Mr. BOOKBINDER. That is so, Senator. I do want to add this thought, though, that even if the workers doing the beauty parlor's work were added into the cost toward the 25-cent provision, the worker himself would not be subject to the Fair Labor Standards Act regulation, but only those who in the first place brought coverage to the establishment. Senator BALL. Oh, no, you cannot sell me that one, because they cannot separate those things out. All of the employees would be covered, as a matter of fact. The bookkeeping job of keeping one type separate from another would be an impossible job.

Mr. BOOKBINDER. Now you are saying that in practical operation the employer would choose to pay the same 40-cent or 60-cent rate. I might agree with that.

Senator BALL. He could not separate one out from the other. It seems to me your position is somewhat at variance with that expressed by Mr. Levy yesterday, who said that it was unfair competition to have one laundry covered by this law because 30 percent of his sales were of a certain type, and another laundry which is competing with it on 7 percent of its activities is exempt; and yet that is what we are running into all the way through this Wage-Hour Act. It is not a simple problem and I don't know what the solution is, but you cannot have it your way and the other way too. Mr. Levy was taking the position that we should cover everybody, and on that basis the Thomas bill does not make any sense either, because a little hat shop which may do a very small gross business is nevertheless, in effect, in competition with the millinery department of the big department store wage, which under the Thomas amendment, would be covered. That is real competition, the little independent millinery establishment.

So that if your purpose is to put competition on an equal basis under this law, I don't quite see how you are going to escape it and have any exemptions at all. Of course, you are up against a problem of administration, where to draw the line in application of the interstate commerce law.

Mr. BOOKBINDER. There is certainly a basic problem in this type of legislation, and when it comes to the service industry it becomes particularly difficult to decide where to draw the line. For the record I would like to say that I do not think Mr. Levy and I disagree in our approach to the problem. In the service industries it is unfortunately true that some arbitrary line will have to be drawn somewhere, either by Congress, by the Administrator, or by the courts. We hope that the line is not too arbitrary and that when it is drawn it will include as many as possible not now in. It is an exceedingly difficult problem. It is still going to be possible to draw up a chart that has 60 steps or 49 steps and so on. But it is not so bad, and if I were one of the clients of Mr. Lane I would say: "Thank you very much. Now that I have your outline, I know whether I qualify or not." It requires half an hour's study. That is all.

If I may risk an analogy, Senator, I come from New York City and you gentlemen reside in Washington. You know what a most difficult thing it is for a driver here to learn all the traffic rules, and it is even worse in New York City. I insist it is so complicated because we happen to have a lot of traffic and it is complicated traffic. The solution to the problem certainly is not to abolish traffic regulations or traffic lights. We have to try to educate our people, our

drivers or pedestrians as much as possible, and try to live within a complicated situation. Our economy is a complicated one.

I do not think the owners are nearly as confused as Mr. Lane would have you believe they are. If they applied themselves and hired lawyers as good as Mr. Lane, they would understand what their rights

are.

Senator ELLENDER. You want Congress to try to adopt the complicated traffic problem of New York, and try to do the same thing in my own little town of Houma, where we have but a handful of people. You want the same rules and regulations to apply to New York and apply to Houma and apply to every other place, and the impossibility of that is what you do not seem to grasp. I wish you could spend about a year of your time visiting these little towns.

Mr. BOOKBINDER. I do, Senator. I know we have got to legislate for all American industry.

Senator ELLENDER. That is just the point, and you are trying to put every industry in the same category as industry in New York City, where all of this trouble is generated-or most of it.

Miss LOWTHER. Some of it generates in the little towns in North Carolina where I came from.

Senator ELLENDER. Well, of course, you are trying to make it the same everywhere as in New York City.

Miss LOWTHER. Living conditions are the same. the same in one as the other.

Senator ELLENDER. Bread costs the same, I suppose?

Food costs are

Miss LOWTHER. We can go over it bit by bit with those people and you will find the living costs are the same.

Mr. BOOKBINDER. The problem that we are concerned with, may I submit, Senator, is not a New York problem. The clothing industry happens to be concentrated up in New York, where our national office is located.

Senator ELLENDER. Fifty-one percent, I understand, of all the ready-made clothing comes out of New York, notwithstanding the fact that New York does not produce a pound of cotton or grow a pound of wool-maybe it produces a few pounds of wool-is that

not true?

Mr. BOOKBINDER. That is generally true; yes, sir.

Senator ELLENDER. And this big city, with all the trouble that is now existing there, all these demands for this law and that law, wants to try to apply its complications to other communities.

Mr. BOOKBINDER. I wish the record could include the smile on your face, Senator. It may look more serious than I think you mean to be. Senator ELLENDER. What I have in mind, of course, is not so much the minimum-wage law as the FEPC. You know, this committee has all kinds of legislation before it.

Mr. BOOKBINDER. The statement shows where six provisions in your bill would narrow the coverage. I don't want to burden you now with the specific details, but the total effect of your bill has been estimated by myself and by people in the Labor Department competent to make such an estimate. I think it is a fairly accurate estimate that currently about 35,000 laundry workers are covered by the Fair Labor Standards Act and that the further exemption provided in S. 2386 would narrow that down to 15,000, so that more than half would possibly lose coverage under the law. We feel that is very significant, and

instead of taking a step forward we will have taken a significant step backward.

Senator BALL. We will place your summary and the tables in the record.

(The summary and tables referred to are as follows:)

EFFECT OF THE BALL BILL, S. 2386, ON COVERAGE AND EXEMPTIONS OF LAUNDRIES UNDER FAIR LABOR STANDARDS ACT

1. Ordinarily there are four types of laundries: (a) home laundries, (b) industrial laundries, (c) linen supply companies, and (d) mixed laundries.

2. Under the present act: (a) Home laundries ordinarily have few, if any, employees engaged in commerce or in the production of goods for commerce, and are, in any event, ordinarily exempt as service establishments under section 13 (a) (2); (b) industrial laundries and linen supply houses normally have employees engaged in commerce or in the production of goods for commerce and are ordinarily not exempt under section 13 (a) (2); (c) mixed laundries would be able to claim exemption under section 13 (a) (2) for their covered employees if 75 percent or more of their work was for individual private consumers.

3. The coverage provisions of the Ball bill would remove otherwise covered laundries from the scope of the act unless more than 50 percent of the business was necessary to the production of goods for commerce. This assumes that the establishment is not serving out-of-State customers or directly producing goods for commerce. For example, none of the employees would be covered in a laundry engaged to the extent of 49 percent in laundering overalls for a steel mill and engaged to the extent of 51 percent in laundering uniforms for hospitals within the State. Similarly, none of the employees would be covered in a linen supply company if 49 percent or less of its business was that of supplying towels and uniforms to factories producing goods for commerce and 50 percent or more of its business was that of supplying these services to schools, barber shops, hotels, courthouses, etc., within the State.

4. Mixed laundries that are now not exempt because the volume of nonexempt services for business or industrial customers is more than 25 percent would be exempt under the Ball bill if the percentage of nonexempt services was less than 40 percent.

5. The Ball bill permits the "incidental production of goods" in such establishments as laundries without defeating the exemption if the dollar value of the goods produced does not constitute more than 10 percent of the gross dollar volume of all sales or services during the preceding fiscal year. For example, a linen supply house which was otherwise exempt could claim the exemption for its establishment although it was engaged in manufacturing towels, uniforms, and other linen supplies unless the 10-percent limitation were exceeded.1

6. Section 14 (a) of the Ball bill permits employers to pay new employees 50 cents an hour for the first 160 hours. It also permits the same rate for the same period to an employee less than 18 years of age during vacation periods.

Mr. BOOKBINDER. If I may make one further brief statement. I studied last night all of the testimony submitted to the House committee last fall, and I studied very carefully Mr. Lane's testimony, not knowing that he would submit essentially the same statement today, and I think you will agree that the record should include the following facts: The administrator's objection to Mr. Lane's proposed amendments were not primarily the objections cited in today's brief but were much more significant, and I should like to read into the record two short paragraphs in which the Administrator comments on the proposed amendment of Mr. Lane:

This provision would encourage the renting, rather than the owning, of manufacturing machinery and equipment of all types, since the owner, if he is not himself engaged in production of goods for commerce, would be exempt and would have a competitive advantage over concerns which own their own factories

1 Frequently such laundries segregate such portions of their establishments in order to claim exemption where otherwise applicable. Under the Ball bill these departments would

be merged with the laundry department.

and equipment. Here again it would seem that the major effect of such an amendment might be to encourage less business arrangements and widespread undercutting of fair labor standards.

It is likewise clear that unintended consequences might easily flow from the proposal to exempt establishments selling to buyers within the same State who do not buy the goods for resale, in substantially the same form or for incorporation as a component part in other goods which are produced for commerce. This proposed exemption would create uncertainty and confusion until a number of important questions concerning it were settled by the courts: What would be the status of repackaging and labeling? Would sales of coal, oil, machines, and machine tools to factories, and so forth, be exempt, since they are not bought for resale or for incorporation as a component part of goods produced for commerce?

The important thing is that the Administrator felt that it was such a broad clause that it would make possible exemptions to many other industries, and would give encouragement to the setting up of artificial types of subcontracting establishments. Therein lies the real danger.

Senator BALL. Thank you, Miss Lowther and Mr. Bookbinder. Our next witness will be Martin C. Kyne, executive secretary of the Retail, Wholesale, and Department Store Union. You have here a prepared statement of quite substantial size. Could this go into the record and you give us a short summary of it?

STATEMENT OF MARTIN C. KYNE, EXECUTIVE SECRETARY, RETAIL, WHOLESALE, AND DEPARTMENT STORE UNION, ACCOMPANIED BY MISS PHOEBE SHARFSTEIN, ECONOMIST, EMPLOYED BY THE RETAIL, WHOLESALE, AND DEPARTMENT STORE UNION, NEW YORK CITY

Mr. KYNE. Yes, Senator; I will summarize it. My summary will be short. I am Martin C. Kyne, the executive secretary of the Retail, Wholesale, and Department Store Union, CIO, on whose behalf I am appearing. The Retail, Wholesale, and Department Store Union, CIO, is a labor organization representing in excess of 125,000 organized workers employed in and about retail, wholesale, department store, warehouse, building service, food, bakery, confectionery, and production establishments.

We are here to discuss and urge the passage of the Thomas bill. Let us consider it from three angles.

First, the necessity for doing something for the retail workers. Second, can the industry afford to pay?

Third, why the Thomas bill?

It is impossible to accomplish fully the aim of the Fair Labor Standards Act while retail employees remain unprotected by it. Congress cannot afford to gloss lightly over the matter of coverage of retail employees. Of the estimated 6,362,000 retail workers in March 1947, approximately 100,000 were protected by the Fair Labor Standards

Act.

For no justifiable reason, Congress chose to exempt almost all retail employees from the FLSA. It did this despite the fact that it itself stated in section 2 of the existing act that the purpose of the FLSA