items have risen far more than the proposed increase in the statutory minimum. Food has gone up 104 percent and clothing 92 percent. The third question I have raised concerns the possible impact of the proposed minimum. The most complete figures available on this question are those of the Department of Labor, given in the attached exhibit III. These figures indicate that as of November 1948 only 1 out of 15 workers in manufacturing industries is receiving a wage less than 75 cents an hour, and 1 out of 5 less than $1 an hour. This proves that the 75-cent standard is already being met by the overwhelming majority of employers.

Senator DOUGLAS. Mr. Mason, may I interrupt a minute? Do you have figures on the distribution of earnings in the service trades? I notice your figures here are for manufacturing. Do you have data as to what proportion in the service trades are getting less?

Mr. MASON. I do not have them with me, Senator Douglas. However, we will try and break that down and furnish it to the committee later on.

Senator DOUGLAS. Thank you very much.

Would you develop that point a bit, Mr. Mason-this last sentence? Mr. MASON. Well, in 1938, when the minimum wage was set at 25 cents an hour, at that time many industries like textiles were paying as low as 18 or 20 cents an hour.

Also, lumber was paying a very low wage at that time; however, they adjusted themselves without any serious effect on the industries. With a rise right now up to 75 cents an hour, the impact would be less and should not have any serious effect on our economy. Lumber has an average down through the South of about 72 cents an hour at the present time. The adjustment up to 75 cents should not have any serious effect on this particular industry. Also, it should be noted that the lumber industry on the west coast has already established a minimum rate of $1.25 an hour. Maybe Mr. Henle could amplify further on that.

Mr. HENLE. Well, the only point that I would like to make in addition is: There have been a number of special studies directed at particular industries, at the impact of the particular minimum-wage order, particularly in such industries as cotton garments, hosiery, textiles.

I think in hosiery, at the time the 32.5-cent minimum went into effect, the average wage in the industry was below 32.5; and I think actually, of all the industry studies, the most important one concerns lumber because that is the industry about which you will be hearing' concerning the possible impact of the 75 cents.

I asked the Labor Department to give me the figures on the wages in lumber at the time that the various industry wage orders went into effect, and I found the following: The first wage orders in lumber, for the lumber industry, was recommended by an industry wage committee in June of 1941. At that time the average earnings in the southern lumber industry were 38.5 cents, but the industry committee, even with all the wage data in front of them, thought and recommended a minimum wage of 35 cents for the southern lumber industry, and it was later put into effect, put into effect in November at a time when the administrator estimated that 44 percent, or almost half the industry, would be affected by the imposition of the 35-cent minimum.

As events later turned out, the southern lumber industry was quite able to bear the brunt and to absorb the impact of the 35 cents.

Senator DOUGLAS. Was there a price increase following the wage increase?

Mr. HENLE. I am sorry, I was not able to determine that. I think that would be very easy to find out, and I would be glad to find it out for you.

Senator DOUGLAS. What happened in the famous case of the pecan nuts? Did you study that at all?

Mr. HENLE. I am sorry, the case of the pecan nuts has not come to my attention.

Senator PEPPER. Senator Withers.

Senator WITHERS. What is going to be the effect on the industry if you pass a law and later there is a decrease in commodity prices?

Mr. HENLE. I think they are decreasing largely as a result of previous decreases. In other words, steel prices go down as the price of steel scrap goes down, as the price of coal goes down.

Senator WITHERS. Well, if you bring prices down and labor is up, what happens?

Mr. HENLE. I see your point, Senator, but I would say that the number of people who would be brought up by the imposition of a 75-cent minimum is so slight that only a very few industries would be affected.

There would be extremely little if any tendency to raise costs.

Senator WITHERS. Do you think a reduction in a few commodities would help bring other prices down, a decrease in the price of steel, in the price of coal, in the price of lumber? Would not that bring the price of farm commodities down?

Mr. HENLE. The prices of farm commodities generally are normally barely independent of the price of such finished products as those made out of steel and coal.

Senator WITHERS. Do you have any actual experience with agriculture? It is more sensitive than all industries in the United States, more responsive to any change in economic conditions in the country. Mr. HENLE. Yes.

Senator WITHERS. Farm commodity prices would be about the last to go up, and about the first to go down. Do you know that?

Mr. HENLE. Well, they are certainly very sensitive. They are most sensitive to changes in demand and changes in supply.

Senator WITHERS. In general, the figures show that the farmers' buying power and the workers' buying power go hand in hand up and down together. People have to buy to be able to sell, and they have to be able to sell in order that they can give work to labor. Then, when they cannot sell at a profit, they close up.

Mr. HENLE. But similarly the workers, particularly the workers who are not receiving a minimum wage, have to receive that minimum in order to have sufficient buying power to buy the products of the farm.

Senator WITHERS. I want you to understand I am in favor of labor being paid all that they can be paid, but never enough to disturb the economic structure, because that hurts everybody when you do that. Now, I notice that you were not able to tell about the lumber prices declining or not. In other words, the only thing that can justify an increase in wages is an increase in commodities; is that right?

Mr. HENLE. We feel that the imposition of this minimum will directly improve the productivity of the individual worker concerned and the plant in which he is working.

Senator WITHERS. That surely must be balanced. overlook selling prices as you advance labor costs.

You must not

Mr. HENLE. We feel that the labor costs will not be advanced for two reasons: The individual worker whose wage has been raised, say, from 70 to 75 cents will be able therefore to maintain his family and himself in a better state of health and decency.

Senator WITHERS. Of course, you say to that that his buying power is increased as his pay is increased, but you could carry that to the point of diminishing returns.

Mr. HENLE. That is right. I think if the minimum were raised to something like $1.25, obviously that would be your point, carrying it to the point of diminishing returns.

Senator WITHERS. So, it is just as important that you watch commodity prices as it is that you watch labor prices, because they are so necessarily interlocked. It would not be wise for us to separate them; would it?

Mr. HENLE. I agree. Our only feeling is that in raising the minimum we will be improving the efficiency of industry because it is largely, we have found, the less efficient manufacturers who are paying the minimum, who are paying below the minimum.

In other words, they are able to survive in business only because they have the competitive advantage over the fair employer by paying these low substandard wage rates, and that when you raise them to the minimum, to the level of others, they are going to have to, as they have in the past, examine their own operations, their own technical efficiency in their own plants, and I think you will find, as these other studies have borne out, that the particular industry has been able to improve their own efficiency so that their labor costs have not increased.

Senator WITHERS. Then you are confronted with this further danger: a great many operate on volume. That might have a tendency to cut out the smaller operator entirely; might it not?

Mr. HENLE. It is possible, but we feel in some respects the smaller operator is or will be, in order to survive, more efficient.

Senator WITHERS. It strikes me as important to us, when you speak of different industries, to ascertain and report to us whether or not selling prices are increasing or declining, and when they begin to decline, how much they are declining so that we can tell whether or not the approach is basically sound.

Just to come in here and talk about wages alone will not be enough for us. We need both sides of the picture. You are interested in it the same as I am. We must have a balanced economy.

If you favor one side at the expense of the other, the economy becomes unbalanced and then conditions are gradually going to grow worse. When it is thrown out of balance, all of us are going to suffer; is that not right?

Mr. MASON. Senator, from the best estimates that we have, it is a very small percentage that will be affected by this increase up to 75 cents an hour.

Senator WITHERS. You mean a small number of employees?

Mr. MASON. That is right. Out of 22,000,000 who are now covered by the act, I believe there are about a million and a half who are now receiving less than 75 cents an hour. It would not affect any industry as a whole, because the dominant number of employees in all industries

are already receiving 75 cents. It is just a small percentage in a particular industry that are not receiving it.

Senator WITHERS. Take the coal fields. They are operating one day a week, two days a week, three days a week. Now the coal business is a tremendous industry and they have already reached the old production point. That will soon reflect itself back.

Mr. MASON. Well, that has happened over a long period of years. Senator WITHERS. That is right.

Mr. MASON. Just before the union comes up for contract negotiations, the coal operator generally has seen to it that they have a surplus of coal above the ground.

Senator WITHERS. I agree with you on that. That is true. There may be some little collusion.

I am for your principles all right. I just want to know as to balance whether we can do it for the whole country. That is the only thing worth while. I think anything that affects a class will ultimately be a boomerang against that particular class unless the whole economy is balanced. Am I right about that?

Senator DOUGLAS. I agree with you.

Senator WITHERS. I thank you. In any other testimony that you might have, I would appreciate it if you would give us the idea of commodity prices and how industry is progressing, operating.

Mr. HENLE. May I say, Senator, we felt in preparing this testimony we wanted to keep it to a minimum. In the last Congress when we were testifying before the subcommittee, a good deal of our testimony was devoted to this very question. We went into a great deal of detail on the whole question of the theory of the minimum wage and the extent to which a minimum can affect prices and employment, and we cited numerous examples in that testimony.

Senator WITHERS. Have you considered all along in your study of these questions that we have been here in the country on a wartime production basis, and you might say over normal production, more than we need, and there will be an adjustment sometime. Is that right?

Mr. MASON. That is right. I would like to point out, too, that if it was not for wartime controls that we had on wages during the war, that we would not even have a million and a half workers that receive less than 75 cents an hour. During the war I served on the War Labor Board, and the highest minimum that we approved was 55 cents. However, we received requests for approval of much higher minimums which were denied.

Senator WITHERS. I do not think I am on the other side of the question at all. I just want to as nearly as I can keep up the balance. I know I am interested in that.

I think that labor well paid is the health of the country regardless of any position a man might be in. He can produce, but he has to have a buyer and he has to have a buyer who is able to buy and pay. Those are all simple facts.

I am interested in the two sides, whether the man can afford to pay, and how much labor costs. Of course, I know when you say "75 cents an hour" that may look like a big wage. When you work a man 5 days a week, 8 hours a day, and multiply that by 75, and by the number of work days he has a year, it is not so large as it might appear to be in the first place.

Mr. MASON. Back in the thirties, 75 cents was considered a high rate and the minimum wage was 40 cents during that period. It was the mechanics who received 75 cents. Since that time the mechanics rates have been adjusted to over $2 an hour, and the minimum wage is still 40 cents an hour.

Senator WITHERS. Of course, I know all of us are interested in holding up the national income.

Mr. MASON. The current wage rates now being paid are completely out of line with the minimum wage.

Senator WITHERS. You are talking for the millions who are under the minimum.

Mr. MASON. The million and a half that are now covered, receiving less than 75 cents an hour and the other workers who are not now covered under the present Act, but provided for under S. 653 which will include all those employees that are working on goods affecting commerce. This will extend coverage to maybe five or six million more workers.

Out of this group it is estimated that only a million and a quarter of these workers receive less than 75 cents.

Senator WITHERS. What industries do they chiefly come from-not the smaller ones?

Mr. MASON. Well, your large retail and service establishments, and laundries. We also propose here to extend coverage to industrialized commercial agricultural workers.

Senator WITHERS. What do you mean?

Mr. MASON. Large commercial farms.

Senator WITHERS. What will be the result when they are brought under this, and the smaller farms are not? Would that throw us out of balance on agriculture?

Mr. MASON. No; I believe farm labor on small independent farms have better conditions to work under. They are more like partners. Senator WITHERS. I agree with you on that.

Mr. MASON. They are treated a lot differently than an employee who works on some commercialized farm.

Senator WITHERS. You are right. That is all.

Senator THOMAS. Go right ahead, Mr. Mason.

Mr. MASON. We strongly believe that the minimum wage could be raised to 75 cents and up to $1 without any serious economic dislocation.

A rise in the minimum wage will be accompanied inevitably by an increase in the productivity of the employees affected. It will also tend to improve the managerial efficiency of the firms affected by the increase. Since current profits are high even in those industries where some of the employers are paying substandard wages, it should be possible in most instances to absorb the cost increase without any price increase. There is thus no reason to fear either higher prices or unemployment as a result of increasing the minimum wage. Studies of what happened in a number of industries after the introduction of the minimum wage in 1938 bear out this contention.

In concluding this discussion on minimum wage rates, I would like to point out that there are in effect today a number of minimum wage rates in the District of Columbia above 75 cents and ranging close to $1 an hour. The minimum rate for employees of manufacturing and wholesale establishments is $30 a week for a work week as low as 32