1 Assuming 2,000 working hours per year.

2 Not comparable with budgets of other States because it excludes taxes, savings, and insurance. Source: Women's Bureau, Department of Labor.

EXHIBIT II

CHANGES IN AVERAGE HOURLY EARNINGS, OCTOBER 1938-JANUARY 1949 The Federal Reserve Bank of New York publishes each month a special index of hourly earnings covering workers in nonagricultural industries. These indexes are derived not merely from Government statistics, but include information obtained from several private sources. The following table compares the Federal Reserve Bank's index for 2 months: October 1938, when the Fair Labor Standards Act became effective, and January 1949, the latest month for which information is available.

Estimated distribution of production workers in manufacturing, November 1948

Senator PEPPER. The next witness we have is Mr. Barkin, representing the CIO. Mr. Barkin, we are glad to have you. We welcome your statement.

STATEMENT OF SOLOMON BARKIN, CHAIRMAN, CIO COMMITTEE ON REVISION OF THE FAIR LABOR STANDARDS ACT, ACCOMPANIED BY IRVING J. LEVY, GENERAL COUNSEL, UAW Mr. BARKIN. Mr. Chairman, I am appearing here in behalf of the CIO. Associated with me is Mr. Irving Levy, who is general counsel of the United Automobile Workers of America, CIO.

We appreciate the interest in brevity in the presentation of data, and consequently we would like to offer each member of the committee a summary of all of the material which we have compiled in a booklet which, if you will turn to the table of contents, attempts. to review all of the various aspects of this problem which have been raised either by the proponents or opponents.

Obviously, we have attempted to meet the arguments and issues raised by the opponents on specific matters, and have submitted very detailed data in each instance. We thought that it would be desirable to do so, inasmuch as many of these problems are raised and cannot be adequately and thoroughly enough discussed at the hearings themselves.

For example, Senator Douglas this morning inquired about the experience in the lumber-and-timber-products industry. On pages 33, 34, and 35, we reviewed the entire history of wage legislation in connection with the lumber-and-timber products industry, and on page 35 provided a table of the history of wages and prices and profits in the industry, so that that problem is succinctly analyzed and the data are made available to you.

We have selected the lumber-and-timber-products industry merely because in the past that has been an industry on which considerable discussion has been offered.

Similarly on all other issues which have been previously presented, we attempted to furnish you with our views and with such objective data as there are in support of our views and the reasons we were led to the conclusions we have been.

We offer that to you, Mr. Chairman, and members of the committee, for your aid, and I am sure that you will find it most useful in the analysis of this problem.

I would like to request the inclusion of our statement in the record, Mr. Senator, because I do not like to take your time merely reading it. I presume my best service to you, and that of Mr. Levy here, is to offer ourselves for any questions. I shall therefore attempt to restrict myself to a very short summary so that you can follow with me the contents of our argument and our position as set forth in the brief.

(The prepared statement and booklet referred to follow in turn:)

STATEMENT OF THE CONGRESS OF INDUSTRIAL ORGANIZATIONS ON THE REVISION OF THE FAIR LABOR STANDARDS ACT OF 1938, DELIVERED BY SOLOMON Barkin, CHAIRMAN OF THE CIO COMMITTEE ON THE REVISION OF THE FAIR LABOR STANDARDS ACT BEFORE A SUBCOMMITTEE OF THE SENATE LABOR AND PUBLIC WELFARE COMMITTEE, APRIL 12, 1949

The Congress of Industrial Organizations believes that the minimum wage shall be established at $1 per hour and endorses the revision of the Fair Labor Standards Act which prescribes a universal minimum wage of 75 cents with a provision designed to allow for the establishment of higher minimum wage standards up to $1 on the recommendation of industry committees with the approval of the Administrator, and the extension of coverage to many classes of employees now exempt from these provisions. We endorse the proposed bill and urge its immediate approval by your committee.

During the recent Presidential campaign both candidates endorsed the revision of the Fair Labor Standards Act in line with this proposed bill and it should be speedily approved by your House.

We urge that the provisions allowing for the review of the minimum wage rates in individual industries be incorporated and be applied speedily so that more realistic minimum wage rates may be prescribed for industries where higher minima than 75 cents should prevail.

We have previously appeared before your committee on three occasions since 1944 urging the upward revision of the minimum-wage provisions and the extension of the coverage of the act. We have fully covered the various economic and social aspects of this problem in briefs offered at various hearings of congressional committees and through the testimony of many witnesses who have personally described their own plight as underpaid persons. We hope that action at this session of the Eighty-first Congress will erase the long-standing inequities created by the present terms of the act which date from 1938.

To facilitate your study of our evidence and arguments throughout these years we have prepared a summary entitled "Toward Fairer Federal Labor Standards" which consists of "Questions and Answers on Improving the Fair Labor Standards Act of 1938." We are submitting it for the record. In our testimony today we can only highlight a few critical issues.

I. THE 75-CENT MINIMUM

In all discussions on the revision of the Fair Labor Standards Act of 1938 there is virtually no disagreement on one conclusion; namely, that the present minimum of 40 cents is obsolete. The 40-cent minimum has no tangible effect upon the current American wage schedule and is tantamount to the absence of legislation. All political parties are in agreement on the necessity of raising the minimum.

We urge the universal 75-cent minimum not because it will eliminate all forms of substandard wages, but as a step forward to the eradication of the worst forms of underpayment, discrimination, and exploitation of the bargaining weaknesses of American workers. Eevery objective approach to the wage problem affirms the modesty of this goal. We urge it as a means of securing speedy enactment of an improvement in the lot of some 1,500,000 workers now covered by the act who suffer from these exceptionally low wages.

The 75-cent minimum will moderate the operations of the competitive process sufficiently to prevent the fringe of workers being victimized by inordinately low standards of living. The 75-cent minimum provides a realistic wage floor to which no employer can truly object if he wants to pay his workers a wage which represents some modicum of decency. It should be established by law to protect fair-minded employers in industries where they are now inhibited from paying decent wages by competitive forces. That sector of employers who exploit the helplessness of workers by paying them intolerable wages should not be allowed to create unfair competition by paying less than 75 cents.

Congress is obliged to modernize its legislation. Changes have occurred in the level of wages, in the costs of living, in the standards of productivity, and in our national income. Our national and international obligations have been broadened. These facts impose upon Congress the obligation to raise the minimum and extend the coverage of the law. If minimum-wage legislation is desirable, as most groups will acknowledge, certainly the benefits of such legislation should be extended as far as the powers of Congress permit. Fair competition should prevail not only between the members of the same industry but also among employers of different industries.

(a) In setting the minimum wage, we must consider the basic purpose of the act, which is to establish the "minimum standards of living necessary for health, efficiency, and general well-being of workers." All existing measures of living costs indicate higher minimum-wage levels than the proposed 75 cents. The city workers' family budget developed by the United States Bureau of Labor Statistics, which provides only a "necessary minimum" standard, reflects a living level below which deficiencies exist in one or more aspects of family consumption. It is the "total dollars necessary to provide family health, worker efficiency, nurture of children, and social participation of members of the family." It is estimated that this budget, which provides for no savings other than life insurance, would cost as of February 1949, for a family of four, in the lowest cost city, New Orleans, $3,019, and in the highest cost city, Seattle, $3,579. The average cost for 18 cities was $3,330, or on the assumption of 2,000 hours of work about $1.665 per hour.

Even the WPA emergency budget, which is far below the standard of living prescribed in this act, would cost $1.08 per hour in January 1949 on the assumption of 2,000 hours of work.

The cost of the minimum health and decency budget for employed women living alone which has been priced by seven State departments of labor since the beginning of 1947 is now well over 80 cents an hour, and ranges in some States over $1 per hour.

We underscore that persons employed at the minimum wage are persons of all ages: men and women, and persons with varying personal responsibilities. They are entitled to realize at least a part of the potentialities of the American economy. (b) The second pertinent consideration in the determination of the national minimum wage is the rise in the cost of consumer goods purchased by the wage earner. From January 1941 through January 1949, the rise in the costs of consumer goods for the lowest income groups, as measured by the WPA emergency budget, has been 93 percent, which in itself justifies a minimum of 77.2 cents per hour.

(c) A third vital consideration justifying the revision is the rise in the national income and productivity since the enactment of the Fair Labor Standards Act and the realization of its original purposes.

National income was 67.4 billion dollars in 1938. In 1948, the national income had risen to 224 billion dollars, or 233 percent. The productivity had risen considerably as indicated by the fact that the gross national product (in current dollars) per employed person had risen from $1,916 in 1938 to $4,254 in 1948, or 121 percent.

Organized workers have shared in varying degrees in these rises. Their bargaining power has been sufficient to wrest from reluctant employers some measure of the benefits. But many workers in unorganized industries, and particularly those in which earnings are below 75 cents, are still not enjoying the benefits of this rise. This is outright discrimination and unjust deprivation. The fruits of

a flourishing economy are not being shared with these underpaid workers. Legislation is required to correct this inequity. Voluntary action by the laggard employer is not likely. The American people are determined to overcome this deficiency in the name of greater national equity by insuring a 75-cent minimum rate through legislation.

(d) Additional proof of the need for legislation is to be found in the following two facts on wage trends:

First, since 1941 four general wage increases have been granted to the vast majority of American workers. These totaled 60 cents per hour. Certainly the employers who failed to grant similar increases to their employees are withholding the benefits generally enjoyed by American workers. The profits of American industry have been more than adequate to enable all workers to share in the general wage movement (appendix A). The addition of these general increases to the 40-cent minimum would warrant a minimum of well over $1 per hour.

Second, the straight-time average hourly earnings of employees in manufacturing industries have risen between January 1941 and January 1949 by 68.2 cents, despite the inclusion of the lagging employers who depress the general

average.

(e) The prevailing minimum plant rates in most American industries are now well above the proposed 75 cents. The greater number now establish minima ranging from 90 cents to $1.40 per hour with the preponderance above $1.10 per hour. The 75 cents rate is truly a minimum plant rate for American industry.

(f) Governmental wage orders approved by the War Labor Board points up the reasonableness of the 75-cent rate. By September 1946 it had raised the

approvable minimum from 40 to 70 cents. It first raised it to 55 cents in 1945, then to 65 cents at the beginning of 1946, and finally to 70 cents at the end of 1946. The rise in consumer prices since September 1946 certainly justifies the additional 5 cents adjustment contemplated by the 75-cent minimum.

(g) A seventh approach to the determination of a rate is to set it at a level to affect the same proportionate group of workers as that contemplated by the 1938 act. Certainly we have every assurance that that adjustment was easily absorbed. A similar adjustment could be contemplated with equal confidence of success. In 1938, 12.9 percent of the covered workers were receiving less than 40 cents per hour. Among the manufacturing workers 18 percent were below 40 cents. If we apply the 18 percent ratio to the pay rolls of November 1948 to determine the appropriate rate we would arrive at 95 cents per hour as the appropriate level to raise the minimum.

These seven approaches suggest that the minimum of 75 cents we are considering is a moderate step toward the goal of establishing a fair guaranteed national minimum rate. Every measure of equity supports a higher than 75-cent minimum. This rate is being offered as an absolute fall-back rate for the national economy to prevent a downward spiral in unorganized plants and those unionized plants which would be competitively affected by a ruthless wage cutting program initiated in the unorganized plants. Unless we have such a floor our entire economy might well be rocked by the cruel action of individual employers. A 75-cent floor is necessary to trim the unseemly edge of our American wage structure.

There is widespread endorsement of the 75-cent rate. Congressmen, labor, church, civic and business organizations and individuals have endoresed the proposal. The President of the United States has proposed a 75-cent minimum in his message to Congress and his public addresses to the people. Representatives of the administration have publicly favored this minimum. Officials of the State labor departments have officially indorsed the 75-cent minimum. Immediate action is imperative.

II. A NATIONAL UNIFORM FIXED MINIMUM IS NEEDED

The 75-cent minimum must be a national single rate applicable to all areas and workers except for the handicapped, learners, apprentices and specific types of messengers.

Regional differentials are unjustified as there are no distinct differences in living costs by regions or size of community. The differences in the costs of living among cities in the same regions are greater or as great as differences among regions. Variations in living costs among cities of the same size are greater than between large and small cities.

A national minimum will not impede the development of the South or of smaller communities. During the last few years southern wages have moved up and its industrial development has been greatest. Many southern industries pay wages equal to those in the North. The new industries tend to be the higher paying industries which seek markets and resources. Northern capital owns the greater share of southern industry. The strength of the movement for the decentralization of industry belies the argument that it needs encouragement from subminimum wages. Neither southern nor smaller areas have less proficient management or labor.

Such differentials are not welcomed by many industrialists. They create unfair competition and are impossible to administer.

The rate must be fixed and not flexible. The 75 cents is a minimum rate well below established costs for a minimum standard of living necessary to health, efficiency, and general well-being of the workers. It is not a living wage. It does not compensate for the full rise in the cost of living which has taken place. It is an intermediate step toward the establishment of a minimum living wage. To reduce the inadequate legal minimum with each drop of a point or two in the cost of consumer goods would be to condemn workers at the minimum level to permanent substandards of living. Reductions in the prices of the goods workers must buy is one way of helping them realize health, efficiency, and general wellbeing. A fluctuating minimum is economically impractical and would create unrest and serve only the unscrupulous employer. It provides Government sanction to wage cutting and the wholesale collapse of our economy.

A uniform minimum wage of 75 cents will promote the interests of the smaller employer. They are most interested in equality of bargaining which will be promoted by a uniform floor. Many of them pay higher rates than those of their larger competitors and their position will be thereby improved.