I want to mention just two other cases here, and then I will pass on-the office furniture store. All those sales are for business purposes. On the other hand, the sale of furniture that is to be used in the home is exempt sales, and the establishment exemption would apply. The small tailor, who has a shop making clothes from cloth received outside the State and selling all of his clothing locally, would have no exemption because he would be treated as a manufacturer and not a retail establishment, and "affecting commerce" would pick him up, and he would be under the law. But across the street, the clothing store selling 100 percent of this merchandise to private individuals for individual or personal consumption could be entitled to the exemption.

Now, just adding a few more remarks, going into the small local 1 farm communities, I should like to point out the country elevator has lost its exemption; that the produce buyer in most small towns, in farm communities, where there are farmers engaged in producing eggs, poultry, and butter-they will bring it in and sell it to a purchaser of produce. They will have a small establishment located in these small towns. That exemption, likewise, is lost.

The facts set forth in the above chart with respect to establishments selling to private individuals for personal or family consump tion as well as to business customers are based upon information brought to my attention while I was connected with the administration of the law and also upon information that has come to my at tention since I have been in private practice. It is submitted that these facts would be supported by competent witnesses from the several trades and services involved.

I do not mean to imply in my statement that the retail and service establishment exemption in the existing law as construed by the Administrator is not discriminatory at the present time. This is true, however, because the Administrator has taken the position that there can be no such thing as a retail sale to a business consumer as opposed to an individual or household consumer-unless the goods being sold to the business consumer are (1) of the same type, and (2) in the same community or at the same price as goods being sold to the individual consumer. H. R. 2033 would not only perpetuate the discrimination created by the Administrator but, as indicated. ! would worsen it substantially.

In order to remove the discrimination all local distributive and service trades and their employees should be treated uniformly irre spective of whether the selling or servicing is for private individuals or local commercial concerns. This is so because employees in all such trades have substantially the same working conditions and by and large form a common and interchangeable labor pool. There are no distinguishing features between employment in an establishment selling to private individuals and an establishment selling to local commercial establishments which would justify the imposition of different labor standards upon the two types of establishments The only possible exception to this is in the case of those local estab lishments which are engaged primarily in selling goods to and performing services for manufacturers and producers of goods for

commerce.

The committee should, I believe, also give serious consideration to the question of how the administration and enforcement of the act

will be affected by the extension of the act to local business, as is proposed by this bill. The number of establishments brought within its provisions would be increased by untold numbers. Consequently the enforcement problem would be comparable to that which confronted the Government under the NIRA. Certainly a vastly increased personnel would be required to obtain compliance. As was stated by a member of the National Labor Relations Board, dissenting from the Board's assumption of jurisdiction over local automobile dealers under the National Labor Relations Act:

An agency that received 12,500 new cases in the most recent 6-month period and closed its books on March 1 with 9,500 cases pending ought not, in our opinion, to embark upon a search for 'new fields to conquer. There is more than enough to do. We believe that it would be better for the Board to concentrate attention upon expediting action on cases in important industries, rather than dissipate its energies upon matters that would normally be the concern of the States. If it be said that certain States do not now have the necessary machinery available, we reply that the unrestrained explanation of Federal jurisdiction is the most likely way to assure the perpetuation of that condition. This is from the case entitled Matter of Liddon White Truck Co. (21 L. R. R. M. 1290, 1922; 76 N. L. R. B. No. 165).

That is all I have, Mr. Chairman.

Mr. LESINSKI. Mr. Lucas?

Mr. LUCAS. How many new employees do you estimate it would take to enforce H. R. 2033 if enacted?

Mr. POOLE. I would like to give you same facts which I think may enable the committee itself to make some estimate of that. In the fiscal year 1948, the Administrator stated that they inspected 29,240 covered establishments. He said that they found 15,324 establishments in violation. Now, was last year an unusual year?

Not

at all. He sets forth the results with respect to found violations for the last 10 years, ever since the law was in effect, and, gentlemen, you will see that the percentage of violations to establishments inspected runs in excess of 50 percent.

Stating it just that way may not be an accurate picture. Of course, many of these violations were slight, but on page 38 of his report to Congress, he says 39 percent of the violations were substantial, and of the major provisions of the act.

Mr. Lucas. Of course, it is because they simply did not understand the act; is that right?

Mr. POOLE. Now, he goes on and explains why, I think, you find o many violations. First, he says that you have the intentional wiolator, and as I read his statistics, that embodies only a group of round 7 percent. Then he says that the great proportion of violaions is because of ignorance of the law, first, and secondly because of technical misunderstanding on application of the law.

But in answer to your question, if you are going to take this statute and amend it, making it applicable to everyone who is "affecting ommerce," I can say first to you, gentlemen, that there are not any wo lawyers in the United States who are going to agree as to what s covered. You are going to have a field day, first, of litigation to pattern out coverage, and I certainly would hesitate to advise any employer-client if he had anything at all to do with interstate commerce by way of purchasing or by way of selling or servicing a prolucer for interstate commerce, that he may not be subject to the act. So it means that most of your establishments in the smaller com

munities are going to be subject to the act. There cannot be any question about that unless they have an exemption, and then you have this complicated set of exemptions which will have to be applied.

I want to point out one thing to you. The complications of the act, as you approach the smaller community, increase rather than de crease. In a large city, you have specialized selling. When a man engages in the selling of furniture, he will not commingle his lines and sell both to business and household users. He will carry one line. But as you approach the smaller communities, you get more and more diversification. And the greatest diversification and the greatest problem that we found was with the country general store. This is the kind of picture you will run into, because we had it, and it will certainly be encountered again. The operator of that store, first. will be buying produce. He will take the produce in exchange for the goods that he sells; he will turn around and sell that produce butter, eggs, live poultry-to a purchasing company in Chicago, St. Paul, or wherever he is going to ship it. That is going to start building up a category of sales toward the exhaustion of the 25 percent that will destroy his exemption.

You will also have a lumber yard, possibly, or he will be selling coal. And as he sells coal to those other than farmers or for household use. such as the church or the school, he will be eating that up. Well, it is going to be a very, very difficult task to analyze that business, and it will have to be done as an individual proposition. To advise the particular proprietor as to whether he comes under the law, I say it is impossible. I do not think it can be done.

It may be that we were wrong in the way we originally cast the law. It may be that we did not have sufficient experience under NRA to do the job correctly, but I am pessimistic about it, and I say that with all due respect to those who framed this bill and certainly the high motives that inspired them.

Mr. LUCAS. Mr. Poole, have you had any experience with industrywide committees?

Mr. POOLE. I have.

Mr. LUCAS. Has it not been the tendency of all industry-wide committees to extend coverage and to raise the minimum wage in the industry?

Mr. POOLE. You are speaking now of industry-wide committees that are set up under the Fair Labor Standards Act for the purpose of raising wages above the statutory minimum?

Mr. Lucas. Correct.

Mr. POOLE. I think in almost every instance with which at least I am familiar, those committees did recommend an increase. But that may be understandable. You started out with a very modest minimum wage. If you will recall when the Fair Labor Standards Act was passed, we commenced at 25 cents an hour, and then by operation of law within 1 year it went to 30 cents an hour. Then I think there was a period of 6 years before it went on to 40 cents an hour. During that period, you will recall that wage rates started to go up very rapidly in the United States. Within a year after the passage of the Fair Labor Standards Act, the impact of the rearmament program was making itself felt, and with the coming of the war, necessarily, wages as you know, went up very rapidly. The automatic application of the 40-cent rate did not become effective, you see, until the midst of that

period. So it will be expected that I think those committees would have recommended an increase.

Mr. LUCAS. Pertaining to the provisions in the bill before us, granting the Secretary of Labor authority to appoint industry-wide committees and delegating authority to them to raise minimum wages from 75 cents up to $1 or more, what would be your opinion as to the action such industry-wide committees would take if this bill is passed?

Mr. POOLE. That is a difficult question to answer. But I think there are two or three things that you have to bear in mind. First and foremost, it depends on who is going to administer the act. That is the most important problem that you have before you.

Mr. LUCAS. The bill provides the Secretary of Labor.

Mr. POOLE. That is a long story in itself. Unless you want me to go into that, I would prefer to go on here. I want to point out why this is possible. If you have a completely impartial and objective Administrator who is not subject to pressure groups, I think a fair job could be done. I am a believer in the industry committee method.

On the other hand, if you want to pick your jury, you could certainly determine what the verdict is going to be, and the appointment power here is in the administrative official. The determining group is the so-called public members, for which provision is made. You have three groups that are being appointed to this industry comnittee, one group representing labor, another management, and another the public. Now, there are people that can be found who are always in favor of raising wages, and if the Administrator sets out with a view that wages should be raised for a particular industry, e can accomplish it. He can accomplish it by the method of selection. But I do not want to suggest to you that that has to be done. say that that type of thing could be accomplished under the machinry that you have here.

Mr. LUCAS. Yes, certainly that is my view precisely. The Secreary of Labor is empowered to appoint the committee, and if he does not like the decision reached by them, he can fire them and hire another

one.

Mr. POOLE. He can, and I think he has, too.

Mr. LUCAS. And the Secretary of Labor, of course, is authorized y the statute to represent the wage earners in this country, and not ndustry. I am inclined to think that if the Secretary is given this uthority, all minimum wages in all industries will rapidly go to $1 n hour. I think it is a worthy objective, but I doubt if the economy f the Nation can stand it. You will notice on page 33 of the proposal before us that the words read:

If the Secretary disapproves such recommendations, he shall again refer the atter to such committee, or to another industry committee for such industry which he may appoint for such purpose), for further consideration and recomendations.

Which means that in the end the Secretary will be the final judge f what minimum wage to put in.

That is all, Mr. Chairman.

Mr. FORSYTHE. Mr. Chairman, might I ask one or two questions connection with the testimony which was given in regard to Mr. Lucas' questions?

Mr. LESINSKI. Mr. Forsythe.

85539-49-vol. 2- -25

establishments in any ordinary town or local c the illustration graphic I have prepared a chart committee's attention. The chart also demonstr limitations on the retail and service establish viously discussed likewise operate discriminat chart demonstrates how a number of local bus under the act are brought under it through t provision with which I dealt earlier in my staten

Before going into this chart, I just wanted t connection with my last statement. Under the local retailing is exempt. It is true as a matte became necessary to strike out that exemption include any of the employees who were engage be it a large store with a volume of over $500,00 But it has far-reaching effects. For example, the newsboy in under the law. The effect of bring every newsboy in the country under t

statute.

I should like to address myself to this chart w 10. Here you have a picture which I say is not two small towns, and I have made literally hur the course of the administration of this act, a in small communities, and I have been conscious were involved in the present law. So that I th are set up here are illustrative and I suggest that confirm them just by looking back into the comm were reared.

First, start out with the grocery store, A. It one of five or more. The annual sales volume I need not have taken a grocery store. I cou situation where the impact of this law I think that is in connection with the sale of gasoline. in the smaller communities have only one or two say that probably the majority of them. And but it is based on my own observation; but in m are probably chain operated.

You would have in that situation employee station and the grocery store under the law, an the road or street you would have the grocery part of the chain, not under it, irrespective of t that it had.

Coming down to the second example, the de the volume is in excess of five hundred thousa fact that it was an independent store, it would across the street or next to it, vou might hav store with an annual volume of less than fiv and it would be exempt.

Let us come to the coal dealer and see wha that we can really appreciate what this bill is to write into law. Let us assume that the a less than five hundred thousand, and let us a not a part of a chain. It sells 60 percent of dividuals for personal or family consumption. of its coal to churches, stores, schools, hospita