STATEMENT OF WALTER S. JOHNSON, PRESIDENT OF THE AMERICAN BOX CO., IN BEHALF OF THE NATIONAL LUMBER MANUFACTURERS ASSOCIATION

Mr. JOHNSON. My name is Walter S. Johnson. I am president of the American Box Co. and several lumber companies in California. I have been actively engaged in the lumber industry all of my business life, having gone in the business in 1919 when I came out of the Army after the First World War.

I appreciate the opportunity to appear before this committee today to talk with you about the Fair Labor Standards Act. I appear on behalf of the National Lumber Manufacturers Association, which consists of 15 regional lumber associations representing the major commercial wood species in the United States. The lumber manufacturing industry embraces more than 50,000 producing units, varying in size from the small one-man operations, to the very large mills of the South and West.

With the committee's permission, Mr. Chairman, I would like to file for the record our complete statement, and present at this time a brief summary of the statement.

Senator BALL. Your complete statement will go into the record to follow your testimony. Do you want to give one to the reporter? Mr. JOHNSON. Yes, sir; I shall do so now.

Senator BALL. You may proceed with your summary.
Mr. JOHNSON. Yes, sir.

The National Lumber Manufacturers Association is opposed to the principle of legislating wages and hours of work by Federal law. We believe that this type of legislation is fundamentally unsound and in the final analysis will be a disservice to those whom it purports to benefit. This position of our industry has been stated repeatedly in resolutions of the board of directors of the association, and was reaffirmed as recently as November 19, 1947.

This position was also taken by the American Lumber Congress, held in Chicago last June, which was attended by a large and representative group of lumbermen from all segments of the industry and from all parts of the country.

The act is supposed to prescribe a minimum wage, but the high and low paid alike are affected by it. You gentlemen will recall to mind the near-catastrophe of the portal-pay problems. The perverted, arbitrary, and unrealistic interpretations of the Wages and Hours Act that led to this crisis illustrate the attempt of a powerful bureaucratic agency to carry out its own socialistic aims rather than give to the act and its terms the normal meaning intended by Congress. The constructive provisions of the Portal-to-Portal Act, passed by this Congress, have gone far to relieve industry of this gross inequity, but the point I wish to emphasize is that this extremely critical situation, involving thousands of the highest-paid workers in the country was the direct result of a law which was intended "to protect the standard of the underpaid workers and to eliminate sweatshops and child labor." It has been suggested that it would be a competitive advantage to the western lumber industry where wages are particularly high, if an increase in the Federal minimum wage brought about an increase in

the wages in other lumber-producing regions. The issues before us are more important than such local considerations. Lumbermen are keenly aware that real free enterprise and governmental control cannot exist side by side. Sooner or later one or the other will prevail as the dominant pattern. And I say to you here and now, that we in this industry do not want the Government to fix the rules of competition. We are not so blind but that we can see that these so-called rules of competition, even under the guise of offering an advantage today, tomorrow lead only to a bitter, economic slavery. We will take real competition, now and all the time.

An increase in the minimum wage is clearly inflationary. It will have a direct effect on the low-wage industries, but none but the naive believe that only these will be affected. Increasing the wages of the lowest paid will have a chain-reaction effect on all wages, for wage differentials will have to be maintained. Therefore, if low wages are increased the higher wages will also have to be increased to maintain the differentials. This means, generally speaking, an increase "across the board" in most industries. By increasing the minimum, Congress will be encouraging and augmenting the inflation we are all trying to lick. A statutory increase of this kind has no relation to production or efficiency, and arbitrary wage increases, brought about by statute, can have but one effect-further inflation.

This committee and Congress should give serious consideration to the effect of "freezing" the economy at 60 cents, 75 cents wage level, and to the possible results in terms of unemployment in periods of lessened business activity. There is good reason to believe, it seems me, that in periods of falling business activity a wage level "frozen” at this figure would have the effect of needlessly accelerating unemployment.

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We have not yet seen the full force and effect of this law. Defense preparation, wartime production, European relief needs, a pent-up postwar demand, and now the European recovery program and possible rearmament have created tremendous production requirements. This in turn has inflated wages and prices. But make no mistake about it-in a period when there is less demand for industry's goods, the minimum-wage law will have a stifling effect on production, and therefore have an adverse effect on the economy in general and on labor in particular.

The proponents of a higher minimum wage have talked "long and loud" about increased purchasing power. This is a highly fallacious argument and many economists have said so. Furthermore, this committee should realize that the clamor for a higher minimum is never ending. I note with interest that the Administrator of the Wage and Hour Division, in his testimony before this committee April 19, suggests that a wage higher than 75 cents be established by Congress as a "goal" to be reached in the immediate future on an industry basis. Thus, even before the currently proposed increase be enacted into law, if it is, the advocates of governmental wage fixing are already beginning to seek still another increase.

Second. If the act is to remain on the statute books, the hours of work limitation should be removed. Hours of work is a matter that emplovers and employees should fix by contract. When the act was passed the Senate committee stated that it was not intended to invade the right of employer and employee to fix their own contracts of em