will name the industries covered, so that you can get some idea of their importance. They are the following:

Blast furnaces, steel work, rolling mills, hardware, stoves, structural and ornamental metalwork, electrical machinery, foundries and machine shops, machine tools, furniture, millwork, sawmills, brick and tile, cotton goods, silk and rayon, cotton garments, paper boxes, and paper and pulp.

What did we find? We found first that in all of the 16 industries weekly hours had been increased substantially over those that prevailed under the codes. Some of the increase, of course, was due to business improvement, but generally there was substantial increases in the number of plants working above the 40 hours that tended to prevail under the codes.

As a matter of fact, we found that in the steel industry, for example, whereas only 3 percent of the workers had been working more than THE 40 HOUR WEEK IN BLAST FURNACES. STEEL WORKS AND ROLLING MILLS MAY 1935 AND MAY 1936

40 hours during the last month of the code, 67 percent, or 20 times that many, were working more than the code hours a year later.

In the hardware industry, whereas 9 out of every 10 people were working under 40 hours during the last month of the code, nearly two-thirds were working more than 40 hours a year later.

In the electrical-machinery industry, whereas one-fifth of the people were working more than 40 hours during the last month of the code, almost 90 percent were working more than 40 hours a week a year later.

And so on down through the list to millwork, where only 24 percent had been working more than 40 hours during the last month of the code and 74 percent were working more than 40 hours year later. In cotton garments, where only 4 percent were working more than 40 hours in May 1935 and a year later 41 percent were working more than 40 hours.

A picture of the situation in the steel industry-blast furnaces and rolling mills-is shown in this chart. You will note that in May 1935,

10 percent of the establishments were working over 40 hours, and 89 percent of the establishments were working under 40 hours, and a year later 64 percent of the plants were working more than 40 hours and only 35 percent under 40 hours. Only 3 percent of the wage earners in this industry were working over 40 hours under the code and 96.9 percent were working under 40 hours. A year later 67 percent were working more than 40 hours and only 32 percent were working under 40 hours.

The CHAIRMAN. I would like to have this chart inserted in the record.

Mr. LUBIN. The second fact that was revealed by our investigation was that the establishments that increased their hours most, usually fell below the average for hourly earnings. In other words, the plants that were paying the lower wages were the most prone to increase their hours, thus forcing their workers to depend upon a longer workweek rather than on wage rates for maintaining their weekly incomes.

A third factor that was discovered as a result of this investigation was that the gains in business as measured by the man-hours of employment in individual establishments were greatest in the establishments that lowered their wages the most.

I would like for the purpose of the record, Mr. Chairman, to give a few examples of what happened in specific industries as the result of the lowering of wages.

In the cotton-garment industry, of 177 establishments that reported to the Bureau, in May of 1935 and a year later in 1936, the total number of man-hours worked increased from 938,000 in May 1935 to 1,068,000 in May 1936. This was a gain of 13.9 percent in actual number of hours worked in the industry. But the number of people who were employed in that industry increased only about 2.5 percent. The hourly earnings were cut so that despite the fact that the men in the plants worked 13.9 percent more hours, the actual pay roll fell 1.2 percent.

These changes were accompanied by drastic shifts of business within the industry.

Twenty-three establishments either maintained their wages or did not decrease them by more than 21⁄2 percent. These firms that maintained their wages or hardly cut them dropped 91⁄2 percent of their workers and worked 5 percent fewer man-hours than they did the year previously. In the establishments that reduced hourly earnings from 21⁄2 to 71⁄2 percent the number of employees declined; but in the plants that cut their hours by more than 37%1⁄2 percent the number of employees increased by 34 percent and the average weekly earnings decreased from $10.88 to $8.23. The volume of business done by the firms that cut their wages by 37 percent or more increased by over 60 percent. In other words, the firms that did not cut their wages lost business, and the firms that cut their wages 37 percent or more increased the actual amount of business as measured in man-hours of employment for their workers by about 60 percent.

We find very definitely in the cotton-garment industry that over this period of time the business went to the wage cutter.

A second instance is the silk and rayon industry. In the silk and rayon industry the firms reporting to the Bureau, 144 in number,

increased the man-hours of employment from about 1,150,000 to about 1,190,000, which means a 4-percent gain in the actual manhours worked. However, the number of workers employed actually fell by 1.3 percent and the weekly earnings of the wage earners fell by 1.4 percent. Workers in the silk industry suffered certain immediate and obvious losses in the period under consideration.

To begin with, 1.3 percent of the number who had jobs in April 1935 did not have jobs a year later. In the second place, those who had jobs earned each week a few cents less than they did in 1935 but they worked almost 2 hours more per week. Their average hourly earnings fell from 45.06 cents to 43.1 cents, or about 51⁄2 percent. The CHAIRMAN. May I ask you a question there?

Mr. LUBIN. Surely.

The CHAIRMAN. That would indicate that an increase of hours of those particular workers, if I gather that correctly, did not increase the amount of production, necessarily?

Mr. LUBIN. It may have, but what happened was you cut your wage rate and increased the hours, and by the end of the week, after working more hours, the worker had less money than he had previously.

Senator ELLENDER. That increased production, did it not? Mr. LUBIN. In terms of hours, production was increased. Senator ELLENDER. And that is why the business also was increased, because they were able also to sell it cheaper.

Mr. LUBIN. That is a question of the trend of prices in these specific industries, and the evidence is to the effect that prices in the industries that cut their wages the most did not necessarily go down. Where they did go down, they did not go down any more than for other products. I think we must bear in mind, too, that during this period there were plants in these industries that actually increased their wages and were continuing in business in competition with these other fellows. They lost some of their business, but they still continued in operation in competition with the wage cutters.

The manufacturers who maintained their wages in the silk and rayon business during this period suffered a loss of approximately 5 percent in volume. Those who cut their wages by an average of 2% percent or more increased their business by approximately 48,000 man-hours.

In this industry, also, the wage cutter got the business.

I want to point out one further fact in regard to the silk and rayon industry. The largest wage cuts took place most frequently in the establishments that already paid the lowest wages in 1935 under the code, and took place most infrequently in the establishments that had the highest average wages in 1935. This is another evidence of the fact that it was the low-wage firms that took advantage of the situation by cutting their wages still further.

The third case is the cotton textile industry. In this industry, the total volume of employment over the year increased about 15 percent. The average number of people employed, however, increased only 5 percent. The industry as a whole is to be credited with an attempt to maintain standards of hours and hourly earnings in the face of wage cutting that gave the wage cutter a competitive advantage. The total number of man-hours worked in the establishments covered

by the Bureau increased from 7,200,000 in April 1935, to 8,200,000 in April 1936. All groups of establishments shared in this increase. Even those that increased wages showed an increase of 5 percent in volume, but the various groups did not share equally.

Relative to the total national volume of business in this industry, there was a loss of competitive position in the establishments that had increased hourly earnings. Their gain, 5.3 percent in volume of business, is to be contrasted with 23 percent in the volume of business for the 94 establishments that cut hourly earnings from 21⁄2 to 7%1⁄2 percent. And the 18 companies that cut hourly earnings of their workers by 17 percent or more increased their volume of business by almost 58 percent.

I would like to point out incidentally that both in the cotton textiles and in the silk and rayon it was not the small firms that were always the great offenders. There were many large firms that cut their wages, and just as many increased their wages or left them where they were. And similarly, there were many small firms that increased wages. We cannot generalize on that in those industries it is the small fellow who has been solely responsible for cutting wages. You have good and bad among the small just as you have among the big. Representative RAMSPECK. What percentage in the cotton mill industry maintained the code hours and wages?

Mr. LUBIN. You mean after the N. R. A.?

Representative RAMSPECK. Yes; after the N. R. A.

Mr. LUBIN. It is generally agreed that in regard to hours, something approximating 90 percent maintained standards. In regard to the wage rates, it is impossible to say for the reason that many mills made up the difference between the $12 or the $13 code minimum and the actual earnings due to short time. That happened time and again, and there is no way of actually finding out just what the hourly earnings were.

We do know this, that the average hourly earnings of the workers in the textile industry have not fallen or did not fall during that first year sufficiently to justify concluding that any certain large number had violated the standards. They made a very definite attempt to maintain them as far as they could.

In the brick and tile industry, which we also selected for examination because of the fact that it is a local industry with local markets and is not as much affected by competition from other points, we find a 36 percent increase in the business for the establishments that increased their wages from 71⁄2 to 17% percent. The firms that did not change their wages at all gained 45 percent in business. The firms that cut their wages from 7% to 22% percent increased their business by 62 percent in contrast to the 36-percent increase for the firms that actually increased their wages. And 12 establishments that cut their wages by more than 22 percent gained 135 percent in the volume of business as measured by the man-hours of employment afforded to their workers.

And here again it was not the small firm that was primarily responsible for wage cuts. There were relatively as many increases in the wage rates of small firms as cuts in the small firms.

Senator LEE. May I ask a question there? The amount of the cut to the wage earners, was that passed on to the consumer in a

lower-priced article? Was that so that thereby he was able to increase his business by that amount?

Mr. LUBIN. Well, as a matter of fact, one cannot generalize. We find, for example, that prices of many of these commodities moved in different directions; in other words, in the industries where wage rates actually went up, pretty generally there was no marked increase in the price of the products. In some of the industries, on the other hand, prices went down as wages went up, and vice versa. There you have a situation which is based upon the competitive market at a given moment. In the price of brick, there was a gradual upward tendency in prices, and there is no evidence of the fact that the firms that cut their wages the most were operating in territories where prices were going down. In the case of silk and rayon, there was a downward tendency in prices for a period of time.

The significant thing is that after prices started up again last October you had that same differential. In other words, the firms that had cut their wages did not necessarily increase them when prices went up. Senator LEE. The conclusion we ought to draw then is that we cannot depend upon voluntary action to support a minimum wage. Mr. LUBIN. Very definitely. If we depend upon it, there will always be a sufficient faction in an industry that will take business away from their competitors by exploiting their labor.

Senator LEE. And in order to protect the man who would pay a fair wage, we must by law compel the other fellow to meet the requirements that the good manufacturer lays down for his business.

Mr. LUBIN. At least certain minimum requirements which will fix the minimum rules of the game below which the other fellow cannot go. Among the other industries that I want to mention in this connection is hardware. In this industry, we find that firms that cut their wage rates by an average of less than 7%1⁄2 percent increased their business by 21 percent, whereas those who cut them by more than 7%1⁄2 percent increased their business by more than 54 percent.

Finally, I want to point to the situation that has prevailed in the saw-mill industry. In this industry, there were 37 southern establishments that decreased hourly earnings by more than 12 percent. For the group as a whole, the average decrease was 23 percent in the average hourly rate paid to the workers. The average weekly earnings rose however, even in those plants that cut their wages, because of the fact that the actual hours worked were increased so markedly. We find that in the mills that cut their wages by more than 121⁄2 percent, there was an increase in weekly earnings of from $11.89 to $12.21, which means in effect that although the employees worked 10 hours more per week in May of 1936 than they did a year earlier, the extra money that they got for that work at the end of the week was equal to about an hours' pay at the rates of the previous year. Within this group of 37 plants that cut average hourly earnings by more than 121⁄2 percent, there were 8 mills that cut the earnings of their workers by more than 32 percent. The weekly hours were increased from 37 to 47 during the year, and despite the fact that 10 hours of work were added each week, the workers received less for that week's work which was 10 hours longer in 1936 than they did in 1935. The respective averages of the weekly earnings were $11.06 in 1935 for 37 hours, and $8.90 in 1936 for 47 hours.

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