They have been using migrant labor in this place. They have been working in this place 9 months out of the year. All this work is done inside, there is no work done in the field, and yet these people because of the exemptions under the act have been permitted, and they have gotten away with using migrant labor for this type of employment. We have in Chicago a lot of people unemployed who could do this kind of work. It happens to be in the Chicago area. Yet they are not hired. So we have to keep those people on relief and continue paying relief payments every month simply because here is an outfit which finds it much cheaper to bring the migrant workers in and work them 9 months out of the year.

Now would not this legislation in its present form get at that particular problem and would this not really create jobs? I think they employ 180 people in that plant.

Mr. O'CONNELL. I think I am familiar with the situation as to bringing in migrant workers rather than using the industrially unemployed. Detroit is a classic example of how they tried to incorporate the industrially unemployed into agricultural employment, as reported by the Michigan State Employment Security Commission. It was a complete and abject failure.

Mr. PUCINSKI. Why?

Mr. O'CONNELL. For several reasons, and I will try to remember all of them. One was those who claimed they had experience in agriculture did not. Those who were in the late 10's and early 20's and single had a high-quit rate.

Mr. PUCINSKI. Because of the wage; was it not?

Mr. O'CONNELL. No; the wages were worked out in advance. This was a program established by the employment

Mr. PUCINSKI. Were they minimum wages?

Mr. O'CONNELL. I believe they were over a dollar an hour at that time and also I believe they were on a piece rate basis. This was in cherries and cucumbers. It was not handled by an agricultural group, this was handled by a State labor office, there were 60,000 people involved. They needed 15,000 to go to work in the fields.

They handed to each one of these 60,000 unemployed brochures on the opportunities for employment in agriculture. By the time they got through the work rate was best among those family workers, that is mother, father, and maybe an older child.

The poorest work rate was among those who were already on relief. The next poorest was single workers between the ages of 18 and 25. Mr. PUCINSKI. Was there any supplemental training?

Mr. O'CONNELL. No, there was not.

Mr. PUCINSKI. This is exactly the reverse of what we talked about earlier.

Mr. O'CONNELL. If I may finish this, Mr. Pucinski, there were instructions at the farm but it was not handled by the Michigan Employment Security Commission. When they got through, out of this 60,000 they had 3,000 workers who worked more than a month.

Now, this may be a reason why the mushroom factory, as you call it, near Chicago has to bring in migrant workers. Our experience in employing the industrially unemployed in agriculture has been extremely poor regardless of the wage and working conditions applying.

Mr. PUCINSKI. Does this apply also to the food handlers?

Mr. O'CONNELL. In some cases. It depends on the Statte, too; on what their unemployment compensation laws are; how long they have to wait, how long a period before they can get their unemployment compensation.

Mr. PUCINSKI. This is my final question because I am very much concerned about the family which is forced off the farm into the urban areas. We in Chicago, and this is true of all the other urban areas in the country, perhaps find our greatest problem in finding employment for this completely unskilled worker who is not at all prepared for urban life and for production activity.

He is the fellow who has been giving us a great problem in trying to resolve the situation.

I notice around the country a lot of these food-producing plants have sprung up in areas where the produce is growing, but don't you feel that one reason why people still leave the farm even though industrial opportunities have been made available to them on a part-time basis in their own community is because even with this assistance of substandard wages, they still can't provide for their family and therefore are forced to seek economic opportunities elsewhere, namely in the large industrial centers of the country.

Mr. O'CONNELL. I think the seasonality more than the wage rates is the factor for their moving into industrial areas.

Mr. PUCINSKI. Don't you think during the off seasons when he is not working on the farm, if this man had a chance to earn at least a minimum wage to provide a hedge against the off-season period when he still has to continue feeding his family, don't you think this would in fact create opportunities, give the food processor a better quality of worker?

I would think that this farmer who grows the product would certainly be a most reliable worker to then process it in the factory but he does not do that simply because of the abominable low wages? Mr. O'CONNELL. That is not the reason at all.

Mr. PUCINSKI. What is the reason?

Mr. O'CONNELL. The reason is that if he is on the farm at the time they are processing. He can't be two places at the same time. His low level of employment comes in the wintertime. You don't process too many fruits and vegetables in the wintertime other than in the warm climates of California, Florida, et cetera.

So, the group that you are referring to, comes probably out of the States of the Midwest, and some of the South too. I believe the problem is that during the wintertime you are not processing any of the products in the Chicago area.

Mr. PUCINSKI. If this won't do it let me ask you, how do we help this farmer whose income is low and who by the very nature of things must gravitate to the large industrial areas where he gets caught in even worse problems, social, economic, and otherwise? How do we help this fellow if we don't help him through this legislation?

Mr. O'CONNELL. We help him through the other means. This is not a discussion of the rural area development program, but our organization has instructed-we don't instruct our members, we ask them-to participate in county and State rural area development committees to help bring in industry, to develop new industry in these rural areas

because we believe firmly that the person raised in the rural areas has less of an adjustment problem moving into an industrial activity if he can stay in his own area rather than moving to a large metropolitan

center.

I think this will be the answer far more than increasing any minimum wage levels, and they are arbitrary. We don't know what the proper minimum wage level is. It could be $50 or it could be $4. It has been negotiated or at best a compromise.

Mr. PUCINSKI. Thank you very much, Mr. O'Connell.
Mr. ROOSEVELT. Mr. Goodell?

Mr. GOODELL. Thank you, Mr. Chairman. The quorum bells are ringing so we don't have much time. But let me say that I think your statement with reference to what has happened to the various profit sharers is very significant on page 2, the processors' and food handlers' profit remaining at about the 2-percent level and the farmers' share going down.

I think this does create some very significant problems but I am not sure that your statement relates this directly to the problem we have here of the wage rates. Certainly the imposition of minimum wages is not going to have an effect of reversing the other economic factors that have accounted for this. This bad picture that you paint has occurred without any change.

Mr. O'CONNELL. Some of the areas are covered employment; canning and freezing plants.

Mr. GOODELL. You relate in those specific instances, the problem to the Government's role in setting wages?

Mr. O'CONNELL. It has had an impact I believe, Mr. Goodell, in that you have to have an across-the-board wage increase generally speaking in order to be competitive, in order to get the better worker. Mr. GOODELL. Do you know offhand how many workers are in food processing and handling?

Mr. O'CONNELL. Yes, sir, 1,175,000.

Mr. GOODELL. 1,175,000?

Mr. O'CONNELL. Right.

Mr. GOODELL. Is normally a substantial part of that group seasonal employment?

Mr. O'CONNELL. Some of it is seasonal employment.

Mr. GOODELL. I don't mean seasonal necessarily under the definition of seasonal in the law. I am thinking of the auto industry as seasonal to a degree, also. Is there a period of the year when they are not employed regularly?

Mr. O'CONNELL. Yes, there are periods of the year when they are not employed.

Mr. GOODELL. For virtually all of that group.

Mr. O'CONNELL. Most all of them. Some, no. They may have a lower level of production and there may be layoffs but referring to a complete plant closing, I would say some are not.

Mr. GOODELL. Now in the very short time available would you address yourself to the question of what impact you think raising wages would have on, for instance, the rate of automation, the rate of replacing the employee, with a machine or running to machines.

Mr. O'CONNELL. Of course, the replacement of labor input with capital input depends entirely on the particular industry. There are

256 commodities in agriculture; all, in some form or other, are produced.

For instance, I think in 1955 when certain canneries and freezers. in Florida went under the minimum wage their employment dropped 4 to 5 percent between 1955 and 1956. Of the two reasons given, one is the minimum wage, the other is the development of what they call the hot peel.

In other words, it will peel the orange mechanically. I just happened to go over to the Department of Labor and I found one of their older studies on the impact of minimum wage.

For the counsel's benefit I will give the name of the study, "Wage Structure in Selected Areas, 1955-56." It covers cigar manufacturing, canning and frozen foods, raw sugar manufacturing, tobacco stemming and redrying. I would like, if we have the time, Mr. Chairman, in response to this question, to quote from that study briefly

All the raw sugar firms

This is in Louisiana

reported wage increases between the 1955-56 grinding season, usually 10 to 25 cents per hour. A few of the increases were granted across the board in an attempt to maintain wage differentials, but in most cases the largest increases were granted the lowest paid workers.

This had the effect of narrowing existing wage differentials in the industry and/or reducing the spread between the lowest and highest rate in the individual establishment. There was a decrease of about 12 percent in employment from the industry 1955 grinding season to 1956 grinding season.

There was a total of 5,700 workers in this study—

Most of the drop was accounted for by the closing of several mills, but nevertheless all mills showed some decline due to doubling up on jobs in an attempt to cut costs. The impact of the new minimum wage was minimized in the 1956 season by the shortness of the season and the high sugar prices.

However even with the good year, profits were reduced and employers remarked that if the 1956 crop and prices had been the same as 1955 their operation would have been unprofitable. Also, several plants did not report a long grinding season because of breakdown and those plants indicated profits for 1956.

That gives you both sides. That was about a 12-percent drop in employment in the Louisiana sugarmills when the application of the minimum wage law for that industry took place in 1955.

Mr. GOODELL. That is very helpful. I will ask the counsel to get the study so that we may look at it. I notice on page 3 you have the sentence, "Few can deny that no inflation has taken place in the United States since the end of World War II." Does that mean that few can deny that inflation has taken place?

Mr. O'CONNELL. Let me reread that "Few can deny that no inflation." Let me put it in my own words. Few can question that there has been inflation in the United States since the end of World War II. Mr. GOODELL. I think you would want to exclude the no. A final quick question: Is it your conclusion from your paragraph in the middle of page 2, citing the percentage of profits on total sales, and the percentage changes for farmers, and change in price to the consumers, that in this particular area there is a degree of rigidity? If labor costs were increased they would have to be passed on to the consumer?

Mr. O'CONNELL. They would have to go one of the four ways: Either they would have to be passed on to the consumer; remain steady through an increase in efficiency by the processor; reduction in the price to the farmer; or, possibly, the lowering of some profits to the processor and handler.

Mr. GOODELL. Why is it the farmer is always right there at the bottom?

Mr. O'CONNELL. He is the residual receiver of income. This is true in other basic industries, mining, for example.

Mr. GOODELL. It would appear to me that with your 2-percent profit, there certainly is no room, if that has been steady, there is no room for taking it out of that?

Mr. O'CONNELL. That is true.

Mr. GOODELL. Thank you, Mr. Chairman. Thank you, Mr. O'Connell.

Mr. ROOSEVELT. Thank you very much, Mr. O'Connell. We are grateful to you. You have given us much food for thought which we will certainly take into consideration.

The committee will stand in adjournment until the 2d of March. (Whereupon, at 12:30 p.m., the subcommittee recessed, to reconvene Monday, March 2, 1964.)