provide a sound foundation for an immediate rise in the minimum wage. The President had desisted from making a recommendation in 1954 because he favored more advantageous economic conditions. Certainly his present proposal for an increase in the minimum indicates that the administration which the Solicitor represents believes such advantageous conditions now prevail. Other comments on the 1950 adjustment In marked contrast to the general approach presented by the Solicitor, the Secretary had the following to say about the 1950 adjustment: "The Department's studies show that a satisfactory adjustment to the 75-cent adjustment was made. The 75-cent rate resulted in substantial increases in the wages of low-paid workers but business was able to absorb the increases without undue effect on employment opportunities and business mortality." The Solicitor dwells upon the difficulties of adjustment in the Louisiana cane sugar industry, in the 1950 season, which he attributes to the 75-cent minimum. Compare this with what the report of the Department of Labor says on this score: "By October 1950, their first grinding season after the higher rate took effect, sugar prices had risen because of the Korean development and the industry was able to absorb the 75-cent wage. Nevertheless, there was some job elimination at several of the mills because of laborsaving changes made to offset the higher statutory wages. * * * These changes included the shipment of raw sugar to refineries in loose bulk rather than in sacks, the elimination of some positions by combining job stations and reducing yard and mill cleaning crews, and the greater use of small tractors for hauling purposes" (Results of the Minimum-Wage Increase of 1950). The Solicitor selects the specific illustrations but the Department of Labor concludes that a study of the specific cases which reported hardship were small in number "when compared to estimates of the Division of 21 million persons covered in 1950 by the minimum wage provisions of the act and of 1.3 million employees receiving direct pay increases because of the minimum wage increase in that year." The Solicitor comments that there was a "marked bunching of wage earners at or just above the minimum" and concludes that this condition "suggests the difficulty of the adjustment to the 75-cent rate." All it really reflects is the ability of employers in these low-wage industries to get away with making adjustments which comply with the letter of the law, which requires compliance only with the 75-cent minimum. In his analysis of the indirect effects, the Solicitor ventures a hypothesis which is hardly comprehensible and, if his meaning has been understood correctly, is certainly unfounded. He declares that "the relative size of the indirect wagebill increase may be progressively greater as the direct impact decreases for any area in which the direct wage-bill increase represents a significant cost impact." If he means that the indirect wage bill increases in areas of any industry largely affected by the law as the direct impact decreases, his hypothesis is unfounded. Certainly, it is refuted by the conclusion reached in the above-quoted Department of Labor report, viz, "the shift of workers from below 75 cents an hour was accompanied by a marked employment concentration at or very near the 75-cent level. This was especially true in southern sawmilling, fertilizer, and woodfurniture activities where time rates form the basic pay system *** on the whole (employers) did not try to maintain wage spreads between low-, middle-, and high-wage occupations. *** In men's dress shirts and nightwear and in men's seamless hosiery, the situation was modified by the prevalence of the piece-rate mode of payment. *** But even in these industries lower level earnings were increased relatively more than higher level ones with a consequent percent reduction in spreads between them" (p. 10). For further details, see CIO Fair Labor Standards Committee Fact Sheet No. 9. The Solicitor and BLS have reached unfounded conclusions on price trends for low-income groups The Solicitor concludes that "the cost of living has risen at about the same rate for the low-income families as the general index, and perhaps a lesser proportion." This position is presumably founded on the memorandum prepared by the BLS. However, the memorandum filed by Mrs. Wickens at the hearing provides no basis for such conclusions. The memorandum concludes, first, that a reweighting of the prices according to the weights for a low-income budget for the period from January 1950 to March 1955 would result in an increase of 14.1 percent as against 13.6 percent for the moderate income groups covered by the consumer price index. But the BLS knows very well that this is not the issue. The problem is not that of reweighting the components of the index. Rather the issue centers on whether the price trends of goods bought by the lower income groups have been different than the trends for the moderate income group. In the past all authorities have agreed upon an affirmative response to this question. It has been commonly observed that on the rise, the trend has been greater for the low-income groups and on the decline it is likely to be less steep for the low-income groups. This position was fortified by the special study reported by the CIO fair labor standards committee and from which the ratio of 1.4 to 1 was obtained and the actual 1.25 margin of adjustment was secured. (See CIO Fair Labor Standards Committee Fact Sheet No. 15.) The significant fact, as shown in previous submissions, is that the above estimates were derived from a survey which showed the same rise in food and rent for the low-income groups and the moderate income groups. But the differences in price trends for the other commodity groups was most marked. The reason for the difference is the disparity in the types of goods bought. We have pointed this out in our letter of May 12, 1955, to the committee which was a supplement to our fact sheet No. 15. In commenting on the CIO submission, the Bureau of Labor Statistics acknowledges that it is in no position to analyze price trends for lower income groups. It declares that "these special calculations of price changes for low-income families *** do not take into account the fact that different qualities and types of goods are often purchased by low-income families and that they often live in different types of housing. *** Price data do not exist either for 1950 or for 1955 for types or qualities of goods not priced for the consumer price index and hence no account can be taken of this factor." In face of this admission and in view of the fact that the principal cause for a difference in the price index for these two groups is the difference in the types of goods and services they secure, it is nothing short of fantastic for the BLS to conclude that the movement of the price indexes for the two groups would be similar. The This position by the Solicitor and the BLS is in fact even more questionable since the BLS in its 1953 revision raised by about 7 percent the average income level represented by the families which the consumer price index covers. Labor Advisory Committee protested this upgrading of the income level but gained no satisfaction and failed in its attempt to have the budget priced for low-income groups. We cannot believe that this upgrading move should be employed to reach such unfounded conclusions. Apparently, the BLS has not recently examined the emergency budget surveys, and has therefore unjustifiably concluded that the important consideration accounting for the difference in price trends was the differential movement in food price. We call attention to table A of the supplement to Fact Sheet No. 15 to indicate that the source of the difference must be found in the varying price trends in the other goods. The Solicitor alleges that there was a 1949 repricing of the WPA budget. I do not believe there was such a repricing. The BLS may have employed the reweighting technique, using its regular price series in the manner in which it has proceeded in the present memorandum. But I do not believe it made a new survey through the pricing of goods purchased by the low-income families. We urge that in face of all of the evidence available that there is a differential price movement for low-income groups and in view of the prevailing conviction that such is the fact, that the adjustment urged by the CIO be adopted. We have no current data to measure the precise amount. It is for that reason that we pared down the adjustment found for the period 1935 to 1944 from a ratio of 1.4 to 1.25. We believe that the latter is a safe adjustment factor. Other comments on the Solicitor's statement 1. The Solicitor dismisses budgetary studies as a guide because they don't provide an arithmetical formula. But actually they have been regularly used in the past in this manner. They have been used specifically to determine miniinum-wage rates. 2. The Solicitor contends that there are "no suitable data *** for measuring productivity in the affected industries and firms." We have submitted in CIO Fact Sheet No. 18 a listing of the information published by the BLS on productivity changes in the following low-wage industries: Canning and preserving, seamless hosiery, tobacco products, clay construction products, confectionery, men's informal shirts. Detailed productivity data on a plant basis are available for the men's dress shirt, men's work shirt, processed food, seamless hosiery, men's and women's dress shoes, wood furniture, overall, and fertilizer industries. If the Department would only peruse its own printed literature it would find mounds of additional information in available publications. Some of these have been itemized in Fact Sheet No. 18. They relate to all branches of the needle trades, lumber, canning, and wood-furniture industries. We have also submitted data on the textile industries. These point to the significant con clusion that productivity increases have taken place in the low-wage industries and the workers have not shared in these advances. NO EVIDENCE FOR GENERALIZATION ON PROFITS 3. No evidence is presented in support of the sweeping generalization that low-wage industries tend to operate on small-profit margins or the break-even point or that the small-profit margin industries tend to pay low wages. All of us know of small-profit industries which pay high wages. We shall submit a more detailed analysis to point up the facts on this subject. 4. The Solicitor is concerned with the impact of higher minimum wages on the low-cost segments of an industry, but he has expressed no solicitude for the economic security of establishments of fair employers in an industry whose economic security is undermined by the low-wage employers. He expresses no concern for the mills and plants which have closed by reason of this unfair competition. He is not alarmed at the migration of plants to low-wage areas This indifference to the lot of the fair-minded employer is unmatched in the annals of the United States Department of Labor. We are disturbed by the present supplemental statement because thereby the Department of Labor has forfeited its responsibility of leadership in the promotion of the interests of labor. Instead of helping the subcommittee to reach a balanced conclusion on the highest minimum which can be adopted, it has arrayed a biased and incomplete statement of selected facts and contentions designed to overstate the effects of higher minima without presenting the vital human and economic facts in support of raising the economic sights of our society. The Department in this unprecedented submission has made it more difficult for the members of Congress to frame a course designed to advance the lot of the underprivileged, unorganized, and repressed workers who are unable to effect improvements in their own plight through their own bargaining power. Instead of helping to right the imbalance in the labor wage system created by the unequal bargaining powers of employer and workers in our lowwage industries, the Department's statement overdraws the difficulties confronted by a limited and selected group of employers who are undermining the fairlabor standards in their own industries. Hon. GRAHAM A. BARDEN, TEXTILE WORKERS UNION OF AMERICA, House Office Building, Washington, D. C. MY DEAR CONGRESSMAN BARDEN: I am enclosing a copy of the report by the Legislative Reference Service on the Fair Labor Standards Act. I refer to it in my statement. I believe that the record on the subject will be much enriched by the inclusion of the enclosed report submitted to the Congressional Record by Congressman Patterson on March 31, 1955. Very truly yours, (The statement referred to is as follows:) SOLOMON BARKIN. REPORT ON A MINIMUM WAGE RATE SURVEY (Extension of remarks of Hon. James T. Patterson, of Connecticut, in the House of Representatives, Thursday, March 31, 1955) Mr. PATTERSON. Mr. Speaker, I ask unanimous consent to have printed in the Appendix of the Record a copy of a document entitled "What Wage Floor Would Be Necessary To Protect Connecticut's Great Industrial Labor Force Against the Migration of Industries From the State?" which was prepared by Dr. Sar A. Levitan, an outstanding economist on the staff of the Legislative Reference Service, Library of Congress. I requested the Legislative Reference Service to conduct this survey with a view of determining what national minimum wage floor should be established in order to protect Connecticut's industrial labor force from runaway industries migrating to labor market areas of surplus labor supply, indecent wages, and substandards of living. The Legislative Reference Service, of course, makes no recommendations. Consequently it would be unfair to read into this study any support or opposition to any specific proposal for the modification of the Federal minimum wage law now pending before Congress. This study is based upon a comprehensive survey and an objective analysis of the facts. I commend Dr. Levitan for his excellent presentation of a vital economic problem. I hope that this factual study will be of benefit not only to me but to other Members of the House: WHAT WAGE FLOOR WOULD BE NECESSARY TO PROTECT CONNECTICUT'S GREAT INDUSTRIAL LABOR FORCE AGAINST THE MIGRATION OF INDUSTRIES FROM THE STATE? (Prepared by Dr. Sar A. Levitan) MINIMUM-WAGE LEGISLATION TO DATE Minimum-wage legislation in the United States dates back to 1912, when the Commonwealth of Massachusetts passed the first State minimum-wage law. Since then more than half the States have enacted minimum-wage legislation. Twenty-three of the thirty States and Territories with minimum-wage legislation have limited their coverage to women and/or children. Twenty-two States, most of them in the South, have no minimum-wage laws. Two of the seven States that have extended the protection of their minimumwage laws to men as well as women have a statutory minimum-wage rate of 75 cents an hour. These two States are Connecticut and Massachusetts. Connecticut was the first State to set a statutory minimum equal to the current Federal rate. Besides these two cases, State coverage has been largely limited and statutory minimum wages comparatively low. The Federal Government entered the field of minimum-wage legislation with the enactment of the National Industrial Recovery Act codes. In 1938 it passed permanent minimum-wage legislation with a 25-cent minimum that became effective in October 1938. This minimum was increased to 30 cents a year later, and during the war a 40-cent minimum became effective. The floor on wages was further increased to 75 cents in the beginning of 1950. THE CASE FOR MINIMUM-WAGE LEGISLATION The justification for minimum-wage legislation is twofold: 1. It attempts to raise the standard of living of those who are at the bottom of the economic ladder and tries to provide these with a minimum standard of living. 2. Minimum-wage legislation recognizes that the existence of low wages tends to debase the living standards of workers enjoying higher wage levels and acts as a drag upon the economy. Substandard wages, in the words of the Fair Labor Act, constitute an unfair method of competition in commerce and interferes with the "orderly and fair marketing of goods and commerce." The Fair Labor Standards Act declares it to be the policy of the United States to try to correct as rapidly as practicable the depressing effects that substandard wages exert upon the overall wage structure. This is to be accomplished, however, without substantially curtailing employment or the earning power of those individuals involved. REGIONAL WAGE DIFFERENTIALS Minimum-wage legislation normally affects directly only a small percentage of wage earners-those at the bottom of the economic ladder. It apparently has not appreciably reduced wage differentials among the several sections in the country or among different occupations. Detailed regional information on wage distribution is available for manufacturing. Data published recently by the Bureau of Labor Statistics reveal that in April 1954, there were in the United States some 1,282,000 production workers in manufacturing whose hourly earnings were less than $1 an hour, while more than double that number were earning less than $1.25 an hour. One out of every five production workers engaged in manufacturing in the northeast were earning less than $1.25; in the South a comparable percentage was 50 percent. TABLE 1.-Estimated cumulative distribution of production workers in manufac turing industries by straight-time average hourly earnings,1 United States and regions, April 1954 TABLE 2.-Estimated cumulative percentage distribution of production workers in manufacturing industries by straight-time average hourly earnings,1 United States regions,2 April 1954 1 Excludes premium pay for overtime and for work on weekends, holidays, and late shifts. ? The regions used in this study include: Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont; South: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia; Middle West: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin, Far West: Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexic Oregon, Utah, Washington, and Wyoming. 3 Less than 500 workers or 0.05 percent. Source: U. S. Department of Labor, Bureau of Labor Statistics, Washington 25, D. C., February 1955. Average hourly rates in manufacturing disclose similar wide differentials. Bureau of Labor Statistics data reveal that average hourly earnings for production workers in manufacturing was $1.85 in February 1955. The average hourly rates for States ranged, however, from a high of $2.22 per hour in Oregon to $1.20 in Mississippi. The comparable rates in Connecticut was $1.85, New York $1.88, and in Pennsylvania $1.86. The average hourly rates in the New England States ranged from $1.44 in Maine to $1.85 in Connecticut. Representative |