But may I again say, in reference to your service charge concept, that this little additional gratuity again becomes a cost to the patron, and again, because of the overgenerosity of the American, if you charge $10 for a family to eat out, and you add a 15-percent service charge, that is $11.50, and then he adds a little gratuity of a dollar.

Mr. PUCINSKI. Mr. Power, I would hate to think of how many waiters in this country, and how many restaurant owners in this country, are the victims of the old swindle sheet, where a guy puts down on his expense account 50 cents or a dollar or two.

You have seen expense accounts. I defy you to show me any guy who makes out an expense account who does not put down 12 or 15 percent tip on everything that he spends on services. But that does not necessarily mean that he has paid that money to a waiter or to somebody performing that service. He may very well have paid only a fraction of that in the way of a tip, and the rest goes into his own pocket.

I just do not think that that kind of an inequitable distribution of the wealth is a good idea.

Mr. POWER. Well, this is a problem for the industry. But again I emphasize the fact that you charge a service charge, and it comes up. to $11.50 to eat out, and then they add a dollar, and now it is $12.50— and they eat out 1 day less.

Mr. PUCINSKI. I think that I am particularly grateful to Mr.. Tucker and Mr. Sabatos and Mr. Tutton and Mr. Olson for coming here. We have said earlier that we are grateful when we have a chance to talk to people at the grassroots level, people who are living with this problem.

We know Mr. Power. He is very eloquent, and we are beginning to recognize Admiral Nunn over here for his eloquence in pleading your cause. But actually, the fact remains that we like to talk to you gentlemen who are living with this problem every day.

I am sure that there is going to be a need for additional testimony after we have had a chance to analyze what you have presented us here. The Department undoubtedly is going to have to analyze this and give us some additional views, and the unions will.

And so, because we have additional witnesses, I will ask you to bearwith us and postpone any further testimony from your industry today, until we have had a chance to get some additional information.

We will want to have some additional comments from you on this subject.

We are grateful to you for coming down today.

(Reproductions of charts used by panel as visual aids, submitted by Mr. Nunn, follow.)

34-421-64-pt. 1--38

Employee and Establishment Coverage Under The Fair Labor Standards Act

T"T

Apparel Stars

Total Retail

Grocery Stores

Mr. PUCINSKI. Our next panel of witnesses is the American Motor Hotel Association and the American Hotel & Motel Association. I am sorry. I misstated the case, gentlemen.

On my schedule, here, we will now hear the testimony of the American Hotel & Motel Association, and right after that we will take the American Motor Hotel Association.

Mr. DAWSON (S. Cooper Dawson, Jr., American Motor Hotel Association). We are right with the restaurant association. We are right behind them and work with them. That is why we were originally scheduled to come right behind them.

Mr. PUCINSKI. Gentlemen, I did not make up the schedule.

Mr. RICE (J. Linwood Rice, American Motor Hotel Association). We were told we were to follow immediately the restaurant group. We will be very brief, only about 45 minutes, or maybe less. Mr. PUCINSKI. We have three witnesses, three more witnesses. Gentlemen, we will have to take your testimony, but I am sorry that I did not realize that your testimony was part of the restaurant industry, because we would have put you together with them.

We will go ahead and take your testimony now, but in all fairness to you I must caution you that we have two more witnesses. Now, perhaps you would rather come back some other day.

What would you rather do?

Mr. RICE. Our people I am afraid, sir, would not be able to make it. Mr. COOPER. Mr. DuBois is from Memphis, Tenn., and Mr. Miller is from Pennsylvania.

Mr. PгCINSKI. I am afraid the committee is not going to be able to give you too much time today, but we will move along if you want to. It is up to you.

All right. Let's go.

Mr. RICE. We would like to proceed, sir.

Mr. PUCINSKI. Will you please, then, identify your group for the

record!

STATEMENT OF S. COOPER DAWSON, JR., AMERICAN MOTOR HOTEL ASSOCIATION

Mr. DAWSON. I would like to stand up, if I may, sir.

I am the first speaker. I am S. Cooper Dawson, Jr. I own and operate a motel and restaurant in Alexandria, Va. I am the immediate past president of the American Motor Hotel Association, the trade organization of the motel industry of America, and I presently serve as chairman of the governmental affairs committee of this group with 9,200 members in 42 States.

Incidentally, just to set the record straight, I have washed dishes, scrubbed floors, and I am still my engineer. Thank God, I have never had to be the cook.

Mr. PUCINSKI. Mr. Witness, your statement will go in the record in its entirety at this point.

(Statement referred to follows:)

STATEMENT OF S. COOPER DAWSON, JR., AMERICAN MOTOR HOTEL ASSOCIATION

Mr. Chairman and members of the committee, I am S. Cooper Dawson, Jr. I own and operate a motel and restaurant in Alexandria, Va. I am the immediate past president of the American Motor Hotel Association, the trade organization of the motel industry of America, and I presently serve as chairman of the governmental affairs committee of this group with 9,200 members in 42 States.

Mr. Chairman, I appreciate the opportunity and the privilege of appearing before you and your committee today to give you some pertinent information about the condition of the motel industry. Our testimony will be shared by Dean C. DuBois, Holiday Inns, Memphis, Tenn., and Edwin D. Miller, of Superior Motels, West Chester, Pa.

As a veteran motel operator, dating back almost to the beginning of the motel industry, and with recent contacts with motel operators in all sections of the United States, I have had the opportunity to observe at first hand the growth and the problems of this big segment of the innkeeping business in America. With this background, I feel that I can speak with some authority of the disastrous effect the extension of the minimum wage would have on the motel business. I can do this because I have discussed all phases of this complex and mushrooming business with many operators in many States, cities, and towns during my recent official capacity as president of the national motel trade association.

We are opposed to the extension of the minimum wage to the innkeeping and restaurant industries for two principal reasons:

(1) This section will produce hardship on both employee and employer, and,

(2) It will either result in substantial unemployment or force many motels out of business.

Let's look at the employer hardship angle:

The employer-in this case the operator of the motel-is besieged today with many real and vital problems such as overbuilding and changing traffic patterns. A steady drop in occupancy levels has, in many instances, reduced profits to the break-even point. Wages are the largest single item in the operating cost of motels. They amount to over one-fifth of gross sales.

During 1962, the latest year that national averages are available, wages amounted to 22.11 percent of the gross revenue of all motels. This was about two times what the same labor cost was 10 years ago when it stood at an average of 10.58 percent in 1952.

During this same 10-year period, all other items of operating expense combined rose less than 1 percent. During this same 10-year period, 1952-62, profits shrank from an average of 26.68 percent to 8.71 percent with the rise in labor costs by far outstripping all other costs of doing business.

It is a device to extract pay from employers for unearned wages.