TABLE 10.-Estimated distribution of production workers in durable- and nondurable-goods manufacturing industries, by straight-time average hourly earnings,' New York State, April 1954

1 Excludes premium pay for overtime and for work on weekends, holidays, and late shifts.

NOTE.-Because of rounding, sums of individual items do not necessarily equal totals.

Source: Estimated by the Division of Research and Statistics on the basis of data for the Northeastern States by industry and for the Middle Atlantic States by durable and nondurable goods as determined by the U. S. Bureau of Labor Statistics.

TABLE 11.-Percent distribution of manufacturing production workers, by plant gross average hourly earnings, New York State, January 1955

TABLE 12.-Estimated effects of increasing the Federal minimum wage, New

STATEMENT OF HON. GEORGE M. RHODES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. Chairman, I appreciate the opportunity of submitting this statement in support of legislation before your committee which would increase the minimum wage to $1.25 an hour.

I have introduce a bill (H. R. 6997) to extend coverage to the retail trades, but in view of the decision of this committee to defer consideration of coverage, I will withhold comments on this important and interrelated aspect of the minimum-wage issue.

Mr. Chairman, before proceeding with the main portion of my statement, I think it would be worthwhile to restate the basic reasons for minimum wage legislation. I would like to quote the congressional finding and declaration of policy set forth in enacting the Fair Labor Standards Act of 1938, as amended in 1949:

"(a) The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce.

"(b) It is declared to be the policy of this chapter, through the exercise by Congress of its power to regulate commerce among the several States and with foreign nations, to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power" (29 U. S. C., sec. 202).

This language clearly justifies the Federal Government's recognition of the principle of a minimum wage for American workers and sets the stage for the current hearings on just what the minimum wage should be.

PRINCIPLE OF MINIMUM WAGES

The need for a minimum wage is now generally accepted by all but a few die-hard groups and individuals in our modern-day society. Most people realize that the existence of substandard wage levels create a drag on the entire economy, threaten to debase the living standards of higher paid wage earners, and act as "an unfair method of competition in commerce," as the original 1938 act pointed out.

The continuing growth of our economy is prevented from realizing its full potential because of these substandard wages. Millions of workers are thus denied a living wage for themselves and their families. Lacking adequate purchasing power, they cannot afford to buy the goods and services produced in abundance for the betterment of living standards. This has a crippling effect on the entire economy. The principle of the minimum wage is economically and morally sound and in the long-range best interests of all Americans.

DIRE PREDICTIONS UNFOUNDED

We all remember some of the extravagant opposition statements which were made when the original Fair Labor Standards Act and the 1949 amendments were being considered by Congress. Some predicted that it would destroy the American labor movement. Others charged it would have an inflationary effect on the economy. Still others forecast a limitation of competition in industry, and possible bankruptcy of many businesses and increased unemployment.

All of these arguments have been thoroughly disproved in the years which have intervened. We have seen an unprecedented growth of our economy by all terms of measurement. National prosperity, output, employment, workers' efficiency, and our standard of living have all risen to new heights. Yet today we hear these same old arguments from the same groups and individuals who continue to conveniently overlook the facts of our economic life.

Rapidly growing southern industries were among the most outspoken critics of the 1949 minimum-wage increases from 40 to 75 cents an hour. It was predicted that the increase would curtail the economic and industrial development in the Southern States. This argument has also been proved false and shortsighted.

EFFECTS OF 1949 MINIMUM-WAGE INCREASE

A study of the effect of the last minimum-wage increase has been conducted by the Department of Labor, concentrating on 5 low-wage industries where substantial numbers of employees were receiving less than 75 cents an hour in 1949 The study concluded that the wage increases had no appreciable effect on emplorment and that the industries showed a very high degree of adjustment to the increased minimum wage.

The Labor Department study proved that, despite protests by affected indus tries, even the lowest-wage industries were easily able to absorb the 75-cent-ahour-minimum wage 5 years ago.

Since that time the minimum wage has remained unchanged but manufacturing wages have gone up by about 30 percent. Most industries, particularly in the South, have improved their financial positions and are now better able to par a higher minimum wage than they were 5 years ago. Moreover, increases in the cost of living and increased productivity per man-hour by American workers must also be considered in determining a new minimum wage,

$1.25 AN HOUR IS A FAIR MINIMUM

Mr. Chairman, I am convinced that an increase in the minimum wage from 75 cents to $1.25 an hour is thoroughly justified, solely on the basis of upward changes in our economy over the past 5 years.

Since the last minimum-wage increase went into effect on January 1950, the cost of living has risen by about 14 percent. Average hourly earnings in manufacturing industries have risen by about 40 cents an hour-from $1.38 to $1.75in the past 5 years. In addition national productivity over this period has increased about 20 percent, or about 4 percent, a year higher output per man-hour of work than in 1950.

If we consider only the upward changes in the cost of living and increased output of American workers, a minimum wage of about $1.03 would be needed just to put these workers in the same economic position they were 5 years aga That is not enough. Already we have seen the emergence of new wage patterns in the recent 3-year contracts signed by the United Automobile Workers, CIO, the Ford Motor Co., and General Motors Corp. These new contracts provide an estimated 20 cents an hour increase in combined wage, pensions, and other fringe benefits. We must not permit minimum-wage legislation to become obsolete even before it has cleared this committee.

We must also consider the general wage improvements over the past 5 years According to the Bureau of Labor Statistics, wages during this period have increased 522 cents an hour in the bituminous-coal industry; in the rubber industry, wages have gone up 45 cents an hour; in the meat-packing industry, 41.3 cents an hour; in farm equipment, 44 cents an hour; in the vital steel industry, 381⁄2 cents an hour, and so on. The average increase in all manufacturing industries has been about 40 cents an hour since 1950.

If this entire amount were added to the $1.03 cents an hour minimum, which is clearly justified solely on the basis of the increased cost of living and man-hour productivity increases since 1950, the new minimum would be at least $1.43 an hour. Even this would not take into effect the new wage patterns being established this year.

Of course, it can be argued that the 40 cents an hour average pay increase over the 1950-54 period includes some wage adjustments for the increased cost of living and increased productivity. But it also is a reflection of the growth of our gross national product, the expansion and higher profits being made by industry, and the steady upward trend in the American standard of living. Thus if we add in only slightly more than half of this average 40 cents an hour wage increase, we arrive at a fair justification for at least $1.25 cents an hour minimum wage.

Assuming a $1.25 an hour minimum wage, this would mean only a $2,500 a year income for American workers, based on a 40-hour week, 50 weeks a year. This amounts to only $50 a week, before deductions. Could anyone here support his family on that amount, in view of our heavy tax burden, our standard of living. and the other financial demands of our modern society?

MINIMUM FAMILY BUDGET

With respect to the income necessary to provide a decent standard of living for our people, it would be well to examine a 1951 study of the cost of a city worker's family budget of 4 persons made by the Bureau of Labor Statistics in

34 United States cities. This budget was described as providing the "necessary minimum with respect to items included and their quantities as determined by prevailing standards of what is needed for health, efficiency, nurture of children, social participation, and the maintenance of self-respect and the respect of others."

This study showed that the cost for such a budget ranged from $3,812 in New Orleans (the lowest) to $4,454 in Washington, D. C. (the highest). While the city of Reading, Pa., (the largest city in my district) was not included in the study, the budget for the two nearest cities may be cited. Scranton, Pa. was $4,002 and for Philadelphia the figure was $4,078. Since 1951 the cost of living has risen by about 3 percent, so that a minimum wage of well over $2 an hour would be needed to fulfill the requirements of this minimum budget.

Thus the $1.25 an hour minimum is not unreasonable or overly-liberal. On the contrary it is a conservative figure when all of the weight of the evidence is considered.

EFFECTIVE DATE

One of the most important considerations which I feel should be brought to the attention of this committee is the importance in the selection of the effective date of any minimum-wage legislation reported.

The bill passed by the Senate (S. 2168) provides that the new minimum wage go into effect in the United States on January 1, 1956. It seems to me that this is an unreasonable delay. The 1949 Fair Labor Standards Act amendments went into effect 90 days following enactment. I feel that the same 90-day period should be specified in the pending legislation and hope that such an amendment will be offered and accepted by this committee and by the House.

Assuming favorable action by Congress in this session to increase the minimum wage and assuming the bill was signed by August 1, its effective date would be on or about November 1, 1955. This would give workers now receiving substandard wages approximately 7 weeks of higher pay at the new minimum before Christ

mas.

Consider for a moment what this would mean to the countless numbers of workers and their families receiving such wage increases. For a worker now receiving the 75 cents an hour minimum, an increase to the $1.25 an hour minimum would give him an additional $20 for a full 40-hour week or about $140 more spending money in the interval between the effective date of the new law and the Christmas holiday season.

Consider also the stimulating effect on business and our economy in general as these high-velocity dollars are quickly put into circulation to buy the goods and services which would become available to these workers under the new minimum wage law.

In view of the speed at which Members of Congress acted on legislation to raise congressional and judicial salaries, I feel that it is extremely unfair to make these lowest paid workers wait until next year for their pay increases. It would be applying a double-standard-quick raises for Members of Congress and judges as compared with delayed-action raises for needy families.

I have prepared a chart which shows the chronological comparison of congressional action in the speedy adoption of the congressional and judicial pay bill as contrasted with the rather leisurely action thus far on minimum wage legislation. (See exhibit I.)

Mr. Chairman, in conclusion I would like to have made part of the record several communications which I have received in regard to the pending minimum wage legislation. I think they are typical of the feeling of both labor and management in my area in support of a $1.25 an hour minimum wage.

(The exhibits referred to follow :)

63489-55-71