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MINIMUM WAGE-HOUR LEGISLATION

FRIDAY, FEBRUARY 7, 1964

HOUSE OF REPRESENTATIVES,

GENERAL SUBCOMMITTEE ON LABOR
OF THE COMMITTEE ON EDUCATION AND LABOR,

Washington, D.C. The subcommittee met at 9:30 a.m., pursuant to call, in room 429, Cannon Building, Hon. James Roosevelt (chairman of the subcommittee) presiding.

Present: Representatives Roosevelt, Dent, Pucinski, Daniels,
Hawkins, Gill, Ayres, Goodell, Martin, and Bell.
Also present: Representative Frelinghuysen.

Also present: Russell C. Derrickson, staff director; Odell Clark, investigator; John Schuyler, counsel to the General Subcommittee on Labor; J. H. Foreman, special assistant to Mr. Roosevelt; Edward Wynne, counsel to the full committee; and Cleomine Lewis, subcommittee clerk.

Mr. ROOSEVELT. The subcommittee will come to order, please. This morning the General Subcommittee on Labor continues public hearings on proposed amendments to the Fair Labor Standards Act of 1938, as amended, which have been before the subcommittee, and commences hearings specifically on a new bill, H.R. 9824, introduced by the chairman of the subcommittee, which proposes to broaden the coverage of the act.

This bill, of course, is the bill representing the views of the administration and the requests of the administration.

Hearings on proposals to amend the overtime provisions of the act will begin Monday, February 17, 1964, and will be conducted jointly by Mr. Holland's select subcommittee and the general subcommittee.

The bills presently before this subcommittee are designed to carry out the recommendations contained in the President's state of the Union message on January 8, 1964, and to prosecute that war against poverty declared by the President by extending minimum wage and overtime protections of the act to approximately 738,000 workers, including 254,000 employees of restaurants and food service establishments in the retail trades, 170,000 in hotels, 80,000 in laundries, 87,000 in logging operations, and 126,000 in various other industries.

In addition, better overtime protection would be afforded 1,211,000 transportation employees, 484,000 employees engaged in agricultural product processing and seasonal industries, and 86,000 in gas service stations.

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(The text of H.R. 9824 follows:)

[H.R. 9824, 88th Cong., 2d sess.)

A BILL To amend the Fair Labor Standards Act to extend its protection to additional

employees, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-SHORT TITLE AND PURPOSES

SEC. 101. This Act may be cited as the “Fair Labor Standards Amendments of 1964”. SEC. 102. The purposes of this Act are to

(1) extend minimum wage and overtime protection to employees of certain laundry, hotel, motel, restaurant, and other food service enterprises; and

(2) consolidate and clarify the agricultural processing exemptions of the Act and narrow or remove exemptions for certain logging, transportation, and gasoline service station employees.

TITLE II-COVERAGE OF LAUNDRY, HOTEL, MOTEL, AND

RESTAURANT WORKERS

SEC. 201. Section 3(m) of the Fair Labor Standards Act of 1938, as amended, is amended by inserting after the words “ “Wage' paid to any employee includes". the following: “the value of tips or gratuities received and accounted for or turned over by the employee to the employer, and" and by inserting after the words "the fair value of such” in the second proviso to such section the word "tips", and a comma.

Sec. 202. Section 3(s) of such Act is amended by striking out the colon at the end of paragraph (5), inserting a semicolon in lieu thereof, and adding the following new paragraph immediately preceding the proviso:

“(6) any such enterprise which has one or more establishments engaged in laundering, cleaning, or repairing clothing or fabrics if the annual gross volume of sales of such enterprise is not less than $1,000,000 exclusive of

excise taxes at the retail level which are separately stated;". Sec. 203. Section 6(b) of such Act is amended (a) by striking out "section 3(s) (1), (2), or (4)” and inserting in lieu thereof “section 3(s) (1), (2), (4), or (6)”; (b) by inserting after the words "the enactment of the Fair Labor Standards Amendments of 1961" the words “or 1964"; (c) by inserting after the words "by the Fair Labor Standards Amendments of 1961," the following: "or (iii) is brought within the purview of this section by the amendments made to section 13(a) (2) or (3) or the repeal of section 13(a) (10), (15), (17), (18), or (20 of this Act by the Fair Labor Standards Amendments of 1964,"; and (d) by striking out the words "effective date of such amendments" in paragraph (1) of such section and inserting in lieu thereof the words “date the provisions of this section became applicable to such employee by virtue of the enactment of the Fair Labor Standards Amendments of 1961 or 1964, as the case may be".

Sec. 204. Section 7(a) (2) of such Act is amended (a) by striking out *Section 3(s) (1) or (4) or by an establishment described in section 3(s) (3)" and inserting in lieu thereof "section 3(s) (1), (4), or (6) or by an establishment described in section 3(s) (3) or (5)”; (b) by inserting after the words "the enactment of the Fair Labor Standards Amendments of 1961" the words "or 1964”; (c) by adding the following clause immediately after the words "by the Fair Labor Standards Amendments of 1961": "or (iii) is brought within the purview of this subsection by the amendments made to section 13(a) (2) or (3) or to section 13(b) (1), (2), or (3) or by the repeal of section 7(c) or section 13(a) (10), (15), (17), (18), or (20) or section 13(b) (8) by the Fair Labor Standards Amendments of 1964; and (d) by striking out the words “effective date of the Fair Labor Standards Amendments of 1961" from subparagraph (A) thereof and by inserting the words “date the provisions of this section became applicable to such employee by virtue of the enactment of the Fair Labor Standards Amendments of 1961 or 1964, as the case may be".

SEC. 203. (a) Section 13(a) (2) (ii) of such Act is amended by striking out "hotel, motel, or restaurant, or”.

(b) Section 13(a) (3) of such Act is amended by inserting after “any establishment” the following: “(except an establishment described in section 31s) (6))"; and by inserting "commercial,” after "transportation,".

(c) Section 13(a) (20) of such Act is repealed.

TITLE III-CONSOLIDATION AND CLARIFICATION OF EXEMPTIONS FOR HANDLING, PACKING, AND PROCESSING FARM PRODUCTS AND SARROWING OR REMOVAL OF EXEMPTIONS AFFECTING CERTAIN LOGGING, GASOLINE STATION, AND TRANSPORTATION EMPLOYEES

SEC. 301. Clause (3) of section 7(b) of such Act is amended to read as follows:

*(3) for a period or periods of not more than fourteen workweeks in the aggregate in any calendar year in an industry found by the Secretary to be (i) of a seasonal nature, or (ii) characterized by marked annually recurring seasonal peaks of operation in the places of first marketing or first processing of agricultural or horticultural commodities from farms in which such industry is engaged in (A) the processing of cottonseed or (B) the ginning or compressing of cotton or (C) the making of dairy products or (D) the handling or packing or storing or preparing or first processing or canning of any other agricultural or horticultural commodities

in their raw or natural state,”. SEC. 302. Subsection (c) of section 7 of such Act is repealed.

Sec. 303. Section 13(a) (10), (15), (17), (18), and section 13(b) (8) of such Act are repealed.

SEC. 304. Paragraphs (1), (2), (3) of section 13(b) of such Act are amended to read as follows:

*(1) any employee employed during the greater part of any workweek as a driver or driver's helper riding a motor vehicle in the performance of orer-the-road transport operations (as defined by the Secretary) and with respect to whose service as a driver or driver's helper the Interstate Commerce Commission has established qualifications and maximum hours of service pursuant to the provisions of section 204 of the Motor Carrier Act, 1935; or

“(2) any employee of an employer which is an express company, sleeping car company, or carrier by railroad, subject to part I of the Interstate Commerce Act; or

(3) any employee employed as flight personnel on an aircraft by a carrier by air subject to title II of the Railway Labor Act; or”.

TITLE IV-EFFECTIVE DATE

SEC. 401. The amendments made by this Act shall take effect upon the expiration of one hundred and twenty days after the date of its enactment, except as otherwise provided and except that the authority to promulgate necessary rules, regulations, or orders with regard to amendments made by this Act, under the Fair Labor Standards Act of 1938, and amendments thereto, including amendments made by this Act, may be exercised by the Secretary on and after the date of enactment of this Act.

Mr. ROOSEVELT. We are very happy this morning to welcome again the Secretary of Labor, the Honorable W. Willard Wirtz, who has appeared before us several times in the past, and whose presentations we are always glad to hear.

Mr. Secretary, we very much appreciate your accommodating us by starting at this early hour this morning. Personally as well as on behalf of the members of the committee, I greet you as an old friend and suggest you proceed in any manner most convenient to you.

STATEMENT OF HON. W. WILLARD WIRTZ, SECRETARY OF LABOR;

ACCOMPANIED BY C. T. LUNDQUIST, ADMINISTRATOR, WAGE AND HOUR AND PUBLIC CONTRACTS DIVISIONS; CHARLES DONAHUE, SOLICITOR, DEPARTMENT OF LABOR; AND S. V. MERRICK, SPECIAL ASSISTANT TO THE SECRETARY OF LABOR FOR LEGISLATIVE AFFAIRS

Secretary Wirtz. Thank you very much, Mr. Chairman.

This subject, as you know, is one which comes very close to the center of the interests of those of us in the Labor Department, and a good many of those on this committee, and I am grateful for the form of your expression of welcome. I should like to say how very, very appreciative we are of the opportunity to come before this committee to talk about this matter, which we count one of such great concern.

I have, Mr. Chairman, a statement, which, if it fits in with the desires and convenience of the committee, I should be glad simply to file, and then to summarize in very short form, because I know that there are pressures of time which might make it desirable to move shortly to whatever questions you have.

Mr. ROOSEVELT. Without objection, it will be so ordered. (Statement referred to follows:)

STATEMENT OF HON. W. WILLARD WIRTZ, SECRETARY OF LABOR

Mr. Chairman and members of the subcommittee, I testify, from deep conviction, in support of the administration proposal to expand the protection of low wage earners against exploitation.

There are still large numbers of workers in interstate commerce who do not receive the protection of the Federal Fair Labor Standards Act minimum wage guarantee. There are others who have been exempted from the application of the overtime provisions.

Continuing failure of the act to cover many larger enterprises can no longer be explained away in terms of any economic justifications. It reflects special interest pressures. It contributes to the perpetuation of a poverty we are now committed as a people to eliminate.

The fight for a general law fixing wage standards in employment in commerce began during the depression of the thirties. As a prelude to his request for legislation to fashion a floor under wages and a ceiling over hours, President Roosevelt said:

"Here is the challenge to our democracy: In this Nation, I see tens of millions of its citizens—a substantial part of its whole population-who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life ***. I see one-third of a nation ill housed, ill clad, ill nourished.”

Enactment of the Fair Labor Standards Act of 1938 was part of the Nation's response to this call upon its conscience.

The Fair Labor Standards Act is now in its third decade. The act has meant much to many :

Greater dignity and security and economic freedom for millions of American workers.

An upswing in economic growth for the country as a whole.

Perhaps most important for millions of our children, opportunities for education and training instead of low wages and long hours. These are only some of the benefits flowing from more than 25 years under the Fair Labor Standards Act.

Yet despite the tremendous good that has resulted from this pioneering statute, the war against want is not yet won. On January 8, in his state of the Union message, President Johnson called once more upon the Nation to face up squarely to the fact of poverty in the midst of plenty-and to do something about it:

“Unfortunately many Americans live on the outskirts of hope_some because of their poverty, and some because of their color, and all too many because of both.

“This administration today here and now declares unconditional war on poverty in America. I urge this Congress and all Americans to join with me in that effort."

In launching his assault on poverty the President urged an amendment to the Fair Labor Standards Act to “Extend coverage to over 2 million workers who lack minimum wage or overtime protection or are not protected at all."

The administration's proposal would provide wage and hour protection to workers in larger size hotels, motels, restaurants, and laundries, and to others working for logging contractors. Overtime protection would be extended to employees of certain oil pipelines, air carriers, motor carriers, and gasoline stations. In addition, present exemptions dealing with the processing of farm products are clarified and consolidated. All of these employees would be brought under the act's minimum wage or overtime provisions, or both, at the levels and under the time schedule provided for employees brought under the act by the 1961 amendments. There is real meaning in this proposal for 2,616,000 American workers. 1. Laundry and drycleaning.--The bill before you, H.R. 9824, will provide minimum wage and overtime protections for 80,000 laundry workers, not by regulating the small neighborhood laundry with which we are all familiar, but by covering establishments which are part of large enterprises doing an annual gross business of $1 million or more.

In 1963 the Department of Labor completed a study of the laundry and cleaning industry. This study shows not only that wages in this industry are low, but that the gap between these wages and those in low wage manufacturing industries has been steadily widening. For example, in 1947, a laundry worker earted 16 cents an hour less than a worker in a fertilizer plant. By 1960, this difference had grown to 63 cents an hour—four times what it had been in 1947. The 1963 study disclosed that the average wage per hour received by employees of large laundry and cleaning enterprises was $1.38. But this average hourly figure conceals how low some of the wages really are. The facts are that

Almost 12,000 workers, or 16 percent, were paid less than $1 an hour;
About 21,000 workers, or 28 percent, were paid less than $1.15 an hour;

About 32,000 workers, or 40 percent, were paid less than $1.25 an hour. This means that some 32,000 laundry and cleaning employees will benefit directly from the minimum wage provisions of the bill. Important as this is to these wage earners, it should be noted that the administration's proposal Fould cover under the Fair Labor Standards Act only about 80,000 employees of large laundry and cleaning enterprises out of a total of 513,000 workers in the entire industry. In other words, we are proposing here a modest but nevertheless constructive advance, which can be readily absorbed by industry, as I will show later in this statement.

2. Hotels, motels, and restaurants.-The administration bill will bring immediate wage and hour protection to employees in hotels, motels, and restaurants and to food service employees in retail stores doing a million dollar business Fearly and receiving for resale $250,000 worth of out-of-State goods each year. This would extend the act's coverage to 444,000 workers out of a total of over 2 million nonsupervisory employees in these industries. Occupational wage structure studies conducted by the Bureau of Labor Statistics in 1948, 1955, and 1960 in selected metropolitan areas indicate that the wages in hotels and motels are not only low, but that their upward movement is slow and arduous. For example, in July 1948, chambermaids in one large metropolitan area averaged 29 cents an hour. At that time the minimum wage was 40 cents an hour. Twelve years later, the Fair Labor Standards Act minimum wage was $1 per hour, having been raised to 75 cents in 1950 and $1 in 1956, or a total increase of 60 cents. But the average wage of chambermaids had risen only 12 cents to 41 cents an hour during the same 12-year period.

Our studies also revealed the low level of cash wages paid in hotels and restaurants in the United States: In hotels and motels :

About 63,000 or 30 percent were paid less than $1 an hour;
Over 82,000 or 40 percent were paid less than $1.15 an hour;

Over 95,000 or 47 percent were paid less than $1.25 an hour.
In restaurants:

Over 53,000 or 30 percent were paid less than $1 an hour';
About 80,000 or 45 percent were paid less than $1.15 an hour;

Over 95,000 or 53 percent were paid less than $1.25 an hour. State minimum wage legislation affords some measure of protection to workers in the hotel, restaurant, and laundry industries. However, just about half of the States have no minimum wage protection for workers in these industries. In the States where protection is provided, only half of the law apply to both seres. Many of the State laws set minimum rates of less than $1, and often the rates set under these laws remtain unchanged for many years.

Extending coverage to employees of restaurants and hotels raises the matter of bow significant tips are in the wages of waiters, waitresses, and bellmen; how should they be accounted for in a minimum wage law.

After the 1961 amendment became law, we surveyed restaurants and hotels in large metropolitan areas. Estimates were developed on the value of tips by ques

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