4. Postharvest ripening.

5. Commodity diversification.

Grower-processor contracts are a major factor in extending season. This is accomplished by

1. Staggering planting schedules among contractors.

2. Spreading out supply sources among areas of early and late maturity. 3. Within a given area, contracting for production of varieties with different maturing dates.

4. Scheduling or timing deliveries for processing.

11. THE INDUSTRIES INVOLVED CAN AFFORD TO PAY THE MINIMUM WAGE AND OVERTIME PAY

Even in the most extensive exemption under the act, section 13(a) (10)—the "area of production" exemption—about 90 percent of all workers in canning establishments (except citrus) are nonexempt in respect to minimum wage and overtime, according to the Labor Department's report on handling and processing of agricultural products, as shown in the following tables:

FRESH FRUITS AND VEGETABLES

TABLE 1.-Distribution of employees of canning establishments (except citrus), by status under sec. 13(a) (10) and by average hourly earnings during a week of maximum employment, 1960

1 Sec. 13(a) (10) provides a year-round exemption from the minimum wage and maximum hours provisions of the act.

TABLE 2.-Distribution of employees of establishments engaged in handling and processing other than canning (except citrus) by status under sec. 13(a) (10) and by average hourly earnings during a week of maximum employment, 1960

1 Sec. 13(a) (10) provides a year-round exemption from the minimum wage and maximum hours provisions of the act.

In essence, therefore, these hearings are concerned only with 10 percent of the employees in establishments within the "area of production," those without protection, those who are to be protected by the bill before us.

Only one-fifth of those unprotected are receiving less than minimum wage. At the time of the compilation of these tables, the minimum wage was $1 an hour.

Examination of table 1 shows that only 20 percent of the 23,800 exempt employees were actually receiving less than the minimum wage. Table 2 shows that but 24 percent of the 14,400 noncanning food handlers were receiving below the minimum.

We can then conclude that only 2 percent of the canning employees and only 2.5 percent of the noncanning food handlers would benefit, insofar as minimumwage provisions are concerned, from the present bill. We do not see the slightest reason to deny the minimum wage to workers in an industry where about 98 percent of the other workers are enjoying that wage. No evidence has been offered here by industry spokesmen to prove that these 2 percent of the work force are working for the marginal firms in the industry.

Moreover, these industries can shoulder whatever financial impact may be involved in removing the exemptions. A recent study of the food manufacturing industry concludes:

"Measured by growth of sales, profits, and dividends, for the period 1957-61, only the telephone industry exceeded the food and kindred products manufacturing industry."

(See attachment 23, Profitability of Food Processing Industry.)

"Most certainly, employees working in the handling and processing of agricultural products are just as deserving of minimum pay standards as are employees in other industries." 15

Studies on the impact of minimum wage increases demonstrate conclusively that such increases have not resulted in substantial unemployment and have had negligible upward price consequences.

Thus, the objective data collected over the past 20 years since the Federal minimum wage was first enacted, clearly show that the economic disaster predicted by critics of protective legislation has not occurred. The myths about the adverse effect of minimum wage increases have been exploded.

Secretary of Labor Wirtz, in his testimony before this committee on February 7, 1964, has amply demonstrated that increasing the minimum wage or removing the overtime exemptions will not reduce employment. We support his position on this point.

As was once stated by President Roosevelt, during whose administration the Fair Labor Standards Act came into being: "The test of our progress is not whether we add more to the bundance of those who have much; instead it is whether we provide enough for those who have too little."

12. THE "AREA" OF PRODUCTION" EXEMPTION

There is no economic justification for the "area of production" exemption. The worker employed in a small community or near the farm is not covered, but a worker doing the same job in a city is covered. Both workers have the same needs and requirements. The cannery worker in a rural town, doing the same work as the cannery worker in a large town, should certainly have the same basic rights.

The "area of production" exemption gives some firms a competitive advantage in labor costs to some firms or establishments simply on the basis of geographical location. It denies workers basic labor standards, simply on the basis of size or location of community. In no other field of legislation is this discriminatory principle followed.

A firm or plant processing an agricultural product in a rural area for distribution and sale to outside markets should meet the same standards of wages and overtime pay as firms doing the same work in nonrural areas.

The basic difficulty with the area-of-production concept is that it is inherently discriminatory. Competitive inequities are bound to be present when identicai operations are exempt from the law when performed in the area of production and not exempt when performed anywhere else. This was clearly stated by the U.S. Supreme Court in its ruling on the Holly Hill case.

Section 13 (a) (10) was intended to give the small farm operator who processed or packer his own crop, an exemption from the act. However, it has also made it possible for large operators who are entirely commercial to gain exclusion from the act by locating their plants in areas which enable them to qualify for such exemption. This is contrary to the act's original intent.

15 Address by Clarence T. Lundquist, Administrator, Wage-and-Hour and Public Contracts Divisions, before 19th Annual Cannery Convention of Western Cannery Council, Seattle, Wash., May 28, 1962.

The geographical tests which are at the root of the area-of-production exemption produce economic disturbances and unfairness. Large factories are often located in small towns in farming regions; they use highly mechanized equipment operated by scores of skilled factory laborers who work and live under industrial and not farm conditions. To exempt these factories from minimum wages and overtime provisions of the Fair Labor Standards Act on the basis of location or mileage and population is to strike at fair competition.

This particular exemption is confusing and contradictory. An establishment in one town is treated differently than one located in another town only a few miles distant though they may be in all respects similar as to operation, products handled or processed, character of employment, etc. They may be direct competitors.

The Wage and Hour Administrator has stated:

"Specific discrimination is apparent in the area of production exemption. New and advanced methods of rapid shipments and marketing practices have eliminated most of the need for special treatment that may have existed previously."

The area-of-production exemption, as well as the others affecting handling and processing of agricultural products have constituted an administrative and legal nightmare for the Wage and Hour Division and for employers and employees in the industry. The tests of compliance are exceedingly difficult to formulate and to administer, with the result that no certainty prevails in the application of the law.

One can readily realize the complexities and confusion surrounding the socalled area-of-production exemption, when one realizes that more than 17 years passed before there was a valid definition of that phrase, acceptable to the courts. Even today, this section of the act (sec. 13(a)(10)) is confusing, both to the industry and to its workers. The results are confusing, contradictory, and artificial.

Even after numerous public hearings, informal conferences with the industries involved, volumes of evidence, and numerous studies and reports, the Wage and Hour Division has not found it possible to draft a single definition of area of production which did not create serious competitive inequities. For these are inherent in these sections of the act themselves, which clearly exempt some establishments, but not all in the same industry. Under any definition of the area of production some establishments within an industry would be exempt from the provisions of the act while other similarly situated would be denied the exemption. Thus, any definition cannot help but give the plants within the area of production economic advantages over those outside of the area of production.

These inequities have been a source of complaint since the act became effective. They have caused considerable controversy and litigation. Experience has demonstrated that this is not a workable concept. The only satisfactory solution for the area-of-production problem is to eliminate the phrase entirely from the act.

(See attachment 24: "The Area of Production Exemption.")

A study by the Bureau of Labor Statistics of canning and preserving establishments casts some interesting light on the "need" for an exemption for plants within the area of production. In 3 of the 10 States surveyed-Washington, Oregon, and Arkansas-the average hourly earnings of employees in plans located in communities of less than 2,500 were higher than those located in larger communities. In Wisconsin, the average hourly earnings were the same in communities of less than 2,500 as in those with a population of 2,500 to 25,000. In the other States the difference was very slight.

CONCLUSION

The President of the United States has declared a war on poverty. An expanded and strengthened Fair Labor Standards Act is part of the necessary ammunition for fighting this war. This committee is an ordnance factory in the war on poverty. The charge, the explosive you put in the 1964 Fair Labor Standards Act Amendments will be of great importance in the coming battles.

The President stated in his state of the Union message on January 8, 1964: "We must extend the coverage of our minimum wage laws to more than 2 million workers now lacking this basic protection of purchasing power."

18 "Canning and Preserving: Wages in 11 States," 1948 season. U.S. Department of Labor, Bureau of Labor Statistics, Monthly Labor Review. July 1949, p. 22.

By removing the present exemptions in the act, as provided in H.R. 9824, including the repeal of section 7(b) (3), you will be firing a mighty shot in battling poverty. Two and one-half million workers (and their families) will have greater income because they will now receive a minimum wage and overtime pay for overtime work. This added income will aid materially, in the words of President Johnson, to achieve the full economic potential of the Nation. The key to general prosperity is to bring the depressed fifth of our economy into the stream of progress.

We urge passage of this bill as a positive step if our economy is to move forward. Nothing else will do, in these times, the President noted. Now the time has come to act on that message. The needs of the economy, the demands of social justice unite to call for passage of H.R. 9824.

As a matter of basic economic policy, let us extend the minimum wage protection rapidly to all affected workers. Let us bring all workers under the actand let us adopt a realistic minimum wage level, consistent with today's living costs and the living standards we expect American citizens to enjoy. Presently, many employees who are not covered by the Fair Labor Standards Act have to turn to the surplus-food program to feed their families after doing a week's work. In this case, the Government is subsidizing substandard wages. We need a positive bill.

Remove all exemptions. No single worker should be left without minimumwage protection.

Adopt a realistic minimum-wage level.

Make the minimum wage effective 6 months after passage of the bill.

ATTACHMENTS TO STATEMENT OF SIDNEY ZAGRI, INTERNATIONAL BROTHERHOOD OF TEAMSTERS

ATTACHMENT 1

LEGISLATIVE INTENT AND ADMINISTRATIVE PRACTICE WITH RESPECT TO SECTIONS 7(B) AND 7 (c) OF THE FAIR LABOR STANDARDS ACT OF 1938

A. Issues involved in the original enctment and the nature of the testimony offered to the legislators

In 1937, when President Roosevelt asked the 75th Congress to enact legislation establishing minimum fair labor standards, he acknowledged that there were a "few exceptional trades" which could not readily adjust to a general maximum working week. For these, the President proposed that longer hours be permitted on the payment of time and one-half for overtime.

The Connery and Black bills that were offered immediately in response to the President's request-respectively H.R. 7200 and S. 2475-carried no specific provisions concerning exceptions to the general hours standard. These bills did, however, provide that the proposed Fair Standards Board might exempt from the hours standard "overtime employment in periods of seasonal or peak activity, or in maintenance, repair, or other emergency work * * and the wage rates to be paid for such overtime employment."

Joint public hearings were held on these bills by the House Labor Committee and the Senate Committee on Education and Labor between June 1 and 22, 1937. The committees heard testimony from some 90 witnesses, most of which represented labor, industry, or Government. Agricultural processors were represented only by a written statement presented by the National Canners Association. The canners requested that the powers of the Board to determine maximum workweeks and exemptions (if any) therefrom during seasonal activities be removed in favor of a specific and mandatory exemption that would apply in the harvest season. The actual amendment proposed in the canners' statement was that, to the appropriate sections of the bills, the following language should be added:

"The provisions of this subsection shall not apply to employees engaged in processing or packing perishable agricultural or fishery products during the harvesting or catching season."

1 U.S. Senate Committee on Education and Labor, 75th Cong., 1st sess. Hearings on S. 2475 and H.R. 7200, pt. 3, June 1-22, 1937, pp. 1132-1136.

In support of this proposal, the canners' statement argued that

1. Harvesting periods for perishable agricultural commodities (are) wholly dependent on weather conditions.

2. Yields per acre are variable dependent upon temperature, rainfall, drought, insect pests, etc.

3. Location of plants for processing perishable agricultural commodities, and variations in daily tonnage delivered by farmers, make multiple-shift operation impossible.

4. Tonnage of sea foods dependent upon run of fish and conservation regulation.

Representative Welch, of San Francisco, noted in the record of the hearing that he had received messages in support of the National Canners Association proposal from the Ripon Canning Co., of Merced, Teagarden Products Co., of San Francisco, and from the California Canning Peach Association and the Canners League of California.

The initial proposal to amend submitted on behalf of the cannery industry was a comparatively modest one. The request for exemptive relief from the hours standard embraced three significant points:

1. Employees engaged in processing or packing (not industries that are seasonal);

2. Perishable agricultural or fishery products (not all seasonal products, whether perishable or not);

3. Exemption during the harvesting season (or catching season); (not blanket exemptions extending to half the year or to the duration of employment of workers whose employment was seasonal in nature). The canners' position, as taken in 1937 before the joint committee hearing. was made to depend on detailed testimony that had been presented in 1933 to the House Committee on Labor in connection with the 30-hour week bill. The association in 1937 submitted that "in view of this congressional familiarity with and recognition of these agricultural requirements, it is not necessary to do more than briefly summarize the detailed information already presented to Congress."

The 30-hour bill, S. 158, passed the Senate only; it contained an hours exemption relating to perishable products. Beyond its experience with this bill, another source of the "congressional familiarity" with hours exemptions were the NRA codes which permitted employment during the hours "necessary to the handling and/or packing of perishable products during the packing season for such products, when the physical conditions of the perishable product, erop sequence, temperature, humidity, climate, or other circumstances beyond the control of the employer would result in loss or deterioration, or loss to the producers of raw commodities."

The testimony of the cannery industry spokesmen given in 1933, and which served as the foundation of the industry's written statement in 1937, amounted in effect to a series of sweeping allegations that since nature controlled the flow of raw product, the supply was uncertain and unpredictable and, since the raw product was perishable, it had to be processed immediately upon delivery. The testimony of Elmer E. Chase of Richmond-Chase, in 1933 president of the Canners League of California and former president of the National Canners Association, is an example:

"All fruits and vegetables used for canning are highly perishable. They must be harvested at just the right time and should be put into cans the same day they are received at the plants, for delay of a few hours often means serious loss in quality and in many instances total waste of the product. For this reason, each canning plant must be prepared to take care of each item in the quantity that nature brings to maturity and this is highly variable and utterly impossible to predetermine.""

The cannery industry statements went on to argue that the forces of nature were determinative regardless of man's efforts to be at least partially independent of them and, moreover, that the fate of the canners and that of the farmers were equally vulnerable:

2 U.S. Congress. House Committee on Labor. Hearings on S. 158 and H.R. 4557, 734 Cong., 1st sess., 1933.

3 Hearings on S. 2475 and H.R. 7200, 75th Cong., 1st sess., 1937.

Hearings on S. 158 and H.R. 4557, 1933, p. 34.