TABLE II.-Percentage of unionization among persons habitually working for

1 Leo Wolman, Ebb and Flow in Trade Unionism, pp. 192-193; National Bureau of Economic Research. Pub. No. 30.

2 Willford I. King, The Wealth and Income of the People of the United States, p. 264.

Interpolated or extrapolated along a straight line.

1 Willford 1. King, The National Income and Its Purchasing Power, pp. 56 and 60, National Bureau of Economic Research, Pub. 15.

Florence Peterson, American Labor Unions, p. 56.

6 United States Survey of Current Business, June 1945, p. 20; July 1945, p. 24. Members of armed forces are excluded.

Rough estimate based upon data taken from the National Industrial Conference Board's Road Map of Industry No. 489 and on an article in the New York Times of Jan. 28, 1946.

TABLE III.-Percentage of Nation's net new spending power going to employees

1 Calculated from data found in reports of the United States Comptroller of the Currency and the United States Director of the Mint.

2 Estimates made by the National Industrial Conference Board.

3 See the report of the National Bureau of Economic Research entitled "The National Income and its Purchasing Power," p. 74.

4 Median.

5 National Industrial Conference Board, National Income in the United States, 1799-1938, pp. 21 and 90. 6 Compiled from data in the United States Survey of Current Business for June 1945, p. 19; February 1946, p. 32; July 1946, p. 5; and in the Statistical Abstract of the United States for 1944-45, p. 403.

? Estimates made by the U. S. Department of Commerce.

Per Cent of Net New Spending Power

70

CHART I

THE WAGE-SALARY SHARE IN NET NEW SPENDING POWER

compared with

THE PERCENTAGE OF ALL EMPLOYEES UNIONIZED

Wage-Salary Shore of

Net New Spending Power

35

30

25

Per Cent of All Employees Unionized

20

15

10

Year

Of course, some minimum wage advocates may be driven to the extreme of arguing that the raising of hourly wage rates itself increases production. However, there is little if any statistical evidence to show that, in the long run, wage changes have much effect upon production rates. In reality, a man's output normally depends primarily upon his health, ability, temperament, and training; upon the equipment with which he works; and, if he belongs to a union, upon the restrictions laid down by that organization.

True, in dull times, raising wage rates sometimes does cause hourly production rates to rise, but this effect is usually very transitory. Within a short time, the workers settle back to their customary paces.

At this point, advocates of minimum-wage legislation are likely to assert that, regardless of abstract arguments and statistical generalizations, the fact remains that thousands of instances can be cited where minimum-wage laws have actually raised the wages of specific individuals. This is undoubtedly true. Does this fact prove invalid the statement that minimum-wage laws do not actually raise wage levels, but merely cause unemployment? By no means. Let us see why not.

The demand for certain types of labor is very inelastic. When this is the case, an increase in wage rates may appear to produce little unemployment. Let us suppose, for example, that the wages of bakers are raised from $1 to $3 per hour, and that, as a result, the price of bread rises from 15 cents to 25 cents per loaf. In a country as prosperous as the United States, the probability is that bread consumption will not decline noticeably; hence few bakers will be discharged. Apparently, the minimum-wage legislation has produced almost no unemployment.

This conclusion is, however, entirely unjustified. Customers are spending a dime more for each loaf of bread purchased. Their incomes have not been increased. Therefore, for every loaf of bread bought, they necessarily spend a dime less for something else probably for some luxury. This decreased deman for luxury goods makes it unnecessary to hire so many workers in those fiel of production. Workers there lose their jobs. The law of supply and demand has not been circumvented. It has worked just as inexorably as ever. Legislating upward the wage rates of the bakers has caused unemployment, reduced the Nation's production total, and made the Nation poorer.

All this merely illustrates the fact that trying to beat the law of supply and demand is a tough assignment-even for a powerful Congress. This economic law states that raising prices reduces the volume of sales-and this principle applies just as fully and just as certainly to labor as it does to anything else that is bought and sold.

An especially pernicious feature of all arbitrary fixing of wage rates either by labor monopolies or government is that, by making wages rigid, the occurrence of depressions is practically guaranteed. Experience amply proves that, from time to time, waves of pessimism sweep the world. Such waves produce sharp contractions in the volume of bank credit, and thereby pull down the ability of the people to buy goods. Thus table III, column B, shows that, during the period 1929 to 1932, our volume of circulating medium shrank by nearly $8,000,000,000. This shrinkage was the impelling force behind the downward spiral which reduced net new spending power from $79,000,000,000 in 1929 to $42,000,000,000 in 1932. If, in 1929, when spending power began to decline, wage rates had fallen correspondingly, unemployment would not have occurred, and the great depression of the 1930's would never have materialized. But wage rates were kept rigid by labor monopolies reinforced by Government. Minimum wage laws contributed to this rigidity, and were, therefore, in part responsible for the depression.

Sooner or later, the optimism now generating the 1948 boom will give way to pessimism. If left alone, bank credit will contract. Demand will shrink. When this happens, unless wage rates fall promptly, another depression will be ushered in. And every minimum wage law on the statutes will make it more certain and

more severe.

When our Nation was founded, it was dedicated to the principle of freedom. One of the freedoms most important to the average individual is freedom of contract-the right to buy and sell on the most advantageous terms obtainable. Any law limiting a man's right to dispose of his labor on such terms as he sees fit constitutes a serious infringement on his liberty. Minimum wage laws are suited to fascist states-not to liberty-loving America.

Today, the nations of Europe furnish a clear demonstration of the pitiable results which follow the destruction of the economic freedom of the individual. It is still true that "that government governs best which governs least." Europeans nations have regulated their people into destitution. Why do we wish to follow their example?

In conclusion, I respectfully urge you to recommend the repeal of all Federal wage-fixing laws now on the statute books, and the enactment of no new ones to take their places. Such action is desirable because:

1. Minimum wage laws injure consumers by making the goods that they buy 2. Minimum wage laws injure the taxpayers by making them support an army of persons who ought to be supporting themselves.

unnecessarily scarce and dear.

3. Minimum wage laws throw people out of work, pauperize them, destroy their self-respect, and make them miserable.

4. Minimum wage laws help to bring on depressions and thus to impoverish the Nation.

5. Last, but not least, minimum wage laws take away from the individual that liberty which our Nation was founded to protect.

As I see it, your committee's duty is to strive to safeguard the American people against all of these evils.

STATEMENT OF JOSEPH A. BEIRNE, PRESIDENT OF THE COMMUNICATIONS WORKERS OF AMERICA (CWA), REGARDING CHANGES IN THE FAIR LABOR STANDARDS ACT The Communications Workers of America (hereinafter referred to as CWA) is the successor to the National Federation of Telephone Workers (NFTW) and is the dominant labor union in the field of telephonic communication. Its divisions have an aggregate membership in excess of 168,000 and hold collective-bargaining contracts for more than 228,000 telephone workers.

The membership of CWA extends throughout the entire country and includes a wide variety of persons and jobs in all phases of the telephone industry. Its activities are not restricted to the larger companies which comprise the industrial empire known as the American Telephone & Telegraph Co. (or the Bell system) but extend to many of the independent companies, large and small, which share the 10 percent of the national telephone business which is not enjoyed by the Bell system.

The persons who make up our union are telephone operators, in both urban centers and widely scattered rural areas, telephone line construction and repairmen, inside plant craftsmen, commercial and accounting white-collar workers, building maintenance and cafeteria workers, all types of electrical-equipmentmanufacturing employees, and research and engineering workers. Approximately 60 percent of our members are women.

We understand that this committee is presently exploring suggested changes in the Fair Labor Standards Act with the object of determining whether to recommend amendments which may appear necessary and desirable to the second session of the Eightieth Congress. In addition to recommending two amendments to the present Fair Labor Standards Act, we should like to offer some critical comments regarding S. 2386, a bill with which we completely disagree. We suggest for your consideration the following two amendments to the Fair Labor Standards Act, namely: (1) That the minimum wage be increased to 75 cents per hour; and (2) that the present exemption from overtime and minimum wage provisions for telephone switchboard operators employed in a public telephone exchange which has less than 500 stations be modified to exempt only switchboard operators employed in a public telephone exchange by an employer who directly serves not more than 300 stations.

MINIMUM WAGE

It is, we believe, apparent that the current 40-cent minimum is wholly inadequate under present economic conditions. Protection and improvement of the living standards of lower paid workers make a higher minimum wage imperative.

Adequate data either have been or will be furnished the committee from governmental and other sources on the general issue of substandard wages and the effect of any increase in minimum standards upon our total economy. The CWA believes, however, that it should point out to the committee the wage situation in the telephone industry.

As of December 1947, there were some 748,000 workers in the telephone industry, including manufacturing and research workers employed by the Western Electric Co. and the Bell Laboratories, respectively. These workers are departmentally distributed as follows: