per hour and an additional 50 percent for hours in excess of 40 hours worked in any one week.

The purpose of this statement to your committee is to make known the position of the wiping cloth industry with particular reference to the laundry exemption now contained in the act. As you know, laundries are now exempt from the minimum wage and overtime provisions of the act, provided that:

*** more than 50 per centum of the establishment's annual dollar volume of sales of such services is made within the State in which the establishment is located and provided that 75 per centum of such establishment's annual dollar volume of sales of such services is made to customers who are not engaged in a mining, manufacturing, transportation, or communications business. (Sec. 13 (3) Fair Labor Standards Act.)

As a result of the exemption granted laundries meeting the above requirements, it is obviously now possible for any laundry which does 51 percent of its business within the State and which makes 75 percent of its sales to customers who are not engaged in mining, manufacturing, transportation or communications business still to do 25 percent of its annual volume of business through the sale, servicing, or rental of industrial wiping cloths either within or without the State in which the establishment is located without being required to conform to sections 6 and 7 of the act.

Since these laundries are not required by law to pay the $1.25 minimum or overtime wages, they, of course, have a significant advantage in competing with wiping cloth laundries who are compelled under the law to conform with sections 6 and 7 of the act.

Laundries engaged in this practice are family laundries, linen supply laundries, diaper laundries, and industrial laundries, many of whom wash or rewash industrial towels or reclaimed rags for use as wiping materials.

It is the firm conviction of members of our association and of the wiping cloth industry that the wage-hour law was not intended to create discriminatory conditions of competition in any industry. We are entirely in sympathy with the philosophy of minimum wages and maximum hours. We believe, however, if we are to be bound by the wage and hour provisions of the act, our competitors should also be so bound.

For these reasons, our association and industry wish earnestly to endorse with one change section 3 (t) (3) of H.R. 4488 introduced by Congressman James Roosevelt into the House on February 16, 1959, but not included in the amended act which became effective on September 3, 1961. Section 3 (t) (3) reads as follows:

Any enterprise where such employer has one or more establishments engaged in laundering, cleaning, or repairing clothes or fabrics if the annual gross volume of sales of such enterprise is not less than $250,000 or if the sales of such enterprise to customers who are engaged in mining, manufacturing, transportation, commercial, or communications business amount to at least 15 per centum of the gross volume of sales of such enterprise.

The change which we recommend is the substitution of "10 per centum" for "15 per centum" in the last line quoted above.

In the South, particularly, certain laundries doing industrial washing are branches of huge family laundries which do a total annual volume of business of $1 million or more. Such a laundry, doing a total annual volume of $1 million may at present sell as much as

$250,000 worth of its products or services to businesses engaged in mining, manufacturing, transportation, or communications, and still legally be exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act.

Wiping cloth laundries, all of whom are covered by the minimum wage and overtime provisions of the act, simply cannot meet such competition.

In addition to family laundries and linen supply services who have for years taken advantage of this loophole in the law to undersell our industry, numerous diaper laundries have recently seized this opportunity to branch out into the processing of wiping cloths or industrial towels, thus further encroaching on markets formerly held by wiping cloth laundries.

They have been able to undersell wiping cloth processors for the sole reason that they have a legally protected privilege to pay wages less than those paid by wiping cloth processors. The importance of this privilege is evidenced by consideration of the wages paid in laundries in certain cities as reported by the U.S. Department of Labor in their most recent industry wage survey covering power launderies and cleaning services-Bulletin No. 1333, published June 1961. Bulletin No. 1333 publishes the following average wages:

All inside workers (exclusive of supervisory)

Memphis, Tenn...
Atlanta, Ga_--_--
New Orleans, La----

Cents

83

87

97

While these average wages are so low as to give the employer a significant advantage in competition with the wiping cloth industry, it should be noted that some wages are considerably below the averages cited.

Bulletin No. 1333 reports women being paid as little as 64 cents per hour in Atlanta laundries. The manifest injustice of this situation is, I am sure, apparent to your committee.

The inclusion of section 3(t) (3) of H.R. 4488 quoted above, with the change of "15 per centum" to "10 per centum", would grant the wiping cloth industry a partial relief from the unfair competition from exempt laundries which now confronts them.

Even with the exemption as limited in accordance with our recommendation, however, it should be noted that a family laundry, linen supply laundry, or diaper laundry doing an annual volume of business of $249,999 could still, if it so desired, sell or service wiping cloths in an amount up to $24,999 per year to customers engaged in mining, manufacturing, transportation, commercial, or communications business.

This 10-percent tolerance which would still be permitted should be more than ample to cover the "occasional" sale or servicing of wiping cloths by those laundries which are primarily local in character and engaged in servicing nonindustrial and noncommercial

customers.

Those laundries doing more than 10 percent of business to firms enraged in mining, manufacturing, transportation, commercial, or communications business should, in all fairness, pay the same wages and

overtime which are paid by wiping cloth laundries with which they are competing.

There should be sufficient volume of business for them on regular home laundry work and diaper service work. If they do not want to compete with us under the provisions of the Fair Labor Standards Act, then we are satisfied that they not come under the provisions of the act. We do, however, request protection if they are going to be allowed to compete with us.

It is for this reason that we urge the change from 25 percent to 10 percent of the volume of sales or service which may be made to customers engaged in "mining, manufacturing, transportation, commercial, or communications business."

It is our belief that one of the purposes of your Special Subcommittee on Labor is to eliminate the numerous loopholes which create injustice or unfair competition because certain firms are now covered by the Fair Labor Standards Act while their competitors are not.

It was, we believe, to prevent such situations that Congressman Roosevelt included under "Definitions" section 3(s) in his proposed bill, H.R. 4488. Section 3 (s) reads as follows:

"Activity affecting commerce" includes any activity in commerce, necessary to commerce, or competing with any activity in commerce, or where the payment of wages at rates below those prescribed by the Act, or the employment of child labor prohibited by this Act, burdens or obstructs commerce or the free now of commerce.

In defining "activity affecting commerce" so as to include activities "competing with any activity in commerce," the language proposed by Mr. Roosevelt takes an important step toward elimination of unfair competition arising from the act as presently written.

If the spirit of this section were carried through to its logical conclusion and applied to the laundry industry, no laundry competing with wiping cloth laundries (which are engaged in commerce) would be granted exemption from the act.

It is not our intention or desire, however, to seek denial of the exemption to those laundries engaged almost exclusively in servicing householders. The 10 percent which we recommend as the maximum of sales permissible to firms engaged in a mining, manufacturing, transportation, commercial, or communications business is a fair and reasonable tolerance.

In closing, our members would like emphatically to underscore the handicap under which they operate in competition with exempt laundries. As reported by the U.S. Department of Labor in Bulletin No. 1333, in June 1961, average wages of laundry workers were 83 cents per hour in Memphis, Tenn., 87 cents per hour in Atlanta, Ga., and 97 cents per hour in New Orleans, La. Wages as low as 64 cents per hour were being paid women laundry workers in Atlanta, Ga.

At this time, the minimum wage paid to the lowest paid worker in any wiping cloth laundry in any State in the United States was $1.15 per hour, with a 50-percent increase to $1.725 per hour for hours over 40 in 1 week.

In addition: On September 3, 1963, the minimum wage for employees covered by the Fair Labor Standards Act will be increased from $1.15 per hour to $1.25. This increase will further burden the wiping cloth employer, since his competitors who operate exempt laundries will not be affected by this increase.

The injustice in this situation is so clear that it should not require further elaboration. In the interest of equity and fairplay, we again urge your committee to incorporate as an amendment to the Fair Labor Standards Act, section 3 (t) (3) of H.R. 4488, but with the important substitution of "10 per centum" for "15 per centum." Respect fully submitted.

I should like, if I may, at this moment, to add a bit of an off-thecuff comment.

That is that the bulk of our membership in the National Association of Wiping Cloth Manufacturers do a total annual volume in commerce of probably less than $500,000 per year. They are principally small businesses, as defined by the U.S. Government.

We have a small percentage of them who will range in volume from $1 million on up, but these are a very small minority.

A goodly portion, I would estimate possibly one-third, of the firms engaged in the wiping cloth industry throughout the United States probably do an annual volume in wiping cloths of $250,000 or less. So that even given an exemption of $250,000 for a commercial laundry or household laundry, this still puts him in an excellent position to compete with the bulk of our membership.

Thank you.

Mr. ROOSEVELT. Thank you, Mr. Greenman.

I might comment that you are quite correct about the original purpose of the language that you quoted.

It is, of course, our purpose and the purpose of all of the amendments through the years, I think, to the Fair Labor Standards Act, to reach those industries that no longer need the exemption granted to them, and where they were then getting an unjust advantage as a result of the inequity competitively set up by their having that exemption, we have tried to close the difference, to put everybody on the same basis.

I think that is true here, and I think that we would look sympathetically upon your plea.

We have, as you know, under consideration, the inclusion of the laundry industry under the act, or, rather, the removal of its exemption from the act, and this, however, would be probably subject to a volume standard.

Therefore, as I gather your plea, here, the section that you would like to have included would still be important to you, if we have that volume exemption.

Is that not correct?

Mr. Greenman. Yes, sir.

Mr. ROOSEVELT. Mr. Pucinski?

Mr. PUCINSKI. There is only one thing, Mr. Chairman, I wanted to find out from the witness.

As I get your testimony, then, you are already covered by the act? Mr. GREENMAN. We are faced with the necessity of paying minimum wages in all cases.

Mr. PUCINSKI. And your complaint is that under the language of this act the laundries would have an advantage over you?

Mr. ROOSEVELT. They do have.

Mr. GREENMAN. They do have now.

Mr. PUCINSKI. They do have, and they would continue to have? Mr. GREENMAN. Yes, sir. We are looking for a minimumization of that competitive advantage.

Mr. PUCINSKI. How is it that you can meet these minimum wage standards with this kind of limited business, and the laundries cannot ? We will have testimony from them, but I would like to get your view on this.

Mr. GREENMAN. I would say that the laundries can meet this minimum wage standard as easily and probably more easily than we can. If I may digress for a moment, our members, for example, are required to go out and purchase raw materials to be converted into a wiping cloth, some of which is still used to clean the House Office Building.

The household laundry, on the other hand, is using his own material, which he can resell to the same House Office Building, since we have picked on it, from the residue of his torn sheets, for example, or torn diapers, or torn towels.

These are laundered, anyhow, before he knows that they have gone beyond their use as a household item, and he is then able to sell them to the trade, which he does, for example, to garages or beauty parlors and that type of industry.

When the household laundry no longer has commercial outlets for his materials, he then turns to the wiping cloth industry to buy this residue, and in some cases this can amount to considerable poundage or tonnage over a period of time.

But he basically can pay the wage. There is no question in my mind about that.

Mr. PUCINSKI. Then perhaps this committee should take into consideration that maybe we write in such complicated criteria that we defeat the purpose of the bill.

It is very difficult for me to understand how anybody can expect to pay a worker less than $1.25 an hour.

Now, the President, in his poverty message, lamented the fact that 9.3 million American families in this country are forced to live on an income of less than $3,000 a year. But even using that criterion, which the President pointed out creates the real scope of the problem of poverty-even under that $3,000 a year criterion, this comes out to $1.45 an hour for a worker who works a 40-hour week and 52 weeks out of the year. And here we are talking about $1.25 an hour.

In other words, we are trying to extend this bill to deal with a problem of poverty, where the figure that we have come up with, the $1.25 maximum, is still 20 cents below the minimum that this Government feels is a poverty wage.

So I think your point is well taken, here, and I think your testimony is very valuable to this committee.

I am going to be very anxious to hear how the laundry industry refutes your statement that you are paying these wages now. You have made the adjustment, and your statement is that they can make these adjustments, too, to bring these workers to the $1.25 minimum. I think you have made a fine statement, Mr. Greenman.

Mr. BELL. Thank you very much for your very fine statement, Mr. Greenman.

I was wondering: Do you have any figures on wages paid by laundries outside of the South? You just mentioned, as I recall, Georgia and Tennessee and Louisiana. Is this a situation that prevails throughout the Nation?