Mr. HARE. Exactly. Have you any other statement, Doctor?
Dr. STEELMAN. I have not, Mr. Chairman.

Mr. HARE. On the record or off the record?

Dr. STEELMAN. Off the record.

(There was a discussion off the record.)

Mr. HARE. Doctor, we thank you very much. You are always interesting and edifying.

FRIDAY, DECEMBER 16, 1943.

WAGE AND HOUR AND PUBLIC CONTRACTS DIVISIONS STATEMENTS OF L. METCALFE WALLING, ADMINISTRATOR, WAGE AND HOUR AND PUBLIC CONTRACTS DIVISIONS; JAMES E. DODSON, BUDGET OFFICER, DEPARTMENT OF LABOR: J. R.. DEMOREST, CHIEF OF BUDGET AND ACCOUNTS, DEPARTMENT OF LABOR; CHARLES S. BOLWELL, BUSINESS MANAGER; THACHER WINSLOW, ASSISTANT TO THE ADMINISTRATOR; HARRY WEISS, CHIEF, ECONOMICS BRANCH; J. R. DILLE, CHIEF OF THE FIELD OPERATIONS BRANCH; AND WILLIAM R. MCCOMB, DEPUTY ADMINISTRATOR, WAGE AND HOUR AND PUBLIC CONTRACTS DIVISIONS

SALARIES AND EXPENSES

Mr. HARE. The next item for consideration in this bill is the justification of estimates for the Wage and Hour and Public Contracts Divisions of the Department of Labor.

JUSTIFICATION OF ESTIMATE

I think it advisable to insert pages 103, 104, 105, 106, and 107 in the record at this point, in order that we may have a full background for the statements to be made by the witnesses.

(The justifications are as follows:)

Total appropriation, 1943..........

Deduct savings by merger not required in 1943.
Deduct savings by merger not required in 1944:

Wage Determination Branch (10).

Information Branch (3)

Exemptions Branch (7).

Economics Branch (41).

Business Management Branch (20)

Regional offices (3).

Total...

Base for 1944--

REVIEW OF OPERATIONS, FISCAL YEAR 1942

$4,711, 600

33, 600

24, 495

6, 260

17, 245

86, 440

33, 160

10, 400

211, 600

4, 500, 000

During the fiscal year 1942 the national office of the Wage and Hour Division was moved to New York under the decentralization program. In October 1942 the Wage and Hour Division and the Division of Public Contracts were merged by an administrative order of the Secretary of Labor. The merged Divisions are

86811-43-pt. 1-10

continuing to operate through the 13 regional offices and in the States in which State agreements were in effect, and have adopted a policy of making joint inspections for compliance under both acts wherever practicable. In addition to the economies of the merger, a major drive has been made to achieve maximum efficiency in the industry committee program.

In the fiscal year 1942 the Wage and Hour Division inspected 74,676 establishments, of which 67,438 were found to have employees subject to the Fair Labor Standards Act. Payment of restitution for monetary violations of the act was agreed to in 28,850 establishments, or 43 percent of all inspected establishments with covered employees. A total of $20,460,320 was to be paid to 570,408 employees. In 54 percent of the restitution cases the establishment was found to be in violation of the minimum wage provisions or of both the minimum wage and overtime requirements under the act.

Complaint inspections constituted 38 percent of the total made, and spot-check inspections the remainder. Of the establishments found to be covered on complaint inspection, restitution was required in 15,010 cases (59 percent). In 8,914 of these cases the establishment was found to be in violation of the minimum wage provisions, or of both minimum wage and overtime provisions. The complaint case backlog was reduced from 22,635 on June 30, 1941, to 12,909 on June 30, 1942, a reduction of 43 percent.

Spot-check inspections resulted in payment of restitution in 33 percent of the establishments found to be covered. In 47 percent of these restitution cases the establishment was found in violation of minimum wage provisions, or of both wage and overtime provisions. Restitution resulting from spot-check inspections mounted to $5,858,862, to be paid to 207,308 employees. The restitution case ratio on spot-check inspection under the Fair Labor Standards Act was approximately the same as under the spot-check program of the Division of Public Contracts (about 30 percent in fiscal year 1942). The wage-hour spot-check program, however, included only 10 percent of establishments covered by the Fair Labor Standards Act, as compared with a general practice of attempting about 20 percent inspection of establishments holding contracts under the Walsh-Healey Act.

The Division of Public Contracts inspected about 2,660 plants holding contracts under Walsh-Healey in the fiscal year 1942, and found 790 (30 percent) in monetary violation. Payment of approximately $206,200 to 32,760 employees was required. The increase in the number of public contracts reported continued to increase. The average per month was 779 in the fiscal year 1940, in 1941 it was 2,028, and in 1942 it was 4,961. The average per month was 9,260 in the first half of the current fiscal year.

The recommended budget for salaries for regular employees of the merged Divisions is $4,500,000, which is $211,600 less than was appropriated by Congress for 1943, and does not provide for any funds for administrative increases.

INSPECTION PROGRAM, FISCAL YEAR 1944

The inspection policy on which the inspection program for the fiscal year 1943 is based will continue in effect for the fiscal year 1944. On the assumption that the complaint backlog will be reduced to 1,000 cases by June 30, 1943, the complaint load for the fiscal year 1944 will consist of the projected in flow of 18,000 complaint cases during that year. Joint inspections are planned for 25,000 establishments. The total inspection output for the fiscal year 1944 is therefore estimated at 90,000 inspections in 65,000 establishments.

This requires an average presumably of 7 wage-hour inspections per manmonth for the inspection staff. On this basis, a staff of 903 men may be expected to carry out 75,000 inspections. Our estimates show that inspection of an estabblishment covered by both acts takes approximately 1.4 times the manpower of an inspection under the wage-hour law alone. Joint inspections of 25,000 establishments will, therefore, take approximately the same time as 35,000 establishments inspected under the wage-hour alone. The remaining 40,000 single coverage inspections bring the total inspection output to the equivalent of 75,000 single inspections, Under the program for the fiscal year 1944 this will give the anticipated performance of 90,000 inspections in 65,000 establishments.

It is highly likely that there will be a large inflow of complaints on WalshHealey, for which no estimate has been included in the above apportionment. To the extent that this increase in complaints takes place, manpower will be shifted from spot-check inspection of establishments subject to only one of the acts, to complaint inspection.

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