The time and volume of labor required in these operations is determined and regulated by nature through weather conditions prevailing during the ripening and harvesting seasons for cotton.

Such operators compete with the farmer for labor; and the competition is especially brisk during the active cotton-picking season.

When this law was enacted, such workers were wisely exempted from its requirements. The reasons justifying those exemptions are just as sound and

valid as they were in 1938.

Under the present Wage-Hour Act, cotton ginners are subject to three exemptions or partial exemptions. The first of these is one by which the ginner would not be required to pay overtime premium until an employee has worked as many as 12 hours per day or 56 hours per week. This applies for not more than 14 weeks out of a year.

A second exemption now relieves the ginner of the obligation to pay an overtime premium for hours worked in excess of 40 hours per week. This is conditioned only upon the employer being engaged in the ginning of cotton. This exemption is included in section 7 (c) of the Wage-Hour Act, and applies also to the compressing of cotton, and the processing of cottonseed.

The most important of the exemptions is the "area of production" exemption contained in section 13 (a) (10) of the act. This exemption provides that employees engaged in cotton ginning (as well as those engaged in cotton compressing or warehousing) are not subject either to the minimum wage or to the overtime requirements of the law, provided they are engaged in such occupations within the "area of production" of cotton as that term is defined by the Administrator of the act.

Apparently, the Administrators of the Wage-Hour Act are determined that this exemption shall be withheld from the greatest possible number of cotton ginners and warehouse and compress operators, because they have defined "area of production" of cotton in such a manner that relatively few ginning, storing, or compressing establishments can comply with the definition although they are located as nearly as possible to the heaviest possible volume of cotton production. Under the definition now in effect, an employee in a cotton gin would be exempt only when 95 percent of cotton received at the gin originates at points within 10 air-line miles of the gin, and does not move from points having a population of 2,500 or more. In order to comply with this definition, it would further be necessary that the gin itself not be located in or within 1 mile of a place having a population of 2,500 or more.

Neither the distance which cotton moves from the farm to the gin nor the population of the place where the cotton is grown or ginned can have any possible relationship to the area of production of cotton.

Cotton gins are and must be located as near as possible to the farms on which the cotton handled is grown.

In recent years there has been a marked decline in the number of cotton gins. This has been brought about by several factors, probably the most important of which is the increased cost of gin equipment and the increased costs of operation and maintenance of that equipment. The expenses of owning and operating a cotton gin have grown to the point where a very large volume of cotton must be handled in order that operating expenses will not exceed the revenue that can be obtained for ginning and baling operations. The trend is definitely toward fewer gins and gins of greater capacity. There are at this time approximately 8,000 active cotton gins in the United States, and I predict that it will not be many years before that total number is reduced to 4,000.

This trend is being and will be accelerated by the mechanization of cotton production, and the development of improved cleaning, humidifying, and drying machines and other equipment used in ginning operations.

The cost of an ordinary cotton gin used to run from $5,000 to $7,500. Last spring a friend of mine at Minter, Ala., installed a modern gin, and the cost was $75,000. Some of the larger modern gins cost more than $100,000.

As the number of cotton gins decreases, the distance between gins increases, resulting in a substantial increase in the average distance which cotton must move from the cotton field to reach the gin. An important factor here is that the ginner has no control over what cotton is brought to him for ginning and baling. A cotton farmer takes his cotton to whatever ginner he pleases to have it ginned and baled. He may take it to the first gin, or he may not. He may pass up one, two, three or more gins in order to reach the gin of his choice, and the choice lies wholly with the farmer. The modern gin of my friend at Minter is more efficient and produces cleaner cotton of a greater value-than the older gins.

As a result, he receives cotton from 11 counties, and from farms as far as 165 miles from the gin.

Officials of the National Cotton Ginners' Association are of the opinion that at this time cotton gins throughout the Cotton Belt generally receive more than 5 percent of their annual cotton receipts from farms more than 10 miles from the gin, which would prevent compliance with the Administrator's definition of "area of production" of cotton. In addition, all studies which have been made of the location of cotton gins with respect to population (which include the State of Oklahoma, the State of Texas, and Mississippi County, Ark., which has been the largest cotton-producing county in the world) indicate that approximately onefourth of all cotton gins are now located either in or within 1 mile of towns having a population of 2,500 or more, which of itself would prevent compliance with the Administrator's definition of the "area of production" of cotton.

Ironically enough, the gins which are located most closely to the greatest volume of cotton production (Mississippi County, Ark.) are located in towns of 2,500 or greater population and are, therefore, outside the "area of production" of cotton as it is defined by the Administrator.

It is of the most vital importance that the exemptions granted to cotton ginners under the present Wage-Hour Act be continued in effect; and that the area of production exemption be clarified so that a reasonable and realistic definition of area of production of cotton will apply. There seems to be no hope of obtaining such a reasonable definition from the Department of Labor. During the 10 years since the act first became effective, each definition of area of production of cotton has clearly been made with the objective of denying the exemption to as many as possible of the cotton gins and other agricultural handlers and processors, and with little or no consideration of the actual area of production of cotton.

Speaking for the cotton ginners of the United States, I ask that the Congress entirely remove from the Department of Labor the duty and authority to define area of production of agricultural commodities, and give that power to the Secretary of Agriculture. He has the information, staff, and the ability to formulate a proper and reasonable definition of the area of production of cotton and other agricultural commodities.

The area of production of cotton is such a well-known and sharply defined matter that a simple definition could easily be written into the act. This probably is not true of all agricultural commodities; and that is why we recommend that the power and authority to define "area of production" be transferred to the Secretary of Agriculture.

I am sure I voice the sentiment of every cotton ginner and every cotton producer in the United States when I say that a cotton gin should be considered in the area of production of cotton if it is located in a county which grows cotton in commercial volume. The volume of cotton per gin, of course, varies between individual gins, but on the national average a gin will produce something like 1,800 bales of cotton per year from seed cotton received from the county in which the gin is located and surrounding counties. The average number of bales ginned per ginning establishment in the United States has increased from 342 bales in 1902 to approximately 1,800 bales for the current season. During the same period the number of active cotton gins has been reduced from approximately 31,000 to about 8,000.

The bill before the committee would give the Secretary of Labor additional power to make definitions of the terms of the act, and issue regulations and orders, almost without limitation. As I read section 4 (c) of the proposed act, it virtually authorizes the Secretary of Labor to amend, interpret, and apply the act as he pleases. I have always thought that our Government was a Government of laws which the people subject to them could understand and be guided by; and that the people who administer the laws should be guided by. As I interpret the proposed section 4 (c), it would certainly not provide government of the people, by the people, and for the people. In my opinion the powers of the person who is to administer this act (or any other act of Congress) should be set forth clearly and definitely, and especially should the limitations on such powers be made so clear that there can be no misunderstanding.

I have worked with a committee of other cotton ginners from various parts of the Cotton Belt assembling information from our records, and by telephone from the records of other ginners and local ginner organizations to determine the extent to which the proposals of S. 653 would increase the costs of cotton ginning. These figures were determined for the States of Texas, Mississippi, Arkansas, Louisiana, Oklahoma, North Carolina, South Carolina, Tennessee, and Alabama, and the average results (weighted by the production of cotton in each of those States) were applied to the Department of Agriculture estimate of total United

States cotton production during the current season (14,937,000 bales). The results are as follows:

If cotton gins are required to pay a minimum wage of 75 cents per hour, without a premium on overtime, the additional cost would be $2.63 per bale, or a total of $39,224,562.

If ginners are required to pay a minimum wage of 75 cents per hour, and time and one-half for overtime, the additional cost would be $4.06 per bale, or a total of $60,703,968.

If ginners are required to pay a minimum wage of $1 per hour, without an overtime penalty, the additional cost would be $5.10 per bale, or a total of $76,193,637.

If we are required to pay a minimum wage of $1, plus overtime, the additional cost would be $7.02 per bale, or a total of $104,842,803.

If such requirements should also be applied to the warehousing and com pressing of cotton and to the crushing of cottonseed, we estimate that the over-all increase in costs of ginning, compressing, warehousing, and seed crushing would amount to something like $55,000,000 under a 75-cents minimum wage, without an overtime penalty, and that under a $1 minimum wage, with an overtime penalty, the increased cost would exceed $200,000,000 per year, based on the volume of the crop for the 1948-49 season.

Many, if not most, cotton gins find it extremely difficult to realize any proft from their ginning and baling operations. I know of a number of instances where the out-of-pocket operating costs exceed the total revenue received for ginning and baling. Certainly the cotton ginners could not absorb such additional costs, and I know that warehouses, compresses, and oil mills could not absorb the increases in their costs. The full amount of such increases would have to be reflected in increased charges for services performed, or in the case of cottonseed crushing, in a decreased price for the farmer's cottonseed. In either event, the full cost of the resulting increase would be passed on to the far.ner either in directly increased charges or in a reduced return for his crop.

It is my judgment and that of the ginners who assisted me in the preparation of this statement that such tremendous increases in labor costs would within a comparatively short time, force more than half of the (older) United States cotton gins to go out of business, because they would not be able to obtain sufficient revenue to cover their increased operating costs.

The entire economic structure of our country is now abnormally inflated, as a result of the recent war. Inflation of revenues, as well as expenses, now enables employers to pay high-wage scales in almost all business activities.

However, there are numerous indications that we are entering a period of recession, or depression-if we have not already entered it. Food prices are declining. Prices of securities, livestock, and commodities are falling. For the first time since the war, unemployment has increased substantially beyond the usual seasonal unemployment.

If the statutory wage minimum is increased as proposed in S. 653, and especially if the exemptions now granted to cotton ginners and other processors of farm products, are repealed, and coverage of the act is extended to all activities affecting commerce and all persons employed in, about, or in connection with such activities, the increased unemployment resulting from a recession, or depression, would be greatly accelerated because employers would have to seize every possible means of reducing their operating cost. For many wage earners, the question would be: A job at a wage justified by economic conditions, or a much higher statutory wage, but no job.

On behalf of all cotton ginners, as well as cotton farmers and kindred interests, I urge the Congress in determining any increase in the minimum wage to give the most careful and deliberate consideration to the effects which would be created; not to confer upon the Secretary of Labor or any other official of the Labor Department more extensive powers than are granted to that Department under the present act. We feel it would be a tragic mistake to extend coverage of the law to activities affecting commerce.

We urge with all the earnestness at our command that each of the exemptions and partial exemptions granted to agricultural processors, including cotton ginners, be retained in the law, and especially that the power and authority to define "area of production" of agricultural and horticultural com no lities be transferred to the Secretary of Agriculture, in order that the area-of-production exemption for the handling and processing of agricultural conmodities will have a reasonable chance of being applied in the manner which we believe was intended by the Congress.

90175 49- -47

Senator PEPPER. Next to be heard is a representative of the Food, Tobacco, Agricultural and Allied Workers Union of America, CIO, Mrs. Elisabeth Sasuly.

STATEMENT OF MRS. ELISABETH SASULY, WASHINGTON REPRESENTATIVE, FOOD, TOBACCO, AGRICULTURAL AND ALLIED WORKERS UNION OF AMERICA, CIO

Mrs. SASULY. Mr. Chairman, my name is Elizabeth Sasuly, and I am Washington representative of the Food, Tobacco, Agricultural and Allied Workers of America of the CIO.

I would like to direct my remarks to the question of the exemptions which apply to the food-processing industries, and to say, first of all, that we propose that all of these exemptions, section 7 (c), section 13 (a) (10), the area-of-production exemption, and section 7 (b) (3) be eliminated from the act, as well as section 13 (a) (5), which is the complete exemption from both the minimum-wage and overtime provisions as now applied to the fish-canning industry.

We think, frankly, that certain industries have been getting special gifts from Congress for an awfully long time, and that they have been getting them under the pretense that they are in some way connected with the farmers in such a way that it would be to the farmers' detriment if these industries were covered.

We feel that these industries have actually been imposing upon Congress through attempting to hide behind the farmer in gaining these exemptions.

Now, I think that the best proof of the fact that these very industries that you have heard testify here today do not need these exemptions is in the situation that obtains within our union and other unions where we have union contracts that have either wholly or in the case of very newly organized plants, only in part, eliminated these exemptions from the working conditions under which the plants operate. Senator PEPPER. Excuse me, Mrs. Sasuly.

Mrs. SASULY. Yes.

Senator PEPPER. These gins that we have been just talking about, they have to pay the minimum wage, do they not?

Mrs. SASULY. The gins; yes.

Senator PEPPER. They are presently paying the minimum wage? Mrs. SASULY. Except for those

Senator PEPPER. Which are in the area of production.

Mrs. SASULY. In the area of production.

Senator PEPPER. They do not even pay the minimum wage?

Mrs. SASULY. They do not even pay the minimum wage. If you would like to have this figure, Senator, there are 68,000 workers who are paid no overtime.

Senator PEPPER. What is the authority for that?

Mrs. SASULY. These are the Wage-Hour Administrator's figures. There are 68,000 workers in the cotton-ginning industry who receive no overtime payment year around. Now, with respect to area of production-I will give you that figure in just a moment.

Senator PEPPER. I thought the area of production only applied to the hours provision.

Mrs. SASULY. No, the area of production is both a minimum-wage and a maximum-hour exemption, and under the area-of-production

exemption-I would like to give you the figure on how many cottonginning workers there are exempt. Under 13 (a) (10) 41,000 are exempt from both the minimum-wage and overtime provision.

Senator AIKEN. Do you know how the comparison is in the gins in the area of production and those that are outside?

Mrs. SASULY. No, sir; I do not.

Senator AIKEN. I had an impression that the gin, perhaps, located on the farm, on the larger plantations, was paying as well as those located outside, and did custom work. I am not sure about that. I am asking you that. Do you know?

Mrs. SASULY. I cannot answer that, Senator, but I can get you the figures.

In respect to the cotton industry, I would like to say a word about the cottonseed-oil industry. The cottonseed-oil industry is an entirely independent industry for the most part. It is controlled by such companies as the Southern Oil Co.

Senator AIKEN. Two of them.

Mrs. SASULY. That is right. Procter & Gamble.

The cottonseed industry has the longest hourly workweek of any industry in the United States.

Senator AIKEN. Cottonseed-oil industry comes about as near being a monopoly as you can find in the United States; is that not true?

Mrs. SASULY. It has the longest workweek of any industry in the United States. It has a complete exemption from the overtime provisions of the act under section 7 (c), and it also has a partial exemption from the minimum-wage provisions under the area-of-production exemption.

I think this is, perhaps, one of the best examples of the completely unfair and inequitable way in which these exemptions have operated, of the haphazard way in which they were written, and the senseless way in which, under section 7 (c), some industries, such as the canning industry, will get a 14-week complete exemption, and a 14-week partial exemption, and other industries such as the various cotton-processing industries, will get a complete year-around exemption from the overtime provisions of the act.

Now, the contracts which our union has with various of these industries, we have eliminated the overtime exemptions in over 85 percent of all of our contracts. This has been done in some industries, such as the fresh fruit and vegetable industry, in California where, prior to the union organization, you had the most haphazard, the most irregular hours worked, and you found the industry represented saying, time after time, year after year, that it was impossible to operate the industry on any other basis.

Now, in that industry today we have contracts covering over 10,000 workers, where overtime is not only paid after 8 hours in any day, but it is paid between the hours of 5 p. m. and 8 a. m. in the morning which, I think, is pretty good proof that that industry cannot only pay overtime, but can pay overtime above and beyond the requirements of the Fair Labor Standards Act, and still compete effectively with other unorganized sections in other parts of the country. Of course, I do think that they are suffering a competitive inequity in that the other sections which are not organized do not have to pay overtime for virtually any time of their operations.

Senator PEPPER. Mrs. Sasuly, I had the idea that the "area of production" definition prescribed by the Board had been held invalid