74TH CONGRESS 1st Session

SENATE

THIRTY-HOUR WORK WEEK

{

REPT. 367
Part 2

MARCH 13 (calendar day, March 29), 1935.-Ordered to be printed

Mr. AUSTIN, from the Committee on the Judiciary, submitted the

following

MINORITY REPORT

[To accompany S. 87]

The undersigned have reached the conclusion that S. 87 should not pass because:

1. It is in conflict with laws of nature and of economics;

2. It is incompatible with a free government;

3. It attempts to exercise powers not vested in Congress.

Briefly analyzed, the purpose of the bill is to control labor to the .extent of limiting the sale of services to not more than 5 days in any week, or to not more than 6 hours in any day.

The scope of the bill includes employees (except officers, executives, and superintendents and their personal and immediate clerical assistants) of any person producing or manufacturing goods in any mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment, situated in the United States.

The author of the bill, Senator Black, testified that the bill contemplates the exclusion of agriculture (hearings, p. 14). Nevertheless, the bill includes employees of all producers of agricultural or farm products save those producers who are the original producers and who process for the first sale (sec. 7 (b) p. 6).

Senator Black also stated that it included the publishing business, the original bill having excluded that business by name and this bill having eliminated that exclusion (hearings, pp. 9-10).

An exemption permit with respect to the foregoing class of employees may be granted to "such persons, relieving the employer from the provisions of this Act with reference to such persons" (bill, p. 3, lines 15-16.)

"Such persons" are those who are found by the Secretary of Labor upon satisfactory proof of the existence of special conditions in any industry to be necessary to be employed beyond the statutory limit. Industries are not exempted.

1

Subject to the exception above stated, the scope of the bill includes the following:

Employees of vendors of articles or commodities sold to the United States or to any department or organization thereof. The ramifications of this phase of the bill reach food, clothing, drugs, toilet articles, paper, paint, bedding, house furniture and furnishings, vehicles, military and naval equipment, construction materials, books, magazines, newspapers, office supplies, tools, fuel, and other articles and commodities too numerous to specify herein (sec. 2 (a), p. 3).

Employees of any materialman who sells to any contractor for any public work (sec. 2 (b)).

Employees of any borrower from any governmental agency who is engaged in the production and manufacturing described in the first section (sec. 3 (a), (b)).

Employees of every person who is under a code of fair competition, agreement and license under title I of the National Industrial Recovery Act (sec. 4 (a), p. 5).

The enforcement provisions of the act are unusual:

An embargo on transportation in interstate and foreign commerce affecting the shipper, the transporter, and the deliverer.

That no article or commodity shall be shipped, transported, or delivered in interstate or foreign commerce, which was produced or manufactured in— any of the establishments described in section 1

which any person

that is to say in which even one person—

was employed more than 5 days in any week or more than 6 hours in any day:

*

* *

(Sec. 1, p. 3.)

A boycott:

SEC. 2. (a) No article or commodity shall be purchased by the United States, or any department or organization thereof, from any business enterprise operating contrary to any provision of this Act

*

A limitation of the right to contract:

(b) Each contract made with a contractor for any public work shall contain a provision that the contractor will buy no article or commodity to use on or in any public work from any business enterprise violating any of the terms or provisions of this Act * *

Disqualification to borrow of any governmental agency:

* * *

*

SEC. 3. (a) No governmental agency shall make or renew any loan to any employer of labor in which any person (even one person) * was employed more than five days in any week or more than six hours in any day.

Another limitation of the right to contract:

SEC. 3. (b) On and after the effective date of this Act, any such employer of labor who applies for a loan from any such governmental agency shall agree at the time of making application for such loan that so long as he is indebted to the United States he will not permit any person, except * * * to work more

than * * *.

Forfeiture:

In the event that there is a violation by any such employer of his agreement, the full amount of the unpaid principal of the loan * * * shall be immedi

ately payable.

Impairment of contracts: Another violation enforcement provision consists of the arbitrary changing of the essential and vital element of labor provisions contained in all the codes. These were voluntary agreements.

* * * * *

*

SEC. 4. (a) On and after the date this Act takes effect, every code of fair competition, agreement, and license shall contain a condition that the employers covered by such code shall not employ any person, except * * * more than five days, etc.

*

(b) Every such code, * heretofore approved * * *shall be deemed to be amended so as to include a provision corresponding to that prescribed in subsection (a) of this section.

Fine or imprisonment:

SEC. 6. Any person who violates any of the provisions of this Act, or who fails to comply with any of its requirements, shall upon conviction thereof, be fined not less than $200, or be imprisoned for not more than three months, or both.

This penalty runs against others than employers and employees; it strikes shippers, carriers, and deliverers who may or may not know that they are violating the act.

All of the foregoing enforcement provisions reach the employee indirectly and tend to curtail his liberty to work and to earn money.

The compensation of employees is frozen by section 5, at the present "daily, weekly, or monthly wage rate", unless a change is made according to the bill. The change intended is obviously a reduction, for the bill provides:

SEC. 5. On and after the date this Act takes effect, it shall be unlawful for any employer subject to any of the provisions of this Act to reduce, directly or indirectly, the daily, weekly, or monthly wage rate in effect on such date * * * with respect to any―

even one

of his employees until a reasonable opportunity has been afforded to his employees, through representatives of their own choosing by a majority vote, to meet with the employer or his representatives and to discuss and consider fully all questions which may arise in connection with the reduction of such wage rate.

The obvious discrimination forced upon employees in divers industries varies between those running on the 30-hour, 40-hour, and 50hour per week basis at the present time, and between those operating under sectional and seasonal differences.

1. IT IS IN CONFLICT WITH THE LAWS OF NATURE AND OF ECONOMICS

Leaders of thought in economics whose interest is general, opposed the bill, testifying, among other things, as follows:

Harold G. Moulton, Brookings Institution, Washington, D. C. (hearings, p. 166):

At page 177:

Our conclusion simply is that this measure will not only not accomplish anything for the laborers themselves, those now on the pay rolls, but that it will tend to defeat the very purpose which labor ought to be interested in.

Wallace B. Donham, dean of the Graduate School of Business Administration of Harvard University (hearings, p 165):

Advances in labor cost would advance prices and cut profits which are already dangerously low. Advancing prices at the expense of consumers would check buying and create more unemployment. It would run up the cost of living. It would set us back from our goal of a better balance between agricultural and other prices. Cutting profits would remove the leading incentive to hiring more men.

O. G. Saxon, professor, Yale University, Sheffield scientific school "Business operation and relations"; law school course, "Marketing" (hearings, p. 180):

At page 180:

* * * To adopt it now would mean more rather than less unemployment, less rather than more real wages, and in the long run longer rather than shorter hours for many people, and a lower, not a higher, standard of living for all.

At page 190:

Commenting on the 30-hour week, the National Industrial Conference Board study says:

*

At page 191:

The result would be:

For the employed worker, reduced hours, increased hourly earnings, stationary money income per week, and increased cost of living.

For the manufacturer, smaller output per man-hour, increased labor costs per man-hour, increased material costs, and a larger increase in labor costs per unit of product.

It should be clear * * * that a 30-hour week would involve a simultaneous increase in wage rates and a decrease in productive efficiency. The volume output would be declining at the same time that the payment of wages was increasing. This would result in either bankrupting business or in a rise in prices more rapid than expansion in pay rolls. If the former alternative resulted, we obviously would not have recovery, but rather intensified depression. In the latter alternative the rapid advance in prices would nullify the increased money wages.

Wilford I. King, professor of economics, School of Commerce, New York University (hearings, p. 336):

At page 337:

Unemployment, then, is nothing more or less than the relationship existing between the holding price of the laborer for his labor and the world price at which the supply of labor will be demanded.

At page 340:

* * * You can have your choice; you can have flexible prices with stable production and full employment, or you can have rigid prices with flexible production and much unemployment.

At page 342:

* * * If an attempt is made to compel the employer to pay the same wage rate for a 30-hour week as he is now paying for a 40- or 44-hour week, it evidently increases his cost per piece or per article. According to the law of supply and demand, if the cost is increased, he will sell fewer units of the product. That is exactly what has been happening during the last year and a half under the restrictions which have been imposed upon industry.

At page 349:

When the Government began to put restrictions upon industry, that rapid rise ceased.

As soon as the Government began to put restrictions on hours of labor, those restrictions tended to offset the effects of the increasing price level. When we pay out relief in great quantities, that procedure also helps to keep more rigid the wage rates, so that they cannot be adjusted to new levels. There has been no adequate downward adjustment of wage rates. The restrictionists did everything they couid, as I see it, to prevent recovery.

Gus W. Dyer, Vanderbilt University, Nashville, Tenn., representing the Southern Industrial Council (hearings, p. 350):

At page 351:

* * * The proposed law would bring an unusual hardship on the small industries and on small business concerns in general.

*

*

* * To put a burden of 33-percent extra wage cost on a small factory that has no reserve, has limited credit, would practically make it impossible to continue in business.

* * * This bill prohibits men who could support themselves, if free, from accepting employment that would enable them to take care of themselves and preserve their independence.

Fred H. Clausen, director of the Chamber of the Commerce of the United States (hearings, p. 433):

At page 434:

* We cannot establish wage rates by Government fiat that are not earned and recovered by the employer who pays them. The wage fund must come from gross income, and not from capital.

To the worker, it (the 30-hour bill) says that under the American law you cannot work for others more than 30 hours a week. It definitely limits his earning power without any relation to his health or the betterment of his economic position.

Frankly, the program designed to create scarcity of labor will in itself effect increased scarcity of work and not of workers.

At page 437:

* * This proposed law will reduce and not increase man-hour employment. At page 438:

One of the most objectionable features is the lack of flexibility. Neil Carothers, professor of the College of Business Administration at Lehigh University, as quoted by Professor Saxon (hearings, p. 183, and exhibits, p. 883).

At page 183:

This fundamental truth that you cannot help labor by reducing production is the basic fact in this 30-hour-week matter. If the average work week in normal times is 44 hours, then the national dividend is simply the product of 44 hours of labor applied to our land and capital. Cut this work week to 22 hours and you destroy the American standard of living:

At page 883 (exhibit):

* Cut it again to 11 hours and our civilization disappears. Cut it once more to 51⁄2 hours and death sweeps away the population. But, you say, this is a proposal to cut to 30 hours. Exactly. It will have the same starvation tendency, but it will not go so far.

M. H. Reymond, industrial engineer, representing only himself, "the average citizen" (hearings, p. 263):

At page 265:

The principal result of inflating costs, under such circumstances is to close down more businesses and make the unemployment situation worse than it otherwise would have been.

At page 266:

To the extent that this bill contemplates higher wages per hour, it would cause lower wages per week by forcing a further contraction of business enterprise, or, what amounts to the same thing, by preventing a normal reexpansion of business enterprise. To the extent that this bill may contemplate reducing