As you no doubt know, American Samoa has been a possession of the United States since about 1900. Its affairs are administered through the Office of Territories, Department of Interior. That Department has been endeavoring for some time to interest American concerns in locating there, that the people on the island may learn trades and business, and may become self-supporting. No industries or businesses are now located there to provide employment for more than a few hundred people. Due to the background of the natives on the island, their lack of opportunity and experience, workers cannot be expected to earn wages comparable to those paid continental United States or stateside workers. The Government has established a pay scale to meet standards that exist in that part of the world, particularly in neighboring islands, such as Western Samoa, Tonga, and other Pacific territories under the jurisdiction of other nationalities. This company, at the behest of the Department of Interior, has gone to Pago Pago for the purpose of endeavoring to establish a fishery and a fish-processing and canning plant. It is on a trial basis. In the first 12 months of our experiment, it has been found that the American Samoans are adaptable to catching, cleaning, and processing fish and seafood, but it takes 3 to 5 people to do and perform what 1 American laborer or worker in the States can do. Consequently, we believe that if your committee studies the situation that exists there, a realistic approach, for the time being, in relation to the local economy and living conditions, will be made and result in a fair law to assist these peoples in helping themselves. If the United States or stateside standard of wages and hours are continued to be made applicable to local conditions in American Samoa, there will be no incentive for American concerns to move in and build up the island. During the 83d Congress, several proposals were made for legislation. Two bills (S. 3831 and H. R. 10181) had the clearance of the Bureau of the Budget, which meant the approval of the Interior Department, the State Department, the Defense Department, and the Labor Department. There are now pending many bills for amendment to the Fair Labor Standards Act. Some of these propose a law applicable to American Samoa as now applies to Puerto Rico and the Virgin Islands. In those territorial possessions, the Secretary of Labor, after public hearings on recommendations of an advisory committee, may promulgate wages and hours which must be followed. We believe you would agree with us that the economy and industrial development in those islands far surpasses that of American Samoa. If the recommendation of fono is accepted for a limited time and then reviewed by the Congress, such a procedure would then be expedient. We have discussed this matter with Governor Lowe of American Samoa, and with officials of the Interior Department. We believe they heartily concur in these views. We are convinced that both the Labor Department and organized labor likewise want a fair law for the island peoples. If there is any information we can obtain for you, we will be glad to do so. Will you please notify our attorney, Mr. Linton M. Collins, 1100 Tower Building, Washington 5, D. C., of any scheduled hearings, and us in due time, so that we may appear and testify. Most respectfully submitted. W. D. MOORE, Jr., Foreign Production Manager. GOVERNMENT OF AMERICAN SAMOA LEGISLATIVE BRANCH Tutuila, American Samoa FONO RESOLUTION C JR: RESOLUTION 3 The Legislature of American Samoa in joint session assembled, acknowledges, with great pleasure, the opening address of His Excellency the Governor to the fono on the 28th of June 1954. The fono is fully aware that the Governor possesses the sole power to enact laws in American Samoa. Therefore, respecting his authority, the fono asks that the recommendations contained herein be looked upon as outlines of policy which the Governor may or may not wish to enact into law. The fono feels that it is in the best interests of Samoa to follow these policies until an adequate Corporation Code has been enacted, at which time the fono will resume a more positive role in advising on matters concerning legislation. (1) That amendments to the code be made, as may be necessary, to induce industry to locate in American Samoa; and that amendments for incentive purposes be made effective for a limited period of time. (2) That his Excellency the Governor requests the Department of Interior to negotiate for exemption of American Samoa from the Wage and Hour Act by virtue of the relatively lower living costs in Samoa. Such exemption will undoubtedly prove itself a desirable measure as well as an attractive industrial incentive. And further, such exemption if necessary may be made for a limited period of time. (3) That new industries be enfranchised individually and for a specific purpose so as to preclude monopoly and economic control by any one group. (4) That laws pertaining to taxes and licenses for new industries be made. And that His Excellency the Governor, assess, evaluate, and estimate the amounts thereof; and award exemptions as may be necessary for a limited period of time. (5) That His Excellency the Governor, for the present, take all measures to insure the protection of the lands, customers, and culture of the Samoans as practiced by the United States for the past 54 years while the industrial incentives are being developed and until the Corporation Code and the Constitution of American Samoa are completed. Senator DOUGLAS. We meet this afternoon at 2 o'clock in this room, and we will have the witnesses who were to have testified yesterday afternoon but whom we could not call because of the session of the Senate. If there are no other matters, we will recess until 2 o'clock. (Whereupon at 12 noon, the subcommittee recessed to reconvene at 2 p. m. the same day.) (See volume 2 of hearings, p. 1145.) AMENDING THE FAIR LABOR STANDARDS ACT OF 1938 FRIDAY, MAY 6, 1955 UNITED STATES SENATE, COMMITTEE ON LABOR AND PUBLIC WELFARE, SUBCOMMITTEE ON LABOR, Washington, D. C. The subcommittee met, pursuant to adjournment, at 10:05 a. m., in room P-38, Capitol Building, Senator Paul H. Douglas (chairman), presiding. Present: Senator Douglas (presiding). Other committee members present: Senator Allott. Also present: Stewart E. McClure, staff director; Roy E. James, minority staff director; John S. Forsythe and Michael J. Bernstein, professional staff members; and Dr. Fred H. Blum, consultant. Senator DOUGLAS. The subcommittee will come to order. There were two witnesses who were scheduled at previous sessions. Because of the congestion of the calendar, they could not be heard. We are very glad to hear them this morning. Mr. Hodgson of the Minnesota Retail Federation. STATEMENT OF THOMAS H. HODGSON, CHAIRMAN, MINNESOTA WAGE AND HOUR EXEMPTION COMMITTEE, AND EXECUTIVE VICE PRESIDENT, MINNESOTA RETAIL FEDERATION, INC. Mr. HODGSON. I am Thomas H. Hodgson, executive vice president of the Minnesota Retail Federation, and chairman of our Minnesota Wage and Hour Exemption Committee, a group of retail and service trades associations grouped together voluntarily to present to you our statement this morning. Mr. Chairman, I would also like to file with you the separate statements of the Minnesota Hotel Association and the Minnesota Restaurant Association. The one is attached to our longer statement and the other I am giving to you now. I wish to thank your staff, sir, for letting me speak out of turn because I was coming here this weekend anyway and it meant a great deal to me to appear now rather than on May 2. The conclusion of our group is stated on our covering letter in the last paragraph: These associations and their members now oppose any congressional action that would change the present exemption provisions of the Fair Labor Standards Act. This, Mr. Chairman, is a Minnesota statement, pure and simple. We are not speaking for anybody else. It is a home product. If it is agreeable with you, I would much rather not drone through these statements of some 18 pages, but would much prefer, if I may, to visit informally with you on some of the ideas that we bring out here. Senator DOUGLAS. Would you like to have your statment made a part of the record? Mr. HODGSON. I certainly would, Mr. Chairman. (The prepared statement of Mr. Hodgson follows:) Senator Douglas and gentlemen, it is an honor to present this statement in behalf of the 27 trade associations subsequently listed. These associations represent more than 60,000 retail stores, hotels, restaurants, grain elevators, feed dealers, and other firms servicing farmers, motels, resorts, laundries, drycleaning shops, and several other vendors of services in Minnesota. Back in 1938 and 1949, they opposed with good reason the imposition of Federal wage and hour provisions on their businesses. Their thousands of members have long been aware of how unnecessary and unreasonably burdensome such coverage could be for businesses local in character. These associations and their members now oppose any congressional action that would change the present exemption provisions of the Fair Labor Standards Act. My statement is made at the express request and with the approval and endorsement of the following State trade associations with members in Minnesota : Cleaners and Launderers Institution, George E. Samels, executive Farmers Elevator Association of Minnesota, Lloyd Nelson, executive Independent Retail Lumber Dealers Association, Edwin W. Elmer, executive Minneapolis Grain Exchange, Ronald Kennedy, executive. Minneapolis Retailers Association, C. A. Wildes, executive Minnesota Association of Small Loan Companies, Herbert J. Dower, executive Minnesota Implement Dealers Association, Charles Partridge, executive Minnesota Motel Association, Elmer Berdahl, executive Minnesota Resort Association, Mark J. Ocken, executive Minnesota Restaurant Association, Mark J. Ocken, executive Minnesota Retail Food Dealers Association, Earl F. Altnow, executive Northwest Chain Store Council, Robert T. Thornburg, executive Retail merchants and owners of hotels, restaurants, summer resorts, laundries, drycleaning establishments, motels, mortuaries, theaters, filling stations, establishments directly servicing farmers, and others respectfully ask the Congress to maintain and continue their exemption from the minimum-wage and maximum-hour provisions of the Fair Labor Standards Act. Bills introduced in both houses indicate a studied attempt to force local business under Federal regulation and direction. Surely, the Congress ought not to force Federal regulations into the affairs of small Main Street stores, hotels, laundries, and the many other vendors of services. It is the fear of such oppressive legislation that causes small and large business firms alike to join in protest for the reasons stated elsewhere in this statement. If it is the intent of some to regulate and dictate to only the relatively few large multistate stores, hotels, restaurants, farmers, elevators, and others, such an objective condemns itself. It would be punitive, discriminatory, inequitable legislation unworthy of serious consideration by the Congress. Small-business men have become suspicious of any legislative attempt to apply regulations only to the big. They know selective regulations for what they so often are a foot-in-the-door gimmick. First only the big are regulated. Then regulation and control are gradually extended downward to the small. Small business has seen this steady encroachment in many fields. It is fearful and it is not naive. The drug store on the corner, the little hardware store, the town funeral parlor, the restaurant and many like them are locals. That's what the Congress said in 1938 and 1949. These home town firms live or die at the local level, not under interstate conditions. "Joe's Food Market” does not compete across State lines. It does not even compete with grocery stores in other cities. It competes only with other food stores in the same town and, even more specifically, only in the same neighborhood part of town. And this confinement to local competitive conditions prevails whether the grocery store is an independent or part of a food chain. Federal regulations should not be broadened. If any wage-and-hour regulation is needed at the local level (and this can be ably denied), the State, not the Federal Government, should exercise the power. If local conditions of markets, pricing, labor supply, and customer demands are better known at home (and they are), then our State government in St. Paul is better able to handle Minnesota's local problems than the Federal Government in Washington. A BRIEF REFERENCE TO HISTORY In 1938 when the Fair Labor Standards Act became law, our economy and social welfare were disturbed by depressed economic activity, serious unemployment, sweat shop employment in some large industries, the "runaway shop," and unfair area competition in the manufacture of goods having an important effect on supplies and prices of goods moving through or affecting commerce between the States. It was to the large manufacturer and others greatly affecting interstate commerce, not the local enterprise, that the Congress, its committees, and Government officials addressed their attention. The Congress listened to witnesses from Government, business, labor and industry. It wisely decided to exclude from minimum-wage and maximum-hour provisions all businesses local in character. Nothing has happened since 1938 to require coverage at this time. In 1949 an unsuccessful attempt was made to destroy the exemptions. The philosophy of the 1938 Congress was adhered to. No substantial change should be made now. Evils that brought the law in 1938 did not then, and do not now, exist in retail merchandising or in the service trades. WAGES AND LOCAL COMMUNITY CONDITIONS Minnesota is not a manufacturing State. Like many other States it is agricultural with rural communities predominating. It has only three metropolitan centers. Of the State's 11 Members of Congress, only 4 are from metropolitan areas. The other 7 are from very small towns. Their constituents are farmers and small town business and professional people. In these communities local conditions set the wage patterns. Employment is steady. Wages and working hours are good. The merchant and the seller of services pay as much as they can afford for the best help they can afford. The law of supply and demand, not something false and artificial, sets the local wage pattern. It has always worked well. It always will. We are not statisticians or wage experts so we accept from reliable sources the information that retail hourly earnings have increased 83.5 percent since 1945 while in manufacturing the increase has been only 76.4 percent. Weekly earnings, we are told, have increased 80.2 percent in retailing against 61.3 percent in manufacturing. We believe the same favorable pattern of increases is found in the service trades. It would seem, therefore, that retailing and the service trades have done a pretty good job at increasing employees' earnings without the artificial stimulus of a Federal minimum wage. The small-town employer knows that depressed wages would give him only the riff-raff of the local labor market. To pay less than local conditions warrant |