minimum should there be no wage order. S. 2386, however, changes radically the existing provisions for the promulgation of wage orders and the standards which are to apply. It eliminates the existing policy of the act to reach "as rapidly as economically possible without substantially curtailing employment, the objective of a universal minimum wage" of the highest figure specified in the act. Instead it permits a committee to recommend a higher rate than 60 cents only if it finds "special conditions" or "economic changes" which have occurred since the enactment which makes 60 cents inadequate. Moreover, the new standards which are prescribed for the committee would be difficult to apply to justify a higher rate.

Encouragement is given to the establishment of regional differentials. This overturns a fundamental aspect of the existing law and resurrects a principle which is inconsistent with the basic concept of minimum-wage legislation and which has been widely criticized by those who support the principle of Federal minimum-wage legislation.

The Administrator of the Wage and Hour Division has commented on the administrative complications which the new industry committee procedure would entail, and my own experience in the Department of Labor shows that his criticism is fully justified. The wage-order procedure now in the act has operated very successfully over the past 10 years. Not a single wage order was found defective by any of the courts, all of whom have agreed that the requirements of due process of law were fully met in each case. Although a large number of wage orders were promulgated over the first 7 years of the act's existence, a very, very small number were even challenged in the courts. Industry committees found the standards definite and readily applicable. The Supreme Court unanimously determined that:

"the standards set up for the guidance of the administrative agency, the procedure which it is directed to follow, and the record of its action which is required by the statute to be kept * * * are such that Congress, the courts, and the public can ascertain, whether the agency has conformed to the standards which Congress has prescribed Opp Cotton Mills v. Administrator (312 U. S.

126, 144).

*

The standards which section 8, as amended, would introduce for the industry committee and the Administrator are radically different. Section 8 (d) (4) and (5) are new factors which must be considered. By subsection 4 the committee is told to determine whether it should make wage classifications in an industry or determine a lower minimum rate because of the minimum amount "necessary to maintain * * single workers" without dependents or because of "variations in the number of wage earners and dependents in a family." In addition to the difficulty of applying this factor, it is not clear whether it is suggested that a different minimum rate is to be set for the single worker from that set for the wage earner with dependents, or whether it is intended that the existence of a large number of single workers in an industry would mean that the minimum wage was to be adjusted down to their needs without regard to the needs of those workers who had families. It would be difficult to justify Federal legislation which encourages the employment of single workers and discourages giving jobs to those who have families lest the employment of the latter cause the minimum wage to rise. If this act is to provide wages adequate to the maintenance of minimum standards necessary for health, efficiency, and general well-being of workers, as the policy states it is, the minimum must be adequate not only for those who happen to have the most meagre needs. Besides, as the Administrator and others have testified, even the 70-cent top set by S. 2386 is inadequate under present-day conditions to maintain a single worker without dependents.

Section 8 (d) (5) says that the committee should consider in prescribing minimum rates "the value of the service or class of service rendered." We think this would be a most unfortunate change. We have come a long way from the time when labor was regarded as a commodity on which a value could be fixed, in the same way in which a price is fixed on a bushel of wheat. As the Supreme Court said, the Fair Labor Standards Act does not deal "with mere chattels or articles of trade." Tennessee Coal Co. v. Muscoda (321 U. S. 590, 597).

It would be unfortunate to interject the problem of "value" into the considerations of the industry committee. Everyone knows the complexities and the endless litigation which has attended the determination of what is fair "value" in public utility rates cases, or for goods under price control statutes. Legislators, commissions, and the courts have all been seeking in recent years to find a way out of the morass in which the necessity for determining what is a fair

or reasonable value for public services or goods has placed them. It is no exaggeration to say that the conditions which this act is meant to prevent will have arrived long before any industry committee can determine what the "value of the service" is, and before the litigation over it will have been concluded. How is the value of the loom tender to be determined? What is the relation of the value of his services to the wage which an automobile mechanic receives? Is it to be fixed on the basis of what an employer can get another to work for if there were no minimum wage legislation? S. 2386 offers no guides, and none are to be found elsewhere as far as I know.

This section seems to be a carry-over from provisions which were included in State minimum-wage laws at a time when it was thought that such standards were necessary to save the constitutionality of the statutes. But this idea which was suggested by the Supreme Court in the much-criticized Adkins case was overruled 12 years ago by the Supreme Court in West Coast Hotel Co. v. Parrish (300 U. S. 379), and it has never been since suggested that this factor was necessary as a matter of law. I also think that it has no merit as a matter of economics or public policy.

This requirement would seem to be irrelevant in determining how to achieve the objectives of the act because the so-called value of the services, whatever it may mean, is not germane to the question of what are minimum standards of living necessary for the health, efficiency, and well-being of workers. In times of depression, if the test is what the employer can get his labor for in a free and open market in which there is a surplus of labor, the value would, of course, be below the minimum standards which the act seeks to impose. It is precisely because the "value" is too low that minimum wage legislation is necessary. The introduction of this test would be a step backward in social progress, and it could have no other effect but to frustrate the full achievement of the objectives of the act.

There is another important respect in which the changes in the wage order standards would interfere with the attainment of the objectives of the legislation. Section 8, as amended, would encourage the creation of classifications in wage rates on the basis of geographical differentials. This issue was thoroughly discussed when the Fair Labor Standards Act was originally passed. The act provided that differentials could not be made solely on a regional basis, but if transportation costs, costs of living and production costs warranted, geographical differentials could be created. It is very significant that not a single industry committee ever recommended a geographical classification of minimum wage rates. The first and most important wage order which was before the Supreme Court in the Opp Cotton Mills case involved the question as to whether geographical classifications were necessary to meet the requirements of the act. The conclusions of both the industry committee and the Administrator were that neither differences of transportation costs between the North and South, or of costs of living or of production costs required geographical classifications. The Supreme Court was unanimous in believing that the economic data "amply supported" the findings that no regional differentials were necessary.

It is not clear what the change in language in section 8 (d) with respect to regional "economic differences" is intended to accomplish. In the statement by Senator Ball explaining the changes made by S. 2386, the language that industry committees are to give "due consideration to regional economic factors" seems to be emphasized, and it is stated that the changes "permit regional classifications within industries if the industry committee finds 'that as a result of regional economic differences' the establishment of uniform minimum wage rate would create substantial competitive inequalities among different branches of an industry." So far as I know, there has been no evidence that the absence of regional differentials in wage orders has adversely affected any legitimate business interest in any part of the country. I think it has retarded the spread of the evil of "runaway shops." It has helped to effectuate the policy of the act to prevent the spread of substandard labor conditions through the channels of interstate commerce. It has helped to eliminate unfair methods of competition in commerce. Now to change the act to encourage regional differentials would be to ignore the lessons which 10 years of experience with wage orders has taught. The change would, in our opinion, be a distinct step backward.

S. 2062 retains the existing wage-order procedure and standards which have proved useful, workable, and effective. We are strongly in favor of those provisions.

IV

Thus far I have tried to deal with the major changes which S. 2386 would introduce. Time does not permit a full discussion of all the amendments, but I should like to speak briefly of some of the others and would be glad to answer questions concerning any which I have not mentioned.

S. 2386 does make several changes which, in our opinion, are desirable. Like S. 2062, it strengthens the child-labor provisions. It also makes uniform the child-labor provisions of the Walsh-Healey Act and the Fair Labor Standards Act. This is an improvement. However, S. 2386, by the change in section 3 (j), permits child labor in establishments which are exempted from coverage because of the number of employees or because the employer is not directly engaged in production, etc. If child labor is an evil, it should be eradicated to the full extent which the commerce power permits.

S. 2062 proposes a limitation upon child labor which is absent from S. 2386 and which, in our opinion, is desirable. It would remove the exemption from the child-labor provisions now in section 13 (c) so far as it applies to the industrial farm. As the Administrator has pointed out, the greatest child-labor exploitation in the United States at the present time is probably in the field of industrialized agriculture. The industrialized farm is not much different from any other type of industrial establishment. Child labor is a recognized evil in both places. S. 2062 provides an easily applied test to remedy this. A farm which employs more than eight employees would not be permitted to secure exemption from the child-labor provisions. We endorse that change.

The change in 13 (b) (1), which both bills would adopt, will help remove a confusing and unjustifiable situation which exists because of alleged conflicts between the Motor Carrier Act and the Fair Labor Standards Act. A motorcarrier employee will be exempted only to the extent that the Interstate Commerce Commission has exercised its power to establish qualifications and maximum hours of service for him.

There are, however, certain other changes which S. 2386 would bring about which seem inadvisable to us. Section 14 (a) is amended for the stated purpose of encouraging the employment of learners, but the change exempts all employees, whether experienced or not, from the minimum-wage provisions during the first 160 hours of employment. If the desire is to take care of learners, the existing provisions of section 14 accomplish that purpose. The change would permit an unscrupulous employer to create a rapid turn-over of employees to secure freedom from the minimum wage.

My own experience with the problems of enforcing the Walsh-Healey Act leads me to feel that the establishment of a 2-year statute of limitations is undesirable. In times of heavy Government contract work, it is difficult to make current inspections of all the contractors. Two years is a shorter period than applies in the case of other Federal statutes of limitation. Moreover, the Government contractor is given 6 years in which he may sue in the Court of Claims for breach of the contract by the Government. See 28 United States Code, section 262. Furthermore, this shortening of the period of limitation is made retroactive. It would bar all existing claims more than 2 years old in which no proceeding has as yet been brought. If enacted, it will provide a windfall to a particular group of employers who have violated the act. A retroactive change in a statute of limitation is generally inadvisable as a matter of principle, and usually raises serious constitutional questions.

Since I was for a considerable time one of the lawyers engaged in advising the Administrator concerning the interpretation of the act and assisting in its enforcement, perhaps I may comment on the proposed change which section 4 (b) would bring about. I was an attorney handling wage-and-hour matters both during the period when all attorneys were under the direction and control of the Administrator, and when they were part of the Office of the Solicitor of Labor. I think it would be an unwise move to put attorneys engaged in interpretative work under the Administrator. I think it would be bad, first, as a matter of administration. All attorneys who do any work on the act should be under the direction of a single head, the Solicitor. Moreover, they advise the Secretary of Labor in matters concerning the Walsh-Healey Act.

The proposed change cannot fail to leave the impression that attorneys are now intended to fashion their legal opinions to the desires of the Administrator. Their real duty, however, should be to interpret the law in accordance with their best judgment as to what proper legal principles require. A legal interpretation

should rest on a firmer foundation than that which may serve some momentary interest of the Administrator. In other recent moves, the Congress has shown concern when the legal functions were not divorced from other administrative functions. This change proceeds in the opposite direction. It will inevitably make people suspicious that the Administrator is to be given an opportunity to shape his lawyers to his will. He and all persons affected by the act should be given the benefit of interpretations by an independent legal staff. I would have thought this was an undesirable change when I was a Government attorney doing wage-hour work. I think it is an undesirable change now.

CONCLUSION

To sum up briefly, the 10 years of experience under the Fair Labor Standards Act justifies this important piece of social legislation. All are agreed that the act should be modernized. To do so requires that its benefits be extended to maintain proper living standards for workers not now covered. Any changes which remove workers from its protection frustrate its purpose and increase opportunities for the unfair competition which this act was designed to do away with. The minimum wage must be brought up to current living needs, with provisions to further advance our minimum standards in the interest of social progress. The enactment of S. 2062, the Thomas bill, would help bring this about. We are opposed to the provisions of S. 2386 because they would create new discriminations, and would curtail the benefits which the act was designed to bring about.

Senator BALL. Very well. We will recess until 3 o'clock this afternoon, when we will hear Mr. Ramel.

(Whereupon, at 12: 20 p. m., the subcommittee recessed until 3 p. m. of the same day.)

AFTERNOON SESSION

Senator BALL. The committee will please be in order.

Mr. Ramel, you are representing the United States Chamber of Commerce?

STATEMENT OF H. M. RAMEL, REPRESENTING THE CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. RAMEL. That is correct, sir.

I am H. M. Ramel, vice president of the Ramsey Corp., St. Louis, Mo. I am a member of the labor-relations committee of the Chamber of Commerce of the United States, and am appearing as a witness on behalf of that organization. I should like to discuss current problems under the Wage-Hour Act, and make reference to various proposals in the bills before your committee, S. 2386 and S. 2062, to meet these problems.

At the outset, a bit of background is appropriate, I believe. The Chamber of Commerce is a federation of some 2,936 local chambers of commerce, trade associations, and other business organizations. These organization members, in turn, collectively comprise almost a million and a quarter of American businessmen in all fields of activity in every geographical section in the United States.

Predominantly these individual businesses are small, and yet the employees of a very large proportion of these businesses are deemed covered by the Fair Labor Standards Act.

I would like to add, however, that the views which I am expressing are also my personal views and the views of my company, as well as the views of the St. Louis Chamber of Commerce, as I am chairman

of their labor-relations committee. I also represent the Associated Industries of Missouri, a State-wide organization, of which I am president. I am, therefore, covering these problems not only from a national level, but also from State and local areas, and as an industrialist.

The Fair Labor Standards Act has now been in effect almost 10 years. When the law was first proposed our organization opposed its passage, taking the position that there should be "no centralized Federal regulation of wages and hours." We held

that, with regard to minimum wages, maximum hours, and working conditions, there should be only such public regulation as may be validly applied by State governments for those special classes of workers for which legislative protection may be necessary to prevent their oppression and to safeguard their health and well-being. (Taken from 1938 Policies Advocated by the Chamber of Commerce of the United States.)

Experience with the act demonstrates that the chamber was not amiss in seeing the difficulties that would arise. The almost 10 years of the law's operation have pointed up the areas in which they are most pronounced.

We are greatly pleased that there are Members of Congress, which, of course, includes those on this committee, who are aware of the problems that have arisen under this law, and are endeavoring to rectify them. I wish to discuss with you some of the major issues.

The coverage problem under the present law: First, there is the broad question of how far-reaching Congress intended the coverage of the act to be. It is, of course, all too well known that there has been much uncertainty about this question. The real cause of such trouble is that the language of the act is not clear. It leaves the possibility of more than one interpretation, and it has been drawn in such broad terms that the effect is to permit far too much Federal encroachment on matters not properly its concern.

It is well to note the way in which the vague and indefinite language of the act has encouraged the Administrator to extend its scope to bring in business of a purely local character. Most employers believe that the original intent of Congress was to leave the regulation of the wages and hours of such business to the State and local authorities in their legislative discretion. If so, the language of the act does not make that intent clear.

No one denies the impropriety of usurping the prerogatives of the States by a Federal statute. Yet this is what the broad terms of the act have encouraged the Administrator to do, to the increasing harassment of small-business men and the discouragement of proper State regulations in this field.

The expression of opinion in a recent NLRB dissenting opinion (Matter of Liddon Motor Co., 76 NLRB No. (blank), 21 LRRM 1290 (Apr. 9, 1948)) is pertinent in this regard. The dissent states that:

We believe that it would be better for the Board to concentrate attention on expediting action on cases in important industries rather than dissipate its energies upon matters that would normally be the concern of the States. If it be said that certain States do not now have the necessary machinery available, we reply that the unrestrained expansion of Federal jurisdiction is the most likely way to assure the perpetuation of that condition.

This salutary principle has rarely been followed by the Wage-Hour Division.