The development of new industries and the setting of the highest feasible wage rates has resulted in a continuous shift of workers from low-paid to higher-paid employment. For the economy as a whole, this has meant a shift from relatively unproductive home industries to more productive factory-operated and related industries. For the worker, it has meant higher wages than ever before and the virtual elimination of the sweatshop conditions that prevailed prior to 1940. Let us take the home needlework industry as an example. In 1950, this industry employed 61,000 persons. By 1954, this figure had dropped to 29,000. Since, during this same period, factory-operated apparel industries have increased sharply; we know that many of these workers have been attracted to higher-paid employment. Insofar as the decrease in home needlework has occurred as a result of this shift to better-paid jobs, this has been a healthy development and one which is in complete accord with our goals of higher wages and industrial expansion. Insofar as the decrease has occurred as a result of a shift of production to the Philippines, Japan, and other countries, this has been an adverse development. I must add that the present picture is in striking contrast to the picture between 1938 and 1940, when the home needlework industry was practically demolished by the establishment of a fixed minimum wage, and the workers were thrown into the ranks of the unemployed. It is also important to point out that whenever other witneses have quoted very low wages existing in Puerto Rico, they have been referring to home needlework and not to factory-operated industries. I would like to say that it is the stated policy of the Commonwealth government not to extend tax exemption to industrial homework. I shall welcome the day when home needlework has been completely eliminated from the Commonwealth, and I am convinced that this day is not in the far distant future. In weighing the success of our attempt to raise wages, it must be remembered that until very recently our economy has been predominantly an agricultural one, and that even now agriculture is the major factor in our economy. I shall also ask you to bear in mind that much of what has been accomplished in Puerto Rico has taken place under conditions quite different from those in the States. For example, Puerto Rico had no war plant expansion either during World War II or the Korean emergency. Wartime shipping restrictions, submarine hazards, and the absence of large industrial establishments meant that Puerto Rico's postwar accomplishments were not the result of the spur of World War II. During the war, rigid price controls on sugar and tobacco, our principal agricultural export products, prevented any wartime inflation of our commercial staples. At the same time, we suffered from increased prices on consumers' goods, and from shortages. Although on the mainland both prices and wages went up, in Puerto Rico prices were not permitted to go up on our salable products-sugar and tobacco. Consequently, wage increases were attained in the face of an economy that was largely frozen. In addition, as I have mentioned, they were attained in the face of constant unemployment averaging at least 15 percent of the labor As an indication of the progress we have made, I should like to point out that our present average hourly earnings in manufacturing are actually higher than those prevailing in Great Britain. I have obtained a table from the United States Bureau of Labor Statistics which converts the average hourly earnings in manufacturing for certain Western European countries into dollars and cents, and I am personally amazed to discover that Puerto Rico, with only a 10-year history of effort in industrial development, has already surpassed the wage rates of England, the mother of the industrial revolution. In addition, our wage rates are considerably higher than those prevailing in France, Western Germany, and Italy. The table showing these is No. 8. Another important aspect of our development is Puerto Rico's role as a customer of the United States. Senator DOUGLAS. Your figures, showing that Puerto Rico's hourly earnings are higher than those of Great Britain, are almost incredible. Mr. SIERRA. It is that way. We decided not to compare it with the Caribbean. If you compare with the Caribbean, then the difference is much greater. Senator DOUGLAS. Are you sure you are right on these figures? Mr. SIERRA. Yes. We got them from the Bureau of Labor Statistics in Washington. Our purchasing power has expanded to the point that we now spend about $500 million per year in the States. Only 5 countries make larger purchases in the United States than does Puerto Rico, and only 2 of these are Latin-American countries. In per-capita purchase of goods, we are the No. 1 customer of the United States, with per-capita expenditures of over $211 in 1953. Canada, the largest importer of United States goods, spends only $197 per capita, and the United Kingdom and Western Germany, Uncle Sam's second and third best customers, spend only $12 and $7, respectively, per capita. It hardly seems necessary to emphasize that the goods which Puerto Rico purchases from the States represent mainland jobs and mainland profits of a substantial nature. Even a partial increase in unemployment in Puerto Rico would have serious consequences both for our own tight economy and for the mainland as well. The failure of our over-all program could only mean that the United States taxpayer and the United States Congress would be faced with problems of extreme gravity. These problems would include not only the problems inherent in any failing economy, but also a manifold increase in the migration of Puerto Ricans to the mainland. These are the consequences which we, in the Commonwealth, are striving to prevent. We thus approach the subject of minimum wage policy with a full realization of its vital importance to the Puerto Rican economy and of its far-reaching implications for the United States as a whole. Having set forth the social and economic framework within which a minimum wage policy must be considered, I should now like to examine, more explicitly, how industry committees have functioned under the present system. First, let me describe briefly the structure of our industry committees, and the procedure they follow. Each industry committee is a special tripartite body representing employers, workers, and the public, in equal numbers. In accordance with the law, each committee includes members from both the mainland and Puerto Rico. Thus, the interests of employers and workers on the mainland, as well as those in Puerto Rico, are safeguarded against any possibility of creating unfair competition by setting unfair minimum wages. I should also like to mention that United States organized labor is invariably represented on these committees. We welcome their interest and participation. Their presence helps to insure against unfair advantage, which we do not want, and, in addition, guarantees that the highest feasible wage standards will be set, which we do want. Senator DOUGLAS. Mr. Sierra, I am not perfectly informed on who sets up these industry committees. Who appoints them? Mr. SIERRA. Well, I tell you, Mr. Chairman, these committees under law are appointed by the Secretary of Labor of the United States, or the Wage and Hour Administrator. Under the terms of the law, the three interests must be represented in the committees the public interest, labor, and industry-and besides that, the committees must include representation both from the island and from the mainland. But the entire responsibility for the appointment of these committees is in the United States Department of Labor. They consult with the Government of Puerto Rico only in the nominations for the public representatives, because most of them are top officials in the Government of Puerto Rico that need some authorization from the Governor to get away from their job and serve for a month or a month and a half. Senator DOUGLAS. In practice, does the government of Puerto Rico submit to the Department of Labor a panel of names from which it requests the Department to make the appointments? Mr. SIERRA. It is my recollection that the Governor's office sends these lists to the Wage and Hour Division. Persons on the lists are representatives either as the commonwealth or of the University of Puerto Rico in the field of economics. About 10 or 15 names have been submitted on this list. But that is all I remember. Senator DOUGLAS. Well, who suggests the employer representatives? Mr. SIERRA. Industry suggests the employer representative. Senator DOUGLAS. That is industry in Puerto Rico? Mr. SIERRA. And in the mainland. Senator DOUGLAS. And in the mainland, too? Mr. SIERRA. Yes. Senator DOUGLAS. Who suggests the labor representatives? Mr. SIERRA. Labor in the mainland and in Puerto Rico, and labor is directly interested in the committees. Senator DOUGLAS. How about the unorganized industries? Mr. SIERRA. Labor, too. That is the information I have. I think the wage and hour people would be in a better position to inform you on these details, Mr. Chairman, than I am. Senator DOUGLAS. Well, the Department of Labor has preferred not to testify this morning. They say they will testify later. So I am not privileged to call upon them this morning, but I see in the room Mr. David Dubinsky, who is president of the International Perhaps he could tell us how the labor representatives are chosen. Mr. Dubinsky, would you come forward and sit here? (The tables and charts referred to by Mr. Sierra follow :) TABLE 1.-Distribution of wage earners' family income in Puerto Rico, 1941, 1952, 1 The median income and the income groups for 1952 exclude "other money receipts" such as inheritances, etc.; these are included in the mean income for that year. TABLE 2.-Employment and unemployment in Puerto Rico, 1950-54 |