hand, they learn from administrative rulings that they qualify under the exemption set forth in section 13 (a) (2) of the Fair Labor Standards Act. On the other hand, many of the dealers have recently been subjected to demands of field inspectors of the Wage and Hour Division that they accept coverage immediately. Statements by the Solicitor of the United States Department of Labor and by the Administrator of the Wage and Hour Division to the effect that present administrative rulings will necessarily be narrowed or canceled in the near future, of course add to this uncertainty and confusion.

Farm-equipment dealers are located in rural communities and have a rather definitely defined trade territory which they serve locally. They employ on the average of from one to three trained mechanics, a parts man, a general salesman and merchandise man, and a bookkeeper-typist. As a general rule, each of these employees assist in the different phases of the operation at various times as circumstances may require. The employees are usually local people with an agricultural background. The work of these employees require a long period of training on the job, particularly in these times of extensive farm mechanization. A large percentage receive periodically a share in the profits of the business. A high percentage of them take personal interest in the farm-equipment industry and many ultimately acquire an interest in a retail farm-equipment establishment. In case after case the employees themselves have expressed surprise that wage-and-hour inspectors have questioned hours of employment long recognized as necessary to supply adequate service to farmers. This is probably due to the fact that a large majority of these employees have a farm background and realize the importance of keeping farm machinery in operation during planting and harvesting seasons.

Farmers cannot maintain a fixed schedule of hours in their work. The planting, cultivating, and harvesting of crops must be done as conditions in various sections of the country dictate. The care of livestock does not permit operation on a short or regular timetable. Those who serve the farmer must accommodate their hours to his needs During planting and harvesting seasons emergency repairs are made as break-downs occur, irrespective of the time of day or night. To compensate for the long hours worked during these peak seasons, shorter hours and staggered schedules are usually followed during winter months and slack seasons. The over-all annual pay to employees takes all of these circumstances into consideration.

Farm-equipment dealers cannot hire additional labor to cut down the hours of regular employees during peak periods since inexperienced employees during these emergency periods would not be competent and would not adequately serve farmers' needs at a time when immediate and expert repair jobs on a farmer's machine may save a crop.

At the present time, farm-equipment dealers employ their mechanics and parts men from 48 to 54 hours a week. During slack seasons the hours are shorter and during peak periods of harvesting they may even be longer. All of these employees are receiving far in excess of the minimum wage presently provided in the Fair Labor Standards Act and in excess of the minimum levels which are currently being proposed. Hours and conditions of work frequently vary from State to State depending entirely upon local agricultural conditions. Most of these dealers will be unable to change to a 40-hour week and make the adjustment in salary based on present wage rates which time and one-half for all hours over 40 a week would require. In the case of many employees now drawing the equivalent of $1.50 to $2.50 per hour, this would mean increases varying from $7.50 to $15 per week. This might amount to several hundred dollars annually for each employee.

Farm-equipment dealers generally feel that if they should be forced to a 40-hour workweek with time and one-half for overtime compensation, one of two courses are open to them. They could limit operations of both sales and service to a 5-day, 40-hour week or possibly a 6-day, 44-hour week and could inform farmers that they must get along with such service during all seasons of the year. The alternative is to raise prices for farm machinery and parts and charges for services to meet the substantial pay increase and, of course, that result would be inflationary. In neither case would employment be spread; nor would other avowed purposes of the Fair Labor Standards Act be achieved. In fact, the opposite would probably result insofar as some of the purposes are concerned. Certainly any lowering of the present annual wage for these employees would result in their seeking part-time employment in other endeavors. You are no doubt aware that new farm machinery was not available through

out the war years in sufficient quantities to meet even the minimum needs of agricultural producers. That situation still exists today. Farm-equipmentdealers have made, and are continuing to make a substantial contribution to increasing food production by keeping old machines in operation under the handicap of shortages of critical replacements and repair parts. This has only been possible by long and irregular hours of service and by making parts in their shops when circumstances require. The United States Department of Agriculture has, on many occasions, publicly commended our dealers and their employees for this contribution and have urged the continuation of such service during this period of continuing need for increased food supplies. If the world food supply is as critical as our experts allege, then this surely is no time to cripple farm equipment service with a 40-hour-a-week strait-jacket throughout the Nation.

We have taken note of the proposed amendment to Section 13 (a) (2) as provided in S. 2386 which was introduced on March 25 and referred to this Committee for consideration. We appreciate the fact that the author of this bill Las recognized the need for clarification of the retail and service establishment exemption. We wish to point out, however, that this proposed amendment falls short in that it would not clarify the situation with respect to sales to farmers. A correction of the basic difficulty is needed; that is, a precise definition of retail sales and services so that administrative and judicial determinations will not alter an expressed intention of Congress to exempt all retail and service establishments engaged primarily in furnishing goods and services to consumers. We are confident that in the light of present conditions as outlined herein the proponents of S. 2386 will be agreeable to further amendment to accomplish that purpose.

Senator BALL. Our next witness is Mr. Harold O. Smith, Jr., executive vice president of the United States Wholesale Grocers Association.

STATEMENT OF HAROLD O. SMITH, JR., EXECUTIVE VICE PRESIDENT, UNITED STATES WHOLESALE GROCERS ASSOCIATION

Mr. SMITH. My name is Harold O. Smith, Jr. I am executive vice president of the United States Wholesale Grocers Association, a national trade organization of wholesale food and grocery distributors, with headquarters in Washington, D. C.

In coming before this committee, I do not come as an economist or statistician. However, in preparation of our viewpoint I have in recent months taken a rather extensive trip and talked to wholesale grocers in Mississippi, Louisiana, Texas, Tennessee, Kansas, and then up to Wisconsin, Kentucky, and Pennsylvania, as well as other fringing States.

The wholesale grocer is a man of recognized importance and prestige in his community. In addition to supplying, as an estimated average, about 1,000 retailer grocers and other retail outlets with their requirements, he takes an active part in the civic affairs of his city and State. He participates in movements for better health and education, slum clearance, higher standards of living and wider cultural attainments. He does not pay substandard wages or sweatshop rates. He does not employ as large a number of employees compared to concerns in many lines of industry. As a matter of fact, the average employees would be 35 and 7 salesmen and his truck drivers. Many institutions run up to 300 employees on their total staff. His desire is to gather around him a force of satisfied and loyal employees, who will stay with him, because of adequate pay, incentive and profit sharing provisions, and a high degree of employment security.

While we have no complete figures from Government or other sources there is support for the statement that he is generally paying well above the 40-cent hourly minimum.

The Bureau of Labor Statistics on November 17, 1947, issued the results of a study of straight-time average hourly pay of order-fillers, stockmen, and truck drivers in wholesale grocery establishments, in 30 large cities, representative of all sections of the country. This survey showed an average of $1.07 an hour for order fillers, range 66 cents to $1.36. For stockmen an average of $1.02, range 63 cents to $1.40. For truck drivers an average of $1.13, range 62 cents to $1.57. The same survey showed that class A stenographers received from 87 cents to $1.30 an hour; class B stenographers received 68 cents to $1.06 an hour and clerk-typists 67 cents to $1.15.

It is true that these figures apply to 30 large cities in the North, South, East, and West, where both pay and the cost of living are normally higher than in the smaller cities, but from these figures we believe we are justified in the conclusion that pay in the smaller cities is also reflecting the present high level of business activity and demand for labor.

In addition we made a sampling survey of our members in December 1947 which showed that members included in the survey in both the large and small cities were paying executive employees not less than $50 per week, $20 more than the present required minimum for such employees and also were paying more than the minimum of $200 a month for administrative employees.

It is apparent that in this field the present minimum is playing very little part, that generally it is not being used as a maximum. These rates above the minimum have been reached by the voluntary action of employers and employees.

This is as it should be. Why undertake to make the minimum approximate a maximum that may be justified in good times but may be full of dangers in bad times?

Even the 40-cent minimum could impose severe hardship on employees as well as employers as it could cause serious unemployment in periods of national or local depression. The substantial increase in the minimum such as proposed in the bills before this committee would generally multiply these hazards and dangers to the economic welfare in times of business recession.

Many thoughtful men in and out of Congress view with growing uneasiness the present operation of the wage-price spiral-increased wages resulting in higher prices for commodities and services and higher prices resulting in renewed demand for increased wages. They view this spiral as a distinct danger to the national economy and, in present circumstances, to the urgent need for foreign recovery and seek ways of halting the inflationary trend. They believe that labor in present conditions should refrain from urging further increases. We believe that this duty rests also on Congress, that it should refrain from authorizing wage increases by general and permanent law to be maintained whether times are good or bad. We believe that the Congress should refrain from contributing in this way to inflationary causes and tendencies.

If Congress enacts a law that makes it mandatory to raise the wages of unskilled and lower-paid employees, all employees above this level will feel they are entitled to a proportionately similar increase. There

fore, raising the minimum will most likely bring about a general overall wage increase at all levels of employment. The impact this would have on the cost of living could cancel out any advantages gained for he lower-paid employees and might very well leave them with less purchasing power than at present.

In view of these considerations we would oppose any increase in e minimum wage.

We also oppose any narrowing of the exemption from overtime pay for motor carrier employees for whom the Interstate Commission has wer to establish qualification and maximum hours of service. The ICC has ruled that it has such power with respect to drivers, drivers' ripers, leaders and garage mechanics, employees whose work has to do th the safety of the motor vehicle, and herein further referred to motor-carrier employees.

Section 13 (b) (1) of the present law reads as follows:

The provisions of section 7 (overtime pay requirement) shall not apply with pect to any employee with respect to whom the Interstate Commerce Comission has power to establish qualifications and maximum hours of service suant to the provisions of section 204 of the Motor Carrier Act, 1935.

It is quite apparent that Congress intended to continue control of e working hours of motor-carrier employees in the Interstate ComJerce Commission in view of the fact that it already had such control der the Motor Carrier Act of 1935 and further that it did not intend to give control of the working hours of these employees to the Wage Hour Division because by the subsection just quoted it gave exempon from overtime pay to the employees named.

The idea, as it seems to us, was that confusion would arise if risdiction over hours worked were given to separate regulatory

encies.

The ICC in its control of motor-carrier employees has nothing whatever to do with pay. It sets a flat limit of 60 hours a week for zivers no matter what they may be paid. This limit cannot be exreded. It is established to protect drivers from the dangers of overatigue. It differs in this respect from the 40 hours provision of the Wage and Hour Act. That provision was established as a basis for Overtime pay. Under it there is no limit to weekly hours. These O maximum workweeks are still confusing to members of the trade. It is easy to see added confusion when two regulatory bodies underke to operate with respect to workweek hours.

Such confusion has in fact arisen, because the Wage and Hour Division undertook to prescribe conditions under which motorrrier employees must be paid overtime. It ruled that until the ICC set qualifications and maximum hours of service for such emloyees that they were subject to overtime. The Supreme Court deded adversely to this position. The Wage and Hour Division further ruled that truck drivers were subject to overtime pay unless they devoted at least 50 percent of their time to interstate transportation. This position was also overruled by the Supreme Court with the result that the motor-carrier employees now need only engage for a very small part of their time in interstate transportation to come under ICC rules and therefore under exemption from overtime.

The exemption from overtime as given in section 13 (b) (1) is based on the mere power of the ICC to establish qualifications and maximum

hours of service for these employees regardless of whether the ICC has or has not actually set such requirements. The ICC has fixed qualifications and maximum hours for truck drivers only. It has not established such requirements for drivers' helpers, loaders, and garage mechanics.

Some of these bills, particularly S. 2386, are so worded as to remove the overtime exemption for drivers' helpers, loaders, and garage mechanics, leaving only truck drivers exempt from overtime.

We believe that Congress was right in its original grant of exemption to these motor-carrier employees and that two regulatory bodies should not have concurrent jurisdiction over their hours of service. In addition, Senator Ball's bill provides that truck drivers would not be exempt from overtime if they spend less than 20 percent of the workweek riding on the motor vehicle. This also seems to have some question as to whether that 20 percent would be interstate commerce transportation.

Senator BALL. I think you have a point in the 20 percent provision but it seems to me the ICC authority is primarily concerned with safety measures. They say, you cannot work them more than so many hours a week or you violate the law. It has nothing to do with the purpose of the Fair Labor Standards; and the ICC Act has never extended out to anybody around the drivers although they have the authority.

Mr. SMITH. That is correct.

Senator BALL. And most of these terminals do have some employees covered by wage and hour regulations.

Mr. SMITH. That I could not say. I can check that point for you. I was only expressing the general view so far as loaders and helpers were concerned.

Senator BALL. It seems to me the ICC would not step in to regulate the hours of overseers and mechanics.

Mr. SMITH. This would narrow the exemption for truck drivers under present law and court interpretations. It would in effect restore in part the Administrator's interpretation over the adverse decisions of the Supreme Court.

Further, the 20 percent requirement would restore untold confusion and difficulties in enforcement and compliance. The provision now in the act as it has been interpreted by the Supreme Court is generally practicable from an operating standpoint. Where an employer has some interstate truck operations throughout the year which are shared indiscriminately among his drivers, for example, he knows where he stands, that all his drivers are subject to ICC regulations and exempt from wage-hour overtime (Morris v. McComb, 92 L. ed. 83). But the proposed 20 percent requirement would again create an unworkable and intolerable situation in such a case by covering some drivers and not covering other drivers of the same employer, and by covering a particular driver in one week and not covering him in the next, with a determination required each week for each driver.

It is our firm belief that the original exemption for motor-carrier employees, as now interpreted by the courts, should stand and that no change should be made in such exemption as interpreted, as it would have to go through another round of litigation before being thoroughly clarified.