Nonwage Effects of Minimum-Rate Increase

A. Effects on employment

Data specifically for men's seamless hosiery mills are not available, but for the seamlesshosiery industry generally, including women's as well as men's hose, and women's and children's anklets, the number of production workers declined from 58 thousand in last quarter 1949 to 57 thousand in first quarter 1950 to 51 thousand in second quarter 1950. A comparison with other years indicates this may have been a seasonal pattern. For 1950 as a whole, average production-worker employment in the industry was larger than in 1949, 55 as against 53 thousand. 2/

B. Effects on capital expenditures

Of the 48 plants surveyed in 1950 in the three areas of study, one-sixth reported the introduction of labor-saving machinery after January 25 of that year. Of these eight mills, six were located in high-wage Winston Salem-High Point, one in each of the other two regions. Approximate expenditures on such equipment showed a wide range, from

1 All material in this section on nomwage effects was furnished by U. S. Department of labor, Bureau of Labor Statistios, and, unless specifically credited, is from unpublished information.

2/ Employment figures from U. S. Department of Labor, Bureau of Labor Statistios, Division of Manpower and Employment Statistios.

$6,000 to $198,000. No information was collected on whether this spending was incurred because of the higher minimum or for other reasons.

C. Effects on hiring policies

Only 1 of the 48 surveyed establishments reported a change in hiring policy. The nature of this change was not indicated, except that it did not involve the hiring of younger workers. The proportion of plant workers 50 years of age or older was the same in October-November 1950 as in March of that year in the two North Carolina regions, but in Reading was smaller by one percent of total workers there.

D. Effects on hours of work

Since in October 1949 all plant workers in each of the surveyed regions were already on a 40-hour scheduled workweek, there was no shortening of scheduled weekly hours because of the amended minimum. But average weekly hours, which represent actual rather than scheduled worktime, declined for production workers in seamless hosiery manufacture from 37.5 in last quarter 1949 to 35.7 in first quarter 1950 to 33.1 in second quarter 1950. Some of this drop may have been due to a reduction in overtime hours because of the amended minimum, but some probably occurred for seasonal reasons. For 1950 as a whole, in any event, average weekly hours for production

1/ Based on U. S. Department of Labor, Bureau of Labor Statistios, CWR-23 (Revised) releases.

less hosiery mills. The higher minimum had no visible effect, prices for both rayon and cotton half rose remaining constant during last half 1949 and first half 1950. They did not rise till July-August 1950 after the start of the Korean conflict.

Summary of Effects

The higher minimum appeared to have had little determinable effect on nonwage variables. But it did exert significant influence on wage structures in the industry. Its consequences were greater on lower-level wage rates than on middle-level rates, and on middle-level rates than on upper-level ones. Its upward effects were more substantial in lower-wage than in higher-wage regions and occupations. The higher minimum, therefore, tended on the whole to narrow percent differentials within regional wage distributions and among regional and occupational wage levels.

After October-November 1950, the higher-wage occupations generally received larger percent earnings increases than the lower-wage ones. This reverse pattern made inroads into the relative earnings advantage gained through minimum-wage legislation by the poorer-paid workers. Only in the lowest-wage region did such workers still retain in 1952 some of the advantage in their position relative to higher-paid employees that was achieved as a consequence of the 75-cent rate.

Background Data

Nonupholstered wood furniture is made in every section of the country, with the Great Lakes, Middle Atlantic, and Southeast regions together accounting for about two-thirds of the industry's plants and workers. 1/ The lowest-paying establishments appear to be in the Southeast States, 2/ where almost one-fourth of the industry's 139,000 workers were employed in 1947. 3 Because the impact of the 75-cent minimum would therefore presumably be greatest there, the study of this industry was confined to that region (and the adjoining State of Virginia), and to only the three most concentrated production areas therein. These three areas, Winston Salem-High Point, N. C., Morganton-Lenoir, N. C., and

Locording to U. S. Bureau of the Census, 1947 U. S. Census of Mamfacturers, Vol. II, pp. 296 and 303.

The industry discussed in this chapter includes Number 2511 and part of Number 2521 of the Standard Industrial Classification oode af the Executive Office of the President, Bureau of the Budget, Nov. 1945, and is part of SIC Major Group 251 (Mamfaoture of) Furni ture and Fixtures.

2/ In 1945, straight-time average hourly earnings in nompholstered wood furniture plants were 56 cents in that region, lower than in any other section of the country. U. S Department of Labor, Bureau of Labor Statistios, Wage Structure Series 2, No. 30, Wood Furniture 1945, Table 4, p. 16.

2/ U. S. Bureau of the Census, 1947 U. S. Census of Manufactures, Vol. II, pp. 296 and 303.

Martinsville, Va., had in October 1950 an estimated 52 establishments with 21 or more workers producing wood furniture (except upholstered), and approximately 17,000 persons employed in them. All the 52 establishments primarily produced household furniture, except for a very few in Winston Salem-High Point primarily engaged in manufacturing office furniture.

Most of the plants which were located in the three survey areas and had 21 or more workers were included in the investigations made in September 1949, March 1950 (to measure short-run minimum-wage impact), and October 1950 (to measure longer-run minimum-wage effects). In two of the three areas, Winston Salem-High Point and Martinsville, payroll records were also collected for pay periods in July 1952 to throw light on regional wage structures as they existed two and a half years after introduction of the 75-cent minimum. As in the Southern sawmills and the fertilizer plants, time rates are the prevalent mode of payment in the industry.

1/ Results of these payroll surveys are numarized in U. S. Department of Labor, Bureau of Labor Statistics, Monthly Labor Review, June 1951, pp. 672-674.

In this ohapter the "short run" oovers the period September 1949 to March 1950, the "longer run" September 1949 to October 1950.

Wage Effects of Minimum-Rate In

crease

The same preliminary qualification made in the chapters on men's dress shirts and men's seamless hosiery is applicable here, that while wage-structure changes occurring between September 1949 and March 1950 may have been caused chiefly by the higher minimum wage, those between March and October 1950 were probably significantly influenced by other economic forces, especially after the North Korean attack in June. These forces largely defeated the primary purpose of the October 1950 survey, which was to assess the longer-run, less immediate consequences of the higher minimum.

Table 36 and Charts 8, 9, and 10 point up the comparatively minor wage adjustments required in the surveyed plants because of the amended minimum. In September 1949, the three regions varied in average hourly earnings from 88 to 92 cents, in the proportion of plant workers averaging below 75 cents an hour from 13 to 6 percent. These proportions were generally smaller than those in any of the other industries to which the preceding four chapters have been devoted. Estimated wagebill increases required to raise to 75 cents the hourly earnings of workers averaging below that amount equaled only 1 percent in the lowest-wage region