Colonel HERR. Well, if you are talking about specifics, I assume that you folks were making up the map, and I imagine that is what you have already presented while I was away. If you want to talk just about the general principle of the application of the Vermilya-Brown decision and, thereby, the Fair Labor Standards Act to leased bases, I am prepared to talk about it. Mr. ELLIOTT. Just a minute. Admiral, you had some classified information that we spoke of your giving to the committee in executive session. Can Colonel Herr proceed with that in your absence? Admiral PARKS. Yes, sir. Between Colonel Herr and Mr. Sellman, I think that they can give all the information that is necessary. However, I would be very happy to come back at another time. Mr. ELLIOTT. Thank you very much, Admiral. Admiral PARKS. Thank you. Colonel HERR. The proposed legislation would eliminate the socalled leased bases from coverage of the Fair Labor Standards Act at all, prospectively and retroactively. These leased bases have a great deal of different character. For instance, the leased bases in Bermuda, about which the Vermilya-Brown case was concerned, as compared with perhaps a concern in Germany or in France or in Spain or in any other country in the world where we have leased bases, the character of the bases varies greatly. However, under VermilyaBrown v. Connell the court was very general in its discussion of this matter. It said that the act applied or did not apply depending upon what Congress had in mind when the act was passed. And they talked about legislative control in rather loose terms, and found that there was some degree of legislative control in Bermuda under the bases that we had there through an agreement with the British sovereignty. They said that in each instance we would have to examine whether or not the Congress had in mind application to that particular type of base, leaving the matter completely in limbo as far as any concrete conclusion could be concerned. One redeeming factor of the Vermilya-Brown decision, which is more or less dictum, is the fact that they did allude to the fact that many Americans were being employed in this construction activity on Bermuda. Now perhaps we could conclude from that that they only wanted the Fair Labor Standards Act to apply in leased bases to the extent that Americans were employed. However, there is no conclusiveness about that statement because it is entirely possible that if Congress intended for us to improve the labor standards wherever we might be, and might have some degree of legislative control and might establish labor standards, the court would decide that we also intend to improve the lot of our foreign indigenous employees. Consequently there is shadow of doubt cast upon all of our activities in all of the leased bases throughout the world. I have pointed out to you that there are varied types of agreements reached with the various governments wherein we have these bases. Some of the agreements specifically are perhaps governing in some degree, stating that we will use only the local labor standards. In others there is a degree of inconclusive finality as to the type of standards that we will use. Accordingly, a court could well say that, although we have agreed to take on certain aspects of the local labor standards, that this does not preclude us from paying the rates and applying the Fair Labor Standards Act to those people working on our base. Accordingly, this legislation would relieve a great deal of doubt as to our position in the operation of our bases and in the construction of any potential bases that we might have in being. That is about as general as I can get. But I believe it covers the problem that we are faced with. In Okinawa we do not think that the Fair Labor Standards Act applies. However, this area of doubt applies to Okinawa as well as to Japan or any other country wherein we have bases being constructed, and perhaps some degree of commerce that would warrant the applicability of the Fair Labor Standards Act. We feel that an uncertainty has been created, an uncertainty that has been in existence for a number of years now, and that we can operate better, we can have better relations with our allies, we will understand the proposition better if it is clarified. This bill clarifies it. We think we need it. We think we need it right now. Mr. CHUDOFF. Mr. Chairman, could I ask one question? Mr. ELIOTT. Yes. Mr. CHUDOFF. Colonel, it appears that both you and Admiral Parks are concerned about the military problems in these various bases, and that as far as you are concerned, as far as the Department of Defense is concerned, as long as we maintain the status quo as far as the military is concerned with the hiring of employees, you have no objection to what we do with the bills as far as private industry is concerned. Is that correct? Colonel HERR. Our client is the Secretary of Defense. Our interest is in preventing defense money from being used in a way that would dissipate it and would not benefit the United States or our purposes. Accordingly, we have no voice one way or the other on the question of the commercial aspects of it. Mr. CHUDOFF. Thank you, Colonel. Mr. ELLIOTT. Do you have any questions? Mr. LANDRUM. No questions. Mr. ELLIOTT. Any questions? Mr. Coon. No questions. Mr. FJARE. No questions. Mr. ELLIOTT. Thank you very much, Colonel Herr. Mr. CHUDOFF. Mr. Chairman, Congressman Roosevelt had to leave, and he asked me to offer for the record a communication addressed to Walter J. Mason, legislative representative of the AFL-CIO, in response to a communication addressed to the Embassy of the Philippines. And the answer is from the Minister-Counselor. Mr. ELLIOTT. Without objection, the letter will be made a part of the record at this point. (The letter referred to follows:) Mr. WALTER J. MASON, EMBASSY OF THE PHILIPPINES, Representative, Legislative Department, American Federation of Labor and Congress of Industrial Organizations, Washington, D. C. My DEAR MR. MASON: In compliance with your request made to Dr. Urbano A. Zafra of this Embassy, I take pleasure in giving hereunder information and data received from the Philippine Government in Manila in connection with the recruitment and employment of Filipino laborers in Guam and Wake Island: 1. Under an exchange of notes between the American Embassy in Manila and the Philippine Department of Foreign Affairs in 1947, the Philippine Government agreed to permit Filipino laborers to be recruited for employment in Guam, Wake, and other islands in the Pacific where the United States Army and Navy have military installations. Approximately 13,000 Filipino laborers are employed in Guam and some 200 in Wake Island. These constitute the bulk of the labor population in these islands. 2. The Filipino laborers were engaged under contract which provided for a minimum wage equivalent to the prevailing Philippine wage rate plus 25 cents overseas differential, free board and lodging, and fringe benefits. 3. Brown-Pacific-Maxon, contractors of United States Navy, employs some 4,000 to 4,500 laborers under various categories; Vinell Reconstruction employs 3,400 in stevedoring and waterfront activities, and also laborers under various categories. Minimum wage paid in both companies, 69 cents per hour, minus 371⁄2 cents deducted for services supplied laborers, leaving a net wage of 311⁄2 cents per hour. 4. United States Air Force employs indirectly over 2,000 Filipinos under different categories with a minimum wage of 53 cents per hour, minus $22 a month for board and lodging. 5. Commercial private firms employ about 3,000, with generally higher wages. 6. The Philippine consulate in Guam reports that "practically no Guamanians are receiving less than the minimum wage provided in the Fair Labor Standards Act of 1938, as amended. I trust the foregoing information may be of value to you. I wish to take this opportunity to thank you and your organization for the stand you took at the hearings this morning on the proposed amendment to the Fair Labor Standards Act of 1938, as amended, on behalf of the Filipino laborers in Guam and Wake Island. Sincerely yours, MAURO CALINGO, P. S.-Enclosed is a copy of Ambassador Romulo's note to the Secretary of State dated February 24, 1956, which was inserted this morning in the records of the hearings of the subcommittee by Congressman Roosevelt. Mr. ELLIOTT. Now, is next Wednesday satisfactory with you, Colonel Herr, to come back and discuss first in executive session the classified information that we have referred to? That is next Wednesday at 10 o'clock. Colonel HERR. Yes, sir. Mr. ELLIOTT. Thereafter the representatives of the State Department will be heard. Now, Mr. Derrickson, do we have other witnesses that we can schedule for Wednesday? Mr. DERRICKSON. Yes, sir. We have a witness, Mr. Munro of the labor union concerned in the Canal Zone, and we have the possibility of Mr. Vaiinupo Ala'ilima, and that is all. Mr. ELLIOTT. Very well. The committee will stand adjourned until 10 o'clock Wednesday, and we will expect to have sessions on Wednesday and Thursday of next week. (Whereupon, at 12 noon, the committee was recessed, to be reconvened at 10 a. m., Wednesday, March 7, 1956.) MINIMUM WAGES IN CERTAIN TERRITORIES, POSSESSIONS, AND OVERSEA AREAS OF THE UNITED STATES WEDNESDAY, MARCH 7, 1956 HOUSE OF REPRESENTATIVES, ON EDUCATION AND LABOR, The subcommittee met at 10 a. m., pursuant to recess, in room 429 of the Old House Office Building, Hon. Carl Elliott (chairman of the subcommittee) presiding. Present: Representatives Elliott, Landrum, Chudoff, Roosevelt, Holt, Coon, and Fjare. Present also: Fred G. Hussey, chief clerk; John O. Graham, minority clerk; Kennedy W. Ward, assistant general counsel; and Russell C. Derrickson, chief investigator. Mr. ELLIOTT. The committee will be in order. The schedule, first, this morning is our hearing in executive session of the Navy Department for the Department of Defense on classified matters relating to the subject of this inquiry. We should be finished with the Navy Department in about how long, Admiral Parks? Admiral PARKS. I think it would not take over a half hour. Mr. ELLIOTT. We should be through by 11 o'clock or maybe a little sooner. And if the other witnesses and other parties in interest can return at that time it will be appreciated by the committee. (Whereupon, the committee proceeded in executive session, which proceedings were not recorded, after which the following ensued:) Mr. ELLIOTT. The committee is now in open session, and we will ask Admiral Parks of the Navy Department to summarize the materials that he has brought, in such a manner as not to violate the classification of those materials. STATEMENT OF REAR ADM. JOEL D. PARKS, DEPUTY CHIEF, BUREAU OF SUPPLIES AND ACCOUNTS, DEPARTMENT OF THE NAVY, ACCOMPANIED BY WILLIAM SELLMAN, COUNSEL, BUREAU OF SUPPLIES AND ACCOUNTS; AND T. L. JONES, LABOR RELATIONS OFFICER, BUREAU OF YARDS AND DOCKS, DEPARTMENT OF THE NAVY-Resumed Admiral PARKS. Mr. Chairman, I have summarized in executive session certain classified information showing how much money has been spent and is contemplated to be spent throughout the world in these leased bases in outlying territories of the United States. As the committee has observed, it amounts to many millions of dollars. The result of the application of the minimum wage law to all these areas would result retrocatively in many more millions. It would be difficult to compute the retrocative liability. However, we will en deavor to give you a rough figure. It will be the best we can compute, and it will be something which you can look at and consider. Now the further liability of the United States in case of the application of this act to these outlying areas would also be very difficult. to compute, the reason being that the wages vary, and the actual decision as to which laborers would be covered is difficult to determine. However, it is self-evident that if we raise the wages of the people who are legally covered, then we must raise the wages of all the others comparatively. We have, as I mentioned before, estimated that our possible liability for the past in Guam is in the neighborhood of $3 million, and that the future liability in case of the application of this act is in the neighborhood of $10 million a year. Throughout the world it would undoubtedly be many, many millions more. I cannot impress upon the committee too strongly that in this time when the appropriations of the Defense Department, I am informed, are the most that this country can spend on defense, any additional expense for which value is not received will result in a lowered defense posture for this Nation. Now the committee asked me to get comparative rates paid by private firms in Guam by civilian occupations. The best information which I could obtain was from our own Civil Service Commission, which has recently made a survey in that area. This report has its limitations, in that it does not cover employees in commercial sales activities. However, it covers those positions which the Civil Service Commission thought might be competitive with United States-appointed positions, and in my opinion it covers the majority of positions which might be covered under this act. It will be noted that the wages paid are all in excess of $1 an hour at the present time. I want to submit that for the record. Mr. ELLIOTT. Without objection, the material will become a part of the record at this point. (The material referred to follows:) Average rates paid by private firms in Guam for certain positions, October 19551 1 The survey covered 46 key positions. Only the 9 positions listed here occurred in enough companies so that their average rates can be released without risk of revealing rates paid by specific companies. Companies contributing salary data were pledged that rates paid by individual companies would not be disclosed. Rates paid to Filipino contract employees are excluded, as are rates reported for positions which do not appear to match the key jobs properly and rates which deviate excessively from the general level for a job. The survey covered primarily white-collar positions comparable to positions in the Federal service. It did not cover enough blue-collar jobs to be representative of blue-collar wage levels. Many white-collar positions excluded because they were not comparable to Federal positions (e. g., salespeople) might be even more important in the local economy than positions surveyed. Descriptions used for the 9 jobs listed are attached. 2 Note that the samples in some cases are so small that some question may be raised about the representative character of the rates found. |