The hours stores must remain open, 6 days a week, is dependent upon the needs and demands of the customers in the particular neighborhood.

The average individual sale in some stores is less than 50 cents. In department stores it is between $4 and $5.

Large supermarkets have a relatively high wage scale, compared with stores whose customers buy a few cents worth of merchandise at a time.

Large department stores have a wide range of departments, some requiring great skill, knowledge and sales ability, such as furniture and high fashion expensive dresses. Some departments require little or no training, such as handkerchiefs. In department stores there are some very elementary, beginning jobs. In this great range the wage rates differ and are related to the experience and training needed for efficient job performance.

The wage rates in large cities are traditionally higher than those in small communities.

It must be realized that a minimum fair wage is the wage floor for the least skilled and least experienced worker in those stores where the average sale and possible sales per employee hour are lowest. Other rates go up from that minimum or starting point.

It must also be recognized that within stores, because of differences in skill, length of service and sales volume, less than 15 percent of the employees are paid the starting rate for that particular store. Other employees are paid progressively higher than beginning rates.

Reasons for relative lower wage scales in retailing.-Retailing universally is one of those industries or lines of work which is characterized by a lower wage scale than many other fields of employment.

In his book, Labor and Industrial Relations Problems, Professor Lester cited several characteristics of high pay industries: (1) Large capital investment per worker; (2) labor costs are a low percent of total production costs; (3) high and increasing productivity per worker; (4) skill requirements relatively high.

These four factors are worthy of a brief review as they relate to retailing in New Jersey.

Capital investment per worker.-In 1948 investment per industrial employee average $8,600, for retail employee $5,114. Investment per worker in industry has gone up since that time. More efficient tools have been provided. Retailing continues to be a nonmechanized field.

Labor costs are a very high percent of gross margin in retailing.-Gross margin is that which is left after the merchandise is paid for.

A recent Dun & Bradstreet survey of retailing shows:

High-wage industries are those in which wage costs are a low proportion of value added. In retailing wage costs take a very high proportion of value added. Increased wage costs in retailing cannot be absorbed by automation as they can in most industries.

Productivity per employee. Most estimates show that productivity per man-hour has been increasing in manufacturing by 2 percent per year. This is said to have reached 3 percent last year. In retailing the rate of increase is less than one-half of this amount.

Skill requirements in retailing.—The jobs, directly affected by a retail minimum wage order, are entry jobs into employment. They require no training or experience. These beginning jobs in retailing are virtually the only employment available for many who because of age or lack of experience do not qualify for other industries.

Minimum wage rates as fixed by law or wage orders in other States.-A survey of all minimum wage laws or orders applying to employees in retailing has been made and is offered as exhibit C. A separate page showing the effective dates of these is included as exhibit D.

It is noted that only one State, Nevada, has a minimum rate over 75 cents per hour and Nevada with its liberal gambling laws is hardly comparable with the Garden State.

Two States revised their laws or orders in 1954 and six in 1955.

In the States bordering New Jersey, only New York has a wage order covering retail employees. It provides 75 cents an hour in New York City, 70 cents per hour in zone 2, and 65 cents per hour in zone 3.

BLS Consumers Price Index and wage order for mercantile occupations in New Jersey (No. 8).-The retail wage order now in effect in mercantile occupations was signed by the Commissioner of Labor on December 7, 1948, and became effective on June 6, 1949. The Bureau of Labor Statistics of the United States Department of Labor publishes a Consumer Price Index. This index, from 1947 through November 1955, is included as exhibit E. This index shows the Nation's trend of consumer prices. Applying this to the present retail wage order (No. 8) in New Jersey the 60-cent minimum rate for zone A counties could be adjusted to 68 or 69 cents an hour, depending on whether the date of signing (1948) or the effective date (1949) is taken as a base.

The 55 cents per hour rate now provided for zone B counties would become 61% or 62 cents per hour.

2. No minimum wage for women and minors can be said to be "fair" which is higher than that earned by 34.7 percent of the women now employed in retailing in New Jersey

Based on the evidence in the preceding section a minimum wage of $1 an hour for mercantile occupations must be viewed as excessive and therefore not a fair minimum.

A fair minimum wage is the minimum, not the average, wage paid by fair and reasonable employers. Any proposed minimum which exceeds the rate currently being paid to 34.7 percent of all women in retailing is excessive, unreasonable, arbitrary, and too high to be a fair minimum.

Can it be said that recognized unions affiliated with the Retail Clerks International Association, AFL, have rates of pay in their contracts which are less than fair? A copy of the contracts between a leading department store and the RCIA-AFL dating back to January 31, 1949, was submitted to the wage board as evidence. These contracts show that an agreement was signed on April 12, 1955, extending to January 31, 1957, providing for a minimum or starting rate of $27.50 a week or 684 cents per hour. This store pays more than the prevailing rate and more than the minimum rate that smaller stores in the same community (particularly those selling different and lower priced merchandise) pay their employees. Certainly in this case the union does not collect dues from its members for negotiating an oppressive or an unfair wage.

A very large and highly respected department store in a very large city in New Jersey has been fully organized by the RCIA-AFL for some 15 years. Minimum contract rates presently being paid are 75 cents per hour. Less than 10 percent of the employees receive this wage, but it is considered a fair and reasonable minimum by an eminently fair store and an international union which has its representative on the present wage board.

In a very large New Jersey city, containing three of the largest department stores in the State, starting rates are: Store A, 75 to 85 cents per hour; store B, 85 cents per hour; store C, 80 to 85 cents per hour.

It must be emphasized that these are not marginal employers and they do not employ marginal employees. These stores are no "oppressive and unreasonable" or "unconscionable" employers. Can small, marginal retail employers in less busy locations in small town fairly be required to pay a starting rate considerably higher than that now prevailing in better stores in the busiest part of the State? It is a fact that employees in large supermarkets are paid a higher rate than that which prevails for general merchandise or drug stores. The sales production per employee hour, in spite of a low markup or margin on the merchandise sold, permits this.

All the evidence indicates that a jump in the minimum wage for mercantile occupations to $1 an hour would be excessive and therefore not a fair or just minimum wage.

3. The proposed rate does not take into consideration the area or zone differentials which now exist and are recognized in the present Mandatory Wage Order No. 8 for Mercantile Occupations

The present wage order (No. 8) provides different minimum rates for those counties listed as A counties than those for B counties.

There are now differences in the starting rates and in the wage scales paid in different sections of the State. Table 9a on page B-36 of the preliminary report submitted by the Wage-Hour Division to the wage board substantiates these area differentials. In so-called area No. 1, 29.3 percent of the women employees in retailing receive less than $1 an hour. In that designated as area No. 2, 62.1

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percent receive less than $1 an hour. In area No. 3, 51.7 percent, and in area No. 4, 40.3 percent are now paid less than $1 an hour.

The Secretary of the wage board testified during meetings of the wage board that to his knowledge the cost of living did not vary by even 1 percent between sections of New Jersey. This statement was not supported by any evidence which he presented. This statement was challenged by the employer representatives who asked for facts and figures to bear this out. They cited the known differences in union contracts negotiated for single stores within the State on an area basis. They further cited the well-known and obvious difference in the cost of working between large metropolitan areas and small towns. From the retailer's point of view it is completely obvious that the store in a town like Sussex or Cape May cannot possibly do the volume of business in each hour that the store is open that a similar sized store in Newark, Jersey City, Paterson, or other large cities could do. Equally obvious, we think, is the fact that it does not cost the woman or minor as much to work in typical small communities as in large cities.

Area differences exist. They are recognized in practice and should be recognized in any wage order promulgated for mercantile occupations in New Jersey. 4. The impact of the proposed recommendations on retailing and the public would represent "too much too soon" and would disrupt every Main Street in New Jersey, impair the distribution of consumer goods in New Jersey, and cause considerable disemployment

It is proper that the cost and other economic consequences of a major change in the existing pattern of retail wage payments should be considered. Even if it were desirable to reach a goal like $1 an hour, the consequences of moving directly and immediately to that goal must be measured-consequences shared by retailers, by employees who would lose their jobs, and by the public who would have to pay that part of the additional cost which could not be made up by disemployment. Attached to this report, as exhibits F and G, are two charts showing the estimated cost of adjusting present retail rates to $1 an hour. Chart F, based on statistics supplied by the Wage-Hour Division, shows the cost of these adjustments for women; chart G shows the cost of the adjustments as they would affect men now paid less than $1 an hour. In this connection it should be noted that it was impossible to tell which of the men listed were minors, but because of the New Jersey equal pay law it is proper to assume that if the minimum wage for women and minors were to be established at $1 an hour, adult males over 21 would be equally affected.

The annual cost for adjusting rates now below $1 an hour would be $7,405,580 for women, $6,103,188 for men, or a total of $13,508,768. This figure is, however, only part of the story. Experience has shown that immediate adjustment of at least this same amount would have to be made in wages which are now at or just above $1 an hour. Thus, the immediate cost becomes $27 million a year.

A longer range cost, but a very real one, would be added by the further adjustment of rates for all retail employees which would have to be made gradually throughout the ensuing year, for it must be remembered that the pattern of wage differentials based on experience, length of service, productivity, and so forth, as well as areas, will have to be maintained. Legislation or mandatory wage orders can temporarily disrupt but cannot destroy established wage relationships and traditional differentials. The fact that less than 15 percent of all retail employees work at the minimum rate paid by their employers must be recognized. The immediate cost of $27 million would in fact cause a longer range cost of over $50 million.

This cost obviously cannot be absorbed by the retailers in New Jersey. It must result in extensive disemployment of the least productive workers and a substantial amount, probably between 75 and 80 percent, of the increased wage costs passed on to the public in the form of higher prices. It is unfortunate that a great deal of the disemployment of the least productive workers would be among older women who now find in retailing one of the few fields of employment available to them.

The threat to the stability of the retail industry by raising the minimum wage rates of women and minors 6633 to 80 percent was not given due consideration by the majority members of the Wage Board. The possibility or probability of the proposed minimum wage causing serious layoffs among such workers and loss of business due to necessary increases in price levels was rejected by the board.

The wage board rejected the consideration of the so-called equal pay law enacted in New Jersey, whereby no employer shall discriminate in any way in the rate or method of payment of wages to any employees because of his or her sex. It is true that any provisions in any minimum wage order affecting women and minors necessarily will affect male employees as well.

5. The decision reached by the wage board for mercantile occupations was reached without adequate and proper consideration given to the limited information furnished or without giving retailers an opportunity to be heard before the final recommendations were formulated, in spite of the fact that a number had asked specifically for this right and in spite of the fact that this right was recommended in writing by the employer members of the board

It is true that on the tripartite wage board employers were represented by three members. However, it was obvious to these three members that in spite of evidence, or facts, or statistics, the other members of the wage board were not impressed and failed to realize or understand the nature of retailing, the differences between various kinds of stores, the differences between stores in different areas, etc., etc. The employer members requested in a written report that they be permitted to invite affected retailers to present testimony to the wage board before a final recommendation was made. Specifically, it was proposed that the personnel vice president of a very large department store be permitted to explain the rate structure within retailing; the differences between jobs of varying degrees of difficulty; the interrelationship of the rate ranges for various jobs. It was felt that this testimony would be very valuable in pointing out the far-reaching effect on all retail employees of a major shift in the minimum wage rate. Unfortunately, the wage board did not permit this testimony.

Prior to the fourth meeting of the wage board, which was held on January 19, a number of communications, telegrams, and letters addressed to the chairman had been received from various parts of New Jersey. Many of these communications asked that the writer be given the opportunity to explain to the wage board the impact and consequences of a minimum wage order of $1 an hour. Many of these communications came from small-town retailers. One of the employer representatives, prior to the final decision by the wage board on its proposed rates, moved that affected parties be given an opportunity to testify in person before the wage board reached any final decision. This motion was seconded by another employer member of the wage board. The chairman stated that he was very distressed by the motion; that he certainly did not want the record to show for public relations reasons that a majority of the wage board had voted against such a proposal. He argued this point at some length and the seconder of the motion, out of deference to the chairman, withdrew his second, so that this very proper suggestion would not appear on the public record of the wage board deliberation. We believe that the affected parties should have been given an opportunity by the wage board to have their say before a wage order was recommended to the commissioner of labor and industry.

6. The recommendations of the present wage board for mercantile occupations are arbitrary, capricious, and were in fact predetermined

The secretary of the board, testifying at times in his capacity as an expert and at other times as secretary, advisor of, and guide to the board and representative of the labor commissioner, announced at the first meeting and at all subsequent meetings, and finally recommended in writing at the fourth meeting that nothing less than $1 an hour could be, in his opinion, justified. The interest of the union members of the wage board who were appointed to represent the employees, even though a relatively small percentage of retail employees in New Jersey are unionized, was obvious. It is best described in the following quotation from an article in the New York Times:

"Union locals in the garment industry were instructed today to seek a general wage increase for 150,000 workers when the Federal minimum wage goes to $1 an hour March 1.

"The mandate was issued by the general executive board of the International Ladies' Garment Workers' Union, AFL, at its semiannual meeting here. David Dubinsky, the union's president, said the wage drive was intended to counteract the 'squeeze' that would be put on the industry's pay structure by the addition of 25 cents an hour to the Government-enforced wage floor.

"He explained it this way: When a worker now earning less than $1 an hour moves up to $1, the spread between his earnings and those of workers making more than $1 will be narrowed. The union proposed to maintain the present balance between jobs by insisting that employers give workers in the over $1 bracket increases proportionate to those the under $1 group will get automatically." The recommendations of the wage board were handled like union negotiations, with the employers in a minority forced to abide by the majority vote. pointed out early in the wage board meetings that the wage board was not a negotiating committee, yet when motions on various parts of the proposed wage

It was

order were taken, the employers were in effect subject to negotiating tactics and were left no alternative except to acquiesce in the best possible package deal. This is not the way a wage board should arrive at its final recommendation. This single alternative-namely, the package deal proposal of the wage board-is far from satisfactory and is utterly unfair to retailers of New Jersey, to those employees who will lose their jobs if the proposal is adopted, and to the public who will have to pay the major share of the ultimate cost.

For all of the foregoing reasons, we believe that the proposed recommendation of the wage board is unfair and unreasonable.

Respectfully submitted.

JANUARY 24, 1956.

APPENDIX XXXIV

PHILIP W. SCHINDEL.
REES T. Dow,

PORTLAND RETAIL TRADE BUREAU, PORTLAND 4, OREG.

Brief of Portland Retail Trade Bureau, re Recommendations of Conference Board for Revision of Wage and Hour Commission, Mercantile Order No. 9

INTRODUCTION

The Portland Retail Trade Bureau, a voluntary, nonprofit association of some 400 individuals and firms engaged in the retail mercantile business in the city of Portland, hereby registers its objections to and protests against the recommendations made by the conference board at its meeting on November 5, 1951, for certain revisions in Mercantile Order No. 9. A conservative estimate of the number of employees of members of the bureau subject to this order is 15,000 persons.

The bureau feels that the same objections which it submitted to the revisions considered at the conference committee meeting on February 9, 1948, are of even greater force today and those objections are therefore here revoiced and made to the presently proposed revisions. Presumably these objections, which were quite voluminous, are available from the commission's files, but if not copies will be furnished on request.

Four years ago our Government was striving desperately to stem the spiral of inflation. Since then we have had Korea and the Nation has embarked on a vast worldwide armament program. We have the Office of Price Stabilization, Salary Stabilization Board, and other agencies, all straining every effort to combat price rises and to prevent a runaway inflation. In addition we have the wartime allocation of basic materials-copper, steel, etc.-and rapidly extending limitations upon the production of many lines of consumer goods. Shortages in some lines are already appearing although armament production is barely getting underway. The real impact of the restrictions on the manufacture of certain lines of consumer goods is expected to begin seriously in the second half of 1952 and from then on. Government experts predict this will continue and intensify until 1955, unless of course the world crisis should in one manner or another be solved, but no one has yet come forward with a solution and none is in prospect.

Retail sales are down nationally from 15 percent to 20 percent, in Oregon, 7 percent. Our State is of course much better off than the heavy industry States of the East and Middle West, but the business trend is definitely downward and retailers are compelled to hold down costs of operation to stay in business. Business failures or retirements from unprofitable business mean loss of jobs.

These are cold, conceded and indisputable facts. We submit that any revision of Order No. 9 which adds to the burdens of retailing must be avoided as much for the welfare of the employees as the merchants, even more for the welfare of the employees, as they will be the first to suffer from economies forced upon retailers by conditions beyond their control. Seeking to add burdens to retail operations at this time impresses us as extremely shortsighted policy on the part of the employee representatives, which cannot but react adversely to the interests of the employees and thus to the public interest.

OBJECTION TO ANY INCREASE IN MINIMUM WAGES

In the Portland area only few employees are affected by the present minimum wage schedules. However, the Bureau speaks for upstate employers, also for those who have only one, two or a few employees. Many of these perforce are governed by these schedules and the proposed increases of over 15 percent would so increase their labor costs as to drive them out of business as the Federal price regulations will not permit them to raise prices correspondingly. Wages are by