TABLE 3.-Retail payrolls in stores of multiunit firms as a percent of retail sales in those stores, by kind of business, United States, 1948

2 Other retail stores include liquor stores and second-hand stores as well as the lines shown in the Census. Source: Census of Business, 1948.

APPENDIX 3

EMPLOYMENT BY SIZE OF FIRM

The great majority of retail-trade firms are of the small local, essentially intrastate type, but they do not account for the bulk of industry employment. Side by side with the many "mom-'n-pop" or "friendly corner merchant" enterprises, and in strong contrast to them, are a relatively few larger firms. These few, by virtue of their size, have an importance and significance out of proportion to their numbers. For example, some 37,000 chain organizations, less than 3 percent of industry firms, hire two-fifths of industry employment.

Retail firms with under 4 employees number over a million and equal 80 percent of industry firms, but they account for only 15 percent of industry employment. This is the sector of retail distribution made up of the many and the small. In this sector are over a half million enterprises with no employees at all, being entirely family-operated. In strong contrast, retail trade also has some 3,000 firms with 100 or more employees. Though equaling only 0.2 percent of industry concerns, these firms have 39 percent of industry employment.

The above contrasts are brought out in table 1, which emphasizes the distinction between big and little enterprises in terms of sales volumes as well as employee sizes. Two-thirds of the enterprises in retail trade gross under $50,000 in annual sales, but these smaller firms together employ only 12 percent of the industry's workers. On the other hand, the 0.7 percent of retailing firms grossing a million dollars or more in annual sales account for 44 percent of industry employment.

TABLE 1.-Retail trade: Number and percent of firms and employees, by employee size and sales size of firm, United States, September 1953

1 Includes 641,000 executive, administrative and professional employees and 5,715,000 other employees. Our conservative estimate would place about 46 percent of industry employment in firms doing less than $500,000 in annual sales.

Source: Wage and Hour and Public Contracts Divisions.

APPENDIX 4

STABILITY OF EMPLOYMENT AND EARNINGS

There is general agreement that average hourly earnings in retail trade is below the level in most industries. However, there is no such uniform agreement with respect to annual earnings. Actually, the theory has been advanced that many workers prefer employment in retail trade because the regularity of employment insures greater annual earnings than do industries with higher hourly earnings. In 1953, annual earnings in retail trade averaged $3,092 per employee as compared with 4,051 in manufacturing, $4,244 in construction, $4,364 in mining, and $4,465 in wholesale trade. Among the nonagricultural industries, annual earnings in retail trade were lower than in any other industry group with the execption of the service industries. However, even the service industries would not compare unfavorably if estimates of the value of nonmoney payments, like room and meals, could be added to cash wages.

A discussion of annual earnings which was confined solely to major groups, would fail to indicate the wide variations around the averages. In manufacturing, for example, while the combined average is $4,051 per year per employee, there are many low-wage industries, in which the employees average considerably less than that amount. Similarly in the retail trade groups, employees in the low-wage components average considerably less than $3,092 per year. The figures below show annual earnings per employee in low-wage manufacturing and retail trade industries. It is evident from these, that employees in lowwage manufacturing industries where seasonal unemployment is not uncommon, still earn more per year, on an average, than do employees in the low-wage retail trade industries.

1 These figures are averages for all employees covered by State unemployment insurance laws. The average for full-time employees would be somewhat greater, especially for variety stores. Source: U. S. Department of Labor, exhibit H, Materials on Coverage and Exemptions Under the FLSA, April 1955.

APPENDIX 5

LEVEL OF EARNINGS IN RETAIL TRADE1

Earnings are rather low in retail trade compared to other industries. For the year 1955, as an example, average hourly gross earnings in retail trade (except eating and drinking places) averaged $1.50, compared to $1.91 in wholesale trade, $1.88 in manufacturing, $1.95 in the railroad industry, $2.10 in gas and electric utilities, $2.19 in metal mining, and $2.32 in petrtoleum and natural gas.

TRENDS IN AVERAGE HOURLY EARNINGS IN RETAILING COMPARED WITH OTHER INDUSTRIES 2

Over the 7-year period 1947-53, average gross earnings in retailing increased almost two-fifths (38 percent), but lost ground to the 43 percent advance in average earnings for all manufacturing, the 47 percent advance in construction earnings, and the 40-61 percent earnings increases in transportation and public utilities.

1 Source: Bureau of Labor Statistics.

Source: U. S. Department of Labor, exhibit H, Materials on Coverage and Exemptions Under the FLSA, April 1955.

Source: U. S. Bureau of Labor Statistics, Employment and Earnings, April 1956.

1 Based on BLS average of $1.47 per hour in August 1954, and adjusted by relationship shown in Census of Business, 1948.

Safeway Stores, Inc.

Average hourly wage rate paid to certain employees, year 1954:

Grocery section employees

Produce section employees

Meat section employees--

$1.60 1.72

1.91

NOTE 1.-The hourly rate shown for the grocery section includes takeaway boys. This would be a tendency to reduce the hourly rate.

NOTE 2.-The hourly rate shown for the meat section includes the head meateutters' total compensation.

APPENDIX 7

Comparison of corporate profit rates and average hourly earnings of production workers in specified nonmanufacturing industries, 1951

Sources: Profit ratios computed from Internal Revenue Service Data: Average hourly earnings, Bureau of Labor Statistics.

APPENDIX 7-A1

There is little relation between profit rates and average wages in American industries.

The contention that the low-wage industries operate on narrow profit marginsand are therefore not in a financial position to absorbe a substantial increase in the minimum wage-is not borne out by a study of available industry profit-andwage data. Comparison of individual profit rates and average hourly earnings for manufacturing and nonmanufacturing industries reveals that there is no consistent relationship between rates of profit and wages. Many low-wage industries have above-average profit rates and, conversely, many high-wage industries have below-average profit rates. The latter have been stabilized at these higher wage levels.

1 Source: Barkin, Solomon, Statement on Amending the FLSA of 1938, presented before Senate Labor Subcommittee, April 21, 1955, fact sheet No. 20.

APPENDIX 7-B

Median net profits of retailers of apparel and household textiles as proportions of net sales and of tangible net worth, by kind products, United States, 1939-501 NET PROFITS AS PROPORTION OF NET SALES 3

The number of concerns reported for 1950 ranged from 51 for men's furnishings to 367 for department stores.

• Profit after depreciation on buildings, machinery, equipment, furniture, and other assets of a fixed nature; after reserves for Federal income and excess-profit taxes; after reductions in the lower value of inventory to cost or market, whichever is lower; after chargeoff for bad debts; after all miscellaneous reserves and adjustments; but before dividends or withdrawals.

Dollar volume of business transacted for 365 days net after deductions for returns, allowances, and discounts from gross sales.

The sum of all outstanding preferred or preference stocks (if any) and outstanding common stocks, surplus, and undivided profits, less any intangible items in the assets, such as goodwill, trademarks, patents, copyrights, leaseholds, mailing lists, treasury stock, organization expenses, and underwriting discounts and expenses.

Clothing, men's and women's.

Source U. S. Department of Agriculture Tech. Bulletin No. 1062, September 1952, "Marketing and Manufacturing Services and Margins for Textiles,' p. 279.

APPENDIX 7-C1

CHARGES OR COST INVOLVED IN RETAILING TEXTILE PRODUCTS

Gross margins, or the spread between merchandise costs and net sales, for department and specialty stores increased from 35.5 percent of net sales in 1935 to 38.9 percent during World War II, decreased to 35.3 percent in 1949, then increased to 36.9 percent in 1950. These margins represent typical performance of department and specialty stores, as reported by the National Retail Dry Goods Association. In arriving at these margins, adjustments were made in the cumulative markon, for markdowns, stock shortages, workroom costs, and cash discounts.

Data relating to the operating results of department stores, as reported by the Harvard Bureau of Business Research, show that gross margins increased from about 33 percent of sales in 1932 to about 38 percent during World War II, decreased to 35 percent in 1949, then increased to more than 36 percent in 1950. Total operating expenses decreased from almost 40 percent of sales in 1932 to about 28 percent in 1945, then increased to more than 32 percent in 1949 and 1950.

Payroll expense, which compromises salaries, wages, and bonuses for all employees, including executives, but excludes pensions and payroll taxes, was by far the largest single item of expense for department stores. The proportion of net sales accounted for by payroll expenses decreased from 18.7 percent in 1932 to 15.4 percent in 1945. It was more than 17.5 percent in 1945 and in 1950. Real-estate costs, advertising, and other expenses, as proportions of net sales, have also increased in recent years. Net operating results show improvements from losses of more than 6 percent of net sales in 1932 to profit of almost 10

1 Source: U. S. Department of Agriculture, Technical Bulletin No. 1062, September 1952, Marketing and Manufacturing Services and Margins for Textiles, p. 262.