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resulted from having no local offices to handle the hundreds of thousands of inquiries which have come in might well have swamped the entire program at the very start.

From the larger governmental interest it has obviously been decidedly more efficient to integrate the wage stabilization activities into closely related activities already carried on by the Wage and Hour and Public Contracts Divisions than to set up duplicate facilities.

We feel that the Wage and Hour and Public Contracts Divisions have been of real assistance in the war effort as well as to the War Labor Board and we are looking forward to continuing to utilize your Divisions even more in the future than in the past.

Yours very truly,

WILLIAM H. DAVIS, Chairman.

May I make clear also at this point that the work for the War Labor Board is naturally being done on a reimbursable basis. Furthermore, it is interesting to note that though there has been considerable additional personnel needed to perform this work these people have been quickly absorbed into our organizational framework and closely integrated with our regular work.

In so doing, I believe the Divisions have saved the Federal Government thousands of dollars by making it unnecessary for another agency to set up additional offices with their supervisory personnel and general overhead. As I see the picture, the Division's organization might be likened to the skeleton framework, or cadres, which are the basic components of an army, with its already operating offices located in strategic industrial centers and manned by experienced supervisory officials.

The Divisions are ready at a monent's notice to absorb any enforcement or survey work relating to industrial establishments which any other Federal agency requires to be performed.

Briefly, what our Divisions have been performing for the War Labor Board is, in the first place, to answer all the first inquiries regarding wage stabilization that are made by industrial firms, unions, and employees throughout the country. These inquiries are coming into our offices at the rate of 33,000 a week.

At the same time our field offices are handling the requests for jurisdictional rulings, which are made on a very simple one-page form, as to whether a wage increase may be made immediately under one of the General Orders of the War Labor Board or whether it is necessary to make a formal application to the War Labor Board for the approval of such an increase.·

As of April 2 the divisions had received 80,000 requests for rulings. Where it has been necessary for the firms to make a formal application for a wage increase on what is known as form 10, the divisions receive these forms, check them for accuracy and completeness and then forward them to the appropriate War Labor Board regional office. As of April 2 the divisions' field offices had received over 46,000 of these applications.

Finally, the divisions are now entering on a program of enforcement for the War Labor Board-a procedure which is very necessary if we are to "hold the line" as President Roosevelt has requested. It is expected that a large number of these enforcements and compliance inspections will be done on a concurrent basis with wage and hour and public contracts cases.

PROGRESS OF WAGE AND HOUR PROGRAM

Having digressed at some length on what the Divisions have been doing for the various war agencies, let me get back to what we have been doing on our own program during the last 9 months. In this period we have inspected 38,415 establishments with a total number of covered employees of 2,554,874. Of the covered establishments inspected, 76 percent were found in violation of the act in one way or another. Interestingly enough, 52 percent of these establishments were in violation of either the minimum wage or overtime provisions of the Fair Labor Standards Act.

Mr. HARE. Isn't that information included in your justifications. that you insert in the record?

Mr. WALLING. No, sir; Mr. Chairman, I think not because those were prepared before these figures were made up. Those were prepared at the very beginning of the fiscal year, and these were prepared only recently.

Mr. HARE. All right.

Mr. WALLING. The figures cited there are for the preceding fiscal

year.

RESTITUTIONS EFFECTED FROM VIOLATIONS

As a result of these violations among the establishments agreeing to pay restitution, there were 283,079 employees who were underpaid-103,869 being underpaid because they were not receiving the proper minimum wage and 179,210 employees being underpaid solely because they did not receive the proper amount of overtime.

I am sorry that we were not able to inspect establishments at the rate of approximately 65,000 for the year or 5,400 a month, as we had hoped, which would have brought the total of inspections for 9 months to 48,600.

There are two principal reasons for our falling behind this quota. In the first place, we have had a turn-over of inspection personnel which projected on an annual basis amounts to approximately 50 percent. I have already given you the reasons for this turn-over, but may I now give you a picture of what it has meant in terms of manpower qualified to perform inspections at the rate of six establishments a month, which is the rate used in figuring the number of establishments to be inspected during the past fiscal year.

Experience has showed that it takes 6 weeks of training in the office before an inspector is qualified to make field inspections. He is then sent out into the field with an experienced inspector for several weeks before he is permitted to go into an establishment by himself. After that it is a good month or two before we can even hope that, if he is extremely well qualified, he will be able to cover as many as six establishments in a month. This means that for every inspector which we have lost we have at the same time fallen behind an inspector's output for at least 3 months; and in making this estimate I am not including the time which must be spent by the experienced inspectors in training these new inspectors.

Through this cause alone we estimate that we have fallen behind. approximately 15 percent in the number of establishments we might have inspected if we had had our full complement of inspectors for

the 9 months' period. On the basis that we ought to have inspected 48,600 establishments by April 1, our abnormal turn-over is responsible in itself for our not making 7,300 inspections during this period. The additional amount by which we have fallen behind can be in large part accounted for by the fact that our inspectors have been severely curtailed so far as automobile travel is concerned. The lack of automobile transportation has meant that our inspectors have had to rely upon train schedules, streetcars, and buses to get them to the spots where establishments are located, frequently in fairly remote areas. This has meant careful planning of inspection itineraries in order to avoid an inspector's going to a given town, making an inspection, and then being forced to remain in that town after the inspection is over, waiting for a train or bus that will take him back to his duty station.

Despite the fact that our inspections have not added quite up to what they could have been in a more normal year, I should like to emphasize that the amount of restitution which we have collected in back wages has shown a decided increase in the amount of restitution per case.

The amount of restitution per case for these 9 months on all inspections was a little over $1,000 as compared with something over $700 in the fiscal year 1942. During the first 9 months of the present fiscal year we have collected nearly $13,000,000 which was paid out to a total of 288,568 employees in 12,855 establishments.

INSPECTION POLICY OF DIVISION

The major reason why the restitution has been at such a high ratio per establishment can be found, I believe, in our inspection policy. This policy which has been transmitted to all our regional directors stated that:

1. Inspections will be made on bona fide complaint cases under either act or both.

2. Firms found under either act to have been in serious monetary violation on the last inspection (that means either failure to pay the minimum wages or overtime) or whose safety and health standards were very bad, that is, in the case of Government contracts only, will be subject to investigation on receipt of additional PC-1's (contract notices).

3. Companies which have not been inspected under either act and have a current contract, companies which have completed one within the past year, or companies covered by either Act, will be subject to inspection if they are in industries or areas in which previous inspections revealed a high proportion of restitution cases, or for other valid reasons, at the discretion of the regional director.

4. All companies which do not fall in the above categories need not be inspected.

On complaint inspections we found monetary violations in 78 percent of the covered establishments while we found such violations in 40 percent of the establishments which were spot-checked in accordance with the policy laid down by this committee.

1 Will be followed up by the State in those States which have entered into agreements to make safety and health inspections for the Division.

STUDY OF CASES SPOT CHECKED

We have made a study of the cases which were spot-checked in the 6 months from July to December 1942. We then tabulated the firms, industry by industry, in accordance with whether or not they showed a high percentage of minimum wage and overtime violations.

This tabulation revealed that there were nearly 9,000 firms which were in industries that showed a rate of violation of section 6 and 7 of the act, that is, the minimum wage and overtime sections, of more than 40 percent. The percentage of violations in these industries ranged from 42 to 70 percent and represented industries that included roughly 364,000 establishments. In other words, in the first 6 months our regional directors showed a good record in determining which industries should be spot-checked inasmuch as 9,000 out of 14,500 spot-checked establishments showed violations of more than 40 percent.

As throwing further light on the fact that we are still finding a high percentage of violations of the minimum wage provisions, I should like to mention a development which occurred during the year in the increase of learner certificates. Heretofore we have been issuing learner certificates on the basis of not more than 10 percent of a plant's personnel the certificate being generally applicable to one individual learner for 3 months and thus making it possible for plants to train as many as 40 percent new employees during the year.

LEARNER CERTIFICATES

Upon the representations of a large group of industries affected by the learner certificates which maintained that a greater percentage of learner certificates should be granted a hearing was held in New York to determine whether or not our regulations should be changed.

At this hearing evidence was brought out by employers that it was imperative for them to be allowed to hire a larger number of learners because so many of their experienced people had left either for the draft or for higher paying civilian and war industries. It was maintained that if the Divisions did change their learner policy to allow a larger percentage of learners to be hired all at one time, then the industries could tap the reservoirs of unskilled labor which was willing to come to work at less than the minimum rate.

After this hearing and after a notice to show cause why there should not be an amendment of our regulations, the Division removed the 10-percent limitation on learner certificates where a showing could be made that an abnormal labor turn-over existed; and learner certificates are now granted in accordance with actual need and a showing that no experienced labor is available in the community. What is to me particularly significant about the fact that the Divisions were asked to relax their learner requirements is that this request was based on the belief that labor is still available at rates which are below the established minima.

PROGRESS OF INDUSTRY COMMITTEE PROGRAM

In conclusion I would like to emphasize that we are speeding up and streamlining our industry committee program thus bringing up to the minimum wage rate of 40 cents, in as efficient a way as possible,

those industries covered by the act which are still below that wage rate. In the last few months we have been setting up broad industry committees, and it is our hope that through this means we shall have raised all industries up to the 40-cent rate during the early part of the next fiscal year.

Through this procedure we are saving the time, money, and travel of those persons who serve on industry committees. We are also being enabled through this streamlining to show a substantial savings in our own personnel which is reflected in the cutting out of a large number of economists in our Economics Branch as well as personnel in our Wage Determination Branch.

All in all, I believe that we have put the Divisions on a wartime basis and that we are stripped down to the bare essential minima of personnel necessary to operate the Divisions and to achieve essential and effective enforcement of the Fair Labor Standards Act and the Public Contracts Act.

The sound organization of the Divisions has made them come to be recognized as the Federal Inspection Service in the field of industry and labor and as equipped to do the important wartime jobs which other Federal agencies have assigned to them.

FUNCTIONS ADDED TO DIVISION

Mr. HARE. Thank you very much, Mr. Walling. You stated at the outset, as I recall, that some added functions had been taken over by your Divisions during the past year?

Mr. WALLING. Yes.

Mr. HARE. Would you mind giving us a concrete statement as to what these functions were?

WAR PRODUCTION BOARD PRODUCTION REQUIREMENTS PLAN

(See p. 150)

Mr. WALLING. Well, there were, in the first place, this special series of jobs which I have enumerated in different industries for the War Production Board, and the checking of inventories of raw materials, metals, and things of that sort, and assistance of the War Production Board in what they call their production requirements plan, which has been an arrangement under which the War Production Board attempted to find out what raw materials were available in American industry, so that they might be allocated in accordance with the needs of the wartime program, and not lie idle in the hands of a particular company, for instance, which had more than it needed of vital war materials.

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In connection with the War Labor Board, we have made available the facilities of our offices all over the country as information centers for members of the public to obtain information as to what they can do and what they cannot do under the Economic Stabilization Act, that is, with regard to making changes in wage rates.

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