He told Congress that the increases effective September 3, 1961, had no inflationary effect on wage levels generally nor did they have any detrimental effect upon the nationwide level of employment in the industries affected. He pointed out further that employment has in fact risen in those industries brought under the law's coverage since the increase took effect. The report stressed that the most pronounced change in wage structure occurred in "nonmetropolitan areas of the South." In these areas 44 percent of employees in wholesale trade and 27 percent in manufacturing received wage increases to bring their earnings to $1.15 an hour. Employment in covered industries in these areas other than retail trade-increased by 235,000 over a 20-month period. Conclusion A minimum wage of $1.25 is wholly justified immediately. It is evident from studying the two cost-of-living budgets pertinent to the District of Columbia that even $1.25 an hour is not enough to maintain a decent American standard of living, but it is a step in the right direction. The $1.25 minimum wage can be accomplished without curtailment in employment or earning power. The Greater Washington Central Labor Council, AFL-CIO, would not seek a bill the effect of which would curtail employment. We are always highly conscious of and deeply disturbed about any measure that would adversely affect employment in our community. If the bill is to serve the fundamental purpose of assuring at least a minimum level of earnings to low-paid workers, its coverage must be extended as broadly as possible. It is clear that uncovered workers' earnings lag behind those of covered workers. Unless the coverage of this bill remains broad, these uncovered workers will be doomed to continue at depressed wage levels and substandard living conditions. No sound case can be made against minimum wage and hours" protection. It would bring a measure of justice to thousands of workers who have no other recourse. It would stimulate our community's economy without danger of inflation, or a decline in employment. Mr. Chairman, and members of the Senate District of Columbia Committee, I thank you. Mr. MULTER. Your full statement will be made a part of the record. Would you have any objection to eliminating the employees of religious, philanthropic and other eleemosynary institutions? Mr. BOND. We think the community as a whole has to bear the responsibility of all these people and as we assume they are part of our community, so these people would be a part of the people that this bill we hope would support. Mr. MULTER. You have no objection to the students, the handicapped, and aged being excluded? Mr. BOND. We wouldn't want any of the communities excluded. We believe this is a general part of the overall working force inasmuch as from time to time they are trying to bring these people to make them members of our community and certainly with the dignity of earning their own support. Mr. MULTER. Are they presently excluded under the national minimum wage law? Mr. BOND. I am not aware of that. Mr. MULTER. Will you check on that and let us know whether the employees of religious, philanthropic, and eleemosynary institutions and the aged, handicapped, and students, are excluded from the National Minimum Wage Act? Mr. BOND. Yes, we certainly will. (The information referred to and subsequently submitted follows:) GREATER WASHINGTON CENTRAL LABOR COUNCIL, AFL-CIO, Washington D.C., January 10, 1964. Hon. JOHN L. MCMILLAN, Chairman, House District of Columbia Committee, DEAR CONGRESSMAN: I am writing in response to Congressman Abraham Multer's question directed to me at the public hearing on the proposed minimum wage and hours law (H.R. 8423) concerning the exemptions of religious and philanthropic institutions, learners and handicapped workers in the Fair Labor Standards Act as amended. After studying the law, we can find no specific exemption for either religious or philanthropic institutions. We contacted the Wage and Hour, Public Contracts Division of the Department of Labor and were informed that there is no specific exemption in the Fair Labor Standards Act for either religious or philanthropic institutions. For further information on the subject, you may contact Clarence T. Lundquist, Administrator of the Wage and Hour, Public Contracts Division. Learners, apprentices, and handicapped workers are covered in section 14 which gives the Secretary of Labor, to the extent necessary in order to prevent curtailment of opportunities for employment, the power to lower wages for this group. Thank you for the opportunity of expressing our views at the hearing. Respectfully yours, MARTIN J. BOND, Vice President. Mr. MULTER. Thank you very much, gentlemen. It is now 12 o'clock. The House is in session and we will have to recess these hearings. Are there any other witnesses who desire to offer their statements for the record? We will be very happy to have them and the committee will reserve the right to address questions to them with reference to their statements. The record will be kept open to receive any statements from those who desire to submit them. STATEMENT OF JOHN D. COCKRELL, REPRESENTING THE RESTAURANT ASSOCIATION OF METROPOLITAN WASHINGTON Mr. COCKRELL. Mr. Chairman, I would like to submit our statement. I represent the Restaurant Association of Metropolitan Washington. (The statement is as follows:) Mr. Chairman and members of the committee; my name is John D. Cockrell. I am representing the Restaurant Association of Metropolitan Washington here today. This association represents approximately 500 restaurants in the District of Columbia which do 85 percent of the volume of restaurant business here. The application of a $1.25 minimum wage to the restaurant industry will have a greater effect on employment in our industry than in any industry to be covered under this proposal. This is because wages will be increased so drastically in the restaurant industry. Such an increase will have an inflationary effect. we will explain, we honestly believe a 20-percent payroll increase will be necessary with a corresponding increase in prices. Mechanization will have to be increased. As AMEND THE MINIMUM WAGE LAW OF D.C. Automatic cafeterias will replace the service restaurants; the automatic dishwasher will replace human dishwashers. A food cutter is now on the market which makes, for example, coleslaw in 15 minutes with one operator which before had taken two persons 3 hours to make. Beyond this effect, and even more important, borderline employees will be substituted with more productive help. Because of the restaurant industry's ability to pace its work according to the individual's ability to produce, the industry has traditionally filled a need in the American economy by offering employment for the unskilled and somewhat As a result, the industry has always provided jobs for unproductive worker. many hundreds of employees who might otherwise be classified as temporarily unemployable. The restaurant industry provides work for the untrained, the transient, people temporarily out of work, school dropouts, individuals looking for part-time or temporary employment, and students. All too often, If the restaurant industry can't use these people, who can? they will be forced to unemployment compensation, public welfare. These people, because of their lack of productiveness, are invariably paid minimum In the same establishment where a cook will receive $2 or $3 an hour, a wage. dishwasher will receive $1. Rightly or wrongly, this is a fact and we wish to The drastic effects of an application bring it to the attention of the committee. of the $1.25 minimum wage to a restaurant operation is particularly acute in the restaurant industry because our labor cost is already the highest of any major industry and ranges anywhere from 25 to 42 percent of sales. The escultor effect of the $1.25 minimum wage will drive our costs up. The fellow who is making $1.25 now will not be satisfied without an increase when the less skilled The entire scale will have to go up. worker comes up to his level of pay. A large How can restaurant establishments absorb a large percent increase in labor cost when, in fact, its labor cost now averages 35 percent of sales? retailer might well raise prices in view of the fact that he already has an advanLabor cost is simply too great tage. But not so with the restaurant operator. Large retail food stores might increase their prices a factor with restaurants. But no restaurant could by as little as 4 percent if a 40 percent increase in labor costs were forced upon them and still compete with their smaller competitors. survive a 20-percent increase in restaurant prices. In many industries, wage increases can be passed off through increased prices. This is not true, however, in the restaurant industry. The public is far more sensitive to prices of restaurant meals than any other major commodity. The The housewife can reason or explanation is quite simple. There is an immediate economic alternative available to the vast majority of the eating-out public. and will feed her family at home or the working man will carry his lunch if they A 15-percent increase in menu prices feel restaurant meals are priced too high. will unquestionably sharply curtail sales in our industry. Nor will the drop in sales be substantially offset by the fact that competition will also be forced up. Competition, as we said earlier, from the housewife, from her family budget, and from the widespread increase of frozen foods, frozen complete dinners, and other convenience items produced and merchandised on a low-cost, mass-production basis through supermarkets. If prices are forced up to the extent indicated by our evaluation of this law, families will eat at home and workers will return to the lunch pail. The restaurant industry differs from other retail-service industries in another very important respect, i.e., the annual sales volume productivity per employee. The anual sales volume per employee in an average price restaurant is approxi mately $5,800 to $6,600. By comparision, I would like to cite a few examples of annual sales volume per employee of a few other retail service industries. member, our per person sales were, at the highest, only $6,600. Re Number Annual sales Annual sales per employee Number Annual sales Annual sales per employee It is thus understandable that any further disturbance of the cost ratios in relation to sales volume would have a severe effect on the restaurant industry. To force the industry under an extremely difficult handicap. The industry price levels are at a point now where any further price increase would meet with serious customer dissatisfaction and consequent drop in customers and sales. As an example, to cite one such unbalanced cost ratio, percentage labor costs against sales has just about doubled in the past 20 years. Contrast a 30- to 35percent-of-sales labor cost in the restaurant industry with 11.5 percent in retail, 7.2 percent in food stores, 15.3 percent in general merchandise, 14.3 percent in furniture and appliances. These contrasts further accentuate the differences between the restaurant industry and other retail-service industries. I would like to point out that 30 percent of the total restaurant employees receive the majority of their income in the form of tips; and another 10 percent, bus boys and girls, receive part of their income from tip-sharing plans worked out by the employees themselves. Almost 100 percent of all employees receive free meals. Surely, these are worth a considerable amount over a week's time. I suppose all of us would appreciate 10 or 12 or 21 free meals a week. The suggested minimum wage of $1.25 an hour would impose a prohibitive and unnecessary wage increase on our business-not because our wage scale is low, but because an across-the-board wage law would find great difficulty in allowing adequate credit for fringe items which are part of our employees' total wage I speak of tips, laundry, and meals. Add tips to the daily wage, his meals, uniform, laundry, insurance, etc., valued at $3 to $3.50 per day, and you can see that his wage is far above $1.25 but not in cash wages. These men are making This proposal would cover men as well as women. more than the minimum wage and all the law would do would be to cause us to do a great deal of paperwork we have never had to do before. We recommend that the law be left as it is to cover women and minors. There is another aspect of minimum wage about which we are deeply concerned. This is the provision which would require employers to pay all employees covered under the act time and one-half of their regular base pay for all hours worked in excess of 40 weekly. We doubt if there is any industry in the city which will be as drastically affected as the restaurant industry by this provision. This is because the restaurant industry must operate in accordance with the eating habits of the American public. By and large, the public eats three meals a day, 7 days a week. There are many restaurants that stay open 24 hours a day, 7 days a week. This would create a tremendous hardship upon them. The public does not eat all its meals within a 40-hour period, nor even its three daily meals within an 8-hour period. Physical necessity demands that people eat before their own 8-hour day begins and after it ends. As with housewives, the 40-hour workweek for restaurants does not come easily. As a consequence, there are many hours in a normal restaurant operation which are unproductive. During this time many employees by necessity are idle. It would be necessary to put these people on a part-time or split-shift schedule where they may earn even less than now. We ask the committee to keep this fact in mind. Two-thirds of our business, breakfast and dinner, is done before the majority of other workers begin their day or after they have completed it. Any attempt to force the restaurant industry into a 40-hour week will necessarily impose a more difficult burden on our industry than on any other industry. While the 40-hour workweek is desirable, recognition must be given to the fact that certain occupations do not easily adjust to such a standard. Throughout the history of mankind, there has always been an attempt to persuade people to abstain from service work on the Sabbath as a day of rest dedicated to God. It is interesting to note, however, that almost universally, the necessity for some exception has always been made. The necessity for daily eating, both in the home and restaurants, has always been a primary exception in this regard. Can you imagine the difficulty of the housewife complying with the overtime provision of this law? We believe this same consideration should be taken into account by this committee before applying any overtime law to the restaurant industry. To do otherwise, will bring about undesirable, uneconomic split shifts which might well hurt workers more than it will benefit them. Because this problem varies in accordance with the size of the restaurant, the nature of its business, the area of the city in which it is located, and many other factors, it can be handled more readily by the basic laws of economics than by overtime regulation. Therefore, we recommend that this provision of the proposed bill be dropped. Contrary to what some people might want you to believe, that a businessman's sole purpose and concern is making money, is a complete falsehood. If we for a moment thought it possible to pay a minimum rate of $1.25 per hour, and still maintain a healthy business, we would have done it long ago. We, in the restaurant industry, sincerely feel a deep sense of responsibility to the eating-out public. We also feel a deep responsibility to our employees. We must recognize them as individuals, provide them with the best possible working conditions and other benefits, and pay them the highest wages our business will allow commensurate with their individual abilities, and at the same time maintain a healthy business that insures the security of their jobs. STATEMENT OF JOSEPH F. CURTICE, EXECUTIVE SECRETARY, WASHINGTON BUILDING & CONSTRUCTION TRADES COUNCIL Mr. CURTICE. Mr. Chairman, I am Joseph F. Curtice, I have a statement I would like to submit to the committee, sir. Mr. MULTER. It will be made a part of the record. Mr. CURTICE. We are the highest paid in the city but we still have feelings for these people. (The statement is as follows:) Mr. Chairman, my name is Joseph Curtice, executive secretary of the Washington Building & Construction Trades Council. I want to thank the committee for the opportunity to appear here in support of H.R. 8423. I appear here not to plead for a minimum wage to improve the wages of our members. Our members are among the best paid workers in the District of Columbia. I appear here today to plead for the passage of this bill to give a measure of economic justice to the neediest members of our community. In our opinion, enactment of H.R. 8423 is urgently needed at this time to make sure that wage earners in the District of Columbia receive wages that will provide for them at least a minimum standard of health, efficiency, and wellbeing. The special study made in 1962 by the Bureau of Labor Statistics of the U.S. Department of Labor clearly shows that many District wage earners are paid wages that are not adequate to provide such a minimum standard. It is commonly known that the cost of living in the city of Washington, D.C. is one of the highest in the Nation. "The Interim City Worker's Family Budget," last published by the Department of Labor in autumn of 1959, measures the income necessary for a "modest but adequate" standard of living. In autumn of 1959, $6,147 was needed for a District of Columbia worker's family (wife and two children) to enjoy a "modest but adequate" level of American living. Adjusted for subsequent price increases, this budget had increased to $6,426 by May 1963or about $123 a week and over $3 an hour. No one should have to belabor the point that $1.25 an hour is too little to maintain a decent American standard of living. The fact that many companies pay more than the $1.25 an hour should convince other companies that giving decent salaries is a good investment--it decreases labor turnover, increases employee production, safety, health, and morale. Low wages also undermine the stability of industry by leading to labor disputes and work stoppages and contribute to unemployment by reducing the purchasing power of workers. In many cases, low wages must often be supplemented by public or private relief payments and thereby impose a heavy drain on public and community welfare resources. Mr. Chairman and Members of the House District of Columbia Committee, thank you for allowing me to present the views of the Washington Building & Construction Trades Council on this important legislation. STATEMENT OF CURTIS E. McCALIP, JR., REPRESENTING AUTOMOTIVE TRADE ASSOCIATION, NATIONAL CAPITAL AREA Mr. McCALIP. Mr. Chairman, I represent this association and I have a prepared statement I would like to present. Mr. MULTER. It will be made a part of the record at this point. (The statement is as follows:) |