JULY 6, 1973.-Ordered to be printed

Filed under authority of the order of the Senate of June 30, 1973

Mr. WILLIAMS, from the Committee on Labor and Public Welfare, submitted the following

REPORT

together with

MINORITY VIEWS

[To accompany S. 1861]

The Committee on Labor and Public Welfare, to which was referred the bill (S. 1861) to amend the Fair Labor Standards Act of 1938, as amended, to extend its protection to additional employees, to raise the minimum wage to $2.20 an hour, and for other purposes, having considered the same, reports favorably thereon with amendments, and recommends that the bill as amended do pass.

SUMMARY

The present minimum wage of $1.60 an hour was established by amendments to the Fair Labor Standards Act enacted in 1966. For most workers the $1.60 rate went into effect on February 1, 1968 (an interim raise from $1.25 to $1.40 was effective February 1, 1967). For newly covered non-farmworkers (employees of medium-size retail and service establishments and certain state and local government employees), the rate increased from $1.00 per hour effective February 1, 1967, by 15¢ per hour per year, until the $1.60 rate was reached February 1, 1971. For farmworkers, the rate of $1.00 was established effective. February 1, 1967, with increases of 15¢ per year until the present rate of $1.30 was reached, effective February 1, 1969.

The purpose of this bill, as amended by the Committee, is to incorporate into the Fair Labor Standards Act a breadth of coverage and a minimum wage level sufficient to bring the Act closer than at any

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time in its 35-year history to meeting its basic, stated objective the elimination of "labor conditions detrimental to the maintenance of the minimum standard of living necessary for the health, efficiency and general well being of workers."

The bill seeks to achieve this purpose by extending the law beyond the 47 million currently covered employees to almost 7 million additional workers employed in retail and service industries, Federal, State and local government activities, on farms and as domestics in private homes, and by increasing the minimum wage in steps to $2.20 an hour as follows:

The Committee bill extends minimum wage coverage to the following additional workers:

ESTIMATED NUMBER OF NONSUPERVISORY EMPLOYEES BROUGHT UNDER THE MINIMUM WAGE PROVISIONS OF THE FAIR LABOR STANDARDS ACT BY S. 1861, UNITED STATES

Note: Estimates exclude 2,069,000 outside salesmen and relate to May 1972 for agriculture, October 1972 for education and September 1972 for all other industries.

Despite this added coverage, several large segments of the work force will continue to be exempt from the minimum wage provisions of the Act. For example, at present only 3 percent of the Nation's farms are covered by the Fair Labor Standards Act. Under the Committee bill between 90 and 95 percent of all the Nation's farms will remain uncovered by the Act. The only farms covered will continue to be the relatively large users of agricultural labor. The small family farm will continue to be exempt from coverage under the Act.

The majority of retail and service establishments will also remain exempt under the provisions of S. 1861. Estimates furnished the Committee indicate that at least 1 million retail and service establishments

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will continue to remain exempt from coverage, including all so-called "Mom and Pop" stores.

COMMITTEE CONSIDERATION OF LEGISLATION

The pending bill is the result of long and careful study. Lengthy hearings were held on similar legislation in 1971 and 1972. The Senate gave extensive consideration to amending the Fair Labor Standards Act including a debate on the floor for four days. Seventeen amendments were considered by the Senate. The bill was passed by a final vote of 65 to 27 on July 20, 1972. The results of these debates and votes on the amendments were available to the Committee in its consideration of this year's legislation. The House refused to go to conference and consequently no bill was enacted. The Subcommittee on Labor held public hearings on two bills (S. 1861 and S. 1725) for three days on June 6, 7, and 8, 1973. Testimony was received from many witnesses, including the Secretary of Labor Peter J. Brennan and witnesses from labor and industry. In addition, many new and updated statements, letters and additional pieces of written material were submitted and included in the official hearing record.

The subcommittee met in executive session for three days, concluding on June 20, 1973, and reported S. 1861 to the full committee. After 2 days of executive sessions, the Committee on Labor and Public Welfare ordered S. 1861 reported to the Senate on June 27, 1973. The committee was aided, and the process of considering the bills greatly expedited, by the fact that similar legislation had been considered in the last Congress. Additionally, the committee was able to consider S. 1861 in light of the House debates this year and with the knowledge of the provisions of the House minimum wage bill, H.R. 7935, which was passed by the House on June 6, 1973.

BACKGROUND

The most pressing question which confronted the first pioneers in America was how they were going to get enough to eat.

Today after more than 350 years, this question is once again foremost in the minds of many Americans. This present concern reflects both spiralling inflation and lagging wages.

With the shift from an agricultural to an industrial economy in the early 1800's, there was widespread acceptance of the idea that every American could find economic opportunities suitable to his talents and his needs. Even during the periods of recession the belief was widespread that no man need want with such abundant opportunities as this country offered all of its citizens.

At the turn of the Twentieth Century, however, there was widespread evidence that a laissez-faire economy could not be depended upon to create a decent way of life for all. State and national governments initiated actions which reflected a growing belief that not every person, if left entirely to his own devices, would share in the national wealth according to his merits and industry.

So, laws were enacted by States and by the Federal Government which were designed to give direction to our economic life and which curbed the economic freedom of some elements in the community.

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Laws were enacted requiring factory owners to install safeguards which would protect their workers from industrial accidents. Other laws regulated the hours, and sometimes the wages, of women and . children in industry. The principle of workmen's compensation was widely accepted and was implemented by legislation. Laws and regulations were developed to check the spread of occupational diseases. Sanitary standards were established for factories. Building codes were adopted as safeguards for persons living in tenements. Health regulations were established for the manufacture and handling of food products. Working hours in transportation were shortened. The rights of workers to organize and to bargain collectively with their employers were recognized. Insurance against unemployment and against want in old age was accepted as necessary for industrial workers.

In this climate of growing concern for those elements in the community which had to be assisted if they were to be treated fairly, the Fair Labor Standards Act represents one of our fundamental efforts to direct economic forces into socially desirable channels. It was designed to protect workers from poverty by fixing a floor below which wages could not fall, to discourage excessively long hours of work through requiring premium payments for overtime work, and to outlaw oppressive child labor in industry. It was intended to discourage competition among employers through substandard wages and excessively long hours. It was expected that it would add to buying power by broadening the base of people with money to spend and thus benefit business and the economy in general. The desirability of this effort was emphasized by President Roosevelt, in his Second Inaugural Address:

I see one-third of a nation ill-housed, ill-clad, ill-nourished *** The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.

and in his message to the Seventy-Fifth Congress, first session, requesting legislation to establish fair labor standards:

All but the hopelessly reactionary will agree that to conserve our primary resources of manpower, Government must have some control over maximum hours, minimum wages, the evil of child labor, and the exploitation of unorganized labor.

The Fair Labor Standards Act of 1938 took effect on October 24, 1938. The Act is frequently referred to as a "depression measure" because many of its advocates stressed its importance as a tool, to prop up the economy after the depression. During periods of recession, the law is looked to as a support for wages; during periods of prosperity the law protects the low wage worker who finds himself frozen into a pocket of low wages. At all times, it protects fair-minded employers against those who compete unfairly by paying substandard wages.

The original Act provided for a minimum wage of 25 cents an hour, to be increased to 30 cents at the end of a year, and to 40 cents by 1945. Industry committees were authorized to recommend rates above 30

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cents prior to October 1945. All employees subject to the minimum wage were required to be paid at least 40 cents an hour by October 24,

1945.

Actually, by virtue of the action of the industry committees, & minimum wage of 40 cents was applicable to all workers covered by the Act on July 1944, more than a year before the date set by the Fair Labor Standards Act of 1938.

When the Fair Labor Standards Act of 1938 was originally passed, Puerto Rico and the Virgin Islands were given identical treatment with the mainland. Special industry committees were established for all industries on the mainland and the islands to "achieve as rapidly as economically feasible" the statutory minimum which was to go into effect not later than October 1945.

In 1940, Congress adopted an amendment to the act allowing for lower rates on the islands than on the mainland. Although the 1949 Amendments removed the industry committees for mainland industries, the procedure was, and has been maintained for the islands.

The FLSA Amendments of 1949 increased the minimum wage from 40 cents to 75 cents an hour. During World War II and the postwar period, many employees realized significant gains in purchasing power. However, just as today, the minimum wage worker saw his buying power eroded. An increase in the minimum wage from 40 cents to 75 cents an hour, an increase of 872 percent, reflected the recognition by the Congress of the total inadequacy of the 40 cents rate.

During Congressional consideration of amendments to the FLSA, culminating in the 1949 amendments to the Fair Labor Standards Act, bills were introduced to extend the scope of coverage of the Act. At that time it was believed that it would not be feasible to simultaneously increase the minimum wage and expand coverage. Although there was considerable evidence that both were essential if the Act were. to accomplish its basic purposes, the Congress opted for an increase in the level of the minimum wage and large numbers of low-wage workers remained outside the scope of the Act.

By 1955, the buying power of the minimum wage of 75 cents an hour had been severely reduced by the inflation which followed the outbreak of the Korean War. Bills were introduced to raise the level of the minimum wage and to expand the coverage of the Act. The Congress elected to raise the minimum wage to $1.00 an hour, a 331⁄2percent increase but once again deferred consideration of the question of coverage. In the 1961 amendments the Congress reflected the growing recognition that both an increase in the minimum wage and extension of coverage were essential if subtandard living conditions were to be eliminated. The minimum wage was raised to $1.25 an hour and an additional 32 million workers, principally in the retail and construction industries, were brought under the Act for the first time.

The effects of this dual approach to improving the Fair Labor Standards Act were closely studied by the Department of Labor. The studies clearly showed that the expansion of coverage under the Act was of critical importance in reducing poverty among the working poor. The 1961 amendments also showed that the economy could benefit from an increase in the minimum wage and an expansion of coverage.