr. Jackson one or two questions in reference to the 16-and-18-year age on child labor. The 18 only applies when things go into a State where the State has and 18-year-old law?
Mr. JACKSON. No; 18 may apply in case the Children's Bureau finds that the particular industry in which they are employed has conditions that make the 16 to 18 detrimental to health or well-being. That is found at the bottom of page 6.
Representative CONNERY. But it is only on hazardous cases that they go to 18?
Mr. JACKSON. Yes.
Representative CONNERY. Sixteen ordinarily?
Mr. JACKSON. Yes.
Representative CONNERY. When they go to a State that has an 18-year-old law, then the goods going in there would be subject to that law under another separate provision that you have there?
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Mr. JACKSON. Yes, sir.
Representative CONNERY. Now, on the collective bargaining, Mr. Wood spoke to you and some others spoke today, and it is clearly interstate commerce. Collective bargaining in one State - Indiana and California, for example, have collective bargaining, and Indiana has $4 a day, and by collective bargaining in California they get $6 a day. Can the Board go in and set a minimum wage higher than that as long as it is under your $1,200?
Mr. JACKSON. They can set it higher - they can set a minimum wage higher than the wage which might be established by any method, whether collective bargaining, or otherwise.
Representative CONNERY. That is what I mean. You can even go in by collective bargaining where you think it is too low?
Mr. JACKSON. You can raise the minimum but you cannot reduce. You can raise the minimum even though it is established by collective bargaining. You cannot reduce.
Representative CONNERY. In section 4 on page 12: the Board shall from time to time by regulation or order declare such provisions applicable to employments within the scope of this Act as rapidly as the Board finds that such provision can be made applicable to such employments without unreasonably curtailing opportunities for employment.
You spoke about investigating and such an investigation gave you a stronger position in reference to the constitutionality. Why do you say that?
Mr. JACKSON. Well, in the first place you would have a record which would contain your facts. That is always important - to be able to point to some place where something is definitely proven, rather than to just get up and say it and expect the court to take your word for it. Then, further, you eliminate by that method, the cases of hardship. And, of course, if a lawyer, or a group of lawyers, is talking about the constitutionality of an act, they always cast about to take the best case, naturally enough. Sometimes Government counsel have done the same thing. And they always pick the case that is most glaring in hardship, and will get the most sympathy from the court. There is an old saying among lawyers that hard cases make bad law.
So that you eliminate those cases that the Board feels would be cases of hardship, and when you come to really testing your act, you are apt to test it in a fair case. It is a great advantage sometimes. I think in the Wagner Act case, that it was a fortunate thing that the test came in the Jones and Laughlin cases and other cases where pretty definite facts existed which were helpful in sustaining the act.
Representative CONNERY. On the delegation of authority of Congress to a board. You said first of all that there is nothing in the Constitution that prevents such an authority.
Mr. JACKSON. Nothing in the Constitution about delegation whatever.
Representative CONNERY. But it is better with the Supreme Court to set a certain standard where you delegate that authority?
Mr. JACKSON. It is better from the point of view of sustaining it in the Court, and it is better from the point of view of good administration that you prescribe the limits as well as you can, so that the board will carry out your instructions.
Representative CONNERY. Would you be in a stronger position from a constitutional point of view if you set a 40-cent minimum up or
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down for the board to decide whether they could go up or down on it, and a 40-hour week maximum, and then say the board could shrink below to a 35-hour week? Which would be the stronger constitutional position?
Mr. JACKSON. I think it is better to insert the figure.
Representative CONNERY. And give them the power of going up or down from that?
Mr. JACKSON. Yes.
The CHAIRMAN. It is also better from the governmental standpoint, is it not, to permit the law so far as possible to be enacted by the elected representatives of the people, rather than by appointed bureaus?
Mr. JACKSON. Oh, yes.
The CHAIRMAN. So that so far as the difference between the delegation of power is concerned and the enactment of legislation is concerned, it is always preferable to have the act go as far as it can without having such a rigid condition so that it would work great hardship?
Mr. JACKSON. Yes. It is much better also from the point of view of the citizens, most of whom want to live up to the law, to have as accurate a guide of what the law is as possible. Their point of view demands that the standard be made as definite as it can be.
Representative CONNERY. Why is competition good law? I mean from a constitutional point of view. Does that enter strongly into the picture as to constitutionality and taking that garment industry in New York, that the manufacturers in New York who sell in New York, and then who are in competition with goods made under fair labor standards in Indiana?
Mr. JACKSON. Competition is unquestionably one of the strongest grounds constitutionally for the regulation of any act. One reason is we are used to that, and the courts act more readily along lines that they are accustomed to. From 1890 when the Sherman Act was applied, down to the present time, we have constantly exerted Federal power over acts that were supposed to be contrary to the policy of Congress in reference to the building up of monopoly. Many of those acts were purely local acts, but since they affected competition in interstate commerce, the courts have held that there was power to regulate them. Likewise they hold that the local act which never got into interstate commerce itself, but which affected interstate commerce competitively could be regulated, so that we have a broader base for Federal action in reference to competition than we do without it.
Representative CONNERY. Would you figure logically - I mean logically legally-would you feel, in view of the situation in the Wagner-Connery Act, that a labor dispute is an interference to the free flow of interstate commerce, and that long hours and cheap wages and child labor are the most frequent causes, recurrent causes, of labor disputes? I mean now logically legally there; would you feel that that would strengthen your constitutionality?
Mr. JACKSON. Yes; we have felt that that strengthened the case and have included it in this act for that reason, although in a sense the provisions which apply that doctrine overlap somewhat the provisions which apply the other.
Representative CONNERY. I mean on the grounds of what Chief Justice Taft said, where certain recurring practices are likely to
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interfere with the free flow of interstate commerce, Congress has the power under the commerce clause to stop that.
Mr. JACKSON. Yes.
Representative CONNERY. Thank you. Are local transportation systems-that is, local bus lines, streetcar companies, taxi companies, and service agencies, and so forth-not contemplated to be controlled by this act?
Mr. JACKSON. You mean so far as they carry goods that are declared to be unfair goods?
Representative CONNERY. I think you answered this question a little while ago. Where a taxi driver took you on a through ticket, that would be interstate commerce; but if he was an independent contractor on his own, it would not be wise, so I think you have covered that pretty much. Now, what about the newspaper business? Would the editorial staff and printers in the newspaper establishment itself-would they come under this, and how far do these go down? To the newsboys, or what?
Mr. JACKSON. If the newspaper moved in interstate commerce, the persons who were engaged in its production would come under the act.
Representative CONNERY. I am very much interested in this, because back in the A. P. case it involved that. Are you taking it from the standpoint of view of the newspaper itself, that it must go over a State line, or are you taking it by telephones and radio and that picture of them getting their news through the A. P., and all that?
Mr. JACKSON. It would not seem to me, although I have never investigated the subject, that the fact that the newspaper got its news from an out of the State source would be sufficient to make the newspaper itself in interstate commerce.
Representative CONNERY. I-low about the guild? The fellow that was in the guild?
Mr. JACKSON. The fellow that was in the guild was engaged by the Associated Press in the collection of news from all States, centralized it and sent it out. He was in the flow. But where a newspaper is getting its news in by wire, some of it, perhaps, from New York and some of it from Chicago, I do not think that the fact that they get it by wire would be sufficient to make the newspaper itself engaged in interstate commerce. There might be other conditions - I don't know what they are, and I don't know what their contracts are.
Representative CONNERY. Suppose the Boston Post ships up into New Hampshire. They do.
Mr. JACKSON. When it crosses the line, it is an act of interstate commerce.
Representative CONNERY. How would that affect the employees?
Mr. JACKSON. That would affect the employees just as any others would be affected by this act.
Representative CONNERY. How about the reporters?
Mr. JACKSON. They can come under the group of professionals. It does not affect employees who are engaged in a private capacity. I don't know whether the newspapermen consider that they are engaged in a professional capacity or if they are engaged at such low wages as not to come within the bill.
Representative CONNERY. Suppose they went into a labor organization, or suppose they have a guild, all of the reporters, and suppose
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just for the sake of argument, that their wages are down pretty low, would they come under it then? Could you set a definite minimum wage, in other words, for your newspaper reporters? I don't mean these "big shot" fellows, but I mean the small-town fellows.
Mr. JACKSON. It would be a matter of interpretation, and differend minds might disagree on it. I would not think that the newpapermen would be included, because I would regard them as a profession.
Representative CONNERY. But you would say that those Boston Post linotype operators, the men who were engaged in actually getting out the paper, printing the paper, with the machines and all that, would be in it?
Mr. JACKSON. I think they would.
Representative SMITH. Does the bill apply to municipally hired employees?
Mr. JACKSON. I think not. There is a specific exemption, page 3, section 6, that an emmployer shall not include the United States or any State or political subdivision thereof.
Representative SMITH. A municipality, then, who are engaged in the shoe business, or any other kind, could pay any price; is that right?
Mr. JACKSON. The employer does not include amunicipality. I think there would be other questions inolved, as to whether they could engage in the shoe business.
Representative SMITH. I happen to know of municipalities that are engaging in the shoe business, and they are testing the proposition whether they had a right to. There would in no way to prevent that condition in this bill.
Mr. JACKSON. Well, there is a constitutional problem involved the moment that the Federal Government attempts to regulate anything that a State or municipality does in reference to its employees. Where the line would be drawn is hard to tell. In the income-tax statute, as you no doubt know, essential governmental functions are not taxable as to the salaries paid.
Representative SMITH. Is three anything to cover employees working under contracts for municipalities?
Mr. JACKSON. You mean where the contract is let and the contractor employs the help?
Representative SMITH. The contractor takes a contract of a town or a city or a State.
Mr. JACKSON. The question whether his help would be included?
Representative SMITH: Yes.
Mr. JACKSON. I don't see any reason why his help would be exempted.
The CHAIRMAN. If they were engaged in interstate commerce?
Mr. JACKSON. Yes; if they were engaged in interstate commerce.
Representative RAMSPECK. I would like to ask you, Mr. Jackson, about the definition of agricultural labor on page 4, subsection (7). Am I right in assuming that the definition is left up to the Board?
Mr. JACKSON. I don't find the reference.
Representative RAMSPECK. Line 10, on page 4.
Mr. JACKSON. Yes; there is a provision authorizing the Board to define and delimit the definition of agricultural labor. There is another provision on page 35.
Representative .RAMSPECK. Then it would be a question for the Board to decide as to whether a man working in a dairy, for example,
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was an agricultural worker or a man who might pick peaches or pack peaches or apples.
Mr. JACKSON. The power to make regulations is not a power to alter the statute, of course. If you have a person who is clearly engaged in agriculture, the Board would not have any power to say that agriculture is not agriculture. Where you have doubtful cases, where it is hard to say whether a person is engaged in agriculture or is engaged in manufacturing because of the blending of their duties in such a way, the Board can then make regulations defining where the classification should fall.
Representative RAMSPECK. The same thing would be true as to naval-store workers, because, as I understand it, the growing of trees is an agricultural pursuit, but the question of whether the gathering of turpentine is would be a matter for decision by the Board.
Mr. JACKSON. I think the extent to which a person gathering turpentine or gathering sap, as we call it, from trees - I don't know much about the turpentine industry - that they might get into a question as to the extent in which he was devoted to that exclusively, and the other work involved, and the magnitude of the operation, and I think it should be for the Board to define where the line should be drawn.
Representative RAMSPECK. In connection with that discussion on page 8, subsection (24), I find the bill says:
(24) "Produced" means produced, manufactured, mined, handled, or in any other manner worked on in any State-
And it also goes on to say: and for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in the making of tools and dies used in the production of such goods.
That would indicate to me that unless it was purely an agricultural product or clearly an agricultural product, the right of the Board to define that employee as an agricultural worker would be somewhat limited?
Mr. JACKSON. Well, there are cases, as Mr. Pope has called to my attention, the case of a farmer who operates a canning factory in connection with his enterprise, and operates the two enterprises; or perhaps some of the companies making milk products also operate a farm and an ice-cream factory, or a farm and a candy factory or chocolate factory, or something of that kind. You have some very difficult borderline cases, and the Board will have to lay down the rules for them, but I do not think they would have any power-of course, their rulings are subject to review-but the Board would clearly have no power to make an unreasonable application of this power.
Representative RAMSPECK. It is not the intention, however, of the drafters of this bill, to apply it to agricultural workers?
Mr. JACKSON, Oh, no.
Representative RAMSPECK. And in reference to the independence of the Board, is there any value to that from a constitutional standpoint?
Mr. JACKSON. From the point of view of delegation, perhaps there is.
Representative RAMSPECK. Then I wanted to ask you something about section 5 (a). First, as I understand it, the limitations as to the hours and wages which Congress may put in this act do not apply to anybody until the Board applies them, is that correct?
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Mr. JACKSON. Yes.
Representative RAMSPECK. In other words, we pass the act and it does not apply to anybody until the Board investigates a particular industry or group, and then they apply it, and vary it up or down as the circumstances may warrant?
Mr. JACKSON. That is right.
Representative RAMSPECK. With reference to what they shall consider in fixing the wage, it says on page 14 that –
If the Board shall determine that wages lower than a minimum fair wage are paid in such occupation to a substantial extent, or that the payment of such wages by one or more employers in such occupation threatens to undermine a fair labor standard maintained by others, and that the establishment of a minimum fair wage in such occupation will not unreasonably curtail opportunities for employment, the Board shall make an order establishing the minimum fair wage for employees in that occupation.
Take the case like this, for example. Suppose you have a cotton textile mill in a town where there is no other employment on textile work, and they have antiquated machinery. A given worker in that particular plant cannot produce as much as the same worker could in a plant with modern machinery. Could the Board take that situation into consideration in fixing the wage?
Mr. JACKSON. In determining whether to apply it, it could consider the production, because there is a very broad provision under class 2 that it shall be guided by like consideration as would guide a court in a suit for the reasonable value of services rendered. Of course, it could consider all of the working conditions, the effect of the work in the production to the employer, and they could undoubtedly consider another factor which is not included in this in reference to making the minimum applicable there, whether it would throw those people out of work.
Representative RAMSPECK. That is the point I am getting at, exactly.
Mr. JACKSON. It is in subsection 2.
Representative RAMSPECK. If they apply a wage there on the same basis as the modernly equipped plant it would destroy the opportunity of that manufacturer to compete, and therefore he would go out of business, and these people would be then out of employment, and no opportunity to get employment in that particular town. I happen to know of a case of that sort.
Mr. JACKSON. That is the difficulty in trying to lay down a fiat minimum wage for the entire United States, that you meet a situation of that kind, and you are doing a real hardship to somebody, and you get a test of constitutionality based on that when you have a bad situation from a legal point of view, and a bad situation from the point of view of the fairness of the legislation if it does that.
Representative RAMSPECK. In connection with that same question of fixing the wage, can the Board take into consideration differentials in transportation cost to the consuming market? For instance, suppose we have a mill, we will say a cotton textile mill in Massachusetts, and one in Georgia. The Georgia mill pays the lower wage rate, but its cost of transportation to the competing markets, say, Chicago, is 25 percent higher, would that be taken into consideration in fixing the wage scale?
Mr. JACKSON. It will be taken into consideration because it would enter into the value of the service performed at that point. Any
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factor, it seems to me, that would enter into the question of the continuance of that business and any question that would enter into the value of the service could be taken into consideration by the Board. If they failed to take into consideration the transportation differentials that were serious enough to affect the continuity of the business, they might put people out of work. So they would have to take into consideration all of the factors which affect both the plant and the enterprise and the individual worker.
Representative RAMSPECK. Then it follows, as I understand your statement, that they could also take into consideration the things furnished to an employee, such as company houses if rented at a lower rental than the rental in the community where the plant was established, and any conditions with reference to the employment that reduced the cost of living to that employee.
Mr. JACKSON. Yes, that is provided on page 19. That is a part of his compensation.
Representative RAMSPECK. I am asking those questions, I may say, for the record, for this reason: Personally I am anxious to see wage scales in the South as high as anywhere in the world, but I do not want to see my employers put out of business in the South, and my employees then out of employment. We here in the House Labor Committee, everytime we meet nearly, there is a discussion of the low-wage scales in the South. Nobody deplores them more than I do, but there are other factors that enter into it which we cannot afford to disregard, such as freight rates, and no doubt Chairman' Black knows about it. I am glad to have that in this bill.
Representative CONNERY. I think, knowing you as a member of this committee so long, that you will agree that this bill is probably the closest approach to anything upon which we can get harmonious action along the various lines of which you spoke, of any bill that we could introduce.
Representative RAMSPECK. I think that is true. That is the reason I brought out, through the questions of Mr. Jackson, that without them, we down in the South in the cotton-textile industry, would be put out of business if there were not such considerations.
Mr. JACKSON. A bill could be drawn with great simplicity, of maximum hours and minimum wages, which might greatly disrupt industry. The whole complexion of this bill, and it does seem like a complicated bill when you try to read it-I have found it so-is in the first place to try to get the benefit of all the constitutional possibilities; and in the second is to get a bill that will begin to move in the direction of taking care of these minimum wage situations without destroying businesses that employ men.
Representative RAMSPECK. That also carries out the President's message, because he stated in one paragraph of it that geographical and industrial diversities could not be immediately overcome without causing serious hardship.
Now, that is all I have to ask.
Senator ELLENDER. Mr. Jackson, will you answer one question?
Mr. JACKSON. I will try.
Senator ELLENDER. We have in our State quite a few small factories that make raw sugar, let us say, and syrup, not made for the purpose of interstate commerce, but they sell this raw product to a refinery
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that may probably sell it in interstate commerce. Would the manufacturers of this raw product come under this act?
Mr. JACKSON. Well, they intend it to go into interstate commerce?
Senator ELLENDE1R. Not as far as they are concerned. They have been disposing of this material or this raw product to these factories and these factories, I presume, do engage in interstate commerce, but it has been a custom among them to manufacture the sugar in a raw state and also manufacture the syrup, and then the refinery in turn makes it into a merchantable product that is sold in the State and probably without the State. Would this act cover those people who manufacture the raw material?
Mr. JACKSON. Well, of course, in the first place, you have a question there whether the Board will apply the minimum wage and hour standards to them under those circumstances.
Senator ELLENDER. The point I want to know is, could they?
Mr. JACKSON. They could.
Senator ELLENDER. Under what theory?
Mr. JACKSON. That they are producing it with the intention and with the customary result -.
Senator ELLENDER (interposing). They do not have that intention.
Mr. JACKSON. You are talking about a different thing. You have the prohibition of those goods from moving in interstate commerce. Their sale to the refinery would be lawful, because, as you say, they are not engaged at all in interstate commerce themselves and do not intend to, but the refinery may find that it was obliged to stay out of interstate commerce, if this product was produced under substandard conditions.
You have also the question that, as you frame it, that they are very small plants. You have the question whether the exemption to the employers would come in, resulting from some figure to be fixed.
Senator ELLENDER. I am assuming that they would not come under that exemption, but that they produced these raw materials, and as far as they are concerned, they do not intend that these raw materials should be shipped out of the State, but they in turn sell them to someone who does ship them in interstate commerce. I am just wondering whether under this law, would you have the right to make them come under that act and make them come under the jurisdiction of your Board.
Mr. JACKSON. Of course, when the goods move into interstate commerce, if the refinery sells them in interstate commerce, the refinery would have to have them produced under conditions that were not substandard. If the refinery bought those goods, the refinery when it attempted to move them into interstate commerce would be moving substandard goods or unfair goods.
Senator ELLENDER. How could you classify them as substandard if the people or the concern that manufactures them did not intend them to go into interstate commerce?
Mr. JACKSON. The point is this, if you could not do that, all that any manufacturer would have to do would be to contract out the amount of production that he wanted to do with child labor, and he could move his stuff all in interstate commerce and evade the law.
Senator ELLENDER. I could follow you on that, because such a procedure would be to evade the law, but where they have been doing this in the past for 50 or 100 years-they do not have the facilities, for
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instance, to manufacture granulated sugar. They have but a small mill where they make from 500 or 600 bags of sugar per year. They have no intention of shipping that through interstate commerce, but there has been a custom of selling that product to a large concern that in turn may ship it through interstate commerce.
Mr. JACKSON. It is my judgment there that it is the refinery who will not be able to buy and sell in interstate commerce, that product, if this bill goes through.
Representative RAMSPECK. I cannot find it in the law.
Mr. JACKSON. It is in the competition. It enters into competition, into the channels of interstate commerce, these unfair goods, and the fact that these goods have been produced by two producers instead of one, by a refiner and a local man.
Representative RAMSPECK (interposing). If that is a fact, then you might apply the same thing where you establish the minimum of 15 people. The product of these 15 people that you exempt might find their way through interstate commerce.
Mr. JACKSON. That would be true, but you make an express exemption of them.
Representative RAMSPECK. But here the people never intended that those goods should be produced for interstate commerce.
Mr. JACKSON. If they enter the competition, and I do not want to disagree with you about their intent, they surely are not raising it for local consumption entirely.
Representative RAMSPECK. The reason I am insisting on the view that I am taking is that they must have the intention of doing it, and the fact that they have been doing it in the past would clearly demonstrate to me that they had no intention of violating a law that did not even exist.
Mr. JACKSON. Even if they do not intend and still do enter into the competition, those unfair goods are excluded from interstate commerce, and the fact that you change the title by selling them from A to B before they go into interstate commerce does not affect it. If you did, of course, the law would be a nullity, because they could farm out the parts of the work that they wanted to do under substandard conditions.
Senator PEPPER. Is "agriculture" broad enough to include horticulture in a legal sense, for instance, cane growing and citrus-fruit production and so forth?
Mr. JACKSON. I would think so.
The CHAIRMAN. I would like to ask you one question, Mr. Jackson, before we get through. I think I understood what you meant, but I want to be sure. One of the standards is that the Board shall shorten the minimum wage and take into consideration what we call a quantum meruit in the law, which is the value of services, and the value of services might be one thing in one place and another thing in another, and under that legal rule which has been in existence practically since the beginning of the Anglo-Saxon law.
Mr. JACKSON. Yes.
The CHAIRMAN. It is true also, is it not, that the majority of judges might not have decided the minimum-wage case as they did from New York, if it had not been based upon a statute which was elucidated by Chief Justice Hughes, that the law provided that they must consider the real value of the services?
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Mr. JACKSON. Yes.
The CHAIRMAN. That is correct?
Mr. JACKSON. Actual value; yes.
The CHAIRMAN. And one of the reasons for invalidating previous minimum wage laws, one of the strongest arguments had been that there was no provision in the law whereby the Board must take into consideration the value of the services. That is correct?
Mr. JACKSON. That is correct. That came into it.
The CHAIRMAN. Is it not also true that if that should continue to be the opinion of the majority of the Supreme Court, even though they have ratified the New York minimum-wage law, that we should pass the minimum-wage law which did not give the authority to the Board to consider these definitions based on the idea of the quantum meruit, that this law might also find itself meeting the fate of those that were stricken down on the ground of unconstitutionality?
Mr. JACKSON. I should think that a minimum-wage law, Federal or State, which paid no regard to the fixing of the value of the services, would be on dangerous constitutional ground.
The CHAIRMAN. And that in order to meet that situation, the law does, on the value of the services, take into consideration the value of the services at the place where the services are performed?
Mr. JACKSON. The place and the time where rendered.
The CHAIRMAN. That means, does it not, that without that provision for a wage differential, you could not give us the statement you did this morning, when you said that in your judgment this bill would meet the constitutional grounds?
Mr. JACKSON. Yes.
The CHAIRMAN. And if it did not meet that provision for differentials by including the idea of the quantum meruit, you would not have given the answer you did, would you, as to your opinion that this act would stand the constitutional test?
Mr. JACKSON. I certainly would not give it with any such confidence. I do not think I would want to have a bill that did not have this provision in.
The CHAIRMAN. The courts have emphasized that you must consider the value of the services and anything else would be arbitrary.
Mr. JACKSON. Yes, sir.
The CHAIRMAN. One other question which another Senator asked me to bring out, and that is this: What are the different methods by which a case can come before the Board?
Mr. JACKSON. Well, almost anything can bring a case before the Board. The Board would have the power to initiate an investigation on its own motion and, of course, having power to initiate an investigation on its own motion, it could initiate an investigation at the suggestion of any citizen, any officer, a Governor of a State, a member of a city government, Member of Congress, any Senator - they could do it, as could any person who gave the Board information on which it saw fit to act.
Union labor organizations would be enabled to make complaints about conditions, and one source of complaint that I think is quite likely to develop is that of one manufacturer complaining of another and saying "I am trying to live up to this law but this man is not. I want to be protected against this unfair competition." He is within his rights, because that is one of the purposes of the bill.
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The CHAIRMAN. All right; thank you very much.
Representative CONNERY. I move that we thank Mr. Jackson and adjourn until tomorrow morning at 10 o'clock.
The CHAIRMAN. Before we adjourn until tomorrow, we will have before us tomorrow Mr. Robert Johnson, of Johnson and Johnson, and Mr. John G. Paine.
The committee will adjourn now until 10 o'clock tomorrow morning, Thursday, June 3, 1937.
(Whereupon, at 4:55 p. m., a recess was taken as noted.)
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FAIR LABOR STANDARDS ACT, 1937
THURSDAY, JUNE 8, 1937
United States Senate,
Joint Committee of the Senate Committee on Education and Labor, and House Committee on Labor,
Washington, D. C.
The joint committee met, pursuant to taking of recess, at 10 a. m. in the 3caucus room, Senate Office Building, Senator Hugo L. Black presiding. Present: Senators Hugo L. Black (chairman), Elbert D. Thomas, James E. Murray, Claude Pepper, Allen J. Ellender, Josh Lee, Robert K. La Follette, Jr., and James J. Davis.
Representatives William J. Connery, Jr. (chairman), Robert Ramspeck, Albert Thomas, Joseph A. Dixon, George J. Schneider, Richard J. Welch, Clyde H. Smith, and Arthur B. Jenks.
The Chairman. The committee will now come to order. The committee will now have as a witness Mr. Robert Johnson, of Johnson & Johnson.
The Chairman. Is this Mr. Robert Johnson?
Mr. Johnson. Yes, Senator.
The Chairman. What is your business, Mr. Johnson?
Mr. Johnson. I am president of Johnson & Johnson.
The Chairman. In what business is Johnson & Johnson engaged?
Mr. Johnson. We manufacture miscellaneous surgical dressings and operate a number of affiliated and subsidiary companies in the textile field, baby-food field, and other such products.
The Chairman. Where are your enterprises located?
Mr. Johnson. New Brunswick, Gainesville, Ga.; Chicopee, Mass.; Manchester, N. H.; Rochester, N. Y.; Chicago, Ill.; Chambersburg, Pa.
The Chairman. How many employees do you have at all of these places?
Mr. Johnson. In the neighborhood of 5,000.
The Chairman. Have you prepared a statement with reference to bill which you can read to us?
Mr. Johnson. I have prepared one.
The Chairman. Do you prefer to have questions asked?
Mr. Johnson. Whatever you like.
The Chairman. You have the statement?
Mr. Johnson. Yes, sir; I have the statement.
The Chairman. I suggest that you go ahead with your statement now and after you have finished the statement we can ask any questions we desire.
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Mr. Johnson. Very well, Senator.
Senator Black, Congressman Connery, members of the committee and gentlemen, let us take as our premise the statement of the President of the United States: “We cannot achieve lasting prosperity or political stability in this country so long as one-third of our people earn less than a decent living and many millions are unable to find work in private industry and business.” Those of us who look forward to a career in commerce and industry want to see the country prosperous for selfish reasons. We cannot conduct our business unless our currency is stable, which means that at a reasonably early date we must have a balanced budget and some adjustment oi the present burdensome tax structure. I mention these things not in condemnation of this administration, but in the hope that by bringing these elements into our consideration of the hours and wages bill we will gain the support of many realistic business men who naturally must think of the welfare of their private business. Roughly speaking, 60,000,000 people are supported by commerce and industry, and another 60,000,000 supported by agriculture. This leaves 10,000,000 people whose livelihood is derived from a long list of miscellaneous professions and services.
The prosperity of all American industry and commerce rests in the final analysis of the buying power of the masses and therefore we have a direct and selfish interest in the welfare of these people. Of course, it is difficult for men who are devoting every hour of their lives to the development of a private business to see clearly the relation between the prosperity of their own business and the prosperity of the Nation as a whole. This administration has wisely taken upon itself the duty of raising the standards of living, particularly of those underprivileged millions who now reside in our country, and the administration is also striving to give jobs to the millions who would trade their souls for an honest day’s work.
I can imagine no more valuable service at this time than the work that you and your committee are doing. liberal-minded business leaders throughout the country believe in the principle of shorter hours and higher wages and while some years ago the number of such men was unfortunately too few, today their ranks are being augmented each week. They now see prosperity returning and yet do not see in the return of that prosperity the solution to our national unemployment problem and the raising of the standards of those who are now employed but who work excessively long hours and receive less than a decent minimum pay.
It would be helpful to know exactly how many men and women are now out of employment but the situation is so obvious that we can well afford to take corrective measures without a detailed understanding of the exact figures. We know, for example, that in the prosperous year of 1929 that there were many millions who could not find work, and we also know that in the reasonably prosperous year of 1936 that there were more millions who could not find work. From this we can all accept the fact that something has got to be done to correct this situation. The Department of Labor has available many statistics which go to prove that the average wages in a number of industries in this country are today below that which is necessary to maintain a decent standard of living.
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A number of authorities and economic analysts have pointed out that if we could raise the pay of the underprivileged third of this country to even as small a degree as 10 percent we would increase the buying power of the public tremendously; in fact, enough to put nearly all of our factories into full-time operation. Those of us who have had to do with this project for the last 4 or 5 years realize that a great many reasonable-minded business men do resent and turn away from the notion of any form of Federal control; at the same time organized business has failed to come forward with any constructive plan aimed toward the solution of national unemployment.
Much has been said for the scheme of having individual States pass legislation dealing with hours and wages. I am confident that many of those who have suggested this form of correction have not fully thought out the problem. At the same time, I also feel that some of those who are suggesting State legislation versus Federal legislation are doing so to hinder and delay the consideration of the solution to the national unemployment problem. We have all of us seen what happens when these questions are put before State legislators. It would no doubt take many years to get a few States to pass the required legislation, and after that, we would be faced with confusion and a different level of cost of manufacture by States.
We cannot suffer this delay even though the program of passing State legislation were practical. Our present national budget requires a balance. Our present taxes deserve revision. And we cannot wait 5 or 10 years to find a solution to this question.
Anything that we do must be simple. Let us avoid the complexities which contributed so much to the failure of N. R. A. The purpose of this bill, as I understand it, is to set a floor for wages below which we may not go and to set a maximum hour beyond which we may not go. This is obviously fair to all and it only remains for us to work out the right number of hours which is to be our maximum, and the right weekly wage which will establish a decent standard of living for those who are paid the minimum.
Beyond setting the minimum wages and maximum hours for industry I understand this bill gives authority to the Commission to set higher levels up to 80 cents an hour, and also authorizes the Commission to establish differentials between Territories, States, trading areas, or sections of the country. This phase of the situation is a particularly difficult one. However, the problem must be faced— those who are opposed to Government control of minimum wages and maximum hours will use these difficulties as one of their strongest arguments against any effect in the direction of a solution for unemployment
It seems clear that the Congress and the Senate would not find it practical to lay down in the law wage rates by industries and by areas. If this were to be attempted, and any such question were open for debate on the floor of the House and Senate, it would mean the collapse of the legislation, as each and every State would have different ideas. It would seem to be your duty to lay before the Congress and the Senate some practical formula which may be acceptable to the majority and capable of effective execution.
There seems to be but two formulae available—either you give the Commission the authority to establish the rate by areas and by industries or you set up some such scheme as I shall outline in a few moments
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namely, a simple measuring device which can be applied to all industrial and commercial activities which would automatically give these operating units a rating and therefore place them under certain regulations which would be covered by not over three codes for the whole Nation.
No doubt there will be criticisms from certain low-wage areas. Southern business may bring to your attention that the cotton textile industry in particular is unable to pay a reasonable minimum wage. The examples that are usually cited are small cotton mills in little rural communities where the mill is the sole source of profit and employment in the neighborhood. It is frequently pointed out that the cost of living in the South and especially in the community under consideration is very low indeed and it is further said that the demands of the people are simple and moderate. To put it another way, however, these people are saying that the standard of living in these small communities is extremely low. The argument against legislation, however, is based on the statement that should reasonable wages and moderate hours be established it would put these small mills out of business and hence the entire community would be in eclipse.
Let us look at the facts. First, while those who use this argument against such legislation as we are considering always refer to the little mill because of the sympathetic reception given to the use of the word “little”, let me point out that in the cotton textile business low wages and ineffectual management are not confined to little mills. There are probably more poorly managed large units in the textile industry than small unite. For many years it was said, with a good deal of truth, that the cotton textile business was unprofitable. Cotton textile business has been in what might be termed a depression since 1918, except for a very brief period Just prior to the N. R. A. This brief period before the N. R, A. is interesting as it seems to indicate that as soon as the industry was forced to better wages and moderate hours it became profitable.
However, let’s see where we are today. The cotton textile industry has been more profitable since last fall than at any time during the past 20 years. As many of these large and small unite in the South nave claimed in the past that their reason for working long hours and paying low wages was the lack of profit, let’s see what happened when very large profits returned to the cotton textile industry. Were wages raised to a reasonable level? The answer to this is best disclosed in the report by the Labor Department. Comprehensive and representative studies of two branches of textiles - seamless hosiery and men’s knit underwear- -indicate that the average hourly wage for women was 32 cents and the average hourly wage for men was 39 cents. Please remember these are averages. The weekly earnings run as follows: Almost four-fifths of the women as compared with one-half of the men earned less than $15 per week. Over one-third of the women as compared with one-fifth of the men earned less than $10 per week.
Choosing some other figure at random, we find the full fashioned hosiery industry in the State of Tennessee - of the women in these mills not quite two-third earned less than $15 per week and a little over ome-forth earned less than $10 a week.IN miscellaneous cotton textile mills some figures for the State of Tennessee and the State of Texas seem to indicate that four-fifths of the women in the cotton
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textile mills in Tennessee earned less than $15 a week and one-fourth earned less than $10 a week, and in Texas 95 percent of the women earned less than $15 a week and 46 percent earned less than $10 per week.
Adding further to the textile figures, in the States of Delaware and West Virginia 16 percent in West Virginia earned less than $10 per week and 59 percent earned less than $15 per week. In Delaware these figures snow that 17 percent earned less than $10 a week and 56.6 percent earned less than $15 per week.
To avoid singling out the textile business, however, I shall give you a few miscellaneous figures. Brick tile and terra cotta for the State of Alabama averaged $14.43; men’s clothing, $10.97; cotton goods, $13.40; fertilizer, $10.54. These are average wages for men and women, per week. Arkansas—average wages—cotton goods, $11.99; furniture, $15.61; lumber and saw mills, $14.22; cottonseed oil, cake and meal, $10.76. May I mention that when there are average wages as low as $10.76—what must the minimum wages in that industry be? Florida; Fertilizer, $15.24; lumber and saw mills, $13.49; cigars and cigarettes, $16.04; canning and preserving, $10.66 average weekly earnings. The State of Georgia: Brick tile and terra cotta, $14.57; men’s clothing, $11.92; cotton goods, $14; fertilizer, $11.22; furniture, $14.75; knit goods, $13.90; cottonseed oil, cake, and meal, $10.28; marble, granite slate, and other products, $14.95. May I remind you that those are average wages, including men and women.
All of this would seem to prove rather conclusively that returning prosperity did not of itself raise the wages of those who were now employed. I feel quite confident that if a reasonable minimum wage is established that it will be the greatest step forward for the low-wage areas, whether they be South, West, East, or North, and in this connection let me say that we have low wages in all directions of the compass in this country. Any attempt to write into this legislation wage differentials by territories or by industries will result in confusion and probably in the defeat of the effort.
As I understand it, the average family in America consists of a man and wife and two children. It would seem most improbable that any public official or responsible business man would come forward to propose that such a man could maintain his wife and children on less than $16 a week in 1937. We sometimes hear that where a man has grown children that the family should exist on a total pay of $16 a week and that they should not have the advantage of more than one worker. This seems to me to be a very unsound approach to the problem. If the head of the house is fortunate enough to have other members of his family in good jobs, that should be his advantage and his good fortune and his earnings should not be reduced because of it.
In all the discussions which have taken place regarding better wages and shorter hours, I have heard but one good reason for paying low wages and working long hours, and that is because some competitor down the street is doing so. If we have proper Federal legislation effectively executed that one reason is removed and it will immediately become possible for all commerce and industry to pay not less than a reasonable wage and to work more than reasonable hours.
I have often heard it said, if we do this thing we will greatly increase the cost of our products. Analyses would seem to indicate that we will slightly increase the cost of some products and perhaps
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materially increase the cost of others, but a careful study of costs shows that were we to raise wages as much as 25 percent that it will not result in a 25-percent increase io the cost of the finished product. One very simple way to prove that this statement is correct is to look at the average manufacturing cost sheet. In modern industry one usually finds that the labor content in the finished product is below 25 percent, in some few cases higher. Obviously if you increase 25 percent of the labor cost an additional 25 percent you do not increase the total cost 25 percent.
This question of adding to the cost of the finished product is one that does deserve careful study. It is a question which seems to be greatly confused today by many apparently rather loose statements that are made in connection with increased prices. Let those who believe that increased wages would mean greatly increased costs consider at the same time the present tax structure. We are meeting the national unemployment problem today by public works, and by direct doles under the heading of relief. And we are paying these bills by a combination of taxes and currency inflation, combined with the constant addition to our national debt. All of these things must, of course, be added to the cost of production.
In other words, the present situation and the present method of attempting to meet that situation probably adds more to the cost of finished products than would be added by the provisions of this bill. Many of us are confident that the plan of employing all our people in private business is a far less expensive way to meet our problem of unemployment than to continue the present system. Let me again point out m this connection that it is not a question of no expense on the one hand and higher wages and shorter hours on the other hand—it is a question of the present inadequate and unsatisfactory method of meeting unemployment on the one hand versus what seems to be a more satisfactory method on the other hand— the cost of both plans go into the cost of finished goods.
Some people raise the issue of export business—let us make a rough analysis of this situation and see just how much harm might come from an increase in wages and a reduction in hours. As I understand it, the United States exports between 10 and 11 percent of the total production of the Nation per year. Of this, about 4 percent is cotton—of the remaining miscellaneous fabricated products exported, which pay transoceanic freight, which jump tariff walls, which meet quotas set by other countries, and which finally compete with low-price native labor, are very largely the products of the so-called high-wage, short-hour industry. In my rather limited study of this part of the problem, I have found no case where the product of our low-wage, long-hour industries successfully compete with overseas products in foreign markets. This would lead one to suppose that in many cases high wages and short hours when coupled with good management result in low costs. While I admit it is dangerous to use any one business as an argument to substantiate this statement, nevertheless it must be fairly clear to all of us Americans that the motor-car industry 25 years ago proved through the manufacture of the automobile that as they increased wages and shortened hours, they decreased the cost of their final product. This demonstration has been followed in many other industries.
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We have all of us seen what happens in a number of industries when the management is confronted with a severe competitive situation. This is especially true where there is a close personal contact between the owner and the employees. The owner calls the employees in to a meeting and points out to them that the business is facing difficulties, that others are quoting a lower price on the product than they have been able to, that it would therefore seem best for all the people employed in the factory to take a small decrease in pay rather than to lose their job altogether.
It may be said that with proper legislation it will no longer be possible for these business owners to carry out that type of cost reduction, and therefore it may be concluded that these companies will be forced to close. I wonder if this is true—these men are not going to give up their businesses without some struggle. Perhaps in the past they have followed the line of least resistance. Won’t they consider the new scheme of things and perhaps look into some other factors of cost, we’ll say waste, for example? Won’t they begin to investigate improved methods of production and a lower cost of sales? I am confident that they will and in the end we may find that the small manufacturer instead of being at a disadvantage in comparison with his large competitor may really be at a considerable advantage if he comes to see that he can actually reduce his costs and pay more reasonable wages and work more reasonable hours.
Some observers have mentioned that all this could be and should be done by organized labor unions and especially since the recent Supreme Court decision validating the Wagner Labor Relations Act. It might be a very fine thing if all of our 43,000,000 wage earners were members of well organized and intelligently led unions. No doubt at some very distant time this or something near it may exist. But it will take many years to organize into well-administered unions the great body of wage earners in the United States. We cannot delay for that many years.
While it is a very fine thing to set a floor below which -we must not go in weekly wages and to set a maximum number of hours beyond which we may not operate, it does seem as if it might be wise to carry this a little further. Perhaps the Commission which proposed to establish this bill, should consider three major codes for the Nation, into which it might be possible to classify most commercial and industrial activities. We will call code A modern industry; code B semi-modern industry; code C backward industry. Code A would be a 6-hour day and a 34-hour week; code B a 7-hour day and a 35-hour week; code C an 8-hour day and a 40-hour week.
One way to classify industries which would be quite simple, is to arrive at the percentage of labor in the cost of the final product.
Let me interject that you only need two figures to do that, gross business and total annual labor bill, divided one into the other. Anyone who is in business knows those two figures.
We might say, for example, that a product in which the labor element was less than 25 percent would fall into code A and should therefore go to the 6-hour day and the 30-hour week at once. Products in which the labor content in the final cost was greater than 25 percent, but not in excess of 50 percent would automatically fall into the B code and operate on the 7-hour day and the 35-hour week. Such products as had a labor content in excess of 50 percent would
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automatically fall into the B code and operate on the 7-hour day and the 35-hour week. Such products as had a labor content in excess of 60 percent would fall into the C code and work an 8-hour day and a 40-hour week. But in this case the industry would be asked to get ready to move to the 35-hour week within some given period, such as 6 months or a year. Believing as I do that the 6-hour day is the most efficient arrangement of hours for modern industry, I feel that we should lose no opportunity in establishing this day for all industry that is now equipped to operate under such a plan. Furthermore, it seems to be necessary to place as much of American industry on the 6-hour day as possible to accomplish the end we have in mind, namely, the solution of the unemployment problem.
I am urging that this bill be approved in accordance with the principle of enlightened self-interest and that in passing this legislation you will be doing a great thing for business and a great thing for millions of American employees. May I recommend that you establish a $16 per week minimum wage and a maximum week of 40 hours, and perhaps give some thought to shorter hours for the more modem units of industry and commerce. Private management must assume new social responsibilities or forego the privileges of management and the satisfaction of creative enterprise.
Representative Connery. Have you concluded your statement?
Mr. Johnson. Yes.
Representative Connery. I would like to ask you one or two very vital questions in reference to hours. What experience, Mr. Johnson, have you had yourself personally with the 6-hour day?
Mr. Johnson. When President Roosevelt announced to the Nation that he wanted industry to cooperate in 1932 and shorten their hours, we immediately went to a 6-hour day in certain factories. We learned from this a good many things in its favor. One of my motives was to establish that as a principle for our kind of industry under the N. R. A. To my great disappointment the N. R. A. declined to approve the 6-hour day, and further established wages for the particular industry that I have in mind of one-half of what we were then paying, and it was no longer practical to continue the 6-hour day in that industry. Perhaps there was little pique involved. I might have been unable to do it, I don’t know.
Recently we established a 6-hour day in the cotton textile industry, which seems to me to be an interesting place to try it, because the product is competitive and I believe it is accepted that the industry is competitive. It appears to be very successful. If, after further effort and study, it works, we will carry that into New England, into Massachusetts and New Hampshire.
Representative Connery. Do you favor a differential between the North and South in the textile industry?
Mr. Johnson. I do not.
Representative Connery. Why?
Mr. Johnson. I feel, first, that the South has suffered more than any other area that I know of through a traditional low-wage policy. We ought to establish a wage that is a reasonable minimum for a man who is head of an average American family. Owning mills, as I do, in the North and South, I would not like to see a differential in the bill. I think it is confusing and unnecessary. Northern mills will have to compete and are now competing with miscellaneous fabricating and mechanical industries who pay more than cotton mills do
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usually, therefore the wage rate in the North will automatically be higher than the wage rate in the South. Congressman Connery, I would also like to try to establish with you that the South does not need a lower wage to attract industry.
Representative Connery. What about your factories in Massachusetts, New Hampshire, and even Maine, up through there, with a differential? I agree that a differential should not be written in the bill, if anything it should be left to the Board to look over the entire situation, and I think Mr. Ramspeck agrees with me on that, and he is from the South, that it should be left to the Board to decide.
Is there a danger—I asked this yesterday also-—is there a danger, if there is a differential of northern manufacturers moving into the South in order to get that differential, taking their factories out of the North and into the South?
Mr. Johnson. Well, one can always answer that best from one’s own experience. We are just starting a mill in the old Amoskeag property in Manchester. That is accepted, I believe, as one of the most difficult situations in the textile industry. However, if we were building a mill we would build it in the South, whether you had a differential or not, it would make no difference.
Representative Connery. Why would you do that?
Mr. Johnson. Because there are many advantages at least as important as the wage advantage, an unnatural and unreasonable wage advantage of the past 20 years. You have lower land cost, lower tax cost, better climatic conditions, lower operating cost resulting from that, and the finest type of industrial employee for that kind of work that I know of.
Representative Connery. And you are closer to your raw material, you are right there?
Mr. Johnson. That is not an important factor. What you save on cotton you lose on finished goods. It about breaks even.
Representative Connery. Why do you favor the 6-hour day and 30-hour week?
Mr. Johnson. Well, the 6-hour day is the longest operating period that a man or woman can work without interruption. It is a very simple matter to learn to work 6 hours without food, for example, except, perhaps, if necessary a little hot soup or a glass of milk, or something like that. A well person can work at high speed for 6 hours without detriment to their health or draining their energy too greatly. The 6-hour day divides itself equally in the 24 hours of the day for continuous operation of machines, where that is wise.
The 6-hour day is so short that in offering men and women an opportunity to choose a shift it is interesting to see what they do. Many women like to work afternoons because with their short day like 6 hours they can devote all their morning to housework and still have an evening free. The day is short enough so that almost anyone can order their life and work that 6 hours when they please.
It is the most elastic plan that I know of. Most modern industry has progressed to a point where they will make money by the 6-hour day. Now, there are some that will not, but most of them will. I think we have got to select between those who know how to do it, or are equipped to do it, and those who do not.
Representative Connery. In those three classes that you referred to, the ones that are ready to go on a 30-hour week, and then the next class, and then the third class that is not ready.
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Mr. Johnson. Yes. There is one other element. By establishing the 6-hour day those who do it, and particularly those who do it promptly, will get the very best type of employee.
Representative Connery. How do you think this bill, if it became an act, should be policed? There seems to be worry as to who would make the complaint, or how it would be done.
The Chairman. Mr. Connery, before he answers that would you mind me asking him a question in line with the other, so as to clear this up?
Representative Connery. Certainly.
The Chairman. You made the statement that one of the reasons why you favored the 6-hour day was because you found the employees could work 6 hours without draining their health. You give that as an experience from your enterprises in the employment of people.
Mr. Johnson. I do.
The Chairman. You employ about 5,000 workers?
Mr. Johnson. That is right.
The Chairman. Your viewpoint is altogether from the side of the employer and manufacturer?
Mr. Johnson. That is true.
The Chairman. I judge from the statement you made that you find that they can work 6 hours at high speed without draining their health, that you have some kind of an idea as to what happens if they work more than 6 hours at high speed each day continuously. What is your judgment as to the effect on the health under those conditions?
Mr. Johnson. May I qualify that, or explain my position to say that as president of a hospital for 6 years one of my jobs was to study the general health standards of eastern industrial operators. 1 found them to be unsatisfactory; that the process of speeding up which I favored had reached such a point that the drain of energy, the output of human effort for 8 hours was too long, after you had passed a certain point of speed-up, depending upon the operation itself. I think many operations are unhealthy for the operator when they are carried to the extent of an 8-hour day, but it depends on the operation.
Representative Connery. What about the policing of this act? Would there be a great deal of policing necessary, or would it automatically take care of itself?
Mr. Johnson. Well, I do not know. There seem to be so many viewpoints about that. There is one thing, however, that has always been pretty clear to me, if I understand it right. May I ask this question before I answer yours?
Representative Connery. Yes.
Mr. Johnson. Do you propose to use the existing regular courts and machinery of law now extant in this country, or are you going to set up a lot of separate courts?
Representative Connery. No, under the provisions of the bill now if a complaint came to the board the board would issue an order telling that industry to work 30 hours, 40 hours, or whatever it would be, and if it did not, we would go to the United States District Court.
Mr. Johnson. That seems to me to be very sound and sensible, and simplifies the answer to that question. You do not have to hire any policemen, Congressman Connery, you have only got about
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35,000,000 policemen for nothing, which is a pretty good-size police force. If I understand it correctly, so as to make it less embarrassing, you are the employer and you pay me less than the proper wage-----
Representative Connery. Reverse it and it would be better.
Mr. Johnson. All right. I then merely have to inform the existing local authorities by showing them my receipt that I signed and swearing before an ordinary notary, I imagine, that I had asked you to work 50 hours.
Representative Connery. Well, you would not even have to do that. You would go into the board, or send the receipt in to the board, or an affidavit, if you went to a notary, and the board takes care of it.
Mr. Johnson. All right, then that is still simpler. I do not see why you need to have any police force when you have got one for nothing, but I do feel you would have to have a moderate but sufficiently high-class organization of field observers so as to educate these 35,000,000 or 43,000,000 policemen to do that job for you at no cost to the Government.
Representative Connery. Then you feel that the labor organizations would be a tremendous police force in themselves, to take care of that, through their organization?
Mr. Johnson. I think they would be the greatest single force and that it would give organized labor a great new reason for its existence. Most mill operators would be delighted, I should think, to join a union at a moderate fee so that the union might become their organized policemen.
Representative Connery. How many people would be affected by the $16 minimum wage?
Mr. Johnson. Well, I am not an expert in reading legislation. Now, I studied this as much as I could, and with a moderate knowledge of these statistics it looks to me like this, that some 4,000,000 people plus will enjoy an increase from this legislation directly.
Representative Connery. About 4,000,000? Mr. Johnson. Yes, directly, but in making that statement “directly” I refer not only to those who fall below the minimum. Beyond this are many others in the higher brackets whose wages will be increased because of the higher minimum. On top of that in the future there will be many millions more affected indirectly by competition with these interstate industries, as this legislation leads, as it surely will, to separate State legislation operating in intrastate commerce.
Representative Connery. Do I get you right, taking Senator Davis’s statement, taking Pittsburgh, for example, if wages go up in the steel industry there the man who works in the department store, or some place else, will not stay in the department store but will go in the steel industry to get the higher wages, and therefore the department store has to get up on its wages.
Mr. Johnson. I mean that exactly.
Representative Connery. What about the minimum wage becoming the maximum wage?
Mr. Johnson. Well, all I can say about that, it seems to be one of the war cries of the opposition to labor legislation that has been going on as long as I can remember. We have tried to find out what substantiation there was for that. My observation is that the reverse is
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true. As soon as you raise the minimum wage in any industrial or commercial organization you must, of course, raise your upper brackets; otherwise everyone is going to be unhappy and dissatisfied. You are more anxious to keep the higher type expert operators than any other. You have already expressed that m higher pay, because your record shows you that you are paying more than you did those where the minimum would have an effect. What actually happens at once is that you have to raise the whole level of your wages somewhat. Now, supposing you were paying a $10 a week minimum and your other brackets, one-third of your employees you pay from $18 to $25 a week, you move your $10 a week minimum to $16 a week—I think the practical working out would be like this: You would not increase the wages of your higher brackets as high a percentage as you did the $10 people, but you would raise them $2, $3, or $4 a week.
Representative Connery. That is the practical answer to it not becoming the maximum wage.
Mr. Johnson. There is nothing in this business at all that the minimum becomes the maximum.
Representative Connery. How about the argument that it would be better even to have lower wages and lower prices in order that the person even with the lower wage could buy something, while if you increase your cost of production by going to the 30-hour week, the minimum wages and maximum hours—what about that?
Mr. Johnson. There is a whole school of people who think that and they have a right to a place in the sun, and there is a good deal in what they say, that if the buying power of wages were increased through a deflationary cycle that, in terms of those wages, it might be smarter to reduce prices a good deal and wages a little. That sounds all right, but it entirely ignores what is at least an important situation in this country, and that is this: You have a debt down here, a debt by States, debt by counties, debt by towns, debt by industries and debt by individuals. Now, particularly are we interested in the individual debt. We have had, as all of us know, 20 years of promotion on installment buying and everyone is in debt some way or another. Under that deflationary system of lower wages and still lower costs you would be all right until you came to pay your debt, and then you would be in an impossible position all the way down the line from Washington to Squeedunkville. You cannot follow that, Congressman, because you have got to give these people money enough to pay off the debts that they have, and it will take a great deal higher wage level than the present one to do it, let alone any lower wage level.
Representative Connery. One more question along that line. What about the person who is not in industry who does not work? Take a person -who has retired and has a small annuity to live on, and who does not come under the old-age pension bill of the Government, who does not come under the unemployment insurance, who does not work any more than a very little, who has got some small savings put aside, perhaps a small amount of stock; now, when we raise the prices a little bit under this sort of legislation what about those people? Will it affect them adversely?
Mr. Johnson. The fixed income groups, especially the lower ones— m other words, we are not so awfully worried about the fellow who has got a fixed income of a million dollars a year, we will let him go along,
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but when you get down into the fixed income groups in the very low brackets, I do not know what the answer to that is.
Representative Connery. Do you think it would require other legislation by Congress supplementing this?
Mr. Johnson. I would not care to express an opinion, except this: In terms of the Nation as a whole that group must be relatively limited.
Representative Connery. I have one or two questions and then I will conclude. How many people do you think would be put to work if the board decided—of course, they have 4 months, we give them 120 days before any of this goes into effect, the law goes into effect but the board could wait for a year, for instance, on textiles, or longer on automobiles or something else, but suppose that they eventually reach, within a year or 2 years, a 30-hour week, a 5-day week and a 6-hour day, how many people do you think directly would be put to work in the country?
Mr. Johnson. Will you allow me to call this an estimate, and some freedom of action for inaccuracy? I understand that today there are employed in commerce and industry between 30 million and 35 million people. I understand that there are in need of employment a grand total of between 40 million and 45 million people. I am speaking of wage earners now, not agriculturists. As this 30 million or 35 million employed are working today about 40 hours a week, it would seem to me that a 30-hour week would absorb about 10 million people, 10 to 12 million people, which, by the time you get around to doing it, will be the number you need to absorb.
Representative Connery. Now, would you favor the amendment suggested by Senator Ellender yesterday, that the board, taking for example the textile industry, set up a 30-hour week, or a 40-hour week or whatever it would be, that the person employed in the textile industry would not be permitted to take other employment at the same time? Would not that be necessary in order to take up your slack? If a man worked 6 hours a day and then went out driving a taxi 6 hours more you would not get your 10 million back, would you?
Mr. Johnson. When we went to 6 hours a day all sorts of people came and visited us, fine, well-trained social workers who wanted to teach people how to use their new idle hours, and we said, “They haven’t had any idle hours. Let us see what they can do with them themselves for a while.” It worked out mighty well. Some wanted to give them a lot more education, and we found that automatically the night school increased about a thousand percent in that town, the number of books out of the public library went up many, many times, and then, of course, many men said, “Well, are not these people now going to take other jobs?” A very few of them, so few as to be quite insignificant, did so for a short time, but their wages being fairly good, competitively quite good, the number who will continue to work at two jobs for any length of time is not important.
Representative Connery. That is good. I am glad to hear you say that. Mr. Johnson.
You can check it any way you want to. It automatically comes to the front, to either of the two employers anyway by the mere experience of doing it over a week or two and then one or the other decides it is not a good thing and he lets the man go. After that occurs a few times people say, “It is not worth the bother.” Representative Connery. In your remarks I notice you refer to the 80 cents an hour. As I understand the 80 cents, where they go to
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80 cents it is merely for the seasonal employment. In other words, we go to the $1,200 ceiling and say to labor, “That is your job, $1,200. We are not going to regiment your skilled labor, we are going to give them an approximately decent wage, something we would do anyway." Take your $16 a week proposition. Two years ago we appropriated $4,800,000,000 for relief m the United States. Now, you are a manufacturer, you are not a labor organizer or employee but a manufacturer, and I want to know from you.
Mr. Johnson. I do not sound like one.
Representative Connery. Yes; you look like one and you are all right, I am with you. Do you consider as a manufacturer that it would be cheaper for you, I mean in profits, leaving out sentiment, cold-blooded business profits, that it would be cheaper for you to go along with legislation of this kind even to the extent of a 30-hour week, a 5-day week and 6 hours a day than to pay the taxes that you must pay to keep people on the dole, on relief, on the W. P. A., and all the relief organizations?
Mr. Johnson. I would like to take an hour to answer that, but I will just say “Yes" as decisively as I can.
Representative Connery. It is cheaper?
Mr. Johnson. Much cheaper.
Representative Connery. That is all I want to ask.
The Chairman. I want to ask you just one or two questions to carry out an idea of Mr. Connery and then I will not ask you any more. Mr. Johnson.
That is all right, Senator. The Chairman. As to this 6-hour day that you worked, did that put you out of business?
Mr. Johnson. No; I am still in business.
The Chairman. Did you make a profit?
Mr. Johnson. Yes, sir.
The Chairman. Did you still produce goods?
Mr. Johnson. Yes, sir.
The Chairman. Did you have competitors?
Mr. Johnson. Yes, sir.
The Chairman. Did they work the 6 hours?
Mr. Johnson. No.
The Chairman. And even when you were working 6 hours did you reduce the wages any?
Mr. Johnson. No.
The Chairman. You continued to pay them the same wage?
Mr. Johnson. Yes.
The Chairman. In your judgment what is the answer to the statement of those who take the position that if you reduce hours and put more people to work that by reducing hours you are going to cut off production and starve the Americans out of the things that they ought to have?
Mr. Johnson. Well, sir, there are so many reasons, but you know from experience that we come to classify people who say that. I believe the great majority of them are not exhibiting their full feeling. They are legitimately opposed to any form of Federal regulation. Now, instead of saying, “I am opposed to this thing in principle, from a legalistic standpoint", a good of many of those in opposition bring up these other points. A great many others fall into the class of men
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whom I remember as my father’s friends, who felt that it was positively indecent to work less than 10 hours a day and you really were not doing anything; if you did not work 12 hours a day. Now, it would be hard to criticize those gentlemen.
The Chairman. That was an honest belief.
Mr. Johnson. That is what they felt. When you said 8 hours to them, as I remember men saying at that time, it seemed rather sacrilegious, it just was not in their business philosophy. There are a great many who view 6 hours that way. Now, there are others who see only the equation between the man who worked 8 hours before and who works 6 hours now and is paid the same as working 8 hours. He assumes that all he has to do is to get out a cost sheet and add 25 percent to his labor cost, that nobody can do any better, there is no way he can save any money, there is no way he can rearrange his work and lawfully to. do this thing at all, and if there is he is not going to try to do it anyway.
The Chairman. You produce more when you have more people to buy, do you not?
Mr. Johnson. 1 do not know where else we American manufacturers can sell our products except to Americans, and particularly American wage earners.
The Chairman. Did you find any of your workers who were only employed 6 hours a day had their character destroyed and wasted their time in riotous living, any more than they had before?
Mr. Johnson. Well, I am glad you brought that up, because when we went some 8 or 10 years ago to the long week end a good many people said to me, “This means two Saturday nights a week, and that is one too many.” [Laughter.]
I found that several things occurred. In a few weeks what happened was that a number of Saturday nights were advanced to Friday nights, and therefore in addition to the recovery day of Saturday you had the rest day of Sunday; that the great majority of our people went out and built small week-end shacks. It was just an amazing development. Please remember that a 5-day week makes a week end very much better. It does not make it twice as good but very much better, without the Saturday-morning interruption. They would leave on Friday night, they would take their family and go to a little house that they built down on the lake, or down to the seashore, and spend a week end there.
The Chairman. They did not have a yacht?
Mr. Johnson. No. Some of mv friends are saloonkeepers and they were complaining that all our folks left town for the week end.
The Chairman. You have been interested in this problem of working hours and wages for a number of years?
Mr. Johnson. Yes, sir; for many years.
The Chairman. And you have been giving it careful study from the manufacturers’ standpoint. Have you belonged to any of the committees of the Manufacturers Association, or have you made your studies outside of that organization?
Mr. Johnson. Senator, I have been unable to find a sympathetic group of colleagues in organized business.- I have tried very hard.
The Chairman. And you make your living wholly from business yourself?
Mr. Johnson. That is right.
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The Chairman. What is the fundamental philosophy on which you base your idea that it is better for this Nation to have a shorter work week and a regulation of hours and a better wage system? What is the fundamental philosophy on which you base it?
Mr. Johnson. Well, it is just this. I do not see any way we can have economic stability in this country until it is possible for a willing worker to find a good job with good pay, with clean conditions, with a fair management and continuous operation or work throughout the year so as to give him a reasonable sense of security, until we can bring that fact home through private management, we have not earned out our responsibilities.
The Chairman. Do you believe that in each period of 10 years under such a system of good wages and short hours, we would produce more for the benefit of the American people or less?
Mr. Johnson. I think we would produce infinitely more.
The Chairman. Why?
Mr. Johnson. I just want to try to frame an answer to that in a few words. There is a circle between production on the one hand and consumption on the other hand. Just which is cause and which is effect at a given time is hard to say. They are both interlocked. If we can put all of our people to work, by so doing we enlarge and develop the size of the domestic market, which is our market for 95 percent of all of the things we make. As we develop volume, we develop efficiency, and as we develop efficiency, we can still further raise wages and still further reduce prices, and by doing those things we will add materially to the wealth of the Nation and comfort and happiness of the people in it.
The Chairman. You favor producing more by efficient management and by the utilization of all the inventions that science can produce, do you not?
Mr. Johnson. Yes.
The Chairman. And then you believe that will bring about an increase in production for all the people?
Mr. Johnson. I do.
The Chairman. And making them more happy and more contented and letting them work such a reasonable number of hours that they can give the maximum amount of production from themselves during that period of time?
Mr. Johnson. I do.
The Chairman. What was the year that you had the greatest production, do you recall?
Mr. Johnson. Yes. 1936.
The Chairman. In 1936, if you had suddenly had opened to you twice as many customers available if you could supply the goods, do you think you could have increased the supply very rapidly?
Mr. Johnson. I certainly do.
The Chairman. Were you running to within 80 percent of the capacity that you could have had, in a very short time?
Mr. Johnson. Were we running at 80 percent?
The Chairman. The reason that I asked you that is that a book has been published to the effect that American business—I have read some of the assumptions—has been going up to 80 percent of the capacity, and that you would simply freeze it if you had more demand and if you shortened hours, you would not have enough people to
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produce it. What I am getting at is that some of us have the idea that increased demand would bring on increased efficiency, increased use of the things that we produce, and instead of cutting down production, would increase it, and as I understand it, you agree with that idea?
Mr. Johnson. I do.
The Chairman. Do you believe that there has been any year when we could not have produced infinitely more if we had had more customers to buy the goods, where we would get a profit out of it?
Mr. Johnson. Well, I can certainly answer that, that I do believe that we could have increased. We can now increase very materially, and I have never known a year when we could not, including the war years.
The Chairman. And, of course, you are familiar with the fact that since the depression, stimulated by the desire to curtail the cost of production, inventive genius has marched along very rapidly, and we ave greatly increased the productivity per worker?
Mr. Johnson. Yes, sir.
The Chairman. And your judgment is that we can continue that with still more rapidity if our system still functions to supply purchasers with money.
Mr. Johnson. I think just that.
The Chairman. That is what makes it gear up and faster.
Mr. Johnson. Yes, sir.
The Chairman. That is the only thing that makes you produce more, the fact that you think you can sell it?
Mr. Johnson. Yes.
The Chairman. And when they spend $4,800,000,000 to take care of people who had no work, you felt that you had to pay a part of it?
Mr. Johnson. Most decidedly. And still further, as generous as you seem to be, viewed from the taxpayers’ standpoint it was a most unsatisfactory thing from the standpoint of a man out of a job. It was better than before you did it. But it is not the answer that suited him.
The Chairman. But you prefer a system that will employ as many in private business at good wages and reasonable hours.
Mr. Johnson. I do, just that.
The Chairman. And you are sure it will work better, from your experience as a manufacturer, and as a man who can only make his living when he can manufacture goods and still sell them to the people of America at a profit?
Mr. Johnson. I do.
Senator La Follette. May I ask a question, Mr. Chairman?
The Chairman. Certainly.
Senator La Follette. Mr. Johnson, when your company went from an 8-hour day to a 6-hour day, I understood you to say that you paid the same wages. What was your experience so far as the number of man per day output on the 6-hour basis as compared to the 8-hour basis?
Mr. Johnson. We have a lot of records. I cannot answer your question in two words. It has varied by methods of production. It takes time, Senator La Follette, to develop all of the advantages of 6-hour operation. I am confident that in a great many cases, costs will be reduced in the end with a little energy and gray matter being
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used; in other words, there is an ingredient here of management required. I should say that the output per worker tended to increase very materially. I would not care to put a percentage on it.
Senator Pepper. Mr. Johnson, do you hold any office in the United States Chamber of Commerce?
Mr. Johnson. No.
Senator Pepper. I am about as much interested in your being here as I am in your testimony, so if I may ask you a question or two that you may have answered in the absence I had to have, I am sorry. Where is your residence?
Mr. Johnson. Princeton, N. J.
Senator Pepper. Just roughly—I don’t mean to go into your private life—but what is your educational and business background?
Mr. Johnson. Well, I do not want to give you anything that will bore you. I went to work when I was 16 years old, and I have been working in and operating miscellaneous industries ever since—mechanical industries, engineering industry, package-product industries, making large and small packages, and a number of technical industries. I have done nothing else but that.
Senator Pepper. Are you a college man or professional?
Mr. Johnson. I am sorry to say that I am not. My father died, and I left school and went to work.
Senator Pepper. And then you became the proprietor of your own business, interested in it, and perhaps the owner of it?
Mr. Johnson. No. My father left me a velvet carpet under my feet, and as far as the ownership of our original business, I inherited that. After that I built on my own.
Senator Pepper. And have you been in active charge of the business for the last number of years?
Mr. Johnson. Yes; I have been in active charge of the business for—oh, I don’t know—for 20 years.
Senator Pepper. And yours is a sizable business?
Mr. Johnson. It is a relatively small business in the United States as large industry goes. It is rather miscellaneous and far-flung in character.
Senator Pepper. Your commerce affects a good many of the States?
Mr. Johnson. All the States.
Senator Pepper. And you have places of business established in how many different States?
Mr. Johnson. All the States. That is, we have either branch offices or sales offices or otherwise. We contact probably maybe 65,000 or 70,000 businesses in the United States in terms of customers.
Senator Pepper. So that your business outlook in its scope is what you would call Nation-wide in its extent?
Mr. Johnson. Definitely.
Senator Pepper. How long ago did you begin to toy with this idea of a good or better wage and a shorter day ? How did that idea occur in your mind and you determined to put it into actuality?
Mr. Johnson. Well, I will have to make an admission. I never took legislation very seriously, but I collected some of these things, and flying down in a plane over Washington and reading the first N. R. A. bill, I had gotten from Princeton to this point and decided it was a pretty important matter and I looked down and I was over Washington, and I have been paying attention to it ever since.
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Senator Pepper. Well now, getting around to the physical effect of a shorter work day, you have already spoken of some of the manifestations of it in the pastime and recreation that the people indulged in?
Mr. Johnson. Yes.
Senator Pepper. Have you noticed anything about their health? Have you noticed any improvement in the health or the mental attitude of the worker since the shorter work day has come into effect?
Mr. Johnson. Oh, very definitely; very definitely. You see, particularly in the winter, but all times of the year, a man who has worked too hard, too long, he still may have some daylight hours, but he is too tired to do much. What you find is that these people that once turn to painting their houses, growing a garden, fixing their car, dressing up the place, beginning to look like something, spend some time with their children and being out in the sun. Now, he had some daylight hours before, nowhere near as many, because from a practical standpoint, it means much more than 2 hours difference per day. In the first place, the 8-hour day requires your presence both morning and afternoon and it is too late when you get out to plan an afternoon program; but if you go to work, we will say, at 7 o’clock in the morning and stop at 1 o’clock, you have much more than 2 hours additional daylight time.
Senator Pepper. You can go to the ball game in the afternoon and still work, can’t you?
Mr. Johnson. You certainly can.
Senator Pepper. Now, let me ask you this: Do you find the tendency on the part of your workmen to display what might be called a decent gratitude for this conscience that you have indicated toward him by efficiency and diligence in their work?
Mr. Johnson. Oh, most decidedly; and I really should have answered your other question that way. A great many years ago, in working in a crew of Hungarian immigrants, I found—the foreman was ill and that is the only way that I got the job—I found that by exceeding my authority and increasing their wages and decreasing their hours some—it was then 10 hours—that they responded to that, tremendously, and that has been my experience ever since. Sometimes, occasionally there is some little element of confusion and while somebody will say, “I don’t really like this 6-hour day, it upsets the picture”, and you find that they are in the wrong shift or something like that. But in the long run you get an extraordinarily fine reaction and more than an adequate return.
Senator Pepper. Something suggestive of a pride in their position and a desire to vindicate the experiment?
Mr. Johnson. We move them from what might be termed in the past as labor, to the position of an industrial technician. There should be no such thing as labor in modem industry. If you have got what is properly called a laboring job, you should so reorganize it and improve it as to make it a technician’s job.
Senator Pepper. Of what do most of the operations in your plant consist? I mean, are they more or less routine mechanical jobs, or are they creative jobs? Do you see what I mean?
Mr. Johnson. Well, they are rather miscellaneous in character. I think in most cases in modem industry, the great majority of jobs
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are repetitive and routinized jobs. With them, however, are another large number of operations in designing and building equipment, and the hand tooling of certain dies and mechanical things, and then of course the control people and the laboratory technicians. The operators are mostly on routine work.
Senator Pepper. Is it not a fact, Mr. Johnson, or is it a fact, that turning a wheel, which is simply a mechanical operation, in a repetitive way, is tremendously fatiguing upon the individual? Do you see what I mean? Where there is no intellectual or creative effort involved in the operation and it is just merely a matter of physical action which is done over and over again.
Mr. Johnson. Yes, sir; but I would like to get some things straight about that. A repetitive job of the kind you visualize, the turning of a wheel, is boring and tiring and exhaustive, and that is the kind of a picture a great many people have got today of automatic industry, of modem industry. But when you come to the point where a machine is a great intricate affair, you run into somewhat as you would fly an airplane, which is a mechanical device. It takes skill, in fact it takes increasing skill, it changes it from merely turning a wheel. While both are mechanical, one is boring and exhaustive, and 8 hours is usually too much. The other takes great energy and is exciting, but it is not boring. However, usually 8 hours is too much for that. Then, of course, we find that out of choice, a great percentage, not the majority necessarily but a great percentage prefer an operation not requiring the trained mentality. There is a place for every one.
Senator Pepper. I see. I think the realm of pedagogy; it has been pretty well accepted that there is a certain maximum class period after which the attention of the ordinary student begins to lapse unless there is some interruption. Is something like that applicable to industry? That the efficiency of the worker is prevalent for a given time, and after that time it tends to diminish by sheer physical and nervous forces.
Mr. Johnson. No question whatever.
Senator Pepper. How long do you think it is going to take you to convert all of your brethern to your point of view?
Mr. Johnson. Well, these gentlemen are being converted, but if you are going to wait until the last of my colleagues are converted, I am not even interested in when you succeed.
Senator Pepper. I want to ask you one further question. Do you know of any instance in modem history—I won’t concern you with medieval and ancient—where industry has ever voluntarily come into the picture and asked that there be a reduction in hours and an increase in wages, or has not the impulse of it in response to the increasing sensitivity of the social consciousness, always come through legislation of a pioneering character like this?
Mr. Johnson. As far as I know, the latter.
Senator Pepper. And under the stimulus of a few enlightened businessmen like yourself?
Mr. Johnson. May I go back, however, to say for my collegues that some are being converted. I think as the younger men come along, that plays a part. I think the return of prosperity without the solution of unemployment is playing a part, and while I certainly find your taxes unpleasant, I think taxes are converting some people who begin for the first time to see a rather simple mathematical equation
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between Senator Black’s $4,800,000,000, on the one hand, and tax bills on the other hand. It is not much fun to work hard and keep your profit between January 1 and I think it is March 15.
Senator Pepper. Thank you very much.
Representative Connery. Senator Ellender has a few questions, Mr. Johnson.
Mr. Johnson. Yes, Senator.
Senator Ellender. I did not hear all your written statement you made, and if I do ask questions that you have already answered, I will ask your pardon. As I understand, in the past few months you have put all of your business on a 6-hour minimum?
Mr. Johnson. Not all.
Senator Ellender. Why didn’t you?
Mr. Johnson. Because we have been entering into this work experimentally for a good long time. I think we might be rather criticized for not having done it. In the cotton-textile industry, for example, I was disappointed in the first code. It established hours that I felt were too long, and wages that I felt were too low. When the Supreme Court found it unconstitutional, I had no way of knowing whether the cotton mills were going to a 50-hour week or 60-hour week. I had seen them do it in years gone by. We could operate 6 hours a day at 8 hours pay if the other fellow did not go too far in the direction of long hours and low wages, and I can only go so far in this competitive situation.
Senator Ellender. What part of your business did you put under the 30-hour week, the 6-hour day?
Mr. Johnson. The textile industry, in that we put the Gainesville mill in Georgia on the 6-hour day, and we are proposing to see that through to a complete experiment, and then place it in the other mills. Of course, there would be no difficulty at all if others did it, but what I want to see is whether we can do it despite the fact that the others do not.
Senator Ellender. Is your Gainesville mill the only one in which you have a 6-hour day?
Mr. Johnson. At the moment in the textile industry.
Senator Ellender. If you don’t mind, how many mills have you in the North and how many in the South?
Mr. Johnson. We have two mills in the textile business in the North, and one in the South.
Senator Ellender. What proportion of the output of these three mills is not used by Johnson and Johnson?
Mr. Johnson. What proportion of the output of these mills is not used by Johnson and Johnson?
Senator Ellender. When I say “Johnson and Johnson”, I think you manufacture various medical supplies, don’t you?
Mr. Johnson. That is correct.
Senator Ellender. What proportion of your output is not used in your other business that you carry on in conjunction with it?
Mr. Johnson. A varying proportion. I can answer that in this way. Johnson and Johnson purchases 40 to 50 percent of what it uses in the open market outside of our own mills. That we do because I have not wanted to go too far in the cotton textile industry. That, however, results in our being in constant touch with the market, and it might interest you to know that our policy is to pay our own subsidiary or
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affiliate, either market or less. The reason I would like to see them pay less is a simple one. When they bring me a financial statement showing the profit of an affiliated company, I don’t want them to fool me. I don’t want them to show me a statement that is really the profit of someone else where they sold the goods above a market price, would rather see it at a figure below that, so that I know if they have made a dollar, they have really done so.
Senator Ellender. You say you buy from 40 to 50 percent from the outside?
Mr. Johnson. Yes.
Senator Ellender. Am I to understand that Johnson and Johnson uses the entire output of your three mills?
Mr. Johnson. No. To go back to your question, they have a given part of the product of those three mills which is also sold direct to other types of industry, such as the dry-goods industry, through the Chicopee Sales Corporation, in other words, there is a varying percentage there. Sometimes Chicopee makes most of their product for Johnson and Johnson, and at other times Johnson and Johnson buys the product in the outside market and Chicopee will be converted over to making dry goods rather than a surgical dressing product. I cannot answer you as any constant amount. Usually, however, I would say that Chicopee was producing for Johnson and Johnson between 60 and 70 percent of what they were making at the time.
Senator Ellender. Well, if your three mills were to compete with the outside world and not have an avenue through which they could sell, as you do to Johnson and Johnson, would your same theory follow?
Mr. Johnson. Most decidedly. Those mills have certain advantages and certain disadvantages.
Senator Ellender. Is not your competition less keen since you have an outlet for most of your product from your three mills?
Mr. Johnson. May I clear the air here by saying a number of things that we are not, and I think we can clear it up. In the cotton textile business, I have been accused of a list of things, and I would like to mention them and explain why I am not that.
I am told that I am running a philanthropy in Chicopee. That is not true. That mill has kept its head above water financially throughout the depression despite its cost.
I have been told that it is a new mill, and therefore has advantages. The northern mill, however, during the same period, operating in the same way in Chicopee, Mass., is about 100 years old. The youngest building is 50 so apparently the fact that it is a new mill is not an answer. I have been told that it sells its product to Johnson and Johnson at a better than market price. The reverse is true. If anything, it sells those goods at a less than average market price. I am told that it has had the advantage of continuous operation. That is true, but it did not come by the route of a pigeon through the window. Someone worked to do that, to sell those products throughout the depression effectively, so that the mill did operate full time. It is a fact that it had that advantage, the advantage that any other mill could have had if it went to work.
Senator Ellender. Well, Mr. Johnson, of course I give you credit for being an A-l business man, and my only object in asking you these questions was to compare your business with the average cotton mill.
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Mr. Johnson. Yes, sir.
Senator Ellender. I suppose you would agree with me that very few mills have the opportunity of selling their output as you say you do? In other words, you have this extra business of yours whereby you can dispose of quite a bit of your output, and as a matter of fact if you desire, I suppose, you could have your three mills furnish you the entire output rather than buy this 40 or 50 percent from these outside mills?
Mr. Johnson. No, sir; we do not manufacture as much as we sell.
Senator Ellender. Do you have any foreign competition in the products that you manufacture at Johnson and Johnson?
Mr. Johnson. A little. Nothing of any import, however. The answer to that is no, in general.
Senator Ellender. I believe you said—I understood you to say— that the foreign markets would not bother at all. Am I correct in that?
Mr. Johnson. I did not put it quite as strongly as that. I said that an analysis of American business taken as a whole indicates that there is a small percentage of the national business in fabricated products that is exported, that a study of such products as are exported indicates that it is a product of high-wage and short-hour industries, so called, who are successful in export business, and that the low-wage, long-hour industries seem to be unsuccessful, and that from that one might deduce that high wages and short hours, when mixed with the leaven of good management, result in low costs and not high ones.
Senator Ellender. Would you say, Mr. Johnson, that if every mill in the United States were to adopt, let us say, a minimum weekly wage of $16 and 30 hours per week that those mills could compete with the European mills where the people there work 12 hours a day at six or seven dollars a week. Would that be possible unless we would incorporate in this bill some way by which that could be offset?
Mr. Johnson. Well, taking the specific thing that you have just said, and assuming that you have applied it to the cotton-textile industry-----
Senator Ellender (interposing). That is what I am doing.
Mr. Johnson. I can answer you, no. Our mills would not be able to compete with mills which operated 12 hours a day and paid $8 a week; but I would like to ask you, Senator, would we lose anything? Have we any export business in the textile field of sufficient moment today to have it weigh heavily against the welfare of 43,000,000 wage earners in the United States?
Senator Ellender. But you might have some imports that come in here and offset all of the good work that we are trying to do. That is just the point that I am trying to bring out by you.
Mr. Johnson. Oh!
Senator Ellender. So long as we could produce the goods in this country and dispose of them to our people, there would be no question about that.
Mr. Johnson. Right.
Senator Ellender. But the point is that we are here attempting to fix minimum wages, minimum hours for industry, and at the same time no provision is being made in this bill to offset foreign competition.
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Mr. Johnson. There are some industries that perhaps might need further tariff protection. At the moment—I do not remember the exact situation the textile business. I believe the textile business has some tariff protection. How much it might be on some particular thing I do not know; but if it is not quite enough, apparently it has been enough to exclude most things to date and it might need adjustment; I don’t know.
Representative Connery. Would the Senator yield on that point?
Senator Ellender. I just want that one question, and then I am through. I heard one Congressman say here yesterday that in his district there was an industry there, the shoe manufacturing section, where as much as 6,000,000 pairs of shoes a year come in from Czechoslovakia, and the cost of manufacture there as compared to our cost is ridiculously low. Now, if our manufacturers are met with such competition as that, could it be met unless we put something in this bill to offset that?
Mr. Johnson. Well, not being a legislator, I could not answer your question. If we need higher tariffs, whether they should be written into this bill is something that I do not know. I should imagine that you would want another bill.
Representative Connery. Would the Senator yield to me?
Senator Ellender. Yes, surely.
Representative Connery. Right on that, Mr. Johnson, in my bill it does provide for that. It strikes out the words, “in any State” and applies it both to the United States and to foreign imports. In the N. R. A., if you will remember, there was a provision—I am going into a little past history here. Senator Black’s 30-hour bill passed the Senate. It came over to our committee in the House and it struck a snag there, and I submitted a licensing clause, and in that bill I had this particular provision, that wherever the President should find, or the Secretary of the Treasury should find, that the total landed costs of any article or commodity imported into the United States were less than the cost of production of a similar article manufactured in the United States, that that article would be barred. The administration felt that that was going too far, that that was pretty much of an embargo. They asked me to take it out and I refused, and as a result of that, the N. R. A. was written 6 weeks later, and they took the best parts of our bill, and Senator Black’s and mine, and wrote it into the N. R. A., and wrote a lot of other things about codes that we did not like. But I want to get back to this. As a result of that, and as a result of the fight which I made at that time on foreign imports, into the N. R. A. was written a provision which gave the President the power wherever he found that foreign imports were interfering with the administration of the N. R. A.-bright along the line of what the Senator spoke about now—that the President could embargo them if he wished and tax them, or could place a tax there that would equalize the difference in the cost of the production; in fact, gave him almost unlimited powers in that respect.
Now, while I do not want an embargo and do not insist upon an embargo, don’t you think that something should be put into this bill so that this Board might have permissive authority, not mandatory authority but permissive authority, if the situation to which the Senator refers and to which I referred yesterday, should come up, that the Board after consultation with the President, could put some
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Mr. Johnson. There are some industries that perhaps might need further tariff protection. At the moment—I do not remember the exact situation the textile business. I believe the textile business has some tariff protection. How much it might be on some particular thing I do not know; but if it is not quite enough, apparently it has been enough to exclude most things to date and it might need adjustment; I don’t know.
Representative Connery. Would the Senator yield on that point?
Senator Ellender. I just want that one question, and then I am through. I heard one Congressman say here yesterday that in his district there was an industry there, the shoe manufacturing section, where as much as 6,000,000 pairs of shoes a year come in from Czechoslovakia, and the cost of manufacture there as compared to our cost is ridiculously low. Now, if our manufacturers are met with such competition as that, could it be met unless we put something in this bill to offset that?
Mr. Johnson. Well, not being a legislator, I could not answer your question. If we need higher tariffs, whether they should be written into this bill is something that I do not know. I should imagine that you would want another bill.
Representative Connery. Would the Senator yield to me?
Senator Ellender. Yes, surely.
Representative Connery. Right on that, Mr. Johnson, in my bill it does provide for that. It strikes out the words, “in any State” and applies it both to the United States and to foreign imports. In the N. R. A., if you will remember, there was a provision—I am going into a little past history here. Senator Black’s 30-hour bill passed the Senate. It came over to our committee in the House and it struck a snag there, and I submitted a licensing clause, and in that bill I had this particular provision, that wherever the President should find, or the Secretary of the Treasury should find, that the total landed costs of any article or commodity imported into the United States were less than the cost of production of a similar article manufactured in the United States, that that article would be barred. The administration felt that that was going too far, that that was pretty much of an embargo. They asked me to take it out and I refused, and as a result of that, the N. R. A. was written 6 weeks later, and they took the best parts of our bill, and Senator Black’s and mine, and wrote it into the N. R. A., and wrote a lot of other things about codes that we did not like. But I want to get back to this. As a result of that, and as a result of the fight which I made at that time on foreign imports, into the N. R. A. was written a provision which gave the President the power wherever he found that foreign imports were interfering with the administration of the N. R. A.-bright along the line of what the Senator spoke about now—that the President could embargo them if he wished and tax them, or could place a tax there that would equalize the difference in the cost of the production; in fact, gave him almost unlimited powers in that respect.
Now, while I do not want an embargo and do not insist upon an embargo, don’t you think that something should be put into this bill so that this Board might have permissive authority, not mandatory authority but permissive authority, if the situation to which the Senator refers and to which I referred yesterday, should come up, that the Board after consultation with the President, could put some
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sort of a tax or could make these people in Europe live up to the same hours and wages that we do here.
Mr. Johnson. Well, Congressman Connery, as long as you have given me the opening, to speak on this subject, I will say, very briefly, that I am for simplicity first, because it seems to me that in trying to do this thing, there is so much confusion that we ought to reduce it to the very minimum. I can imagine people who are in favor of good wages and shorter hours opposing the whole thing because it has got a tariff clause in it, or elasticity, or too much independence of action, or too much authority. Is it not fair to assume that the Congress and the Senate of the United States and the executive of either party will respond to the general welfare of the great majority of the people in the Nation, being wage earners and agriculturalists? If this plan mitigates against the welfare of a given industry or group of industries, then as I understand it, the regular channels are there to go before bodies of both Houses and ask for various tariff revisions upwards or downwards. That is all we do now.
The Chairman. You have never heard that they were very timid about that, have you?
Mr. Johnson. I had not noticed any such thing.
Representative Connery. Right there, Mr. Johnson, if I may. Opening up the tariff in the Congress of the United States is opening a Pandora’s box, and they want to keep away from it. They don’t want to touch the tariff either in the House or in the Senate; they want to keep away from that. Now, I am not asking an embargo, but I do believe that a permissive clause should be put in there. 1 do not think they might even have to touch it, but a permissive clause should be put in there so as to allow the President and to allow that Board if necessary, if they found that foreign competition was ruining this new bill by long hours and cheap wages, I think we ought to look ahead a little bit and give them permissive power.
Senator Ellender: Mr. Johnson, just a few more questions.
Mr. Johnson. Yes, Senator.
Senator Ellender. I understand that during the depression, you say that you ran your three mills full capacity?
Mr. Johnson. Two mills. We did not have three then.
Senator Ellender. Do you feel that you could have run those mills at full capacity if you had not had this outlet of Johnson and Johnson? In other words, put yourself in the same shoes as the average cotton mill throughout the South and the North, and giving credit, of course, for your business ingenuity and probably better business judgment, and taking all of that into consideration.
Mr. Johnson. Let us go back. Particularly in New’ England, because perhaps this is less true of the South. Some generations ago, when a young man inherited a cotton mill, he looked upon it as the Bank of England. He hired men to sell the product, he hired other men to run the mill, and he hired other men to look after the finances, on the assumption that the mere ownership of a pile of brick somewhere would give him an adequate income for life. It became the habit in the textile business to completely divorce this business of selling the product and making the product. That did not suddenly become obvious in 1929 or 1931. It was a fact for many years in the textile industry and is a fact today. Now, having neglected to arrange for any satisfactory device for continuity of production, mills not having that power suffered more
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than mills having it, because they merely took their goods out and sold them on the open market.
I feel that you are right, that it was easier for any mill to operate, who had already built up a sales organization, but please remember when you get over into selling, it is also competitive, and that that mill had to stand up against mills who were producing with the lowest possible wages and the longest possible hours and little or no profit, and sell its product in the same ultimate competitive market as anyone else. This thing begins a long time ago.
Senator Ellender. Just one more question, Mr. Johnson, should this bill become the law, don’t you think it would be no more than fair and right that an employee should not be employed for any other gainful purpose except that in which he is employed?
Mr. Johnson. If I understood you correctly, you refer to the question of a person who works at two jobs?
Senator Ellender. Yes, sir; that is the point I wanted to bring out. I understood you not to agree with the proposition.
Mr. Johnson. From our practice and from such observation as I have been able to experience on short hours, a few people, a very few, will for a short time in the early days, attempt to do two jobs, but what happens is this. Both employers ultimately find it out. It is conceivable that in some cases it is satisfactory to both employers, but the number of such cases is very very small, so small as to be insignificant.
Senator Ellender. But the fact that this proposed law is to relieve unemployment and to help the health of the employee, that being so, don’t you think that it might be wise to prevent an employee from getting outside employment other than where he is usually employed?
Mr. Johnson. Well, Senator, on the score of the particular case it might be, but let us view another angle. We have got to avoid limitation of personal freedom here some. If you put that in the bill, would not some group feel, even though it were a minority, would they not raise the point that you were going a little too far in ordering the life of the average citizen?
Senator Ellender. But this is done for the benefit of their health and happiness and this and that. That is the basis of the bill, and if you say that they should not work more than 6 hours or 8 hours because it will affect their health, and then permit them to work 16 hours-----
Mr. Johnson (interposing). Well, first of all, we have very few cases. And secondly, is it not true that while we have an educational job on our hands, it is not always easy to sell everyone that they should do what is best for themselves. I am a little fearful of being too specific on that score, because I think you may raise opposition over a field when you have a very small field influenced by it.
The Chairman. As I understand it, Mr. Johnson, you think the objective that Senator Ellender has in restricting it to one job is a desirable objective?
Mr. Johnson. Yes.
The Chairman. You doubt if that objective would be best obtained by writing it into the law?
Mr. Johnson. Yes, sir.
The Chairman. You think that probably that is one of the situations in which it could be achieved better without a law which might irk a great many people?
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Mr. Johnson. I do.
Representative Connery. Mr. Chairman, Senator Davis asked me to ask Mr. Johnson a question. He was called away. The Senator wanted to know what the difference was in the cost of production during your father’s time in the business and now while you are running it?
Mr. Johnson. I could say with practical accuracy that the operating costs are constantly decreasing over the past 25 years. Now, in attempting to explain that, that may not mean that the final cost of the product has decreased, although in our case that has usually been the fact. The raw materials, if they went up very materially, despite the reduction in operating costs, the ultimate cost might be greater today in some cases. But looking at the operating side of the industry alone, the cost has had a constant tendency to decrease.
Representative Connery. Is that due to machinery?
Mr. Johnson. Due very largely to the machinery, more uniform production, the better control of waste, the better administration of lost time, the higher quality of supervision, better technical advice, the use of substitute raw materials that cost less and are worth more, and so forth.
Representative Connery. That has brought up a thought in my mind, and then I will conclude. Suppose that this legislation goes through, and suppose that they all finally decide that a 30-hour week is good. After that goes into effect and they are liable to fire people by putting in new machines, labor-saving devices, won’t we have to supplement this legislation later with something like a tax on power, horsepower or something like that, so as not to place a premium on firing people and putting a machine in their place? For instance, to give you a perfect example, I went to the movies the other night and I saw in a picture taken in New Orleans, some kind of a thing that looked like a flashlight that you put into a slot, and there were groceries arranged there, and these groceries would automatically fall into place, and then you went up to the counter and they gave you your entire order of groceries and you paid for it and went out. Like an automat, like you would go in and get a cup of coffee in an automat. That probably displaces I don’t know now many people who would be displaced in an ordinary grocery store by some such mechanism. Do you think that later we will have to do something in reference to that?
Mr. Johnson. Well, I am rather hesitant to try and visualize the ultimate operation of the short-hour high-wage principle, but while shorter hours might and probably would put a premium on the mechanical advances and increased efficiency, it is after all only through this that we raise the earning power of the nation as a whole. That if we could pass a bill today limiting all hours to 30 and if at some future time we would begin again to develop technological unemployment on a large scale, we would then have to consider the subject.
Representative Connery. In other words, what I am getting at is this. Not in your own particular case, because you favor a 30-hour week and have tried it, but those colleagues of yours who won’t come in fine voluntarily, would they prefer a power tax on horsepower of their labor-saving devices by the United States Government, and then use that money to pay unemployment insurance to the people that they throw out of work, or would they rather have this kind of legislation
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which, by putting people to work, they won’t have that tax put on them?
The Chairman. Mr. Johnson, you do not want to stop progress, do you?
Mr. Johnson. No.
The Chairman. And if we get to where we can produce all that the people need with even a smaller amount than 30 hours, you would not consider the race would be destroyed?
Mr. Johnson. I was just coming to that, Senator. We may have to progress at that future point to a shorter day or we may learn by then that the higher wages given in a moderate day, increase the purchasing power and without shorter hours, enough to do the job we then have to face.
Now, to answer your question, sir, what would organized business, and by that I presume you mean the chamber of commerce and the American Manufacturers’ Association—of the two alternatives you outline, which would they prefer? I would not care to voice any opinion as to what their viewpoint may be.
Senator Lee. Mr. Johnson, I could hardly resist from applauding when I heard a manufacturer who gave voice to some of the thoughts that you have given us here this morning. Following this line of thought, do you as far as you know now, think that perhaps a 6-hour day reaches a point of diminishing returns? In other words, with new inventions, should we go on a 4-hour day later in order to distribute the labor necessary and the income necessary?
Mr. Johnson. Well, Senator, we are getting a good way down the road. I propose that we give consideration to a top of 40 hours and a minimum of $16 and that beyond that, some industries should at once go to a 7-hour day and a 35-hour week, and many industries modem in character with a low labor content in their finished cost should go at once to a 6-hour day and a 30-hour week. Now, it will take us some years to get that running well, and then we can begin to progress from the 40 to the 35, and from the 35 to 30, and that will take some years, and then we come to the point that you have just brought up.
Senator Lee. Some bring the argument against the 6-hour day that we approach a defeatist attitude, that a man who labors at a craft, enjoys his work and likes to work more than 6 hours a day and to produce if he has a real creative instinct, and if he is an artisan, he must work longer than that. I cannot see where this law would interfere with that, can you, or in your business does it appear that to reach the maximum of efficiency, an individual laborer must work longer?
Mr. Johnson. I believe that in organized modern industry, you have an entirely different situation than the individual craftsman and artisan who independently and individually does a superior job on some private craftsmanship product and likes it so that he would probably prefer to work more than 6 hours. I can see nothing in this legislation that stops him.
Senator Lee. Neither do I. Now, following this other thought a bit further somewhat, you suggested a while ago, and of course this is an estimate, that perhaps this minimum law might absorb the unemployed at the present time if applied all over the United States. I understood you to say that it would probably take care of 10,000,000 more.
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Mr. Johnson. No, sir. I said that if we were to go to a 6-hour day universally for commerce and industry at this time, that I felt that would absorb the unemployed. But the bill, as I understand its construction, would aid the underpaid in industry, and contribute somewhat to the solution of unemployment.
Senator Lee. You have about 5,000 employed. How many did you add after you went to the 6-hour day?
Mr. Johnson. Well, for example, in Chicopee South, where the total number I believe was—this will have to be a guess—on the 8- hour shift was about 900, and the 6-hour shift worked to an additional 300 to 325.
Senator Lee. And your pay roll increased that amount?
Mr. Johnson. Yes; our pay roll increased that amount.
Senator Lee. Now, you suggested in answer to Congressman Connery that generally the cost of production has been lower. Has the laboring group benefited by that increase between the cost and the selling price, or has that in most cases, not in your business necessarily, but in most cases in industry, has that been enjoyed by the laborer, the consumer, this lower price, or has it gone back into capital goods or has it gone to the manufacturer or to a decrease in the profits?
Mr. Johnson. Well, I would find it extremely difficult to answer that question with either satisfactory accuracy or so analyzed as to give you what you want, but this is the general impression that in America with competitive industry as we have understood it, and with the moderate taxes so that these amounts do not go through the tax funnel, it has been the practice of American industry to pass on to its customers a great percentage of industrial savings by the law of competition.
Senator Lee. Those who you say enjoyed the week end, have you noticed any tendency on their part to buy and own homes or small tracts of land and spend their time producing garden truck and fruits?
Mr. Johnson. Yes; I have noticed such a tendency.
Senator Lee. Is it your belief that with a shorter number of hours and an opportunity to own a small tract of land and a home, that these people might become more self-sufficient, self-supporting so far as producing food and vegetables and fruits is concerned in addition to the joy and health that would result?
Mr. Johnson. That is very definitely my impression.
Senator Lee. I have heard the argument that the laboring group do not care to own a home, that they prefer to live in a flat or a tenement. Is that your impression? Of course, some may, but what do you think?
Mr. Johnson. That is a very interesting point. Where the laborer, and I hope in the future he will be an industrial technician, has not got reasonable security in his job or continuity of work, he has a hesitancy in buying a home in that community, and he is more or less forced to consider rent, but where he has the element of security and reasonable wages, he turns almost every time to the ownership of a small plot of land.
Senator Lee. Do you pay a different wage in your southern factories as compared to your eastern or northern?
Mr. Johnson. I brought those figures in case I was asked that question. Just a moment. The average wages in Georgia today are $17.50, as against what I believe is an average in the State in the same industry of $14. New Hampshire $19.92, and Massachusetts, $19.07.
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Senator Lee. In each case, those wages will buy about the equivalent; that is, the cost differs so much in the different localities that the average is practically the same, is it not, so far as purchasing power is concerned?
Mr. Johnson. I would not know. We have kept track of the cost of living, which is a hard thing to do, I mean the essentials, and incidentally we have noticed in the past year a severe rise in those essential things, a rise in rent and a rise in food.
Senator Lee. The difficulty of laying a flat floor, so to speak—it would be a mistake for us to try to do that, would it not, in your opinion?
Mr. Johnson. Decidedly not. I think it is absolutely essential to any legislation that deals with the subject. It ought to be moderately simple, with all of the statistics here in Washington and all of your experience with different parts of the country.
Senator Lee. What is your minimum wage in the South? What you just gave me there, is that the minimum?
Mr. Johnson. No; I should say it is about $15.50.
Senator Lee. And the North?
Mr. Johnson. Probably $16. Senator Lee. Do you believe that the information and the data that we have, that with that, we could fix that wage with reasonable certainty without running into difficulties that would destroy the effectiveness of this bill?
Mr. Johnson. Let us go at it in another way. Let us decide that private management has not carried out its responsibilities unless it is able to provide its people with a minimum value that will give them the necessities of life. Let us decide what that is without any relation to any hour or to any industry. If anyone believes that the head of a family, with a wife and two children, and that is the average for the Nation, can exist decently on less than $16 a week, let us hear from those people and decide what shall be some lower sum. But the thing that is essential above all else is to put a floor, and one that becomes a floor for all parts of the country. Now, if you want to go further up for certain areas, that is a matter of some debate, but for any area you simply establish a figure in wages below which no one can go.
Senator Lee. Would it be your opinion that if we fix the wage in this bill definitely and removed the element of judgment that we are attempting to delegate to the Board and fixed the 6-hour day and 5-day week; that that would be desirable?
Mr. Johnson. I think the first would be most desirable. To fix the 6-hour day for industry and commerce throughout the Nation at one gesture, as anxious as I am to see it done, would probably be unwise, but to establish in industry which is already in a position to do it, I think it is necessary, and then to have a 35-hour week, or between 30 and 40, and then a 40-hour top and then slowly move from 40 to 35 and from 35 perhaps to 30.
Representative Ramspeck. Mr. Chairman.
The Chairman. Yes.
Representative Ramspeck. In your Massachusetts mill, do you furnish houses for your employees?
Mr. Johnson. Yes; in part. There is an old village there, and in part we do.
Representative Ramspeck. You rent them to the employees?
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Mr. Johnson. Yes.
Representative Ramspeck. In Gainesville, you have a very modem mill village?
Mr. Johnson. Yes, sir.
Representative Ramspeck. You have brick houses, and hardwood floors.
Mr. Johnson. Yes, sir.
Representative Ramspeck. Electric refrigeration and electric cook stoves.
Mr. Johnson. That is right.
Representative Ramspeck. And a very beautiful village. I have been in there, and I have been in the houses. I think it is perhaps the finest thing of its kind I have ever seen anywhere.
Mr. Johnson. Thank you.
Representative Ramspeck. What rent do you charge those people?
Mr. Johnson. I don’t know. I have been over it a great many times, and I am just hesitant to give the figures, because I cannot keep them all in my head
Mr. Ramspeck. Do you keep any record with reference to the investment in that mill village to see whether the rents make a return on the investment?
Mr. Johnson. Yes, sir; we do.
Representative Ramspeck. What I am getting at is this, does that service which you render your employees there figure in your wage scale in any way?
Mr. Johnson. Of course, they get a great deal of benefit out of it. The rents are extremely low. There may be one of my friends in this room, and I would like to ask in a minute if I may, if he can give me the answer to your question, but I would say this about that village. On the surface, that village looks like an extravagance, but let us look at the picture. That village was very carefully worked out. The square feet of exposed board that needed painting was worked out to a detail, and it was established on the unit basis of rooms. If you wanted to get a different room arrangement, all you had to do was to take the basis and add a room here or there, or subtract one here or there from the basic unit. The streets were made curved and the houses were set at different levels from the street, so that it did not look like a manufactured thing cut out by the yard, and all of that makes it look expensive, but I believe from the figures I had, that despite the fact that that village costs more to build originally, the upkeep has been so greatly reduced over the average, that as an investment it is a better village than the straggling disgraceful looking things you see throughout the country.
Representative Ramspeck. I cannot say too much in commendation of your village there.
Mr. Johnson. I think it was a good investment.
Representative Ramspeck. The point I was getting at, however, is that in the South generally, the cotton-textile mills do furnish quarters.
Mr. Johnson. Yes, sir.
Representative Ramspeck. In the North, they do not as a general rule, as I understand it.
Mr. Johnson. That is correct.
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Representative Ramspeck. From your experience as a manufacturer in both sections, does the furnishing of quarters constitute in part at least a source of income to the employees by saving them rent that they otherwise usually pay?
Mr. Johnson. Yes; I think it does. It depends entirely on the rent, but I think in general it does. I know our rents in Chicopee South are very low. May I ask a question, Mr. Chairman?
The Chairman. Certainly.
Mr. Johnson. Is Mr. Cosgrove here?
Mr. Cosgrove. Yes. Mr. Johnson. Do you know the rents in Chicopee South?
Mr. Cosgrove. A dollar per week per room.
Mr. Johnson. A dollar per week per room. I think that is correct.
Representative Ramspeck. That is a very low rental, of course, because those houses are just as good as the average citizen in the South lives in.
Mr. Johnson. May I add something to that, this question of villages having been opened? As a result of better roads and as a result of the almost universal ownership of some kind of a motor car, in the past few years the village has probably been a greater liability than an asset, and as the whole tiling is somewhat paternalistic in nature, and tied up not infrequently with a company store with all of its difficulties, I would hope to see most of the villages abandoned, including Chicopee.
Representative Ramspeck. Mr. Johnson, where do you buy your raw cotton for the Gainesville mill?
Mr. Johnson. Well, we buy it in a good many places, and differing by years. Then sometimes cotton buyers change their minds. We usually get it in through Texas or the Mississippi Valley. We have been unable in most years to use any cotton developed near the mill.
Representative Ramspeck. That means that your freight rate from the point where you buy the cotton to your mill in the South is practically the same or maybe greater than it is from Texas to Massachusetts, is it not?
Mr. Johnson. I was told the other day by the president of our cotton null corporation that the cost of cotton delivered to our New Hampshire mill was less than our Gainesville mill and it was a little difficult for me to understand it.
Representative Ramspeck. That is due to your water transportation.
The Chairman. A lot of people in the South do not understand it.
Representative Ramspeck. It is true, is it not, Mr. Johnson, that the cost of shipping your finished products from Gainesville to your consuming center is higher than it is from Massachusetts?
Mr. Johnson. Very definitely higher. We have made those comparisons frequently.
Representative Ramspeck. I think that is all I want to ask.
Representative Connery. I would like to ask a question there, because I thought the Congressman and I differed on that. I know when they were working for the development of the port of Boston, it was brought out that the freight rate differentials—that it was cheaper to ship from Chicago to Baltimore than it was from Chicago to Boston. This seems to be at variance with that. Evidently your own experience is that it is cheaper to ship from Texas to Massachusetts than it is from Texas to Gainesville, is that right?
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Mr. Johnson. That is right, Congressman; but may I say in connection with freight rates that if you and I sat down to study them, at the end of 20 years we might have some slight knowledge of it. We have a crew of men studying freight rates, but I cannot say that I have any very definite understanding of the subject.
Representative Ramspeck. There is one other question I forgot to ask you, Mr. Johnson. You recommended in your prepared statement, three groupings of industry. Did you mean that the same wage scale would apply for different hours, in other words the 30- hour week, the 35-hour week, and the 40-hour week would pay the same wage?
Mr. Johnson. I meant the same weekly minimums. If you establish $16 as the wage necessary for the minimum standards of living per week, that would be the same in the 30 and the 35 and the 40.
Representative Ramspeck. And that, I presume, is based on the theory that less productive machinery justifies a longer workweek for the same wage; in other words, the employee can produce less therefore he can make less.
Mr. Johnson. That is right, and I felt it was more economical from the standpoint of operating industry. You cannot just generalize in industry. On the other hand, if you ever try again to use these 473 ways of coding it, you will fall down in the middle.
Representative Ramspeck. It is too much complication.
Mr. Johnson. And overlapping.
Representative Ramspeck. In the cotton textile industry, there is a very wide difference between the productivity of the machinery now installed, is there not?
Mr. Jackson. There are some interesting figures there, and I am afraid there may be some men in this room who know so much more than I do about that, that they are going to check me up. But these are generalities. Some years ago, as I understand it, there were about 37,000,000 spindles in the United States. Today I am told that there are approximately 27,000,000 spindles in the United States. The rest have been destroyed. Of those 27,000,000 spindles in the United States, am told that some 23,500,000 are now in operation, and I am also informed that the remaining 3,500,000 are especially poor and hardly capable of operation. Some men believe that the old-fashioned inexpensive cotton-mill machinery is more efficient than the modern expensive cotton-mill machinery. Our individual experience is that given a proper type of management we can afford to pay a higher price for modem machinery, but it is entirely possible that without that ingredient of management, you may operate and produce more cheaply in an inexpensive old-fashioned mill than a modem one. For example, when we built Chicopee South, it cost $86 a spindle, and at that time I could have bought any one of 100 mills for $10 a spindle, and many for $5 and $6 a spindle. Despite that, in what is accepted as the most competitive market in the textile industry, namely tobacco cloth, and it is purely competitive because nobody ever makes them unless they have not anything else to do, the mill at $86 a spindle was able to compete or at least keep its head above water, as against the mill which was bought at $7 a spindle. Now, it is a debatable point.
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Representative Ramspeck. Do you mean that you would operate the inefficient machined mill and the efficiently machined mill at the same wage scale and get that result?
Mr. Johnson. Well, I can only say that if I had an old mill—and we have—that we paid more wages in the old mill than we did in the new mill, because in those days there was a greater differential between the North and the South, and with higher wages being one of the best ways I know of to reduce cost, I would strongly recommend it for the man who had an old mill. And I was informed the other day that our Massachusetts mill produced at slightly lower costs than our southern mill.
Representative Ramspeck. In spite of the fact that it is older machinery?
Mr. Johnbon. Yes, sir.
Representative Jenks. Mr. Chairman, may I ask Mr. Johnson one question?
The Chairman. Certainly.
Representative Jenks. Mr. Johnson, what are your maximum hours in Manchester?
Mr. Johnson. Forty.
Representative Jenks. And in Chicopee?
Mr. Johnson. Thirty-six.
Representative Jenks. And your southern mill?
Mr. Johnson. Thirty-six.
Representative Jenks. With your minimum wage of $15.50 in the South, and $16 in Chicopee, and in Manchester, if this bill were passed it would not make any difference to your business, would it? It would not affect it at all.
Mr. Johnson. Yes.
Representative Jenks. Unless it would seem as though it would affect it favorably by making your competitors come up nearer to your level.
Mr. Johnson. No, it would increase our wages, because by paying $16 minimum, we would have to raise the wages of Chicopee South and Chicopee, Massachusetts. Chicopee, New Hampshire, also, and if competition were to have a $16 minimum, we would also have to raise wages, because from the very beginning of those operations, we have paid from 15 to 20 percent more than the average of the cotton textile industry, believing it was a good investment, because we got the best operators available, and we could not maintain that level under the higher wage if we did not move our wages upward, which we would expect to do.
Representative Jenks. But you would not be compelled to do it.
Mr. Johnson. We would be compelled to change wages in the South and the North. We would really be compelled to do it all along the line.
Representative Jenks. The thought came to me that because your business is so well-organized and handled so efficiently, that you had put yourself beyond the general competition. What I mean is the competition that is considered among most mill 'men. For instance, I think you made the statement that you could operate on a higher wage cost—you thought you could and you would be willing to try— than what your competitors did.
Mr. Johnbon. Well, we would be willing to try, because of what perhaps might be a personal ambition. One of the reasons for building
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Chicopee South at $86 a spindle was to prove that you could put into a mill, the proper conditions and still make a success, because it seemed to me that that was the solution to the textile industry, and not constantly going in the direction of longer hours and lower wages. I hoped through that mill, which was the only new one built for years or since, that the industry at large might use it as a laboratory and through it to learn that it would be better to dispose of and junk a good many of the old mills and go to the reorganization of the textile industry. Unfortunately that does not seem to be the case. Through machinery limitation, perhaps unduly, I read into it that some people would prefer to take the model off the scenery rather than to follow it.
The textile industry has for years paid low wages, and I felt from a selfish standpoint that unless the textile industry could be brought up to modern standards, it was an unwise business to be in. One of the reasons we are trying this 6-hour day in Chicopee South is because we see the 6-hour day coming, and it will be a very easy matter for us to go along with it because we have been ahead of the game.
Representative Jenks. It is for that reason that I asked the question, that you would not by this bill be affected as much as the general textile industry would be? I take that from the testimony you have given here this morning.
Mr. Johnson. Quite correct. We would not be affected as much as the person who paid $10 a week and not as much as the person who paid $6 a week, but I remember being told this, that a man who is paying $8 a week who went to $14 spoke of the tremendous gift to the Nation that he was making in this percentage of increase, but the premise did not seem to be quite right.
Representative Jenks. I ao not think as a rule that manufacturers think in terms of benefits to the Nation. I mean, generally speaking, after listening to your testimony this morning, is that not true as to your situation as compared with other mill owners?
Mr. Johnson. Well, why not? Is it not obvious that our individual business success is tied very closely to the welfare of business generally throughout the country? We cannot sell goods to 10,000,000 unemployed people; they are out of the market. We cannot sell goods to the millions of the underpaid in the United States; they are out of the market. I am tremendously interested in seeing America develop its domestic markets because it will double my business here.
Representative Jenks. You are taking a very broad view of that; much broader than what a great many manufacturers do take.
Mr. Johnson. Perhaps I am taking a directly selfish view.
The Chairman. It is 20 minutes to 1. I think if we are going to meet back here at 1:30, as we have told the other members that we would do, that we had better adjourn now.
Representative Connery. I move we recess until 1:30.
The Chairman. We have two other witnesses this afternoon. We will meet back here at 1:35.
(Whereupon, at 12:45 p. m., a recess was taken until 1:35 p. m. of the same day.)
AFTERNOON SESSION
(The hearing was resumed at 1:35 p. m. at the conclusion of the recess.)
The Chairman. Mr. John G. Paine.
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The Chairman. Mr. Paine, will you first state what your business is?
Mr. Paine. Well, I am here representing the management group of the National Council for Industrial Progress.
The Chairman. What is that?
Mr. Paine. The National Council for Industrial Progress is a council that was organized under now Senator George Berry, who was then coordinator for industrial cooperation and an appointee of the President. I have it formally set out, if I may read it, Mr. Chairman.
The Chairman. That is all right.
Mr. Paine. It will clarify it to some extent. In support of the Black-Connery labor bill, I appear as chairman of the management group of the Council for Industrial Progress. The records of the council from which I shall quote will establish that what I say reflects the consensus of at least a preponderant majority, and probably all of the members of the council who represent industrial management. Because of the broad and varied industrial field which this membership covers—the manufacture and distribution of nearly every product from portland cement to pretzels— and because it represents more than 700,000 employing establishments, its attitude on any legislative question is, I believe you will concede, enormously important.
But in addition to this management representation of a very substantial cross-section of American industries and distributive trades, the council membership includes also official representation of the entire organized labor movement in the United States. The labor membership of the council speaks for every organization within the American Federation of Labor and all those not so affiliated which claim more than purely local interests and local membership.
Together, the management and labor memberships in the council account for more than 52 percent of all industrial employment in the United States, exclusive of agriculture, public, and domestic service.
The partnership between management and labor in industry implemented by the Council for Industrial Progress is dedicated to promoting the common interests of the partners in the success of their joint enterprise as a contribution to furthering the general welfare. When these partners are in agreement as they are on the need for just such legislation as here is being considered, they become a powerful influence in molding public opinion and in shaping national policy.
The characteristic of the management group of the council which will be of particular interest to you is that it is preponderantly representative of the small establishment. The corporate, closely integrated mass production industrial establishments are not represented.
The controlling by statute of minimum wages and maximum hours of work, and the abolition of child labor in industry, as a first step toward correcting the maldistribution and misuse of the national income, reducing unemployment, increasing mass consumption and otherwise securing stability in the economical life of the Nation, has been one of the prime objectives sought to be accomplished by the council from its first meeting early in January 1936. At its March
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12, 1936, meeting the council unanimously adopted the reports and recommendations of seven committees, several of which dealt with this vitally important question of working hours, wages, and child labor, and the need for regulatory legislation.
I want to interject here, if I may, by stating that one of the questions asked this morning was whether or not management had ever come forward with the suggestion of shorter hours and better rates of minimum pay, and I think that the reports of this council prepared over a year ago, and sent, I think, in printed form, to every Senator and Congressman in the United States, is an answer.
The Committee on National Industrial Policy made the following declaration regarding “hours and wages” [reading]:
While recognizing the need to maintain the respective field of State and Federal authority, the committee advocates the policy of the minimum wage in industry and the payment of substantial overtime rates for hours worked in excess of a reasonable workweek, believing this to be an advisable national policy, tending to increase the purchasing power of wage earners, and make for reemployment in an age of continuous technological improvement.
The Committee on Internal Competition included in its report the. following statement:
To protect the wage earners and give stability to our industrial structure; suitable standards must be established with regard to minimum rates of pay, maximum hours of work, and work load exacted. The standards must be recognized as minimum standards and they must be supplemented by true collective bargaining of employees with their employers to prevent minimums from becoming maximums and to attain full measure of equitable wage distribution.
The Committee on Fair Trade Practice condemned as an unfair competitive practice:
The employment of child labor or the maintenance of unjust or unreasonable hour standards as against a competitor maintaining proper labor standards as to wages and hours and not employing child labor.
And the Committee on antitrust laws advocated amendments to the antitrust laws which would prohibit “the pernicious practice of maintaining unfair labor conditions.”
But the specific recommendations made by the council which I wish particularly to emphasize are contained in the report of the Committee on Maximum Work Week, General Wages and Child Labor. The committee found [reading]:
Long working hours, inadequate wages, and employment of children in industry create unfair competition in interstate commerce and are detrimental to the welfare of the Nation; and that Congress should establish a commission or commissions with power to regulate such unfair practices.
The Committee by resolution then requested Congress to enact legislation creating a Commission or Commissions with the following powers:
After findings, to have authority to determine a minimum wage rate to be paid by each of the several industries; and to determine the field covered by each industry.
After findings, to have authority to determine the maximum number of hours per week to be worked in each of the several industries; and to determine the field to be covered. In any instance where the hour-week shall have been greater than the hour-week established by the Commission for that industry, an adjustment in the wage rate shall be made so that there shall be no reduction in the earnings of the worker.
After findings, regulate the minimum ages at which children may be employed, in commerce, manufacturing, mines, or agriculture.
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The committee, by further resolution, declared that Congress, in legislating for such a Commission, should provide for a personnel giving equal representation to management and to labor.
The report of this committee contained the following statement:
In its recommendations, your committee deals specifically with minimum rates. Hence, it feels called upon to state that general wages should have a sound basis above which employees should, through initiative, ability, training, and organization, be able to individually or collectively obtain wages commensurate with the worth of their services.
All of the committees, from whose reports the foregoing quotations are given, were composed of equal numbers of representatives of management and of labor.
I might state that these committees worked for a great many months, had a great many conferences, and were supplied with quantities of data before they made their final report, and these reports, when they were finally prepared, were presented to the entire council and by unanimous vote of both management and the labor members of the council were adopted.
Under date of April 8, 1936, Mr. William Green, president of the American Federation of Labor, acting in his capacity as chairman of the labor group of the council, and I, acting as chairman of the management group, jointly addressed a letter to Senator David I. Walsh, then chairman of the Senate Committee on Education and Labor, and to Congressman William P. Connery, Jr., then and now chairman of the House Committee on Labor, quoting the report of the council’s committee on hours, wages, and child labor, and inviting consideration of the council’s recommendations by the members of the two congressional committees. I will not read that letter into the record because it merely repeats what has already been stated.
At its December 1936 meeting the council created out of its membership, a coordinating committee and authorized the coordinator to appoint a legal advisory committee. These two committees were charged with the task of drafting and securing the introduction of legislation designed to effectuate the council’s recommendations.
These committees prepared drafts of two bills which were described as fair-competition bills, providing for Federal regulation of hours of work, wages, and the employment of minors. These drafts were transmitted to the President by Major Berry, Coordinator for Industrial Cooperation.
It is highly gratifying to the council to find the Black-Connery labor bill strikingly similar to one of the bills drafted by the council’s committees. I feel, and I am certain that all of the members of the council feel that the similarity between the council’s ideas as embodied in the drafts of bills prepared by the council and the ideas and purposes of the Black-Connery bill is abundant reward for the 18 months of study and effort which the council has devoted to this vitally important problem of regulating hours of work, wages, and the elimination of child labor.
I have given you this history of the council’s interest in this subject, even at the risk of being accused of bragging, because I wish to leave no doubt in your minds as to the wholehearted, enthusiastic character of the endorsement of the purposes of the bill which it is my privilege to express on behalf of the management membership of the council. The record speaks for itself and reflects a unity of opinion as between labor and management which must appeal to you as being unique in the industrial history of America.
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There are here with me a number of the management members of the council. They are here to give physical evidence of their concurrence in the principles and objectives of this legislation. I ask the privilege of introducing them. They do not desire to speak, although some of them may wish to leave with you briefs setting forth individual ideas intended to clarify and strengthen the proposed legislation. As I introduce each of these members I shall state his industrial identification.
The council and its committees you will observe, have confined themselves to the consideration of principles. They have given no thought to details or to effectuating administration. I am unable, therefore, to speak for the management group on some of the provisions of the bill which seem to me to call for comment given in sympathetic and constructive spirit. I am sure that the committees conducting this hearing solicit the views of those who will be affected by the legislation, with respect to certain of its provisions which seem to need clarification.
Speaking for myself, I would suggest that thought be given to the apparent conflict between the limitations set on the Board’s jurisdiction under section 5 (a). I desire to draw attention to the fact that if we assume a 40-hour, 5-day work week in a year, there will be a maximum of 2,000 work hours. Hence, if an employee works the 2,000 hours in a year at 80 cents per hour, his annual income will be $1,600, which is $400 in excess of the amount at which the Board loses control. Moreover, I do not see how a limit on the annual income which is indeterminate until the end of the year, and even then requires an elaborate system of records covering several million persons, can be used through the year to establish the legal jurisdiction of the Board. My suggestion is that the annual wage income limitation be omitted.
Another point to which I believe the committees may, with benefit to the bill, give their thought, is the omission from the bill of any reference to a maximum work day. Under the bill as now drawn, an employee may be worked continuously for the maximum number of hours per week to be fixed by the bill and by the Board, and receive no overtime pay and be deprived of any protection under the Act. It seems to me that the omission of a limitation on the hours per day which an employee may be permitted to work, renders meaningless the overtime provision of the bill.
I suspect that suggestions from industry in regard to the minimum wage standard to be established in section 2 (a) (10) and in regard to the maximum work week to be established in section 2 (a) (11) will be useful to the committees.
In this connection I wish to remind the committees that I express my own personal views, which, however, have been gathered from an extended study of these two vexing problems.
In the light of the discretionary power vested in the Board under section 5, to vary the minimum wage and the maximum work week, which discretion may recognize justifiable geographical differentials and yet avoid migrations of industry to low-wage regions, diversions in the flow of commerce and the creation of unfair competitive conditions as between States, I believe the minimum wage should be set at 40 cents per hour. In regard to maximum work week I believe there should be flexibility and recommend therefore, 40 hours as the maximum
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and 30 hours as the minimum. The blanks at the end of section 5 (6) I believe should state “not less than 30 hours, nor more than 40 hours.”
In order that there may be no misu 1½ times the normal rate of pay. I believe the discretionary power of the Board under section .6 (c) (4) to modify the overtime rate in periods of seasonal or peak activity (but not in maintenance, repair, or other emergency work) is open to serious question. Under legislation of this type, wide fluctuations in employment in normal operation should be discouraged by every possible and practical means.
Under section 6 (a) the small employer will be exempted from compliance with the provisions of the act. The question here is where this exemption line should be drawn. If drawn too low, enforcement becomes impracticable and many small establishments would suffer. On the other hand, small employers enjoying the competitive advantages of exemption are potentially large employers. Reasonably accurate data are available showing the number of employees in each of the several industries who would be exempted if the exemption line is drawn at 5 employees, 10 employees, 15 employees, or 20 employees. If employers in productive industry employing 20 or less employees are exempted, approximately 10 percent of all those employed in industry in 1929, or some 900,000 persons will be released. The percentages vary considerably in the several industries. I wish to leave with the committees the suggestion that exemption be granted to employers employing less than eight employees. That number will satisfy the real needs of the situation and has the advantage of being the same as the exemption under Social Security, thus preserving uniformity in Government policy and practice.
In conclusion, I wish again to urge the inclusion in the bill of a limitation of the workday. Without such a provision a 10-hour day, a 12-hour day or a workday of any length up to the maximum of 24 is permissible.
Now, I have here some gentlemen who were all here this morning, whether they are all here now or not I cannot say, but I would like to present them, if I may, because they are part of the National Council for Industrial Progress. Your witness this morning is also a member of that council. These men have come down in support of the statement that I have just read in the record.
Mr. Victor Riesenfeld, if he is here. Mr. Riesenfeld is vice president of the Cohen-Goldman Co., the largest clothing manufacturers in the United States. Is he here? Will he stand up?
(Mr. Riesenfeld identified himself by rising.)
The Chairman. Where is his business?
Mr. Paine. In New York City.
Mr. Charles A. Jaffe, president of the Jaffe Clothing Co. and president of the New York Clothing Exchange. Mr. Jaffe also belongs in New York City. Is Mr. Jaffe here?
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(Mr. Jaffe identified himself by rising.)
Mr. Paine. Captain Rudolph Greef, president of the Greater Clothing Contractors Association, which has more than 1,000 employing units in that association. Captain Greef is not here as yet this afternoon.
Mr. Paul S. Hanway. Mr. Hanway has a brief that he would like to present. Mr. Hanway represents the National Fibre Can and Tube Association.
The Chairman. We would be glad to have his brief.
Mr. Paine. Senator Black told me that the briefs would be accepted.
The Chairman. What does he represent?
Mr. Paine. He represents the National Fibre Can and Tube Association.
The Chairman. What is that?
Mr. Hanway. That is an organization of some 80 manufacturers of fibre cans, tubes, and other paper products.
The Chairman. Where do they do business?
Mr. Hanway. They do business all over the United States.
The Chairman. Do you have representatives of that business in all of the States in the Union?
Mr. Hanway. Not in all of them, but in a majority of the States in the Union.
The Chairman. And is your brief in favor of the bill?
Mr. Hanway. The brief. Senator, is in favor of the bill. However, it makes certain criticisms of specific provisions, express or implied, in the bill, and offers in substitution thereof specific recommendations.
The Chairman. How many of those briefs do you have? Do you have enough to give one to each member?
Mr. Hanway. I have some of them here.
The Chairman. When Mr. Paine is finished we would like to have you state the particular points of the bill on which you have criticism. I think that would be very helpful to us.
Mr. Hanway. Thank you.
Mr. Paine. Mr. O. W. Peareon of the Millinery Stabilization Commission. Mr. Pearson was here this morning and is not here now.
The Chairman. What is that commission, Mr. Paine?
Mr. Paine. That is an association of practically all of the manufacturers of millinery products in the United States.
Mr. John D. Clark of the Waverly Growers Cooperative. Is Mr. Clark here?
Mr. Clark. Yes.
The Chairman. What is that organization?
Mr. Paine. He represents the citrus fruit growers, packers, and shippers of the State of Florida.
The Chairman. We would like for Mr. Clark to remain. We might want to ask him a question or two also.
Mr. Paine. Mr. A. F. Allison, representing the International Association of Garment Manufacturers. Mr. Allison also has a brief which deals with certain specific recommendations in connection with certain provisions of the bill and I suppose, when I am through, would like to be heard.
The Chairman. We will hear these gentlemen who have some criticisms to make and suggestions, briefly. I think it would be very helpful to the committee.
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Mr. Paine. Mr. Miles Pennybacker, representing the National Electric Sign Association and president of Voltarc Tubes, Inc. There is Mr. Pennybacker [indicating]. He is down here in support of the bill.
Then we have Mr. W. M. Richardson, president of the National Portland Cement Co. He is not here. He was here this morning. He had nothing to offer but he is here in support of the bill.
Mr. L. 0. Munroe, representing the National Association of Chain Manufacturers. He is not here hut was here this morning. He is in support of the bill.
The Chairman. We understand they all came then in support of . the bill?
Mr. Paine. They all came in support of the bill. Mr. W. Midler, president of the Ransome Concrete Machinery Co.; Mr. R. A. Locke, manager of the Steel Heating Boiler Institute; Mr. J. M. Wells of the Homer-Laughlin China Co.; Mr. G. W. Bayliss, vice president of the Barber Co.; Mr. B. R. Jacobs, representing the National Macaroni Manufacturers Association; and Mr. O. W. Rosenthal, president of the National Association of Building Trades Employers.
They are all down in support of the bill. That, Senator Black, concludes my formal presentation. If there are any questions that anybody wishes to ask I shall be happy to answer them, if I can.
Senator Ellender. Mr. Paine, I was not here when you started, sir. Did you tell the committee what the Council for Industrial Progress was?
Mr. Paine. Yes.
Senator Ellender. What it was composed of?
Mr. Paine. Yes. Would you like me to repeat that?
Senator Ellender. No, sir, not if you have it in the record. How is that council managed?
Mr. Paine. That council is managed under the coordinator’s appointment. The clerical force of the council has been supplied and the headquarters, the actual rooms in which it has been operating here in Washington has been supplied by the Department of Commerce, but the activity of the council is maintained at the personal expense of each of the members of the council.
Senator Ellender. Now, you have personally given your opinion that the wage should be not less than 40 cents per hour.
Mr. Paine. That is right.
Senator Ellender. And the hours not less than 40 per week.
Mr. Paine. Yes.
Senator Ellender. Now, how did you come to that conclusion, if I may ask, first, with reference to wages?
Mr. Paine. Well, I came to that conclusion because of the belief that in the United States the success of the country is due to the massproduction activities, the wealth of the country is largely created by mass production. In order to create mass production you have to have mass consumption, and in order to have mass consumption you have to have a very wide group of people with sufficient purchasing power to meet the requirements. That seemed to give a wider distribution of income than we have at the present time, and, therefore, I felt that it was commendable.
Senator Ellender. Did you hear Mr. Johnson testify this morning?
Mr. Paine. Not all of it, but I heard part of it; yes, sir.
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Senator Ellender. Wherein he gave as his opinion that where as much as 25 percent of the labor constituted the expense of manufacturing a certain product the hours should be set at, say, 6 hours, and if as much as 50 percent of the expense is labor that the hours should be fixed at 7, and so on. Do you agree with that? May I ask this: Did you have that in mind when you fixed this rate?
Mr. Paine. No, I did not; I had only in mind the general theory that we must have, some way or other, a wider distribution of income, national income, if we are going to support the great mass-production enterprises of the United States. That is all I had in mind at the time I made the recommendation.
Senator Ellender. Well, would you be prepared to state that if labor is, let us say, 60 percent of the cost of a certain commodity and then in another commodity the cost should be 20 percent, would you say that the hours should be the same, as well as the per-hour basis?
Mr. Paine. Well, I have never really given any study to that. I have a great deal of respect and regard for Mr. Johnson and I think that I would be led personally very much by his own conclusions. I think he is a very progressive employer.
Senator Ellender. How did you reach the figure of eight as being the minimum number in an industry that should be exempted from a bill?
Mr. Paine. Well, that was just arbitrary. From the figures that we had in the council it appeared that if you had as low as 10, as the figure, there would be an enormous number of small enterprises that would be exempt from the operation of the bill. Now, at all times in industry the difficulties arise largely from the small individual who has a commercial advantage over the large individual. It disturbs the morale of the whole industry, and therefore I felt that there would be too many exempt if you had 10 and I selected 8 because that is what you have in the Social Security Act, and it just seemed to give uniformity. It is just an arbitrary number, an arbitrary figure, but it just seemed to be a uniformity of Government practice, that is all.
Senator Ellender. When you say you figured out if you made the minimum of 10 that it would be too much, what caused you to believe it would be too much? Did you have any figures before you?
Mr. Paine. Yes; we have at the council. I did not bring that with me, but it is in the records of the council. We have those figures. I stated that those figures are available if the committee wants them. They show what it will be if you fix it at 20, if you fix it at 15, 10, and so forth, or 5.
Senator Ellender. Now, what are the principal industries, Mr. Paine, according to your research, that employ as low as eight people? What is the nature of that business?
Mr. Paine. Almost any kind of an industry, except one of the big mass-production industries. The pottery industries and glassware industries, and brick industries, and brush industries, and industries of that sort, manufacturers of brushes, all kinds of small commodities. I do not know of any steel mill that employs only eight men, or any automobile factory that employs only eight men, but there are a great quantity of small industries in a great variety of fields.
Senator Ellender. Suppose you exempt these small industries, do you think that the mass producers—that is, those engaged in mass production—could offset the difference in cost because of mass production?
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Mr. Paine. I do not know that I quite understand your question. The way I look at it is this: Let us take a manufacturer of scrubbing brushes, for example, there are some large companies that manufacture scrubbing brushes, quite a number of them., There are quite a lot of small companies that only employ a few employees that make not necessarily scrubbing brushes, but various kinds of brushes, and if the small groups are exempt they invariably develop a situation which gives them a commercial advantage over other larger employers through the exploitation of their labor. Now, the council feels that that is a wrong thing to allow. We feel that it is an unfair competitive situation for one manufacturing establishment to gain a commercial advantage over another through the exploitation of its labor. We would like to see it all controlled, so that that commercial advantage does not exist. If there is to be an exemption we hope that that exemption will be low so as to cause the least amount of unfair competitive situations existing in any one industry.
Senator Ellender. Are you prepared to give us your idea as to the effect on domestic manufactures in the textile industry, or the shoe industry, if this bill goes through and nothing is done toward stopping manufactured goods coming from abroad, that are manufactured at a lower wage scale and under longer hours?
Mr. Paine. I am not; but, offhand, I would say that would be terrible. In one of the bills that was prepared by the council we felt that we had taken care of that. Was it Mr. Connery this morning who stated that in his draft of the bill he had taken care of that?
The Chairman. Just a moment there. Let us get clearly just what that is. Do you understand how he took care of it? Do you believe it would be possible for us to exclude goods from all the countries in the world that did not manufacture on the same wage, the same hours that we do, or do you think we should handle it in the regular way, through the tariff?
Mr. Paine. Well, I suppose through the tariff would be the most direct way, but it seems to me that if you have the right to regulate interstate commerce and you find something that interferes with interstate commerce, and one man is losing his market because of goods manufactured under sweatshop labor conditions whether they are here or elsewhere throughout the world, that the party injured ought to be entitled to an injunction against the further distribution of those goods, in order to get that protection. Now, whether that can be done or not I do not know. The legal advisory committee of the council seemed to feel that that could be done. Whether they are right or wrong of course I cannot state.
Senator Ellender. I do not know whether this information is correct or not, Mr. Paine, but I am informed that Japan sends to this country as much as 75 percent of the bleached cotton that is used by the people of this country, and that the wages paid in Japan are as low as 23 cents a day.
Representative Connery. Four cents a day.
Senator Ellender. My information is 23 cents a day. Can you figure out how our people could compete under such conditions?
Mr. Paine. We could not.
Senator Ellender. And would not that same condition prevail in other industries in almost the same proportion?
Mr. Paine. Yes. Japan is a serious competitor in all kinds of things. I was up to Plymouth Rock not long ago and had a great
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deal of pride in purchasing a little memento that I was going to send back to my son to let him know that I had been there, and when I bought it I picked it up and it said “Made in Japan.” I have been to hearings on copyrights from time to time where the people have been asking for protection under design patents because of the Japanese infringement in glassware, in crockery and all kinds of things of that sort. It is true that that is a serious handicap.
Senator Ellender. Now, you have no doubt discussed this bill, and others, with various labor organizations, have you not?
Mr. Paine. Yes, sir. Well, I have not discussed this particular specific bill with any of the labor organizations.
Senator Ellender. But you have discussed the principle of it, I presume, have you not?
Mr. Paine. That is right.
Senator Ellender. Now, Mr. Paine, do you think that the board that is created under this bill should have jurisdiction over an industry wherein the employee and employer have, by collective bargaining, ironed out their differences and agreed on certain principles to go by and that both the employer and employee are satisfied with them, do you think that the Board should have jurisdiction over an employer and employee who has done that?
Mr. Paine. Yes; I think so, because undoubtedly they have arrived at an agreement which is in harmony with the minimum and the maximum.
Senator Ellender. Why should the Board have jurisdiction over an employee and employer that have settled their differences, or that are operating under a contract?
Mr. Paine. Well, because it seems to me that if we are going to have any success at all in connection with wages and hours legislation there must be some kind of national control of the whole situation. It would be nice if we could do it without national control. We tried it for 150 years and we have not succeeded. It seems to me we ought to have national control regardless of the fact that in some industries the arrangement between the employer and employee happens to have worked out in a very satisfactory way.
Senator Ellender. Well, has not that condition existed because some manufacturers paid very low wages and had long hours, unduly so, whereas under this bill that feature will be eliminated in that every industry will have to pay their labor a minimum amount and work a minimum amount of hours? Now, if you eliminate that feature why should the Labor Board have control of or jurisdiction over an employer and employee of a given industry that has agreed, or that has bargained under the Wagner Act?
Mr. Paine. I do not think that there is any—what shall I say— vital necessity for it for such a control, except in the interest of uniformity of practice, that is all.
Senator Ellender. But 1 am assuming now that a given industry has agreed, as between employer and employee in a particular locality, the same thing as you are doing under this act, that the employer and employee have agreed that they are willing to work for so much and the employer to pay so much for so many hours. Now, when they have done that and the minimum provided for in this bill has been met, why should the Board have jurisdiction over that condition?
Mr. Paine. Why should they worry about whether the Board has jurisdiction over the condition? That is the thing I cannot understand,
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because if they have complied with all of the provisions of the act, and they have even gone beyond that, they need not worry about the jurisdiction. The courts have jurisdiction over me but I do not worry about it because I am not committing any crimes. I just do not see why they should be particularly disturbed over having that jurisdiction. It does make for uniformity. I may not understand the question.
Representative Connery. Let us take a practical situation. They are having labor trouble up in Maine now. Suppose the union goes in and tries to get the Maine manufacturers in those sweatshop factories up there to come down to certain hours and up to certain wages, and the district union would say that their men will come up below the minimum wage which we have set up in this bill, certainly the National Labor Relations Board, this Board here, should not be obliged to say that is all right because the member unions in Maine have passed on that question and said it is 30 cents and hour and the minimum wage is 40 cents an hour. In other words, the Black-Connery bill supplements the Wagner Bill and strengthens it.
Senator Ellender. The Black-Connery bill strengthens the Wagner bill?
Representative Connery. The Wagner-Connery bill.
Senator Ellender. Is it your opinion, Congressman, that this bill supplements the Wagner bill?
Representative Connery. Yes; right to the point of where they go below the minimum wage. We can bring them up to the minimum wage.
Senator Ellender. That was the very thing I was trying to bring out yesterday. Representative Connery. And if I am not mistaken, where they go above the minimum wage there is a provision in this bill which says that this Board shall not interfere with those wages, once they are above the minimum.
Senator Ellender. That was the point I intended to develop by Mr. Paine.
Mr. Paine. I am sorry I did not develop it for you, but it has been developed.
The Chairman. It has been developed now.
Senator Ellender. I am through. I do not want to ask any more questions.
Representative Connery. Senator, if I am not mistaken, and I think I am correct, there is a provision in this bill here which provides that where they go beyond the minimum by collective bargaining this bill does not interfere with collective bargaining.
The Chairman. The section which gives jurisdiction says: Whenever the Board shall have reason to believe that owing to the inadequacy or ineffectiveness of the facilities for collective bargaining and wages lower than the minimum fair wage are paid to employees in any occupation. That if they fix $16 as a minimum the Board would not have jurisdiction unless they had fixed it below the $16 minimum wage. So that that would answer your question.
Representative Wood. Right in that connection,
Mr. Chairman, there is another situation. The employees organize in the first analysis and they very frequently negotiate a joint agreement with the employer for nothing else but recognition, not any raise in wages, and
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certainly we ought not to interfere with the Board stepping in and telling the employer, “You have fought your employees organization until you had to deal with them, you have given the right to collective bargaining but you have not recognized the necessity for raising the wages commensurate with the American standard of living”, therefore the Board will raise the standard, raise the minimum. The employer, just because he has an agreement with his employees, not a wage agreement but a joint agreement for collective bargaining when they first organize, that they will continue to work a certain number of months or a year for the same wages, until such time as they can work out a wage agreement certainly the employer should not be permitted to hold the employees to that lower wage that they were drawing before they were organized, just because they have an agreement. The employees, in the first analysis, entered into that agreement because, first, they wanted recognition, they wanted the right to organize, and very frequently the first contract has nothing to do with anything else excepting the right of collective bargaining, recognition.
Representative Connery. That is right.
Representative Wood. So the Board should certainly be empowered and authorized to step in, if they ascertain that this agreement, that is the first agreement, is below the minimum that should prevail in that industry. Of course, the decision of the Board would never affect the wage agreement entered into that provided more wages than the minimum.
Senator Holt. Mr. Paine, in your opinion, how does this bill resemble the old National Industrial Recovery Act?
Mr. Paine. Oh, I did not say that it resembles it.
Senator Holt. Do you think it resembles it in any way?
Mr. Paine. No, I do not; because the National Industrial Recovery Act gave to industry, gave to the management side of the industry, a great many commensurate rights which are not given to them here, which we, in management, hope will eventually, by other legislation, be given to us. So that we had a quid pro quo in the National Industrial Recovery Act which we do not have here. Then I think that this bill avoids many of the faults that existed in the National Industrial Recovery Act in that it is not establishing a procedural operation. I think the great fault with the National Industrial Recovery Act was on the procedure side of the act, and I think the procedural methods of this bill are not the same.
Senator Holt. As I understand you to say, the business element, the management, thought that they could get that later?
Mr. Paine. I did not say they thought they could, but they hoped they would.
Senator Holt. In other words, this would be a stepping stone to getting that?
Mr. Paine. Yes. The council believes that management should have the same right to organize and to collectively bargain as is given to labor.
Senator Holt. I would like also to have your opinion on this: Do you think there is any danger of Federal control of industry in this manner?
Mr. Paine. I do not know just what you mean by that.
Senator Holt. In other words, would there be any danger of finally reaching the point where the control of labor, or the labor conditions,
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would be a Federal matter, such as we have in some European countries?
Mr. Paine. I think this bill, of course, is a step away from what we have been doing in the past, where we had absolute liberty of action, where we could exploit labor to our hearts’ content. It is a step away from that to complete control, but I do not worry about taking that step, because it does not, in my opinion, presage the fact that we will take further additional steps. If this does meet the situation we never will. If it does not we will have to go further, because there is a situation that must be met.
Senator Holt. In other words, this bill does lead to very definite centralization of power, does it not?
Mr. Paine. In the Government?
Senator Holt. Yes.
Mr. Paine. Yes.
Senator Holt. In other words, it takes away from industry and labor some of the powers that both of them now have?
Mr. Paine. I think so.
Senator Holt. And in the future you would not think there would be any danger at all because of that?
Mr. Paine. Not unless this does not work. If this does-not work then we will have to go one step further because there is a problem that must be solved. We have technological development in this country. Technological development built it. Interference with employment, in my opinion, is a nuisance. I do not mean to say by that that I am opposed to technological development. I think we should encourage it. We should go on and on and on as much as we possibly can, but we must see to it that the benefits of the technological development are spread over a wide area. If we can eventually get to a point where we can have one man employed in the United States whose only work would be to press a couple of buttons and run a lever and manufacture everything that we need, I do not see that there is any really serious objection to that at all, providing everybody is given the benefit of what is created by that technological development.
Senator Holt. You spoke about another step in the Federal situation. What step do you have in mind? You said we would have to take another step if we were not successful.
Mr. Paine. This does give to industry, to management an opportunity to discuss and argue and debate the problems as it affects each of their specific and particular industries.
Senator Holt. But what step would be taken? You said if we were not successful in this step we would have to take another step.
Mr. Paine. The next step would be where you did not give them that right, where you just arbitrarily say, “This is what you have got to do.” I do not think, however, that we will ever come to that.
Senator Holt. I hope not.
Mr. Paine. No; we never will. I do not worry about that.
Representative Connery. Mr. Paine, you brought out a very vital matter here in reference to the hours. I want Senator Black to notice this particularly. You figure they can work for 10 hours a day for 4 days making the 40-hour week as the bill now’ stands, and you would like to see the workday as well as the workweek in there?
Mr. Paine. That is right.
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Representative Wood. In connection with the question that was asked by Senator Holt, the question was: “Don’t you think that this bill, if enacted will take away some of the powers and authority of both labor and industry?” You said it did. Of course, you just said previous to that that it did take away the power of the employer to employ labor to his hearts’ content.
Mr. Paine. That is right.
Representative Wood. Of course, this bill would take away from the employee the right to work for as low wages as he pleased and for as many hours as he pleased. What other power would it take away from labor, organized or unorganized?
Mr. Paine. I do not see where there is any additional power to be taken away. What I understood Senator Holt had in mind was the freedom of a man to enter into any kind of a bargain that he wanted to enter into. That is denied him under this bill. He cannot enter into any kind of a bargain if the bargain is worse than the provisions of this particular bill.
Representative Wood. Of course, as far as the power and authority of labor to work as cheaply as they please is concerned, there is not much power in that.
Senator Lee. Mr. Paine, have you estimated how much you think the passage of this bill would decrease unemployment, or how many people it would result in putting on the pay rolls that are not now on the pay rolls?
Mr. Paine. No; I do not see any way in which that can be completely calculated. I talked about it a great deal.
Senator Lee. You believe it would materially reduce unemployment?
Mr. Paine. Oh, yes.
Senator Lee. These men whose names you called a while ago you say are all here in support of the bill and, as I understood it, all of them are producers, manufacturers?
Mr. Paine. Yes; or representatives of producers and manufacturers.
Senator Lee. If the passage of this bill will mean that they have to pay more for the same labor that they are getting now, why are they supporting the bill?
Mr. Paine. Well, here is the situation as they all view it: We often think of the reduction of hours and the increase of wages as a method for increasing employment by the absorption of more employees in the same industry; that is to say, if the industry is working at the peak and employs 1,000 employees at 40 hours a week, in order to produce the same amount of work if you cut it down to 30 hours a week you would have to have that many more people in that particular industry to do that. But that is not all that happens. To me that is only a small part that happens in this kind of legislation. What happens is that you increase the purchasing power of a great quantity of people and then you have an enormous increase in production because there is an enormous increase in demand. It is like the steel industry going from 12 hours a day to 8 hours a day which creates the automobile industry. If that had not been done there would not be any automobile industry, in my opinion, in the United States.
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Senator Lee. You believe that most employers would welcome an opportunity to increase the purchasing power of the consumers in this method, if they thought their competitors would do it in the same way?
Mr. Paine. Sure.
Senator Lee. And this bill gives them an opportunity to put them all on an equal footing and thereby increasing the purchasing power?
Mr. Paine. That is right. Employers today hate to go out and hire buyers. That is what they are doing. They pay enormous taxes which are going to the relief and the people on relief buy. That is really hiring a buyer. They do not want to do that.
Senator Lee. You do not believe then that this bill will meet the organized opposition of employers?
Mr. Paine. Well, there are some employers who will, undoubtedly, very strenuously oppose it. There are employers in this country who would like to build up tremendous monopolies, if they possibly can, so that they can control the prices, so that they can control wages, so that they can control the number of hours of work. They are perfectly satisfied with that, they can see no harm, no objection to that kind of control because they are controlling it, but when somebody else controls it they do not like it, although it is exactly the same in principle.
Senator Lee. But these men today, and many others, would gladly welcome the opportunity that we propose in this bill, provided they can be protected from competition?
Mr. Paine. That is right; and I represent 52 percent of employables in the United States; that is, in the management group of the council.
Senator Holt. There is another question I would like to ask Mr. Paine. Do you think this bill really delegates too much power? Is it too wide in its delegation? Should it be strengthened by limitation in some instances? In other words, do you think the commission of five should have all that power?
Mr. Paine. Well, I am really not prepared to answer that specific question. Our thinking in the council was somewhat along these lines, but somewhat modified in this way: We felt that the matter should be regulated by the whole doctrine of unfair competition, but that when goods found their way into the market, goods that were manufactured under favorable labor conditions, the finest kind of labor conditions, when those goods competed with goods that found their way into the market under sweatshop conditions, that there should be then the right, under those circumstances, of the commission to regulate that situation, or the courts to enjoin the disposition of those goods.
Senator Holt. Would not there be this danger, Mr. Paine, that in those sweatshop factories instead of increasing the wage and decreasing the hours they would meet this by increased machinery?
Mr. Paine. Well, I do not know. You mean by technological improvement?
Senator Holt. Yes. In other words, instead of employing 1,000 more they would just put in four or five more machines to do the work.
Mr. Paine. Of course, that is always the problem. I do not see any objection to that if they want to do that. That is technology, that is a technological problem.
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Senator Holt. In other words, this bill would not touch that feature at all?
Mr. Paine. I do not think it would. I do not see how that can be controlled. I would hate to see that controlled. If we can get down to a point where we can manufacture all we need in the United States, giving employment to all the people possible by only working 4 days a week, I think that is a consummation devoutly to be wished. I have no objection to that at all.
Senator Pepper. Mr. Paine, that is the thing I have been interested in. Some people seem to think a machine is necessarily a curse. If we could do so we would like to have a job and existing mechanical arrangements for everybody that is employable in the United States. As for me, I have had all the work in the steel mill I want, and I imagine there are several other people like that. So that when we by efficiency, are able to turn out all the products that are necessary for consumption we release that many more people to do other useful services in the building up of a civilization, do we not?
Mr. Paine. We have plenty of useful services to do today that we have not begun to employ our people for.
Senator Pepper. Do you not think that in spending money for research so as to develop new inventions, new discoveries, new businesses, new types of services, that we can always take care of people that are displaced by technological employment, but it requires a degree of national foresight and national planning that is not laissez faire?
Mr. Paine. That is right.
Representative Fitzgerald. Mr. Paine, do you believe this commission of five, this board as set up, will be able to administer the •whole of this act? What I mean by that, would all of the exemptions for apprentices, all the aged, subnormal, handicapped, the exemption of hours, and so forth, do you believe that thus Board would be able to do that work besides its judicial duties also?
Mr. Paine. I think it is a very big undertaking. I do not know whether they can or not. I know at first they are going to be swamped and they are not going to be able to do it, at first, but I hope the act will remain on the statute books for a long period of time and as time goes on I think they can prepare a method, a procedure by which they will not be so swamped.
Representative Fitzgerald. It has been mentioned this afternoon that possibly there would be too much Federal control given into the hands of this board of five. If some of this administrative work was handed back to the States, through their departments of labor, would not that take off some of the power of the Federal control under this act, administered through the States, through their departments of labor?
Mr. Paine. Being a good Republican all my life I do not worry about Federal control.
Representative Fitzgerald. Well, there will be questions arising about it, you understand that. That is the first thing that they will holler about, that there is too much concentration of power in the Federal Government. From my experience with N. R. A., with all the complaints of the chiselers that came in, with all the exemptions that were granted under codes during the N. R. A. and also granted
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under this law, if all of the exemptions are carried out, that is the homework provisions, the exemptions for apprentices, the protection of those apprentices so that they will not be exploited by the chiseling type of employers in order to get under the minimum rate, where he will try to hire apprentices at lower wages, the exemptions for the aged, the handicapped and the subnormal, all that work will have to be handled by somebody, and I cannot see where this board of five is going to handle all of that work unless it is delegated, and I want to know what your thought would be if some of that power was delegated back to the States.
Mr. Paine. Well, so far as I am concerned, I have no objection to any procedure which will make effective the theory of this bill. If that ought to be done by the delegation of some power, if that is going to make it more effective by the delegation of power back to the States, then I am for it.
Representative Fitzgerald. You admit it is going to be an enormous job for the board of five, do you not?
Mr. Paine. It is going to be a big job in the beginning. I do not know what it will be as time goes on, because they are going to have an awful lot of help from the industries. Some of the industries in this country may object to this provision or that provision, but once the thing gets started they are going to cooperate in the elimination of bad labor conditions in competing establishments, because to do that is for their own salvation and their own good.
Representative Fitzgerald. It will require a lot of police work on the part of this board.
Mr. Paine. Of course, it is hard to judge at this time. It would appear that it would require a lot of police work, but I think in the long run it is not going to require as much as appears on the surface. That is my theory on now the thing will eventually work out. I may be wrong.
Representative Fitzgerald. We certainly had our experience under N. R. A.
Representative Connery. Mr. Paine, right along the line of what Mr. Fitzgerald says, I do not think it is going to require much policing. Furthermore, we have the National Labor Relations Board now and the only trouble they are having is that Congress has not given them enough money for their regional offices. They do not need many employees. There is no poncing to be done, and certainly the issues are just as vital as they are going to be under this bill. They have the collective bargaining proposition, as to whether this fellow or this concern is living up to the Wagner-Connery Act, and the only trouble they have is they haven’t got enough money for the regional offices. The policing is going to be done by the labor unions.
I would not like to see it going back to the State because we always have a turmoil between the State and National Governments when you have State employees and Government employees. We have it now.
Mr. Paine. In this act it is going to be policed not only by the labor unions but by the industries that are complying with the provisions of the act. So you have additional help here over that which you have in the Wagner Labor Relations Act.
Representative Connery. Mr. Chairman, along the line of what Senator Ellender said, and Mr. Paine, may I read into the record at
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this time, so it will be clear, from page 40 of the bill, section 23 (b) [reading]:
Nothing in this act, or in any regulation or order thereunder, shall be construed to invalidate any contract, understanding, or collective-bargaining agreement whereby an employer undertakes to pay a wage in excess of the applicable minimum wage under this act or to require a shorter workweek than the applicable maximum workweek under this act or otherwise to confer benefits or advantages upon employees not required by this act.
ow, that settles our difficulty there about the National Labor Relations Board. It is only when they go below the minimum wage in collective bargaining, and above the hours, that it steps in.
Mr. Paine. That this Board would have jurisdiction.
Representative Connery. Yes.
Mr. Paine. I will submit Mr. Hanway’s brief.
(The brief of Mr. Paul S. Hanway, National Fibre Can and Tube Association, referred to, is as follows:)
The Honorable, the Joint Congressional Labor Committee,
The Congress of the United States, Washington, D. C.
Gentlemen: Your petitioner has been an executive manager of a trade association or code authority of a smaller industry since 1925.
He knows from experience the many real problems with inequalities in working conditions and wages in industry, and in concert with a great majority of management; he too condemns the exploitation of labor through the medium of unreasonably low wages and long work days. He believes such conditions not to be in the public interest, detrimental to quality of goods produced, unfair as methods of competition and, generally, a decided injustice to wage earners, their families and the communities in which they live.
The expressed aims and purposes of the Black-Connery wages and hours bill— -to increase employment and raise the lower standards of wages and working conditions—are indeed laudable.
It is, however, a matter of profound conjecture as to whether the proposed methods to accomplish these purposes will not instead reduce income of skilled workers in the present higher wage brackets due to freezing of earning capacity, and further as to whether the means of approach to your objectives will not result in confusion comparable to that of the defunct N. R. A.
These hearings are for development of constructive ideas and suggestions. My purpose is solely that.
May I respectfully offer the following:
1.Attempted control of wages and hours by the Congress or by some unlimited delegation of congressional authority, proposed in this bill can accomplish no more than the attempt to control the sale of spirituous liquors under prohibition, or the regulation of standard practices under N. R. A.
Except for penalties provided for violations, and the limitations on child labor, the bill is little changed from the labor sections of N. R. A.
Call 100 former code authority executive secretaries to testify and their response will almost unanimously predict failure of the bill if enacted into law as presently constituted. And the reason is that the bill cannot be carried out throughout the United States without overburdening itself with red tape, detail, slow progress and, finally, disgust.
Why? No blanket scheme of rigidity for minimum wages and maximum hours is economically sound or practical because the supposed benefits in one industry may be offset by ruin in another industry. The total cost of brick may comprise 10 percent labor and 90 percent materials. The cost for a complicated mechanical appliance may comprise 70 percent labor and only 30 percent for materials.
There is and must be an equity in adjustment by each industry, and no good purpose could be accomplished by arbitrarily putting goods out of consumptive ability; too many products are now on that precipice.
Anyone in business knows the plan to be unworkable because one dose of medicine cannot be prescribed as a cure for thousands of different ailments, many of which cannot withstand the shock caused by the proposed cure.
2.Even though the medicine might be reasonably favorable, the means of administering it, as implied by the bill, is burdensome and impractical.
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Indeed, it seems to invite chiseling because of its unknown quantities, its undefined, unlimited powers, and its lack of definite understanding, and its inability to cover the entire field of labor within a reasonably short period of time.
3. Your bill proposes the employment of an army of paid advisory committees, stenographic and other help for each, and expenses, travel included. Who pays the bilk for such expenses, or where the money is to be derived, is not provided for in your bill.
In essence, the scheme is bad. It lends itself to political pressure; it develops a type of pork-barrel regulation; and, finally, you will find innumerable complaints and delays originated solely to continue the paid employment of such multitudinous staffs. And the chiseler can indefinitely continue objections or petition for “relief” from imagined invasion of his rights under the Constitution.
4.If your bill be enacted, the inefficient will be replaced in most instances by more efficient help which could earn the premium demanded. That dumps countless thousands back on relief or on part-time work, and doesn’t solve your problem.
The raising of wages in the lower brackets will certainly lower wages in the higher brackets in an equalization of costs. N. R. A. clearly demonstrated that it froze earnings at a low level and sped up production per employee by demand for greater output per employee. That wouldn’t help you solve your wages-and- hours problems.
Any attempt to make rigid the hours to be worked on a set schedule to apply to all industries will only tend further to freeze earnings aforementioned, and accomplish no good purpose in the end.
And, finally, the whole scheme will go overboard or bring on a labor revolution with the inception of the next decisive setback of general business. Your bill could not be sustained under the pressure of falling demand for goods over a period of years.
On the other hand, a workable plan may be developed by reasonable changes in your proposed bill.
The following is respectfully submitted:
1. Admittedly, a majority of business is honest. It desires to be fair to its employees. Thousands of employers have been, for years, doing more for labor than you now propose.
2. A relatively small percentage of the male and female workers of the Nation are to benefit under the provisions of these proposed wages and hours standards. .The bulk of those to be so benefited are the unskilled and the inefficient. If your present bill be enacted, the inefficient will be replaced in many instances by more efficient help. Many now employed will revert to relief rolls.
3. N. R. A. clearly demonstrated that any rigid minimum tended to freeze wages at that figure, but that output per worker increases in an “equalization” proceeding in industry. Higher wages tended downward toward the minimum established. This neither creates purchasing power nor reemployment.
WHAT CAN BE DONE
Your bill specifically provides that any person who willfully aids or abets a violation of any provision of the proposed statute upon conviction shall be guilty of a misdemeanor and subject to a fine or imprisonment, or both.
That penalty would apply to any member or group of members of any industry, or to any committee of employers and employees in any industry, and that effectively simplifies the whole subject particularly since any employee or anyone else cognizant of any violation may complain to administration authority and, thereby, responsibility can readily be located.
Now, each industry knows its own problems better than any group outside that industry. Therefore, I propose that the bill be changed so as to provide that each industry or subdivision thereof shall determine by majority vote upon its proposed standards for wages and maximum hours within 60 days after the enactment of this bill; that such proposed standards of minimum wages and maximum hours shall be reported, in writing, supported by statistical data and other information to the Labor Standards Board not later than 60 days after enactment of the bill. Schedules of hours shall provide for time and one-half pay for hours in excess of an average of 40 hours per week, worked by any wage earner (similar to sec. 2 (11)).
If approved, the industry be so notified in writing by the Labor Standards Board, which, in turn, shall appoint an advisory committee of that industry, which committee shall comprise three representatives of employers and three representatives of employees, who shall be officially elected by the respective employers and employees of the industry.
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This advisory committee shall be quasi official; it shall be empowered to collect and compile any necessary data and any information, keep records, investigate allegations of complaints, and when reasonably certain of willful violation of any provision of the act, shall file formal complaint to a designated authority, together with all available facts and data relating to the alleged violation, such complaint to be filed within 30 days of receipt of the original allegation. Failure to so file complaint would be a misdemeanor upon conviction.
Secondly, each industry shall determine within reasonable accuracy, through majority vote, upon those standards of wages, relating to higher brackets, which were operative during the period 6 months prior to enactment of the bill and shall thereupon make recommendations on other minima wage scales based on various classifications of skilled help employed in the industry; and it shall, within 60 days after enactment of this legislation, submit its recommendations for minima wages on such skilled classifications to the National Labor Board; provided, however, that such recommendations shall not be construed to result in a decrease of wages in any classification of skill—emergency help or employment of exceptional skill being excepted to the foregoing. This to apply on wages up to $2,400 per annum. Maximum-hour standards shall apply to watchmen, chauffeurs, truck drivers, and their helpers, engineers, firemen, electricians, filter-plant employees, electric and hydroelectric operators to be classified separately as to maximum-hours standards.
In the event of disapproval of any standard or standards so recommended by the industry, the Labor Standards Board shall then hold an open hearing where industry, representatives of employers and employees, shall be given the opportunity to present any factual data to prove unfair or economically unjustifiable any arbitrary standards set up by the Labor Standards Board in substitution for those recommended by the industry itself.
If agreement shall be reached at this hearing, the Labor Standards Board shall publish the approved standards as effective within 10 days of such approval. If an agreement be not reached within 40 hours after the time of the hearing, the controversial subjects not agreed upon shall then be referred to any advisory committee, such as is proposed in your bill, for arbitration. If, within 1 week from the date of meeting of such advisory committee, an agreement be not reached, then the Labor Standards Board shall define the standards in dispute and publish its approved findings as effective within 10 days of such approval.
Any industry, or group subdivision thereof, which shall within 60 days after enactment of this law fail to report in writing its recommended standards for wages and hours shall be subject thereafter to the same proceedings as though its standards had been disapproved, no agreement reached at official hearing.
PETITION FOR REVIEW
Petition by any person or group of persons for relief from alleged injury or injustice resulting from any standards so adopted shall be filed in writing with the industry’s advisory committee. If such petition (s) be not approved, petitioners may then appeal in writing to the Labor Standards Board, which shall, within 30 days thereafter, designate a time and place for hearing on the petition before its designated agency.
COMMENTS
The foregoing would result in voluntary adoption, or adoption through arbitration, in 98 percent of cases. It permits industry to work out its own peculiar problems. It imposes a responsibility on industry to carry through its own agreement. It permits each industry to attempt to regulate its own affairs through quasi-official committee or association action.
It further provides that each industry build up its own standards through factual evidence and to prove such factual evidence in event of dispute.
It relieves the agencies of government of undetermined expense and of logrolling pay roll of individuals who could not properly render real results in too many cases.
It simplifies the situation while providing for strict regulation and adequate enforcement.
Finally, every wage earner engaged in commercial interstate enterprise, as defined, should be included. Exemptions will lead only to chiseling and confusion.
Provision should be included for appropriation of funds to carry on the aims and purposes of the bill.
Provision should be made to indicate to whom fines levied shall be made payable.
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Designation of violations as “unfair methods of competition” would serve to add legal force to the bill and permit it to operate similarly to the Federal Trade Commission trade practice conferences, which imposes a responsibility on all when a majority approve.
Respectfully submitted.
Paul S. Hanway.
STATEMENT OF PAUL S. HANWAY, EXECUTIVE SECBETARY-TREASURER, NATIONAL FIBRE CAN AND TUBE ASSOCIATION, NEW YORK CITY
The Chairman. Mr. Hanway, will you give us the criticisms that you have to the bill, so we can have it in the record? In the main, as we understand it, you support the bill?
Mr. Hanway. I support the bill,
Senator. The Chairman. You have some criticisms?
Mr. Hanway. Yes.
The Chairman. We would like to have you state them to us. First, will you give us your name?
Mr. Hanway. Paul S. Hanway.
The Chairman. Whom do you represent here?
Mr. Hanway. I represent the National Fibre Can and Tube Association of New York City.
The Chairman. How many employees does your association have? I understood you represented the association.
Mr. Hanway. Approximately 8,000.
The Chairman. Now, will you state your criticisms of the bill?" You have a brief , which we will be glad to have, and we will be glad to have your criticisms at this time.
Mr. Hanway. I will not take the time to read the brief unless you desire it.
The Chairman. We will not ask you to read the brief, but we would’ like to have the benefit of the criticisms that have been suggested here.
Mr. Hanway. The remarks I shall make may seem to be in disagreement with the previous witness.
The Chairman. That is perfectly all right. We expect a lot of disagreements.
Mr. Hanway. However, in principle we are agreed.
Taking the points that were brought up in the beginning and which are contained specifically in several instances in the brief which I have submitted here today, the first deals with the approach of this proposed law- in principle to that of the N. R. A., and I have specifically mentioned certain features of the N. R. A. which might develop under this bill, whether this bill was construed to be similar to the N. R. A. or otherwise.
In the first instance, as the code authority executive secretary, and having had contacts with a great many other code authority executive secretaries, it was our general opinion, after discussing the N. R. A., that where the minimum wage was established, with the maximum workweek, that the trend of wages instead of advancing took a downward path, and that the trend of employment also followed that path.
That was due largely, to my mind, to the fact, first, that there was an equalization of cost in the industry, whereas those in the high-wage brackets were affected adversely because of the rise of those on the
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lower floors, and, secondly, that the arbitrary 40-hour restriction caused some concerns to work perhaps the 40-hour week but they worked on a 10- or 12-hour shift to get in their 40 hours, and therefore worked on two shifts; others doing principally what the witness stated this morning that he did, employing the highest qualified or skilled mechanics in the country to produce more units per individual worker and by that method of reasoning he certainly could afford to pay them considerably more per hour for that time, but if all concerns endeavored to secure the most highly skilled and best-equipped mechanics in the country there would be a depletion of those very shortly and then the pay would be there without the result which manufacturers desired and the break-down would again ensue.
To avoid that, I have proposed a specific means in the latter part of this very brief statement by which industry can cooperate to a greater degree in this law in fulfilling the purposes and intents of the bill itself and at the same time to prevent any decrease in the wages of those in the higher brackets, or what we generally term the high-skilled wage earners. I feel that some protection should be given to the high- wage earners as well as the low-wage earners if this bill is to be made effective, for the principal reason that the majority of the employees in the United States will not be seriously affected by this bill in any manner if it approaches only a minimum wage as is implied, but not specifically embraced, in the bill itself at this time.
My second objection to the bill is the fact that it recommends the express employment of advisory committees and their staffs, and the payment of their traveling and other expenses is going to mean a multitudinous army of new men on the Government pay roll. Now, in the inception of that it might seem reasonable that that could work out, but to my mind it will not be long before those who recognize that there is a pay roll available will use every means at their command to disrupt the provisions of this bill, to raise objections, to secure injunctions from the courts and otherwise to stagnate the operation of this bill in order to extend the employment, the time involved in that employment, and the expenses to be paid, to their own individual or political advancement. I have made a recommendation in this brief whereby I believe that can be eliminated with greater saving, greater efficiency in the administration of the bill.
In the third place, in this bill it provides that anyone who aids or abets in any violation of any provision of the bill upon conviction shall be guilty of a misdemeanor in the same manner as if he had actually violated the bill. We did not have that under the N. R. A. If that would apply to any committee of an industry which could take on itself a quasi-official duty similar to a code authority under the N. R. A., to help supervise, carry on, and, if you will, police its particular respective industry, the very penalty which is implied or expressed in this bill, and which would be carried out in such provision, would apply to such committee in a manner which would prevent the chiseling, which would prevent the cheating, which would offset 90 percent of the bad features of the administration of the N. R. A., and I believe could greatly simplify the procedure under this bill itself.
I say that because I believe, first of all, that industries have their individual problems. There are too many problems for any labor board of five to attempt to evolve and work out. I think it would
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take years to begin to learn just what are some of the real reasons behind objections or criticisms of the bill, or objections or criticisms of any arbitrary standards which might be set.
We will take an illustration expressed this morning by the witness. The cost of labor in the manufacture of brick might be 10 percent and the material 90 percent of the total cost, but in the small, mechanical piece of machinery, the employment might be 60 percent of labor and only 40 percent of material cost. The one might be what we would term a luxury and the other an absolute necessity. If you raise the cost of the 60 percent of labor, we will say, by 10 or 15 percent arbitrarily, without looking into the market, you may find a so-called luxury which is employing a great many thousands of people, would be placed out of consumption because of the increased cost, and the cost of substitutes.
On the other hand, if you refer to my particular industry, we have a set-up folding-box industry which competes with us. The cost of the set-up folding-box is less than the cost of the fiber container, that is the round fiber container or the fiber body with the tin end. Then above us is the tin-can industry. Now, the set-up folding-box industry today is reportedly operating on schedules of pay which are a great deal less than any standards of minimum pay which have been recommended to this committee, as published in the press to date. If they should be compelled to pay wages which are exactly identical with the wages paid in the industry which I represent it is conceivable to me that they are going to lose perhaps a relatively large share of their business to my industry, and if we have to gage our labor standards, we will say arbitrarily, the same as the tin-can industry it is very likely then that the tin-can industry might develop benefits from the increased cost which would affect the consumptive ability of our product and of the set-up folding-box business.
That is just one concrete example of how the Labor Board, when it begins to work, has got to analyze not only the industry itself, but the competing factors, the outside things which affect the industry. It is far above the ability of any labor board to do that, and it arbitrarily has power to do that, as the bill now constituted proposes.
Speaking about my own personal opinion, Senator, I believe industry has absolutely got to cooperate, it has got to be helpful to you in tins matter.
The Chairman. As I understand it, what you desire to do is to go back closer to the N. R. A. in connection with industrial boards?
Mr. Hanway. I think there was a great deal, Senator, in the N. R. A. that was acceptable. It was the administration of it that was troublesome.
The Chairman. Your objection, as I understand it, is on the ground that this is not done like the N. R. A. did it, but it provides that the Government should do it by the Government agencies?
Mr. Hanway. Not because of that, but I think industry has got to work out its problems and then come to the Board with its problems, instead of the Board setting an arbitrary figure or basis, and then having, through hearings, through court injunctions, through every conceivable means, the power to set up procedure to review what industry may have done.
Senator Pepper. Who is going to look out for the little fellow in the industry?
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Mr. Hanway. The little fellow in the industry ought to be, without exception, included under this bill.
Senator Pepper. You cannot have, in a given industry, yours, for instance, one fellow included and another fellow not included, can you?
Mr. Hanway. No; you cannot do that.
Senator Pepper. I say if you are going to let your own industry be self-governing who is going to look out for the little fellow in that crowd?
Mr. Hanway. He has his opportunity to petition for relief on what the majority in the industry would develop. They would not set up the rate, they would merely set up recommendations under this procedure which I recommend.
Senator Pepper. Cannot they do that under the advisory committee provisions of this act?
Mr. Hanway. They can do it, except you provide here for a paid advisory committee with staffs and other things, incidental expenses and whatnot, and then they get to work after appointment, whereas a great many industries have already gone far beyond what you propose in this bill.
Senator Pepper. The Board itself, of course, will hear anybody who comes in to discuss the matter with them at appropriate times. Do you not think they at all times would be glad to hear organized representatives of an industry to come in and report to them the problems that they have in a given industry? That would be very helpful to them, I suppose.
Mr. Hanway. I am sure they would. My fear is they would be so overloaded that they would not have the opportunity to hear them.
The Chairman. How does the advisory committee work in New York State on the minimum-wage law? This is copied practically from the New York minimum-wage law which was sustained by tho Supreme Court, including the advisory committee to which you refer. Has it worked out all right up there?
Mr. Hanway. It worked fairly satisfactorily. It is a little early, I think, to state whether it has worked or not, Senator. It is just like the State Wagner Act. It is in its inception. What will develop remains still to be seen.
The Chairman. That provision was in the New York minimum wage law. This is not exactly copied from it, but the principle is exactly the same, and the method of appointment is the same.
Mr. Hanway. Yes; I noticed that.
The Chairman. That was referred to by the Supreme Court in sustaining the act.
Representative Connery. Mr. Hanway, you seem to have some worry about the advisory board. Let us get back to the old N. R. A. for a minute. When you were drawing up your codes for textiles, for example, they used to lock them in a room there. The employers were writing the codes for the employees. Labor sat in at the Board and could talk, but that is all. They had no vote in it at all.
In this new set-up here, take the textiles—I just take the textiles because it is one of the first ones to accept the board of five, so we will deal with the textile industry—let us bring down a northern cotton textile man and a northern wool textile man, a southern cotton textile
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man and another textile wool man from some place else in the country, bring in a representative of the United Textile Workers Union and another union representative, and then somebody representing the public and say, “Now, what do you fellows think you can get together on?” Now, if they do not get together in 2 days under this bill they can fire them and get somebody else, they could get somebody that is more reasonable, that can get together better. Don’t you think that those employers and union men in there, and the public representative can come in with an agreement to that board of five and probably settle the whole thing in a few days?
Mr. Hanway. I think the approach is similar to what I have here, Congressman.
Representative Connery. Beg pardon?
Mr. Hanway. I have the 2 days specifically mentioned in my recommendations here. It is very similar to the statement you make, but the method of getting together is somewhat different. I feel then that if it comes to a dispute under the advisory committee, or before the Board, between labor and industry, then it is a matter that is definitely under a law, the Wagner law, the Wagner-Connery law, irrespective of this act, is it not?
Representative Connery. No; that would not apply. There is the advisory committee there. You mean the advisory committee hearing something that was set out for the Board?
Mr. Hanway. I say if it develops that there is a dispute there between labor and industry, by the representatives of labor and industry meeting it ties down that situation.
Representative Connery. I do not think your Wagner-Connery Act would apply there. I mean you would get the same result, as a practical matter. In fact, I think you would have very little difficulty as long as you have the employer, the employee, and the public represented, you being a member of that Board, if you were a member of that five, and they will come in with something and it will be pretty reasonable and you will put your 0. K. on it. If they cannot, of course, you would put another Board in.
Mr. Hanway. I have provided in this recommendation, in the event industry cannot develop recommendations which can be approved by the National Labor Board, then it goes to a hearing before the Board, and in the event they cannot get together again that your advisory committee can become operative in that instance, and that within 48 hours after the advisory committee meets the Labor Board may issue its final decree arbitrarily. I feel on this basis you can eliminate about 85 percent, at least, of the detail work of the Board; that within 4 months after the act passes you can have it regulated and operated in most industries in the United States by simplification. I am expressing my personal opinion, as I stated previously.
Senator Holt. I would like to ask a few questions.
The Chairman. We have another witness who has been summoned for this afternoon, and I thought that we would just take these two witnesses. Let us make it short if we can. We had intended to call two other witnesses, and Mr. Henderson is waiting to testify.
Senator Holt. I do not want to misunderstand you. The way you believe now is that when the bill is drafted in its present form, it would not be workable.
Mr. Hanway. Some of the features of it I believe would not be workable.
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Senator Holt. And you also think that it would lead to a bureaucracy, a number of officers here in Washington?
Mr. Hanway. No; I have not expressed that opinion.
Senator Holt. What is your opinion about that?
Mr. Hanway. I feel that the unexpressed delegation of power in the bill might become dangerous, as a matter of personal opinion.
Senator Holt. The delegation to a board?
Mr. Hanway. The delegation of power which has not yet been placed into the bill, but which probably will be before it reaches a state for passage.
Senator Holt. In other words, there is no definite ultimate place where the delegation ends.
Mr. Hanway. Not yet.
Senator Holt. That is all.
The Chairman. Did you know that the delegation of power was taken from the minimum wage law of New York and sustained by the Supreme Court of the United States?
Mr. Hanway. I recognized that, Senator.
The Chairman. And as I understand it, your statement is that you are afraid that something will be put in hereafter that might not be fair?
Mr. Hanway. I feel that while the delegation of power to the five men who are placed on the Board in the beginning might be absolutely all right, we do not know what the Board may do, what may transpire in 5 years from now. There should be a definite limitation of those powers if it is possible to put that in the bill.
The Chairman. Thank you very much. Now, there were two gentlemen who wanted to give us their criticisms.
STATEMENT OF JOHN D. CLARK, WAVERLY, FLA.
The Chairman. Did you have any criticism to the bill in your brief? Any suggestions as to changes?
Mr. Clark. Well, of course, coming from the section of the country that I come from, and dealing in a different commodity from most of those who have appeared, naturally I do not know that my views would quite fit some of their answers. We are dealing in a perishable down there, largely.
Senator Lee. Where?
Mr. Clark. I beg your pardon. I come from Florida, from Waverly, Fla. I represent the citrus industry of Florida; oranges, grapefruit, and so forth; both the packing and canning industry, and especially from the cooperative standpoint. We are largely speaking, producers.
Senator Pepper. Speak up louder, Mr. Clark, so that they can all hear you.
Mr. Clark. I have a prepared statement which I prefer to make, which is in writing, and perhaps it would give you a better idea of our feelings down there, and with your permission, Mr. Chairman, I would like to read that. It will take me about 2 minutes.
The Chairman. That is all right.
Mr. Clark (reading):
Members of the Council for Industrial Progress have diligently applied themselves for several months in an effort to formulate a program which has for its purpose among other things the enactment of suitable and needed legislation on
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the subject of child labor, a minimum wage scale, and the establishment of a maximum work week for labor.
The bill as drawn and now before Congress carries out the recommendations of the council on this subject.
It has been my privilege to sit as a member on the council representing the management group, and while I may be ready to admit the need in certain instances of an improved attitude toward labor, I am slow to proclaim that all employers have been unfair to their employees. I believe it is with conditions which are the exception rather than the rule that this act is aimed to deal with.
It would be easy to point out possible dangers from the operation of this act and there will be many who will find multitudes of objections to this type of legislation, but I do not feel compelled to be among those who will enumerate the obstacles or even the possible disadvantages of ultimate danger which may be involved in the accomplishment of these high purposes. In passing them thus I am not admitting that they' may not exist.
The ultimate attainment of the objectives of this law will depend upon the wisdom, the fairness, and the absence of an over class consciousness on the part of those who administer it. The mere fact that the motives behind legislation of this type are high and worthy does not mean that everything that may be done in connection with its administration will also be righteous.
It is this phase of the subject which gives me greatest concern, but it is believed that men to administer this program can be found who can and will put politics behind them, who will enter upon their duties with no preconceived convictions in any direction but will approach each problem with an open mind, not to attempt to prove or disprove the correctness of some doctrine, knowing that such an arbitrary course would logically lead to the abuse of power and the temptation to resort to troublesome and even punitive measures in an effort to bring about compliance in belief as well as conduct.
This must not be considered a reform measure, but rather a corrective measure and if those who are called upon to administer its operation will approach their task with this objective, great good can come from its enactment.
The wisdom of the drafters of the measure is indicated by the very broad discretionary powers vested in the Labor Standards Board to meet almost every conceivable problem arising from conditions peculiar to any given industry or set of circumstances surrounding a situation because of location in urban or rural surroundings or because in certain sections of the Nation conditions exist which call for a different standard than would be found to be proper elsewhere. Provision is made also for those industries engaged in seasonal operations and their problems are to receive fair and considerate consideration under the act, as is also the case with those engaged in the packing or processing of perishables. We are particularly interested there. This is of particular importance to the vegetable and horticultural interests in all parts of the Nation, especially the South.
Just two other points occur to me which are worthy of consideration. It might be wise to increase the proposed number of members of this Board from five to a higher number, so as to be sure that it would be truly representative of all factors and all sections. The power to create advisory committees in any section or locality to handle preliminary hearings and to ascertain the facts in each particular case, such committees to be composed of local groups most interested in the particular locality, may take the place of a larger Labor Standards Board. It seems to me, however, this is a point which should receive careful thought on the part of this committee.
In closing this statement may I again endeavor to allay the fears of some who honestly believe that this type of legislation is perhaps revolutionary in its action and dangerous in its consequences to the rights of individual, which should be held sacred in a constitutional democracy, by reminding all such that there is an almost universal recognition of the need of some correction in the situation as it now exists and that while this act has gone far in its invasion of the freedom of the individual in this field heretofore dominated by private arrangement, there still remains the right of any individual or of any interest to appeal to the courts and lastly the right and duty of Congress to change or modify or even to repeal the measure if resulting conditions through its operation seem to be contrary to the general good of all.
The Chairman. Thank you very much, Mr. Clark.
Senator Pepper. Much obliged "to you, Mr. Clark.
Senator Lee. Senator Black was this former brief included in the record?
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The Chairman. It should be.
Senator Lee. I move that it be included, and if any of the other representatives who have carefully prepared briefs of this type, I move that they be included in the record.
The Chairman. I think that that would be a good suggestion. Without objection, this brief will be included in the record.
(Reporter’s Note: The brief of Mr. Hanway will be found in connection with his testimony.)
The Chairman. There was one other gentleman who came with Mr. Paine.
Mr. A. F. Allison. If it is satisfactory to you, Mr. Senator, it is perfectly satisfactory to me to just place my brief in the record, and then I would like to ask if you would care to have extra copies, for this reason, that the points that we discuss there may be brought to the attention of the various members of the committee.
The Chairman. Will you please state your name to the stenographer?
Mr. Allison. My name is A. F. Allison, and I am secretary of the International Association of Garment Manufacturers. The only point that I want to make is that the suggestions we are making are based on our recent experience, and I think it is rather unusual in working as an advisory committee to the administrator of public contracts board, Mr. Frank Healy under the Walsh-Healey Act, and the statement in my brief goes to the specific points and is not in controversy but a mere classification, so I doubt if I should take up your time by reading it, providing I can submit extra copies to you.
The Chairman. We will be delighted to have them. Thank you very much.
(The brief of Mr. Allison is as follows:)
(Brief of A. F. Allison, secretary International Association of Garment Manufacturers, 40 Worth Street, New York, N. Y., follows:)
To the Chairman and Members of the Labor Committees of the United Slates Senate and House of Representatives:
Gentlemen: Section 14, part V, pages 28-29 of H. R. 7200, providing that panels and employer and labor consultants, together with not more than three public representatives, may be set up as advisory committees to aid the proposed Labor Standards Board, seems to follow to some degree the procedure already demonstrated to be both practicable and necessary in the more limited area of minimum-wage determination under the Walsh-Healey Public Contracts Act.
It so happens that the panel of employer-labor consultants established by the Secretary of Labor in behalf of the cotton garment industry was not only the first to be so established, but remains to date the only such group with sufficient actual experience to justify and support its definite recommendations in reference to this procedure.
Therefore, in authorizing and approving my appearance today as their representative at this hearing, the board of directors of the International Association of Garment Manufacturers has also voted to limit our direct testimony strictly to this statement urging the outstanding importance of section 14, part V, of H. R. 7200, and the necessity for further clarifying and insuring the adequacy and equity of the procedure set forth in this section of this bill.
Although under part V, section 12, subsections (4) and (5), which appear on page 26 of H- R. 7200, it appears that a labor-standard order, at the discretion of the Board, may be made applicable to one factory or establishment engaged in any certain industry, and a different labor-standard at the same time or any other time may be made applicable to one or more additional factories or establishments also engaged in the same industry, we shall assume, for the purpose of our presentation, that an entire industry, such as the cotton garment industry, will be dealt with by the Labor Standards Board as an entity. All necessary variations, including the highly essential tolerances for (1) the employment of learners
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and apprentices and (2) the continuation of employment opportunities for persons whose earning capacity is impaired by age or physical or mental deficiency should be issued at the same time as the labor-standard order for the industry.
With these preliminary and partial explanations in mind, we believe the following questions, directed to specific provisions of section 14, will indicate certain points of our recent experience, through our group of employer consultants who, together with the labor consultants, since early in December 1936, have worked with the Public Contracts Board and the Administrator of the Walsh-Healey Public Contracts Act, in respect to the determination of minimum wages oh governmental contracts in our industry.
(1)Section 14, lines 10-11: “♦ * * the Board may, if it considers it necessary or appropriate, appoint an advisory committee to investigate and report * *
Why not direct the Board to appoint such advisory committees?
Granted that, in all probability, the practical working out of the administration of this act will find the Board appointing such advisory committees in every instance where such procedure is at all practicable. Why not state this policy in the wording of this section?
(2) Sec. 14, lines 15, 16, 17, 18, 19: “* * * Such advisory committee shall be composed of an equal number of persons representing the employers and the employees in such occupation, and of not more than three disinterested persons representing the public, one of whom shall be designated as chairman."
Judging from our recent practical experience, the requirement that an equal number of persons shall be appointed to represent employers and employees, together with at least one public representative, may cause quorum difficulties, since two-thirds of the members of such advisory committee shall constitute a quorum, as stated on lines 22, 23, section 14.
These advisory committees presumably are not to be set up as debating societies, but are intended to be highly useful agencies to assist in the securing, analyzing, and practical evaluation of essential facts and figures relating to employment and wages.
Probably other industries would face the same situation that would confront us in the cotton-garment industry if, under the terms of H. R. 7200, the Labor Standards Board thus established should request us to submit the names of our panel of employer consultants. It would be unfair to all concerned if we were to be limited to nominating three employers, for example, in this capacity. Our industry is spread throughout the country, with plants making cotton garments located in more than 40 States. Under the terms of H. R. 7200, the problems of' various areas as well as the subdivisions of any industry are to be given careful consideration.
Unless some authorization of the use of proxies is implied or may be construed from the present wording of this bill, we can see serious difficulties in holding sufficient meetings of these advisory committees, so far as the employers are concerned.
Labor representatives will speak for themselves on this matter, but those I have consulted tell me, informally, that they are too busy these days to send two or more people to do a job which one person can do.
Our question therefor is: Why set up rigid rules for these advisory committees when their work, at its best, will be conducted on the basis of informal discussion, and their only function is to submit a recommendation to the Labor Standards Board which makes the final decision and is expressly authorized entirely to disregard the advisory committee recommendation.
As to the interesting suggestion that not more than three disinterested persons representing the public, shall serve on each advisory committee, one of the public representatives to serve as chairman, we have had no experience with any similar plan in our recent work with the public contracts board. The chairman of the public contracts board has always served as chairman at the meetings of the employer-labor consultants. And, undoubtedly, the present chairman, Mr. Frank Healy, has contributed greatly to the successful development of this joint employer-labor advisory procedure.
However, the thought does arise that if different persons are to be chosen as public representatives and chairmen of each of these advisory committees, and if such a committee is appointed for each major industry classification, several hundred disinterested persons will be required, and may be hard to find. Certainly this provision should be given further study.
(3) Section 14, lines 9, 10, 11, 12, 13: "Any such advisory committee shall, after investigation, hearing, and conference with the principal interested parties, submit a report upon the matter on which its advice was requested within 60 days after the appointment of such advisory committee.”
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We do not question the desirability of insuring reasonably prompt action by any advisory committee. We do desire to question the apparent implication given by the wording of the lines quoted, that an advisory committee is to be set up only as a temporary body.
Accordingly, for the record of this hearing, we ask that the status of the advisory committee serving in behalf of any industry be more clearly and specifically stated. Such a committee can be highly useful in its advisory capacity to the Labor Standards Board, not only in respect to determination of a proper labor standard but also in respect to the million and one details which will undoubtedly arise to place an enormous administrative burden upon every individual member of the Board and its entire staff.
We have seen one difficulty after another confronting the administrator of the Public Contracts Division of the Department of Labor in connection with the relatively simple problems involved under the Walsh-Healey Act.
(4)So we conclude by urging:
(a) That appointment by the Board of Advisory Committees for each industry be made mandatory, except where the Board finds such procedure wholly impracticable.
(b) That each manufacturing industry be dealt with as a national entity, and that variations, exceptions, exemptions from the basic labor standard be kept as few as possible, and that all such rulings or decisions be communicated by the Board to the members of the advisory committee serving in behalf of the industry.
(c) That the advisory committee be constituted as continuing agencies offering the widest possible opportunity for cooperation with the Board, not only in the determination of labor standards but also in the administration thereof.
It is our earnest belief, based on recent experience in cooperating with the administrator and the Public Contracts Board, under the Walsh-Healey Act, and also based upon experience under the National Recovery Administration, that the cooperation of the average citizen is essential to the efficient administration of any regulatory measure.
We do not pretend at this time to pass upon the merits or practicality of other sections and other provisions of H. R. 7200. But even casual reading of this measure must convince anyone familiar with the administrative difficulties encountered under the N. R. A. that section 14, with further clarification of its provisions in regard to advisory committees of employer-labor panels, is highly important to the prospects for successful administration of this or any other regulatory law enacted to regulate and increase the average level of earnings of industrial workers in this country.
A. F. Allison, Secretary.
STATEMENT OF LEON HENDERSON
The Chairman. Mr. Henderson, does your prepared statement give any of your background and the reason for your knowledge on these questions?
Mr. Henderson. No.
The Chairman. Will you state your experience and your interest in this bill?
Mr. Henderson. I was director of the Research and Planning Division of N. R. A., economic adviser to General Johnson when he was Administrator, economic adviser to the National Industrial Board, and member ex officio of that Board.
Since the termination of N. R. A., I have been engaged in various, consulting jobs as an economist, both within and without the Government. I served for a period as economic adviser to the United States Senate Committee on Manufactures in connection with the Senate resolution having to do with the National Economic Councils.
At present, I am consulting economist for the Works Progress Administration.
I desire to comment on some values of the proposed wage and hour bill which have not been covered as yet. Maintenance of purchasing power is the key to that economic balance which is necessary if we are to surpass 1929 production. A
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rise of 20 percent above the 1929 volume of goods and services would be required to reduce present unemployment in the 1929 level. This would mean that goods and services 40 percent above the 1936 production level would be necessary.
Firm standards as to minimum wages and maximum hours are of high desirability now. They will be almost indispensable in efforts to maintain economic balance if this country should suffer a relapse in business activity and competition for lessened markets should then, as it did after 1929, seek focus on the depressing of wages.
If the effective demand for goods and services is to be fortified and sustained, it is necessary not only that the lowest paid be afforded additional buying strength, but that gains so dearly won since 1932 be kept in force.
The time to consolidate those substantial gains is now, so that whatever adjustments are required in the structure of production can be made under the favorable circumstances of strong business activity.
It may seem like useless wearying of the soul to recapture now some idea of the extent of the decline in wages and employment after 1929, but perhaps it may be valuable.
National income was cut to half.
Real factory pay rolls were the lowest since the turn of the century.
Actual wages were lower and hours of work were longer than at any time since the World War. Average weekly earnings of employees in manufacturing industries fell from about $28.50 to $14.50.
Employment was lower than in any time since 1910, and unemployment encompassed one-third of the working population.
By 1933 there were two part-time workers for every three completely unemployed.
The decline in the totals and averages indicate the extent of the depression for the entire economy.
What happened to the individual worker?
A new low in this century of 5 cents per hour for common labor was uncovered. Working hours of 70 per week were reported. Wages of 15 cents and less an hour were not uncommon in cigarette factories, set-up paper-box factories, sawmills, wood-heel factories, and for female employees in container factories. When N. R. A. began, 15 cents an hour wages and less were found in substantial numbers in the railway-safety-appliance industry, in factories making umbrellas and clocks and clothespins, and many other businesses.
If it seems harsh to single out certain industries for such report, it should seem harsh, too, that a competitive system should attempt suicide by denying purchasing power to its customers.
But that such instances were not rare can be seen by reference to some tables I have prepared.
And I would suggest that you see the tables labeled “Low hourly earnings in specified industries” and “Employees with hourly wages less than 40 cents, classified by industries”, which appear later.
The information from which these tables are derived was obtained chiefly by the Research and Planning Division of N. R. A., of which division I was the last director. These tables cover only a portion of the 578 N. R. A. codified industries, and show prevailing wages before codification.
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I present them today to indicate a set of conditions, the recurrence of which the Black-Connery bill can help to prevent. If wage and hour standards are set now, mass purchasing power can be sustained, and the heaviest impact of competition will be transferred to other segments of the system, which have greater capacities for absorption.
THE PRESIDENT’S REEMPLOYMENT AGREEMENT
The N. R. A. experience demonstrated that readjustments in the distributive shares can be accomplished. Most of you remember the pre-N. R. A. flurry of prices and production. It seemed necessary then to ask employers voluntarily to assume the burden of increased wages and lower weekly hours, and P. R. A., the President’s Reemployment Agreement, came into being. Between June and October 1933, while these agreements were being effected, man-hours worked in manufacturing industries remained about the same, average weekly hours actually declined some 15 percent, but employment rose 18 to 19 percent. In these manufacturing industries alone, about 1,179,000 were employed, while total employment went up 2,462,000. All N. R. A. industries increased employment 11.4 percent, but industries not covered by the act increased only 4.4 percent.
These astounding results testify adequately to the often-expressed desire of the great majority of American employers to have standardization of wages and hours, just as long as their competitors are held to the same standards. It is significant, too, that in this P. R. A. period, American industry and trade moved toward that standard of maximum hours per week which the Black-Connery bill now seeks.
The P. R. A. period witnessed a most tremendous increase in wages of low-paid employees. In June 1933 there were 20 industries having an average hourly rate of less than 32.5 cents per hour—by October there was but 1. In July, the average hourly rate of N. R. A. industries was 43.8 cents, but by October it had risen to 52.1 cents, a gain of 20 percent. Reports on 159 industries during this period show that 154 voluntarily responded with increased rates. Labor income for N. R. A. industries went up 13 percent, the non-N. R. A. industries but 7 percent.
THE N. R. A. CODE PERIOD
Under the codes, the substantial gains of P. R. A. were consolidated. Labor’s increased income came mainly from new employment, from raising of subminimum rates to the code minima, and from some increases above the minimum. Hourly rates went up about 5 cents an hour, weekly average income went up 12 percent, by May 1935.
Codal minimum basic rates were as follows: 285 codes had 40-cent minimum, covering 39 percent employment; 53 codes had over 40- cent minimum, covering 16.4 percent employment; 225 codes had 30 to 39-cent minimum, covering 39 percent employment; 14 codes had less than 30-cent minimum, covering 5 percent employment.
The basic wage and hour minima were sapped of considerable strength by exceptions, exemptions and tolerances for peak periods. Only 4 out of 578 codes had no exceptions for specific occupations. It has been estimated that from 14 to 20 percent of all employees of codified industries were exempted from code provisions. Many of
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these exemptions, exceptions, and tolerances seemed necessary for flexibility, but undoubtedly a system of mandatory standards such as are envisioned by the Black-Connery bill, would reduce these leakages, which were inherent in a system of negotiated standards.
Many lessons are to be learned from the N. R. A. experience, many of which relate to administration. Certainly it was learned that penalty overtime rates need to be stiff to force reemployment and training. As the period of code making closed, the N. R. A. moved toward simplification of provisions, tightening of standards, and looked forward to higher minimum wages, lowered hours, and regularization of employment. It was apparent that the more clearly a standard was defined, the greater was the possibility of achieving better standards. Little advance was made in effecting changes in wages above the minima, but hourly rates of those employees receiving rates above the minima did in general increase during the life of N. R. A. Despite frequent complaint that the “maximum was becoming the minimum”, the wage bill of industry was substantially increased. Employees’ share of the national income rose from 64 percent in 1932 to 66.8 percent in 1934 and to 67.3 percent in 1935.
By the end of 1934, a working balance had been reestablished within the structure of production. Prices, wages, and costs acquired that relationship which lends vigor to production. With a stable price level during 1935 and most of 1936, profits, reemployment, and purchasing power gains were substantial, and all gains were due mainly to the vigorous increases in goods and services turned out by the economic machine in balance and not to price advances. It is to the maintaining of this moving equilibrium that the Black-Connery bill can contribute by raising the mass purchasing power of eager spenders in the neglected low-wage and long-hour areas.
I have made an estimate of the labor force in the United States, employment, and preliminary estimate of coverage of the Black- Connery bill.
As of July 1, 1936, the population of the United States was estimated at 128,429,000.
The National Industrial Conference Board has estimated that in March 1937 the labor force for all enterprise, public and private, was 52,880,000, and that agricultural employment was about 10,800,000.
Figures recently released by the Bureau of Labor Statistics show 34,100,000 employed in March 1937 in nonagricultural pursuits.
Anyone is free to do his own “guesstimating” from the above figures and conclude that unemployment in the United States is about 7,900,000. Such a “guesstimator” could arrive at a slightly lower estimate by taking the figure of 1,800,000 unemployed in 1929, and adding to it the difference between 1929 and 1936 employment of 1,200,000 plus and estimate of 4,000,000 to 4,500,000 new entrants to the labor market since 1929.
In a simple table, the result would appear as follows:
Labor force..................................................................................52,800,000
Agricultural employment...........................................................10, 800, 000
Nonagricultural employment and unemployment..................42,000,000
Nonagricultural employment....................................................34,100,000
Unemployment...........................................................................7,900,000
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The total employment of 34,100,000 is made up as follows:
Industry.....................................................................................14,700,000
Distribution and service..........................................................13,500,000
State, local, Federal....................................................................1,700,000
Proprietors and self-employed..................................................4,200,000
Total........................................ ................................................. 34,100,000
I guess that the Black-Connery bill, because of constitutional and other limitations, would exclude:
Distribution and service..........................................................13,500,000
State, local, and Federal employees........................................ 1,700,000
Proprietors and self-employed..................................................4,200,000
Total.......................................................................................... 19,400,000
In passing, it should be noted that low wages and excessive hours are to be found more extensively in trade and service establishments than in industrial concerns.
The industry total of 14,694,000 would likely not include the 1,384,000 persons employed on construction jobs, so that the coverage of the Black-Connery bill would be limited to part of the following:
Manufacturing industries..........................................................9, 644,000
Mining ............................................................................................ 781,000
Transportation..............................................................................1,974,000
Public utilities................................................................................. 908,000
Total........................................................................................... 13,307,000
This industry total of 13,307,000 would probably reduce to 12,000,-000 or less, because (1) much of coal mining is now on a 35-hour week basis; (2) many railroad employees are employed on terms which conceivably would not be modified; (3) many industries and public utilities are small or local in character; and (4) casual laborers are included in the total.
To summarize, industries with total employment of about 12,000,000 would be affected by the bill under consideration.
How many of these 12,000,000 industrial employees are presently receiving below 40 cents an hour?
I estimate something under 3,000,000. This guess I make with considerable trepidation, because some entire industries, like cotton goods, are averaging less than 40 cents an hour now. The law would preserve the wages of many more in times of business decline and indirectly affect wages in practically every local community in the country.
How many of these same 12,000,000 are presently employed at hours in excess of 40 per week?
I estimate at least 6,000,000.
In this estimate I am on firmer grounds, because of some extraordinary work done recently by Witt Bowden, of the Bureau of Labor Statistics, and published in the January 1937 issue of the Monthly Labor Review. The entire article is well worth reading. In my opinion, it is the best single argument extant for establishing national wage and hour standards. The Bowden study analyzed the departures from N. R. A. code standards by 16 principal industries, covering 2,200,000 employees or, roughly, about 25 percent of all manufacturing employment. Briefly, the study shows that after the nullification of the National Industrial Recovery Act, all 16 industries lengthened
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the workweek of employees instead of adding new employees taken from the ranks of the unemployed.
In the steel industry, for example, only a few employees were exceeding code hours in May 1935, when the Schechter decision was handed down. By May 1936 more than two-thirds of the employees were working longer than code hours. Brick-tile, and terra-cotta establishments, for example, had 85 percent of their employees working in excess of code hours by May 1936. Nearly IX million employees in these 16 industries were exceeding code hours—which excess hours could have given jobs to 125,000 new men, according to the estimate. My own estimate, based on N. R. A. experience, suggests that manufacturing industries alone in the year following the demise of N. R. A. would have added 650,000 more than actually did find jobs in this period.
Most startling and significant among the rich findings of this study is the showing that those plants which cut wages most and increased hours most were those which gained the greatest increase in volume. The wage reductions presumably gave a cost advantage, which in competition was reflected in lower prices.
In short, those establishments profited most which abandoned standards which the Black-Connery bill seeks to reestablish, while those who tried to maintain commendable standards were disadvantaged.
The Bowden study demonstrated that the average hours reported monthly for various industries cannot be used to determine the extent to which employees in the industries are working long hours. The reported averages are valuable, of course, but these are averages of long and short workweeks.
When all industry is reported with average weekly hours per employee of somewhere near 40, it is often mistakenly assumed tnat few employees are working in excess of 40 hours. I have seen some such contentions in the press in recent days. But let’s take an example from an industry which presumably would come within the jurisdiction of the Black-Connery bill—tlie brick, tile, and terra-cotta industry. In May 1936 its average weekly hours, as reported by the Bureau of Labor Statistics, were 44.1. Yet 53 percent of this industry’s employees were working from 41 to 48 hours, and 33 percent were working more than 48 hours.
At N. R. A. we found that when an industry was averaging 36 hours a week or better per employee, then most plants in the industry were running 40 hours; and if the code hours w'ere 40, then a rise in business volume would require employment of additional hands. The latest tabulations of average weekly hours per employee for February 1937 show the following distribution:
| Average Weekly Hours | Manufacturing | Non-manufacturing | Total |
|---|---|---|---|
| Not given | 2 | 2 | 4 |
| 36.9 and less | 10 | 3 | 13 |
| 37.0 to 39.9 | 28 | 2 | 30 |
| 40.0 to 43.9 | 37 | 7 | 44 |
| 44.0 to 47.9 | 11 | 2 | 13 |
| 48.0 and over | 1 | 1 | 2 |
| Total | 89 | 17 | 106 |
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From the above table, if it be assumed that industries averaging 37 or more hours per week per employee have many employees working in excess of 40 hours per week, then it follows that 77 manufacturing industries out of 89 would have been affected in February of this year by the hours provisions of the Black-Connery bill, had it been in force.
To simplify, seven out of every eight manufacturing industries today are working some employees more than 40 hours; and if the proposed bill were passed and limited weekly hours to 40—then over 6,000,000 employees would be potential candidates for reduced hours or increased wage through time and half-time pay, and additional persons would obtain work.
Many steel and automobile companies have recently adopted the basic 40-hour week, with time and half-time for overtime. Results seem to indicate that flexibility has been achieved through (a) reduction of overlong hours; (6) increased pay for overtime, particularly for key workers; and (c) by additional employment.
Can less be expected of the Black-Conneiy Bill?
I have made a contrast of the Black-Connery proposal with N. R. A. plan for hour and wage standards.
The gains made under N. R. A. in raising wages and reducing over- long hour's need no apology here. The millions of workers who found reemployment, higher hourly rates, and greater leisure could offer testimony-in-boots, if this committee desired. For the first time in a recovery segment of the business cycle, wages kept pace.
When the N. R. A. was conceived, there was no such constitutional support similar to that on which the Black-Connery bill is founded. New constitutional bases, as clearly outlined by Assistant Attorney General Jackson yesterday, have been afforded in recent months.
The N. R. A. sought to utilize proposals of wage and hour code provisions by trade groups and to establish the labor standard of the best employers, as did the “law merchants” of old. That standards can better originate with government than through bargaining, only few will now deny.
High advantage in compliance lies with the new proposal over the limited possibilities under the N. I. R. A.
The Black-Connery bill has greater simplicity. The N. R. A. dealt with a wide range of trade practises and with more industries and trades. Its labor standards had four main parts: (1) Hours, (2) wages, (3) conditions of employment, and (4) collective bargaining. The bill under consideration deals principally with hours and wages and with a limited number of employment conditions, such as child labor, espionage, and so forth. It has no internal conflict of objectives to cause administrative indigestion.
One extraordinary advantage stands out. It is now generally recognized that wage floors and hours ceilings should be established so that the marginal worker cannot be made the football of competition. Policy pronouncements of N. R. A. to this effect had the whole-hearted support of employer and public representatives, as well as that of labor. The President had declared that “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country”, and this concept, widely expanded, has now come to firm acceptance.
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A great need was felt in N. R. A. for an absolute standard, such as the cost of living, as the basis for minimum wages. Even if adequate ground had existed for a cost-of-living standard no worth-while points of reference on standards of livings were available. Almost inevitably, then, the N. R. A. procedure turned to demands that the “going wage” in each specific industry be improved almost without regard to the amount necessary for decent living standards. The Labor Standards Board, as now conceived, can utilize the wealth of material developed recently by the Bureau of Labor Statistics in its study of consumer purchases. Standards relating to “physical and economic health, efficiency, and well-being of workers” can now be given substantive meaning in recognized economic terms. I presume a Department of Labor representative later will discuss adequately what a family income of $1,200 and less will buy in the way of an American standard of living.
A labor standards board will be better equipped to utilize the help of labor organizations and will have a greater number of collective bargaining agreements to rely upon than did N. R. A. Many of the codes which carried adequate wage rates were those with strongly organized unions, and the advantage in compliance of a strong union was well recognized. In 14 codes carrying minimum rates of 30 cents an hour and less, no collective bargaining effort was exerted.
Last, but yet of high importance, the Labor Standards Board can build on the experience of N. R. A. techniques, trials and errors, and upon the vast distillate of acquired information which has been recorded in organized form and stands eagerly ready for instant use.
In this connection, Mr. Chairman, may I make a suggestion? Following the work of the Division of Review which came after the termination of N. R. A., certain staff members were assigned to make functional studies of the N. R. A. experience. That having to do with labor was assigned to Solomon Barkin. From these staff reports, a final N. R. A. report was written, which necessarily had to be considerably abridged, but I can think of no compendium of more value to this committee than that staff report, which today exists only in a mimeographed form in a limited number of copies.
Senator La Follette. Mr. Chairman, may I ask Mr. Henderson whether a copy of that could be made available to this committee?
Mr. Henderson. The Department of Commerce, I believe, is the residuary legatee of those copies.
Senator La Follette. Might I suggest, Mr. Chairman, that you request the Department of Commerce to furnish this committee with copies of that staff report?
The Chairman. I will be very glad to do that. Will you give us the name of it?
Mr. Henderson. The Division of Industrial Economics, Staff Report on Labor, by Solomon Barkin.
May I suggest also, Mr. Chairman, that I have no intention of presenting a pile of statistics. My interest in this bill is such, and my availability is such, that I would be glad to respond to requests of this committee that are within my power, to prepare special memoranda on subjects having to do with this particular bill.
The Chairman. Thank you very much, Mr. Henderson, and I am sure that we may need some of that before we are through.
Representative Connery. Mr. Henderson, how long is that N. R. A report?
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Mr. Henderson. It probably stands 1 foot high in double space mimeographed form, but I assume that if the Nye committee could reproduce a volume of War Industries Board testimony as an aid to its labors, that this committee, having a much more and immediately pressing problem, might do the same.
Senatot LaFollette. I suggest, Mr. Chairman, that if we get a copy of it, that we can then determine whether we wish to have it printed. It might be available to members of the committee for study in any case.
The Chairman. Yes, we would like to get it and see it and then determine about having it printed.
Senator LaFollette. I presume that these mimeographed tables of Mr. Henderson will be printed as a part of his statement?
The Chairman. I think they should be. Will you deliver those to the stenographer?
Mr. Henderson. Yes, sir.
Low hourly wage earnings in specified industries (prior to or during N. R. A.)
| Industry | Number | Hourly wage less than- | Percent of total | Total number in industry sample |
|---|---|---|---|---|
| Asphalt shingle and roofing: | Cents | |||
| ...North | 41 | 25 | 1.4 | 2,983 |
| ...South | 29 | 25 | 15.6 | 186 |
| Asphalt and tile | 9 | 25 | 5.1 | 176 |
| Grinding wheel | 7 | 25 | .5 | 2,238 |
| Ball clay producing | 78 | 25 | 61.8 | 123 |
| Rock and slag wool | 86 | 30 | 13.5 | 632 |
| Fiber wall board | 11 | 25 | 1.6 | 708 |
| Preformed plastic products | 14 | 25 | 16.1 | 150 |
| Wood plug | 90 | 25 | 21.7 | 415 |
| End wood strip grain block | 16 | 25 | 11.4 | 141 |
| Ornamental mold, carving, tec | 47 | 25 | 17.5 | 262 |
| Wood heel | 345 | 20 | 14.4 | 2,405 |
| Wood turning and shaping | ||||
| ...Flat and shaped veneer | 84 | 20 | 58.7 | 396 |
| ...Variety and small handle | 11 | 20 | 12.1 | 307 |
| ...Nuscell | 78 | 20 | 18.9 | 888 |
| Wood preserving | 466 | 20 | 23.8 | 1,956 |
| Water-proof paper | 53 | 25 | 18.6 | 285 |
| Pyrotechnic manufacturing | 413 | 25 | 50.0 | 826 |
| Shoe polish | 52 | 25 | 705 | 701 |
| Stoker | 23 | 25 | 3.2 | 720 |
| Peanut butter | 63 | 20 | 11.1 | 566 |
| Ice-cream cone, North | 120 | 25 | 30.1 | 399 |
| Preserve, North | 225 | 20 | 14.7 | 1,524 |
| Flavoring extracts | ||||
| ...North | 309 | 25 | 22.7 | 1.362 |
| ...South | 100 | 25 | 76.2 | 131 |
| Cigarette manufacturing | 1,740 | 25 | 15.3 | 11,368 |
| Smoking-tobacco manufacturing | 1,657 | 25 | 30.6 | 5,411 |
| Sniff manufacturing | 15 | 25 | 1.4 | 1,063 |
| Chewing tobacco | 506 | 20 | 10.0 | 5,024 |
| Vinegar manufacturing | ||||
| ...North | 154 | 20 | 9.4 | 1,637 |
| ...South | 101 | 20 | 31.9 | 317 |
| Baking powder | 127 | 25 | 14.8 | 857 |
| Biscuit and cracker: | ||||
| ...North | 1,187 | 25 | .......... | 14,605 |
| ...South | 493 | 25 | .......... | 1,252 |
| Cane-sugar refining, South | 1,154 | 20 | 37.5 | 3,075 |
| Cotton compress, male | ||||
| ...Port | 476 | 20 | 12.4 | 3,856 |
| ...Interior | 7,650 | 20 | 71.6 | 10,634 |
| ...Warehouse | 780 | 20 | 58.1 | 1,339 |
| Rayon and silk dyring and printing | 136 | 25 | 2.5 | 4,421 |
| Carpets and rugs | 455 | 25 | 3.8 | 11,930 |
| Bias tape | 198 | 25 | 30.5 | 649 |
| Sash cord | 13 | 25 | 2.3 | 571 |
| Viscose extrusion | 92 | 20 | 3.2 | 2,873 |
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Low hourly wage earnings in specified industries (prior to or during N.R. A.) - Con.
| Industry | Number | Hourly wage less than- | Percent of total | Total number in industry sample |
|---|---|---|---|---|
| Cents | ||||
| Cast-iron pressure pipe, South | 257 | 20 | .......... | 2,649 |
| Railway safety appliances | 325 | 25 | 8.8 | 3,739 |
| Steam-heating equipment | 25 | 25 | 4.9 | 515 |
| Clay machinery | 14 | 25 | 6.1 | 229 |
| Steel tire | 14 | 25 | 1.8 | 782 |
| Beater, Jordan, and allied equipment | 8 | 25 | 5.6 | 142 |
| Water-power equipment | 4 | 25 | 6.9 | 145 |
| Hoist builders | 6 | 20 | 4.2 | 144 |
| Conveyor and material preparation | 91 | 25 | 6.2 | 1,473 |
| Water softener and filter | 6 | 25 | 1.9 | 298 |
| Bakery equipment | 41 | 25 | 2.1 | 1,928 |
| Sprocket chain | 38 | 25 | 21.7 | 175 |
| Oil field pump machinery manufacturing | 20 | 25 | 3.6 | 555 |
| Refrigerator-machine manufacturing | 58 | 25 | 2.4 | 2,264 |
| Hydraulic machinery | 12 | 20 | 2.4 | 539 |
| Pulp and paper machinery manufacturing | 25 | 25 | 4.0 | 612 |
| Bicycle manufacturing | 42 | 25 | 7.1 | 593 |
| Cotton-ginning machinery manufacturing | 244 | 25 | 28.2 | 865 |
| Chemical manufacturing, South | 86 | 20 | 3.3 | 2,632 |
| Printing ink | 22 | 25 | 1.6 | 1,418 |
| Sulphonated oils | 4 | 25 | 1.1 | 356 |
| Ink and adhesive | 65 | 25 | 18.0 | 360 |
| Natural organic products | 4 | 25 | 1.3 | 275 |
| Plastic fabricators | 685 | 25 | 29.1 | 2,350 |
| Steam solvent naval stores | 393 | 20 | 39.0 | 1,006 |
| Waxed paper | 214 | 25 | 8.9 | 2,384 |
| Set-up paper box: | ||||
| ...North | 757 | 20 | 5.6 | 13,515 |
| ...South | 51 | 20 | 6.0 | 855 |
| Stationary tablet school paper | 202 | 20 | 4.0 | 5,101 |
| Folding paper box | 788 | 25 | 12.3 | 6,430 |
| Sanitary napkin and cleaning tissue | 144 | 25 | 14.0 | 1.027 |
| Corrugated paper and solid fiber | 622 | 20 | 8.3 | 7,473 |
| Cloth reel | 28 | 25 | 19.4 | 144 |
| Gummed label and embossed seals: | ||||
| ...Female | 104 | 25 | 46.9 | 222 |
| ...Male | 32 | 25 | 9.2 | 347 |
| Sample card | 650 | 25 | 32.9 | 2,000 |
| Transparent material converter | 301 | 25 | 27.6 | 1,092 |
| Loose leaf and blank book | 201 | 20 | 14.9 | 1.348 |
| Cotton garment, Pennssylvania | 234 | 20 | 2.5 | 1,739 |
| Manganese steel products | 15 | 20 | 1.3 | 1,179 |
| Business furniture, storage equipment | 251 | 25 | 3.9 | 6,387 |
| Office equipment | 249 | 25 | 1.3 | 19,409 |
| Piano manufacturing | 39 | 25 | 3.5 | 1,130 |
| Watchcase manufacturing | 49 | 25 | 11.0 | 446 |
| Metal window | 8 | 25 | 1.1 | 711 |
| Porcelain breakfast furniture | 127 | 20 | 19.1 | 665 |
| Beauty- and barber-shop mechanical equipment | 50 | 20 | 7.3 | 679 |
| Collapsible tube | 117 | 25 | 8.0 | 1,461 |
| Small arms and ammunition | 114 | 25 | 1.6 | 7,488 |
| Umbrella frames | 50 | 20 | 14.0 | 357 |
| Commercial fixture | 4 | 20 | .3 | 1,169 |
| Drop-forging, male | 47 | 25 | .8 | 5,573 |
| Clock manufacturing | 606 | 20 | 8.5 | 7,162 |
| Waste manufacturing | 69 | 20 | 20.7 | 333 |
| Scrap iron, waste materials | 541 | 20 | 34.1 | 1,583 |
Source: Division of Review, N. R. A. report: Wages and Hours in American Industries, Work Material No. 9.
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Employees with hourly wages less than 40 cents, classified by industries (prior or during N. R. A.)
SUMMARIZATION
Industries .......................................................................................71
Total employees ..................................................................784,000
Receiving less than 40 cents per hour..............................287,582
Percent with hourly wage less than 40 cents ............................36.7
| Industry | Date | Total Number |
Number with hourly earnings less than 40 cents |
Percent with hourly earnings less than 40 cents |
| Boot and shoe: | ||||
| ...Male | March 1934 | 27.0 | ||
| ......Do | March 1935 | 110,060 | 24,873 | 22.6 |
| ...Female | March 1934 | 66.3 | ||
| ......Do | March 1935 | 89,849 | 54,628 | 60.8 |
| Wool felt | September 1933 | 1,638 | 178 | 12.6 |
| Rayon and silk dye and print: | ||||
| ...Male | November 1933 | 4,683 | 311 | 6.6 |
| Female | ...Do | 738 | 620 | 84,1 |
| Carpets and rugs | March to September 1933 |
11,930 | 6,013 | 50.4 |
| Drapery and upholstery trimming | Sept. 15, 1933 | 763 | 426 | 55.9 |
| Cotton pickery, female | 1932 pickery | 420 | 420 | 1 100.0 |
| Bias tape | June 1933 | 649 | 549 | 83.8 |
| Floor help in coat and suit | February 1934 to February 1935 |
684 | 134 | 21.1 |
| Cotton garment: | ||||
| ...South | October 1934 | 38,562 | 32,601 | 84.5 |
| ...North | ...do | 3,428 | 3,265 | 95.2 |
Cotton-garment employees of contractors in North |
August 1934 | 10,748 | 8,199 | 76.3 |
| Cotton-garment employees in Pennsylvania | February 1934 | 9,289 | 7,550 | 81.2 |
| Leather | ||||
| ...Male | November 1933 | 48,478 | 2,542 | 5.2 |
| ...Female | ...do | 5,773 | 3,542 | 61.4 |
| Fur dress and dyeing | September 1933 | 2,285 | 316 | 13.8 |
| Fur manufacturing | 1932 census | 1,005 | 312 | 31.0 |
| Manganese--steel products | June 1933 | 1,179 | 455 | 38.6 |
| Fabricated metal | December 1934 | 156,461 | 24,401 | 15.6 |
| Storage equipment, buisness furniture, etc. | September 1933 | 6,387 | 3,045 | 47.6 |
| Office-equipment manufacturing | July 1933 | 19,409 | 3,635 | 18.7 |
| Piano manufacturing | September 1933 | 1,130 | 254 | 22.5 |
| Can manufacturing | April 1934 | 27,506 | 9,480 | 34.4 |
| Watchcase manufacturing | April 1933 | 466 | 160 | 35.8 |
| Metal window | July 1933 | 711 | 232 | 32.7 |
| Porcelain breakfast furniture | June 1933 | 665 | 502 | 75.5 |
| Beaury- and barber-shop mechanical equipment | ...do | 679 | 448 | 65.9 |
| Steel wool | ...do | 393 | 263 | 66.8 |
| Collapsible tube | ...do | 1,461 | 807 | 55.3 |
| Small arms and ammunition | August 1933 | 7,488 | 3,426 | 45.8 |
| Commercial fixture | June 1933 | 1,849 | 474 | 25.6 |
| Drop forging | ...do | 5,573 | 1,441 | 93.2 |
| Clock manufacturing | ...do | 7,162 | 4,720 | 66.0 |
| Fountain-pen manufacturing | ...do | 2,412 | 1,675 | 69.4 |
| Periodical | February 1933 | 4,951 | 2,881 | 2 58.2 |
| Duplicating and mail | May 1934 | 2,737 | 1,706 | 65.7 |
| Transit, intrastate | July 1933 | 54,686 | 2,451 | 4.5 |
| Scrap iron, waste material | June 1933 | 1,583 | 1,399 | 88.3 |
| Woodwork machine | ...do | 1,098 | 276 | 25.2 |
| Water-meter manufacturing | August 1933 | 1,582 | 323 | 20.5 |
| Rolling-mill machine and equipment | June 1933 | 2,819 | 832 | 29.5 |
| Conveyor and material prep manufacturing | ...do | 1,473 | 545 | 37.1 |
| Roller and silent chain manufacturing | ...do | 492 | 138 | 28.1 |
| Bakery-equipment manufacturer | ...do | 1,928 | 363 | 18.8 |
| Refrigerator-machine manufacturing | ...do | 2,464 | 664 | 27.0 |
| Hydraulic-machine manufacturing | ...do | 539 | 133 | 24.7 |
| Cereal-machine manufacturing | ...do | 658 | 268 | 40.8 |
| Railroad-special-track equipment | ...do | 1,099 | 328 | 29.8 |
| Shoe-machine manufacturing | ...do | 2,922 | 134 | 4.5 |
| Sewing machine | October 1933 | 10,327 | 1,192 | 11.6 |
| Mechanical packing | ||||
| .....Male | August 1933 | 1,047 | 250 | 26.8 |
| .....Female | ...do | 262 | 249 | 95.0 |
| Bicycle manufacturing | June 1933 | 593 | 265 | 44.6 |
| Trailer manufacturing | ...do | 801 | 406 | 51.0 |
| Cotton-ginning-machine manufacturing | ...do | 865 | 531 | 61.5 |
| Commercial vehicle body | ...do | 865 | 531 | 61.5 |
| Stoker | ...do | 720 | 264 | 36.7 |
1 Less than 20 cents.
2 Less than 37.6 cents.
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Employees with hourly wages less than 40 cents, classified by industries (prior or during N. R. A.) - Continued
| Industry | Date | Total Number |
Number with hourly earnings less than 40 cents |
Percent with hourly earnings less than 40 cents |
| Linseed-oil manufacturing | June 1933 | 1,538 | 355 | 23.1 |
| Ice-cream cone | 1932 peak | 399 | 298 | 74.7 |
| Bottled soft drink | June 1933 | 450 | 264 | 58.8 |
| Glace fruit | Peak, 1932 | 1,271 | 1,120 | 88.1 |
| Preserve | ...do | 1,524 | 1,052 | 68.9 |
| Candy manufacturing: | ||||
| ...Male | June 1933 | 8,485 | 4,488 | 52.8 |
| ...Female | ...do | 16,373 | 15,842 | 96.7 |
| Yeast | ...Do | 1,566 | 69 | 4.5 |
| Cigarette factories | May 1934 | 2,022 | 1,989 | 98.4 |
| Cigarette manufacturing | June 1933 | 11,368 | 8,264 | 72.7 |
| Smoking-tobacco manufacture | ...do | 5,411 | 4,426 | 81.8 |
| Snuff | ...do | 1,063 | 411 | 38.7 |
| Chewing-tobacco manufacture | ...do | 5,024 | 3,522 | 70.1 |
| Vinegar | 1932 peak | 1,637 | 1,381 | 84.4 |
| Baking powder | June 1933 | 857 | 497 | 58.0 |
| Bisciut and cracker: | ||||
| .....North | ...do | 14,605 | 6,561 | 44.9 |
| .....South | ...do | 1,252 | 1,020 | 81.4 |
| Cane-sugar refining | ||||
| .....South | ...do | 3,075 | 2,774 | 90.2 |
| .....North | ...do | 9,445 | 2,370 | 25.1 |
| Cotton compress and warehouse, males: | ||||
| .....Port | 1932 peak | 3,856 | 3,374 | 87.5 |
| .....Interior | ...do | 10,634 | 10,570 | 99.4 |
| .....Warehouse | ...do | 1,339 | 1,283 | 95.8 |
| Edible gelatine | ...do | 782 | 157 | 20.1 |
Source: Division of Review, N. R. A. Report: Wages and Hours in American Industries, Work Material No. 9.
Representative Connery. In your mimeographed statement, Mr. Henderson, have you got what happened since the N. R. A. went out and down to what it is now? How wages went down and hours were lengthened?
Mr. Henderson. There are two excellent sources other than the Roberts committee report that are available; one by the American Federation of Labor, which I presume will be presented in digested form to this committee if the American Federation of Labor representatives appear. And the second is this Bowden study appearing in the January 1937 issue of the Monthly Labor Review, upon which I have drawn so liberally.
Representative Connery. Well, what I am interested in, Mr. Chairman, is what we could get into these hearings so that the Members of the Senate and the Members of the House when these bills come up, would have it there in front of them. That is why I asked you, Mr. Henderson, how big that volume is. Of course, we cannot get that in the hearings.
Mr. Henderson. I suggest again that you ask the Department of Labor representatives to give you a much more extensive account of the Bowden article, which is the best and most reliable statement of which I have knowledge.
The Chairman. I assume Mr. Lubin has those, does he not?
Mr. Henderson. Yes; they were made under his jurisdiction.
The Chairman. He will appear before the committee.
Representative Connery. In other words, the members do not have the time nor the opportunity to read any big volumes; but we do want them to have in these hearings a picture before them of
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what has happened before the N. R. A. went out and what has happened since. What labor has lost and what the country has lost in wages and hours since the N. R. A. went out of existence.
Mr. Henderson. I have in preparing my statement tried to make a natural division as between the regular reportings of the Department of Labor, and I have recaptured as much as possible of the conditions preceding N. R. A., which I feel can be avoided if this bill is effectively administered.
Senator La Follette. Mr. Chairman, may I ask Mr. Henderson a few questions?
The Chairman. Certainly.
Senator La Follette. Mr. Henderson, I understood you to say that if the proposed bill were passed, and limited weekly hours to 40, that it would affect over six million employees potentially in reduced hours or increased wages through time and overtime, and additional persons would obtain work, is that correct?
Mr. Henderson. That is correct.
Senator La Follette. What effect do you think a 40-hour week would have upon unemployment?
Mr. Henderson. Well, the 40-hour week, even within the constitutional limitations in which the Black-Connery bill can act, according to an estimate which I have privately prepared, would affect about six million people working overtime. If a rigid 40-hour week, a flat 40-hour week without permission of overtime were invoked, conservatively speaking, at least a million and a half people would go back to work on a 40-hour basis. What industry will do when confronted with a standard such as this will probably depend upon the availability of skilled labor. I assume that they would follow, as I indicated in my prepared statement, the automobile and the steel-industries example. They would reduce the hours of some that were overlong. They would use the key workers and the special skills, and pay time and a half, thereby adding substantially to purchasing power, and that for the other jobs there would be a substantial new employment,
I believe that the recent actions of the steel companies are likely to result in the reemployment of 30,000 to 35,000 new employees, even though the level of activity goes no higher.
Senator La Follette. Now, in speaking of industries large and small, how many do you classify as large and how many as small?
Mr. Henderson. I made a hasty table from the Statistical Abstract of 1936 when the previous witness was discussing that, and this shows that in the manufacturing establishments, there are about 40 percent by number which have one to five employees, but these 40 percent only take in about 2.6 percent of the wage earners employed in those industries. Between 6 and 20, there is another 28 percent by number of establishments, but only 7.4 percent of the wage earners, and if you make a departure of the 20 line, you would get 28 percent approximately of the establishments, but you would get 90 percent of the wage earners.
Senator La Follette. Now, we have heard some suggestions that the establishment of wage and hour differentials on a geographical or sectional basis or industrial basis might offer inducements to industry to migrate to sections where the differentials were more advantageous with regard to hours and wages. What was the experience under N. R. A. with regard to migration of industries to lower wage and hour differential territories?
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Mr. Henderson. There were a lot of threats but very few movings, to make it short. As a matter of fact, the N. R. A. standards halted the movement away from the higher wage and hour standard areas. It narrowed the differentials and made it less profitable and made it more of a risk for an individual plant to move. There were some that did move, but I liked Mr. Jackson’s testimony yesterday. I thought he covered it very, very well. In most cases this movement was going on before N. R. A., and the conditions which determined whether an industry should move or not were usually outside of the wage and hour standards of the N. R. A.
Senator La Follette. Then you think the same thing could be said in the exercise of discretion of the Labor Standards Board which they might indulge in under this bill?
Mr. Henderson. I do.
Senator La Follette. In your opinion and from your study of the bill, do you think it provides for a sufficient amount of data and reports to the Labor Standards Board so that they will have sufficient economic and statistical data upon which to base decisions?
Mr. Henderson. Well, that is a dangerous question to ask a person who would run a mile to see a new chart. I believe that the original basis providing for the collection of information by the Board for original determination is sufficient, but as to determining whether or not there has been compliance, I believe that there is a very serious lack. We had two or three occasions in the N. R. A. when we were right up against the gun as to what we would do in the way of compulsion, and we had the right to compel reporting from the establishments.
Now, I believe if the Department of Labor through its Bureau of Labor Statistics were required upon notice to the Board in the case of dispute, to obtain current reporting, that a great advantage would be served, and you would have a better chance of getting fair determinations in difficult situations.
Senator La Follette. In the light of your experience, will you study that subject and submit for the consideration of the committee suggestions along that line to strengthen that portion of the bill?
Mr. Henderson. Yes.
Senator La Follette. What is your opinion, Mr. Henderson, with regard to the question of whether or not this bill, if enacted into law, will be helpful in making adjustments that are necessary to take care of increasing technological efficiency?
Mr. Henderson. May I go into a little discussion on that, based on a lot of new material that is available that was never available to us in the N. R. A.? There are two outstanding studies, one by Dr. Frederick C. Mills, of the National Bureau of Economic Research, and the other by David Weintraub for the W. P. A. The Mills study showed roughly that in that dynamic period from 1899 to 1914 there was a tremendous increase in the man-hour productivity, but there was this moving balance I speak about, because the gains were fairly well distributed to consumers in the way of price and by increases in wages to the wage earners, as well as increased profits to the owners of the productive capacity.
But there was a different story after 1914, and in the main Mills points out that due to the increase in rigidities and in concentration of control, what some people would call the increase of monopoly, a greater part of the savings of technological efficiency was diverted to
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the producer group, and that prices did not go down and wages did not go up proportionately to take the goods off the market. That is shown very, very clearly in the period from 1922 to 1929.
After the country got down off of that high price plateau of the postwar period, we got down to an average of about 95 in the B. L. S. wholesale price index, and in 1929, the price level was just about the same, but there had been a 30 percent gain in man-hour productivity in that period, which might account for some of the source of the funds which were used in speculative markets and for the building of excess capacity.
Now, since 1929 there has been another increase of about 20 percent in man-hour productivity. "We are back to about 87 in the wholesale price index; in other words, we are only 8 points away from where we were in 1922, and you do not need to be an economist or study musty tomes to know that prices ought to be lower if technology has increased at that pace.
Now, getting price decreases is an extraordinarily difficult job. It means the attack on monopolies, it means the attack on the sources of those monopolies through patents and corporate forms, it means the attack on the concentration of ownership which is going on apace, and it means an attack on uneconomic tariffs; it means all sorts of things. But if in the meantime we do not also increase the wage earners’ income through some such devices as are contemplated in this act, in my opinion we will face another impasse in the form of a deficit in purchasing power.
So I would say, from rather an involved statement, that this bill does contribute toward the adjustments that are necessary by a rising technology.
Senator La Follette. Mr. Henderson, could you prepare for the committee, within a reasonable compass to be incorporated as a part of your statement, a summary of the Mills and the Weintraub reports or studies?
Mr. Hendehson. I would be very glad to.
Senator La Follette. I would like very much, if the committee is agreeable, to have that incorporated in the record, because I think it is very important in connection with the study of the whole subject matter of this bill.
Mr. Henderson. I see no other way from the standpoint of wages or purchasing power going to the masses, other than taking up some of that slack, and I might say also that I am not at all afraid of a 40-hour week, or even something less, if Congress should so decide, that it would lessen the capacity to consume and produce in this - country. There is no evidence that we had in the N. R. A. that we would enter an economy of scarcity if decent hour and wage standards are adopted in this country.
Senator La Follette. Did the N. R. A. at the outset set out to fight against hours above 40 per week?
Mr. Henderson. Yes. I think in the initial statements, the general aimed at 32, and the concept in the President’s Reemployment Agreement of 40 hours was that this would be just temporary, and then you could take up the question of reduction below 40 later. Thirdly, when the famous 10 and 10 was under consideration, the N. R. A. had come to a realization that you had to have a reduction in hours if you were going to get another impulse to employment. In the closing days of the N. R. A., you may recall, we were having
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extensive hearings on labor policy. We were looking toward all of the avenues by which reemployment seeped away through tolerances and exemptions. In the geographical differentials that existed there was a spread of about 6.8 cents as between the low and the high in the 298 codes that provided for geographical differentials, and the N. R. A., labor, consumers, and public representatives and employers alike knew that we had to move toward a further reduction in the going hours which would be worked in industry and trade.
I do not think that that has been emphasized, Senator, and I am glad you brought it up, because it is usually thought that the N. R. A. having made a 40-hour week in the Cotton Textile Code and others patterned on this, that the N. R. A. was content. There was never a time in my whole experience there that there were not actively under consideration proposals looking toward reemployment through the reduction of the overlong hours.
The Chairman. The President made a speech down in the Pan American Building, did he not, which was in line with N. R. A. policies, calling on industry to further reduce hours below those which had previously been fixed?
Mr. Henderson. That is right.
Senator La Follette. Have you any estimate of what percentage wages are of total production?
Mr. Henderson. Well, it runs something like this: In the first place, the total employees compensation, as I think I put in my report, now runs about 67 percent of national income. When you come to take the percentage of value which labor is, or wages is of the total value, I think it was around 38 percent in 1935, which is the latest year for which the Department of Commerce gives figures. There was a range there, and it ran up pretty high for some individual commodities. And it had run down pretty low, too. I was not here for the testimony this morning, but taking the value added by manufacture, which is another test, it is about one-sixth. It is roughly 16 percent of the value added by manufacture which goes to labor. That varies widely by industries. In the gold and silver refining industry, it will be down as low as 2 to 3 percent. In a railroad car-repair shop, it will run up in the fifties.
But to summarize: Wages represent about 38 percent of the total value of the manufactured products, and they represent about one- sixth or 16 percent of the value added by manufacture. And as another figure, the total wage and salary compensation is about 67 percent of the national income.
Representative Dunn. Mr. Henderson, I understood you to say that if we would take a 40-hour week, approximately one and a half million more people will be employed. Did I understand you to say that?
Mr. Henderson. If we adopted a rigid 40-hour week without allowing overtime.
Representative Dunn. About one and a half million. Did I understand you to say that?
Mr. Henderson. That is right.
Representative Dunn. About 2 years ago, when the Black-Connery 5-day, 30-hour week bill came before the Labor Committee of the House, Mr. Green appeared before the committee, and I was one of the members of the committee who asked him this question, that if
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we would be successful in enacting the bill into law, the 5-day, 30- hour week, about how many people would go back to work. He said approximately 6,000,000 people; in other words, if you adopt the 5-day, 30-hour week. Are you of the same opinion?
Mr. Henderson. Did he say for 40 hours or for 30?
Representative Dunn. The five-day six-hour.
Mr. Henderson. I have not made a calculation on the 30-hour week since I was in the N. R. A. I made one on the 40-hour within the last 2 or 3 months. Keep in mind that I said a 40-hour week applicable to the industries which I gage would come under the Black-Connery bill, and that only takes in by my own terms about 12,000,000 people. If you went to the service trades and things like that-----
The Chairman (interposing). The 30-hour bill did not. The 30- hour bill related to goods shipped in interstate commerce.
Mr. Henderson. The total amount if you could apply it to all non- agricultural employment right now on a 40-hour basis flat would be about 3½ million people. I would say on a rough calculation that Mr. Green was conservative. On present-day terms, it would be nearer 7½ to 8 million on a 30-hour week for industry and trade.
Representative Dunn. Thank you.
Senator Ellender. The questions that Mr. Dunn asked you cover a point that I wanted to ask you about. Now, this morning one of the witnesses said that he would exempt all industries employing eight people. That would be his limit. What would you say about that, Mr. Henderson? Would you fix it at eight or more, or what?
Mr. Henderson. I would like to go around Robin Hood’s barn a little bit on that, because my work is usually to supply the information as to how many establishments such exemptions would cover. I would say for administrative purposes I would make some exemption. As I have shown, you can cover 90 percent of the employees with 28 percent of the establishments. Where you put it, it would probably fall around five to eight, but there are some industries, such as silk, where the work being done at home is a serious competitor, and 1 would think that you needed to allow for that.
Now, as to that previous witness this afternoon talking about bringing everybody in because it gave equality before the law, suppose you fix it at eight and because of that exemption, this small business gets additional volume, there is a limit to where it can go and what added volume it can produce without taking on new employees, and once it goes by eight it would come automatically under the law; so I am not as scared about an exemption that is on this basis as others might be.
Senator Ellender. But what the witness had in mind this morning, I am sure, was separate and distinct businesses and not this piece work that I think you have in mind, carrying stuff home and doing it. What I have in mind are businesses that do but one thing and in which you would have, say, eight people employed, do you think that that limit of eight would be sufficient, or would you reduce it strictly or separate businesses, because I believe that is going to be one of the things that we will have to decide here in this bill.
Mr. Henderson. I would like to go through the various industries and see what the average size of the establishment is. The Department of Commerce has that information.
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Senator Ellender. Would you also find this out, that if you fix it at eight or five, or whatever figure you would determine, find out what percentage of employees would be affected?
Mr. Henderson. Yes.
Senator Ellender. That is all I want.
The Chairman. Are there any other questions? If not, the committee will recess until 10 o’clock in the morning.
(Whereupon, at 4:20 p. m., a recess was taken until Friday, June 4, 1937, at 10 a. m.)
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FAIR LABOR STANDARDS ACT OF 1937
FRIDAY, JUNE 4, 1937
United States Senate,
Joint Committee of the Senate Committee on
Education and Labor, and House Committee on Labor,
Washington, D. C.
The joint committee met, pursuant to taking of recess, at 10 a. m., in the caucus room, Senate Office Building, Senator Hugo L. Black presiding.
Present: Senators Hugo L. Black (chairman), Royal S. Copeland, David I. Walsh, Rush D. Holt, Claude Pepper, Allen J. Ellender, Josh Lee, Robert M. La Follette, Jr., and James J. Davis.
Representatives William P. Connery (chairman), Matthew A. Dunn, Reuben T. Wood, Edward W. Curley, George J. Schneider, Richard J. Welch, Arthur B. Jenks, Clyde H. Smith, Albert Thomas, Joseph A. Dixon, and Santiago Iglesias.
The Chairman. The committee will come to order. Miss Perkins.
STATEMENT OF HON. FRANCES PERKINS, SECRETARY OF LABOR
The Chairman. Miss Perkins, we have requested you to come up to discuss the Senate 2475 and the corresponding House bill. I presume it is not necessary to go through all the preliminaries. I will just ask you to make any statement that you desire to make.
Secretary Perkins. Thank you, Senator. I am very glad indeed to have the opportunity to testify before you. This bill is peculiarly a measure which is to be considered as a stabilizer of employment, of income, of the market for goods, of production and production planning and marketing, a reward for efficiency. It is also a stabilizer of price, preventing the undue and disturbing fluctuations of price which so frequently lead to such downward markets as we have experienced. This bill, or the measures that are proposed by it, should modify the upward movement in which we are now engaged, by stabilizing it rather than letting it turn into a sudden boom, for which we are unprepared. It will also have the effect of stopping such downward spirals as we have recently seen in the business, industrial, and labor life of our community. That is, it will limit economic fluctuations both ways, thus providing security to industry, to investors, to labor, and to the great consumer public. Therefore I think this is a modem, effective, and democratic method of approaching the problem which many other nations have faced before. It certainly deals with one of the most pressing problems which are before this country today.
There are few modem industrial societies which have not attempted to buttress the attempt which industry itself has made in recent years
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to solve the problems of low wages, long hours, and low living standards, which mean a low purchasing market for the product of manufactured goods. Many industries have attempted, with some success, to solve a number of those problems, and for that we are grateful, because we have had the demonstration of what can be obtained by industry on the basis of short hours and good wages. Nearly ail industrial nations have attempted to assist their industrial and labor effort by some system of maximum hours and minimum wages established by national statute. One of the most successful of these statutes has been the British Trade Boards Act. This has been in effect for almost 20 years and has appreciably helped that country to weather two severe depressions, acting as a stabilizer point for industry, labor, and investors in the underlying industries of the country.
The need of such legislation for the United States was recognized by Congress in 1933 and resulted in the passage of the National Industrial Recovery Act, under which codes containing Wage, hours, and child-labor provisions were adopted for nearly every industry. Administrative difficulties in handling the codes and constitutional objections incident thereto resulted in little effort being made for new legislation immediately following adverse decisions of the Supreme Court.
The failure to propose a substitute for the Recovery Act was not due to lack of interest but rather to the language of the Supreme Court in holding the codes unconstitutional, and it was presumed at that time that the way of handling this matter by national legislation had been blocked. However, recently a way has been opened by a broader and perhaps more complete statement of the principles oi the Constitution by the Supreme Court and we now have the method for accomplishing certain basic objectives, since the Court has indicated in recent decisions that the Congress has power to legislate within this field. With this scene cleared of constitutional obstacles the view, however, is still marred by the need for the complete elimination of child labor, for the elimination of sweatshops, and the establishment of fair wages and a reasonable workweek.
Those of us who know the industrial life of this country know the evils of child labor, sweatshops, and low wages. I found, only in the last 2 weeks, in a city close to New York City, in the heart of what is supposed to be a progressive industrial area, girls receiving a wage so low as $9 a week for a full week’s work. These things still exist and still can be practiced. There are still unreasonable workweeks in many communities and in many industries. By “unreasonable” I mean hours beyond the limit of human health and beyond those which are needed to produce the goods which the community must have in order to maintain its standard of living.
The charge frequently has been made that the benefits to labor which attended the N. R. A., and there were very many of those, were soon lost by the reinstitution by certain industrialists of unfair labor practices shortly after the Schechter decision. In the main, this contention is well founded, although many industries attempted to maintain and have maintained a standard of hours and wages which is in general conformity with the principles of the codes which they had formerly adhered to. Since other witnesses will present to this committee at a later date detailed reports on the labor conditions existing throughout the country today as regards hours and wages after the Schechter decision, I shall only briefly dwell upon this point.
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Taking the cotton-garment industry, for instance, as an example, 177 establishments reported to the Bureau of Labor Statistics of the Department of Labor in May 1935 and again in May 1936 on hours and wages. While the number of man-hours worked increased from 938,020 in 1935 to 1,068,349 in May 1936, a gain of 13.9 percent, the number of persons employed increased only 2.6 percent. In other words, although there had been an increase in the total amount of labor performed, and in production, the number of new persons taken on was only 2.6 percent. By lengthening hours, hourly earnings were reduced, and during that period the aggregate pay roll of all employees in these plants declined 1.2 percent, or about $5,000 per week. That is, in these 177 establishments which we examined, the weekly pay roll declined $5,000 a week. Responsibility for this situation lay with a small number of the 177 establishments, not with all of them, for 11 of these establishments cut the hourly earnings by more than 37.5 percent, primarily by increasing the workweek and not increasing the wages correspondingly, lengthening the hours of work per week, and making no change in the weekly earnings.
A chart which is entitled, “Business Goes to the Wage Cutter”, a copy of which I have here, I should like to introduce in the record as an exhibit. That tells the story for this particular industry, the cotton-textile industry.
(The chart referred to is on following page.)
Furthermore, in the cotton-textile industry, studies covering 448 mills for April 1935 and April 1936, that is the same records taken in the same mills in the same month in 2 succeeding years, show a similar condition. In almost half of these mills little change occurred in the hourly earnings, and in 71 establishments wages were increased by more than 2.5 percent, showing that there had been an effort in some of them to keep the earnings up, and even to increase the wages. But 168 of these 448 firms decreased wages to such an extent that the total average hourly earnings for all of these 448 mills fell from 38 cents to 36.8 cents, or 2.2 percent in the course of a year.
Thus it is seen that a minority may demoralize the labor conditions of an entire industry. Such a situation can be remedied only by the adoption of fair labor standards, the enforcement of which will curtail the parasitical practices of this relatively small group.
The N. R. A. demonstration indicated the value of these principles and of its primary aims, which were the elimination of child labor, the elimination of sweatshops, the establishment of fair wages and a reasonable workweek. These are ideals which are profoundly worth striving for, and I think that we should do everything possible to accomplish them as a permanent part of the structure of our country.
I know that the committee is also sympathetic to these objectives and so I shall address myself to the principal questions which are now before you, namely, whether the best device for achieving these ends is embodied in this bill that is before you for consideration. In view of the statement of the Assistant Attorney General made before the committee a few days ago on the constitutionality and legal aspects of this bill, I shall limit my remarks to the administrative rather than the legal features involved. Permit me to say, however, that even if I were qualified as an expert in the law, which, as you know, I am not, I do not know that I can add anything to the scholarly testimony of Mr. Jackson on the constitutional problems with which this proposed legislation is confronted.
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<p>MAN-HOURS WORKED IN MAY 1936 AS A PERCENTAGE OF MAY 1935</p>
<p>COTTON GARMENT INDUSTRY</p>
<img src="P176.jpg" alt="Page 176" height="500" width="500"></img>
<p>BUSINESS GOES TO THE WAGE CUTTER</p>
<p>U.S. Bureau of Labor Statistics</p>
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The present draft of the fair labor standards bill has three main objectives. First, to exclude from the channels of commerce goods produced by industries employing child labor and engaging in other oppressive labor practices. Second, to establish basic nonoppressive wage and hour standards and to apply them as rapidly as possible to industries of an interstate character; and, third, to create a board to fix fair minimum wages and a reasonable workweek for industries where the bargaining power of workers has not been sufficiently great to achieve fair working conditions and collective agreements.
In other words, this does provide a gradual rather than a sudden method of accomplishing the total result in every industry, and for that reason it is admirably adapted to the present situation in which we find ourselves in the American economic cycle.
The bill contains provisions for imposing penalties upon violators of the labor standards and authorizes the Board to invoke the equity jurisdiction of the Federal courts to enforce its orders. It contains well-defined guides for the determination of the fair labor standard orders. It gives the Board latitude, in establishing differentials either by geographic or other bases, and gives them some latitude in establishing exemptions and tolerances in situations which will arise in the practice of the Board in specific instances. It gives to the Board power to deal with those in a way that is desirable and yet within the pattern laid down by Congress as being the general purpose and plan of such legislation.
I trust that the committee, in its consideration of the bill, will not be deterred by the objection raised in some quarters that a bill which contains merely labor provisions is one-sided. In my opinion, one of the lessons which our N. R. A. experience has taught us is that it is not necessary for legislation of this character to bestow upon private industry the right to fix prices, limit production, and to formulate codes of fair trade practices. It is a mistake to think of the minimum wages and maximum-hours provisions as exclusively labor measures, necessitating the grant of some corresponding privileges to industry. The whole experience under the N. R. A., and of those industries who have attempted to maintain those standards since the Schechter decision, is to the effect that the labor provisions themselves are general economic measures, and that they do, by furnishing a certain delimitation of competition in the field of labor standards, stabilize competition and make for fair practices and fair working conditions. Many employers have said to me in the course of the last few years that they learned the value of the establishment of labor standards and of labor costs on a basis which would be the same for all industry. By removing labor costs from the field of competition it would be sufficient, in their opinion, to compensate for what it costs in actual individual pay rolls. And, if this one item would be removed from competition, the rewards of efficiency, planning, method, distribution, and salesmanship, would flow certainly without this complicated effect of constantly changing and varying the unpredictable labor standards entering into the competitive field, and therefore control all of the figuring which any individual manufacturer could do when he started out upon his manufacturing program. So, these labor practices provisions should be considered as a part of a general economic experience. Moreover, various trade practice acts like the Robinson-Patman Act, the pure food and drug laws, and others,
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each deal with the particular problem and did not have to be supplemented with unrelated provisions. I do not think the two things need to go together in order to accomplish the thing which is most necessary, the removing of labor costs from the basis of competition.
One of the objects of such a bill as this is to make certain that competition will work in favor of efficient management and high standards of productive quality. The overwhelming majority of American businessmen will gain a new sense of security if the law provides that basic labor standards be stabilized and hence removed from the arena of unfair competition. Only where there is some definite guaranty of uniformity of labor standards can management be assured that efficiency will be rewarded.
Another element of security is the influence which the establishment of fair labor conditions will have in avoiding unnecessary, and unnecessarily bitter, labor disputes. With the removal of oppressive wages and long hours of employment the likelihood of strikes which are long continued should diminish. I want to point out, too, that those strikes which we have seen in our country, which result from a long period during which wages have been too low to buy for the family a decent American standard of living, have invariably been accompanied by such bitterness because they were last resort movements. Such bitterness existed that the breach was a long time in being healed, and it became very difficult for the ordinary, sensible, practical method of collective bargaining to operate, because any time the strike occurred so much bitterness had been engendered that one could not think clearly on that subject. This would remove that area of bitterness from the differences of opinion between employees and employers as to what was the fair division of the money product of a particular industry.
With the removal of these oppressive wages and the diminishment of strikes the free flow of commerce will not be interrupted, even though there is a new negotiation for a new wage scale in process. If that is going on without bitterness production can go on, even when there is a long-drawn-out negotiation.
The free flow of commerce will not be interrupted, and the interests of management, labor, and the public will thus be benefited very considerably. I say, therefore, in all confidence that provisions for reasonably fair minimum labor standards are not to be regarded as merely a welfare measure undertaken for humanitarian reasons for labor. Such provisions work to the advantage of the majority of employers quite as much as to the advantage of the workers.
There has been considerable controversy over the wage provisions of this bill. Subsection 2 (10) as it is written today imposes upon your committees the difficult task of fixing the basic standard, the payment of any sum below which is to be regarded as an oppressive wage, unless such figure is varied upward or downward by regulation of the Board under section 4 (c). Conditions in different industries vary so much that I am not at all convinced myself of the wisdom of inserting any specific figure in this bill at this time. I should prefer that even the determination of the basic wage be left to the Board, to be set industry by industry pursuant to the same machinery established for the determination of reasonably fair wages, and after notice and hearing, as is established in a later section of the bill. Now upon this, of course, there is a very real difference of opinion, both as to the
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purpose of Congress and as to the legal aspects. I am speaking very largely of the administrative ease and the approximation to what would be practical justice which can be brought about in this particular way, and I shall hope very much that there will be a consideration of it. Of course, no such delegation of power to fix the basic wage should be given to a Board except by Congress, defining the purposes and the general objectives of the fixing of such a basic minimum wage, if it delegates that power to a Board rather than fixes the basic wage itself for all industries.
In this connection I feel that we might draw upon the experience of the States of the United States and of other countries. The war created an unemployment situation in Great Britain in many respects analogous to that produced by the depression in the United States. In line with the trend of the times the British Government, as we have done under the National Labor Relations Act, encouraged voluntary collective bargaining in well-organized industries, but it also went one step further for industries inadequately organized for effective collective bargaining. Trade boards were set up under the new Trade Boards Act of 1918 composed of an equal number of persons representing workers and employers, plus three independent persons appointed by the Minister of Labor. If the labor and employer members could agree on fair minimum rates, the three impartial members did little but preside over the meeting. In case of disagreement they acted in the capacity of conciliators, attempting eventually to bring the two sides together to bring about a solution of the differences of opinion. The operations and decisions of the- different trade boards were coordinated by a central division in the Ministry of Labor. Wage commissions in the various States have operated under similar plans, have pursued similar policies, and they have been very successful. As you know there are 16 States which have minimum wage laws applicable only to the women because of the fact that women generally in those States represented the lowest paid group of workers working in the lowest paid industries.
I do not mean to advocate that we should return to a code authority method of making these decisions, or of carrying them out, for 1 want to say now that I am strongly of the opinion, and always have been, that the formulation, the adoption, and the enforcement of any Federal law, or set of Federal rules or Government rules of any kind, should be confided solely to sworn officers of the Government who are responsible to the public and can be impeached for any failure in the performance of their duty. I do not think there should be delegated to advisory boards made up of nonsworn officers of the Government any authority to make a final determination, or to enforce any code or any rule which may be adopted pursuant to this act.
I do feel, however, that the rudimentary standards as to minimum wages might well be established with the assistance of advisory committees of representative employees and employers and of disinterested persons as is contemplated in section 14 with respect to the fair labor standard orders. The action is taken by the Board which is constituted of Government officers, and they may have access to the advice of persons experienced in the industry. But it is to be regarded only as advice and not as final authoritative action. I think that in establishing the basic minimum wage we might well use the same technique.
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I feel also that this section should make it clear that whenever the Board is about to consider a minimum fair wage order, that committees of this character be utilized. In this bill I think it is said that it may utilize them. From a practical administrative standpoint the use of such bodies for recommending minimum wages has proved distinctly advantageous. When minimum wages are agreed upon by employers and workers engaged in the industry and cognizant of the situation, the chances of arriving at a realistic and suitable wage are greater even than when set by experts outside the industry, no matter how well informed those experts may be. This procedure tends to prevent standards being imposed which are too sudden for the industry to adjust its practices to. It tends to reflect the sense of justice which the workmen have in the industry with regard to the habitual and traditional practices in the industry. Moreover, when wages are agreed upon in this way greater elasticity is given to the wage structure when variations are required in tunes of rising or falling prices.
It is also important that provisions be made for participation by both employers and employees in the proceedings before a wage board, since it makes the task of enforcement much easier. Both sides have participated in building up the standard and there is a general disposition on both sides to accept the standard, because all of the reasons entering into it have been made clear. The employer stands to gain by the establishment of fair wages which will eliminate the competitive element of undercutting rates, and a participation in wage procedure stimulates the interest of the labor unions and trade associations in making complaint of violations, thus reducing the temptation to disregard the law.
Another important aspect of this representative character of the advisory boards, is the educative experience to both labor and employers in the economic state of the industry and in the problems of the industry. To a very large extent the workers in a given industry are never made familiar with the problems of that industry except when they come into some such conference as this, and that educative experience is extremely important to them.
It is also true that many employers are not aware of the deeper underlying economic problems of their industry and therefore are not in a position to be stimulated to solve this problem. So there is the matter of educative experience which is of extreme importance. This is true particularly in the relatively unorganized trades and industries. It gives both to employers and workers some experience and some realistic education in the technique of collective bargaining. They are not actually engaged in a collective bargaining for company so and so and trade-union so and so, but they are engaged in discussing from two opposite points of view, with Government assistance, the very items they are discussing in collective agreements, namely, wages, hours, and general working conditions. So it gives to both sides, where they have had no previous experience, a very valuable experience in an orderly, scientific, svstematic canvass of the problems upon which they must be mutually agreed in the long run.
Great care should be exerted in framing this legislation to make certain that the objections of labor unions to the Federal Government taking over their functions and establishing minimum wages which have a tendency to bring down higher wages established by collective
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agreement would be avoided. For this reason I am thoroughly in sympathy with the statement of policy which is contained in section 5 of your bill, which makes it incumbent upon the Board to fix fair labor standards with respect to wages and hours as distinguished from nonoppressive standards only in those industries where, through lack of worker organizations, their bargaining power has been insufficient to secure reasonable standards. By insuring fair standards in these industries and by protecting the lowest paid group of workers in other industries from exploitation through the setting of the rudimentary standards, the objectives of minimum-wage legislation will be achieved without encroaching in any degree upon the usual function of organized activity. For this reason I suggest that the bill make it clear that the Board is not to involve itself in delicate questions of classification which are better left to collective agreement, and it therefore should not be empowered to fix any graduated scales by occupations.
One of the greatest difficulties to be overcome, if legislation of this character is to be successful is that of enforcement. The experience of the compliance division of the N. R. A. indicated that small as well as large employers were tempted to disregard the code standards, and for this reason I have grave doubt of the wisdom of including so broad an exemption in the act as that contemplated by section 6 (a) which empowers the Board to grant a blanket exemption to persons employing less than a certain number of employees.
Senator Walsh. Madam Secretary, I was not here when you began. Do you prefer to have questions withheld until after you finish?
Secretary Perkins. I shall be very glad to answer any questions, now,
Senator. Senator Walsh. I call your attention to section 5. The power delegated there is exceedingly sweeping. As I understand it, the Board can fix all wages, not only minimum wages but all wages on what may be a fair basis in any industry where there is no organization of workers.
Secretary Perkins. I do not so read it, sir. I think it is susceptible to that interpretation, but I do not think that the Board would so interpret it, and perhaps that might well be corrected.
Senator Walsh. My purpose was not to criticize that but to point it out, to see if you are in accord with me, that the net result would be uniformity in all industries, to bring about collective bargaining. In other words, that section would tend to promote and encourage and actually lead to collective bargaining insofar as wages were concerned in practically all lines of business, which I think is desirable.
Secretary Perkins. I think that is true, but I do not think any law can bring that about.
Senator Walsh. Don’t you think that an employer, rather than have the question of wages of his employees submitted to a Federal board, would encourage his workers to get together with him on a collective bargaining basis? That seems to me to be the merit of that section, rather than the operation.
Secretary Perkins. The Board is expressly prohibited from fixing wages in excess of $1,200 a year, which does not represent the high wage occupations at all. I personally feel that this is rather awkward. What I understand by this is that this power of the Board to regulate should not apply to persons receiving more than $1,200 a year.
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Representative Connery. If the Senator will yield to me-----
Senator Walsh (interposing). Yes.
Representative Connery. Madam Secretary, yesterday this came up: Taking a situation where we have collective bargaining, suppose we set 40 cents an hour as a limit and those men will get together on collective bargaining and say 30 cents is a fair minimum, their union bargains collectively and established 30 cents an hour, then this provision, section 5, allows the Board to go in and set a minimum wage up to that 40 cents an hour.
Secretary Perkins. Yes, that is true.
Senator Walsh. Section 5 (b) fixes the rate.
Representative Connery. The minimum.
Senator Walsh. Where there is no collective bargaining, where there is no organization of workers.
Representative Connery. Up to the minimum.
Senator Walsh. Up to $1,200. You and I, and Representative Connery know that there are very many industries where the wages are much below $1,200.
Secretary Perkins. It can fix the minimum but not the maximum, I should think.
Senator Walsh. What I wanted to point out was the net result of encouraging collective bargaining, of having the employers and employees, rather than submitting their problems to the Federal Board, to bring about that result.
Secretary Perkins. That might be the result. I have not thought of it in that connection.
Senator La Follette. Miss Perkins, before you leave that, is not section 5 directed more to situations of alleged collective-bargaining agreements which would not be genuine in character? It seems to me that if collective bargaining does not result in wages which equal the minimum that on the face of it the collective bargaining has not been effective, and in many instances might be considered to be a spurious form of collective bargaining, where you might have collusion between the employer and alleged collective bargaining agency, and that section 5 permits the Board to pass judgment on whether or not the collective bargaining has been genuine in character.
Secretary Perkins. Well, I presume, sir, that any effective collective bargaining would certainly fix a wage, at least a minimum wage that would be as high as the one that could be fixed by this Board, under the limitations which it has to take into consideration, that is the cost of living, fair value of services, and so forth. I presume you are quite right. It may have the effect of encouraging effective collective bargaining.
Representative Connery. Madam Secretary they take what they can get in collective bargaining. They may not be able to get even our minimum in certain sections, as, for instance, up in Maine now, with that trouble up there, they might not get anywhere near the minimum wage, and you empower the Board to bring them up to the minimum even if they would bargain collectively and make it less than the minimum.
Secretary Perkins. It would allow the Board to take into consideration other factors than those which were taken into consideration in reaching the collective bargaining agreement, but I presume the Board would always honor and take into consideration a collective
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agreement once it has been arrived at, if it had been arrived at fairly.
Representative Wood. There are collective bargaining contracts now between employers and employees of long standing for the less skilled trades that are far below 40 cents an hour, for instance, for the section men on the railroad.
Secretary Perkins. Yes.
Representative Wood. They bargained for 28 cents an hour, and 25 cents an hour. They formerly worked for 15 cents an hour and 10 cents an hour. Do you think that would have the effect of bringing those wages up to the minimum of 40 cents, irrespective of the collective bargaining agreement?
Secretary Perkins. It depends upon what is taken as the basic minimum. I think it will have a tendency, of course, to do that.
Representative Wood. You think it would?
Secretary Perkins. I did want to point out, though, what I thought was the unwisdom of making these exemptions.
The Chairman. May I make this suggestion: Mr. Connery and I discussed this morning the question of the best way to proceed in connection with the hearing, because we have quite a number here, and we reached the conclusion, if it is satisfactory to the committee, that the proper thing to do, when we have a prepared statement, would be to wait until the statement is finished and then we would simply start down at the end of this table at one time and at the end of that table the next time, so that all could have an opportunity to ask questions. It has been a little difficult, when each one tries to get recognition, to ask the question. I wondered if there would be any objection to that procedure on the part of the committee. That would put Mr. Connery next to the last and it would put me the last.
Representative Wood. That is fine.
The Chairman. If that is satisfactory to the committee, then I think we will proceed in that way, and I believe it will work out more expeditiously and more satisfactorily.
Senator Holt. Mr. Chairman, after a question has been asked by the individual, would it be satisfactory to go back and ask a further question?
The Chairman. Yes,- I have no objection to then going back and going over it all again, after they have all asked the questions. Any way to get it so we can proceed as expeditiously as all of us want it to be, so that all would have a chance to ask questions.
Representative Connery. Besides, Mr. Chairman, it gives you and me the opportunity to get the benefit of the brains of the two committees.
The Chairman. And by that time probably there will not be anything to ask.
Secretary Perkins. There is one thing that I wanted to point out. I know it is small, but it is very important. There is an exemption provided in this bill for employers employing less then a specific number of persons, the definite number to be inserted in the text. I think that is not a good idea. These small employers, while frequently very fine men often bring about restricted and inequitable price competition. If they are permitted to cut wages and work hours beyond that of the general producer, they become at once the price competitors of everybody else and tend to work a great hardship upon
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some larger establishment which must maintain the price and wage level. Moreover, it appears to me that it would encourage the formation of small units of persons employing less than 20 or less than 15 persons, which, in some industries, are perfectly suitable but in many industries are not the most efficient use of the capital investment.
I think it would be unwise to exempt on the ground of a small number of employees. It places at a great disadvantage those workers who are so unfortunate as to find their only livelihood in working for one of these small employers. It tends to make for dissatisfaction; it tends to encourage wandering off to the big city to get a job that is paying the better wage and has better working hours, and thus disrupts the orderly process of industry in that it creates a less favored group of those who have to work for small employers. I hope this provision will be taken out. It is really as much trouble to enforce it excluding the small employers as it is to cover all the employers, because once you have compliance machinery in operation it is necessary to know every firm operating in this industry.
Another method of evading the provisions of wage and hour legislation is by the use of industrial homework. I, therefore, think we should have an amendment here which should give the Board, upon an appropriate finding of fact, the power to prohibit entirely the use of industrial homework, which means putting out all or part of the operation to be taken by the workers to their own homes and done at home and not in a factory, The Board ought to be given the opportunity to prohibit that entirely.
Among the most important features of this bill are those relating to investigation and reporting, and most of these are contained, as you know, in sections 16, 17, and 18. I believe section 18 could be improved by empowering the Federal agencies to avail themselves of the services of State and local departments of labor for the purpose of enforcement and also empowering them to reimburse the State agencies for such service when it is undertaken solely for the purpose of the Federal Government. It is quite possible for the State departments of labor to be built up and improved. They reflect the local understanding of the situation. They can be made stronger and more effective than they are now, and if they are asked to do this important piece of work for the Federal Government they should certainly be allowed to be reimbursed for their expenses in carrying that out. Participation by the States is particularly advantageous in such administrative duties as the issuance of certificates, learners, apprentices, and handicapped workers and other exempt classes which must be dealt with on an individual basis. It is highly desirable, therefore, to be able to bring in these State labor departments for that kind of work.
Attention should be given to the inclusion of provisions which would harmonize all the authorities and duties vested in the Board by this act with those performed by other Federal agencies operating regulatory labor statutes. For this reason I deem it desirable to include some provision which would make the Labor Relations Board the fact-finding body on questions concerning the oppressive labor practices, namely, the employment of labor spies and the use of strikebreakers. They are so closely akin to the unfair labor practices proscribed by the National Labor Relations Act that the vesting of these duties in the Labor Relations Board would tend to prevent duplication of effort and potential conflicts of policy.
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The bill also overlaps to some extent the administrative functions performed with respect to Government contracts under the Walsh- Healey Act. This act has been in effect for almost a year and has played a part in bringing about reemployment through its provisions for a 40-hour week and other standards by firms having contracts with the Government. This measure was enacted after the invalidation of the codes, as it was considered at that time that it provided the only safe constitutional avenue of approach to preservation of wage and hour standards by the Federal Government. It applies to persons contracting with the Government, regardless of the effect of the activities of the contractor in interstate commerce. A case in point would be certain distributive concerns engaged in intrastate business. Since it therefore covers employees outside the ambit of the fair labor standards bill, I believe it should be continued in full force and effect, subject to the qualification that its labor standards should be integrated with the child-labor standards and the fair labor standards orders which this bill contemplates, for it does not seem desirable to have two sets of standards for the same industry. That is, if a firm meets the standards established by the fair labor practice bill that you have before you, it should then be regarded as eligible to contract with the Government.
This suggestion finds support in the history of the N. R. A. when the President, for similar reasons, issued an executive order requiring that no contract be awarded to a bidder unless he could furnish a certificate showing that he was complying with the code of fair competition appropriate to his industry.
Section 17 (b) relating to the keeping of records and the posting of labor standard orders might well be strengthened by the inclusion of a provision regarding the posting of a schedule of hours for particular employees. There is no other way of enforcing a labor law with regard to hours than by the posting of schedules of hours for each employee and providing that the presence of an employee on the premises at other than his posted hours is prima facie evidence of a violation of the act. All of the States which have effective labor laws with regard to limiting hours have such provisions, and it is the only provision which has ever made it possible to enforce the hours of labor in those States that have the 48-hour week. The posting of the names and schedule of hours, for instance, that certain employees work from 7 to 10 or they work from 8 to 12 or from 1 to 5, or something of that sort would be desirable, and if they are there after or before the posted hour, or at any other hour than the posted hour, that is prima facie evidence of violation. Without such a rule, you cannot get evidence effectively because it requires the testimony of individuals who are sometimes too much alarmed to testify, or sometimes too confused themselves really to testify effectively and truthfully as to the hours which they have worked in a particular week.
There is another proposal regarding a matter of administration which I should like to leave with your committees and that relates to the child-labor sections of the bill The child-labor standards fixed in this bill—a minimum age of 16 years with exclusion of those under the age of 18 from occupations declared to be particularly hazardous to the employment of children or detrimental to their health or well-being—are highly commendable and so universally accepted by all right-thinking people as to be outside the realm of controversy.
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The adoption of these provisions, however, will not per se, solve the child-labor problem. Child labor should be eliminated from all industrial and commercial employment, whether interstate or intrastate in character. Therefore, the effort to secure the ratification of the child-labor amendment by the favorable action of eight additional States should proceed with vigor, whatever action the Congress may take with reference to the proposals we now have before us.
In child-labor legislation, as in other forms of labor laws, the object is prevention, not prosecution. The administration should be so devised as to work in collaboration with the administration of State child-labor and compulsory educational laws which are designed to keep children in school until such time as they can find employment under conditions which are not prejudicial to their health, safety, and well-being. Fortunately, we had, 20 years ago, practical demonstrations of the effectiveness of this kind of administration in the first Federal child-labor law, where the Children’s Bureau in the Department of Labor administered it and had the full cooperation of the Federal and State agencies in this field.
It seems to me that we might profit by this experience at this time. I think it is wise, therefore, to differentiate the duties of administrative enforcement of the child-labor sections from the administration of the wage-and-hour sections, and I hope very much that some definite rule may be written in for the participation of States with the Federal Government in enforcing and supplementing this legislation.
In conclusion, may I turn to the problem of wage differentials. This is one of the most difficult questions demanding consideration by the Congress in the enactment of legislation of this character. On the one hand, it is necessary to avoid the establishment of such rigid standards that the industrial possibilities of certain undeveloped areas will be permanently frustrated, and yet at the same time it is necessary to avoid any mandatory differentials which would impose a hardship upon the industrial population of our great cities by encouraging industries to migrate to low-wage areas. This has one of the most disturbing effects on American economic life and one which we should find a way of checking. It is very important that no differential be set which would give a competitive advantage to industries in one section of the country selling into the same market as industries with high labor standards. That is, the market should be the determining factor, it seems to me, rather than the actual geographical location of the industry. We do not want employees competing with each other on the basis of high or low labor standards. The delicate task of preserving the proper economic balance between town and country should be also performed administratively.
It is true that the cost of living is somewhat lower ordinarily in rural areas than in urban areas, but there are certain difficulties with regard to forcing industries into rural areas, differences between the town and the country as well as between different geographical areas, that I think ought to be referred to this Board, with some guides by the Congress to maintain proper economic balances between all areas, both economic and geographical, and with due regard to the welfare of the industries and welfare of the individuals who work in those industries.
It is not for the interests of the people of the United States to have people in one area thinking of themselves as having some disadvantage in getting high wages for themselves and looking perhaps
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enviously at people who live in another area who get better wages. So I want very much to urge that in framing the power of the Board to provide these differentials that great care be taken by this committee to study those phrases which put limits upon the Board’s right to make geographical and other variations and exemptions.
I have a number of special amendments which are minor and have to do largely with administrative matters, which, if you so desire, I should like to have the Solicitor’s office in my department take up with you at your convenience. They refer to details and changes in words based upon the administrative experience which we have had in the Department of Labor, and which the States, in administering similar laws, have had. It is quite important that we should have the administrative provisions of this bill in as good condition as possible.
The Chairman. We should be very glad to have it.
Secretary Perkins. Thank you.
The Chairman. Before we proceed, Mr. William Green is here and is going to testify.
Senator La Follette, I believe you are first.
Senator La Follette. Miss Perkins, have you given any consideration to suggestions that have been made concerning the necessity for incorporating in the bill some provision which would require the fixing of a minimum on the basis of occupation rather than on the basis of sex?
Secretary Perkins. Yes. It is implied in the bill, is it not?
Senator La Follette. I do not believe the bill provides for it specifically.
Secretary Perkins. No, but I assume that these minima should be fixed on the basis of work done and not on the basis of sex. I assumed that it was anticipated that the minimum wage would be for all who worked in the lower classifications.
Senator La Follette. I heard a suggestion that there being no specific provision in the act that the Board might be subjected to a good deal of pressure to fix different minima.
Secretary Perkins. You mean to fix different minima for women and men doing the same work?
Senator La Follette. Yes.
Secretary Perkins. Well, I had not anticipated that any such procedure could be contemplated under this bill, but if that question has been raised, I should be very glad to say that I do not think there should be any difference. I mean the minimum wage should be fixed for the occupation and not according to the age or sex of the employee.
Senator La Follette. For the occupation?
Secretary Perkins. Yes. I had anticipated, however, that by the very wording of this bill that was taken care of. If it is not, I should be in favor of it.
Senator La Follette. That is all the questions I have.
The Chairman. Senator Lee?
Senator Lee. As I understood your testimony, Miss Perkins, you would shift the field of competition from the labor market to the commodity market. Instead of having employers competing in cheap labor and long hours this bill would increase the consumption of goods by increasing the consuming power and shift the competitive field to the sale of the commodity.
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Secretary Perkins. I think it would seem to shift the field also to that thing that we technically call “efficiency.” That is, there are a great many improvements in ways of manufacturing, improvement in quality and improvement in durability of goods which enter into the competition very properly, because the public gets the advantage of all those savings and all those variations in quality.
Senator Lee. How many do you estimate will be put to work under this bill, additionally?
Secretary Perkins. Well, sir, there are at present no hours fixed. The committee has not indicated what they think ought to be the basic working hours, nor has the Board, which is not now in existence, made any variations above or below that standard for particular industries, so that we have no basis to figure on.
Senator Lee. You do feel, though, that there is a possibility of it increasing employment considerably?
Secretary Perkins. I think there is no question of it. It does it, too, by stabilizing employment. Since the number of hours are known in a particular industry, and if you can gage the market on the basis of the consumption the year before, or the 10-year period before, and knowing the hours, you can then make a plan for the rather permanent and regular employment of a larger number of people.
Senator Lee. Assuming that it would increase employment by shortening hours, do you, from experience, believe that the workers would be interested in buying homes and spending this extra time producing fruits and vegetables on small tracts and thereby increasing their security?
Secretary Perkins. Well, I do not know about that, but I do know that in the industries where, in the course of my observation in the last 20 years, there has been a movement from a 10-hour day to a 9-hour day to an 8-hour day, that around those industries and in those communities where there has been that shortening of time voluntarily, sometimes under the State laws, you have seen much better living conditions for workers, better looking houses, better cared for, and as you say, a plot of ground which is every American’s pleasure, and adds to his sense of security.
Senator Lee. There has been no undesirable use of this spare time on the part of the labor that you have found, has there?
Secretary Perkins. Well, in my professional lifetime I have seen the hours changed from a habitual 10 hours a day to a habitual 8 hours a day, and it would seem to me that the activities which have been undertaken by working people with that 2 hours of extra time have been worth while, so far as the well-being of the community is concerned. There has been greater participation in civic affairs by workers, greater attendance by these workers at various types of educational activities, lectures, museums, art galleries, music, because there was time and less fatigue. There has also been a great growth in recreational activities, which are extremely wholesome from the point of view of health. Those recreational activities have in themselves created a great new industry and have given work to thousands of people in providing for the needs of people who have a whole holiday a week, or a half holiday a week.
Senator Lee. Do you believe we should encourage the development of labor-saving inventions? Secretary Perkins. I do not think we need to encourage it by law— I think it will come anyway.
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Senator Lee. But as labor-saving inventions come we should meet them with a redistribution of the hours of labor and a corresponding redistribution of the national income, should we not?
Secretary Perkins. Labor-saving devices frequently result—and it is most desirable that they should result—in an increase of the consumer’s goods available at prices low enough to put them within the purse of the average man. Sometimes it is not necessary to reduce the hours for you have such a demand for the lower-priced product that you do not need to lay off anybody. You can give more work actually to more people by producing articles which the labor-saving device has shown a way to cheapen than you can in any other way. Those things tend to adjust themselves. It is not the same in every industry, of course.
Representative Schneider. Have you given any consideration to the setting of a limitation of machine-hours of operation in the United States in industry?
Secretary Perkins. I have given consideration to it, sir; but I think I ought to say that I have reached no conclusion on the matter that I think is worth recommending. As soon as you begin to limit machine-hours, you begin to put an artificial barrier into the development of goods, which may be necessary at times, but which as a permanent policy strikes me as dangerous.
Representative Schneider. You are familiar with the textile industry?
Secretary Perkins. Yes, sir.
Representative Schneider. In which they operate that third dog watch?
Secretary Perkins. The graveyard shift, they call it. The graveyard shift is an undesirable practice from every point of view. It is undesirable from the humane point of view. Nobody likes to do night work and I think it is not unduly limiting the productivity of machinery to prohibit night work except in those industries which are necessarily continuous. There are certain industries which must operate as continuous-process industries. But that is not true of textiles.
Representative Schneider. From a competitive standpoint, do you think it is possible for a mill that operates with one shift to compete with one that operates three tours, the 24 hours a day.
Secretary Perkins. It would depend a good deal—I do not think it would be in the same quality of goods; no.
Representative Schneider. That is the case, however, in the textile industry, is it not?
Secretary Perkins. In some cases; yes.
Representative Schneider. In some States the law to a certain extent prohibits the operation-----
Secretary Perkins. The prohibition of night work takes care of it pretty well.
Representative Schneider. But it is permitted in other States.
Secretary Perkins. Yes; that is true.
Representative Schneider. And because of that, it is quite impossible from a competitive standpoint. You have not given consideration to that?
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Secretary Perkins. I have given consideration to it, but as I have said, I can not arrive at a conclusion that satisfies me. That is a very delicate economic regulation, and I do not think it ought to be confused with regulation of labor standards, if I may say so, because I think that is something else.
Representative Schneider. Now, may I ask this question? You remember in the codes that you had the differential in minimums as between men and women. What do you say with reference to that?
Representative Curley. Pardon me, but I cannot hear the question, and these are matters in which I am very much interested.
The Chairman. He asked what the Secretary thought about a differential of wages between men and women, as was done under the codes.
Representative Schneider. You do not think there should be any?
Secretary Perkins. I do not think there should be any. I think the work should be on the same basis. I think the wage is an economic factor, and it should be the same no matter who does the work.
Representative Schneider. For similar work.
Secretary Perkins. There are provisions in here for learners and apprentices and for certain substandard workers.
Representative Schneider. Thank you, Madame Secretary.
Representative Connery. Mr. Thomas of Oklahoma.
Representative Thomas. Miss Perkins, a while ago you voiced the thought that perhaps the act could be strengthened in order to prevent circumvention of home work. Will you turn to page 17 of the act, section 6 (a), at line 12:
The Board shall have power to define by regulation or order the method of computing and determining the number of employees employed by any employer to prevent the circumvention of the Act or any of its provisions through the use of agents, independent contractors, subsidiary or controlled companies, or home or off-premise employees, or by any other means or device.
Secretary Perkins. I should like to see that rewritten so as to specifically state that the Board may prohibit any of these practices. This says that the Board shall have the power to define.
Representative Thomas. But anyway, your thought is to have some such language?
Secretary Perkins. Oh, yes, and to have it mean quite definitely that the Board may prohibit or regulate the amount of industrial home work which is given out.
Representative Thomas. And you do not know whether this language will do that or not?
Secretary Perkins. I suggested to the committee that they consider that language to see if it does. It appears to me that this power can be exercised only in computing the number of employees or purposes of exemption.
Representative Thomas. Certainly the act places an almost superhuman task upon the Board. Do you think a Board of five is sufficient, Miss Perkins?
Secretary Perkins. Too many.
Representative Thomas. How many should there be?
Secretary Perkins. I always think that three are better than five. There are not so many people to argue with each other. These acts are acts which are judicial and legislative acts, and three people properly exposed to the currents of American life and thought can come to conclusions perhaps more quickly than five can.
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Representative Thomas. Miss Perkins, if the Board proceeds as contemplated by the act, namely, slowly and cautiously, how long do you think a Board of three men would require to eventually bring into the scope of the operation all of the many industries of the country?
Secretary Perkins. Well, that is difficult to say, but my thought is, not very long. As soon as they have information with regard to a particular industry obtained by investigations which can be delegated to subordinates and when they have reason to believe that there should be a fair minimum wage set and a maximum of hours either different from that set in the law or the same, it should be fixed for that industry. They then proceed to hold public hearings, appoint advisory committees, take testimony. It is not a very long procedure, because they can do a great deal of the preliminary work through agents who report to the Board, which exercises a judicial faculty on the basis of information that is received. I do not think that that procedure would be very long, but I do not think it should be too rapid. That is, I do not think it would all take place in 6 months. I think there would be a relatively slower procedure than that, and I think there should be. I think there should be a slower procedure so that everybody can be heard, and so that different parts of the country can have the opportunity of appearing not in Washington but at some place convenient for them, to state their views.
Maybe in the beginning, five would be better if there was necessity for the Board dividing its work, but my experience has been that small boards operate more coherently than large boards do.
Representative Thomas. Thank you, Miss Perkins.
The Chairman. Congressman Dunn, have you any questions?
Representative Dunn. No; I have none.
Representative Connery. Mr. Wood.
Representative Wood. Miss Perkins, there seems to be an opinion by a great many people in this enlightened age that it is very dangerous to give the workers additional leisure, and some people are greatly exercised by what the workers are going to do with their spare time, as if the wage earners were a separate and distinct class to be dealt with separately from the rest of the population. Don't you think it is pretty well established now, in these many years since we have gone from the 18-hour day to the 7- and the 8-hour day, as to what the workers are going to do with their time?
Secretary Perkins. I do think it is very well established, and I think that all of us that look and want to see, can see what they have done. The change in the character of American life in the last 10 years since there has been more leisure, has been very interesting. Working people do exactly what everybody else does; there is no difference between them, so far as their means allow them. They do not go off on expensive yachting trips, but they get little sailboats or dories if they five near the sea, for example.
Representative Wood. In other words, you do not think just because they are wage earners that they have any different aspirations than anybody else, or different from people of different financial standing?
Secretary Perkins. No.
Representative Wood. I would like to ask you a question, Miss Perkins, that I think is very closely interwoven with this law. It is
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not a question either, but I want to compliment you for your determination and courage in not allowing the steel corporations to violate the provisions of the Walsh-Healey Act.
Secretary Perkins. It took a few days.
Representative Wood. Don’t you think that your position, which was very substantial and fine, had some influence in the steel corporations finally deciding that they could not defeat the law, and finally deciding that they had better deal with their employees in collective bargaining? Don’t you think that that had a great influence?
Secretary Perkins. Well, sir, all of us would like to claim credit for everything that turns out well. I think that probably it was one of the factors. At least, we hope it was.
Representative Wood. I think it was a very fine thing that you exercised your courage and the determination to not allow them to do that thing, because they were a powerful corporation, even in the face of some criticism by the Members of Congress, which criticism of course has fallen flat.
Secretary Perkins. Well, sir, the Members of Congress did not know—those who criticized—did not know what we knew in the Department of Labor, namely, that some steel companies were contemplating at that very time a shift to a 40-hour week, and we knew that they had it under contemplation as a policy for the whole industry and we felt that if we stood firm it would accelerate the process.
Representative Wood. I know that some felt that your action was interfering with national defense, that the steel corporations should be allowed to be exempted from the hours provided in the Walsh-Healey Act. Now, as to the exemption—I think that is a very important thing. Don’t you think that an exemption in this law of 8 or 10, would tend to create other small industries of less than 8 or 10, and would tend to break down and destroy other industries who were employing 15 or 20 by their unfair competition?
Secretary Perkins. I think that is very likely to be the case.
Representative Wood. In other words, getting down to the level that employ 15 or 20 and who desire to maintain reasonable wages and reasonable hours, those people would be unduly burdened in competition with those employing the smaller numbers; in other words, that small element may not be so small.
Secretary Perkins. I have only had experience in enforcing one law that applied differently to employers of different-sized establishments. Most of the laws which I have had to enforce, applied to all employers without regard to the number of employees. But there was one law which had to do with retail establishments, retail-selling establishments, and that applied only to institutions having more than a certain number of employees.
We found that this act tended to prevent a man from taking on additional employees that he might have taken on, that he could have taken on, particularly at seasons like the spring and the fall and Christmas, and that he kept himself constantly below that level so as not to be affected by the particular law; and for that very reason it was a disadvantage to the community, since he might have given employment to considerably more people. But he strove, he studied, to keep himself under that limit so that he would not have to come within the provisions of that law.
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Representative Wood. In the field of competition, it has been agreed generally, especially since the depression, that 5 or 10 percent of any given industry, through cutthroat competition can lower the prices.
Secretary Perkins. They might really upset the industry.
Representative Wood. Upset it, yes.
Secretary Perkins. It makes fluctuations in price, which is the thing that is pretty bad, I think, on the economic side.
Representative Wood. I think the important question is whether the employer manufactured goods that came in interstate commerce or was intended or was destined in interstate commerce, rather than the number of employees he employed.
Secretary Perkins. I think so, too. As a matter of fact, relatively few establishments that are engaged in interstate commerce will be small in the number of employees. That is, very small in the number of employees.
Representative Wood. Thank you, Madam Secretary.
Representative Connery. Representative Iglesias of Puerto Rico.
Representative Iglesias. No questions.
Representative Connery. Mr. Jenks of New Hampshire.
Representative Jenks. If I understand you correctly, you believe in wage differentials.
Secretary Perkins. On a geographical basis?
Representative Jenks. Yes.
Secretary Perkins. I tried to indicate that I thought that that should be very cautiously approached, and that wherever there may be in some industries and under some circumstances a reason for- geographical wage differentials, that it ought be market differential rather than a geographical location of the plant, and that industries or plants selling into the same market ought not to have any differential.
Representative Jenks. And you, of course, are acquainted with the firm of Johnson and Johnson, and with Mr. Johnson who testified here at the opening of our hearing on the second day of our hearings.
Secretary Perkins. Yes.
Representative Jenks. He has a textile plant in the South, and he has textile plants in the North.
Secretary Perkins. Yes.
Representative Jenks. And a man of wide experience in the textile world. He testified that he felt there should not be a wage differential in the textile industry between the North and the South. Would you agree with him on that?
Secretary Perkins. Yes, I think I would, because the textile industry is a national industry, and practically all factories sell into the same market. There may be individual concerns that have a given specialty that they sell to a particular local market, but that is the rare thing. The common thing in textiles is mass production for a national market.
Representative Jenks. If you stated this fact—I did not quite get it—and that is that in your judgment the act should apply to a definite number of people employed in any one industry. How far down should we go in that?
Secretary Perkins. Well, I would not put any limits to it. That is, I would say that any industry, any employer employing one or more persons.
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Representative Jenks. One or more persons?
Secretary Perkins. He is an employer if he employs anybody. You will find so few establishments, of course, with one or more employees, that they hardly matter, but it ought to be the practice of the industry no matter what it is. It ought to be the practice of the industry if it is in interstate commerce, to work a level of wages and a level of hours, and the one man that happens to work there ought to get the same wages as if he worked in the plant where there were 200 people. He is the same sort of a person.
Senator Walsh. Senator Ellender of Louisiana has a table which shows that 20 percent of the wage earners work in plants with less than 20 employees.
Representative Jenks. I would like to refer to a question Congressman Thomas brought up about these home workers. I will put it right back to just what you said, that you believe that the act should include every employer if he only employs One person.
Secretary Perkins. I think it should be applicable; yes. This Board has the power to make variations. I think that the Board should make the variation for due cause rather than having by an act of Congress a flat exemption for persons with an arbitrarily selected number of employees; because if you select 20 as the number, you have done an injustice to a man with 21. If you select 10 you do an injustice to a man with 12. You cannot fix any one figure, but there may be particular operations and particular establishments where at a particular time, there is reason for a variation. I think that an administrative board that can have a detailed report before it and the testimony of those who work there as well as those who operate the place is needed in order to make that variation intelligently.
Representative Jenks. That brings me up to the question that he brought up. About what a tremendous job this is going to be for a board of five, which you say that you think even a board of three could administer this law better. You have given me the impression— I don’t know whether you have given that to the other members or not—but you look upon this, with all of the ramifications of this law and what it means, particularly when you bring it down to every employer, as something that was not much of a job. As a man who has been engaged in industry for 30 years, it would be pretty hard work for me to agree with you on that point, that this is going to be such an easy matter as you have given me the impression it would be, and that a board of three members are delegating the power to administer to a tremendous lot of people. They have to go on reports, and they cannot go on anything else in their final judgment, so that the power of regulating this whole industry of this country has to be spread over a tremendous lot of people, and it would seem to me like a pretty big order. I don’t know.
Secretary Perkins. I do not think it is as large as it seems. When you begin multiplying the number of establishments and the number of wage earners it always seems large, but remember that there are very few things being done here. The bill is just laying down certain general principles with regard to hours and wages and the employment of people. Those things become self-enforcing after a while as an industry gets into the habit and into the rhythm of obeying particular rules and regulations.
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Moreover, I do not think there is anything in this act to prevent this board from taking testimony themselves or hearing testimony, and certainly no board in its organization rules would fail to provide that there could always be an appeal to the board itself from any ruling of any subordinate or any agent, and no matter who he is, or any regional director. The board would hear an appeal under the proper circumstances, certainly.
But, you see, doing this on an industrial basis means that you bring together at one time all of the information you have about one industry, and you concentrate on that industry, and although it is a complicated thing and requires the attention and the conscientious attention of intelligent people, it is not a superhuman task.
Representative Jenks. I have just two short questions and I am through. The first is, you believe that Congress should delegate this power to a board of 5 or 3 or whatever it may be.
Secretary Perkins. To delegate under certain restrictions, certain rules, certain principles, certain objectives which Congress would lay down and define, so that the board cannot go outside of those purposes. The purposes, the duties, the powers, and the responsibilities of the board ought to be carefully defined by Congress and the objective to be sought ought to be carefully defined by Congress, so that when the board is asked to do something, as it will be, it will say, “Well, now, is that within our powers?” And they would study the original act to see what Congress expressed as its purpose, and how Congress limited its activities.
Representative Jenks. The last question is a question on child labor. I am speaking about something I know very little about, and that is the Walsh-Healey bill. I was not in Congress when it was passed, but there is a child-labor provision, I understand, in it.
Secretary Perkins. Yes, sir.
Representative Jenks. There is a provision in it, I believe, that the Labor Department has the option of extending the time for 60 or 90 days when children under 16 years of age may continue in occupation. I understand that there are a great many children, even under that act, that are still employed under that age. Am I correct in that?
Secretary Perkins. Under the age of 16?
Representative Jenks. Yes.
Secretary Perkins. No, sir. There are children employed under age 18, but not under age 16.
Senator Walsh. They may be in industries other than those that furnish supplies to the Government.
Secretary Perkins. Yes; I am thinking of those that have a contract with the Government.
Representative Jenks. I am speaking under that bill.
Secretary Perkins. Under the bill the only exemption we have made is in the textile industry where girls between 16 and 18, were found at work, and this bill curiously enough provided a limit of 18 for girls and 16 for boys. In the textile industry there are probably more girls than boys employed, and we found a great many at work, and a temporary extension has been made there so that there are girls under 18 at work under that ruling.
Senator Walsh. And in that connection, don’t you think the age limitations and the provisions in this bill are better than the Walsh-Healey bill?
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Secretary Perkins. The age limitations in this bill seem to me to be just right. They are a prohibition under 16 and a prohibition of work under dangerous occupations between 16 and 18, where there is an extra physical hazard.
Senator Walsh. Under the Walsh-Healey bill, it is 16 for males and 18 for females.
Representative Jenks. I had been told that that 60 or 90 days had been continually extended.
Secretary Perkins. It has been in the textile industry, for girls over 16 years of age, but only with respect to girls in the employ of the contractor at the effective date of the act.
Representative Jenks. That is all of the questions I have; thank you.
Representative Connery. Mr. Curley of New York.
Representative Curley. I believe that most of the questions that I wanted to ask have been submitted and answered, but I might ask the Secretary about the operation of this law, if it becomes a law, what effect it will have upon the operation of the labor law of the State of New York with which the Secretary is very familiar.
Secretary Perkins. It will supplement it; that is all. The labor law of the State of New York now regulates the hours of labor of women only, and this will regulate the hours of labor of men, with modifications by industries. The State of New York minimum-wage law fixes a minimum wage for women only in industries where an oppressive wage is paid. This will fix a minimum wage for men and women. This is exactly what I have in mind, when I proposed that there be provided in this law a method of enforcement of cooperation with the State labor departments.
You have in the State of New York a labor department that has already experienced people in the enforcement of exactly this same kind of a law, not as broad in coverage, and the easy and effective thing to do would be for the board operating this Federal act to make an agreement with the State labor department of the State of New York to assist in enforcing this law under the Federal Board’s rules and regulations, because they would use the same people, the same basis overhead, the same method, and the same general principles.
Representative Curley. When this law in New York became operative, my impression was that the women of the State of New York, if not of the Nation, were bitterly opposed to the enactment of that legislation by virtue of discrimination in favor of women.
Secretary Perkins. No; I think you are mistaken, sir. They were not. There was a small group of women who held an extreme view of women’s rights, who have so testified; but that was a small group, and the predominating number of working women were in favor of the legislation. There were very few in the opposing group who were wage earners.
Representative Curley. May I ask you to define the difference between the home worker and the sweatshop worker?
Secretary Perkins. By the sweatshop is ordinarily meant a subcontractor; that is, a contractor who takes work from a principal and takes it out to do under contract in a shop which may be in his home or may be in hired premises. The industrial home worker is a person who takes work home into his own house or tenement where he or his family work on it within the confines of their own home and employ
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nobody else except their own family; but the sweatshop usually is run by a contractor who hires other people.
Representative Curley. Do you believe it will require any change in the existing State labor law in New York to meet the provisions of the proposed bill?
Secretary Perkins. Very little. If a 40-hour week were established by Congress under this, it would require modification of the State labor law to meet it.
Representative Curley. In your past experience as industrial labor commissioner of the State of New York you found it very effective, did you not?
Secretary Perkins. It is a very effective law; yes.
Representative Curley. Thank you.
Representative Connery. Senator Holt, of West Virginia, has some questions.
Senator Holt. Miss Perkins, what percent of the workers would “be exempted if the provision of eight employees would be used in this bill?
Secretary Perkins. I find that from the census of 1933, 2.6 percent of the workers are in establishments between 1 and 5; and 7.4 percent of them are in establishments between 6 and 20; and between 100 and 500, there are 35 percent of all of the wage earners in the United States.
Senator Holt. You do not have any later figures than 1933?
Secretary Perkins. No.
Senator Holt. Would it be possible to procure those?
Secretary Perkins. I do not think that they have been assembled in this form since 1933. The next census won’t be available for another year—the 1935. How long will it be before it is available?
Mr. Leon Henderson. I think some of it will be available for this committee with the next week.
Secretary Perkins. There is a special biannual census of manufactures, and it is on that that we base our information. It is different from the regular 10-year census.
Senator Holt. Do you think, Miss Perkins, it would injure the bill if this national board would be deprived of jurisdiction of those industries where collective bargaining is in effect?
Secretary Perkins. No; except that somebody has got to decide whether there is collective bargaining, and whether it is effective. The definition would have to be very carefully drawn, and someone would still have to decide whether there is an effective collective bargain. I think the wording of this bill does practically exempt those industries where there is collective bargaining, except where the Board finds that because of the ineffectiveness of organization, the collective bargain is inadequate, that is, it does not meet what would ordinarily be called a proper standard of living.
Representative Wood. In connection with that, may I ask Senator Holt a question? Do you mean collective bargaining where collective bargaining provides for wages lower than this 40 cents?
Senator Holt. I mean any collective bargaining. Would not the National Labor Relations Board determine whether collective bargaining was effective or not?
Secretary Perkins. They could, if you give them the power to do it and define it, but they have not under the present law the right or the opportunity to determine whether collective bargaining is effective or adequate.
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Senator Walsh. They have nothing to do with the agreement that is made.
Secretary Perkins. The Labor Relations Board has nothing to do with the agreement that is made; no. It protects the right of workers to organize freely as they choose in associations of their own choosing and to present themselves for collective bargaining. The act provides further when a majority of the workers have expressed a view under an election that the majority unit is the sole agent for collective bargaining, but does not go at all into what the terms of the bargain are.
Senator Holt. In other words then, this Board would determine whether collective bargaining was good or bad.
Secretary Perkins. I think it has been pretty carefully phrased here, and I thought it was rather good [reading]:
That was effective.
Representative Connery. On page 13, section 5.
Secretary Perkins [reading]:
Whenever the Board shall have reason to believe that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining.
Senator Holt. In other words, the Board would determine that rather than the man who actually did the collective bargaining?
Secretary Perkins. Well, presumably they would determine it after having heard everybody. There are later provisions in this bill which provide that the Board can take no arbitrary action. It can only take action after notice, public hearing, and a record of its act has been made, so that the reasons for its act can be shown.
Senator Holt. In other words, if labor had an honest collective bargaining agreement and would set a wage lower than the minimum wage, and the employer also agreed with that, the Board could set that aside? I am hoping it does not go that low, but that would be an opportunity, would it not?
Secretary Perkins. Well, the Board could at least inquire into it. They would have to inquire into it and determine whether it had been an ineffective and inadequate bargain.
Senator Holt. And if it had been ineffective?
Secretary Perkins. I do not have to ask you to draw on your imagination much to realize that there might be an organization calling itself a trade union which would be capable of making an agreement which was not in the interest of the workers in that industry. It is a possibility. We know that, and this would enable the Board under such circumstances to inquire.
Senator Holt. But if they should operate under the National Labor Relations Act and set up a union, would that not be an evidence of collective bargaining?
Secretary Perkins. Yes; if they certified them as the agency for collective bargaining, they might make a bargain which a person looking at it impartially from the outside might decide was not an effective bargain for the workers.
Representative Connery. I had an exact instance like that within the last 2 weeks. An organization which does not want to be affiliated with the American Federation of Labor or any bona-fide union, in a shoe shop, wanted to form by themselves a union and call it a union, and under the National Labor Relations Act they will be a collective
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bargaining agency, because the majority of the workers in that plant will represent them, but they will take less wages in their collective bargaining than they would if they were connected with a bona-fide labor organization, and that is why we wrote this in here, to protect the workers against that sort of thing.
Senator Holt. Miss Perkins, would you want to advise or suggest any figures that would be advisable for either the maximum hours or the minimum wages?
Secretary Perkins. Well, I have already said that I think the basic minimum wage ought to be left to this Board to determine for each industry separately, taking into account the items which have been listed here in your bill, and any other things that you think give guidance to the Board, such as the cost of living, the value of services, and all that sort of thing.
On the matter of hours, I suppose that we have a larger body of knowledge and there is not such an intricate adaptation, and I should say it should be somewhere between 40 and 30. We have had enough experience on a 40-hour basis in this country to know that it is entirely possible for our industries to produce with great efficiency on a 40-hour basis, and enough of the basic industries have gone to a 40- hour basis to make us quite sure that we are not operating in the realm of the economically unknown when we are on that basis.
At the time when the International Textile Conference was here several weeks ago in Washington, one of the interesting things that the American delegates had to contribute to their deliberations was the itemized bill of particulars as to the efficiency, the increase in production, the increase in sales, the increase in profits of the textile industry under a basic 40-hour week.
So that I should think we could well expect that to be basic, and I should say that in many industries there is real evidence that hours under 40 are even better for that particular industry. Of course, industries have to adapt themselves to their market and to their production, and whatever their basic week is there are bound to be fluctuations from it under certain circumstances, but some industries certainly have shown that 40 hours is an admirable basis of production and efficient production for them. Others, I think have demonstrated that 30 hours is a good basis. Thirty hours, of course, makes a 6- hour day and a 5-day week, which is a good unit of production even in the continuous industries, because there you can have four shifts in a continuous industry, you see, and carry on on that basis.
There are some industries where the work is of a very exhausting nature to the individuals and where a schedule which will make efficient production ought to be pretty short; whereas there are others not so exhausting where the need for the shortened hours is not so great. There are some industries where the number of unemployed, having particular skill in that industry, is very great, and the Board ought to take into consideration that factor.
Senator Holt. Then you would suggest that the Board have the power to set the minimum wage or the maximum hours, rather than put it in legislation?
Secretary Perkins. I think the Board should fix the basic minimum wage, and I am told by those who have examined the legal and the constitutional aspects of it, that it would be much wiser for Congress to lay down certain limits with regard to the hours within which the Board can operate.
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Senator Holt. In other words, you would have the Board set the wage and let the hours be set by Congress?
Secretary Perkins. Within limits; not more than and not less than.
Senator Holt. Would you put a maximum also?
Secretary Perkins. Yes, sir.
Senator Holt. If you would set a low minimum wage and maximum hours, wouldn’t that drive down all wage levels? Is it not the economic law that the high wage levels seek the low wage level?
Secretary Perkins. No; it is not so far as I have observed it. There are 16 States in this country where there are minimum wage laws for women. Where they have fixed the minimum wage, it has been in those industries where the women had the lowest pay in the industry, and the effect has been over a period of years to raise the average wage in that industry and to raise almost proportionately the wages of the more skilled groups in that industry who were making more than the minimum.
Senator Holt. In other words, the higher wage level would increase with the low wage level?
Secretary Perkins. Well, perhaps not in exact rhythm with it. A high wage depends upon skill and rarity of the skill and the extreme value of the skilled service to the industry. And there again, is where labor organization is always more effective than it is on the minimum wage levels of the great mass.
Senator Holt. Here is a practical question: If the bill would allow a lower wage level, say in the South, would that not tend to reward those industries that go to the South where low living costs are in effect and low living conditions?
Secretary Perkins. Well, that has been one of the factors, I suppose, but we see that equally in the movement between States. We need not think in terms of the movement of the New England textile industry to the South. Senator Walsh and I both have seen the movement of the boot and shoe industry, for instance, out of Massachusetts and into New Hampshire and Maine, States with little industry and with a very low standard wage, and where the wage tended to be fixed by the agricultural laborer’s wage. And also within the South there is now going on a movement of the textile and other industries away from the States where the original location of the textile industry occurred, and into other States where there is very little industrial development, and which therefore have a low wage level. This is being corrected. It is some of these very States which show now an awareness and an alertness in passing State labor legislation because they do not want their States exploited, so to speak, by industries seeking nothing but a low wage.
Senator Holt. Then in this bill which allows or gives consideration to the issue of the low living costs, you do not think that would reward the low living cost States?
Secretary Perkins. I think that when you take living costs into consideration, there is always a tendency to move to the country and get out of the city. A certain amount of that is probably good. It is probably a wholesome thing, but not too much of it. Our cities are very important economic institutions and we should not expect a movement away from the cities into the country of industry as being entirely desirable. I think that the Board ought to be cautioned,
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as you have in this bill, to take these items into consideration— the proper economic balance between all parts of the country ought to be taken into consideration.
Senator Walsh. Senator Holt and others have asked practically all of the questions that I care to put to the witness, except perhaps a little summary. Under existing law, the public contract law, the Department of Labor has had experience with a law which fixes the maximum working hours in a week, and also under a law which leaves to a board in the Department of Labor to adjust and fix in Government contracts a minimum wage. Do you know how many concerns have refused to submit bids to the Government for Government supplies because of the maximum hours fixed in the public contract law of 40 hours?
Secretary Perkins. There were originally industries, sir. There was some refusal to bid in copper and in steel. There may have been difficulties in one or two others, but every one of those has been overcome now. It was a matter of adjustment and patient explanation.
Senator Walsh. They are now rather small in number?
Secretary Perkins. Very few.
Senator Walsh. I noticed the other day when we were opening the bids on the Joint Committee on Printing for paper in the Government Printing Office, there were some paper concerns who declined to submit bids because of that law. They could not adjust their working hours to the 40-hour week. You agree that whatever hour is fixed, and you believe in fixing a maximum week, it should be the same in the Public Contracts Law as in this bill?
Secretary Perkins. I do. I do not think that firms should be required to have two standards.
Senator Walsh. The other question I wanted to ask, which also puts me in accord with your views that the minimum wage should be fixed by a board and not by law and should be fixed differently for different industries—your board or your Department has had that problem and has had to fix, through the administration of the public contracts law, actual cases of minimum wage.
Secretary Perkins. Yes, sir.
Senator Walsh. Could you submit to the committee, the minimum wage which you have fixed in the various industries as the result of the operation of that law?
Secretary Perkins. Yes; we would be glad to.
Senator Walsh. Have you that in mind now?
Secretary Perkins. The lowest that we have fixed has been $15.
Senator Walsh. In any case?
Secretary Perkins. In any case.
Senator Walsh. Per week?
Secretary Perkins. Per week. This will happen in practice, that just as soon as you begin to consider cost of living, you get an item which does not change from industry to industry. It costs a clothing worker just as much to live as it costs a steel worker, and vice versa, so that the cost of living enters in right away. But then you begin to take into account all of these other things—the fair value of the services and the economic state of the industry, and you may get in some industries, you see, the ability to pay as a minimum something above the bare subsistence level.
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Senator Walsh. The only other question I desire to ask, and I would like to have that information for the committee, is the question of differentials. It seems to me that if the marketing of the merchandise is to be the controlling factor, as probably it ought to be, in view of the fact that this bill is among other things seeking to prevent the movement of industry from where there are good labor conditions and high wages, to those localities where there are, as illustrated by the boot-and-shoe industry, lower wages paid, that the tendency would be to do away with differentials, and that you would arrive finally at the place of market and the competition idea, so that the high-priced labor is not going to be in competition with low-priced labor when the goods go into the market, and therefore that you would almost reach the conclusion that there is no need for differentials.
Secretary Perkins. I think that is probably true, sir; but you used a very important word there “eventually”, and I do think that in all of these delicate controls over economic situations, that the original touch should be light and movement gradual, so that you do not get immediately disturbing economic factors coming into the picture. You might therefore have to recognize differentials based upon markets where the purchasing power of that market or of a particular market had been accustomed, we will say, to the $3 shoe of Brockton of the old days, and if it suddenly was raised very much, it would have the effect of decreasing the demand for the shoe, and you would have a bad situation; whereas over a period of 3 or 4 years, that differential might disappear.
Senator Walsh. I have no more questions.
Representative Connery. Senator Ellender?
Senator Ellender. You have already answered most of the questions that came to my mind. I would just like to ask this: In arriving at $15 per week as a minimum wage, you have just spoken about, what yardstick did you use insofar as the employer was concerned?
Secretary Perkins. We did not use any except that he was in the market for a Government contract. This applies only to those who are bidding on Government contracts, and that was the only measuring stick we had to use. If he wanted a Government contract, he had to conform to this wage.
However, in investigating to see what was currently paid in that particular industry, we found wages in the same State, in the same industry, and making the identical garment (because this is very crude kind of work) we found the identical garments made according to the identical specifications in the same State, and some firms having a minimum wage as low as $5 a week and others paying $17 a week in the same State for the same work. So that you can see the extent to which that entered into their competitive situation.
Senator Ellender. The reason why I asked you that question. Madam Secretary, is this: Yesterday we had a witness who testified that where the labor cost of an article was as much as 25 percent, that the working hours should be less, but the same wages if it should be as much as 50 percent, there the wage should be the same but an increase in the work hour. Would you agree to that principle?
Secretary Perkins. Senator, I think honestly that is fairly theoretical. That man who is working in a plant where the labor costs are a certain percentage and does not understand why it is that he works less hours for the same pay than some other worker; it creates bad feeling.
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Your differences should be simple and clearly understood by everyone.
Senator Ellender. Would you say they would have to be uniform?
Secretary Perkins. You mean a uniform minimum wage?
Senator Ellender. Yes; and uniform hours.
Secretary Perkins. No, I do not think so; but when you come to measure the fair value of services, if you are only going to use the cost of living, you would get pretty nearly a uniform minimum wage, of course, and with some differentials on the cost. But when you begin to discuss the fair value of the services, then you come into degrees of cost and into these percentages of labor cost to the total value, and you get also degrees of skill.
Senator Ellender. Now, with reference to exemptions. Did I understand you to say that you would leave that entirely to the board, and would not fix that in this bill.
Secretary Perkins. The exemptions?
Senator Ellender. As to the number of employees in a particular factory.
Secretary Perkins. No , what I meant was that I would not provide for any exemptions on the basis of the number of persons, either in this bill, nor would I give the Board the power to do it except in its general power to vary for a particular reason.
Senator Ellender. You say you would not give the Board that power?
Secretary Perkins. I would not give power to the Board to make exemptions on the basis of the number of persons employed, but I would give them a general power to make variations to individual plants for particular purposes that might be stated. That is, you may have emergency purposes, you may have temporary operations, you may have action requiring the protection of life and property.
Senator Ellender. One more question; with reference to foreign trade. You have not covered that in your statement, and I would like to ask you your opinion on it.
Secretary Perkins. About what?
Senator Ellender. Foreign trade. Should this bill go through, and short hours be established and labor costs increased, and thereby increase the cost of goods, do you not believe that it would be necessary to amend this law or pass some law so as to protect the factories from foreign competition? Either a tariff or something to protect them.
Secretary Perkins. No, sir, I cannot say that I do, because it has been my experience over a long period of years of observing manufacturing under closely competitive situations, that the shortening of hours and the improvement of wages does two things: First, the additional leisure improves the morale and improves the effectiveness of the workers so that the volume of production can be increased tremendously. That tends of course to lower the price in itself, the fact that there are goods on the market.
Also the fact that the workers are paid—just as soon as you raise your minimum wage—we saw that under the N. R. A.—at once there began an increased purchasing power in many areas.
I am quite certain that that is what happens in this country, and the inventiveness of American manufacturers and engineers and distributors has never yet been fully tapped and challenged.
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I am quite sure that you won’t get an increase in the price scene under any sensible regulation.
Senator Ellender. In other words, it is your opinion that no matter if we increase the wages here and shorten the hours, that we should still permit Japan to send cotton goods manufactured on a 14-cent day for labor, and shoes and so forth from Czechoslovakia at half the cost of what these costs are to our manufacturers who produce them? That is your idea?
Secretary Perkins. I should not like to be cross-questioned on that particular matter, sir, but may I say that I do not think it is proven; in fact, I know it is not proven that importation has as yet affected the selling possibilities in the domestic market or the living standards of the American people. When it is shown to me that it has, I might revise my view. Mr. Henderson just reminds me that in 1935 and 1936, we produced and sold more shoes here in this country than ever before in the history of the country, so that Czechoslovakia has not really hurt us.
Representative Connery. Before we raised the tariff to 30 percent after a long battle, on shoes, six million pairs of shoes were brought in every year from Czechoslovakia and sold in the United States at a dollar less than the same shoe made in the city of Lynn, Mass., and until we got up to 30 percent, and now Mr. Batta is over here now at this minute in the United States looking over the market and getting ready to come in now with his cheap wages and long hours to undersell us again in the American market with our 30 percent tariff. Now, proceed, Senator.
Secretary Perkins. Mr. Congressman, I would like to introduce in evidence at a later date a summary which we made at the time of the International Textile Conference here of the possible market for textile goods, the possible world market for textile goods, showing that what you need to do is to increase income and purchasing power to increase the number of people who have got money enough in their pockets to buy goods, in order to keep up. You could absorb probably not only the imported shoes but provide for an extension of those factories that we now have, just the same as you could in textiles. We indicated in the study of textiles the amount of expansion of the existing textile plant structure which we would need to provide the markets of the world or even the possible or potential market here with a reasonable standard of textile goods per capita. You could probably apply it right straight through in many industries if you had the facts. We know what it is. In other words, just as soon as you increase income and purchasing power, you are going to have a surprisingly large market.
Senator Ellender. Suppose this law goes through. We have made trade agreements with quite a few foreign governments under existing conditions. Don’t you think it might be necessary to revise those trade agreements?
Secretary Perkins. I am not in a position to say. I have not had any administrative supervision over those trade agreements, and I do not know really what the differences are that they should provide. I should want to consult the Department of State on that. I am sure that this committee would, too.
Representative Connery. Are you through, Senator? Senator Ellender. Yes, thank you.
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Representative Connery. Mr. Griswold, of Indiana.
Representative Griswold. I did not hear all of the testimony, and I am wondering whether or not you expressed yourself along this particular line. Here is my question: Would you have any objection to writing a prohibition in this bill against any differential between the labor of the minors and the labor of adults, and the labor of the male and female workers?
Secretary Perkins. The bill provides for differentials in wages for apprentices, learners, and substandard workers. By “substandard workers” they mean persons who by reason of illness or age or something else are not up to normal production.
Representative Griswold. The idea is this, to prohibit a minor who does the same work as an adult in many industries at present. Take a man in a shop on a drill press, he will have a boy of 18 years there doing exactly the same work, turning out the same amount and kind of work.
Secretary Perkins. Yes; he should be paid the same.
Representative Griswold (continuing). And he is paid a differential from the adult.
Secretary Perkins. No, he should be paid the same unless he is a learner or apprentice.
Representative Griswold. And the same thing is true with the men and women in many industries?
Secretary Perkins. Yes, I so expressed myself.
Representative Griswold. Do you favor a prohibition of any such differentials as that?
Secretary Perkins. Yes, indeed. I thought it was implied in the bill that the wage and hours be fixed for the work, and that there would be no differentials for sex or age if the work was the same. The bill should be strengthened if it is your opinion that this principle is not in the bill.
Representative Griswold. I would just like to call your attention to the fact that in the hearings on the 30-hour week, we had one of the leading industrialists of the country testify before that committee that he owned factories in 12 nations, and that he shipped his materials from Japan into the United States in competition with his own factories which were then shut down in California.
Representative Connery. Have you concluded, Mr. Griswold?
Representative Griswold. Yes.
Representative Connery. Representative Ramspeck, of Georgia.
Representative Ramspeck. Was it not true under the N. R. A. that one of the greatest difficulties was the application of that law to so many small employers?
Secretary Perkins. I never thought that that was the difficulty. It was the application of the fair-trade practices to the small employers and the enforcement of those fair-trade practices by a code authority which had no basis in law, which was made up of private persons who had not taken an oath of office and who could not be impeached. Those were the difficult things. The hours and wages were not difficult. It was the fair-trade practices that were difficult for the small employer.
Representative Ramspeck. That was the administrative end. If you apply this act to all of these various small employers of 10 or
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less, you greatly burden the board with detailed administrative work, do you not?
Secretary Perkins. But this board is going to be in operation a long time. It is not going to accomplish the reemployment of everybody in a few months. I want to call your attention to the fact that there are relatively few of the establishments employing a small number of persons in interstate commerce. This applies only to interstate commerce. The real difficulty was those so-called service industries. That is where you had the tailor and the dry cleaner and the laundry and the baker.
Representative Ramspeck. The N. R. A. legally applied only to interstate commerce, but the administration of it attempted to apply it to everybody.
Secretary Perkins. Yes.
Representative Ramspeck. And that is where I think they ran into the most serious trouble.
Secretary Perkins. That is undoubtedly the truth.
Representative Ramspeck. In reference to wage differentials. Of course, I am thoroughly accustomed to hearing in these discussions about the South and its low wages. Is it not your observation that low wages are not confined to any particular section of the country?
Secretary Perkins. The worst that I have heard of in recent years I found in Mount Vernon, N. Y., 2 weeks ago, just outside the great city of New York and in the State of New York where we think we have very fine labor standards.
Representative Ramspeck. As a matter of fact, low wages are paid wherever the employer is disposed to do it and thinks he can get away with it; is that not true? [Laughter.]
I asked that question for this reason. I think, and I would like to know what you think about it, that in fixing wages under this act, that the section should not be considered primarily, but that the facts involved in the particular employment should govern the judgment of the board.
Secretary Perkins. Just before you came in, sir, I did say something of that sort, and I indicated that I thought that the geographical area to be considered most importantly was the market, the market to which they sold. Firms and industries selling to the same market ought to be the same basis of productive cost.
Representative Ramspeck. And don’t you think you have to take into consideration such questions as transportation charges to that market, transportation charges of the raw product to the factory and so forth?
Secretary Perkins. That is undoubtedly a part of the marketing situation.
Representative Ramspeck. As well as, of course, the cost of living in the community involved? And to some extent, perhaps, the investment in the plant? For instance, Mr. Johnson yesterday in answer to a question that I put to him, stated that bis mill at Gainesville, Ga., cost $86 per spindle, that he could have bought an old mill at perhaps $10 per spindle or less, and therefore the claim which you often hear that because a mill has old machinery it should pay less for labor is not always true, because if the investment is so much less, sometimes that will offset the difference in the production of the machine, will it not?
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Secretary Perkins. That is quite true.
Representative Ramspeck. All of that leads me to the question of what wages an employer can pay must be determined by all of the facts and circumstances involved in his particular case and not by location or by the type of industry and not always by what investment he has in the plant.
Secretary Perkins. We are only at the beginning of our knowledge of how to study and regulate wages and wage differentials, particularly the fixed minimum wages. We know only the first principles, and we should therefore strive in this bill while giving the Board certain leeway, to make it as simple as possible and not to evolve too complicated a structure. If the structure is complicated, I think the Board would get into trouble, rather than in the size of the problem. It is in trying to do too many complicated and different kind of things that you run into these confusions which make administration so difficult.
Representative Ramspeck. But you do not think that we can be successful if we put industry in a strait jacket as to wages, do you?
Secretary Perkins. I don’t know quite what you mean by that.
Representative Ramspeck. I mean fixing a flat minimum wage in the act to apply it.
Secretary Perkins. I have indicated that I thought it was better to leave to the Board the power to fix the basic wage, but certainly to make variations from the basic wage for different industries.
Representative Ramspeck. That is all.
Secretary Perkins. Because the Board members can go into the thing in more detail over a longer period of time and resubmit their own views to themselves for criticism more frequently than Congress could.
Representative Connery. As I understand it, you want one or more persons, for the act to apply to them. I agree with you on that. I think between 10 and 1 we are liable to get into all sorts of difficulties if we did not set it at one or more persons. Now, Mr. Jackson when he was here, I asked him the question about constitutionality, and he said that he thought that the constitutionality would be stronger if we did set a minimum and maximum under the recent decisions of the Court.
Secretary Perkins. Of course, he and his colleagues have much wiser views on that than I have.
Representative Connery. I don’t know about that.
Secretary Perkins. On that aspect, certainly.
Representative Connery. If we set a minimum of 40 hours per week and 40 cents, up or down, in the discretion of the Board. But they may amend it, as I understand it in setting a wage. Now, in reference to your Walsh-Healey bill, you were wondering whether this would interfere with the Walsh-Healey bill.
Secretary Perkins. No; I think it won’t.
Representative Connery. In section 22, on page 39, it says:
No provision of this act or of any regulation or order thereunder shall supersede, or justify noncompliance with any Federal or State law or municipal ordinance regulating or prohibiting the employment of minors or establishing a minimum wage higher than a minimum wage established under this act or a maximum workweek lower than a maximum workweek established under this act, or otherwise regulating the conditions of employment in any occupation and not in conflict with a provision of this act or a regulation or order thereunder.
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In other words, under Senator Walsh’s bill, if in the steel industry you set a 40-hour week and you set a minimum wage, and that is above the minimum of this act, this Board does not interfere at all.
Secretary Perkins. No.
Representative Connery. If on the contrary, they went below, this Board could bring them up to the minimum wage, and there is not possibility of any bother in regard to that in the Senator’s bill, because your wages are always higher than any minimum wage we have here.
Secretary Perkins. What I really mean here, I think they should be the same.
Senator Walsh. Uniformity?
Secretary Perkins. Yes. I do not think that an industry which conforms to this act should not have to submit to further review and further regulation before it gets a Government contract.
Representative Connery. One more question and then I am through. You remember of course the back history of the Black- Connery 30-hour week bill, and the provision we had in there about foreign imports, and then the N. R. A. was written. In the N. R. A., a provision was inserted that wherever the President found that where it was found that in the administration of the N. R. A., foreign imports would interfere with the administration of the N. R. A., the President would be empowered to embargo them, to tax them, to tax the difference between the cost of production, and it was left to the power of the President. Now, Senator Black’s bill does not include foreign imports. Mine does. Suppose his bill should pass the Senate and mine should pass the House and we went to conference, suppose the Black-Connery bill went to conference. Would you object to some provision being inserted which would give the Board the power, after consultation with the President, would ‘give them permissive authority to make foreign imports come under this act just as well as interstate commerce?
Secretary Perkins. I would not want this Board to have any responsibilities with regard to imports and tariff. If it were deemed wise to make such provision, I think it ought to go to a board that is specially constituted, like the Tariff Commission, to deal with such questions. I think that this Board would not have either the experience or the knowledge or the specialized economic understanding that would put it in a position to draw such conclusions.
Representative Connery. What about the President? Suppose we leave the authority to the President?
Secretary Perkins. It is for Congress to say.
The Chairman. I do not want to ask you any questions, but I would want to say with regard to that that I would regret having to fight a bill that I offered, but I certainly would fight it.
Representative Connery. Senator Pepper?
Senator Pepper. Is it not a fact that the tariff is the traditional method by which we have sought to offset such disadvantages as poor wages and long hours? Is that not the traditional method of dealing with that subject in this country?
Secretary Perkins. I had not thought that that was the real motive for the tariff, but that argument has been used as propaganda for a tariff, but I never was of the opinion that that was the reason for a tariff, nor was J so instructed. I thought a tariff was for the purpose of fostering and developing infant industries and protecting them until they could compete with those industries which were long established and which were putting out a superior product.
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Senator Pepper. I do not want my metamorphosis as a Southern Democrat to become so perfect that I become an exponent of the tariff here, but I think your answer covers that feature of it. Are you aware of the testimony by Mr. Robert Johnson that in the States of Texas, Tennessee, West Virginia, and Delaware, a large percentage of the women employed in the textile industries receive less than $10 a week?
Secretary Perkins. I did not hear his testimony, but I read a digest of it.
Senator Pepper. You are aware of those facts. So that when they ask questions about the board allowing a differential, this act is not creating a differential between sections of the country if it does anything to tend to alleviate or to reduce those differentials?
Secretary Perkins. I think over a period of time, there will be a complete wiping out of those differentials.
Senator Pepper. In other words, the differentials actually exist now as a matter of fact, and the tendency will be to their diminution rather than to their increase?
Secretary Perkins. Yes.
Senator Pepper. I believe you have said already that you regard the provisions of the bill providing for delegation of power as essential to prevent injustice and to prevent unfairness, and to make it a practical and a workable bill, so long as the principles to govern the board are provided for in the act itself.
Secretary Perkins. Yes; Congress cannot be in session all the time, nor can any committee like this give its whole attention to this matter.
Senator Pepper. I think your statement will have the effect of being an assurance to the company when you indicate your opinion that instead of trying to do all this overnight, the board will probably proceed from the fields of the known to the unknown, from those fields where we have immediately through your Department and other agencies of the Government, experience to the fields where experience has not been so completely obtained, and to those businesses which are admittedly engaged in interstate commerce.
Secretary Perkins. And to those industries where there is a known oppressive wage, where we have knowledge of the fact that the oppressive wages are now here. Beginning with those rather than with everything at once.
Senator Pepper. Now, Madam Secretary, the provisions about interfering with instances of agreements made by collective bargaining. Of course, when the law steps in and says that a woman cannot work more than a given number of hours in a factory, the law is in that case interfering with what has actually been an agreement arrived at by bargaining, is it not, or where children have entered into agreements with their employers and the law forbids that sort of thing, it is a sort of an interference with contract.
Secretary Perkins. Yes.
Senator Pepper. But it is done on the theory that society has an interest in the laborers and citizens coming up to a minimum standard of existence.
Secretary Perkins. Yes. Not only that, but society also has an interest in stabilization of industry from the point oi view of the economic welfare of the whole community.
Senator Pepper. And because the employees in collective bargains may not b able to get their standards of pay and wages up above a
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certain point is no reason why society is disenfranchised of either the interest or the power to improve that situation.
Secretary Perkins. Yes.
Senator Pepper. Is it in your opinion the purpose of this bill, or is it the general purpose of the Labor Department so to stifle the inventive genius and the creative ability of this Nation that we do not care to go forward in efficient production of goods and services or is it not rather true that by making it possible for those people engaged in industry to get a decent opportunity to earn a livelihood from it that we realize their opportunity to offer services which make up a modern civilization?
Secretary Perkins. I think you have stated it very well, sir. As a matter of fact, I would like to answer specifically, since you ask me if it was the purpose of the Department of Labor to stifle efficiency, that it is quite the contrary purpose of the Department of Labor; indeed of any agency of which I have ever been connected.
A part of the activity of the United States Department of Labor, and of most of the departments of labor of the leading industrial States, has been to secure through cooperation with employers and engineers, and others having an expert knowledge of industry, to secure the general adoption of practices which tend to reduce fatigue; which tend to reduce ill health. Processes, for instance, such as requiring seats for certain kinds of operations, practices requiring the machinery to be adapted in size to the stature of the people, practices requiring ventilation—all of these things are in the nature of improving the industry both for the people who work and as has been shown by a tremendous body of evidence, improving it for the employers.
Representative Connery. May I say this one thing? During the talk here, it came out about the 16 and 18 years of age in the Walsh- Healey Act, and I would merely like to make the observation that the reason for that was that Congressman Wadsworth, of New York, moved to strike out that entire amendment, to make it 18 years, and after he made a very moving speech, it looked as though we were going to be defeated on it, so I moved the amendment of 18 for the women and 16 for the men in order to save something from the wreckage, which we did. If you can get it back on 18, it is all right with me.
Representative Thomas. Mr. Chairman, I have a question which I should like to ask.
The Chairman. Certainly.
Representative Thomas. Suppose that the standards of the Walsh- Healey Act were made to conform to the standards of this bill, what useful purpose then will the Walsh-Healey Act serve? I do not mean to cast any reflection upon that act, because it has done a tremendously large amount of good.
Secretary Perkins. I think it did protect the wage and hour structure at a critical moment where nothing else would have. In several instances, it made a difference in the hours. I think the purpose of it will be to assist in the enforcement. I mean to insure that in Government contracts, every detail of this law is obeyed, because, in the beginning there is going to be some noncompliance with the terms of this act. It is going to take us 2 or 3 years to catch up the gap between the rules and their 100 percent compliance. It will give an advantage to full compliance, so that firms bidding and certifying to being in full compliance can get the advantage of the bids.
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The Walsh-Healey Act also covers some things which are wholly interstate and not interstate in their nature. The Government contracts, for a great many things which are produced and sold, are used locally, and in that field the force of the purchasing power of the Government contract will be about the only thing that would tend to keep the standards of that industry up.
Representative Thomas. May I point out some defects in that Walsh-Healey bill? I think that the act does not cover the shipbuilding industry, in fact, I know it does not.
Secretary Perkins. No, it does not.
Representative Thomas. And that is a serious loophole, is it not? Certainly this act, if it goes through, will cover that situation, will it not?
Secretary Perkins. It shall be written, so as to do so, certainly.
Representative Thomas. Some doubt has been raised as to whether or not the shipbuilding industry which builds boats for the Government, is engaged in interstate commerce.
Secretary Perkins. In the decision in the Jones and Laughlin case, there is a description of what the court relied upon to constitute interstate commerce. The Jones andff Laughlin Co. brought their iron in from one State, and their copper from another, and their stone and lime from another, and it impinged and it all came into one place; and so it is in the building of a ship. The materials come from many, many places, and the ship itself when work is completed, is destined not to remain at the dock where she ties up, but to go certainly into interstate commerce.
Representative Thomas. Thank you.
The Chairman. Thank you very much, Miss Perkins. I have no questions. We will recess now until 1:45.
Mr. William Green will be the witness this afternoon.
(Whereupon, at 12:40 p. m., a recess was taken until 1:45 p. m. of the same day.)
AFTERNOON SESSION
(The hearing was resumed at 1:45 p. m., pursuant to taking of recess.)
The Chairman. The committee will come to order. Mr. William Green, president of the American Federation of Labor, is the next witness. I will just ask Mr. Green to proceed with his statement on the bill which is under consideration.
STATEMENT OF WILLIAM GREEN, PRESIDENT, AMERICAN FEDERATION OF LABOR
Mr. Green. Mr. Chairman and gentlemen of the committee, the American Federation of Labor, by action of its executive council, on May 28, 1937, endorsed, together with the additional sections to be offered herewith, the proposed Fair Labor Standards Act of 1937 as formulated in the Black-Connery bills introduced in the Congress of the United States on May 24, 1937. The additional sections which we shall offer herewith are essential to strengthen the administrative provisions of the proposed act, to coordinate it with the other congressional enactments and policies enunciated therein covering the same
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subject matter, and to more effectively carry out the objectives sought to be attained by the President’s message and by such legislation pursuant thereto.
As an active and major participant on the firing line in the formulation of public policies dealing with the economic and social welfare of American life, the American Federation of Labor supports the proposed Fair Labor Standards Act of 1937, taken together with the additional sections offered, as constructive legislation of far-reaching significance in the public interest, necessitated by the impact of the forces behind our industrial development and urban economy.
To come at once to the heart of the proposed act, and to strip it of all ambiguity, we shall consider it as dealing with five substantive subject matters: Four of general application within the scope of business and occupation covered by the act—that is, industrial espionage, strikebreaking, child labor, and maximum hours—and one subject of only limited application within that sphere—that is, minimum wages below $1,200 annual wage income.
I AND II. INDUSTRIAL ESPIONAGE AND STRIKEBREAKING
The act outlaws industrial espionage and strikebreaking, defined in the act, as trade practices. As such, it is an extension beyond the Byrnes law, effective June 1, 1936, which, as you know, made it a felony to transport men across State lines with the intent to employ them to interfere with peaceful picketing. The act is intended to make illegal those practices revealed by the Subcommittee on Education and Labor appointed under Senate Resolution 266 in its preliminary report no. 46 to the Seventy-fifth Congress and its hearings subsequent thereto, as shocking to enlightened employers, employees, and to the community at large, as contrary to our American standards of fair play in our industrial life.
As these practices undermine the machinery for the orderly and voluntary solution of our economic problems, the American Federation of Labor condemns them, when used by employers, as it has in the past for similar reasons, as this committee knows, condemned un-American and imported communistic practices of certain elements of labor, of similar effect.
Moreover, as has been revealed, the apparently necessary and inherent dishonesty and deceit in falsifying records, and in misrepresenting financial facts of the enterprise to public authority, to cover up industrial espionage and strikebreaking activities which have been resorted to by industrial management, and by those operating under them, breed implication of grave and unjustifiable harm to the investors of the business, who are the real but absentee owners thereof, and in whose behalf also this legislation will serve as a protection as well.
III. CHILD LABOR
Under the act employment of children under 16 is condemned in any occupation covered by it, and employment is condemned of all children of the ages of 16 and 17 in such occupations covered by the act as are declared by the Chief of the Children’s Bureau in the Department of Labor as particularly hazardous or detrimental to their health and well-being.
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The American Federation of Labor has steadfastly led in the fight for child labor legislation; in support of the Palmer-Owens bill, 1914; United States Child Labor Act, 1916; United States Child Labor Act, 1919, the proposed, national constitutional amendment, 1924; has supported the campaign for ratification of this amendment among the states; and has aggressively fought for the raising of child labor standards within the respective States.
Pending the ratification of the constitutional amendment, the Fair Labor Standards Act of 1937 deals with child labor in interstate commerce. Though it is not as extensive in its scope as congressional legislation could be under the proposed constitutional amendment, nevertheless it does reach a substantial portion of the field of non- agricultural and nonindustrial home work child labor.
The limited jurisdiction of the Fair Labor Standards Act of 1937 removes from controversy the issue of State’s rights alleged by the opponents of the constitutional amendment. We would even favor provisions to strengthen the act to provide for its administration with a view to relating it as closely as possible to the administration of State child labor laws. The act will have the salutary effect of removing from the opposition to raising in States child labor standards the objection that such high standard States are supposedly at a disadvantage in competition with the lower standard States. By breaking down this alleged advantage through such lower standards, it should also tend to weaken the opposition to final ratification of the constitutional amendment.
But that there may be no doubt as to the present position of the American Federation of Labor, we wish to reaffirm the stand which we have taken as the leader in the fight for a constitutional amendment: We shall not pause in our efforts to push to a successful conclusion the fight for the final ratification by the States of the constitutional amendment submitted to them by Congress in 1924.
IV. MAXIMUM HOURS
For intelligent discussion of the questions raised by the provisions of the proposed Fair Labor Standards Act of 1937 covering regulations of maximum hours of employment, it is necessary to present the following brief summary of its provisions relating thereto.
(1)Initial regulation.—The Board is to enter an order or regulation stating what employments are to be covered by the maximum workweek standard of the number of hours which Congress is to specify as part of the act as passed.
In stating the employments to be covered by the order or regulation, the Board must find that the application of such maximum work-week standard to the business will not unreasonably curtail the earning power of the employees in such employment.
(2)Variation of maximum hours’ standard.—The Board may, by regulation or order: (a) Vary the congressional maximum work-week standard upward or downward (sec. 4 (d)); (b) As to all employees or any class or classes of employees (sec. 4(c) To the extent it finds same necessary or appropriate “considering the physical and economic health, efficiency, and well-being of the
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employees and the number of persons available for employment, without unreasonably curtailing the earning power of the employees” (sec. 4 (d)).
(3)Reasonable maximum work week.—The Board may, by order or regulation, establish maximum weekly working hours in any occupation—
(a) provided the maximum work week is not less than------hours to be fixed by Congress.
(b) upon finding that the order or regulation is necessary;
1. To make the number of hours reasonably suited to the nature of the service or class of service rendered (sec. 2 (a) (15)), or
2. To prevent the undermining by a portion of the industry of the higher standard prevailing in the balance of the industry (sec. 5 (b)).
(4) Overtime.—The hours of employment may exceed the fixed maximum work week provided—
(a) Overtime is paid at the rate of one and one-half the regular hourly rate (sec. 6 (b)); or
(b) The number of hours and the rate per hour of overtime is specifically covered by an order of the Board (sec. 6 (b)).
(5) Special cases.—The Board may exempt occupations from the maximum fair week’s standard by an order, upon finding:
(a) The overtime employment is of a special character, such as seasonal, peak activity, repairs, or emergencies (sec. 6 (c) (4));
(4)(b) Special cases justifying special treatment (sec. 6 (c) (5)).
(6) Collective bargaining.—
(a) Neither the act nor any order or regulation shall interfere with collective bargaining or with action taken by employees to enforce collective bargaining under the law of the land (sec. 23 (2)).
(b) Neither the act nor any order or regulation can increase hours above those specified in collective bargaining agreements (sec. 23 (b)).
(c) The act is to be interpreted and administered to encourage collective bargaining.
(d) The investigations by the Board of maximum fair work week in any occupation are to be made whenever the Board has reason to believe (among other things) that “owing to the inadequacy or ineffectiveness of the facilities for collective bargaining” such standards do not exist or have not been maintained.
The above presents three questions:
I.Should hours of labor be regulated by congressional action?
II. Within what limits should congressional regulation of hours be provided?
III. What should be the relation between congressional regulation and collective bargaining agreements in the same field of activity? Each of these will now be considered.
I.SHOULD HOURS OF LABOR BE REGULATED BY CONGRESSIONAL ACTION?
The American Federation of Labor for almost half a century has pioneered for the principle that fair play and industrial morality require of industry the shortening of hours of labor without reduction in pay to provide for labor the escape from suffering through the progressive and continued increase in the per-capita productivity of American labor.
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With the dislocation of life arising from the Great War and the accelerated increase in the use of labor-displacing mechanical equipment thereafter, the American Federation of Labor brought into sharp focus to the American people the necessity of shortening hours of labor to absorb unemployment and championed that cause almost single-handed for the unorganized workers of this country.
With the coming of the depression, the sentiment aroused by the American Federation of Labor crystallized in 1933 in the enactment by the Senate, as championed by the American Federation of Labor, of the Black 30-hour-workweek bill for interstate commerce. That measure was introduced by the Senator from Alabama, Senator Black. But, as you will recall, such legislation was diverted in the House with the passage of the National Industrial Recovery Act enacted to deal with wages, hours, and conditions of employment.
Acting as labor advisers under the National Industrial Recovery Act in the interests primarily of the unorganized workers of this country, the American Federation of Labor succeeded, through the codes, in establishing the basic 40-hour week for most industries, a reduction in some cases from standards ranging from 70 to 80 hours per week.
The story of industry since the invalidation of the National Industrial Recovery Act is one of departure from the labor standards therein provided, in the direction of lengthened hours of employment. A Nation-wide survey of such departures from June 1935, through March 1936, in 583 industries, reveals that 4,073,901 employees were affected by lengthened hours to the extent of 35,247,473 added manhours beyond those specified in the codes. You can certainly comprehend that. That is what has happened. Such added hours, if spread among the unemployed, would have permitted the reemployment by those industries alone, for that period, of 839,123 employees. It is probable that the departures from the National Industrial Recovery Act coded hours of employment alone have accounted for upward of 2% million unemployed since its invalidation.
Add to this situation the consideration that at the same time technological improvements and expansion in the volume of output resulted in a 40 percent increased productivity per worker per hour from 1929 to 1935 and you can readily see why employment has lagged behind production more and more and why industrial recovery alone cannot absorb the unemployed.
The increasing lag of employment behind production became apparent even before the invalidation of the National Industrial Recovery Act. It was clear that the reduction of hours of employment through codes as a substitute for a legislative 30-hour week was not accomplishing its purpose. Accordingly, at its annual convention at San Francisco in October 1934, the American Federation of Labor adopted a resolution reaffirming its position in favor of a 30-hour week for industry and urging the support of the American people for the enactment of legislation to give effect thereto.
In January 1935 legislation was offered in the Senate, as you will recall, requiring that every code embody as a part thereof a 30-hour basic workweek standard to be effective for a period of 2 years from its enactment. At the hearings on that bill before the Subcommittee of the Senate Judiciary Committee on January 31, 1935, the American Federation
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of Labor made an exhaustive presentation in favor of this legislation. The facts therein stated and the majority report of the committee in favor of the passage of the bill of March 13, 1935, stand today as then as conclusive arguments in favor of shortening work hours by legislation to solve the problem of unemployment.
The message of the President of the United States of May 24, 1937, focuses attention on the present unemployment situation and on the urgent need of industry to take action providing for the absorption of the unemployed. The American Federation of Labor at its annual convention at Tampa in October 1936 pledged itself to work unceasingly to solve the unemployment problem. It is firmly of the conviction that such problem cannot be solved by Government relief or Government spending. Nor is it willing to concede that American industry, aroused to the full import of the facts and with full knowledge thereof, is incapable or unwilling to assume the obligation of providing within its own resources the economic stability which in these crucial days of transition is more imperative than ever before, and which can only be attained by the industrial absorption of the army of unemployed through the shortening of hours of work.
To assist industry in its efforts to attain such economic stability, congressional action providing the machinery for such absorption is necessary. We therefore answer in the affirmative the first question raised by the proposals of the Fair Labor Standards Act of 1937 covering maximum work week standards, to wit: SHOULD HOURS OF LABOR BE REGULATED BY CONGRESSIONAL ACTION?
WITHIN WHAT LIMITS SHOULD CONGRESSIONAL REGULATION OF HOURS BE PROVIDED?
Based upon the experience of the many and varied industries wherein, through collective bargaining with unions affiliated with the American Federation of Labor, employers have established and have prospered under a basic 30-hour workweek, the American Federation of Labor is convinced that industry in general is now ready for a basic 30-hour workweek basis of employment and that it wall in due course be so established. On the other hand, the American Federation of Labor appreciates full well that unorganized industry is generally established on a basic workweek basis closer to the 40-hour workweek, and that only in special and unusual cases need or should a basic longer workweek be tolerated.
In order therefore that the transition to a shorter work-week in unorganized industry may be cushioned by flexibility; that the workweek hours so established may be coordinated with the workweek policy established in such industry through collective bargaining and applied by the Board to the industry as a whole thereafter as herein below recommended, the American Federation of Labor recommends that the maximum workweek to be designated by Congress for the initial regulation of industry be 40 hours and that the Board be empowered to vary such workweek standard downward to a 30-hour workweek. That is a definite recommendation.
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III. WHAT SHOULD BE THE RELATION BETWEEN CONGRESSIONAL LEGISLATION AND COLLECTIVE BARGAINING IN THE SAME FIELD OF LABOR
The American Federation of Labor feels that the maximum hour legislation enacted pursuant to the President’s message of May 24, 1937, should conform to the following policy:
(1)It should carry out objectives enunciated in this message and contemplated by it, to wit: To provide legislative regulation of employment in industry only to the extent necessary to produce, and only so long as industry itself by collective bargaining does not produce, the objective therein specified in the public interest and for the national welfare;
(2) It should, in so carrying out these objectives, attach full force to the effective results already, and to the extent, obtained by industrial collective bargaining;
(3) It should encourage the continued functioning of such collective bargaining machinery therein; and
(4) It should provide for the withdrawal of governmental regulation as such collective bargaining, expands to effectively cover the regulated field and produces the results desired to be attained by the President and by the legislation enacted pursuant thereto.
With such objectives attained, it would mean that maximum hours in industry would be regulated either by the Government or by collective bargaining, with the Government withdrawing as collective bargaining expands, and with inducement to industry to accept collective bargaining as an alternative to Government regulation.
Let collective bargaining be extended and expanded until, through the collective bargaining process, we establish minimum rates in practically every industry and then, as that is extended, let the Government recede. Let collective bargaining be expanded and Government interference, if I may put it that way, Government regulation recede.
The recital above given of the maximum-hour provisions of the proposed Fair Labor Standards Act of 1937 reveals a clear intent and substantial compliance by the authors of the bill to conform it to the policy above stated and to attain the objective above outlined.
But to further insure that these objectives are achieved and this policy is carried out in the manner and to the extent contemplated by the President’s message as above interpreted, the American Federation of Labor, as a result of its long experience in collective bargaining, will offer herewith six additional sections to make certain that the provisions of the act shall operate in fact and in practice to encourage and not to supplant collective bargaining, and that the administration of the act shall utilize to the fullest extent the substantial and effective results already obtained and to be obtained from time to time through collective bargaining in industry.
IV. MINIMUM WAGES
For intelligent discussion of the questions raised by the provisions of the proposed Fair Labor Standards Act of 1937 covering minimum wages, it is necessary to present the following brief summary of its provisions relating thereto.
Now because of the importance of that subject I will impose on your patience, if I may, to go over the summary of the minimum wage provisions.
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(1) Initial regulation.
1. The Board is to enter an order or regulation stating what employments are to be covered by the minimum wage standard per hour, which Congress is to specify as part of the act as passed.
2. In stating the employments to be covered by the order or regulation, the Board must find that the application of such minimum wage standard to the business will not “unreasonably curtail opportunities for employment.”
(2) Variation of minimum wage standard.
The Board may, by regulation or order:
a. Vary the congressional minimum wage standard upward or downward (sec. 4 (c)).
b. As to all classes or any class of employees section 4 (c).
c. To the extent it finds such variation necessary or appropriate “to prevent the depression of general wage levels below those consistent with the maintenance of a minimum standard of living necessary for health and efficiency, without unreasonably curtailing opportunities for employment” (sec. 4 (c)).
(3) Minimum fair wage standard.
The Board may, by order or regulation, increase the minimum wages paid to employees in any occupation—
a. So that the total annual income does not exceed $1,200 and the maximum hourly rate does not exceed 80 cents except for overtime, night, or extra shift work (sec. 5 (a)).
b. Upon finding that increased wages are necessary:
1.To make wages paid fairly and reasonably commensurate with the value of the class of service rendered (sec. 2 (a) (14)), or
2. To prevent the undermining by a portion of the industry of the higher standard prevailing in the balance of the industry (sec. 5 (a)).
(4)Special cases. The Board may exempt occupations from the minimum fair wage standard by an order, upon finding:
a. That the employees are of limited qualifications as to learning or apprenticeship, age or physical or mental deficiency or injury; (sec. 6 (c)) (1) and (2).
b. The employees are furnished special facilities of value as required by the nature of the business (sec. 6 (c) (3)).
c. Special cases justifying special treatment (sec. 6 (c) (5)).
(5)Collective bargaining.
a. Neither the act nor any order or regulation shall interfere with collective bargaining or with action taken by employees to enforce collective bargaining under the law of the land (sec. 23 (a)).
b. Neither the act nor any order or regulation can reduce wages below those specified in collective bargaining agreements (sec. 23 (b)).
c. The Board may provide such rules or regulations to prevent minimum wages from becoming maximum wages (sec. 12 (6)).
d. The investigations by the Board of minimum fair wages in any occupation are to be made whenever the Board has reason to believe (among other things) that “owing to the inadequacy or ineffectiveness of the facilities for collective bargaining” such standards do not exist or have not been maintained.
e. The act is to be interpreted and administered to encourage collective bargaining.
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f. Orders of the Board may contain, in wage orders,'provisions to prevent established minimum wages becoming the maximum and to prevent the discharge or reduction in wages of employees receiving more than the established minimum wage (sec. 12 (6)).
The above presents three questions:
I. Should minimum wages of workers with annual wage income of $1,200 or less be regulated by congressional action?
II. Within what limits should congressional regulation of minimum wages of workers with annual wage income of $1,200 or less be provided?
III. What should be the relation between congressional regulation of minimum wages of workers with annual wage income of $1,200 or less, and collective bargaining agreements in the same field of activity?
Each of these will now be considered.
I. SHOULD MINIMUM WAGES OF WORKERS WITH ANNUAL WAGE INCOME OF $1,200 OR LESS BE REGULATED BY CONGRESSIONAL ACTION?
To remove from all doubt, and to bring into the clear the special and limited problem covering special congressional regulation over minimum wages in interstate industry proposed by the Fair Labor Standards Act of 1937, the American Federation of Labor emphasizes:
First. The act is not a minimum wage law for women and minors. It is designed to establish minimum wage standards under very limited and special circumstances for workers engaged in the private industries covered by the act—men as well as women.
Second. The Act does not deal, as in other countries, with the fixing of general minimum wage standards for men as well as women and minors. Any such proposal to deal with the fixing of general minimum wage standards by a government fiat for men in private industry would be strenuously opposed by the American Federation of Labor as contrary to our conceptions of democracy, and as violating the cardinal principles of self government in private industry prevailing in this country.
Third. The proposed act deals only with the fixing and regulation of wages of men, as well as women, in that very limited class of workers whose total annual income is less than $1,200 per year. There is no interference in the field covered by industries employing workers who earn in excess of $1,200 per year. That is exempt. Beyond that special class the act is not to be operative, and the question is, shall Congress be permitted to function even in that limited sphere of private industry?
The American Federation of Labor has insisted from the beginning upon the establishment of a living wage as a minimum, and it has through the force of organized effort succeeded in establishing minimum wages far superior to those prescribed by wage boards of other countries. Comparative experience is ample to show conclusively that through organization wages can and will be maintained at a higher minimum than they would be if fixed by legal enactment.
But just as the American Federation of Labor for almost half a century has pioneered for shorter hours for the unorganized workers of this country, as already detailed above, so during the same years it has pioneered, and at times single-handed has fought for a living wage and higher standards of pay for unorganized workers. Thus it is that the American Federation of Labor brought into play with
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all the force at its command the movement to protect and improve by legislation the wages of all special classes of workers whose character and employment render organization more difficult or its maintenance less stable, and subject them to exploitation in industry. The forward march of minimum wage legislation for women and minors in this country and the eager service of organized workers on boards administering them, are the story of the efforts of the American Federation of Labor to protect those portions of the industrial communities where the principle of collective bargaining presents difficulties of application.
Only those of us who come in daily contact with the working classes can appreciate the difficult problems of organization, the instability of employment, and the temptations for exploitation of that class of workers to whom the vivid description of misery and substandard living contained in the President’s message of May 24, 1937, has application. These workers are in the field where collective bargaining presents special problems, is slower in application, and lacks the stability of other classes of employment. They, therefore, are to a greater extent than other workers entitled to the concern of society.
A fair standard of wages—a living wage—for all employed in an industry should be its first consideration, and an industry which denies to its workers, who are toilers, a living wage is unfit and should not be permitted to exist.
To the extent, therefore, that there are classes of workers yet in this country to whom even the minimum standards of decent living have been denied, or are not safeguarded by collective bargaining in industry, and until they are so safeguarded, the American Federation of Labor urges that they be made the subject of special treatment by the National Government in the fields over which it has jurisdiction.
III. WITHIN WHAT LIMITS SHOULD CONGRESSIONAL REGULATION OF MINIMUM WAGES OF WORKERS OF ANNUAL WAGE INCOME OF $1,200 PER YEAR OR LESS BE PROVIDED?
As summarized above, the Fair Labor Standards Act of 1937 carrying out the President’s message provides for a congressional minimum hourly wage standard, with power in the Board to vary the standard in special cases downward, and to improve upon the minimum wage standard in occupations according to the specifications enumerated in the act, within the sphere of $1,200 per year annual wage income, and to the upper limit of regular hourly wages of 80 cents per hour.
To provide a pendulum within the sphere of permissive functioning of extreme flexibility, so that the Board may effectively deal with variations in maximum work week standards, as provided by the act, with variations in the efficiency, stability, and continuity of employment, and with differentials in hourly and weekly wage's necessary or appropriate to coordinate geographical, industrial, and other competitive relationships within the United States, the American Federation of Labor recommends that the congressional minimum wage standard be fixed at 40 cents per hour. On the basis of the experience of the many and varied industries with which the American Federation of Labor is in daily contact, it is convinced that such a regular per-hour wage scale can and should be paid and supported by American industry.
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What should be the relation between congressional regulation of minimum wages of workers with annual wage income of $1,200 or less, and collective bargaining agreements in the same field of activity?
The special and limited grounds on which the American Federation of Labor feels that private industry should be subjected to government regulation over wages, detailed above, require that such regulation should continue only until private industry shows its ability through collective bargaining to accomplish the objectives of the President’s message and the legislation enacted pursuant thereto.
The American Federation of Labor feels, therefore, that the minimum-wage legislation enacted pursuant to the President’s message of May 24, 1937, should conform to the same four principles which the American Federation of Labor specified as the requirements for maximum-hour legislation, to carry out the purposes of the same message in respect thereto.
As in the case of maximum hours, legislation covering minimum wages conforming to such four principles would mean that minimum wages in industry, even in respect to the special class of workers contemplated by the President’s message, would be regulated either by the Government or by collective bargaining, with the Government withdrawing as collective bargaining expands, and with inducement to industry to accept collective bargaining as an alternative to Government regulation.
The recital above given of the minimum wage provisions of the proposed Fair Labor Standards Act of 1937 reveals a clear and substantial compliance by the authors of the bill to conform it to such policy, and to attain such objectives. But, as in the case of the additional sections offered to supplement the maximum-hour provisions, the American Federation of Labor will offer six additional sections of similar import to make certain that the provisions of the act shall operate in fact and in practice to encourage and not to supplant the collective bargaining on wages in the field covered by governmental regulation, and that the administration of the legislation shall utilize to the fullest extent the substantial and effective results obtained and to be obtained from time to time through collective bargaining in that field.
Now, gentlemen, with your permission I will read the amendments and submit them to you with the recommendation of the American Federation of Labor. That is, I prefer to classify them as additions, Senator, rather than as amendments.
Representative Connery. As perfecting amendments.
Mr. Green. Yes; that is it.
1. This act shall be construed and applied to encourage collective bargaining agreements covering wages and hours of employment.
2. Every regulation and order prescribing minimum wages or maximum hours shall contain therein a finding and legend that such minimum wages or maximum hours, as the case may be, are intended and shall be considered only as such, and are not intended and shall not be construed to represent maximum wages and minimum hours for the employees of the craft, class, or industrial unit expressed by such regulation or order or to preclude or prevent or discourage collective-bargaining agreements between employees and employers of any craft, class, or industrial unit, respectively, to provide for higher
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wages or shorter hours than the minimum wages and maximum hours prescribed by such regulation or order.
3.Maximum hours of employment and minimum standards of wages fixed by contracts for any craft, class or industrial unit between employers and employees (or the representatives of bona-fide unions of employees therein designated or selected by them for the purpose of collective bargaining) and found by the Board to be minimum wage and maximum workweek standards prevailing in a substantial and fairly representative portion of the class, craft, industry, trade, business, or division or unit therein as classified by the Board shall be fixed by the Board as the minimum fair wage or maximum reasonable workweek for such craft, class, industry, trade, business, or division or unit thereof, unless objection is urged that and the Board finds that a higher minimum fair wage or a lower maximum reasonable workweek is necessary to prevent undue discrimination or unfair competition. And the burden of showing such undue discrimination or unfair competition shall be on the party urging the same and the proof upon which the Board shall find the same to exist and shall find the necessity to raise such wage or hour standards to overcome the same shall be found by the Board to be clear and convincing.
4. In every determination of minimum wage standards or maximum reasonable workweek hereunder the maximum hours of employment or minimum standards of wages fixed by collective bargaining between the employer and his employees (or representatives of a bona-fide union of his employees designated or selected for the purpose of collective bargaining) and covering any craft, class, or industrial unit shall prima facie be taken and deemed to be minimum fair wages or maximum reasonable workweek standards unless such fixed hours or wages exceed or are less respectively than the maximum hours and minimum wage standards established by any competitor for employees ’ of corresponding class, or craft or industrial unit as the case may be.
5. Whenever the Board finds employment of employees in any occupation to be covered by its investigation or order, is of a character generally recognized as craft employment, the investigation and order must in each case deal with such craft employment as a separate classification.
6. In any case where pursuant to sections 3 and 4 hereof, minimum fair wages or maximum workweek standards are prescribed by regulation or order of the Board different than the minimum wage or maximum workweek standard fixed by the collective-bargaining agreements considered in connection therewith, the provisions of such agreements shall be deemed to be subject to such regulation or order only to the extent necessary to make such regulation or order effective and only as long as the same shall be outstanding and in every other respect such agreements shall be in full force and effect to the same extent as if such act had not been in effect and such regulation or order pursuant thereto had not been issued or was not outstanding.
These are the additions that we wish to offer, and we believe that the acceptance of these additions, and the incorporation of these additions in the act will serve to make real the recommendation of the President in his message of May 24, 1937, and at the same time preserve the principles of industrial democracy and freedom in collective bargaining.
Representative Connery. Have you concluded, Mr. Green?
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Mr. Green. Yes, sir.
Representative Connery. Senator Holt.
Senator Holt. Mr. Green, you believe that this act should not regulate wages and hours that are already regulated through collective bargaining?
Mr. Green. That is right. As I explained, Senator, the Board itself should recognize and accept the wages and hours set in a wage scale, covering a substantial number of employees in industry as the maximum wage for the industry, and maximum hours.
Senator Holt. Is it not true that the great advancement in labor, such as lower hours and maximum wages, have really come through organization, such as the American Federation of Labor, rather than through governmental edict or law?
Mr. Green. Well, the progress which the workers have made of course was due directly to collective bargaining and to organization. There is no doubt about that.
Senator Holt. That is all.
Representative Connery. Senator Ellender. Senator
Ellender. Mr. Green, you have not made mention in your prepared statement, as I recall, to what extent you would say that small business should be exempted from this act. In the act there is a blank space whereby it may probably be that the committee will set a limit on the number of employees in a particular industry that will be exempt from this act.
Mr. Green. Senator, I will answer you directly. I do not think there is any industry small enough to be exempt. I think it should cover all.
Senator Ellender. No matter what the number of employees is?
Mr. Green. No matter what the number of employees may be.
Senator Ellender. I have a table before me here showing that in businesses of from one to five employees there are as many as 57,152 such businesses, which constitute 40 percent in number of the number of different businesses throughout the country, and that those businesses employ 2.6 percent of the employables.
Mr. Green. Well, it is clearly evident from those figures that the production of commodities and manufactured goods by that large number of employees exempt from the act would create very serious competitive problems.
Senator Ellender. So you would not exempt any factory, no matter if it only employs two or three people?
Mr. Green. I would have it subject to the provisions of the act.
Senator Ellender. Mr. Green, you are recommending 40 cents per hour. What is the maximum per week that you would recommend?
Mr. Green. I explained that.
Senator Ellender. Would you mind saying it in dollars and cents?
Mr. Green. It should be stated that the 40-hour week should be set up as the maximum.
Senator Ellender. As the basis?
Mr. Green. Yes. With power vested in the Board to reduce that between a 40- and 30-hour workweek. If necessary it ought to be reduced to a 30-hour workweek, in industries where unemployment is acute, and where we secure the 30-hour workweek through collective bargaining, then the Board should accept that as the maximum workweek in the particular industry covered.
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Senator Ellender. What I have in mind was if you fixed the maximum at 40 hours a week and the minimum at 40 cents per hour, that would give $16 per week. If you reduce it to 30 hours a week would you expect the same amount?
Mr. Green. Certainly, because the law itself provides that the rate of pay would be fixed between 40 and 80 cents per hour. As the hours of labor are reduced per week then the rate of pay per hour should rise, so as to make the weekly earnings equal.
Senator Ellender. Now, Mr. Green, suppose this act should go into effect as written, and let us say with your amendments, and no provision should be made to protect the manufacturers from foreign goods, what effect do you think that would have on the domestic manufacturers?
Mr. Green. Well, in reply to that question, Senator-----
Senator Ellender (interposing). By the way, you were here when Miss Perkins testified?
Mr. Green. Yes. I will be frank. So far as the American Federation of Labor is concerned, we favor the application of tariff regulations sufficient to cover the cost of goods manufactured abroad and in the United States. We want American labor and American industry to be adequately protected against unfair foreign competition.
Senator Ellender. Well, should this law go into effect do you not think it would be necessary to increase the tariffs so as to protect our manufacturers?
Mr. Green. I will admit that I am not competent to express an opinion on that, because I am not familiar with the tariff schedules. I know about the methods followed in applying tariff rates, but at the moment I am not in a position to express an opinion regarding the fairness or adequacy of the tariff schedules now in effect to protect American industry from unfair competition from abroad. If there is any deficiency, if there is any lack of proper protection to American workers and to American industrv in our existing tariff schedules, then Congress ought to immediately apply themselves to the task of seeing that it is corrected. Now that is our position.
Senator Ellender. One more question. I believe your organization has made a survey of the unemployed in the country on several occasions, has it not?
Mr. Green. Yes.
Senator Ellender. Would you have an idea as to how many persons would be absorbed who are now unemployed should a 40-hour week be established as the maximum workweek?
Mr. Green. Well, I could not do more than make a guess at that now, but I could supply you with the figures on that. That is, an estimate.
Senator Ellender. Could you make an estimate if there was a 40-hour week, a 35-hour week, and a 30-hour week?
Mr. Green. I would be glad to submit it for your information, and for the record.
Senator Ellender. That is all.
Representative Connery. Congressman Jenks of New Hampshire.
Representative Jenks. I have one or two questions along the line of what the Senator has just been asking. In the hearing before the House committee on the 30-hour bill in 1933 did not your executive council direct you to insist that the provisions of that bill apply to
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imported goods as well as to such goods manufactured in the United States?
Mr. Green. No, Congressman. The executive council did not instruct me, or the executive officers of the American Federation of Labor, to recommend that principle, because we have realized that we lacked authority to impose the 6-hour day on workers abroad. As I recall the bill introduced by our good friend from Alabama, Senator Black, did not include within it such a provision. The purpose of the other bill was most commendable because it was intended that we should protect American industry and American workers, but it must be quite apparent to a thinking person that it would be impossible for us to enact a provision here which would provide that a 6-hour day must apply in England or in Germany.
Representative Jenks. Well, it could apply in this way, that you would be in favor of having something enacted into the law that would prevent the importation of goods under those conditions.
Mr. Green. Well, that would come under the application of tariff regulations. I have made my position plain on that.
Representative Jenks. Well, it has been suggested here once or twice by different members of the committee that there might be something in the bill that would prohibit goods coming into this country under conditions or prices that would prohibit, almost, the sale of our goods here. For instance, there has been quite a good deal said about shoes coming in from Czechoslovakia. I understand that in 1934 the shoes that came into this country from Czechoslovakia were 50 cents per pair. Now, there could be a provision enacted into the law that would prohibit those shoes from coming into this country, could there not?
Mr. Green. Well, I should think that would be a subject that would have to be dealt with by Congress, by tariff regulation.
Representative Jenks. Well, it would be dealt with by Congress if it were a part of this bill.
Mr. Green. Perhaps there is a little difference between us in our understanding. This bill deals with the establishment of minimum rates of pay, maximum hours, and a prohibition of espionage and the importation of strikebreakers, and so on. Now if you were to stipulate in this bill that no goods manufactured in Czechoslovakia could be sold in America unless in Czechoslovakia they complied with all of the provisions of this bill you would feel, would you not, that you were going beyond your own power and authority? But if, on the other hand, under the tariff regulations you would provide that when shoes manufactured in Czechoslovakia are so cheap that they could be sold here at 50 cents a. pair, that a tariff must be established so that the cost of landing those shoes in America would compare, at least, with the cost of manufacturing them here, that would be different.
Representative Connery. Would the Congressman yield to me just a moment? Perhaps I can refresh Mr. Green’s memory. Going back to the situation before our committee, originally we had the provision, after the Black bill passed the Senate and it came over to us and was struck out after the enacting clause, there was a provision in there that said that wherever the total cost of any commodity coming into the United States was less than the cost of production of a similar commodity manufactured in the United States, the Secretary was to bar such article. You had a meeting with your council,
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if I remember correctly, and came in before the committee and stated the position of the American Federation of Labor as being in favor of that at that time.
Mr. Green. That is the tariff regulation.
Representative Connery. Then later, after the N. R. A. was written, a provision came into the N. R. A. that the President would have the power, wherever foreign imports interfered with the administration of the N. R. A., the President would have the power to embargo or lay a tax—there were four or five different methods he could use—equalize the cost of production, lay a tax to equalize the cost of production, and the different remedies suggested in that. I merely bring that in at this time to refresh your memory, going back to that.
Mr. Green. I do not think there is any misunderstanding as to our position on that, Congressman.
Representative Jenks. That is in regard to the question I intended to ask, if your organization takes the same position today that it took then?
Mr. Green. Well, Congressman, I think that that matter should be regulated by tariff laws and tariff regulations rather than to attempt to regulate it in a bill dealing with minimum wages and maximum hours. It ought to be handled in that proper, orderly, legislative way.
Representative Jenks. I have nothing further.
Representative Connery. Mr. Iglesias?
Resident Commissioner Iglesias. I have nothing.
Representative Connery. Mr. Wood of Missouri.
Representative Wood. Well, Mr. Green, Senator Ellender just asked you a question about collective bargaining and he asked you if you thought that the Board should interfere with any agreements through collective bargaining of employers and employees, and you said of course that the Board should not interfere with them.
Representative Connery, Senator Holt asked that.
Representative Wood. Senator Holt?
Mr. Green. Yes.
Representative Wood. Of course you had in mind, as brought out by your prepared statement, that insofar as the rates of wages and maximum hours are concerned, if the agreement conformed with the maximum hours and minimum wages m accordance with this bill, that the Board should not intervene or interfere, but if the employees entered into an agreement with the employers, agreeing to work longer hours and for less wages than is stipulated in this law, then the Board should intercede to prevent that action.
Mr. Green. No, I do not think so. I should rather preserve the principle of industrial democracy than to yield a right to the Board to interfere in the free exercise of collective bargaining. Now I cannot conceive of very many cases where such a condition as you described exists. The organizations of labor are constantly fighting for higher wages and improved conditions of employment, and that procedure ought to be encouraged and protected. Now we would resent any interference on the part of this Fair Wage Standards Board in any wage scale fixed between building-trades men and their employees, between printing trades and their employees, between miscellaneous trades and their employees. They have the right to strike or to agree. Now we want them to exercise that right freely without any board having authority to pass upon it. Now, if there was
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some isolated case where some collusion occurs it could be corrected in another way, and the labor unions, as a rule, will attend to that, rather than to vest in a board the power and authority to come in and say, “Your collective bargaining agreement is invalid because we do not approve it.”
Representative Wood. Now, I call your attention to the fact that during the war it was revealed that some section men in the country were working for 12 cents an hour, and during the war they negotiated wage agreements and they were far below 40 cents an hour, and we have wage agreements in effect now that stipulate a lesser wage than 40 cents an hour, collective-bargaining agreements.
Mr. Green. Probably so.
Representative Wood. Now, would you feel that those workers should still be allowed to bargain collectively for a wage less than the minimum established in this bill of 40 cents an hour?
Mr. Green. No.
Representative Wood. That is what I mean.
Mr. Green. Congressman, if you put a minimum wage of 40 cents an hour in this bill there will be no agreements negotiated which wall provide for the payment of a wage below that.
Representative Wood. Well, we have wage agreements now that provide for a lesser stipulation than 40 cents an hour.
Mr. Green. Possibly so in some of the substandard industries, but you will notice that my amendment provides that where a collective bargaining agreement is negotiated between employers and employees in any industry covering a substantial part of the industry that then the fair-wage board will recognize that as the minimum wage established in that industry and apply it generally throughout the industry. That is what my amendment provides. I offered that amendment.
Representative Wood. The bill provides that in collective-bargaining agreements entered into with the stimulation for the payment of less than 40 cents an hour, the Board will have a right to interfere and prevent the agreement from being made between the employers and employees. That is the provision in the bill now.
Mr. Green. I know, and I offered these amendments that I have made in order to make that, what we think, more practical and constructive. However, it does not seem possible under the operation of this bill any agreements will be negotiated which will provide for the payment of a minimum wage at less than that stated in the bill of 40 cents per hour. That is inconceivable, because some labor unions throughout the country would see that that provision is carried out. It is better for us to preserve the principle of collective bargaining and industrial democracy than it is to clothe some board with authority to determine whether a collective-bargaining agreement, honestly entered into between employers and employees, is valid and should stand. That is a very serious matter.
Representative Wood. You agree with me that we still have so- called unions that insist upon their free right to work for a lesser wage, if they desire to agree to do that?
Mr. Green. Well, we mostly classify them as company unions. The day of company unions, Congressman, is about gone, I think.
Representative Wood. I hope it is. They are still in evidence, though.
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Mr. Green. Well, they are moving out pretty rapidly.
Representative Wood. Is it your opinion that if this law is passed there never will be any collective-bargaining agreement entered into for less than the minimum in this law?
Mr. Green. That is my honest, sincere judgment, that is that no collective-bargaining agreement will be entered into at less than the 40-cent rate provided for.
Representative Wood. There has been so much said about that in these hearings that I just wanted to get your opinion.
Mr. Green. I want to give you the benefit of my honest opinion. That is my judgment. I would rather take a chance on that than clothe the Board with authority to determine whether the collective bargaining agreement is valid or whether it is not valid.
Representative Wood. You would be perfectly willing to take a chance on the workers’ demands?
Mr. Green. I will take a chance on that.
Representative Wood. That is all.
Representative Connery. Senator Walsh?
Senator Walsh. I have no questions.
Representative Connery. Mr. Smith?
Representative Smith. I have nothing.
Representative Connery. Mr. Dunn of Pennsylvania.
Representative Dunn. Mr. Green, yesterday one of the witnesses testified that if we adopted the 40-hour week it would put a million and a half people in employment, and also you, 2 years ago, appeared before the Labor Committee on the Black-Connery 5-day, 30-hour law and I understood you to say if we adopt the 5-day and 30-hour week approximately sly million people would be employed, and the witness testified that he thought you were conservative, that in his opinion if we adopted the 5-day, 30-hour week it would put approximately seven million and a half in employment. What is your opinion on that?
Mr. Green. Well, I do not recall at the moment, Congressman, the figures that I gave at the hearing to which you refer. The figures that I gave, however, were carefully prepared and carefully checked before I submitted them. I do not have figures of that kind here now and I cannot answer your question directly, but I will be pleased to prepare the figures and an estimate for you and for the committee, if that will be satisfactory.
Representative Dunn. That will be all right. Thank you.
Senator Walsh. Mr. Chairman.
Representative Connery. Senator Walsh.
Senator Walsh. I would like to ask a question. Is it not a fact that there are a very large number of wage earners in establishments where 20 or less persons are employed who will be reached by this bill, who are unorganized?
Mr. Green. Senator, I had advised Senator Ellender from Louisiana before you came in, that in my opinion there was no industry small enough to be exempt, that all should be covered by the act.
Senator Walsh. I agree with you, but I am asking you if it is not a fact that a large number of industries, small industries, where 20 or a lesser number of persons are employed are unorganized, the workers have no organization at all?
Mr. Green. Yes.
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Senator Walsh. Is there not a danger that the employers may seek, in those smaller industries, to engage in collective bargaining with their employees, who are more or less under personal control, very largely personal employees, to fix a minimum wage lower than that which may be entered into by collective bargaining by the larger industries?
Mr. Green. There may be some danger of that.
Senator Walsh. So that the provision in this bill for the board to deal with such a situation might be helpful and effective in maintaining higher wages in those smaller industries, wages that are comparable with the wage earners doing the same kind of work in larger industries?
Mr. Green. Yes; but. Senator, we have endeavored to meet just such a situation as that in an amendment that I have submitted.
Senator Walsh. Very good.
Mr. Green. The amendment provides that where a substantial number of workers are covered by a collective-bargaining agreement in any industry, that then the board will be called upon to accept the rate of pay embodied in that agreement as applicable to the industry. That, it seems to me, would protect the employees in industry against just such a situation as you described.
Senator Walsh. If a model collective-bargaining agreement was entered into by a well-organized union and forward-looking employer, the Board would have jurisdiction to apply the principles of that collective-bargaining agreement to those who sought to engage in collective bargaining on a different basis?
Mr. Green. That is it. So it facilitates collective bargaining and then it clothes the board with authority to extend the results of collective bargaining even beyond the substantial number covered.
Senator Walsh. Thank you.
Representative Dunn. May I ask one more question? Mr. Green, I believe in almost every business establishment in the United States, men and women who attain the age of 45 are considered to be old folks today. Now, do you believe that this bill in any way would help that situation?
Mr. Green. Congressman, that is one of our difficult social and economic problems, the discrimination against workers who reach 45 years of age and over. I have thought about it a great deal and have tried to find some way by which we could reach a situation of that kind by legislation or by agreements, and I must confess that at the moment I have not any constructive recommendation to make. The opportunities for discrimination against workers of that age are so great that it is almost impossible to cover every situation.
I notice here in the bill that you have attempted to cover it in a fairly constructive way, in the exemptions from labor standards with respect to wages and hours. I am not sure whether that will solve the problem. It may be that it will be helpful.
Representative Connery. Have you concluded, Mr. Dunn?
Representative Dunn. I just want to make this statement and then I am through. If the Government does not do something for these men and women who attain the age of 45 or 50, in my opinion the solution would be that the Federal Government provide them with an adequate pension. I know that the people have to live. You cannot buy beans, ham, and cabbage for nothing, you have to have money, so our Government has to take some action in behalf of our young and
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old people. It is our duty, we men of Congress, to see that they get some money to live on.
Mr. Green. I appreciate that that is a problem that we must deal with and we must find a solution for it, otherwise we are going to be menaced and threatened by a serious social problem.
Representative Dunn. It must be dealt with.
Representative Connery. Congressman Smith of Maine.
Representative Smith. Mr. Green, it was suggested here yesterday that employees should be limited to one job. What is your idea about that?
Mr. Green. Well, that is a detail that I could not answer at the moment. What was the basis of that?
Representative Smith. Well, I suppose it was to make more jobs, to employ more men.
Representative Wood. May I just intercede there? The question was asked one of the witnesses if it would not be well to prepare an amendment to the bill providing that any employee who had his minimum wage established by the Board should not be allowed to be employed in any other industry part time.
Mr. Green. I am not sure that such a proposal as that would be workable. I rather think that it is a matter that must be dealt with by employers and employees through collective-bargaining agreements. They usually cover situations of that kind by rules and regulations embodied in wage agreements, and that, in my judgment, would be the way to deal with that.
Representative Smith. Would that not eliminate the fellow working under the minimum wage of $16, for instance, who has a family of 8 or 10 children? Of course, he cannot subsist on the minimum fixed for four people, and by closing the door to him for employment other than on his regular job what would happen to him?
Mr. Green. Well, I cannot conceive of such a situation as that arising. It does not seem possible to me.
Representative Smith. That is the way I thought about it. Now, then, are you convinced that the minimum wage of $16 is sufficient to comfortably care for people after giving them some of the modern luxuries that all are entitled to?
Mr. Green. No, it is not. I do not agree that it is, but the trouble is there are so many thousands working at a rate below that, that after all, we will lift the wage levels of a great many thousand people, if you establish a 40-cent minimum. However, it is totally inadequate.
I recall when the Supreme Court held the minimum wage law for women and minors in the District of Columbia unconstitutional, that immediately the weekly wages of hundreds, perhaps thousands, of women in this District who were being paid the minimum wage of $16 a week established by the Minimum Wage Board declined to $6 and $7 per week. Now $16 is not enough, but $7 and $8 is worse. It is, at least, a step in the right direction. You are lifting the wage level and the standard of living just a little higher.
Representative Smith. You do not feel that it would be good judgment to try to widen that and make it a larger minimum wage, do you?
Mr. Green. Well, I am of the opinion that if the amendments which are offered are accepted by your committee and adopted by Congress, that the unions of the Nation will see to it that the minimum wage is lifted much higher than that level. It will give them
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standing and strength and power, and in my opinion the employers of the country will accept the inevitable and will prefer to have wages fixed by collective bargaining rather than to have wages fixed by a Fair Labor Standards Board.
Secondly, if wages are fixed by a Fair Labor Standards Board the papers and the books and records of the employer may be brought in for public inspection by the Board. If fixed through collective bargaining he can avoid that experience, and I think he would rather fix a wage through collective bargaining than he would by going though all that other experience.
Representative Smith. That is all.
Representative Connery. Congressman Thomas of Texas.
Representative Thomas. Mr. Green, do you have an estimate of the present number of men and women who are engaged in interstate commerce in the United States?
Mr. Green. Well, I do not have it here.
Representative Thomas. Could you get at that information, that estimate?
Mr. Green. I will undertake to supply you with that information. I will be glad to.
Representative Thomas. And also, please, if you can prepare us an estimate of the number of workers engaged in interstate commerce over and above the $1,200 limit set in the bill.
Mr. Green. Yes.
Representative Thomas. Can you give us an estimate on that?
Mr. Green. Yes.
The Chairman. May I suggest that you write that down for him, because there have been two or three requests here. That will aid very materially, I believe.
Representative Thomas. One or two other questions, Mr. Green. After the maximum-hour week has been set in this bill, do you think it advisable for the bill to go further, to stipulate how many hours shall be worked per day? In other words, shall it be limited to a 5-day workweek or a 6-day workweek?
Mt. Green. Well, my own opinion is that if you stipulate the work shall be 40 hours a week, then those who apply it will work it out so as to comply with the law.
Representative Thomas. Don’t you think that that would give an opportunity to some individuals who thought it might best serve their purpose to work their employees, say, one day 10 hours and then the next day about 4 or 5 hours, or do you think that is a matter that should be left to the discretion of the Board?
Mr. Green. I am of the opinion that that is a matter that could be left to the discretion of the Board.
Representative Thomas. Here is another thing. There has been some criticism levelled at this act by virtue of the fact that it may tend to increase the cost of the finished product.
Mr. Green. Pardon me. I wish to stipulate, however, Congressman, that we are opposed, and I think it ought to be set forth clearly, to a longer workday than 8 hours.
Representative Thomas. That ought to be stipulated in the bill?
Mr. Green. That ought to be stipulated in the bill, a 40-hour workweek, 8 hours per day, and if they were required to work more than 8 hours a day they should get overtime payment.
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Representative Thomas. Since you have gone back to that subject, what do you think about stipulating in there a 5-day workweek? Do you think that would unduly hamper the Board in ultimately working out a fair solution of the act in general?
Mr. Green. I do not think so.
Representative Thomas. You do not think so?
Mr. Green. I do not think so.
Representative Thomas. Now, going back to this question of price increase, suppose that the pay of a substantial number of employees in any given business is increased 20 percent and the hours they work is decreased 15 percent, will it necessarily follow that the cost of that product will be increased 35 percent?
Mr. Green. No; not in my judgment.
Representative Thomas. Why not? What are the factors?
Mr. Green. We must take into account the facts which have developed out of our experience in the relationship between employers and employees, and the human relationships in the industry. Strange as it may seem, the efficiency of the workers seems to increase as the hours of labor are reduced.
Representative Thomas. Do you think that is a constant proposition?
Mr. Green. It is practically constant. I have found from investigations that I have made, that there are employers who are now operating on a 30-hour workweek and a 6-hour day that are enjoying as much per capita production on the 6-hour basis as they did under the old arrangement of an 8-hour basis.
Representative Thomas. Now, let us go back to that specific hypothetical question that I put to you. Increase the pay 20 percent, decrease in the number of hours 15 percent. What effect, if any, would that situation have on the price of the product made by that business organization?
Mr. Green. I could not answer that definitely.
Representative Thomas. In your judgment, would it have a tendency to raise the cost of that product?
Mr. Green. It might temporarily, but ultimately not, because in my opinion, the slight increase whatever it may he, resulting from an abrupt change would be overcome through the introduction of new methods and economic improvements. The strange thing about it is that cost is reduced as the hours of labor arc decreased.
Representative Thomas. Assuming then that there would be a slight increase—I am not inclined to think that it would be slight but it would be far greater than slight—will this bill have a bad effect for the time being upon the agricultural worker and the worker who is engaged purely in intrastate commerce, and his purchasing power?
Mr. Green. No; it is my opinion it will not, although I could not answer that definitely. It would be a question of mathematics. I could not answer that, but in my judgment it would not.
Representative Thomas. It would not?
Mr. Green. Because I think the increase in the purchasing power of the workers benefited by the provisions of this act would be of such a character as to reflect itself in the purchase of agricultural products and so on, and in that way it would balance up.
Representative Thomas. The increase in the purchasing power of those people who were directly affected would spread over to the others?
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Mr. Green. Spread over to the others.
Representative Thomas. It would create a circle and everybody will benefit by it?
Mr. Green. Everybody will benefit by it, in my own opinion.
Representative Thomas. I hope that will be the result. Thank you.
Representative Connery. Congressman Schneider of Wisconsin.
Representative Schneider. Mr. Green, you recall under the codes the difficulty we had in the employers’ determination to have a differential between the. minimum for men and women. So far, it has been the consensus of opinion that the minimum here should be the same for men as for women; yet in the readjustment or the adjustment of these minimums by the boards, there will be the same contention on the part of employers that there shall be a difference and a lower minimum for women than for men. What is your opinion about the act as we are considering it now?
Mr. Green. It is my opinion if you stipulate in the bill that the minimum rates shall be 40 cents per hour, that it should apply to women as well as men. It should be universally applied.
Representative Schneider. .And you think the board should not give any consideration to any lower minimum for women?
Mr. Green. Under no circumstances. The rates of pay for women, the minimum rates of pay for women should be no lower than the minimum rates of nay for men. They are entitled to that.
Representative Schneider. Is it your opinion that there should be some consideration given in connection with this legislation and the enactment of this bill, to the matter of control of operation with reference to machine, hours of operation in industry or of plants?
Mr. Green. Just in what way do you mean?
Representative Schneider. The limitation of the machine hours of operation of the plant.
Mr. Green. You mean a section to provide that the use of machinery be limited to so many hours per day?
Representative Schneider. Yes. per day or per week.
Mr. Green. So many hours per week?
Representative Schneider. Yes.
Mr. Green. That is, of the machinery?
Representative Schneider. Yes.
Mr. Green. I hardly think you could cover that problem by legislation.
Congressman. I cannot see how you could. It would create endless confusion, and I do not see—that is my own judgment—how it could be controlled by legislation.
Representative Schneider. Would you favor a differential in the wage of those working nights and those working during the day?
Mr. Green. Yes, I have always contended for that; yes, sir. We have contended for double time and time and a half for overtime But we have not always been able to get extra pay for night work.
Representative Schneider. That in itself would have a tendency to limit operation in the night-time?
Mr. Green. It would. It would serve a good purpose because it would tend to limit night work.
Representative Schneider. For instance, in the textile industry, some plants operate 8 hours a day, some 16 and some 24.
Mr. Green. Yes.
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Representative Schneider. It is certain that no plant operating 8 hours a day can compete with a similarly capitalized plant operating 24 hours, from a competitive standpoint.
Mr. Green. No: but a partial solution of that would be found in the stipulation that extra pay should be paid for night work. That would tend to decrease the number of machine hours during which a machine would be operated. Because to operate them at night means increased cost, and it is my opinion that it could be dealt with in that way.
Representative Schneider. That is all I have.
Representative Connery. Senator Pepper, of Florida.
Senator Pepper. Mr. Green, you have been active in the labor movement for about how many years?
Mr. Green. Senator, you are trying to find out something there, I think. [Laughter.1 I will say 35 or 40 years.
Senator Pepper. Well, I am interested in this: When you first entered actively into that, we will say 35 years ago, what was the normal work day in industry in the United States?
Mr. Green. It ran in those days—I should say the average work day in those days would be 10 hours. It ran 12 and 14.
Senator Pepper. In the mines, in steel mills, in the textile mills, and in many other industries, 12 was what was a very common and general thing, a 12-hour day?
Mr. Green. Oh, yes.
Senator Pepper. And there were a lot of people who actually believed, conscientiously, that if you reduced the number of working hours in the work day, that all of civilization would collapse, didn’t they?
Mr. Green. Oh, yes. That belief prevailed pretty broadly.
Senator Pepper. And steadily by social advancement and enlightened intelligence and conscience, those hours have been reduced?
Mr. Green. Yes, sir.
Senator Pepper. And this effort is to build up the last group that is down at the bottom that have not been able to build themselves up by their own boot straps, as it were?
Mr. Green. Well, I think you have put it about right there, Senator; yes, sir.
Senator Pepper. Thank you.
Representative Connery. Senator La Follette?
Senator La Follette. I think the ground has been covered.
Representative Connery. Senator Lee?
Senator Lee. No questions.
Representative Connery. Congressman Dixon?
Representative Dixon. I have no questions.
Representative Connery. Congressman Griswold?
Representative Griswold. Just one thing, Mr. Green. I would like to know what your opinion is as to this section of the bill which provides for making special cases on overtime of seasonal and peak activity. You mention it on page 4 of your brief.
Mr. Green. Yes; well, in my opinion, any special arrangements made in order to meet situations of that kind ought to be applied in a very judicious and careful way. I doubt that there are many situations where any special arrangements would be really necessary, although I can understand in cases such as the canning industry and
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the fishing industry, that some special arrangements are necessary in order to meet the urgent needs of the peak and seasonal demands.
Representative Griswold. If you would just yield for a moment, Mr. Green, so that you get my idea. Those occupations are the so-called seasonal occupations, like fishing and canning and berry picking.
Mr. Green. Yes.
Representative Griswold. But if you recall the hearings on the 30-hour week, one leading industrialist there testified in favor of the short workweek, but his contention was this, that this short workweek should be on a yearly basis, you recall, whereby he would be permitted to work all of his yearly hours during his peak season which consisted of about 6 months, and leaving the men unemployed for the rest of the time. Do you think the board should have authority to cover such seasonal activities as that? That is if we have as one of the primary propositions in this bill to relieve unemployment along with other things. No matter what we think about it, you and I, the American laboring man, at least the low-salaried man spends all he makes and you are in the same position if you are going to combine it all in one 6-month period out of the year, and to leave him on charity or on society for the other 6 months.
Mr. Green. In my opinion, every means and every method ought to be resorted to and utilized in order to avoid the extension of any special privileges or exemptions. Situations such as you describe could be met during these days of wide-spread unemployment by bringing in an extra crew. For instance, if a certain amount of work must be done in a limited period of time, it would appear that at the present at least one crew could work say 30 hours per week and another crew could work 30 hours per week, and that would be giving employment to more people, and in that way help to remedy unemployment.
Representative Griswold. To refresh your recollection, I was referring to the so-called Swope plan as presented to the House Labor Committee by Mr. Swope at that time.
Mr. Green. Yes; I recall it.
Representative Griswold. Which provided for the so-called seasonal working.
Mr. Green. That is a pretty broad term, and you would have to watch that pretty carefully.
Representative Griswold. That is what I am afraid of in this bill as to that particular provision.
Mr. Green. I think that ought to be examined very carefully, and adequate protection should be provided for in the bill against any abuses.
Representative Griswold. In relation to your collective-bargaining statement, Mr. Green, I notice at one place in your first statement you refer to the difficulties of organization among the working people, and at another time in answer to a question you stated that the company union was largely eliminated.
Mr. Green. 1 said it is passing out, it is being eliminated.
Representative Griswold. I was in hopes it was, too, but just in the last few days some information has come to me that right here in the shadow of the Capitol you have an organization employing lots of people, who already have an agreement attached to their applications for membership. What about that system of collective bargaining?
Mr. Green. That is reprehensible.
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Representative Griswold. I am referring to the Chesapeake and Potomac Telephone Co.
Mr. Green. We are in there trying to organize them into a democratic trades union, and in my judgment we will succeed.
Representative Griswold. I hope you do.
Representative Connery. Before we proceed to Congressman Welch, Congressman Jenks wanted to ask a question of Mr. Green.
Representative Jenks. I wanted you to ask it.
Mr. Green. Why can’t you ask it yourself?
Representative Connery. On behalf of my distinguished colleague from New Hampshire----
Mr. Green. You are not bashful, are you?
Representative Jenks. I wanted your idea to see how it compares with Madam Perkins on the number and the size of this board that would administer this act. What in your judgment would be the size of the board that would best administer it?
Mr. Green. I will answer that directly and frankly. In my opinion, you should have a board of five members as provided for in the act.
Representative Jenks. Thank you.
Representative Connery. Congressman Welch.
Representative Welch. Mr. Green, in your opening statement at page 13, under the heading "Within what limits should congressional regulation of minimum wages of workers of annual wage income of $1,200 per year or less be provided?” You state "The American Federation of Labor recommends that the congressional minimum wage standard be fixed at 40 cents per hour. On the basis of the experience of the many and varied industries with which the American Federation of Labor is in daily contact, it is convinced that such a regular per hour wage scale can and should be paid and supported by American industry.” Should the 40 cents per hour minimum referred to by you apply equally to every State in the Union, or should there be territorial exemptions made by the Board, as is authorized under the provisions of the bill now before us?
Mr. Green. I would be opposed to geographical exemptions.
Representative Welch. For instance, should the board be authorized and empowered to fix the minimum wage and hours in the State of Massachusetts that would differ from the wages and hours in the State of Vermont?
Mr. Green. The trade unions will take care of that. The minimum rates of pay will be higher than that.
Representative Welch. For instance, in our section of the country where trade unions are not in a position to take care of them.
Mr. Green. Where they are not, then the rate of pay should not be less than 40 cents an hour. That is to apply, as you know, Congressman, to substandard industries, where the whole thing is on a substandard basis. It is a sort of a bottom below which no employer must go.
Representative Welch. You are aware of the fact that the bill under consideration empowers the board to permit territorial exemptions?
Mr. Green. Pardon me. You must always watch this too, Congressman. That there is the one who wants to make the minimum the maximum. That is a thing we must guard against, and when
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you attempt to go into that field of making territorial and geographical exemptions, you are getting into difficulty. I know that under the codes, as Brother Schneider and the others remember, there was a constant fight, the differential between the North and the South because of climatic conditions and living conditions, and it was all very plausible, and the probabilities are that if you leave the fixing of it to a board on a territorial or geographical basis that the pressure will be overwhelming.
Now, I can recognize a lot of economic facts in connection with the differences, but it appears to me that if you put that minimum rate at that level, that there is not any reason why it should not be universally applied. That is my idea.
Representative Welch. Do you recommend that the bill be amended in that respect? The Bill in its present form would permit the board to make territorial exemptions.
Mr. Green. That is the reason I offered this suggestion that the bill be amended to provide for that. If it provides for geographical exemptions, and as 1 recall now when I read the bill, it does. That is, as far as the minimum is concerned.
Senator Welch. Thank you, Mr. Green.
Representative Connery. Senator Thomas of Utah.
Senator Thomas. No questions.
Representative Connery. Had you finished, Mr. Welch?
Representative Welch. Yes. As far as the minimum wage and maximum hours, it should apply to both?
Mr. Green. Yes, to both.
Representative Wood. Mr. Green, there is a philosophy, an erroneous philosophy which is yet held by some that whenever the wage earners receive an increase in wages, that it works to the detriment of the rural element, the farmers, and some yet hold that whenever labor receives better wages, that the farmer is put in a disadvantageous position because it requires him to pay more for his commodities; and that was brought out by the question just asked by Mr. Thomas in which he asked you about the effect of the increase in wages and the lowering of hours, how it would affect the rural element in the way of purchasing his commodities. I think it has been thoroughly revealed by the Department of Labor and other statistical-gathering agencies of the Government since 1929, that whenever labor is depressed, the farmers are also depressed, which is revealed by an index that has been prepared by the Government which shows us that in the years since 1929, the annual income of the wage earners and of the farmers went up and down almost identically together. So I naturally believe that if this law were to become effective and labor were to receive shorter hours and better standards of pay, that it would likewise benefit the farmer or the agricultural worker. Don’t you think so?
Mr. Green. There is not any doubt about that.
Representative Wood. National income has not deviated an iota.
Mr. Green. As you increase the annual income of the workers, you enlarge and broaden the market for the sale of agricultural products, and just in the proportion as you increase the purchasing power of the wage earner, just in that proportion will he buy more of the farmers’ products. That means that the economic welfare of both the farmer and the wage earner groups is inseparably associated. The farmer group will suffer when the wage earners’ buying power is lowered.
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They run along parallel lines. If the wage earners’ buying power ascends and is raised, the farmers’ economic welfare will increase, because they sell more goods and at better prices. So that the philosophy expounded by some, that the farmer’s welfare depends upon low wages to the wage earner, is unsound and has been exploded. It will not stand up.
Representative Wood. If it had not been, these 4 or 5 years of depression would result in the farmers being very prosperous during those years of unemployment and reduction of wages.
Mr. Green. They ought all to be millionaires.
Representative Connery. Senator Black?
The Chairman. You go ahead.
Representative Connery. You were speaking of how the American Federation of Labor for years battled on the question of shorter hours. I thought it might be pertinent at this time to make a statement that I believe it was in 1929 or 1930 that the American Federation of Labor and the American Legion appointed a dual committee to look into the causes of unemployment and try to get jobs for laboring men and veterans.
Mr. Green. Yes.
Representative Connery. And as a result of that investigation, that joint committee of the Federation of Labor and the American Legion evolved the 30-hour week, and the 5-day week and 6-hour day; at least that is where it first came to me, through the American Legion and the American Federation of Labor. I notice your suggested amendments on collective bargaining. Do you feel that the provisions of the bill which, stripped of their legal phraseology, say practically this, that this Board will take care of a minimum wage where there is no collective bargaining, and where collective bargaining has only reached the point where it is below a minimum wage, in other words, 40 cents an hour—if the American Federation of Labor agrees with an employer on a minimum wage for laborers of 40 cents an hour, and they sign a contract to that effect, this Board has no power to go in there at all, because they are paying the minimum wage; but if, as Mr. Woods says, some union organization agrees to 15 cents an hour or 12 cents an hour, by collective bargaining, and a contract was reached, this Board under the bill now would be empowered to go in there and raise it to 40 cents an hour. Do you feel that the provisions of the bill at the present time are not strong enough on that?
Mr. Green. Yes; I do not believe it is clear enough and strong enough insofar as promoting collective bargaining and insofar as establishing the minimum rate of pay and the maximum hours of labor universally as established in collective-bargaining agreements. Then, secondly, there is involved in it the very vital principle of industrial democracy. What we want to do is to lift the economic standard, that is, the wage standard, and reduce the hours of labor to a point where it squares and fits in with our industrial and economic situation.
Representative Connery. Do I understand you right here that this is your idea, that you want it clearly set out in the law whether by a definition or as a matter of policy of Congress, that merely because we have placed a minimum wage of 40 cents an hour, that it is the intention of Congress to encourage collective bargaining and to keep the wage up by collective bargaining?
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Mr. Green. Absolutely, that is the point. And instead of the Board being the primary instrumentality in fixing the minimum wages, let the unions and the employers fix the minimum wages and let the Board recognize those minimum wages.
For instance, if an agreement in the electrical manufacturing industry is negotiated between employers and employees providing for 50 cents an hour on a 30-hour workweek, all right. The Board recognizes that as the minimum rate of pay and the maximum hours in that industry, and then it recedes. It does not invade that; it leaves that to the field of collective bargaining. In other words, as you extend collective bargaining covering the wider field and more workers and a larger number of industries, the activities of the Board merely pass out. In other words, you leave employer and employee to work out their wage problems, but behind it is the Board like a shadow over them. “If you don’t do it, we will.”
Representative Connery. In other words, as I get it now where we in this bill say that if labor goes below a minimum wage, we are going to bring them up to it, you say that if they go above the minimum wage, we want you to come up to their minimum wage?
Mr. Green. That is it exactly.
Representative Connery. I think that is a good idea.
Mr. Green. Yes, sir; exactly.
Representative Schneider. If the Board does not do that, they won’t have much to do, will they?
Mr. Green. That is just it.
The Chairman. You are familiar with the clause on page 41. You did not refer to it. There has been some objection raised by some groups because of that clause, line 2: “The act shall be construed and applied to encourage and protect self-organization of employees for the purpose of collective bargaining and mutual aid.” That is the idea you have in mind?
Mr. Green. That is the idea. That is just it, Senator. That is the purpose of the act. It is to reach that point and that idea.
The Chairman. The purpose of the act as you construe it is to bring about better wages and shorter hours?
Mr. Green. Yes, sir.
The Chairman. Primarily through collective bargaining?
Mr. Green. That is it.
The Chairman. But where collective bargaining has not and cannot reach it, to provide a minimum below which they shall not go in wages and above which they shall not go in hours?
Mr. Green. Yes.
The Chairman. That is your construction of the bill and the construction of the Federation?
Mr. Green. That is my construction of the bill and it is my understanding of the purpose of the bill. And the additions that I offered are to supplement that and to make the bill workable in so far as it achieves that purpose.
The Chairman. And it is your judgment that the bill in its entirety is a bill in line with what you have been working for, for years?
Mr. Green. Yes.
The Chairman. And what the organization, the Federation has been working for, for years?
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Mr. Green. Yes; and that sets it forth admirably—
and the act shall be construed and applied to encourage and protect the self-organization of employees for the purpose of collective bargaining and mutual aid.
There is the purpose of the bill set forth clearly. It is not for the purpose of setting minimum wages by legislative fiat; it is not for the purpose of interfering in the exercise of industrial democracy or interfering in the collective relationship between employer and employee; but rather to promote industrial democracy and the establishment of wages, minimum wages and maximum hours of employment, through collective bargaining.
The Chairman. And, as a matter of fact, a discussion as to many unions setting a minimum wage below the minimum wage fixed by the Board is largely theoretical by reason of tho fact that no union would exist lung if it did that, would it?
Mr. Green. No. It is largely theoretical. I cannot conceive of very many instances where that would be so.
The Chairman. They would not last long?
Mr. Green. They would not last long. They could not stand.
The Chairman. Mr. Green, in all that you have said in reference to it and in connection with all of the discussion, of course, it is your desire also that we try to work out a bill which will stand the test of the courts?
Mr. Green. Oh, yes.
The Chairman. And that we must make that as one of the prime considerations in connection with both the minimum wage and the maximum hours, one that meets the opinions of the Court on the recent minimum wage case?
Mr. Green. That, to me, is of the greatest importance.
The Chairman. I say that frankly because there are several things that you have suggested that it might be possible—I do not mean in your main statement, but in the discussion that has come up—that it might be possible would affect the ultimate fate and destiny of the bill, and it is our desire to work it out in harmony so as to comply with the decisions of the court so as to get what we want, which is better wages and better hours, which we have been fighting for for quite a while.
There is just one other question. Perhaps it may not have anything to do with it, but the question has been asked whether everything that had been done had been done by organized labor. Of course, we know, and everybody that is familiar with the increase of wages and better working conditions knows the magnificent contribution that has been made by organized labor. For instance, a great deal of progress made since we first began to fight to get congressional recognition for a shorter work week, Mr. Green?
Mr. Green. Yes; there has been a great contribution made within this last 4 or 5 years—no; 4 years.
[Laughter.]
Representative Connery. Incidentally, Senator, if you will yield there, we may say that we gained one major victory when we got the 30-hour week on the P. W. A. and the N. R. A.
Mr. Green. And pardon me. We made decided progress when we passed the Walsh-Healey bill sponsored by my good friend Senator Walsh. The value of that bill to organized labor has never been
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properly appreciated. I think it brought the 40-hour week to the steel workers, to the steel industry of this country. It is directly responsible for that.
Representative Griswold. Just one thing that was brought out by Mr. Wood, by what Mr. Wood said, and so that the record may show it was correct in this instance. In 1935, the section men on many railroads were drawing as little as $6.20 a week under their agreement, but that weekly wage was due to the fact of the reduction in hours. I don’t know that it was due to the fact that that was the rate, but they reduced their hours down to where their weekly drawing was only $6.20.
The Chairman. I think it is also fair to state that while I voted against the N. R. A., I think it is fair to state that the N. R. A. made a contribution on wages and hours.
Mr. Green. Senator, it made a very great contribution toward the establishment of decent wages and hours and toward the partial solution of unemployment. Unfortunately it was organized hastily and there was much confusion both in its organization and administration during the early stages, but I want to say to you, based upon my knowledge and experience of that act, that it made a wonderful contribution toward the establishment of decent minimum rates of pay and decent maximum hours and toward a partial and a very large solution of unemployment.
The Chairman. Mr. Green, I am sure the committee will all agree and appreciate your statement. It has been very, very helpful indeed. It has covered the subject well, logically arranged, and very helpful.
Tomorrow morning at 10 o’clock, Mr. R. C. Kuldell, a manufacturer of oil equipment in the State of Texas, will testify. That will be the only witness tomorrow.
(Whereupon at 3:50 p. m. a recess was taken until Saturday, June 5, 1937, at 10 a. m.)
Answers to Questions Asked of Mr. Green at the Hearing on the Black- Connery Labor Standards Bill on June 4, 1937
Note.—In answering the first three questions which are concerned with the number of unemployed who would be reabsorbed under certain work-hour limitations, it has been possible to make only the roughest statistical estimates. It is impossible to forecast what labor-saving devices manufacturers will introduce when hours are shortened, and therefore no one can predict, even approximately, the actual increase in employment which will occur with a shortening of hours. Also, statistical material with which to estimate probable employment is very inadequate. Bearing these facts in mind the following estimates are submitted:
1.Question. How many unemployed would be reabsorbed as a result of application of the 40-hour maximum workweek under the bill?
Answer. Approximately 200,000 (steam railroad employees not included).
2. Question. How many unemployed would be reabsorbed as a result of application of the 30-hour maximum workweek under the bill?
Answer. Approximately 3,650,000 (steam railroad employees not included).
3. Question. What maximum hours would be necessary to reabsorb those now unemployed?
Answer. Our calculations show that a 30-hour week established throughout industry would reabsorb all the present unemployed—that is, including also those industries not covered by the bill.
4. Question. Estimated number of employees now engaged in interstate commerce?
Answer. We estimate that approximately 13,000,000 employees are engaged in the following industries: Manufacturing, mining, public utilities, steam railroads, motor, water, air and pipe line transportation passing in interstate commerce.
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No attempt has been made to eliminate workers in manufacturing industries who produce products which do not pass in interstate commerce. If steam railroads are omitted the number would be 11,800,000.
5.Question. Estimated number of employees engaged in interstate commerce who earn more than $1,200 per year and would therefore be excluded from the application of this law?
Answer. In 1929 Brookings Institution estimated that 68 percent of all persons engaged in gainful occupations, outside of agriculture, received less than $1,500 a year. Workers’ income today is still 15 percent below 1929. Accounting for this, and setting a limit at $1,200 per year instead of $1,500, we estimate the percentage at approximately 60 percent. Assuming that these figures may be applied in general to those employees engaged in interstate commerce, since their income does not differ greatly from that of workers in general, it appears that between 7,000,000 and 8,000,000 persons would fall below the $1,200 per year limit fixed by this law, while the remaining 5,000,000 or 6,000,000 would not be effected.
6. Question. What, if any, increase in cost would result in the application of the 40-cent minimum hourly wage and 40-hour maximum workweek?
Answer. It is exceedingly difficult to estimate the increases in cost which would result from the application of the 40-cent minimum hourly wage and the 40-hour maximum workweek. In the April 1936 issue of the Monthly Labor Review, the Department of Labor gives figures indicating that between 1932 and 1934 a reduction in the average workweek of 3.2 hours together with an average wage increase of 8 cents per hour increased labor costs per unit of product by only 8 percent.
The following list of average hours worked in April 1937 in the industries concerned will show that in most cases the reduction of average hours will be very much less than the 3.2 hours dropped from the average workweek between 1932 and 1934. Average wages in the industries concerned are very much above the 40-cent minimum. Therefore, it appears likely that the increased cost brought about by introducing these minima in industry would be very slight. The change of any one cost item starts management toward the economies which may reduce unit costs. The larger the wage raise, the more sure are production economies. I should like again to emphasize the impossibility of estimating the effect of these changes on costs.
Industries concerned in Interstate Commerce and average actual hours worked per week April 1937
Mines:
Anthracite________ ___________________________________________ 41.8
Bituminous..................................................................................................... 33.8
Metal mining.1......... ...................................................................................... 44. 5
Quarry—nonmetal-. ................................................................................... 43. 1
Petroleum_______ ____________________________________________ 40. 2
Manufacturing_______ ____________________________________________ 40. 4
Utilities:
Telephone and telegraph ............................................................................. 39. 3
Electric power and light__________________ _____________________ 40. 5
Electric railroads . ....................................................................................... 46. 2
Motor transportation:
Motorbus employees 2---------------------------------- ------------------------------- 45. 6
Motor truck employees 2_________________________________ _______ 48. 6
1 March 1937: April 1937 not representative due to strikes.
2 October 1935, the most recent figure.
Source: Motor transportation: Federal Coordinator of Transportation. Balance of groups: Bureau of Labor Statistics, U. S. Department of Labor.
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FAIR LABOR STANDARDS ACT OF 1937
SATURDAY, JUNE 5, 1937
United States Senate,
Joint Committee of the Senate Committee on Education and Labor, and House Committee on Labor,
Washington, D. C.
The joint committee met, pursuant to adjournment, at 10 a. m., in the caucus room, Senate Office Building, Senator Hugo L. Black presiding.
Present: Senators Hugo L. Black (chairman), David I. Walsh, Elbert D. Thomas, Claude Pepper, Allen J. Ellender, and Robert M. LaFollette, Jr.
Representatives William P. Connery (chairman), Reuben T. Wood, Albert Thomas, Jospeh A. Dixon, George J. Schneider, Richard J. Welch, Clyde H. Smith, Arthur B. Jenks and William P. Lambertson. The Chairman. The committee will come to order. Mr. Kuldell.
STATEMENT OF R. C. KULDELL, PRESIDENT HUGHES TOOL CO., HOUSTON, TEX
The Chairman. Will you give your name and address to the stenographer please, sir?
Mr. Kuldell. My name is R. C. Kuldell. I am from Houston, Tex.
The Chairman. What is your business, Mr. Kuldell?
Mr. Kuldell. I am president and general manager of the Hughes Tool Co. of Houston, Tex.
The Chairman. What does the Hughes Tool Co. manufacture or sell?
Mr. Kuldell. The Hughes Tool Co. manufactures tools for the drilling of oil and gas wells.
The Chairman. How many employees do you have?
Mr. Kuldell. We have over 4,000 employees in the plant at Houston?
The Chairman. Do you have more than one plant?
Mr. Kuldell. We have branch plants in Midland, Tex., Los Angeles, Calif., and Oklahoma City.
The Chairman. You have plants in three States?
Mr. Kuldell. Yes, sir. We have warehouses in a number of other States, in almost every oil State.
The Chairman. Do you have representatives in all the oil States?
Mr. Kuldell. Yes, sir.
The Chairman. Sales representatives, I assume?
Mr. Kuldell. Yes, sir.
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The Chairman. Mr. Kuldell, we were informed that you desired to testify before the committee.
Mr. Kuldell. I was invited, kindly invited by Congressman Thomas. I was glad of the pleasure and honor of doing so. I am speaking solely for myself, not as a member of any association but purely from my own experience as an industrial manager for the past 15 years handling problems of labor and management.
The Chairman. Have you been an official of this company for 15 years.
Mr. Kuldell. Yes, sir.
The Chairman. You are the president of it?
Mr. Kuldell. I am the president of it.
The Chairman. Has it grown any in the last 15 years?
Mr. Kuldell. Yes, sir. When I came to the company they had probably 200 employees. It has grown to over 4,000.
The Chairman. Mr. Kuldlell, I do not know exactly the line you wish to speak on, but we will be glad to hear anything you want to say about this bill.
Mr. Kuldell. Thank you, sir. I have read the bill. I believe it is called H. R. 7200. You have the Senate bill, I believe.
The Chairman. Yes, sir.
Mr. Kuldell. I know its objective, namely, to establish wages which might be called minimum wages and hours which might be called maximum hours, and overtime, to eliminate the use of spies and strikebreakers, as defined in the act, and to eliminate child labor.
With all of these things the company which I represent is fully in accord, having established those things in the company voluntarily, with the cooperation of the employees. It was my thought that my appearance would be of some value to the committee, and the committee could question me as to the methods used, or as to our experiences. We will be glad to furnish that information.
The Chairman. May I ask whether your employees are unionized or not?
Mr. Kuldell. We have all the unions that exist in our plant. It is not a closed shop, nor is the plant working under a contract. It recognizes the American Federation of Labor, with its various craft unions. It has two employee organizations, one of white and one of colored, and this last week I was visited by a committee of the C. I. O. so we have them all in the plant, but each one represents its own members and each one visits with us, confers with us on its own program.
The Chairman. Will you proceed, Mr. Kuldell?
Mr. Kuldell. The company which I represent is in the South, and of the 3,600 hourly employees we have 900 colored, so our problem has been keeping in close touch with what is known as unskilled labor as well as skilled labor.
Since 1929 our average wage has increased from 59 cents an hour for the white to 73 cents an hour for the white. Our colored average has increased from 40 cents to about 47 cents, for unskilled labor.
It was my thought that in introducing a bill of this sort and getting it under action that we should consider where the cure is necessary.
In a recent statement from the Department of Labor the highest- paid industries were listed as follows: Newspapers, 94.2 cents per hour; rubber tires, 93 cents per hour-; petroleum refining, 88.3 cents
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per hour; building, 88.2 cents per hour; automobiles, 85.7 cents per hour; utilities, 81 cents per hour.
The lowest-paid industries were: cottonseed, 24.1 cents per hour; hotels, 9.72 cents per hour; men’s furnishings, 33.6 cents per hour; fertilizers, 34.3 per hour; shirts and collars, 37.5 cents per hour. These are the six lowest and the six highest listed among the very long list of over 100 industries.
As the lowest-paid industries are not notorious for their high profit margins it is evident that increases in pay will not be found by reduction in the profit margin.
Low standard-wage conditions result from the following causes: First, a low quality of help, that is, low in skill and intelligence; second, lack of modem equipment; third, lack of modem management methods; fourth, insufficient capital, and, fifth, competition. To raise the lower rates into the liigher brackets, therefore, these conditions must be overcome.
The first condition exists where the class of help is slow in learning and unskilled in its vocational training; and that is one of the necessary elements to be corrected in this situation. Apprenticeships are used by most manufacturers in developing skilled help from unskilled help.
Lack of modem equipment is the cause of much of the low rate paid, because a man cannot earn with hand tools what he can earn with more modern equipment and better working conditions.
Low-rate wages are often due to lack of modem management methods. It has been our experience that as our wages have increased we have been able to offset the increase very often by better methods of management, better buying, better processes, using all the scientific and engineering methods developed, by using better scheduling in the shipment of small orders, less idle time. Modem management methods are one of the most effective means of raising wages.
Insufficient capital often causes companies to be unable to purchase modem equipment and to put in the proper type of plant to use labor to its best advantage.
As to competition, if this bill becomes a law and is widely applied it will, in a way, force all employers of low-rate wages to raise simultaneously, which should eliminate much of the complaint that low wages are due to competition of those who will not raise.
The problem of correcting the low wages is a problem of industrial management and covers the five points which I have mentioned. To accomplish it is a tremendous task and a very worth-while task. This bill sets up an independent labor board to accomplish this task. It is regrettable that another board should be set up. In business we usually put all similar functions under one department, if necessary adding a force to that department to cover it. But since the Federal Government is assuming this responsibility it would seem, for the sake of economy and to avoid confusion and duplication of work, it could well be consolidated with other boards—boards dealing with the labor and management relations problems.
This bill gives the new board every opportunity to approach the task sympathetically and constructively. It is not a blanket order to do a definite thing but is an order to accomplish an objective, and if the task is approached by the board in that spirit it is a worth-while
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objective. Progress should be made constantly and progressively so that it will disrupt business in the lowest possible amount, but if it is attached as an instantaneous change to take place in industry between labor and management it will cause much disruption and might cause much unemployment.
It is a fact that management seldom knows what it can do until it is pressed into doing it by the pressure of either competition or some pressure from inside or outside. Most managers, looking back, will be amazed at things they have been able to accomplish when forced to do so
.We all know what competition has done for industry, and it is my belief that these objectives can constantly be approached by management if the Federal Government, through this board or through some agency, takes a sympathetic and constructive attitude, holding the objective before it constantly and using what pressure is necessary to keep management on its toes, to advance both wages and hour conditions. If it is attempted, as I said, in one stroke it will have nothing but evil effects, but if it is attempted by constant change and improvement it will be beneficial.
It seems to me the objective should be that this Board—and the bill calls for it—should report to Congress annually. The thing that Congress should be interested in, in the work of this Board, is the rising graph of these rates which I have cited in the low-paid industry. If that graph is rising and if the rate of its rise is satisfactory then the Board is doing a good task. It is more important to the individual to have his income constantly raised than it is just to have one jump and then strike a new level. Instead of setting a definite rate which would not apply to everybody, a scale of increase would be a better objective for the committee to adopt. For example, if a 10 percent increase could be arrived at in 3 months and at the end of 6 months another 10 percent, and at the end of another 6 months another 5 percent, some such raise in wages occurring periodically and constantly would disrupt management and business less, and would benefit the employee because he would absorb his increases gradually and grow with them. We have always used in our business the method of constant increases, and only this year, for the first time, made a vertical increase, and yet our wages are from 20 to 25 percent higher per hour than they were in 1929.
I wish to say that the business I am connected with is a special business in that the tools, some of which are covered by patents, are serving an oil industry, and the production in the oil industry, which is a highly profitable industry if oil is discovered, and when our tools are used to drill a well and the well is an oil well the customer can well pay for them. We may be in a very fortunate position in having a good market for our tools and an advanced product to sell, but we accept the obligation of paying higher wages than is paid in our locality, and paying higher than the average in machine shops and foundries throughout the United States. It has been our objective, and our employees have worked with us most helpfully in advancing these wages constantly and continuously.
Our experience with our employees has been most satisfactory. They have brought their problems to us. They have been discussed by the officers in the plant. Conferences are held at least twice a week. Individual cases are handled and the general matters of policy
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are handled that way, and as the result we have all of those things which this bill calls for, and many others which are recognized by modern employers as desirable.
Having had this experience of some 15 years, in constant touch with a large group of employees, operating in a manufacturing industry, I was glad to accept your invitation to tell you of our experience and of my personal approval of the objectives herein, but one recommendation which I wish to leave is that the board handle this matter as a doctor and not as a policeman, and that if that board is properly constituted and does its task sympathetically it can do a tremendous lot of good and will find, 1 think, employers glad to cooperate in a gradual raise of the present conditions to those which are considered more desirable.
The Chairman. I failed to ask you one thing. What hours do your men work?
Mr. Kuldell. We work 40 hours a week; 8 hours is a day’s work and 40 hours is a week’s work. We pay for overtime time and a half, for more than 8 hours in one day, or more than 40 hours in a week. We pay time and a half for Saturday afternoon, double time for Sunday. We have nine holidays, which I think is more than most people recognize. We pay time and a half for holidays. We have 2 weeks’ vacation with pay for all employees who have been with us 1 year. We have athletic departments, a restaurant and all those things that go with the modem plant.
Representative Connery. Mr. Lambertson?
Representative Lambertson. I do not believe I have any questions.
Representative Connery. Mr. Schneider?
Representative Schneider. Mr. Kuldell, is your corporation a stock corporation?
Mr. Kuldell. Yes, sir, a stock company, but all the stock is owned by one person.
Representative Schneider. By one person?
Mr. Kuldell. Yes, sir.
Representative Schneider. Do the same labor conditions apply in all the plants, or the factories of that company, wherever they may be?
Mr. Kuldell. Our other plants are simply service plants for repair work. There are not more than 10 to 20 men in each of them.
Representative Schneider. How would that policy that applies to wage increases be made? Would it be made by the board of directors or by one person?
Mr. Kuldell. I think the general principles laid down by the founder of the company, who had died in 1924, are being followed. Of course, at that time we had the 54-hour week and 9-hour day, 50-cents-an-hour wages, but we have progressed mainly because of the close cooperation of employees and management.
Representative Schneider. Does the owner of the plants adjust the wages, or does he just give his approval?
Mr. Kuldell. He does not do either. He is Mr. Howard R. Hughes, the aviator.
Representative Schneider. Is there a management board? Do they do it or is there just one manager?
Mr. Kuldell. I do it, with the help of the production superintendent. The two of us are the only ones consulted on a wage matter.
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Representative Schneider. Now, as you stated, you have an organization that is in the American Federation of Labor, you have some employees in the C. I. O., and some nonunion people?
Mr. Kuldell. Yes, sir.
Representative Schneider. Just how do all these various groups agree upon the wage policy?
Mr. Kuldell. The way it works out in practice—each one gets an idea that it wants some particular thing, whether it is an adjustment of the hours which they work, or a raise in one particular department, or what not. We have welders, for instance, in one department, machinists in another, molders in another; we have all the crafts, and the crafts have their own program, and each one comes in with its own program and advances it. If it is a constructive suggestion and can be carried out, it is adopted by publication of a notice of the policy, as, for instance, ‘‘This date such and such is effective”; whereas if it affects only the wages in one group and the wages are changed in that group, it takes place the next pay day.
Representative Schneider. Therefore there are several groups that are negotiating these wages?
Mr. Kuldell. There are two groups. The American Federation of Labor combine all their craft groups in what they call the Metal Trades Council.
Representative Schneider. What percentage of all the employees are members of any of these unions?
Mr. Kuldell. I think about 90 percent belong to one or the other.
Representative Schneider. About 90 percent?
Mr. Kuldell. Yes, sir.
Representative Schneider. Now, the management recognizes all of them?
Mr. Kuldell. Yes, sir.
Representative Schneider. It meets them as they come?
Mr. Kuldell. Yes, sir.
Representative Schneider. Do the colored workers belong to the unions, or do they make up this employees’ union?
Mr. Kuldell. They have one of their own. It is not the same as the white union. They have what they call the H. T. Club.
Representative Schneider. Are they affiliated with the C. I. 0.?
Mr. Kuldell. No, sir; they are an independent organization.
Representative Schneider. Do you pay the colored workers equal pay with the white workers? Do they have the same wages?
Mr. Kuldell. I do not think they do equal work; that is, there are certain tasks that are colored, and there are certain tasks that are white.
Representative Schneider. Does the company recognize the union shop in any respect?
Mr. Kuldell. I think we do in all respects. We have in our plant all the conditions that are asked for by any union—that is, as to recognition, as to wages, and as to hours, as to vacations, as to handling of grievances, all those headings that are contained in any contract of theirs—they are all in effect in our plant, and each of them is subject to constant change or improvement as to conditions and hours.
Representative Schneider. For instance, in the foundry, if 95 percent of the men who have belonged to the union for years pay their dues and negotiate with you for improved conditions—if they
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ask you that the other 5 percent should bear their burden of financing the union and participate in it, would you insist on having the 5 percent join the union?
Mr. Kuldell. No; we would not assist them; we would not obstruct them, either. That is strictly their private affair.
Representative Schneider. Well, it seems that you have a rather chaotic condition in the plants with all these various unions. Sooner or later it would appear that you are going to have some difficulty.
Mr. Kuldell. Well, we had our experiences during the N. R. A. days. We had two elections; we had an election first, and the local group won the election.
Representative Schneider. Do you post notices of the hours and wages throughout your plant, covering all the respective positions?
Mr. Kuldell. Well, we have a wage sheet which we print and place in the personnel department, and the representative of any of these groups has access to it; that is, if he wants to know what the rate is in any department and he is a representative of the A. F. of L. or of the company organization, he can go to the personnel department and ask to see the sheet. If he asks me, I have a copy in my desk and tell him.
Representative Schneider. You do not post them publicly in each department?
Mr. Kuldell. No, sir.
Representative Schneider. You spoke about the various results, various methods, by which you get higher production. You did not mention, as I recall, anything with reference to better human relations between you and the employees. Do you think better human relations has anything to do with the productivity of the plant?
Mr. Kuldell. I think better relations has everything to do with it. That is why we have such splendid production.
Representative Schneider. That being the case, don’t you think if all of your employees were members of the respective unions, all bearing an equal financial burden of maintaining the cooperative arrangement with the employer, that you would get better results than you get at the present time?
Mr. Kuldell. I do not see how we could get better results. We are delighted with it, and I think they are. They tell us they are.
Representative Schneider. Do you think it is fair on the part of the employees to pay the maintenance of the unions and devote their time and energies to negotiating with you, and those who do not belong to the unions reap all those benefits? Do you think that makes for good human relationship as between these employees?
Mr. Kuldell. It certainly has not caused any unpleasant relationship.
Representative Schneider. You have got a lesson to learn in human relations.
Mr. Kuldell. We have been doing it for a great many years, and we are in very close touch with it.
Representative Schneider. How much competition do you have in the products that you produce and sell?
Mr. Kuldell. The major product which we produce and sell is made by one other company, and it is located in Houston, Tex. That company is in strict competition with us throughout the world, in all our world markets.
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Representative Schneider. What are the conditions of their plant with reference to labor?
Mr. Kuldell. I think their conditions are identical with ours.
Representative Schneider. But you think yours are a little better?
Mr. Kuldell. Yes; and they think theirs are better.
Representative Schneider- Between the two of you, you have a sort of monopoly; is that it?
Mr. Kuldell. Of that type of business; yes, sir.
Representative Schneider. Therefore, you are able—because of not meeting unfair competition, that is often met within industry— you are able to pay wages a lot more readily?
Mr. Kuldell. Yes, sir. I think I have made that very clear. We are in a very fortunate position from that angle, and we have a very large obligation for that reason.
Representative Schneider. That is all.
Senator Pepper. Mr. Kuldell, that also indicates, does it not, that where your competitor carries out his business on the same high standard that you do, you are not at a disadvantage when you try to give fair hours, fair wages, and fair working conditions?
Mr. Kuldell. That is true. That puts us in a very desirable position.
Senator Pepper. Suppose you had a desire to have good working conditions, pleasant personal relations, fair hours, and fair wages, but you had a direct competitor that did not believe the same way that you did; what would be the effect of that action of your competitor upon your desire to do the good thing?
Mr. Kuldell. It is our experience now, since the N. R. A. days, that competitors get together much more frequently than they ever did before and iron out those difficult tasks. While we have never had a conference with them on wages and hours, our personnel departments exchange rates constantly. When one group of employees get more at Hughes than they do at Reed, they ask us what our rates are. We really compete in bettering the hours, the wages, and working conditions.
Senator Pepper. If, however, there were not some matter of public policy buttressed by law, or some enlightened interest, such as you describe among competitors to get together voluntarily, one individual or one unit, or one portion of an industry, might find itself unable to do all the good things it would like to do in the way of improving hours and wages?
Mr. Kuldell. Yes, sir. I listed competition as one of the causes for low wages: but regardless of the ambition and ability of one concern to do it best, its competitor might hold it down. However, it can do a lot by the institution of modern management and equipment. Still, its selling price could be fixed by its competitor, and under that selling price it could only do a certain amount.
Senator Pepper. Mr. Kuldell, I am very much interested in your story. We think there are a great many people that have some fears that the working men, perhaps, are not going to be reasonable in dealing with management when they bargain collectively; that they are going to be overfacetious, that they are going to be a little vain about their new-found power; they are going to be just a little bit unreasonable. What has been your experience in reference to that?
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Mr. Kuldell. My experience has been this, with our own employees—we have found them extremely reasonable. We have even suggested to them objectives which they could obtain. For instance, recently, we suggested the second and third shifts could be paid a higher rate than the first shift, and we have suggested a number of things. We suggested a rest period between the long morning hours. Where we dealt with our own employees, they have been extremely pleasant, reasonable, and appreciative. Where we dealt with representatives of organized labor who live in the city, who are our own people, we have found them the same way. We have lived with them for many years; we have known them personally; they know us. The only difficulty we ever had was when an outside man came in during the N. R. A. and caused some excitement, then we had to appear before the Labor Board at that time. We had an election; it was ironed out without any serious trouble.
Senator Pepper. What is your official connection with the business?
Mr. Kuldell. I am the general manager.
Senator Pepper. How many of those men do you know personally?
Mr. Kuldell. I know all of the men that are on the committees— all the representatives.
Senator Pepper. How much do you make yourself available and visible to the men in the various departments?
Mr. Kuldell. I make a trip through the entire plant at least twice a day; that is, I walk through every department, and everybody sees me. I think everybody knows me by sight. Our difficulty is that we work three shifts. We have a group of men that come to work at 2:30 in the afternoon and work until 11, and another group of men work from 11 to 7. It is hard to know those people, because we do not visit the plant during those hours, and every movement contrary to the general movement usually starts in those shifts.
Senator Pepper. How much do you think the good will that prevails in the plant is attributable to the conviction that your employees have that the management, in the first place, is interested in them; in the second place, is intelligently trying to provide for their welfare; and in the third place, actually wants to help them?
Mr. Kuldell. I think that is 90 percent of the battle. That is our ambition. We hope that we can make conditions so pleasant, so satisfactory, and meet their suggestions to such an extent that no outside promiser can promise them anything as good; and if we meet those requirements, we feel that we will have no serious trouble.
Senator Pepper. What effect, if any, have you observed that your labor policy has had upon the health condition of your employees?
Mr. Kuldell. Well, I can almost prove that by statistics. This white organization that we have is a welfare organization. They charge $1 a month dues, and for that dollar they give to every man who becomes sick his full hospitalization, his anesthetic, his doctor bill, and from $12 to $20 a week compensation while he is sick. The insurance company who tried to underwrite us said that it was absolutely impossible to do it. They have now been doing it for 4 years without ever failing to make a payment, without ever going into the red. That is because, in the first place, we have ideal labor conditions; athletic, outdoor sports; we nave a physical examination for every man we employ, and therefore, from an insurance standpoint,
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they are good risks, and our health record has been perfectly wonderful, as is proved by the fact that they have met their payment.
Senator Pepper. You think your factory is the kind of a factory in which industrial unrest could not thrive?
Mr. Kuldell. There have been not less than three or four attempts to start it. We have a small group of Communists in our plant. They get out a little paper called the Fighting Worker. I know who they are. I called them to my office and told them—I said: “I know you are the publisher of this paper. You are free to publish and say anything you want to in this country. We cannot discharge you, we have no intention to discharge you for it, but please leave my name personally out of it.” They did that for a number of months. They first worked on the A. F. of L. committee, and one of them got to be a committee member. This group recently discharged them from that committee membership. That group is now active organizing another group; but as far as I know, there are only 20 or 30 in that group, and they haven’t gotten very far with it.
Senator Pepper. You have reason to believe, therefore, from your experience, that the improvement of labor conditions would tend to prevent industrial unrest and disturbance which might affect adversely the channels of interstate commerce?
Mr. Kuldell. I am sure of that. I think the great number of men are reasonable men, and they cannot be influenced against the interests of themselves and their company if they are convinced their best interest is now being cared for.
Representative Connery. Mr. Smith?
Representative Smith. What do you say about a universal or Nation-wide minimum wage applying the same to all sections of the country?
Mr. Kuldell. I think it would be very unfair for me to say that, because of the favorable condition under which our plant operates. Most of our tools are protected by patents which give us a price monopoly, and we are serving an industry that is young and vigorous and profitable, crude-oil production, but we would take a 45-cent minimum without worrying about it at all. It would certainly not be satisfactory for another concern. A friend of mine has a little business which is just the extreme of ours. May I mention it briefly?
Representative Smith. Yes.
Mr. Kuldell. He buys cotton that has been burned or water- soaked in a fire, the outside of the bale has been damaged, and he takes the bale to his little shop and picks it over by hand, the outside is thrown away and the best part is saved. What he can get for his work is the price of cotton which is the international price. He can, therefore, only spend so much on the labor of picking it over. It would be manifestly unfair for him to pay the same wages which I pay, where I have a large margin of profit to work under.
Representative Smith. But you do not ask for any preference?
Mr. Kudell. Not at all. We will join anything.
Representative Connery. Mr. Wood?
Representative Wood. I was interested in the question just asked by Senator Pepper about any efforts to bring about trouble in your plant. You mentioned about the small group. You say they are Communists, and I suppose they are. They have been, as it were, boring from within, they have gotten themselves on the committee.
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What do you suppose the underlying purpose is that they have in trying to stir up turmoil in your plant, and I may call it dissatisfaction to the organization your employees? You have competitors, haven’t you?
Mr. Kuldell. Yes, sir.
Representative Wood. Can you see any good that can be accomplished by this group if they should happen to get the upper hand and create the turmoil that you are speaking of? Don’t you think that it would be advantageous to some of your competitors who pay a lesser wage and work longer hours and have not as much regard for the welfare of their employees as you have?
Mr. Kuldell. I think these men have an objective. It is much like a religious objective. They have a definite plan and their enthusiasm for it is a mental or spiritual force in them. They believe the workers should be fully organized into aggressive fighting units. This is their paper; I have a copy of it here. They usually put out their program in the paper.
Representative Wood. The question is, What is the meaning of those workers organizing into a great fighting unit? Is it not a fact that the American Federation of Labor is quite a fighting unit?
Mr. Kuldell. Yes, sir. I do not know what their objective is that they cannot reach by joining either of the present organizations.
Representative Wood. They want one big union, I suppose.
Mr. Kuldell. I imagine you know the objectives as well as I. They used to carry in the paper an objective for 15-percent wage increase, and the workers got more than that since the paper came out, so they do not carry that any more.
Representative Wood. They always hike the wage in their advocacy , do they not?
Mr. Kuldell. Yes, sir.
Representative Wood. They always pick some brighter situation but they do not come forth with the mechanics to show the workers how it can be done. In other words, they haven’t any responsibility; about all they do is criticize.
Mr. Kuldell. At least they take a critical attitude. They promise something without any concrete method of reaching the objective which they promise. I do not think they carry much weight in a group like our employees.
Representative Wood. Do you think their objective really is to establish a great fighting unit?
Mr. Kuldell. I think there are some of these men who are convinced of that.
Representative Wood. You say your plant is organized now, do you?
Mr. Kuldell. Yes.
Representative Wood. In what group of the American Federation of Labor?
Mr. Kuldell. In each craft the American Federation of Labor has some membership in our plant, and they are all contained in what they call the metal-crafts committee, and that is the committee which deals with me on all matters affecting the American Federation of Labor.
Representative Wood. Your plant is not organized in one organization?
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Mr. Kuldell. It is not organized in just one organization.
Representative Wood. Does the C. I. 0. have any representation?
Mr. Kuldell. The C. I. O. met me for the first time a week ago. They brought a committee in and asked for an appointment. They got it immediately, and we had an hour or an hour and a half of friendly discussion, and that is all I know of what their plans are.
Representative Wood. You would not consider that an ideal condition, would you, where you deal with committees and employees and then you deal with another group representing the American Federation of Labor, and another group representing the C. I. O.? Do you consider that an ideal condition of collective bargaining?
Mr. Kuldell. The only tiling I can say is that I think it can be if the management has the right attitude. It means each group is trying to beat the other in getting some concession, some advantage, and they do not hesitate to pass it around. They say, “We have just come from the management and we got this. The other bunch did not get as much as we did.” The management is besieged by at least two groups, and there are only two major groups, the white welfare organization and the A. F. of L.
Representative Wood. You would rather deal with one group, would you not? Would you not rather have them all organized in the American Federation of Labor?
Mr. Kuldell. Well, one group would be better.
Representative Wood. You are for the bill, I guess, are you not?
Mr. Kuldell. Yes; I am for all the objectives of the bill. I only made this point: I hope the method of reaching that objective will be constructive, through helpful tactics. Some of these industries are not fortunate enough to be able to pay the wages that we are fortunate enough to be able to pay. It is through no fault of their own but through conditions under which they operate. We hope that will be undertaken sympathetically, that the Board will set up an objective to raise wages constantly, 10 percent every 6 months instead of setting a sky limit and say, “This is what we are aiming for.” Take the industry that has a 25-cent minimum and I think the setup should be 30 cents, say, in 6 months. Give them a certain time to reach a certain objective, and then set another objective for them in another length of time.
Representative Wood. Now, you employ men and women, do you?
Mr. Kuldell. No, sir; we employ no women, except in the clerical help.
Representative Wood. What do you think about the exemption exempting employers who employ, say, 8 or 10 or 12, from the operation of the law?
Mr. Kuldell. Being an employer of 4,000 it is very hard for me to speak for a man who employs only 8. I speak in terms of long lines of machines and processes.
Representative Wood. Do you think the law could cover all employers who manufacture commodities that are destined for interstate commerce irrespective of the number of employees he employs? Is it not a fact that usually 10 percent of the industry can destroy the price structure?
Mr. Kuldell. Yes, sir.
Representative Wood. That is all.
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Representative Lambertson. Mr. Wood, you did not mean in your question a while ago, when you asked whether one union would be desirable, you did not mean to express sympathy for the C. I. O.?
Representative Wood. I said the American Federation of Labor. What I meant to ask the gentleman was whether he did not think it would be much better and be more cooperative, whether it would not work more toward amicable relationship if he could deal with just one organization and not to deal with committees from the American Federation of Labor and committees from the C. I. 0. I asked him if he did not think it best to deal with one organization instead of three or four, and he said “yes.” I meant the American Federation of Labor.
Representative Lambertson. Isn’t that the substance of the policy of the C. I. O., to have one organization instead of having the different crafts?
Representative Wood. No; I did not mean that at all.
Representative Lambertson. I did not think you did.
The Chairman. I think that is clear. Mr. Wood.
Senator Walsh. Mr. Kuldell, your illustration of the case of your friend in business prompts me to ask your views about a criticism and an objection that is made to this bill from some quarters, with which I am not necessarily in sympathy. It is argued that desirable and necessary as it is to establish minimum wages and maximum hours of labor the net result of doing it through a Federal law extending from one end of the country to the other is that it will gradually and steadily eliminate the small producer, the small industrialist, and the small manufacturer, and that the tendency will be that all industry will be finally vested in the larger and bigger units. What is your view upon that question? I assumed from what you said that if the Board was not very careful in the establishing of a minimum wage that your friend might be wiped out of business.
Mr. Kuldell. It would discontinue; yes, sir.
Senator Walsh. What would you say about that broad question? In seeking to bring about what everybody says is most desirable is the result going to be that we are going to eliminate steadily and gradually the man that wants opportunities to get into business, the small industry, the small manufacturer, because he cannot compete? He competes now with the big manufacturer because he can pay a little less, because he is situated in a lower-wage community; that is, he can make his wages smaller than the fully organized factory pays, the big establishments. Let me have your views on that.
Mr. Kuldell. I think if the Board were to set a definite line, say, 40 cents an hour and a 40-hour week it would have that effect on small companies, the companies without capital, and it would have this effect on workers who are not able to earn 40 cents an hour. The tendency for employers would be to hire the quickest, the smartest, the youngest men they can employ, and the lines of product which are not entirely profitable would be discontinued. In reading the bill I see the committee has written this into the bill, that the Board is not to do anything that would restrict opportunities for employment unreasonably, or that would restrict opportunities for earning money, and I am assuming that this Board is undertaking this task in the light of the general public good, that opportunities for employment shall not be discontinued, and that
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earning power shall not be unnecessarily restricted. There will have to be exceptions, and the Board, under this bill, I believe, has the authority to make those exceptions.
Senator Walsh. In other words, unless the administration of the law is delicately and carefully handled the situation I have described, which some people say is likely to result, may occur. Now, let me ask you another question along the same line. Why should not legislation of this kind, to prevent the thing that I have indicated, be accompanied by some legislation to dismember the large industrial units in this country?
Mr. Kuldell. You cannot balk progress. There are some items that cannot be manufactured economically in small units. The larger the unit the more economically they can be manufactured, and certainly the more economically the product of consumption can be manufactured the higher the standard of living of those who buy it.
Senator Walsh. Now, if this law is not properly administered and the larger units of industry profit by it, isn’t there only one other alternative, practically only one other alternative, in order to carry out the purposes and objectives of this law, and that is nationalization of industry, of the big units? I am assuming now the law is not administered with the care and caution that you pointed out.
Mr. Kuldell. I pointed out figures, which come from the Department of Labor, that some of the largest industries are now paying a wage rate of 94 cents per hour. The crude-petroleum industry is paying a rate of 81 cents per hour.
Senator Walsh. I think we are agreed on that, that the larger industries, on the whole, are paying larger wages than the smaller industries. The reason why all through the South, through Maine, New Hampshire, and these rural sections where industry has gone is that they can get the outdoor class of workers, where they will work at a much smaller rate than most of the workers in the union plants.
Mr. Kuldell. Yes.
Senator Walsh. If they have got to jump from these small wages to $16 minimum something is going to happen, isn’t that right, unless it is done gradually, slowly, prudently, and carefully?
Mr. Kuldell. That is exactly it.
Senator Walsh. You agree that if it is not done with great prudence, they are all likely to be wiped out?
Mr. Kuldell. Yes, sir; if a law were passed tonight and it were effective tomorrow.
Senator Walsh. Assume that we possibly could get all of these small units up to good wages, good working hours, is not the next step nationalization of these industries? Is not the Government going to take them over, to protect the consumers from excessive profit?
Mr. Kuldell. The Government has that protection now in its income tax on excessive profits. They are confiscated.
Senator Walsh. Thank you. I am glad to get your views. I am not necessarily expressing my own.
Mr. Kuldell. I say if this work is done sympathetically and constructively, a great good can be done, and in order for it to be done the employer must use modem equipment. There will be a tremendous demand for labor-saving devices. Today we cannot get it because it is scarce.
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Senator Walsh. I think we are agreed, though, that the small businesses of the country are desirable, important, and necessary, just as is the legislation for the wage earners and to make the social conditions much better.
Mr. Kuldell. Well, I certainly hope the Board will not overlook that.
Senator Ellender. Mr. Kuldell, I am sure the members of this committee appreciate your frankness with reference to your business. Now, your business, as you have said, is highly specialized and most of the products you manufactured are patented.
Mr. Kuldell. Yes, sir.
Senator Ellender. That is correct?
Mr. Kuldell. Yes, sir.
Senator Ellender. So you do not have much competition, do you?
Mr. Kuldell. We have keen competition for sales but not keen competition for price.
Senator Ellender. Now, as to your patented manufactured goods, do you have other people manufacturing them?
Mr. Kuldell. Yes.
Senator Ellender. Do you have any competition from abroad?
Mr. Kuldell. We used to get a very large volume of business abroad.
Senator Ellender. I mean competition.
Mr. Kuldell. The competition from abroad takes our foreign market, but it does not enter into this country.
Senator Ellender. That is what I had in mind.
Mr. Kuldell. Not in our market.
Senator Ellender. So you do not have any competition with the goods that are manufactured abroad?
Mr. Kuldell. No, sir; pot in this country.
Senator Ellender. It might be interesting to know how you fix your scale of wages with reference to your various employees, various departments, let us say, as to what yardstick you use.
Mr. Kuldell. We do not have a fixed scale of wages in a vertical direction for any department. Each 3 or 4 months that business is good we raise the limit for that department.
Senator Ellender. Is it a profit-sharing basis?
Mr. Kuldell. No, sir; we just make a new sheet. Our object is to give every employee an opportunity to earn a higher rate 6 months from now than he is earning today.
Senator Ellender. In proportion to the benefits you reap during that 6 months?
Mr. Kuldell. We do not tie it together at all. If we are prosperous we do it gladly; and sometimes, like 4 or 5 years ago, during the depression, we did not do it at all, we could not make any advance.
Senator Ellender. Did you have any occasion to decrease the wage that was fixed?
Mr. Kuldell. Yes, sir; we decreased it once in 1932, I think.
Senator Ellender. So you increase it if you make good and if you do not you bring it back?
Mr. Kuldell. That is true. I think your question referred to the relative or horizontal wages?
Senator Ellender. Yes.
Mr. Kuldell. That is a point on which there is more conference with the employees than on any other point. Each group thinks it
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is more important than we think it is by the rate which we fix for it, and they appoint committees to come in and present their views. We have often asked them to appear before committees of other departments to make their contentions. We have called in our technical men, our foremen, our superintendents and have asked them their opinions as to how long it would take to train a man for this job, as to how long it would take before they become qualified, and so on, and that horizontal arrangement is the result of 15 or 20 years’ experience in manufacturing the same item. It varies as the different departments show that they are entitled to a better rate than they were receiving relative to other departments. It is flexible and it is adjusted in conference.
Senator Ellender. I have no further questions.
The Chairman. I want to ask one question. You believe that we should have the minimum-wage law enacted by the Federal Congress, and have the regulation of hours, but it is your belief that it should be done in such a way that the board that carries it out, or whatever organization carries it out, would have power to use judgment and discretion with reference to the application of the bill to the particular situation?
Mr. Kuldell. Yes, sir; as I said, sympathetically and constructively.
The Chairman. And as you read the bill, that power is given to them?
Mr. Kuldell. I think it is one of the best bills in that direction that I have read.
The Chairman. And the remainder of the question would be determined by the type of people selected to execute the administrative features of the bill?
Mr. Kuldell. The spirit of the people, whether they are friendly or whether they carry a big stick, or whether they carry a brief case to help out.
The Chairman. That is all.
Representative Thomas. Colonel, take an industry that pays low. wages and works long hours, suppose in that industry wages increased 20 percent, and the number of hours worked per week is decreased 15 percent, what effect will that increase in wage and that decrease in the number of hours have on the price of that finished product? In other words, will it necessarily follow from those increases in pay and reductions in the number of hours worked, that the price of that product will increase in the same proportion?
Mr. Kuldell. It all depends on what percentage of the price of that product is spent in labor. In industries like chemical industries, where the material is moved through pipes, we will say, or passed on by pumps, and where labor constitutes a small percentage of the price of the product, as compared to our industry where the product is made by hand on the machine and handled a dozen times before finally assembled, the labor is a very large percentage of the price of the product, the labor is 80 percent of the price of the product, that is direct and indirect labor, if you increase labor 10 percent that is 80 percent of the total price of the commodity; whereas if labor is only 20 percent and the cost of the material is 80 percent, then 10-percent increase would only be 2-percent increase in the cost of the product.
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Unfortunately, as I said, industries paying the low rate are not the high-profit industries, so their increases will have to be taken up in two ways, either by better management or by an increase in price.
Representative Thomas. That term of “better management” has been used here quite often. It is a rather elusive thing. Will you give us a bill of particulars and point out specifically how better management will ultimately help the situation?
Mr. Kuldell. Yes, sir. About a year and a half ago our company management was dissatisfied with the margin of profit we had in the firm. Our labor cost was high, our overhead was high, our profit per unit was low. We employed an industrial engineer, an accountant, and a salesman and told them to sit in on the thing until it was worked out. We opened up our books to these men, we showed them what our margins were, and they undertook a study of it, and the first thing we found was that the sales department would put in a small order to be rushed out that night, and the men would quit working on what they were doing in order to finish the small job, to get it out, and that would create what they call a break-up, we would have a break-up on line production, and the men would lose what they would have made if they had not been broken up. We found that was one of our big losses.
Another was that we would not have the steady flow when we started any order. Everything must be prepared so that each man, when he takes up the work, has ample work ahead of him, where he does not have to wait for the man preceding him. Those are the things that have caused a lot of delays.
Then we have made up a list of the tools that a man would need when he began the job. He could go to the tool crib with a list and say, “Give me this list of tools”, instead of saying, “I want a tool for this, that, and the other thing” and try to remember the tools that they would use.
There is a tremendous area in there, in the management, to increase the productivity of a plant and the productivity of man-hours, and no plant, I do not care how successful they are, that could not improve their methods which would work better next year than this year.
Representative Thomas. You do not think then that there is a limit to what you call good management?
Mr. Kuldell. No, sir; there is no limit. We have lots to learn yet.
Representative Thomas. Suppose, after a thorough study of a particular industry by management, that it developed, in order to meet the test of what you commonly designate as good management, it is going to require some new machinery and an additional outlay of capital, and the company is not in a position to borrow that capital— what effect will that have upon the business then?
Mr. Kuldell. That is one of the five points that I mentioned that causes low wage rates, insufficient capital to take advantage of modem methods and equipment. To illustrate that, we handle a pipe of 30- foot length in a plant which has 20-foot column spaces. That wastes time in moving the pipe around the column, so we built a completely new building with a 50-foot span, with an electric crane, so the pipe could be handled quickly and cheaply, and that investment will return to us in 5 or 6 years, in the saving of time. Capital can take advantage of those well-known methods of saving costs more so than can a plant without capital.
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Representative Thomas. Which leads me to the question that Senator Walsh asked you a while ago. Suppose this industry is not in a position to borrow this badly needed capital, what is going to be the result as far as the employment of men is concerned? Will that concern have to shut down or what will happen to it?
Mr. Kuldell. I will again say that being an employer of 4,000 men I would hesitate to say what would happen to a concern employing a few men. I think other people will appear here probably who represent small plants.
Representative Thomas. Can you see, Colonel, anything in this bill that will ultimately tend toward concentration of business into strong hands? Is there anything of danger here in this bill of creating that situation?
Mr. Kuldell. There certainly is, unless it is handled, as I said, systematically and constructively; but I do not think the movement should be abandoned solely for that reason. That group can be given special treatment, given time, given plenty of opportunity.
Representative Thomas. Then I presume by that observation you think that instead of the Congress enacting into law a fixed minimum wage that the Board should be given authority, in specific instances, to set that minimum?
Mr. Kuldell. I think so, and I think it should operate as I suggested. If they find a wage of 20 cents set by agreement with the people in that industry, a wage of 25 cents may be accomplished within 6 months, and give the group with whom they deal 6 months to work up to that 25 cents, then meet with them again and say, “Have you done it? How have you gotten along with it?” Of course, all of this presupposes that business is going to be active and good. If there is a reverse in business the whole thing would prove impossible.
Representative Thomas. Take, for instance, a man, who is dealing with the metal-trades group, he may not be directly in competition with your business but lie may be in a kindred business with you, he could rightfully say, could he not, that you are able to pay a minimum of 50 cents per hour, but, on the other hand, in that same business if we set a minimum of 50 cents for him, it is going to put him out of business? What would you do under that situation?
Mr. Kuldell. I would ask him, “What can you do? What are you doing now?” He would say, “I am paying 35 cents.” I would say, “What will happen if you should go to 40 cents?” He would say, “Well, it would raise my costs so much that I could not operate.” I would say, “Well, could not you, in 3 months, adjust itself to this 40-cent rate by better methods or better equipment?” Necessity is the mother of invention and competition has forced us to do things that we did not know we can do, and this board helping sympathetically and constructively will find ways and means of doing this thing, and those who say now they cannot do it, will find they can, or at least they can do something.
Representative Thomas. So you think, as a broad general national policy, circumstances may arise in the same business where the Board could rightfully say to employer A that “You shall pay a minimum of not less than 40 cents an hour”, and the Board could say to employer B in that same industry, “Will it be all right for you to pay a minimum wage, say, of 35 cents an hour?”
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Mr. Kuldell. Only for a limited time, giving him the opportunity to make his adjustments.
Representative Thomas. Thank you.
The Chairman. Mr. Kuldell. we thank you very much. Your testimony has been most helpful to us.
Mr. Kuldell. Thank you.
The Chairman. There is a witness here who said that he could finish in 15 or 20 minutes, and if it is satisfactory to the committee I would like for him to testify.
Representative Connery. Mr. Chairman, may I ask the witness just one question?
The Chairman. Yes.
Representative Connery. You employ 4,000, as I understand it?
Mr. Kuldell. Yes.
Representative Connery. What difficulty do you have with your insurance companies in employing a man over 40 or 45? Are your rates higher?
Mr. Kuldell. You mean compensation insurance?
Representative Connery. Yes.
Mr. Kuldell. No, sir. We do carry group life insurance which we pay ourselves, and, of course, that rate is entirely set by the man’s age.
Representative Connery. Do you find that there is a penalty placed upon your hiring men over 40?
Mr. Kuldell. No, sir; none whatever.
Representative Connery. In many other places that is the case. I am glad to hear you say that.
The Chairman. Thank you very much. Before we go on with Mr. Merle Vincent, I would like to take up with the committee the matter of procedure. Mr. Connery and I have gone over the complete list of people who have applied to testify. That means everyone who has notified us that he wants to testify, or all who want to testify according to notations given by other people. We prepared a list and a schedule for them to appear, which would permit us to finish with them Monday week, which would be 2 weeks from the date we began. In order to do that, there will be some days where there would be 12 witnesses. Naturally, it would require the cooperation of the full committee if we are to examine 12 witnesses in a day. If we are going to take a day for each witness, or for two witnesses, in order to have all these witnesses here it would require us to continue hearings for about 2 or 3 months. I have not figured it out.
Senator La Follettee. Mr. Chairman, I move the joint committee approve the schedule and the program.
Representative Wood. I second the motion.
The Chairman. Is there any objection? If not, we will consider the program as being acceptable, and on Monday it includes witnesses who are heads of organizations—Mr. John Lewis, of the Committee for Industrial Organization; Mrs. Elinore Herrick; and Mr. Lubin, who will give us the statistics that were mentioned by the Secretary of Labor—and beginning the next morning we will have the witnesses who have requested that they be heard.
Now, Mr. Vincent has a statement.
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STATEMENT OF MERLE D. VINCENT, INTERNATIONAL LADIES' GARMENT WORKERS UNION
Mr. Vincent. Mr. Chairman, and members of the committee, what I have to say will be to consider the need for legislation of the nature proposed by the bill that is before your committee, and the reason for it.
Senator Ellender. What is your business, Mr. Vincent?
Mr. Vincent. I am legislative counsel for Mr. David Dubinsky, president of the International Ladies’ Garment Workers Union. By profession I am a lawyer and have been an industrial manager and a public official.
The New York World-Telegram on the afternoon of March 18, 1931, carried an interview quoting Henry Ford’s model T views of life and unemployment as he found them at that time. “The average man won’t really do a day’s work”, Mr. Ford said, “unless he is caught and cannot get out of it. There is plenty of work to do if people would do it.” Last week press reports stated that the Ford Co. carried a surplus of $602,000,000.
But, Mr. Chairman, your Senate and House Committees on Labor are holding these hearings because unemployment continues to be, as in 1931, notwithstanding a substantial degree of recovery, the most disturbing danger signal on the horizon; and also because you know that new employment is being halted by the rising tides of industrial profits and consumer prices, by overflowing surplus accounts of idle money, derived from low wages and too long hours of work applied to highly mechanized processes of manufacture. Industrial peace and the further progress of recovery are threatened by these long-established business practices that proved disastrous in the past.
Better labor standards will not alone correct all the structural defects and sore spots in our economic and social life. They will, in a substantial degree, expand employment, increase wage income, and expand and stabilize our markets.
Admitting the efficiency of many operating units of industry, its management in general has not been responsive to its responsibilities. Allowing for the exceptional instances it has no rational or effective industrial relations policy; no uniform wage and hour standards within separate industries nor within related groups, excepting in unionized areas; no standard policies to maintain an economically safe relationship between labor costs and profits and prices; no adequate plan for expanding domestic markets; and what is more significant is that— allowing again for exceptional instances—its financial policies destroy its sense of responsibilities to the national economy to maintain wage income at the highest levels and consumer prices at the lowest levels consistent with earning a reasonable return on actual investment.
We are again witnessing operating practices and marketing trends which bear a photographic likeness to those which preceded the collapse of markets and employment in 1929. We see the same increase in productivity of machines and workers—higher output per man—lower labor cost per unit of production, inflation of prices, a rapid rise in profits, and a resistance to demands for increased wages.
We cannot say how high industrial wage levels must reach or how- much hours of work must be shortened to stop rise of profits. We do know that wage levels as a whole have never attained heights or influence to prevent profits from mounting still higher.
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The reason for this unbalance between wages, profits, and prices seems quite apparent. During the period 1922 to 1929, efficiency in manufacturing greatly increased. Industrial wages increased around 8 percent during that period. Labor cost of manufacturing was reduced 14 percent, but production increased 37 percent, and industrial profits made a gain of 85 percent, the small gain made in wages was discounted by higher living costs.
This failure to share with labor and the public the increased realization from greater productivity and lower cost made the collapse of markets and employment inevitable. We are stupidly sticking to the same processes. That is why legislation is necessary to establish higher labor standards.
But before this hearing is over your committees will be warned to let nature take its course. Only a few days ago our friend, David Lawrence, gave us some stagecoach advice. Wage increases, he said, now occurring in the automobile industry, mean higher prices for automobiles. This warning is less than fair, unless the public is given facts of a later model. The National City Bank’s April 1937 review of business conditions is authority for the statement that the automobile industry as a whole earned a net profit of 24.6 in 1936. May we ask how high profits must get before wage levels are raised and price levels lowered? Let us keep in mind that this net earning was on vastly inflated capital structure. The plant expansion in that industry has been mostly made, not on investment of new money but by capitalizing profits which were derived from wage levels that were too low and price levels that were too high. General Motors issued one stock dividend of 1,000 percent, and yet this was but a minor part of its capital inflation. The Ford picture is still more startling.
If this instance were singular, it would not be so serious, but it is a characteristic example of major American industries. The oil, steel, electric power, lumber, and timber industries are equally fantastic examples of how the wage income and purchasing power of labor became a sucked egg. Tobacco is another.
The tobacco industry has been, and is now, a low-wage and high- profit industry. It will also strikingly reveal how irresponsible financial, marketing, and labor policies undermine markets and living standards.
Like the automobile industry, three large tobacco companies have for years occupied a dominant position which gave them quite complete control over the industry’s financial, labor, and price policies. One of them on a capital investment of less than $16,000,000 had net earnings of more than $444,000,000 from 1922 to 1934. Annual dividends exceeded the original investment. The package of cigarettes for which you pay 12½ to 15 cents represents less than 1 cent of labor cost and a very small cost for tobacco. But this is not the complete picture. Not only labor, but nearly a half million tobacco farmers are affected, until recently the annual compensation paid one official of one of these companies exceeded the combined average annual income of 2,000 tobacco growers. These three corporations made net earnings of $1,245,000,000 in the 22-year period mentioned. These examples characterize the management and policies of so many major industries that they threaten to maintain the national economy in a permanent state of unbalance and instability.
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[PAGE 264]Industrial profits have made a recovery. Leading industrial corporations made larger profits for the last quarter of 1936 than during the last quarter of 1929. Many groups made larger profits for the entire year of 1936 than during 1929, notwithstanding the national income stood at sixty billions only in 1936 as against eighty billions in 1929. Rising prices and profits are a danger signal. We are staging a return engagement with excessive profits, idle surpluses, and arrested wage income and markets. These things produce a deficit in purchasing power.
The efficiency of industrial management must be tested by the degree in which it meets and discharges its responsibility to the public for a balanced distribution of the proceeds realized from scientific processes, labor, and actual investment. We cannot acknowledge efficiency in management that takes and keeps profits ranging from 25 to 100 percent or more by maintaining low wages and high consumer price levels. Management is responsible for employing the greatest number of workers possible, for selling its goods at the lowest prices consistent with a reasonable return on actual investment. Such a concept of efficiency and responsibility will constitute the best security against violent fluctuations in employment, prices, and earnings on investment.
We find a greater sense of industry responsibility to the public in some of the secondary industries. Their plants, shops, and capital structures are not so impressive in appearance, and their importance is not publicized as the so-called major industries publicize themselves; but, in the aggregate, they employ a far greater number of workers and have a larger aggregate dollar volume of business. The garment industries alone employ more than 700,000 men and women. The organization for which I appear represents 250,000 of these workers.
Mr. Bertram Reinitz, speaking for the coat and suit recovery board, December 10, 1936, said of this industry:
It has pioneered the principle and practice of collective bargaining and has been a preeminent proponent of enlightened and humanitarian employer and worker relationship.
Its wage rates are probably higher than those of any other industry represented at this conference. Its factories comprise the finest examples of industrial housing in the Nation; and yet our industry, as a whole, was stubbornly resisting the destruction of standards. The trade associations and the labor organization were preventing the retreat from becoming a rout. But retreat it was, with dire consequences in the offing, when the N. R. A. was enacted.
By way of summary, let it be said that the terminating of the N. R. A. found our industry in a more stabilized condition than it was at the time of its enactment. The principal heritage was the realization of the astonishing power of unity.
The sentiment in our industry was overwhelmingly in favor of salvaging those fragments of the wrecked program that had been found to be decidedly beneficial. As the greatest of these had been industry-wide collaboration, we determined to attempt to preserve it.
Mr. Chairman, I think your committees will be interested in knowing that this recovery board membership is made up of the manufacturers, jobbers, contractors, and the union in this industry. This collective relationship has stabilized the industry. It is operating under a maximum 35-hour workweek and wage rates that average $1.06 per hour.
The dress industry is likewise operating under a 35-hour week. You will, I am sure, be interested in knowing that after the establishment of minimum-wage and maximum-hour standards the median hourly earnings in this industry more than doubled in nine manufacturing
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centers and increased over 150 percent in the eastern area in the low-price-dress line. I mention the increase in earnings as applied to the low-priced dress, selling for $3.75, to show you that the consumer has not suffered. Equally significant is the fact that a shortening of the workweek from 5 to 13 hours was in many centers and in a number of lines attended by an increase in production per worker.
But while these industries have been highly successful in establishing rational and effective relations between "management and labor, and have established desirable labor standards, others have tried and failed. The cost of these failures has been paid by labor, the public, and by the industries themselves.
I am able to present to you an unusual document. It reveals impressive proof of the need for legislation. It is a confidential survey made by the trade association of an industry having more than 1,000 members and employing about 50,000 workers. I am not at liberty, for reasons which will appear obvious, to state the name of the industry. But the officers of this association gave me liberty to use the findings and conclusions of the survey. It will be sufficient to quote only a few brief paragraphs:
The record of the industry under the N. R. A. was one of highly satisfactory cooperation and compliance.
Yet, notwithstanding this background, the effort of this industry to adopt another voluntary code cannot be considered successful or even satisfactory.
The association and its officers are not soured or wearied in spirit. Simply, we have tried an experiment. It has failed. Its very failure is instructive. We are recording our observations and drawing certain conclusions that should be of value for future reference.
In two types of industries voluntary codes may perhaps be successfully established. One is where the number of units are few and large * * *. In the other case, the industry must be highly and honestly unionized, and thus the union supplies the agency for the introduction and maintenance or fair standards of employment.
Where industries consist of many units, predominantly small, ununionized, and bitterly competitive—where, in other words, standards of fair competition are most needed—they are most difficult, if not impossible, to establish.
What are the reasons?
1. The first is, perhaps, the most obvious and difficult to overcome. Whereas the will of any group may be democratically expressed through a majority, the control of unfair competition by voluntary agreement requires practical unanimity. Such universality of assent is hardly to be expected from anything lower than angels and therefore, perhaps, least of all from businessmen.
5. Intraindustry politics are likely to run rampant in the absence of higher authority. Though such difficulties were not entirely absent in the days of the code, many an incipient squabble was kept from assuming excessive proportions by the dictates of the superior authority. There is no such curb, however, in the case of voluntary agreements.
This is the diagnosis of an industry made by itself.
These gentlemen have given us a clear picture of the reasons why voluntary action to set up desirable labor standards cannot be relied upon. The efforts of responsible members of industry are defeated by the greed of the irresponsible.
Better labor standards are not only a protection to labor, but they protect industry in stabilizing labor costs on a more fair competitive plane and increase the efficiency and productivity of workers. In many instances wages can be substantially increased, productivity raised, and prices lowered by efficient management. Efficient managers, labor, and the consuming public all pay the penalty imposed by the less efficient mills and factories.
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I know some of you are concerned about the difficulties of establishing appropriate differentials. The bill before you very wisely leaves that to the findings of fact made by a board with broad discretionary powers. I am not disturbed so much by the problem of adjusting differentials as I am by the larger problem of low-wage standards. As wage standards are raised, appropriate differentials will become less difficult to adjust. Nearly every industry has this problem. It is found in its most complex forms, for example, in the coal industry, where coal seams and texture vary in thickness and quality; and in the apparel industries, where adjustments have to be made not only for occupational classifications but for garments in price lines varying, as in the coat and suit and dress industries, from very low to high price lines. Where a rational relationship exists between management and labor, these differentials are worked out by analysis of costs, prices, and by negotiation. These differentials only become serious obstacles to adjustments when management refuses to analyze cost facts and selling prices and refuses to negotiate. Greater than the differential problem is a group of plants found from the Great Lakes to the Gulf, well equipped, making money, and paying wages that range from $6 to $10 per week.
I think perhaps there is as much concern over this subject in the textile industry as in any other. This industry includes cotton, wool, silk, and rayon products. It employs more than 1,000,000 men and women. Millions of American families are dependent upon it. But this industry is today the victim both of its own practices and of the labor and financial policies of major industries to which I have already made reference.
These practices and policies are destructive of markets and employment. Textile products depend largely upon the needs and purchasing power of the great mass of farmers and workers whose income is far too low to create or maintain a stable market. This industry has nothing to fear from better labor standards but much to fear from a continuation of some of its management policies, which are little, if any, less than suicidal.
Much of the machine equipment of textiles is 25 to 30 years old— has low efficiency and wastes much of labor’s efficiency—yet the industry has no equipment policy. It does have many enterprising and efficiently operated plants. These are able to pay higher wages and work shorter hours, but they are naturally reluctant to pay more wages than their less efficient competitors.
We find obsolete equipment competing with modernized mills, and labor and the public paying the consequences. So-called excess capacity—that is, idle equipment—is chargeable in part to changing styles and to obsolescence and high operating cost. It is to be presumed that any board will employ adequate scientific industrial data as a basis for fixing differentials.
The possibilities of market expansion are ignored in the resistance which is encountered in establishing the labor standards contemplated by this measure. The possibilities of domestic market expansion can be glimpsed in the fact that in 1933 the average annual earnings in all manufacturing were only $869. They have risen, but slowly and relatively but little when compared with the amazing rise in industrial profits, much of which should be left in the market by a wider distribution to wage income. This money, if left in larger
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proportions to wages and lower prices, will constantly expand the marets for both our farm and factory products.
This bill very wisely leaves the fixing of standards to collective bargaining where there are effective organizations. Unfortunately, large sections of industry still resist organization and better standards. In this field the Board would have authority to act. Certainly the minimum wage of 80 cents per hour and $1,200 a year, above which the Board cannot go, are very low limitations. In my opinion, they are too low. Eighty cents an hour for a 40-hour week will produce but slightly over $1,200 if the worker has 40 weeks’ work in a year, and large groups of workers have a shorter working season.
In a recent hearing before the House Labor Committee on proposed textile legislation, Dr. Howard Meyers gave the results of a very illuminating survey of living costs for a family of 4 in 59 representative cities. This survey showed that $1,260 was the minimum income upon which such a family can exist on the simplest necessities. It does not allow for adequate wearing apparel nor for a wide enough range of food supplies, nor an automobile, and leaves such families without opportunity for cultural development. The peak figure was over $1,400 for Washington, D. C., and the lowest minimum income need was $1,160 for Mobile, Ala. Contrast these minimum requirements with the fact that many millions of men and women are working in factories, mills, and shops for wages ranging from 40 cents down to 20 cents an hour.
Confronted with this picture, the need for this legislation is manifestly imperative.
I will turn a moment to the questions of hours and exemptions. I suggest that the committees fix the workweek at a maximum of 40 hours and a minimum of 30. Already some industries are operating by contract only 35 hours and 36 hours per week. In some, both management and labor are seriously considering and discussing a 30-hour week. Within this bracket of 30 to 40 hours the Board can conduct examinations and make findings to fit both the ability and the necessities of the industry.
Exemptions for small shops should be low. A recent survey of dress shops in the metropolitan area showed that 9.7 percent had from 1 to 12 machines only. They do a large volume of business in the aggregate, employ much labor, and are important competition with other dress shops, most of which are comparatively small; 52.2 percent have only 13 to 24 machines, and only 7.1 have over 49 machines. In varying degree, this is true in other industries.
May I say in conclusion that labor urges adoption by Congress of a labor standards act as necessary to reduce unemployment, to increase wage income and purchasing power, to expand markets and production, and thus create new employment. It is also urged as necessary to insure a greater degree of security for industrial peace. Labor respects the law. During the desperate and distressing years of the depression, as now, labor has maintained public order by voluntary obedience to the law. It has maintained peace and public order in the face of constant provocation to resist the unlawful and often violent denial of its rights. It has experienced the deliberate disregard of acts of Congress to safeguard labor’s rights. Not infrequently but often in the last 3 years “the advice of counsels” privately employed has been more potent than an act of Congress. Labor has witnessed with amazement the defense of this lawlessness by
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distinguished members of the bar. When peaceable and lawful requests were made in accordance with law for conference and negotiation on wages and working conditions, labor has been met with discharge from jobs and armed force to silence its lawful and reasonable demands. It has seen decrees in equity employed as licenses to suppress civil rights. These circumstances justify the speedy enactment of laws which will tend to remove the causes of industrial disorders and widen the opportunities for a peaceful solution of industrial problems.
Now, I should like to have a few moments to mention some of the situations to which this bill applies. The bill very wisely leaves to a board broad discretion to fix standards. Obviously, such standards should not have the rigidity of legislation. I know that many people are troubled, however, by the question of how differentials are to be arrived at. Differentials do not disturb me so much as the necessity of raising standards in a manner to diminish the difficulties of establishing differentials.
As an example, we have the so-called differentials between the North and South. They are nothing like as great as the differentials between plants in the same industry in the South. The same is true in Pennsylvania, it is true in Massachusetts. In other words, low wages and differentials are characteristic, but not singularly characteristic of any particular area.
Now may I say this: The bill very wisely leaves to collective bargaining the fixing of standards in those areas where there are effective organizations, so that the Board will have only the problem, so far as minimum wages and differentials are concerned, of adjusting them in the unorganized areas. When the Board meets these problems it will have no more difficulty, for instance, in the very difficult textile industry, as you find in the apparel industries or in the coal industries. The differentials that have to be established between mines are created by the differences in thicknesses of coal, quality of coal, whether it contains rock bands or not, and many other factors, and yet it is perfectly practicable, we have found, by collective bargaining to make those differentials and to make them practical.
I, myself, have sat in wage conferences, as the general manager of several operations, where we had to have differentials between mines and between different sections in the same mine.
We find differentials in the dress industry that are made necessary by the fact that we manufacture a product beginning down as low as $2.75 per dozen and going as high as $89.50 per single dress.
Then we have difficulties created by occupational classifications. As a matter of fact, it is not difficult for a board, by a survey of management, such, for instance, as was suggested by Mr. Kulaell, to go into a mill or plant and find whether or not it is able to stand a raise in wages, or unable, because of an inefficient set-up of equipment, improper scheduling of time of delivery of materials, and various other factors which Colonel Kuldell mentioned.
If I were to make one suggestion, Mr. Chairman, it is that you expand the powers given to this board by adding the authority to make industrial surveys of plants by competent industrial engineers. When you do that you will find many efficiently operated plants making money, willing to pay higher wages, but reluctant to pay more than their less-efficient competitors.
Furthermore, very frequently you will find, by an industrial survey, ways and means by which less efficient management will be itself
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assisted in putting itself on a more efficient operating basis. So that so far as differentials are concerned, I do not entertain the fears that some do, because of my experience and observation on that subject.
Now, there is one other matter, the question of exemption of shops with small numbers of employees. That question should be decided by the question whether or not the output of such a shop is competitive in interstate commerce. For example, in the dress industry, a recent survey showed that 9.7 percent of the shops had only 1 to 12 machines, and only about 49 percent of them had from 13 to 49 machines. You cannot apply a uniform rule, but the Board, in its broad discretion, has an opportunity to fit its rules to findings as to whether or not these small shops constitute competition. Moreover, the labor in those shops is, of course, engaged in competitive work and is entitled to operate under the same standards that workers in large shops are working. So far as management is concerned it is a competitive question; so far as labor is concerned it fa a question of enjoying something like uniform or equal standards.
Mr. Chairman, that covers the principal points I wanted to mention, and if there are any questions I shall be happy to answer them, if I can.
Senator La Follette. There is one question I would like to ask Mr. Vincent, Mr. Chairman. Mr. Vincent, do you have any suggestions concerning the administrative problems and features of this bill?
Mr. Vincent. Yes; I would make two suggestions. A board which deals with general policy, as this one must, passing upon findings of fact, will be in effect an industrial court and constantly engaged. It should be relieved as much as possible of the direct administrative responsibility. I would therefore suggest that you include provisions for an executive director, centralize administrative work in some efficient person, so that this Board may have this right hand, I will call him, to rely upon. Upon this administrative officer will be placed the responsibility for administration.
The other suggestion also relates to administration. Your bill provides for regional directors. In many instances the regional director will be adequate, as in areas where there is not a great concentration of industry, but in other areas, like parts of the South, Middle West, and East, where we have very heavy industrial areas and many industries employing large numbers of people, we need, in my opinion, industry directors as well as regional directors, directors for individual industries. We have groups like the cotton textiles and others which will tax the ability of an able director who has no other responsibility.
I suggest this because the Board can use the regional director where the responsibility is not too great, and can break down the administrative work into industry divisions where individual industries are important enough, or related groups of industries are important enough to justify the exclusive attention of one executive officer of the Board.
Representative Connery. I move we recess, Mr. Chairman.
The Chairman. The committee will recess until 10 o’clock Monday morning,
(Whereupon, at 12 o’clock noon, the committee recessed until 10 a. m., Monday, June 7, 1937.)
