The CHAIRMAN. I mean stamped on by the manufacturer? Mr. MAGUIRE. No, the place for marking the price is placed on the package by the manufacturer, but the employer or the store management, of course, stamps the price. The CHAIRMAN. What I had in mind was this: Perhaps I did not make myself clear but they were not items that were nationally advertised and the manufacturers' price was set. A lot of packages have stamped on there what it sells for. Mr. MAGUIRE. Yes, sir. The CHAIRMAN. But there is no manufacturers' price advertised price on there? Mr. MAGUIRE. No. On this one item for example, I might point out that this is the Woolworth Companies own item itself, and it prepares its own packaging, and of course, it has its own name on there. I might make this further addition, that these prices that I mentioned to the subcommittee do not include the matter of sales tax. Mr. LIPPMAN. They would not be fair-trade items where the manufacturers control the price by contract. Mr. SUFFRIDGE. We would have brought in here many dresses and items of that nature that sell at the same price nationally, and we checked with one specialty store and found that certain dresses that they had made or that they bought nationally were priced nationally. While the dress would sell for, these inexpensive dresses as they would be termed, for say $25 in one city, would sell for $25 in the other. However, the employee would receive perhaps 50 percent less, or 30 percent less than an employee in another city. So far as we are concerned, we want to point our that the workman or the worker in these areas and this would not apply to just these seven stores-it is our opinion that they would apply to every store, or any city where Woolworth operates or any of these other chains. But the workers in that particular store would be paying double the price for these items that the worker in the San Francisco store would be paying as an example, and we just wanted to bring out that this national pricing is there, and our minimum wage nationally in these large chains actually is consistent with the idea of national pricing. In fact, many of them are coming to national payrolls, and many of them are paid out of New York City by check no matter where they work throughout the United States. If there is no further question on that, I will continue. During the 10-year period 1945-55, seven giant variety chains increased average store sales by $151,123, nearly 50 percent. (See appendix III, sec. 3, p. 18.) During the same period 1945-55, seven large and well-known multistate chain variety firms expanded their operations by opening a combined total of 228 new retail units. (See appendix III, sec. 4, p. 19.) During 1954, 33 specialty store corporations, reporting to SEC, did a total business of $978 million or an average volume of $29.6 million. Moreover, only 1 firm did less than $5 million business and only 3 reported doing less than $10 million volume. The three topmost volume pacers were Lerner Stores Corp., with $151 million; Grayson-Robinson Stores, Inc., with $90 million, and Lane Bryant, Inc., with $60 million. Five popular and prosperous chain specialty companies added an aggregate total of 303 new individual outlets during the same 10-year period. (See appendix III, sec. 5, p. 19.) The foregoing is not exhaustive but merely illustrates the increasing size and type of operations in the retail field. These stores and others of like character have a more than significant impact on interstate commerce. They operate through an interstate network of numerous officials and local management exists only for the purpose of carrying out the basic policies formulated in the central office of the particular company involved. These tremendous chain and independent enterprises bear as much relationship to the corner retail store as the present high-powered motor car resembles the horse and buggy. In no realistic sense can any of the large retail establishments be regarded as anything but the expression and extension of tremendous corporate power. In a recent analysis of retail establishments for the Senate Subcommittee on Labor, Dr. Fred Blum of the University of Minnesota, pointed out with respect to the ability of the retail trade to pay higher wages that a limitation of our inquiry to a mechanical static comparison of profits and wages must, from the outset, be rejected as an inadequate approach to the problem. There may also be cases in which a firm is simply not able to pay higher wages because its profits would be reduced to such an extent that it would have to go out of business. However, we have not found any evidence that this would be true for any significant number of firms in retailing. Quite the contrary, data presented, have shown that the largest and strongest firms are among the low-wage firms. The marginal firm in terms of profits will not be directly affected by the proposed extension of coverage to retail trade. He concluded that under extreme assumptions the maximum conceivable adjustment is estimated to amount to an increase in the price of retail goods of less than one-half of 1 percent. (See appendix IV, p. 19.) Insofar as ability to pay is concerned, the National City Bank of New York in its Monthly Letter for April 1956 stated that 25 of the largest grocery chain companies reported a total net income of over $94.5 million in 1955, or nearly 11 percent above the 1954 level. In Moreover, the 54 largest variety chain companies reported total net income of over $144 million, a 29 percent gain over 1954. addition, total net income of 49 department and specialty stores in 1955 moved forward better than 16 percent to $176 million. (See appendix V, p. 20.) In fact, the Nation's 20 biggest retailers had a notably successful year in 1955. In its recent June 9 issue, Business Week points to a "long list of pluses" as telling this "important story for the big retailers.” Business Week points out: Every company among the top 20 scored an increase in sales. All but two pulled up their profits. Prosperity and expansion were the key words for the improved sales picture. Thus, a May Department Stores Co. official noted that the average sales slip was up last year. And especially in the food field, expansion was the order of the day. Growth by acquisition, as was pointed out previously, continued unabated, bringing one newcomer to the list-Winn-Dixie Stores of Jacksonville, Fla. New purchases and mergers also explained Colonial Stores jump from 20th place in 1954 to 16th in 1955. A glance at the Business Week table given below shows that in most instances profit gains are substantial when compared with sales increases. The 20 biggest retailers: The 1955 score (figures in fiscal year) Mr. SUFFRIDGE. With respect to the present act's test of ability to pay without reducing employment, Dr. Blum said that retail profits are 14 to 19 percent of gross margins. He declared in his testimony "it does not make sense" to quote profits as a percent of sales, which yields a very low profit figure, and then quote wages as a percentage of gross margins which yields a high figure. The base used should be the same in both instances, he said. According to Dr. Blum's study, if all retail firms, excluding eating and drinking establishments, with sales of more than $500,000 those for which we seek coverage were to be effectively covered under the Fair Labor Standards Act, only 2.2 percent of such firms would be included. Yet, in 1948, this 2.2 percent accounted for 33.4 percent of retail sales and also accounted for 36.5 percent of such retail employment. The percentages given do not apply to eating and drinking places. As you know, the bills we are supporting do not include such enterprises. (See appendix VI, p. 26.) Although it is conceded that average hourly earnings in the retail industry trail behind those of most other industries, the argument that "regularity of employment" in the retail trade insures more income than is the case in some industries with higher hourly earnings is entirely without merit. In 1954 annual earnings in the retail industry were lower than in any other industry group with the exception of the service industries, Labor Department figures indicate. In fact, in some industries characterized by seasonal unemployment, the average annual earnings still are higher than those in the low-wage retail industry. (See appendix VII, p. 27.) In a report submitted last year to the Senate Labor Subcommittee, the Labor Department estimated that there are about 1,690,000 workers employed in multistate retail establishments and of that number about 425,000 or 25 percent are earning less than $1 an hour. Dr. Blum in his testimony this year before the same subcommittee estimated that extension of the act would affect 30 percent of the employees of interstate chains. Extension to independent stores with more than $500,000 annual sales would reach about the same proportion. Coupling these analyses, we believe extension would involve some 750,000 to 850,000 retail workers now earning less than $1 an hour. In summation, I would like to emphasize that retail business today is dominated by big business and no basic reason exists for according these large independent and multistate chain enterprises the same solicitousness and economic concern that Congress manifests for the local corner retail store. There is no justification for treating these enterprises differently from other economic enterprises affecting interstate commerce. Indeed, the size of these enterprises, the volume of their business, the number of employees, the sheer magnitude of their operations, dwarf many industries about which no question exists respecting coverage. Sincerity in meeting the legislative purposes, as stated in the Federal wage-and-hour law, requires that the same protection be given the workers in the retail field that Congress now affords to employees in other industries affecting commerce, especially when the need is so great. May I recall that extension of coverage of the Fair Labor Standards Act has been consistently recommended by both the Democratic and Republican administrations during the past 10 years. It is obvious, therefore, that the extension of coverage is outside the realm of being a political issue. In closing, I would like to thank the chairman and the members of the committee for the privilege of appearing here and being given the opportunity to present the views of the Retail Clerks International Association on this most important matter. (The appendixes to Mr. Suffridge's statement are as follows [supplementary statement, p. 82]:) · APPENDIX I TABLE 1.-State minimum wage laws and orders applying to retail trade, by State, 1 Minnesota is omitted since State supreme court has nullified wage order. Rates are for experienced workers. Not all the hourly rates given in table are actually found in State laws and orders; some are computed from weekly or daily rates specified in State laws and orders. 3 Some States define a minor as any person under 21, others as any person under 18. Order approved by State labor commissioner on Apr. 12, 1956, becomes effective within 180 days thereafter. Order becomes effective in October 19:6. Law held unconstitutional pending appeal. 1 Employed by employers of 4 or more. $30 for work week of 36 to 44 hours. $30 for workweek of 36 to 40 hours. 10 Wage fixed in 1915 law was $1.25 for a 9-hour day. A 1943 amendment made the rate applicable to an 8-hour day. Source: U. S. Department of Labor: Wage and Hour and Public Contracts Divisions and Women's Bureau. APPENDIX II. In 1940 sales of supermarkets operating in this country were 24 percent of all grocery sales; in 1955 they were 55.1 percent; an increase of 130 percent. Supermarket sales had increased from $2 billion in 1940 to $20.4 in 1955, an increase of 902 percent. TABLE 2.-Rise in supers' share of grocery sales Source: U. S. Department of Commerce and Super Market Merchandising, February 1956, p. 39. |