ployees of the Red Cross and similar organizations for the Armed Forces outside the United States.

Liability for the payment of compensation benefits under this program rests upon the employer and the only expense to the Federal Government is for the administration of the program. The employer must insure his liability for the payment of compensation benefits with an insurance carrier authorized by the Bureau to write such insurance or by meeting requirements of the Bureau to qualify as a self-insurer.

This program is administered on a decentralized basis through 13 district offices in the field. The program relating to employments in the District of Columbia is administered through a local district office and the expense for this part of the program is paid from funds appropriated to the government of the District of Columbia and transferred to the Bureau,

LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT REHABILITATION PROGRAM

The budget estimate proposes an authorization to use $51,700 from the trust fund created by section 44 of the Longshoremen's Compensation Act in connection with the rehabilitation of permanently disabled beneficiaries of this act. This fund is made up of sums paid by employers in certain fatal cases and from fines, penalties, and interest on invested surplus. The Bureau does not operate a vocational training program of its own and the amount requested, which is the same as that available in the current year, is for the services of seven employees to aid in the rehabilitation of seriously disabled employees through State facilities.

WAR CLAIMS ACT

This is a liquidating program under which benefits are being paid to American citizens who were captured or detained by the Japanese during World War II in the Philippine Islands. The sum of $31,700 is required for the services of a small staff of six employees engaged in handling cases arising out of this program.

EMPLOYEES' COMPENSATION FUND

This fund established under the Federal Employees' Compensation Act covers the cost of all benefits provided by that act and disability and death benefits payable under sections 4(c) and 5(f) of the War Claims Act of 1948. It is also used to pay benefits for a small number of defense workers injured prior to April 30, 1945, or their dependents, who are eligible for ce tain benefits under the civilian war benefits program.

It is estimated that the expenditures from the fund will amount to $65,019,000 during 1961. This represents a net increase of $3,819,000 over the estimated cost for 1960 of which $1 million is due to the cumulative increase in the number of cases on the compensation roll and a gradual increase in the rate of payments in such cases. New cases added to the rolls are at a higher rate than old cases in which benefits are terminated. The principal increase, however, is due to the inclusion of $2,819,000 to reimburse the U.S. Public Health Service for medical care furnished compensation beneficiaries.

Statements included in the justification explain the basis for the Bureau's estimates but I will be glad to furnish such additional information as the members of the committee may desire.

APPROPRIATION CHANGES

Mr. MCCAULEY. The administrative appropriation for the Bureau provides no change in our organization and includes only a small additional item of $28,000 to cover an increase in cost for contributions toward the insurance premiums for the health program.

The appropriation for payment of compensation benefits shows an increase of $3,819,000 over estimated expenditures for the current year. This increase is principally due to a change in budget practices through which the cost of medical services supplied through the Public Health Service facilities which has heretofore been included in

the appropriations of the Public Health Service has now been transferred to this appropriation.

It is my understanding that a like amount will be deducted from the appropriation for the operation of the Public Health Service hosiptals, as an offset against this. I might note in this connection that in making this change the Bureau of the Budget did not take into account the added administrative expense of handling the individual charges from the Public Health Service, which we will have to process just as we do other charges from private facilities.

Senator HILL. Were you allowed additional funds to do this job through the transfer?

Mr. MCCAULEY. Sir?

ADEQUACY OF FUNDS TRANSFERRED

Senator HILL. Since this responsibility was transferred to you from the Public Health Service, do you have in this budget allowance of additional funds to meet this additional work?

Mr. MCCAULEY. Not to cover the additional cost of administering the new system.

Senator HILL. I say do you have funds in this budget to take care of that?

Mr. MCCAULEY. It will mean that we will have to transfer, if possible, from some of our other activities to absorb this additional cost. It is equivalent to about 5-man years of work. As I say, no provision was made to cover that additional expense in our administrative appropriation.

Senator HILL. In your administrative appropriations.

Mr. MCCAULEY. Yes, sir. There hasn't been any change in our program since we last appeared before you. We are continuing the same activities; and unless there are some questions you would like to raise I will submit my budget on that statement.

STATUS OF TRUST FUND

Senator HILL. How is your trust fund these days?

Mr. MCCAULEY. The trust fund account is made up of funds deposited in the Treasury by private employers and insurance carriers. It is not Federal money. That is used in the amount indicated in the estimates for administrative expenses in connection with rehabilitation of permanently disabled beneficiaries.

STATUS OF EMPLOYEES' COMPENSATION FUND

Senator HILL. What about the status of your employees' compensation fund?

Mr. MCCAULEY. That covers all benefits payable under the Federal Employees' Compensation Act and that is the appropriation showing an increase of $3,819,000.

Senator HILL. We are certainly very much obliged to you.
Thank you again, very, very much. Thank you.

Mr. MCCAULEY. Thank you.

The Employees' Compensation Appeals Board consists of three members appointed by the Secretary of Labor. It is a quasi-judicial body which has exclusive jurisdiction to review appeals filed by Federal employees from final

decisions of the Bureau of Employees' Compensation pursuant to the provisions of the Federal Employees' Compensation Act. Board procedures are informal and designed to facilitate expeditious and careful consideration of issues raised on appeal.

The operations of the Board are essentially current and no program increases are being requested for 1961.

WAGE AND HOUR DIVISION

STATEMENT OF CLARENCE T. LUNDQUIST, ADMINISTRATOR; ACCOMPANIED BY FRANCIS J. COSTELLO, ASSISTANT ADMINISTRATOR; SAMUEL GANZ, ASSISTANT ADMINISTRATOR; WARREN C. ANDERON, CHIEF, DIVISION OF MANAGEMENT OPERATIONS AND SERVICES, WAGE AND HOUR DIVISION; AND JAMES E. DODSON, ADMINISTRATIVE ASSISTANT SECRETARY, OFFICE OF THE SECRETARY

APPROPRIATION ESTIMATE

"WAGE AND HOUR DIVISION

"SALARIES AND EXPENSES

"For expenses necessary for performing the duties imposed by the Fair Labor Standards Act of 1938, as amended, and the Act to provide conditions for the purchase of supplies and the making of contracts by the United States, approved June 30, 1936, as amended (41 U.S.C. 35-45), including reimbursement to State, Federal, and local agencies and their employees for inspection services rendered, and not to exceed $3,000 for expenses of attendance of cooperating officials and consultants at conferences concerned with the work of the Division, [$11,489,000] $11,529,000."

Mandatory increase items: to provide for employees' health benefits (Public Law 86-382).

Mandatory decrease items: 1 less extra day of pay in 1961 from 1960____

Total change_.

$11, 489, 000 11, 529, 000

+40,000

+75, 500

-35, 500

+40,000

PREPARED STATEMENT

Senator HILL. Mr. Lundquist, Administrator of the Wage and Hour Division.

All right, Mr. Lundquist. We are glad to have you here and we will be glad to have your statement.

(The statement referred to follow :)

Mr. Chairman and members of the committee, the Division's request for fiscal year 1961 is $11,529,000, which will allow us to continue our programs at the 1960 level. Our request includes an increase of $40,000 for the new employee health benefits program under Public Law 86-382. The total cost of this program will be $75,500, but we are able to absorb $35,500 by applying funds for a nonrecurring extra day of pay in 1961.

ENFORCEMENT PROGRAM

When I appeared before this committee 2 years ago, I described the extent of noncompliance with the acts which was disclosed by our 1957 compliance survey. I indicated that we were not satisfied with the level of compliance and that we hoped to improve it by improving our enforcement program and investigation techniques.

There has been a substantial increase in disclosures of underpayments as reflected in the statistics for fiscal year 1959. The amount of back wages found due was $22.4 million, or $2.8 million more than in 1958. Minimum wage underJayments increased by $800,000 and overtime underpayments by $2 million. The volume of complaints received has remained high and actually increased over last year by 1,000.

Our experience during the first half of this fiscal year suggests that in 1960 investigations will disclose about $25 million in underpayments.

We have concluded that the increase in the amount of underpayments disclosed is, substantially at least, because of improvements in our operations. While we do not believe that the extent of noncompliance has been increasing,

we plan to make limited compliance surveys during the next year to obtain information on the level of compliance. Such surveys will also provide informa tion which will assist us in planning enforcement programs.

WALSH-HEALEY PUBLIC CONTRACTS PROGRAM

In fiscal year 1959, prevailing minimum wage determinations were issued under the Walsh-Healey Public Contracts Act for five industries: Surgical instruments and apparatus, with a determined minimum hourly rate of $1.25; drugs and medicine, $1.20; bituminous coal, $1.40 to $2.846 depending on the production district; soap, $1.50; and flour milling, $1.30. During the first half of the cur rent fiscal year one additional minimum wage determination was issued, evapo rated milk, $1.68.

During fiscal years 1960 and 1961 we plan to proceed vigorously with the wage determinations program.

TERRITORIAL WAGE ORDER PROGRAM

As a result of the minimum wage order program in Puerto Rico operated in accordance with the tripartite Industry Committee procedure almost 40 percen of the covered workers on the island are now employed in industries with minimum rates of $1 an hour. Public Law 85-750 enacted August 25, 1958 provides that rates below $1 shall be reviewed at least once in each biennia period commencing July 1, 1958. Additionally, the Puerto Rico Minimum Wag Board is reviewing all rates below 70 cents an hour in the alternate years be tween Federal reviews. Thus, the rates in the lower paying industries in Puert Rico are being reviewed once each year either by a Federal or a Commonwealth committee.

Under the Division's current wage order program, it is planned that the mini mum rates for virtually all industries with rates below $1 in Puerto Rico, th Virgin Islands, and American Samoa will be reviewed by an industry committe within 24 months after the previous review even though the statute itself would allow a longer period. While the Secretary is authorized to order an additiona review for particular industries within any biennial period, thus far no nee has been found to exercise this authority. However, we will not hesitate t utilize the authority to order an additional review, if the circumstances in an cases which arise in the future warrant such action.

We anticipate that our other program requirements will remain substantiall unchanged in 1961 and we will continue to strive for improvement in all area of our operations. It is our objective to maintain a vigorous and vigilant att tude toward all known areas of noncompliance, and those larger areas where th potentials for noncompliance are apparent or inherently possible. We are con vinced that, with the limited staff available, we must proceed in a helpful bu vigorous fashion to bring into compliance those who may violate because of in advertence, to discourage carelessness leading to noncompliance, and to dete appropriately those who would willfully violate these minimum labor standards

GENERAL STATEMENT

Mr. LUNDQUIST. Yes. A statement has been submitted for th record.

In summary, I might say that our appropriation request o $11,529,000 for fiscal year 1961 will allow us to continue our program at about the same level as this year. We expect to make betwee 50,000 and 55,000 investigations, which will probably disclose abou $25 million annually in unpaid back wages.

While the number of investigations has not changed appreciably i recent years, our findings of unpaid back wages have increase substantially.

VIOLATIONS OF LAW

Senator HILL. When you say the volume of back wages has in creased, you mean there has been more violation of the law and les cooperation under the statute?